UTAH #2
ASSET PURCHASE AGREEMENT
by and between
**
and
COVOL TECHNOLOGIES, INC.
CARBON SYNFUEL, L.L.C.
SYNFUEL INVESTMENTS, INC.
December 23, 1999
** This Exhibit contains confidential material which has been omitted pursuant
to a Confidential Treatment Request. The omitted information has been filed
separately with the Securities and Exchange Commission.
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TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS.........................................................1
1.1. Affiliate.......................................................1
1.2. Agreement.......................................................1
1.3. As-Built Drawing................................................1
1.4. Assets..........................................................1
1.5. Assignment Agreement............................................1
1.6. Bill of Sale....................................................2
1.7. Books and Records...............................................2
1.8. Buyer's Closing Certificate.....................................2
1.9. Closing.........................................................2
1.10. Closing Date...................................................2
1.11. Code...........................................................2
1.12. Confidentiality Agreement......................................2
1.13. Contracts......................................................2
1.14. Covol Process..................................................2
1.15. Effective Time.................................................2
1.16. Excluded Assets................................................2
1.17. Facility.......................................................2
1.18. Facility Site..................................................2
1.19. Fixed Assets...................................................3
1.20. GAAP...........................................................3
1.21. Improvements...................................................3
1.22. IRS............................................................3
1.23. Knowledge of Buyer.............................................3
1.24. Knowledge of Seller............................................3
1.25. Law............................................................3
1.26. Lease..........................................................3
1.27. License and Binder Purchase Agreement..........................3
1.28. Lien...........................................................3
1.29. Loss...........................................................4
1.30. Material Adverse Effect........................................4
1.31. Opinion of Sellers' Counsel....................................4
1.32. Permitted Liens................................................4
1.33. Plans and Specifications.......................................4
1.34. Product........................................................4
1.35. Purchase Consideration.........................................4
1.36. Required Consents..............................................4
1.37. Section 29 Product.............................................4
1.38. Sellers' Closing Certificate...................................4
1.39. Sublease and License...........................................4
1.40. Transaction Documents..........................................4
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ARTICLE II PURCHASE AND SALE..................................................5
2.1. Purchase and Sale...............................................5
2.2. Payment of the Purchase Consideration...........................5
2.3. Deliveries at Closing...........................................5
2.4. Allocation of Purchase Price....................................5
2.5. No Assumption of Liabilities....................................6
2.6. Sales Tax Exemption.............................................6
ARTICLE III REPRESENTATION AND WARRANTIES OF SELLERS..........................6
3.1. Corporate Standing..............................................6
3.2. Authorizations; Binding Agreements..............................6
3.3. No Actions Affecting Enforcement of the Agreement and
the other Transaction Documents...............................7
3.4. Taxes...........................................................7
3.5. Brokers or Finders Fees.........................................7
3.6. No Imposition of Liens..........................................8
3.7. Title to Assets.................................................8
3.8. Condition of Assets.............................................8
3.9. Pending Litigation..............................................8
3.10. Compliance With Laws...........................................8
3.11. Status of Contracts............................................8
3.12. Consents.......................................................9
3.13. Books and Records..............................................9
3.14. Environmental Conditions.......................................9
3.15. Liabilities...................................................10
3.16. Agreements with Related Persons...............................10
3.17. Adequacy of the Purchased Assets..............................10
3.18. Production Capacity...........................................11
3.19. Section 29 Issues.............................................11
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER...........................11
4.1. Organization and Standing......................................11
4.2. Authorizations; Binding Agreements.............................11
4.3. Brokers or Finders Fees........................................12
4.4. No Action Affecting Enforcement of the Agreement and the
other Transaction Documents..................................12
ARTICLE V CERTAIN UNDERSTANDINGS AND AGREEMENTS..............................12
5.1. Best Efforts...................................................12
5.2. Public Announcements...........................................12
5.3. Confidentiality................................................12
5.4. Taxes..........................................................13
5.5. Private Letter Ruling Repurchase Option........................13
5.6. Solvency Representations and Covenants.........................13
5.7. Sublease and License...........................................14
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ARTICLE VI CONDITIONS PRECEDENT TO THE PAYMENT OBLIGATIONS OF BUYER..........14
6.1. Compliance with Agreement......................................14
6.2. Proceedings and Instruments Satisfactory.......................14
6.3. No Litigation..................................................14
6.4. Representations and Warranties.................................14
6.5. Consents.......................................................15
6.6. Tax Opinion....................................................15
ARTICLE VII CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SELLERS...............15
7.1. Compliance with Agreement......................................15
7.2. Proceedings and Instruments Satisfactory.......................15
7.3. No Litigation..................................................15
7.4. Representations and Warranties.................................15
7.5. Required Consents..............................................16
ARTICLE VIII INDEMNITIES AND ADDITIONAL COVENANTS............................16
8.1. Sellers' Indemnity.............................................16
8.2. Buyer's Indemnity..............................................17
8.3. Bulk Sales Compliance..........................................18
8.4. Additional Instruments.........................................18
8.5. Access to Books, Records and Employees.........................19
ARTICLE IX TERMINATION.......................................................19
9.1. Termination....................................................19
9.2. Rights on Termination; Waiver..................................19
ARTICLE X MISCELLANEOUS......................................................20
10.1. Entire Agreement; Amendment...................................20
10.2. Expenses......................................................20
10.3. Governing Law; Consent to Jurisdiction........................20
10.4. Assignment....................................................21
10.5. Notices.......................................................21
10.6. Counterparts; Headings........................................22
10.7. Interpretation................................................22
10.8. Severability..................................................22
10.9. No Reliance...................................................22
10.10. Parties in Interest..........................................22
10.11. Specific Performance.........................................23
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EXHIBITS AND SCHEDULES
SCHEDULE 1.13 Contracts
SCHEDULE 1.16 Excluded Assets
SCHEDULE 1.19 Fixed Assets
SCHEDULE 1.23 Knowledge of Buyer
SCHEDULE 1.24 Knowledge of Sellers
SCHEDULE 1.31 Opinion of Sellers' Counsel
SCHEDULE 1.32 Permitted Liens
SCHEDULE 1.36 Required Consents
SCHEDULE 3.3 Pending Actions
SCHEDULE 3.5 Brokers or Finders Fees of Sellers
SCHEDULE 3.7 Title
SCHEDULE 3.8 Condition of Assets
SCHEDULE 3.9 Pending Litigation
SCHEDULE 3.11 Status of Contracts
SCHEDULE 3.16 Agreements with Related Persons
EXHIBIT A Assignment Agreement
EXHIBIT B Bill of Sale
EXHIBIT C Buyer's Closing Certificate
EXHIBIT D Sellers' Closing Certificate
EXHIBIT E License and Binder Purchase Agreement
EXHIBIT F Allocation of Purchase Price
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ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT, made as of December 23, 1999, by and between
**., a Delaware limited liability company ("Buyer"), and COVOL TECHNOLOGIES,
INC., a Delaware corporation; CARBON SYNFUEL, L.L.C., a Utah limited liability
company; and SYNFUEL INVESTMENTS, INC., a Utah corporation ("Sellers").
RECITALS
WHEREAS, Carbon Synfuel, L.L.C. owns the Assets comprised of a
processing Facility to produce solid synthetic fuel pellets from coal fines
located near Price, Utah and Carbon Synfuel, L.L.C. is controlled by the other
Sellers; and
WHEREAS, Sellers desire to sell the Assets and the Contracts to Buyer
and Buyer desires to purchase the Assets from Sellers, all on the terms and
subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the Recitals and of the mutual
covenants, conditions and agreements set forth herein and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, it is hereby agreed that:
ARTICLE I
DEFINITIONS
When used in this Agreement, the following terms shall have the
meanings specified:
1.1. Affiliate shall mean, as to any person, any other person
or entity that, directly or indirectly through one or more intermediaries,
controls, is controlled by or is under common control with such person.
1.2. Agreement shall mean this Purchase Agreement, together
with the Exhibits and Schedules attached hereto, as the same may be amended from
time to time in accordance with the terms hereof.
1.3. As-Built Drawing shall mean as-built drawings reflecting
necessary revisions on the original tracings of the Plans and Specifications and
related drawings relating to the Facility necessary to indicate such field
changes as may have been found necessary to suit conditions at the Facility Site
and any other revisions made in the course of construction of the Facility.
1.4. Assets shall mean, collectively, the Improvements, the
Books and Records, and the Fixed Assets, together with all goodwill associated
with the Facility.
1.5. Assignment Agreement shall mean the Assignment Agreement
between Sellers and Buyer relating to the Contracts in the form of Exhibit A
attached hereto.
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1.6. Bill of Sale shall mean the Bill of Sale from Sellers to
Buyer relating to the Assets, in the form of Exhibit B attached hereto.
1.7. Books and Records shall mean original or true and
complete copies of all of the books, records, files, data and information of
Sellers relating to the design, construction and operation of the Facility and
operation of the business prior to the Effective Time, which are relevant to
Buyer's use of the Assets, performance under the Contracts and operation of the
Facility and the Business after the Effective Time, including without limitation
Plans and Specifications, all original tracings of the related drawings and
designs and the As-Built Drawings.
1.8. Buyer's Closing Certificate shall mean the certificate of
Buyer substantially in the form of Exhibit C attached hereto.
1.9. Closing shall mean the meeting of the parties to be held
at 9:00 a.m., local time, on the Closing Date, at the offices of Hunton &
Williams, Riverfront Plaza, East Tower, 951 East Byrd Street, Richmond,
Virginia, or such other time and place as the parties may mutually agree in
writing.
1.10. Closing Date shall mean December 29, 1999, or such other
date as the parties may mutually agree in writing.
1.11. Code shall mean the Internal Revenue Code of 1986, as
amended, and the regulations thereunder.
1.12. Confidentiality Agreement shall mean the Letter
Agreement, dated April 27, 1999, between Sellers and **.
1.13. Contracts shall mean all construction agreements
relating to the Facility and the Improvements, or components thereof, all as
listed on Schedule1.13 attached hereto or as otherwise agreed upon by Buyer
prior to the Closing Date.
1.14. Covol Process shall mean Sellers' proprietary synthetic
coal fuel production process for manufacturing solid synthetic fuel from coal
fines which is defined in and is the subject of the Technology License and
Binder Supply Agreement.
1.15. Effective Time shall mean 12:01 a.m., Eastern Time, on
the Closing Date.
1.16. Excluded Assets shall mean the items listed on Schedule
1.16 attached
hereto
1.17. Facility shall mean the solid synthetic fuel pellet
manufacturing Facility and related support Facility owned by Sellers and located
at the Facility Site.
1.18. Facility Site shall mean that certain parcel of land
located near Price, Utah where the Facility is located as of the Effective Date
and which is the leased premises under the Lease.
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1.19. Fixed Assets shall mean all tangible personal property
located at the Facility Site which constitute part of, or are otherwise owned
and used by Sellers in the operation of, the Facility as of the Effective Time,
including, but not limited to, all fixed assets, chattels, machinery, equipment,
computer hardware, fixtures, furniture, furnishings, handling equipment,
implements, spare parts, tools and accessories of all kinds which are listed on
Schedule 1.19 attached hereto; provided, however, that Fixed Assets shall
exclude (i) leased items of property and (ii) the Excluded Assets.
1.20. GAAP shall mean generally accepted accounting principles
of the United States as applied by Sellers in a manner consistent with prior
periods.
1.21. Improvements shall mean the structures, buildings and
improvements now standing on the Facility Site and constituting part of the
Facility, and replacements thereof, including, without limitation, all plant
equipment, apparatus, and machinery of every kind and nature forming a part of
such Facility, buildings, and improvements.
1.22. IRS shall mean the Internal Revenue Service.
1.23. Knowledge of Buyer shall mean the actual knowledge,
after due inquiry, of any person listed on Schedule 1.23 attached hereto.
1.24. Knowledge of Seller shall mean the actual knowledge,
after due inquiry, of any person listed on Schedule 1.24 attached hereto.
1.25. Law shall mean any federal, state, local or other law or
governmental requirement of any kind, and the rules, regulations and orders
promulgated thereunder.
1.26. Lease shall mean that certain Lease Agreement by and
between U.P.C., Inc. and Covol Technologies, Inc. dated December 23, 1996, as
amended by that certain Amendment to Lease Agreement dated as of April 2, 1997.
1.27. License and Binder Purchase Agreement shall mean that
certain License and Binder Purchase Agreement to be entered into by Buyer and
Sellers, relating to the licensing by the Buyer of Covol's proprietary synthetic
coal fuel extrusion, pellet and briquette production process for the Facility,
and substantially in the form of Exhibit E attached hereto.
1.28. Lien shall mean any interest in property securing an
obligation, whether such interest is based on common law, statute or contract,
and including any restriction on the use, voting, transfer, receipt of income or
other exercise of any attributes of ownership, any security interest or lien
arising from a mortgage, claims, encumbrance, pledge, charge, easement,
servitude, security agreement, conditional sale or trust receipt or a lease,
consignment or bailment for security purposes. The term "Lien" shall also
include reservations, exceptions, covenants, conditions, restrictions, leases,
subleases, licenses, occupancy agreements, pledges, equities, charges,
assessments, covenants, reservations, defects in title, encroachments and other
burdens, and other title exceptions and encumbrances affecting property of any
nature, whether accrued or unaccrued, or absolute or contingent.
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1.29. Loss shall have the meaning given to such term in
Section 8.1(a).
1.30. Material Adverse Effect shall mean a material adverse
effect on the Assets and Contracts, taken as a whole, the business to be
conducted by Buyer with the Assets or the maintenance and operation of the
Facility.
1.31. Opinion of Sellers' Counsel shall mean the opinion of
Pillsbury, Madison & Sutro, LLP, counsel of Sellers and Harlan Hatfield, general
counsel of Covol Technologies, Inc., substantially in the form of Schedule 1.31.
1.32. Permitted Liens shall mean Liens (but only for amounts
not yet due and payable) securing taxes, assessments or governmental charges or
levies, Liens of an immaterial nature which could not reasonably be expected to
have an adverse effect on the maintenance and operation of the Facility or the
good and marketable title of the Assets or the enforceability of the Contracts,
and Liens disclosed on Schedule 1.32 attached hereto.
1.33. Plans and Specifications shall have the meaning given
such terms in the Contracts.
1.34. Product shall mean the solid synthetic fuel pellet
product produced at the Facility using and pursuant to the Covol Process.
1.35. Purchase Consideration shall have the meaning given to
such term in Section 2.2 hereof.
1.36. Required Consents shall mean those consents, approvals
and waivers required from parties to the Contracts or under the Lease or any
subleases or from governmental authorities or other third parties that are
necessary or required in order to transfer the Assets and Contracts to Buyer and
otherwise give effect to the transactions contemplated herein (other than such
consents, the failure of which to obtain, taken as a whole, could not reasonably
be expected to have a Material Adverse Effect) and that are specifically
identified on Schedule 1.36 attached hereto.
1.37. Section 29 Product shall mean Product which is
reasonably expected to constitute "qualified fuels" pursuant to the terms of
Section 29(c)(1)(C) of the Code and with respect to which Section 29 is
applicable pursuant to the terms of Sections 29(f) and 29(g) of the Code.
1.38. Sellers' Closing Certificate shall mean the certificate
of Sellers substantially in the form of Exhibit D attached hereto.
1.39. Sublease and License shall have the meaning given such
term in Section 5.7.
1.40. Transaction Documents shall mean this Agreement, the
Bill of Sale, the Assignment Agreement, the Sublease and License and those
agreements and instruments to be executed and delivered as provided in Section
2.3.
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ARTICLE II
PURCHASE AND SALE
2.1. Purchase and Sale.
(a) Buyer and Sellers hereby agree that at the Closing, and
upon all of the terms and subject to all of the conditions of this Agreement,
Sellers shall sell, convey, transfer and assign to Buyer, and Buyer shall
purchase and accept from Sellers, all of the Assets, free and clear of all
Liens.
(b) Buyer and Sellers hereby agree that at the Closing, and
upon all of the terms and subject to all of the conditions of this Agreement,
Sellers shall assign to Buyer the Contracts and all rights arising thereunder.
2.2. Payment of the Purchase Consideration.
In consideration of Sellers' sale, conveyance, transfer, delivery and
assignment of the Assets and Contracts, Buyer shall on the Closing Date make a
cash payment to Sellers in the amount of ** Dollars ($**), payable by wire
transfer in readily available funds to First Security Bank; Salt Lake City,
Utah; 18A 124 000012; for the account of Covol Technology; Acct. #0600019939
(the "Purchase Consideration").
2.3. Deliveries at Closing.
(a) By Sellers to Buyer. At the Closing, Sellers shall deliver
the following items to Buyer, each properly executed and dated as of the Closing
Date by Sellers and in form and substance reasonably acceptable to Buyer: the
Assignment Agreement, the Bill of Sale, the Improvements Deed, the Sublease and
License, the License and Binder Purchase Supply Agreement, all Required Consents
applicable to Sellers, the Opinion of Sellers' Counsel, Sellers' Closing
Certificate, a subordination and nondisturbance agreement, satisfactory in form
and substance to Buyer, from all mortgagees and other parties with interests in
the Facility Site, the Lease or the Improvements and a certificate of the
corporate secretary of Sellers as to such matters as may reasonably be requested
by Buyer.
(b) By Buyer to Sellers. At the Closing, Buyer shall deliver
the Purchase Consideration and the following items to Sellers, each properly
executed and dated as of the Closing Date by Buyer and in form and substance
reasonably acceptable to Sellers: the Assignment Agreement, the Sublease and
License, the License and Binder Purchase Agreement, all Required Consents
applicable to Buyer, Buyer's Closing Certificate and a certificate of the
corporate secretary (or equivalent official) of Buyer as to such matters as may
reasonably be requested by Sellers.
2.4. Allocation of Purchase Price.
On the Closing Date, or at a later time agreed to by the parties, not
to exceed 30 days following the Closing Date, the purchase price shall be
allocated among the Assets and Contracts in accordance with Exhibit F attached
hereto. Such allocation shall be intended to comply with
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the requirements of Section 1060 of the Code, and no party shall take any
position inconsistent with such allocation for income tax purposes, except that
Buyer's cost for the Assets and Contracts may differ from the amount so
allocated to the extent necessary to reflect Buyer's capitalized acquisition
costs other than the amount realized by Sellers.
2.5. No Assumption of Liabilities.
Buyer does not and will not assume any liability or obligation of any
kind of Sellers, or any obligation relating to the use of the Assets or
performance by Sellers under the Contracts prior to the Effective Time, whether
absolute or contingent, accrued or unaccrued, asserted or unasserted, known or
unknown, or otherwise.
2.6. Sales Tax Exemption.
To the extent applicable, at the Closing, Buyer will deliver to Sellers
appropriate and customary sales tax exemption certificates relating to the
transfer of the Assets and the assignment of the Contracts contemplated hereby.
ARTICLE III
REPRESENTATION AND WARRANTIES OF SELLERS
Sellers jointly and severally represent and warrant to Buyer that:
3.1. Corporate Standing.
Sellers are corporations or a limited liability company duly organized
and validly existing and in good standing under the laws of their states of
organization as indicated in the introductory paragraph of this agreement.
Sellers have the power to own their property, and to execute, deliver and
perform this Agreement and each of the Transaction Documents applicable to it,
and to carry on their business as now being conducted. Sellers are duly
qualified to do business in and are in good standing as foreign corporations or
limited liability companies, authorized to do business under the laws of the
States of Utah.
3.2. Authorizations; Binding Agreements.
The execution, delivery and performance of this Agreement and the other
Transaction Documents by Sellers and each conveyance, assignment, agreement, and
other document herein contemplated to be executed by Sellers, have been duly
authorized by all necessary corporate and limited liability company action, as
the case may be. This Agreement and the other Transaction Documents and the
conveyances, assignments, agreements, and other documents herein contemplated to
be executed, delivered and performed by Sellers are, or will be upon execution,
legal, valid and binding obligations of Sellers, duly enforceable against
Sellers in accordance with their terms (subject, however, to the effects of
bankruptcy, insolvency, reorganization, moratorium, and similar laws from time
to time in effect relating to the rights and remedies of creditors as well as to
general principles of equity). This Agreement and the other Transaction
Documents and the conveyances, assignments, agreements, and other documents
herein contemplated to be executed, delivered and performed by Sellers (i) do
not and will not result in
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any violation of, conflict with or default under the terms of any of Sellers'
organizational documents (nor, to the Knowledge of Sellers, does there exist any
condition which upon the passage of time or the giving of notice would cause
such violation, conflict or default), and (ii) subject only to the Required
Consents, do not and will not result in any violation of, conflict with or
default under any Contract or any other material permit, lease, venture,
indenture, mortgage, agreement, contract, judgment, order or other obligation or
restriction to which Sellers, the Assets, the Contracts or the conduct of the
maintenance and operation of the Facility may be bound or encumbered (nor, to
the Knowledge of Sellers, does there exist any condition which upon the passage
of time or the giving of notice would cause such violation, conflict or
default).
3.3. No Actions Affecting Enforcement of the Agreement and the other
Transaction Documents.
Except as set forth in Schedule 3.3, there are no actions, suits, or
proceedings pending, or, to the Knowledge of Sellers, threatened, against
Sellers in any court, or administrative governmental body or agency which will
affect in any adverse manner the ability of Sellers to execute, deliver and
perform this Agreement and the other Transaction Documents. Subject only to the
Required Consents and such consents which the failure to obtain could not
reasonably be expected to have a Material Adverse Effect, Sellers has obtained
all permits, licenses, franchises, authorizations, variances, exemptions,
concessions, leases, instruments, orders, consents or approvals of governmental
entities and third parties necessary to construct, maintain and operate the
Facility and to execute, deliver and perform this Agreement and the other
Transaction Documents.
3.4. Taxes.
All tax returns and reports relating to the Assets, the Contracts and
the conduct of the construction, maintenance and operation of the Facility
required by law (including all federal, state, and local property tax, severance
and franchise tax laws) to be filed by Sellers prior to the Closing have been
timely filed or will be caused to be timely filed, including those tax returns
relating to periods prior to Closing that are not yet due, except for such
returns and reports which the failure to file could not reasonably be expected
to have a material adverse effect on the Assets, the Contracts or the
maintenance and operation of the Facility. All taxes, assessments, fees,
interest, penalties and other governmental charges relating to the Assets, the
Contracts or the conduct of the construction, maintenance and operation of the
Facility prior to Closing have been paid when due and payable or payment has
been provided for, except for such taxes, assessments, fees, interest, penalties
and other governmental charges which the failure to pay could not reasonably be
expected to have a material adverse effect on the Assets, the Contracts or the
construction, maintenance and operation of the Facility.
3.5. Brokers or Finders Fees.
Except as set forth in Schedule 3.5, there are no obligation or
liability, contingent or otherwise, for brokers or finders fees created by
Sellers with respect to the matters provided for in this Agreement and the other
Transaction Documents. No obligation or liability for brokers or
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finders fees created by Sellers with respect to the matters provided for in this
Agreement and the other Transaction Documents shall be imposed upon Buyer, the
Assets or the Contracts.
3.6. No Imposition of Liens.
The execution, delivery and performance of this Agreement and the other
Transaction Documents by Sellers shall not result in the imposition of any Lien,
other than Permitted Liens, upon any of the Assets, the Contracts or by which
the maintenance and operation of the Facility may be bound or encumbered.
3.7. Title to Assets.
Except as set forth on Schedule 3.7, as of the date hereof, Carbon
Synfuel, L.L.C. owns, and as of the Effective Time, it will own, good, valid and
marketable title to all of the Assets, free and clear of any and all Liens,
except for Permitted Liens. As of the Effective Time and upon Buyer's payment of
the Purchase Consideration pursuant hereto, good, valid and marketable title to
the Assets and holds a fully enforceable leasehold interest in the Facility
Site, free and clear of all Liens, except for Permitted Liens, shall pass to
Buyer.
3.8. Condition of Assets.
Except as set forth on Schedule 3.8, as of the Closing Date, the Fixed
Assets, taken as a whole, will be in good operating condition and repair and
substantially fit for the production of Section 29 Product at a rate of 360,0000
tons per year, and the Facility has been constructed in conformance with that
degree of skill and judgment normally exercised by recognized engineering and
construction firms of similar size and experience to that of the contractors
under the Contracts, and the Assets comprising the Facility conform to the
standards of material and workmanship prevailing in applicable industries and
are free from material defects in design, material and workmanship and are of
good quality.
3.9. Pending Litigation.
Except as disclosed on Schedule 3.9, there are no actions, suits,
arbitrations or proceedings currently pending or, to the Knowledge of Sellers,
threatened against the Assets or the Contracts. There are no outstanding or
unsatisfied judgments, orders or decrees to which Sellers are bound.
3.10. Compliance With Laws.
To the Knowledge of Sellers, Sellers are in compliance with all orders,
writs, injunctions, decrees, judgments, rulings, laws, rules or regulations of
any governmental entity to which Sellers, the Assets or the Contracts are
subject, the violation of which could reasonably be expected to have a Material
Adverse Effect.
3.11. Status of Contracts.
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Schedule 1.12 is a true, correct and complete list of all the material
contracts entered into by Sellers relating primarily to the Assets. Except as
described in the Schedule 3.11, the Contracts are valid and in good standing,
and there is no violation of, conflict with or default under the Contracts, the
consequence of which could reasonably be expected to have a Material Adverse
Effect. Sellers have not received any notice from any party to any Contract that
such party intends to terminate, cancel or refuse to renew the same or that such
party intends to offset any amount due thereunder or assert any defense to the
enforceability thereof.
3.12. Consents.
Schedule 1.36 is a true, correct and complete list of all Required
Consents.
3.13. Books and Records.
As of the Closing Date, the Books and Records shall be complete and
correct in all material respects.
3.14. Environmental Conditions.
(a) Definitions. When used in this Section:
(i) "Environmental Laws" shall mean all applicable
laws (including common law), rules, orders, regulations, statutes, ordinances,
codes, decrees and requirements of any Governmental Authority regulating,
relating to or imposing liability standards of conduct concerning any Hazardous
Materials or environmental protection.
(ii) "Governmental Authority" shall mean any federal,
state, local, municipal or other governmental department, commission, board,
bureau, agency or instrumentality, or any court, in each case having
jurisdiction over the applicable matter.
(iii) "Hazardous Materials" shall mean any solid
waste, petroleum or petroleum product, hazardous material, hazardous waste,
infectious medical waste, or hazardous or toxic substance defined or regulated
as such in any Environmental Law.
(b) Environmental Representations and Warranties. Except as
set forth on Schedule 3.14 attached hereto:
(i) Sellers have not operated the Facility or
conducted business or other activities at or from the Facility, in connection
with the construction of the Facility or otherwise, in a manner that constituted
or constitutes a violation of any applicable Environmental Law;
(ii) There has been no off-site shipment or release
of any Hazardous Materials by the Sellers on, under, at, from or in any way
affecting the Facility or any part thereof, which off-site shipment or release
gives rise to liabilities or obligations under applicable Environmental Laws;
and
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(iii) Sellers have not received any notices or claims
that they are a responsible party in connection with any claim or notice
asserted pursuant to 42 U.S.C. Section 9601 et seq., or any state superfund law,
in connection with the Facility.
(iv) Seller has received all permits as may be
required under applicable Environmental Laws to operate the Facility as of the
Effective Time, and Seller is in compliance in all material respects with the
terms and conditions of each such permits. Such permits shall be transferable to
Buyer and will be effective immediately (or, subject to Section 5.1, as soon as
practicable) after the Closing.
3.15. Liabilities.
Except for liabilities underlying any Permitted Liens, the Sellers have
no liabilities which could reasonably be expected to have a Material Adverse
Effect following the Closing, nor has any condition existed or any event
occurred which could reasonably be expected to give rise to any such liability.
3.16. Agreements with Related Persons.
There are no contracts, licenses, agreements or arrangements with any
Affiliate of Sellers in connection with the construction, maintenance, ownership
and operation of the Facility, other than as disclosed on Schedule 3.16.
3.17. Adequacy of the Purchased Assets.
Except as described in Schedule 3.8 the Assets and the Contracts,
together with (i) the technology and know-how being licensed to Buyer by Sellers
under the License and Binder Purchase Agreement, (ii) the chemical binder to be
supplied to Buyer by Sellers under the License and Binder Purchase Agreement,
and (iii) rights and assets required for the relocation of the Facility to the
site selected by Buyer (including but not limited to relocation construction
contracts, feedstock raw materials, applicable real property rights, permits,
etc.) which Buyer may arrange for but which are not the subject of this Purchase
Agreement, constitute all of the assets and technology rights reasonably
expected to be necessary for the production by Buyer of Section 29 Product at
the rate of 360,000 tons per year.
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3.18. Production Capacity.
The Facility has a rated capacity to produce Product at the rate of
360,000 tons per year.
3.19. Section 29 Issues.
The Facility was placed "in service" for purposes of the Code prior to
July 1, 1998 pursuant to a binding contract entered into prior to January 1,
1997 and effective at all times thereafter through completion of construction.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Sellers that:
4.1. Organization and Standing.
Buyer is a limited liability company duly organized, validly existing,
and in good standing under the laws of the State of Delaware and has the power
to own its own property, and to execute, deliver and perform this Agreement and
each of the Transaction Documents, and to carry on its business as now being
conducted.
4.2. Authorizations; Binding Agreements.
The execution, delivery, and performance of this Agreement and the
other Transaction Documents by Buyer and of each conveyance, assignment,
agreement, and other document herein contemplated to be executed by Buyer have
been fully authorized by all necessary limited liability company action. This
Agreement and the other Transaction Documents and the conveyances, assignments,
agreements, and other documents herein contemplated to be executed, delivered
and performed by Buyer are, or will be upon execution, legal, valid and binding
obligations of Buyer, duly enforceable against Buyer in accordance with their
terms (subject, however, to the effects of bankruptcy, insolvency,
reorganization, moratorium, and similar laws from time to time in effect
relating to the rights and remedies of creditors as well as to general
principles of equity). This Agreement and the other Transaction Documents and
the conveyances, assignments, agreements, and other documents herein
contemplated to be executed, delivered and performed by Buyer (i) do not and
will not result in any violation of, conflict with or default under the terms of
Buyer's organizational documents, and (ii) subject only to the Required
Consents, do not and will not result in any violation of, conflict with or
default under any material permit, lease, venture, indenture, mortgage,
agreement, contract, judgment, order or other obligation or restriction to which
Buyer is bound (nor, to the Knowledge of Buyer, does there exist any condition
which upon the passage of time or the giving of notice would cause such
violation, conflict or default).
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4.3. Brokers or Finders Fees.
No obligation or liability, contingent or otherwise, for brokers or
finders fees created by Buyer with respect to the matters provided for in this
Agreement shall be imposed upon Sellers.
4.4. No Action Affecting Enforcement of the Agreement and the other
Transaction Documents.
There are no actions, suits, or proceedings pending, or, to the
Knowledge of Buyer, threatened, against Buyer in any court, or administrative
governmental body or agency which will affect in any adverse manner the ability
of Buyer to execute, deliver and perform this Agreement and the other
Transaction Documents.
ARTICLE V
CERTAIN UNDERSTANDINGS AND AGREEMENTS
5.1. Best Efforts.
Subject to the terms and conditions herein provided, each of the
parties hereto agrees to use its commercially reasonable efforts to take, or
cause to be taken, all action, and to do, or cause to be done, all things
necessary, proper and advisable under applicable Law, and to obtain the Required
Consents, necessary to consummate and make effective the transactions
contemplated by this Agreement. In case at any time after the Effective Time any
further action is necessary or desirable to carry out the purposes of this
Agreement, the proper officers and directors of each party to this Agreement
shall take all such necessary action. Buyer and Sellers will execute any
additional instruments necessary to consummate the transactions contemplated
hereby. To the extent that any permits referenced in Section 3.14(b)(iv) are not
transferred at the Closing Date, Sellers will use commercially reasonable
efforts to cause such transfer to Buyer as soon as practicable after the Closing
Date.
5.2. Public Announcements.
Buyer and Sellers will consult with each other before issuing any press
release or otherwise making any public statement with respect to this Agreement
and the transactions contemplated herein, and shall not issue any such press
release or make any such public statement prior to such consultation or as to
which the other party reasonably objects, except as may be required by Law or by
obligations pursuant to any listing agreement with any national securities
exchange or inter-dealer quotation system.
5.3. Confidentiality.
Notwithstanding the execution of this Agreement, the confidentiality
provisions of the Confidentiality Agreement shall remain in full force and
effect and shall survive the Closing.
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5.4. Taxes.
Following Closing, Sellers shall timely file all tax returns and
reports relating to the Assets, the Contracts and the conduct of the
construction, maintenance and operation of the Facility prior to Closing which
have not been filed or were not yet due to be filed prior to Closing, and
Sellers shall timely pay all taxes, assessments, fees, interest, penalties and
governmental charges relating to the Assets, the Contracts or the conduct of the
construction, maintenance and operation of the Facility prior to Closing which
have not been paid or were not yet due and payable prior to Closing.
5.5. Private Letter Ruling Repurchase Option.
Following Closing, Buyer plans to seek a Private Letter Ruling from the
IRS as to matters relating to the Facility and Section 29 of the Code. Sellers
shall cooperate with and assist Buyer, as reasonably requested by Buyer, in
connection with seeking such Private Letter Ruling. In the event that Buyer does
seek such a Private Letter Ruling and the IRS refuses or fails to issue it in a
form that is satisfactory in the sole and absolute discretion of Buyer, Buyer
shall be entitled to elect (by giving written notice to Sellers to such effect)
to terminate the obligation to make further royalty payments under Section 3 of
the License and Binder Purchase Agreement and, in such event, Sellers shall have
the option to purchase, within one year following such notice, the Assets and
Contracts (and assume obligations under the Contracts) from Buyer at the greater
of (i) the amount of Purchase Consideration theretofore paid by Buyer plus the
amount of any capital expenditures made by Buyer in connection with the Facility
and Assets plus any obligations of Buyer in respect of the Facility and the
Assets and Contracts, or (ii) the fair market value of such Assets and
Contracts.
5.6. Solvency Representations and Covenants.
Each Seller hereby represents and warrants (as to itself only) that
prior to consummating the transactions contemplated herein, (i) the aggregate
fair market value of such Seller's assets exceeds the aggregate amount of such
Seller's liabilities, including contingent liabilities discounted by the
probability of their occurrence, (ii) such Seller is able to pay and is paying
its debts generally as and when they become due in the ordinary course of
business, (iii) such Seller is adequately capitalized for its current and
contemplated business undertakings, and (iv) the Purchase Consideration
constitutes reasonably equivalent value and fair consideration for the Assets.
Each Seller hereby covenants (as to itself only) that after
consummating the transaction contemplated by the Purchase Agreement, (i) the
aggregate fair market value of such Seller's assets will exceed the aggregate
amount of such Seller's liabilities, including contingent liabilities discounted
by the probability of their occurrence, (ii) such Seller will be able to pay and
will pay its debts generally as and when they become due in the ordinary course
of business, and (iii) such Seller will not be left with unreasonably small
capital for its then-current and contemplated business undertakings.
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5.7. Sublease and License.
At, and as a condition to, the Closing, Buyer, Sellers and the landlord
under the Lease shall enter into a sublease, license and consent agreement (the
"Sublease and License"), in form and substance to be agreed upon by the parties,
which shall provide (i) for Sellers to sublease the portion of the leased
premises under the Lease and grant those rights under the Lease to the extent
necessary to allow Buyer, without restriction, to enter such premises, maintain
and operate the Facility and to remove the Facility, after which such sublease
shall terminate, (ii) for the granting of a license by the landlord under the
Lease providing for the rights referenced in clause (i) above, and (iii) for the
consent of the landlord under the Lease to all of the foregoing and to the
ultimate removal of the Facility from such leased premises with no further
obligation on the part of Buyer. In addition, Sellers shall assign to Buyer, to
the extent assignable, or otherwise shall assist Buyer in connection with
obtaining, agreements providing for necessary utilities at such site and Sellers
shall provide necessary security services relating to the Facility and the
Facility Site during the period following the Effective Time and until Buyer
removes the Facility from the Facility Site.
ARTICLE VI
CONDITIONS PRECEDENT TO THE PAYMENT OBLIGATIONS OF BUYER
Each and every obligation of Buyer to be performed on the Closing Date
shall be subject to the satisfaction, prior to or at the Closing of the
following express conditions precedent:
6.1. Compliance with Agreement.
Sellers shall have performed and complied in all material respects with
all of its obligations under this Agreement which are to be performed or
complied with by it prior to or on the Closing Date.
6.2. Proceedings and Instruments Satisfactory.
All proceedings, corporate or other, to be taken by Sellers in
connection with the transactions contemplated by this Agreement, and all
documents incident thereto, shall be reasonably satisfactory in form and
substance to Buyer.
6.3. No Litigation.
No investigation, suit, action or other proceedings (including, without
limitation, any petition relating to any of the Sellers under the Bankruptcy
Code or similar federal or state law) shall be threatened or pending before any
court or governmental agency that seeks restraint, prohibition, damages or other
relief in connection with this Agreement or the consummation of the transactions
contemplated hereby or in connection with obligations to creditors.
6.4. Representations and Warranties.
The representations and warranties made by Sellers in this Agreement
shall be true and correct in all respects (as to representations and warranties
qualified or limited by the term
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"Material Adverse Effect," the word "material," or phrases of like import), and
in all material respects (as to representations and warranties not so qualified
or limited) as of the Closing Date with the same force and effect as though said
representations and warranties had been made on the Closing Date.
6.5. Consents.
All Required Consents applicable to Sellers shall have been obtained,
including without limitation consents relating and required of the landlord
under the Lease pursuant to the Sublease and License.
6.6. Tax Opinion.
Buyer shall have received an opinion of Hunton & Williams, counsel to
Buyer, in form and substance satisfactory to Buyer, with respect to matters
related to Section 29 of the Code.
ARTICLE VII
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SELLERS
Each and every obligation of Sellers to be performed on the Closing
Date shall be subject to the satisfaction prior to or at the Closing of the
following express conditions precedent:
7.1. Compliance with Agreement.
Buyer shall have performed and complied in all material respects with
all of its obligations under this Agreement which are to be performed or
complied with by it prior to or on the Closing Date.
7.2. Proceedings and Instruments Satisfactory.
All proceedings, corporate or other, to be taken by Buyer in connection
with the transactions contemplated by this Agreement, and all documents incident
thereto, shall be reasonably satisfactory in form and substance to Sellers.
7.3. No Litigation.
No investigation, suit, action or other proceeding shall be threatened
or pending before any court or governmental agency that seeks restraint,
prohibition, damages or other relief in connection with this Agreement or the
consummation of the transactions contemplated hereby.
7.4. Representations and Warranties.
The representations and warranties made by Buyer in this Agreement
shall be true and correct in all respects (as to representations and warranties
qualified or limited by the term "Material Adverse Effect," the word "material,"
or phrases of like import), and in all material respects (as to representations
and warranties not so qualified or limited) as of the Closing Date
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with the same force and effect as though such representations and warranties had
been made on the Closing Date.
7.5. Required Consents.
All Required Consents applicable to Buyer shall have been obtained.
ARTICLE VIII
INDEMNITIES AND ADDITIONAL COVENANTS
8.1. Sellers' Indemnity.
(a) Sellers hereby jointly and severally indemnify and hold Buyer
harmless from and against, and agree to defend promptly Buyer from, and
reimburse Buyer for, any and all losses, damages, costs, expenses, liabilities,
obligations and claims of any kind, including, without limitation, environmental
liabilities (whether involving personal injury or property damage), reasonable
attorneys' fees and other legal costs and expenses (hereinafter referred to
collectively as "Losses"), that Buyer and any Affiliate of Buyer may at any time
suffer or incur, or become subject to, as a result of or in connection with: (i)
any breach or inaccuracy of any of the representations and warranties made by
Sellers in this Agreement or any other agreement or instrument delivered by
Sellers pursuant hereto; (ii) any failure of Sellers to carry out, perform,
satisfy and discharge any of its covenants, agreements, undertakings,
liabilities or obligations under this Agreement or under any of the agreements
and instruments delivered by Sellers pursuant to this Agreement; (iii) claims by
third parties (including governmental authorities) against Buyer relating to the
construction, operation and ownership by Sellers of the Assets and the
performance by Sellers under the Contracts in each case under this clause (iii)
for the period prior to the Effective Time; (iv) any violations of, or failure
to operate in accordance with, necessary permits prior to the Effective Time;
(v) except as otherwise provided in the Sublease and License, all obligations
and liabilities under the Lease; and (vi) any and all liabilities and
obligations of Sellers;
(b) In the event a claim against Buyer arises that Buyer reasonably
believes is covered by the indemnity provisions of Section 8.1(a) of this
Agreement, notice shall be given promptly by Buyer to Sellers containing detail
reasonably sufficient for Sellers to identify the nature and basis of the claim.
Provided that Sellers admit in writing to Buyer that such claim is covered by
the indemnity provisions of Section 8.1(a) hereof, Sellers shall have the right
to contest and defend by all appropriate legal proceedings such claim and to
control all settlements (unless Buyer agrees to assume the cost of settlement
and to forgo such indemnity) and to select lead counsel to defend any and all
such claims at the sole cost and expense of Sellers; provided, however, that
Sellers may not effect any settlement that could result in any cost, expense or
liability to Buyer unless Buyer consents in writing to such settlement and
Sellers agree to indemnify Buyer therefor. Buyer may select counsel to
participate with Sellers' counsel in any such defense, in which event Buyer's
counsel shall be at its own sole cost and expense. In connection with any such
claim, action or proceeding, the parties shall cooperate with each other and
provide each other with access to relevant books and records in their
possession.
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(c) Sellers shall not be required to indemnify and hold harmless Buyer
pursuant to Section 8.1(a)(i) hereof in respect of the representations and
warranties made by Sellers herein unless such right to indemnification is
asserted by Buyer (whether or not such Losses have actually been incurred) by
notice to Sellers within 12 months after the Closing Date, with the exception of
(i) the representations and warranties set forth in Sections 3.4 and 3.19, which
must be asserted by Buyer within the applicable statute of limitations or any
extensions thereof required by any applicable authority relating to the taxes or
assessments giving rise to the Loss, plus 60 days, (ii) the representations and
warranties set forth in Section 3.10, which must be asserted by Buyer within the
applicable statute of limitations for the violation of the underlying law that
forms the basis of such claim, plus 60 days, (iii) the representations and
warranties set forth in Sections 3.1, 3.2, and 3.8, which shall be without time
limitation, and (iv) the representations and warranties set forth in Section
3.14 hereof, which must be asserted within 24 months after the Closing Date.
(d) Notwithstanding the foregoing, Sellers shall not be required to
indemnify Buyer under Section 8.1(a)(i) in respect of the representations and
warranties made by Sellers unless the amount of all Losses for which
indemnification is sought by Buyer under Section 8.1(a)(i) exceeds, in the
aggregate, $250,000, in which event, Sellers' indemnity obligation hereunder
would apply to all such Losses. Sellers' aggregate indemnification obligation
pursuant to Section 8.1(a)(i) shall in no event exceed the Purchase
Consideration described in Section 2.2 and paid to Sellers.
(e) The indemnification provided in this Section 8.1, including the
limitations with respect thereto, shall be the exclusive remedy for Buyer with
respect to Losses as a result of or in connection with the matters described in
Section 8.1(a)(i), notwithstanding any provisions in this Agreement or any other
such agreement or instrument to the contrary.
8.2. Buyer's Indemnity.
(a) Buyer hereby indemnifies and holds Sellers harmless from and
against, and agrees to defend promptly Sellers from and reimburse Sellers for,
any and all Losses that Sellers may at any time suffer or incur, or become
subject to, as a result of or in connection with: (i) any breach or inaccuracy
of any of the representations and warranties made by Buyer in this Agreement or
any other agreement or instrument delivered by Buyer pursuant hereto; (ii) any
failure by Buyer to carry out, perform, satisfy and discharge any of its
covenants, agreements, undertakings, liabilities or obligations under this
Agreement or under any of the agreements and instruments delivered by Buyer
pursuant to this Agreement; and (iii) claims by third parties (including
governmental authorities) against Sellers relating to the operation and
ownership by Buyer of the Assets for the period following the Effective Time.
(b) In the event a claim against Sellers arises that is covered by the
indemnity provisions of Section 8.2 of this Agreement, notice shall be given
promptly by Sellers to Buyer containing detail reasonably sufficient for Buyer
to identify the nature and basis of the claim. Provided that Buyer admits in
writing to Sellers that such claim is covered by the indemnity provisions of
Section 8.2 hereof, Buyer shall have the right to contest and defend by all
appropriate legal proceedings such claim and to control all settlements (unless
Sellers agrees to
17
assume the cost of settlement and to forgo such indemnity) and to select lead
counsel to defend any and all such claims at the sole cost and expense of Buyer;
provided, however, that Buyer may not effect any settlement that could result in
any cost, expense or liability to Sellers unless Sellers consents in writing to
such settlement and Buyer agrees to indemnify Sellers therefor. Sellers may
select counsel to participate with Buyer's counsel in any such defense, in which
event Sellers' counsel shall be at the sole cost and expense of Sellers. In
connection with any such claim, action or proceeding, the parties shall
cooperate with each other and provide each other with access to relevant books
and records in their possession.
(c) Buyer shall not be required to indemnify and hold harmless Sellers
pursuant to Section 8.2(a)(i) hereof in respect of the representations and
warranties made by Buyer herein unless such right to indemnification is asserted
by Sellers (whether or not such Losses have actually been incurred) by notice to
the Buyer within 12 months after the Closing Date, with the exception of the
representations and warranties set forth in Sections 4.1 and 4.2 hereof, which
shall be without time limitation.
(d) Notwithstanding the foregoing, Buyer shall not be required to
indemnify Sellers under Section 8.2(a)(i) in respect of the representations and
warranties made by Buyer unless the amount of all Losses for which
indemnification is sought by Sellers under Section 8.2(a)(i) exceeds, in the
aggregate, $250,000, in which event, Buyer's indemnity obligation hereunder
would apply to all such Losses.
(e) The indemnification provided in this Section 8.2, including the
limitations with respect thereto, shall be the exclusive remedy for Sellers with
respect to Losses as a result of or in connection with the matters described in
Section 8.2(a)(i), notwithstanding any provisions in this Agreement or any other
such agreement or instrument to the contrary.
8.3. Bulk Sales Compliance.
To the extent applicable, Buyer hereby waives compliance by Sellers
with the provisions of the bulk sales law of any U.S. jurisdiction, and in any
event, Sellers covenants and agrees to pay and discharge when due all claims of
any governmental entities and creditors of Sellers and its subsidiaries that
could be asserted against Buyer by reason of such non-compliance. Sellers agrees
to indemnify and hold Buyer harmless from and against and shall on demand
reimburse Buyer for any and all Losses suffered by Buyer by reason of Sellers'
failure to pay and discharge any such claims.
8.4. Additional Instruments.
At any time and from time to time after the Closing, at either party's
request and without further consideration, Sellers or Buyer, as the case may be,
shall execute and deliver such other instruments of sale, transfer, conveyance,
assignment and confirmation and take such other action as Sellers or Buyer may
reasonably deem necessary or desirable in order to more effectively transfer,
convey, and assign to Buyer, and confirm Buyer's title to and interest in and
responsibility and liability for, the Assets and Contracts and the consummation
of the transactions contemplated herein. Without limiting the generality of the
foregoing, Sellers will
18
cooperate with and assist Buyer in renewing, or transferring, into Buyer's name
those Permits for which Buyer requests such assistance and cooperation at the
appropriate time for such renewal or transfer as determined by Buyer.
8.5. Access to Books, Records and Employees.
From and after the Closing Date, Buyer will authorize and permit
Sellers and its respective representatives to have access during normal business
hours, upon reasonable notice and for reasonable purposes and in such manner as
will not unreasonably interfere with the conduct of Buyer's business, to Books
and Records within the control of Buyer that relate to the Facility. From and
after the Closing Date, Sellers will authorize and permit Buyer and its
representatives to have access during normal business hours, upon reasonable
notice and for reasonable purposes and in such manner as will not unreasonably
interfere with the conduct of Sellers' business, to all books and records,
files, documents and other correspondence related to the Facility prior to the
Effective Time, which are not included among the Books and Records. Buyer and
Sellers agree to maintain all books, records, files, documents and other
correspondence related to the Facility prior to the Effective Time in accordance
with their respective normal document retention practices after the Closing
Date.
ARTICLE IX
TERMINATION
9.1. Termination.
This Agreement may be terminated and the transactions contemplated
hereby may be abandoned as follows: (a) at any time prior to the Closing Date by
mutual written agreement of Sellers and Buyer; or (b) by either Sellers or Buyer
if the Effective Time shall not have occurred on or before January 15, 2000,
provided, however, that the right to terminate this Agreement pursuant to this
clause (b) shall not be available to any party whose failure to fulfill any
obligation under this Agreement has been the cause of, or resulted in, the
failure of the Effective Time to occur prior to such date.
9.2. Rights on Termination; Waiver.
(a) If this Agreement is terminated pursuant to Section 9.1, all
further obligations of the parties under or pursuant to this Agreement shall
terminated.
(b) If any of the conditions set forth in Article VI of this Agreement
have not been satisfied, Buyer may nevertheless elect to waive such conditions
and proceed with the consummation of the transactions contemplated hereby. If
any of the conditions set forth in Article VII of this Agreement have not been
satisfied, Sellers may nevertheless elect to waive such conditions and proceed
with the consummation of the transactions contemplated hereby. The election by
Buyer or Sellers to terminate this Agreement pursuant to Section 9.1 (b) shall
not in any way affect the rights of such party against the other party for any
breach or default under this Agreement.
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ARTICLE X
MISCELLANEOUS
10.1. Entire Agreement; Amendment.
This Agreement and the documents referred to herein and to be delivered
pursuant hereto constitute the entire agreement between the parties pertaining
to the subject matter hereof, and supersede all prior and contemporaneous
agreements, understandings, negotiations and discussions of the parties, whether
oral or written, and there are no warranties, representations or other
agreements between the parties in connection with the subject matter hereof,
except as specifically set forth herein or therein. No amendment, supplement,
modification, waiver or termination of this Agreement shall be binding unless
executed in writing by the party to be bound thereby. No waiver of any of the
provisions of this Agreement shall be deemed or shall constitute a waiver of any
other provision of this Agreement, whether or not similar, nor shall such waiver
constitute a continuing waiver unless otherwise expressly provided. The
representations and warranties of each party hereto shall be deemed to be
material and to have been relied upon by the other party. The representations,
warranties, covenants and agreements of Sellers and Buyer contained herein shall
survive the execution and delivery of this Agreement and consummation of the
transactions contemplated hereby and, as to the representations and warranties,
shall be effective until the relevant time limitation for making any indemnity
claim with respect to such representations and warranties under Sections and
shall have been reached and no longer. All agreements, understandings,
representations, warranties and covenants made by Sellers herein shall be joint
and several obligations of Sellers.
10.2. Expenses.
Except as otherwise specifically provided herein, each of the parties
hereto shall pay the fees and expenses of their respective counsel, accountants
and other experts and the other expenses incident to the negotiation and
preparation of this Agreement and consummation of the transactions contemplated
hereby.
10.3. Governing Law; Consent to Jurisdiction.
This Agreement shall be construed and interpreted according to the laws
of the State of New York, without regard to the conflicts of law rules thereof;
provided, however, that Section 5-1401 of the New York General Obligations Law
shall apply to this Agreement. Each of the parties hereto, in respect of itself
and its properties, agrees to be subject to (and hereby irrevocably submits to)
the nonexclusive jurisdiction of the United States federal court for the
Southern District of New York or New York state court sitting in the Borough of
Manhattan, New York, in respect of any suit, action or proceeding arising out of
or relating to this Agreement or the transactions contemplated herein, and
irrevocably agrees that all claims in respect of any such suit, action or
proceeding may be heard and determined in any such court. Each of the parties
hereto irrevocably waives, to the fullest extent it may effectively do so under
applicable Law, any objection to the laying of the venue of any such suit,
action or proceeding brought in any such court and any claim that any such suit,
action or proceeding brought in any such court has been brought in an
inconvenient forum. Either party hereto may make service on the other
20
party by sending or delivering a copy of the process to the party to be served
at the address and in the manner provided for the giving of notices in Section
hereof. Nothing in this Section , however, shall affect the right of any party
to bring any action or proceeding arising out of or relating to this Agreement
in any other court or to serve legal process in any other manner permitted by
law or in equity.
10.4. Assignment.
This Agreement and each party's respective rights hereunder may not be
assigned, by operation of law or otherwise, without the prior written consent of
the other party provided, however, that Buyer may assign this Agreement to an
Affiliate of Buyer without the consent of Sellers.
10.5. Notices.
All communications, notices and disclosures required or permitted by
this Agreement shall be in writing and shall be deemed to have been given at the
earlier of the date (a) when delivered personally or by messenger or by
overnight delivery service to an officer of the other party, (b) five days after
being mailed by registered or certified United States mail, postage prepaid,
return receipt requested, or (c) when received via telecopy, telex or other
electronic transmission, in all cases addressed to the person for whom it is
intended at his address set forth below or to such other address as a party
shall have designated by notice in writing to the other party in the manner
provided by this Section:
If to Buyer: **
Fax: **
Attn: Manager of Assets
With a copy to: ** Hunton & Williams
Fax: ** Riverfront Plaza, East Tower
Attn: General Counsel 951 East Byrd Street
Richmond, Virginia 23219
Fax: (804) 788-8218
Attn: Kenneth J. Alcott, Esq.
If to Sellers: Covol Technologies, Inc.
3280 North Frontage Road
Lehi, Utah 84043
Fax: (801) 768-4483
Attn: Brent M. Cook
and
With a copy to: Covol Technologies, Inc. Pillsbury Madison & Sutro LLP
3280 North Frontage Road 235 Montgomery Street
Lehi, Utah 84043 San Francisco, CA 94104
Fax: (801) 768-4483 Fax: (415) 983-1200
Attn: General Counsel Attn: Linda C. Williams, Esq.
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10.6. Counterparts; Headings.
This Agreement may be executed in several counterparts, each of which
shall be deemed an original, but such counterparts shall together constitute but
one and the same Agreement. The Table of Contents and Article and Section
headings in this Agreement are inserted for convenience of reference only and
shall not constitute a part hereof.
10.7. Interpretation.
Unless the context requires otherwise, all words used in this Agreement
in the singular number shall extend to and include the plural, all words in the
plural number shall extend to and include the singular and all words in any
gender shall extend to and include all genders. All references to contracts,
agreements, leases or other understandings or arrangements shall refer to oral
as well as written matters. The specificity of any representation or warranty
contained herein shall not be deemed to limit the generality of any other
representation or warranty contained herein.
10.8. Severability.
If any provision, clause or part of this Agreement, or the application
thereof under certain circumstances, is held invalid, the remainder of this
Agreement, or the application of such provision, clause or part under other
circumstances, shall not be affected thereby.
10.9. No Reliance.
No third party is entitled to rely on any of the representations,
warranties and agreements contained in this Agreement. Buyer and Sellers assume
no liability to any third party because of any reliance on the representations,
warranties and agreements of Buyer or Sellers contained in this Agreement.
Nothing contained in this Agreement shall be construed as creating a partnership
or joint venture or any agency relationship between the parties hereto, or any
other relationship other than buyer and Sellers as provided herein.
10.10. Parties in Interest.
This Agreement shall be binding upon and inure solely to the benefit of
each party hereto, and nothing in this Agreement, express or implied, is
intended to or shall confer upon any other person any rights, benefits or
remedies of any nature whatsoever under or by reason of this Agreement.
10.11. Specific Performance.
The parties hereto agree that irreparable damage would occur in the
event any of the provisions of this Agreement were not performed in accordance
with the terms hereof and that
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the parties shall be entitled to specific performance of the terms hereof, in
addition to any other remedy at law or equity.
[Remainder of this page intentionally left blank]
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IN WITNESS WHEREOF, each party hereto has caused this Purchase
Agreement to be executed in its name by a duly authorized officer as of the day
and year first above written.
**
By: /**/
---------------------------------------
Its: Vice President and Chief Financial
Officer
COVOL TECHNOLOGIES, INC.
By: /Kirk A. Benson/
---------------------------------------
Its: Chairman and Chief Executive Officer
SYNFUEL INVESTMENTS, INC.
By: /Brent M. Cook/
---------------------------------------
Its: President
CARBON SYNFUELS, L.L.C.
By: Covol Technologies, Inc.
By: /Brent M. Cook/
---------------------------------------
Its: President
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