Exhibit 10.74
ASSET PURCHASE AGREEMENT
by and between
HEADWATERS INCORPORATED
and
RED HAWK ENERGY, LLC
December 28, 2001
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT, made as of December 28, 2001, by and between
HEADWATERS INCORPORATED, a Delaware corporation ("Seller"), and Red Hawk Energy,
LLC, a California limited liability company ("Buyer").
RECITALS
WHEREAS, Seller owns the Assets comprised of a Facility (as defined
herein) to manufacture synthetic fuel from coal located in Utah County, Utah;
WHEREAS, Seller desires to sell an undivided 50% interest in the Assets
to Buyer and Buyer desires to purchase an undivided 50% interest in the Assets
from Seller, all on the terms and subject to the conditions set forth herein;
and
WHEREAS, Buyer and Seller intend to contribute their respective
interests in the Assets to a limited liability company and to relocate the
Facility to a location in Carbon County, Utah.
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. For purposes of this
definition, "control" (including, with correlative meanings, the terms "under
common control with" and "controlled by"), as used with respect to any person,
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management or policies of such person, whether through the
ownership of voting stock or other equity interests, by contract or otherwise.
1.2. Agreement shall mean this Asset 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. Assets shall mean, collectively, the Books and Records and the
Fixed Assets, together with all goodwill associated with the Facility.
1.5. Bill of Sale shall mean the Bill of Sale from Seller to Buyer
relating to the Assets, in the form of Exhibit A attached hereto.
1.5. Books and Records shall mean original or true and complete copies
of all of the books, records, files, data and information of Seller relating to
the design, ownership, construction and operation of the Facility and operation
of the Assets prior to the Effective Time, which are relevant to Buyer's use of
the Assets and operation of the Facility after the Effective Time, including
without limitation Plans and Specifications.
1.6. Buyer's Closing Certificate shall mean the certificate of Buyer
substantially in the form of Exhibit B attached hereto.
1.7. Closing shall mean the meeting of the parties to be held at 5:00
p.m., local time, on the Closing Date, at the offices of Headwaters
Incorporated, or such other time and place as the parties may mutually agree in
writing.
1.8. Closing Date shall mean December 28, 2001, or such other date as
the parties may mutually agree in writing.
1.9. Coal Supply Agreement shall mean the coal supply agreement between
ETG and Red Hawk Energy, LLC executed as of the Closing.
1.10. Confidentiality Agreement shall mean the confidentiality
agreement, dated December 28, 2001, between Seller and Buyer.
1.11. Construction Report shall mean such report prepared by Buyer and
Seller or their consultants, in form and substance satisfactory to Buyer and
Seller, to the effect that the costs for the relocation, construction and
testing of the Assets and appurtenances thereto at the Site shall not exceed
$550,000.
1.12. Effective Time shall mean 12:01 a.m., Mountain Time, on the
Closing Date.
1.13. Environmental Technologies Group, LLC Articles of Organization
shall mean the certificate of organization for ETG executed as of the Closing.
1.14. Environmental Technologies Group, LLC Operating Agreement shall
mean the limited liability company operating agreement for ETG executed by Buyer
and Seller as of the Closing.
1.15. ETG shall mean Environmental Technologies Group, LLC, the entity
to which the Assets shall be contributed at Closing.
1.16. ETG Transfer Documents shall mean the bill of sale and/or other
documents which are required to evidence the transfer of the Assets from Seller
and Buyer to ETG at Closing.
1.17. Facility shall mean the coal processing facility commonly
referred to as the Geneva facility owned by Seller at the Facility Site.
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1.18. Facility Site shall mean the site where the Facility is currently
located in Utah County, Utah.
1.19. Fixed Assets shall mean all tangible personal property currently
located at the Facility Site which constitute part of, or are otherwise owned
and used by Seller in the operation of, the Facility, including, but not limited
to, all personal property, trade fixtures, chattels, machinery, equipment,
computer hardware, fixtures, furniture, furnishings, handling equipment,
implements, spare parts, tools and accessories of all kinds.
1.20. GAAP shall mean generally accepted accounting principles of the
United States as applied by Seller in a manner consistent with prior periods.
1.21. Knowledge of Buyer shall mean the actual knowledge, after due
inquiry, of the Buyer.
1.22. Knowledge of Seller shall mean the actual knowledge, after due
inquiry, of the Seller.
1.23. Law shall mean any federal, state, local or other law or
governmental requirement of any kind, and the rules, regulations and orders
promulgated thereunder.
1.24. Lease shall mean the site lease for the Facility upon relocation
as contemplated in Section 5.5 or a commitment to lease in form and substance
acceptable to both Seller and Buyer.
1.25. 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 pledges,
equities, charges, assessments, 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.
1.26. Losses shall have the meaning given to such term in Section
8.1(a).
1.27. Material Adverse Effect shall mean a material adverse effect on
the Assets, taken as a whole, the business to be conducted with the Assets or
the ownership, maintenance and operation of the Facility.
1.28. Note shall mean the promissory note in the amount of $2,000,000
made by Buyer and payable to Seller in the form of Exhibit C attached hereto.
1.29. Operations and Maintenance Agreement shall mean the Facility
operations and maintenance agreement between ETG and Seller executed as of the
Closing.
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1.30. Permit Report shall mean such report prepared by Buyer and Seller
or their consultants, in form and substance satisfactory to Buyer and Seller, to
the effect that the permits required for the construction, operation and
maintenance of the Assets at the Site have been obtained or can be obtained
without restriction within three months of the Closing Date.
1.31. Permitted Liens shall mean Liens (but only for amounts not yet
due and payable) securing taxes, assessments or governmental charges or levies,
and Liens of an immaterial nature which could not reasonably be expected to have
an adverse effect on the ownership, maintenance and operation of the Facility or
the good and marketable title of the Assets.
1.32. Plans and Specifications shall mean the plans and specifications
used to engineer, procure, and construct the Facility.
1.33. Purchase Consideration shall have the meaning given to such term
in Section 2.2 hereof.
1.34. Required Consents shall mean those consents, approvals and
waivers required from governmental authorities or other third parties that are
necessary or required in order to transfer the Assets 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. attached hereto.
1.35. Seller's Closing Certificate shall mean the certificate of Seller
substantially in the form of Exhibit D attached hereto.
1.36. Site shall mean the real property covered by the Lease where the
Facility will be relocated after the Closing.
1.37. Synthetic Fuel Purchase Agreement shall mean the synthetic fuel
purchase agreement between ETG and Red Hawk Energy, LLC, a California limited
liability company, executed as of the Closing.
1.38. Technology License and Reagent Supply Agreement shall mean the
technology license and supply agreement between ETG and Seller executed as of
the Closing.
1.39. Transaction Documents shall mean:
(a) this Agreement;
(b) the Bill of Sale;
(c) the Note;
(d) the Environmental Technologies Group, LLC Articles of
Organization;
(e) the Environmental Technologies, Group, LLC Operating
Agreement;
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(f) the Technology License and Reagent Supply Agreement;
(g) the Lease;
(h) the Operations and Maintenance Agreement;
(i) the Coal Supply Agreement;
(j) the coal supply agreement between Buyer and Seller
executed as of the Closing;
(k) the Synthetic Fuel Purchase Agreement;
(l) the synthetic fuel purchase agreement between Buyer and
Seller executed as of the Closing;
(m) the ETG Transfer Documents;
(n) the option agreement between Buyer and Seller executed as
of the Closing Date;
(o) the Permit Report;
(a) the Construction Report;
(q) the Buyer's Closing Certificate;
(r) the Seller's Closing Certificate; and such other
agreements and instruments as may be contemplated by this Agreement.
ARTICLE II
PURCHASE AND SALE
2.1. Purchase and Sale. Buyer and Seller hereby agree that at the
Closing, and upon all of the terms and subject to all of the conditions of this
Agreement, Seller shall sell, convey, transfer and assign to Buyer, and Buyer
shall purchase and accept from Seller, an undivided 50% interest in all of the
Assets, free and clear of all Liens, except Permitted Liens.
2.2. Purchase Consideration. In consideration of Seller's sale,
conveyance, transfer, delivery and assignment to Buyer by the Bill of Sale of an
undivided 50% interest in the Assets, at the time of the Closing of this
Agreement, Buyer shall (i) execute and deliver the Note, (ii) pay to Seller in
immediately available funds the sum of One Hundred Twenty Five Thousand Dollars
($125,000). In addition, Buyer shall pay to Seller the sum of One Hundred Twenty
Five Thousand Dollars ($125,000) at the earlier of (i) 30 days following the
Closing Date, or (ii) execution of the Lease. (The foregoing collectively, the
"Purchase Consideration".)
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2.3. Deliveries at Closing.
(a) By Seller to Buyer. At the Closing, in addition to an
undivided 50% interest in the Assets, Seller shall deliver the
following items to Buyer, each properly executed and dated as of the
Closing Date by Seller and in form and substance reasonably acceptable
to Buyer:
(i) all Required Consents applicable to Seller in its
own capacity and to Seller in its capacities as a member and
manager of ETG,
(ii) a certificate of the corporate secretary of
Seller as to such matters as may reasonably be requested by
Buyer, and
(iii) all Transaction Documents.
(b) By Buyer to Seller. At the Closing, Buyer shall deliver
the Purchase Consideration and the following items to Seller, each
properly executed and dated as of the Closing Date by Buyer and in form
and substance reasonably acceptable to Seller:
(i) all Required Consents applicable to Buyer, in its
own capacity and to Buyer in its capacity as a member of ETG,
(ii) a certificate of the manager of Buyer as to such
matters as may reasonably be requested by Seller, and
(iii) all Transaction Documents.
2.4. No Assumption of Liabilities.
Buyer does not and will not assume any liability or obligation of any
kind of Seller, or any obligation relating to the use of the Assets prior to the
Effective Time, whether absolute or contingent, accrued or unaccrued, asserted
or unasserted, known or unknown, or otherwise.
2.5. Sales Tax Exemption.
To the extent applicable, at the Closing, Buyer will deliver to Seller
appropriate and customary sales tax exemption certificates relating to the
transfer of the Assets contemplated hereby.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer that:
3.1. Corporate Standing.
Seller is a corporation duly organized and validly existing and in good
standing under the laws of the state of Delaware. Seller has the power to own
its property, and to execute, deliver and perform this Agreement and each of the
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Transaction Documents applicable to it, and to carry on its business as now
being conducted. Seller is duly qualified to do business in and is in good
standing as a foreign corporation authorized to do business under the laws of
the State of Utah.
3.2. Authorizations; Binding Agreements.
The execution, delivery and performance of this Agreement and the other
Transaction Documents by Seller and each conveyance, assignment, agreement, and
other document herein contemplated to be executed by Seller, have been duly
authorized by all necessary corporate 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 Seller
are, or will be upon execution, legal, valid and binding obligations of Seller,
duly enforceable against Seller 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
Seller (i) do not and will not result in any violation of, conflict with or
default under the terms of any of Seller's organizational documents (nor, to the
Knowledge of Seller, 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 Seller, the Assets
or the conduct of the maintenance and operation of the Facility may be bound or
encumbered (nor, to the Knowledge of Seller, 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.
There are no actions, suits, or proceedings pending, or, to the
Knowledge of Seller, threatened, against Seller in any court, or administrative
governmental body or agency which will affect in any adverse manner the ability
of Seller 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, Seller has obtained all permits, licenses, franchises,
authorizations, variances, exemptions, concessions, leases, instruments, orders,
consents or approvals of governmental entities and third parties necessary to
execute, deliver and perform this Agreement and the other Transaction Documents.
3.4. Taxes.
All tax returns and reports relating to the Assets and the conduct of
the construction, ownership, maintenance and operation of the Facility required
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by Law (including all federal, state, and local property tax, severance and
franchise tax Laws) to be filed by Seller 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 or the ownership, maintenance and
operation of the Facility and the relocation thereof. All taxes, assessments,
fees, interest, penalties and other governmental charges relating to the Assets
or the conduct of the construction, ownership, 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 or the construction,
ownership, maintenance and operation of the Facility.
3.5. Brokers or Finders Fees.
Except as set forth in Schedule 3.5, there is no obligation or
liability, contingent or otherwise, for brokers or finders fees created by
Seller with respect to the matters provided for in this Agreement and the other
Transaction Documents. No obligation or liability for brokers or finders fees
created by Seller with respect to the matters provided for in this Agreement and
the other Transaction Documents shall be imposed upon Buyer or the Assets.
3.6. No Imposition of Liens.
The execution, delivery and performance of this Agreement and the other
Transaction Documents by Seller shall not result in the imposition of any Lien,
other than Permitted Liens, upon any of the Assets or by which the ownership,
maintenance and operation of the Facility may be bound or encumbered.
3.7. Title to Assets.
(a) As of the date hereof, Seller 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 an undivided 50% interest in the Assets free and
clear of all Liens, except for Permitted Liens, shall pass to Buyer.
(b) The Assets constitute all property and equipment required for the
operation of a facility to manufacture synthetic fuel from coal with an
estimated annual rated capacity of not less than 150,000 tons; provided that the
Assets do not necessarily include (i) material handling equipment for the
delivery of feedstock and reagent to, and the removal of finished product from,
the Facility, such as trucks, loaders, conveyor belts and shovels, (ii) site
specific property and equipment, such as suitable real estate and building to
house the Facility, storage areas, electrical cables and connectors and bracing
or mounting hardware, (iii) reagent and other consumables, (iv) a license to use
the technology for which the Facility was designed, (v) miscellaneous nuts,
bolts, belts and other standard hardware which may have become lost or damaged
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in the course of disassembly, storage, moving and re-assembly or which are
considered wear items.
(c) The Assets upon relocation to the Site pursuant to Section 5.5 will
be in operable condition.
3.8. Pending Litigation.
There are no actions, suits, arbitrations or proceedings currently
pending or, to the Knowledge of Seller, threatened against the Assets. There are
no outstanding or unsatisfied judgments, orders or decrees to which Seller is
bound.
3.9. Compliance With Laws.
To the Knowledge of Seller, Seller and the Assets are in compliance
with all orders, writs, injunctions, decrees, judgments, rulings, Laws, rules or
regulations of any governmental entity to which Seller and the Assets are
subject, the violation of which could reasonably be expected to have a Material
Adverse Effect.
3.10. Consents
Schedule 1.34 is a true, correct and complete list of all Required
Consents.
3.11. 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:
(i) Seller has not operated the Facility or conducted business
or other activities at or from the Facility, in connection with the
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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 Seller 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
(iii) Seller has not received any notices or claims that it is
a responsible party in connection with any claim or notice asserted
pursuant to 42 U.S.C. Section 9601 et seq., or any comparable state
Environmental Law, in connection with the Facility.
3.12. Liabilities.
Except for liabilities underlying any Permitted Liens, the Seller has
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.
3.13. Factual Representations.
(a) Each of the material facts regarding the Assets set forth
in the due diligence information delivered to Buyer was true and
correct as of the date on which it spoke and remains true and correct
as of the date hereof unless superceded by subsequent disclosures.
(b) The information furnished by Seller to Buyer, taken as a
whole, does not contain any untrue statement of a material fact or omit
to state a material fact necessary to make the statements contained
therein statements not misleading.
(c) Seller does not have knowledge of any fact, event or
circumstance which it is aware would render the Facility, as relocated,
ineligible for tax credits under Section 29 of the Internal Revenue
Code.
3.14. Other Agreements.
Other than the Transaction Documents, there are no contracts, licenses,
agreements or arrangements with Seller or any other person in connection with
the construction, maintenance, ownership and operation of the Facility, other
than as disclosed on Schedule 3.14.
3.15 Section 29.
Sales of synthetic fuel from the Facility to unrelated third parties
will qualify for tax credits under Internal Revenue Code section 29 when claimed
by an eligible tax payer.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Seller 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 California 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).
4.3. Brokers or Finders Fees.
Except as set forth in Schedule 4.3, there is 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 and the other
Transaction Documents. No obligation or liability for brokers or finders fees
created by Buyer with respect to the matters provided for in this Agreement and
the other Transaction Documents shall be imposed upon Seller or the Assets.
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
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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. Reasonable 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, including, but not limited to, relocation of the
Assets. 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 members of each party to this Agreement shall take all such
necessary action. Buyer and Seller will execute any additional instruments
necessary to consummate the transactions contemplated hereby.
5.2. Public Announcements.
Buyer and Seller 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.
5.4. Taxes.
Following Closing, Seller shall timely file all tax returns and reports
relating to the Assets which have not been filed or were not yet due to be filed
prior to Closing, and Seller shall timely pay all taxes, assessments, fees,
interest, penalties and governmental charges relating to the Assets prior to
Closing which have not been paid or were not yet due and payable prior to
Closing.
5.5 Relocation of Facility.
Buyer and Seller agree that ETG will relocate the Facility to a site
mutually acceptable to Seller and Buyer and appropriate to the planned operation
of the Facility and the Paris synthetic fuel manufacturing facility ("Paris
Facility"). The site selected will be prepared to host the Facility and the
Paris Facility. Buyer will pay the costs of relocation and installation of the
Facility and the Paris Facility up to $550,000 plus 10%. Seller will pay the
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costs of relocation and installation of the Facility and the Paris Facility in
excess of $550,000 plus 10%. Seller will provide oversight, at its expense, for
relocation, installation, and testing to place the Assets in operating
condition.
Buyer will consent to ETG's grant to Seller of the right to relocate
and operate the Paris Facility at the site selected for the Facility.
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.
Seller 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 Seller in
connection with the transactions contemplated by this Agreement, and all
agreements, instruments, and other documents incident thereto, including, but
not limited to, the Transaction Documents shall be executed and delivered by the
parties thereto on the Closing Date and 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 the Seller 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 Seller 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 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 Seller shall have been obtained.
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6.6. Antitrust Filings.
The Hart-Scott-Rodino Act ("HSR Act") and the regulations promulgated
thereunder shall have been complied with to the extent applicable, and all
waiting periods under the HSR Act shall have expired or been terminated.
6.7 Material Adverse Change.
The Facility shall not have been materially and adversely affected by
reason of any loss, taking, condemnation, destruction, or physical damage,
whether or not insured against.
ARTICLE VII
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SELLER
Each and every obligation of Seller 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 agreements,
instruments, and other documents incident thereto, including, but not limited
to, the Transaction Documents shall be executed and delivered by the parties
thereto on the Closing Date and be reasonably satisfactory in form and substance
to Seller.
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 with the same
force and effect as though such representations and warranties had been made on
the Closing Date.
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7.5. Required Consents.
All Required Consents applicable to Buyer shall have been obtained.
7.6. Antitrust Filings.
The HSR Act and the regulations promulgated thereunder shall have been
complied with to the extent applicable, and all waiting periods under the HSR
Act shall have expired or been terminated.
ARTICLE VIII
INDEMNITIES AND ADDITIONAL COVENANTS
8.1. Seller's Indemnity.
(a) Seller hereby indemnifies and holds Buyer harmless from
and against, and agrees 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 Seller
in this Agreement or any other agreement or instrument delivered by
Seller pursuant hereto; (ii) any failure of Seller 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 Seller pursuant to
this Agreement; (iii) claims by third parties (including governmental
authorities) against Buyer relating to the ownership, construction,
operation and maintenance by Seller of the Assets and Facility for the
period prior to the Effective Time including, without limitation, any
claim of landlord's statutory lien; and (iv) any and all liabilities
and obligations of Seller;
(b) In the event a claim 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 Seller containing
detail reasonably sufficient for Seller to identify the nature and
basis of the claim. Provided that Seller admits in writing to Buyer
that such claim is covered by the indemnity provisions of Section
8.1(a) hereof, Seller 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 Seller; provided, however, that Seller
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 Seller agrees to indemnify Buyer therefor. Buyer may select counsel
to participate with Seller's counsel in any such defense, in which
event Buyer's counsel shall be at its own sole cost and expense. In
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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) Seller 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 Seller herein unless such right
to indemnification is asserted by Buyer (whether or not such Losses
have actually been incurred) by notice to Seller within 30 months after
the Closing Date; or, only with respect to claims arising under
Sections 3.4, 3.11, within the applicable statute of limitations; or,
only with respect to claims arising under Section 3.15, until December
31, 2007.
(d) Except with respect to claims arising under Sections 3.4
or 3.11, Seller's aggregate indemnification obligation pursuant to
Section 8.1(a)(i) shall in no event exceed the money actually paid by
Buyer and received by Seller pursuant to Section 2.2.
(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 Seller harmless from
and against, and agrees to defend promptly Seller from and reimburse
Seller for, any and all Losses that Seller 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 Seller relating to the ownership by
Buyer of the Assets for the period following the Effective Time and
prior to the conveyance to ETG.
(b) In the event a claim against Seller arises that is covered
by the indemnity provisions of Section 8.2 of this Agreement, notice
shall be given promptly by Seller to Buyer containing detail reasonably
sufficient for Buyer to identify the nature and basis of the claim.
Provided that Buyer admits in writing to Seller 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 Seller
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 Buyer; provided, however, that Buyer may not
effect any settlement that could result in any cost, expense or
liability to Seller unless Seller consents in writing to such
settlement and Buyer agrees to indemnify Seller therefor. Seller may
select counsel to participate with Buyer's counsel in any such defense,
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in which event Seller' counsel shall be at the sole cost and expense of
Seller. 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
Seller 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 Seller (whether or not such Losses
have actually been incurred) by notice to the Buyer within 30 months
after the Closing Date.
(d) Buyer's aggregate indemnification obligation pursuant to
Section 8.2 (a)(i) shall in no event exceed Five Hundred Thousand
Dollars ($500,000.00).
(e) The indemnification provided in this Section 8.2,
including the limitations with respect thereto, shall be the exclusive
remedy for Seller 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 Seller with
the provisions of the bulk sales Law of any U.S. jurisdiction, and in any event,
Seller covenants and agrees to pay and discharge when due all claims of any
governmental entities and creditors of Seller and its subsidiaries that could be
asserted against Buyer by reason of such non-compliance. Seller agree 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 Seller's 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, Seller 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 Seller 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 the consummation of the
transactions contemplated herein.
8.5. Access to Books, Records and Employees.
From and after the date of the Agreement, Seller 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 Seller's business, to Books
and Records within the control of Seller that relate to the Facility, and 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
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Records. Seller agrees to maintain all books, records, files, documents and
other correspondence related to the Facility prior to the Effective Time in
accordance with its 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 Seller and Buyer; or (b) by either Seller or Buyer
if the Effective Time shall not have occurred on or before December 31, 2001;
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 be 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, Seller may
nevertheless elect to waive such conditions and proceed with the
consummation of the transactions contemplated hereby. The election by
Buyer or Seller 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.
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
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material and to have been relied upon by the other party. The representations,
warranties, covenants and agreements of Seller 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 8.1 and
8.2 shall have been reached and no longer.
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 Utah, without regard to the conflicts of law rules thereof.
Either party hereto may make service on the other 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 10.5 hereof.
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 that Buyer may assign all of its rights under Section
8.1 to ETG in connection with the conveyance of Buyer's interest in the Assets.
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 Seller: Headwaters Incorporated
11778 South Election Road, Suite 210
Draper, UT 84020
Fax: (801) 984-9410
Attn: President
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If to Buyer: Red Hawk Energy, LLC
10000 Stockdale Highway, Suite 100
Bakersfield, CA 93311
Fax: 661/663-3164
Attn: Michael L. Hawkins
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 Seller assume
no liability to any third party because of any reliance on the representations,
warranties and agreements of Buyer or Seller 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 seller 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.
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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 the parties shall be entitled to specific
performance of the terms hereof, in addition to any other remedy at Law or
equity.
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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.
HEADWATERS INCORPORATED
By: /s/ Brent M. Cook
------------------------
Its: President
RED HAWK ENERGY, LLC
By: /s/ Michael L. Hawkins
------------------------
Its: Managing Member
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