ALABAMA PROJECT PURCHASE AGREEMENT
Dated as of March 20, 1997
Covol Technologies, Inc.
and
Alabama Synfuel #1 Ltd.
SELLERS
Birmingham Syn Fuel, L.L.C.
BUYER
ARTICLE I
DEFINITIONS............................................................... 1
1.1 Certain Definitions................................................ 1
ARTICLE II
AGREEMENT TO PURCHASE AND SELL; PURCHASE PRICE............................ 7
2.1 Agreement to Purchase and Sell..................................... 7
2.2 Purchase Price..................................................... 7
ARTICLE III
ASSETS AND LIABILITIES TO BE SOLD AND RETAINED............................ 8
3.1 Assets to be Sold.................................................. 8
3.2 Assets to be Retained.............................................. 8
3.3 Liabilities to be Assumed by Buyer................................. 8
3.4 Liabilities to be Retained by Sellers.............................. 8
ARTICLE IV
REPRESENTATIONS AND WARRANTIES............................................ 9
4.1 Representations and Warranties of Sellers.......................... 9
4.2 Changes Prior to Closing...........................................15
4.3 Representations and Warranties of Buyer............................15
4.4 Changes Prior to Closing...........................................16
4.5 Joint Obligations..................................................16
ARTICLE V
CONDUCT OF BUSINESS ......................................................17
5.1 Operations by Sellers..............................................17
5.2 Negative Covenants.................................................18
5.3 Additional Covenants...............................................18
ARTICLE VI
DESTRUCTION OF ASSETS.....................................................20
ARTICLE VII
CONDITIONS PRECEDENT TO CLOSING; TERMINATION..............................20
7.1 Conditions Precedent to the Obligations
of Buyer...........................................................20
7.2 Conditions Precedent to the Obligations
of Sellers.........................................................22
7.3 Termination........................................................23
ARTICLE VIII
CLOSING...................................................................24
8.1 Time and Place of Closing..........................................24
8.2 Actions at Closing.................................................25
ARTICLE IX
APPROVALS AND CONSENTS....................................................26
ARTICLE X
CROSS INDEMNIFICATION.....................................................26
10.1 Obligations of Sellers.............................................26
10.2 Obligations of Buyer...............................................27
10.3 Indemnity Procedures...............................................27
ARTICLE XI
REMEDIES AND SURVIVAL.....................................................28
11.1 Survival of Representations, etc...................................28
11.2 Procedure..........................................................29
ARTICLE XII
MISCELLANEOUS.............................................................30
12.1 Books, Records and Assistance by Personnel.........................30
12.2 Assignment.........................................................31
12.3 Notices............................................................31
12.4 Expenses and Fees..................................................32
12.5 Successors and Assigns.............................................32
12.6 Waiver.............................................................32
12.7 Entire Agreement...................................................33
12.8 Amendments, Supplements and Etc....................................33
12.9 Applicable Law.....................................................33
12.10 Execution and Counterparts.........................................33
12.11 Titles and Headings................................................33
12.12 Third Parties......................................................33
12.13 Further Assurances.................................................34
THIS ALABAMA PROJECT PURCHASE AGREEMENT is made as of March 20, 1997
between Covol Technologies, Inc., a Utah corporation ("Covol"), Alabama Synfuel
#1 Ltd., a Delaware limited partnership ("Alabama Synfuel," and together with
Covol, "Sellers"); Birmingham Syn Fuel, L.L.C., an Oregon limited liability
company ("Buyer").
WHEREAS Covol has assigned to Alabama Synfuel ownership of a coal
briquetting facility to be located in Birmingham, Alabama (the "Alabama
Project"), including certain contracts entered into by Covol and certain
third-parties in connection with the conduct of the construction, maintenance
and operation thereof.
WHEREAS Sellers desire to sell to Buyer, and Buyer desires to purchase from
Sellers, the Alabama Project, all subject to the terms and conditions of this
Agreement.
NOW, THEREFORE, in consideration of the foregoing premises, the mutual
covenants and agreements hereinafter set forth, and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged,
Sellers and Buyer agree as follows:
ARTICLE I
DEFINITIONS
1.1 Certain Definitions. In this Agreement, capitalized terms and other
defined terms described below shall have the meanings set forth or
cross-referenced below:
"Affiliate" means any person, partnership, joint venture, corporation
or other form of enterprise which directly or indirectly controls, is controlled
by, or is under common control with, a party hereto. For purposes of the
preceding sentence, "control" means possession, directly or indirectly, of the
power to direct or cause direction of management and policies through ownership
of voting securities, contract rights, voting trust, or otherwise.
"Agreement" means this Alabama Project Purchase Agreement, the
Exhibits, and the Schedules attached hereto (all of which Exhibits and Schedules
shall be deemed to be incorporated herein by reference and made a part hereof as
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if set out in full herein), and all agreements or instruments executed in
connection herewith or delivered pursuant hereto.
"Alabama Project" has the meaning given in the preamble of this
Agreement.
"Buyer" has the meaning given in the preamble of this Agreement.
"Buyer's Disclosure List" has the meaning given in Section 4.4.
"Closing" means the closing of this transaction which is described in
more detail in Section 8.1.
"Closing Date" has the meaning given in Section 8.1.
"Construction Contract" means the Standard For of Agreement between
Owner and Contractor, dated as of December 26, 1996, by an between Covol
Technologies, Inc. and TIC The Industrial Company.
"Contracts" means the contracts, leases, purchase orders, and other
agreements pertaining to the conduct of the construction, maintenance and
operation of the Alabama Project as described on Schedule 4.1(m), including the
Construction Contract.
"Effective Time" means 12:01 a.m., Mountain Time, on the Closing Date.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"ERISA Plan" means, for any Person, an employee benefit plan or other
plan maintained for employees of such Person and covered by Title IV of ERISA.
"Files and Records" means all files, reports, data and records
relating to the Purchased Assets and the conduct of the construction,
maintenance and operation of the Alabama Project, including those relating to
engineering, permitting, maintenance, inventory and supply, property and excise
taxes, title, corporate accounting, market studies, coal fines purchases, coal
sales, income tax, Sellers' general files relating to the Alabama Project,
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economic analyses, and documents related to general policies and procedures of
Sellers with respect to the Purchased Assets and the conduct of the
construction, maintenance and operation of the Alabama Project.
"GAAP" means generally accepted United States accounting principles
consistently applied, as in effect from time to time.
"Governmental Entity" means any Federal, state or local government or
any court, administrative or regulatory agency, whether domestic or foreign.
"Hazardous Materials" means any (a) asbestos in any form, urea
formaldehyde foam insulation, transformers or other equipment which contain
dielectric fluid containing levels of polychlorinated byphenyls or radon gas;
(c) any chemical, material or substance defined as or included in the definition
of "hazardous substances", "hazardous wastes", "hazardous materials", "extremely
hazardous waste", "restricted hazardous waste", "toxic substances" or words of
similar import under any applicable Hazardous Materials Laws.
"Hazardous Materials Claims" means any enforcement, cleanup, removal,
remedial or other governmental or regulatory demand, actions, agreements or
orders threatened, instituted, pending or completed by any Governmental Entity
pursuant to any Hazardous Materials Laws, together with any claims made or
threatened by any third party against either of the Sellers or any Purchased
Assets or in connection with the conduct of the construction, maintenance and
operation of the Alabama Project relating to damage, contribution, cost
recovery, compensation, loss or injury resulting from the presence, release or
discharge of any Hazardous Materials.
"Hazardous Materials Laws" means the following Federal laws, and their
implementing regulations, as well as any amendments to such laws, and all State
and local laws and ordinances which regulate the same subject matter: (a) the
Comprehensive Environmental Response, Compensation and Liability Act (CERCLA),
42 USC 9601 et seq.; (b) the Solid Waste Disposal Act, 42 USC 6901 et seq.,
including the Resource Conservation and Recovery Act (RCRA) and the laws
governing Underground Storage Tanks; (c) the Toxic Substances Control Act
(TSCA), 15 USC 2601 et seq., including those provisions governing use and
disposal of Polychlorinated Biphenyls (PCBs); (d) the Hazardous Materials
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Transportation Act (HMTA), 49 USC 1801, et seq.;(e) the Federal Insecticide,
Fungicide and Rodenticide Act (FIFRA), 7 USC 136 et seq.; (f) those portions of
the Clean Air Act governing toxic air emissions, 42 USC 7401 et seq.; (g) those
portions of the Clean Water Act governing toxic water pollutants and oil spills,
33 USC 1251 et seq.; (h) the Emergency Planning and Community Right-to-know Act
(EPCRA, XXXX Title III), 42 USC 11001 et seq.; and (i) those portions of the
Occupational Safety and Health Act (OSHA) governing worker safety with respect
to hazards from chemical substances, including requirements for Material Safety
Data Sheets, 29 USC 651, et seq.
"Indemnitee" has the meaning given in Section 10.3(b).
"Indemnitor" has the meaning given in Section 10.3(b).
"Inventory" means all inventory (as defined in the UCC) of Sellers
held for sale, lease or demonstration, or to be furnished under contracts of
sale or service in connection with the Alabama Project, in all forms, wherever
located, now or hereafter existing, including (i) all inventory, raw materials,
work in process, finished goods, materials and supplies used or to be consumed
in connection with the conduct of the construction, maintenance and operation of
the Alabama Project, and all additions and accessions to such property, (ii)
goods in which Sellers have an interest in mass or a joint or other interest or
right of any kind, and (iii) goods which are returned to or repossessed by
Sellers, and all accessions thereto and products thereof.
"Letter Ruling" has the meaning given in Section 7.1(i).
"Lien" means 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
5
exceptions and encumbrances affecting property of any nature, whether accrued or
unaccrued, or absolute or contingent.
"Loan Documents" means the Convertible Loan and Security Agreement,
dated as of the date hereof, by and between Covol and PacifiCorp Financial
Services, Inc., and the other Loan Documents (as such term are defined in the
Convertible Loan and Security Agreement), and any and all other documents
executed pursuant thereto, or contemplated thereby (other than the Purchase
Agreement Documents), as the same may be modified, extended, renewed, amended or
replaced from time to time.
"1986 Code" has the meaning given in Section 7.1(i).
"Party" or "Parties" means Buyer and Sellers and their successors, as
parties to this Agreement.
"Permitted Liens" means:
(i) Liens (but only to the extent not yet delinquent or (a) which are
being contested in good faith by appropriate proceedings with reserves
acceptable to Buyer having been set aside and maintained and (b) with respect to
tax liens on the Purchased Assets, as to which Sellers shall have paid the
undisputed amount) securing taxes, assessments or governmental charges or
levies, or arising in connection with workers' compensation, unemployment
insurance or social security obligations, or securing the claims or demands of
materialmen, mechanics, carriers, warehousemen, landlords and other like
Persons;
(ii) Attachment, judgment or similar liens arising in connection with
court proceedings (a) which are discharged or stayed pending appeal within
thirty (30) days of attachment or levy, and, if so stayed, the stay remains in
effect or (b) payment of which is covered in full (subject only to customary and
reasonable deductibles) by insurance or surety bonds;
(iii) Liens in favor of PacifiCorp Financial Services, Inc. under the
Loan Documents; and
(iv) Existing Liens disclosed on Schedule 4.1(q) attached hereto and
Liens affecting real property interests consisting of (a) zoning regulations,
(b) easements, (c) set-back lines, or (d) covenants, conditions or restrictions,
6
now existing or hereafter arising, which do not in the aggregate have a
material adverse effect on the construction, operation or maintenance of the
Alabama Project.
"Permits" means any existing permit, license, franchise,
authorization, variance, exemption, concession, lease, instrument, order or
approval of any Governmental Entity and any applications therefor appurtenant or
relating to the Purchased Assets or otherwise held by Sellers in connection with
the conduct of the construction, maintenance and operation of the Alabama
Project as described on Schedule 4.1(n).
"Person" means any natural person, corporation, partnership, sole
proprietorship, firm, association, government, governmental agency or any other
entity, whether acting in an individual, fiduciary or other capacity.
"Personal Property" means all tangible and intangible personal
property owned by Sellers and used or held in connection with the conduct of the
construction, maintenance and operation of the Alabama Xxxxxxx Xxxxxxx Project
as described on Schedule 4.1(q).
"Promissory Note" has the meaning given in Section 2.2.
"Property Leases" means the real property leases, rights-of-way,
easements, licenses and agreements held by Sellers in connection with the
conduct of the construction, maintenance and operation of the Alabama Project as
described on Schedule 4.1(o).
"Purchase Agreement Documents" means this Agreement, and any and all
other documents executed pursuant hereto, or contemplated hereby (other than the
Loan Documents), as the same may be modified, extended, renewed, amended or
replaced from time to time.
"Purchase Price" has the meaning given in Section 2.2.
"Purchased Assets" means all of Sellers' right, title, and interest in
the assets set forth on Schedule 2.1.
"Related Person" means (i) any shareholder who owns or controls more
than five percent (5%) of the voting securities of either Seller, (ii) any
officer or director of either Seller, and (iii) any other Person that, directly
7
or indirectly, controls, is controlled by or is under common control with or is
related to, by blood or marriage, either Seller or any Person identified in
clauses (i) or (ii).
"Retained Assets" means those assets retained by the Sellers as
described in Section 3.2.
"Retained Liabilities" means those liabilities retained by Sellers as
described in Section 3.4.
"Section 29 Credits" has the meaning given in Section 7.1(i).
"Sellers" has the meaning given in the preamble of the Agreement.
"Sellers' Disclosure List" has the meaning given in Section 4.2.
"Transaction Documents" means the Loan Documents and the Purchase
Agreement Documents.
"UCC" means the Uniform Commercial Code as enacted in the State of
Alabama.
ARTICLE II
AGREEMENT TO PURCHASE AND SELL; PURCHASE PRICE
2.1 Agreement to Purchase and Sell. Subject to the terms and conditions of
this Agreement, Sellers agree to sell to Buyer and Buyer agrees to purchase from
Sellers, the Purchased Assets, free and clear of all Liens.
2.2 Purchase Price. The total consideration for the Purchased Assets shall
be a promissory note in the principal amount of Three Million Four Hundred
Thousand Dollars ($4,800,000)(the "Purchase Price"), in the form attached hereto
as Exhibit A-1 (the "Promissory Note"). The Promissory Note shall be secured by
a Security Agreement and Collateral Assignment of Sublease in the form attached
hereto as Exhibit A-2 and Exhibit A-3, respectively.
8
ARTICLE III
ASSETS AND LIABILITIES TO BE SOLD AND RETAINED
3.1 Assets to be Sold. The assets to be sold are the Purchased Assets.
3.2 Assets to be Retained. The assets to be retained by Sellers are all
assets of the Sellers other than the Purchased Assets.
3.3 Liabilities to be Assumed by Buyer. Subject to the terms of this
Article III and upon completion of the Closing, Buyer covenants and agrees to
assume, fulfill, perform and in due course discharge, all obligations and
liabilities of any kind or character whatsoever resulting from, relating to,
arising out of, or incurred in connection with the Purchased Assets, which
obligations and liabilities result from, relate to, arise out of, or are
incurred in connection with actions taken after completion of the Closing;
provided, however, Buyer shall not assume any liability or obligation arising
from or relating to a breach by Sellers of a representation, warranty or
covenant set forth in this Agreement; provided, further, Buyer shall not assume
any liability or obligation retained by Sellers under Section 3.4; provided,
further, Buyer shall not assume any liability or obligation incurred by Covol
under the Operation and Maintenance Agreement.
3.4 Liabilities to be Retained by Sellers. Subject to the terms of Article
III and upon completion of the Closing, Sellers covenant and agree to assume,
fulfill, perform, and in due course discharge, indemnify, defend and hold
harmless Buyer and its directors, officers, agents, representatives,
subsidiaries and Affiliates from and against (i) all obligations and liabilities
of any kind or character whatsoever resulting from, relating to, arising out of,
or incurred in connection with the Retained Assets and (ii) all obligations and
liabilities of any kind or character whatsoever resulting from, relating to,
arising out of, or incurred in connection with the Purchased Assets to the
extent such obligations and liabilities resulted from, related to, arose out of,
or were incurred in connection with actions prior to completion of the Closing.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.1 Representations and Warranties of Sellers. Sellers jointly and
severally represent and warrant to Buyer that as of the date of this Agreement,
the facts set forth below in this Section 4.1 are and shall be true:
(a) Corporate Standing. Covol is a corporation duly organized and
validly existing and in good standing under the laws of the State of Delaware.
Alabama Synfuel is a limited partnership duly organized, validly existing and in
good standing under the laws of the State of Delaware. Each Seller has corporate
power to own its 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. Each 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 Alabama.
(b) 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, has 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 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), do not and will not result in any violation of, conflict
with or default under the terms of Sellers' organizational documents (nor, to
the best of each Seller's knowledge after due inquiry, does there exist any
condition which upon the passage of time or the giving of notice would cause
such violation, conflict or default), and, subject only to such consents as are
set forth on Schedule 4.1(c), do not and will not result in any violation of,
conflict with or default under any material permit, lease, venture, mortgage,
agreement, contract, judgment, order or other obligation or restriction to which
Sellers, the Purchased Assets or the conduct of the construction, maintenance
10
and operation of the Alabama Project may be bound or encumbered (nor, to the
best of each Seller's knowledge after due inquiry, does there exist any
condition which upon the passage of time or the giving of notice would cause
such violation, conflict or default).
(c) No Actions Affecting Enforcement of the Agreement and the other
Transaction Documents. There are no actions, suits, or proceedings pending, or,
to the best of either Seller's knowledge after due inquiry, threatened, against
either Seller 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 such
consents as are set forth on Schedule 4.1(c), and such consents which the
failure to obtain could not reasonably be expected to have a material adverse
effect on the Purchase Assets or the construction, maintenance and operation of
the Alabama Project, Sellers have 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.
(d) Taxes. All tax returns and reports relating to the Purchased
Assets and the conduct of the construction, maintenance and operation of the
Alabama Project 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, except
for such returns and reports which the failure to file could not reasonably be
expected to have a material adverse effect on the Purchase Assets or the
construction, maintenance and operation of the Alabama Project. All taxes,
assessments, fees, interest, penalties and other governmental charges relating
to the Purchased Assets and the conduct of the construction, maintenance and
operation of the Alabama Project which are due and payable have been paid when
due and payable, 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 Purchase Assets or the
construction, maintenance and operation of the Alabama Project.
(e) Brokers or Finders Fees. Except as set forth on Schedule 4.1(e),
no obligation or liability, contingent or otherwise, for brokers or finders fees
11
created by Sellers with respect to the matters provided for in this Agreement
and the other Transaction Documents shall be imposed upon Buyer or the Purchased
Assets.
(f) 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
Purchase Assets or by which the construction, maintenance and operation of the
Alabama Project may be bound or encumbered.
(g) Completeness of Schedules. The Schedules made a part of this
Agreement are true, correct and complete. No information furnished by or on
behalf of Sellers to Buyer in connection with this Agreement and the other
Transaction Documents or on any such Schedule contains any untrue statement of a
material fact or omits to state a material fact necessary to make such
statements accurate.
(h) Title to Purchased Assets. Sellers have marketable title to and
possession of the Purchased Assets free and clear of all Liens, other than
Permitted Liens.
(i) Applicable Contracts and Permits. The Contracts, the Permits and
the Property Leases set forth on Schedules 4.1(m), 4.1(n) and 4.1(o)),
respectively, are the only material agreements, contracts, leases, purchase
orders, permits, licenses, franchises, authorizations, variances, exemptions,
concessions, leases, instruments, orders or approvals of any Governmental Entity
to which the Purchased Assets or the conduct of the construction, maintenance
and operation of the Alabama Project are bound.
(j) Pending Litigation. Except as disclosed on Schedule 4.1(j), there
are no actions, suits, arbitrations, claims, grievances, or proceedings
currently pending or, to the best of Sellers' knowledge after due inquiry,
threatened against or affecting the Purchased Assets or the conduct of the
construction, maintenance and operation of the Alabama Project, the consequence
of which could reasonably be expected to have a material adverse effect on the
construction, operation or maintenance of the Alabama Project. There are no
outstanding or unsatisfied judgements, orders or decrees to which the Purchased
Assets or the conduct of the construction, maintenance and operation of the
Alabama Project are bound.
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(k) Compliance with Laws. Sellers are in compliance with all material
orders, writs, injunctions, decrees, judgments, rulings, laws, rules or
regulations of any Governmental Entity to which the Purchased Assets or the
construction, maintenance and operation of the Alabama Project are bound. There
are no outstanding "notices of violation" with respect to the Purchased Assets
or the construction, maintenance and operation of the Alabama Project. The
construction, maintenance and operation of the Alabama Project are in compliance
with, and neither Seller is in violation of, conflict with or default under
(nor, to the best of either Seller's knowledge after due inquiry, does there
exist any condition which upon the passage of time or the giving of notice would
cause such violation, conflict or default), any order, writ, injunction, decree,
judgment, ruling, law, rule or regulation of any Governmental Entity, the
consequence of which could reasonably be expected to have a material adverse
effect on the construction, operation or maintenance of the Alabama Project.
(l) Hazardous Materials. Except as disclosed on Schedule 4.1(l), no
Hazardous Materials exist on, under or about any of the Purchased Assets or the
Alabama Project in violation of any Hazardous Materials Laws to the satisfaction
of the relevant governmental agency that enforces such laws. The construction,
maintenance and operation of the Alabama Project is and has been in compliance
with all Hazardous Materials Laws. Neither Seller has received any notice of,
and to the best knowledge of each Seller after due inquiry, there are no
existing or threatened Hazardous Materials Claims. The construction, maintenance
and operation of the Alabama Project do not generate any Hazardous Materials. No
storage tanks are or have been located on or under the Purchased Assets or the
Alabama Project within the last five (5) years.
(m) Status of Contracts. Schedule 4.1(m) is a true, correct and
complete list of all the material contracts, leases, mortgages, credit
agreements, indentures, sales contracts, purchase orders, and other agreements
entered into by the Sellers to which the Purchased Assets and the construction,
maintenance and operation of the Alabama Project are bound. The Contracts are
valid and in good standing, and there is no violation of, conflict with or
default under the Contracts (nor, to the best of either Seller's knowledge after
due inquiry, does there exist any condition which upon the passage of time or
the giving of notice would cause such violation, conflict or default), the
13
consequence of which could reasonably be expected to have a material adverse
effect on the construction, operation or maintenance of the Alabama Project. The
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. No action other than the execution of appropriate
transfer documents by Sellers and Buyer is required to transfer such Contracts
to Buyer, subject only to such consents as are set forth on Schedule 4.1(c).
(n) Governmental Approvals, Licenses, Orders, Agreements and Permits.
Schedule 4.1(n) is a true, correct and complete list of all material permits,
licenses, franchises, authorizations, variances, exemptions, concessions,
leases, instruments, orders or approvals of any Governmental Entity to which the
Purchased Assets are bound or are held or used by Sellers in connection with the
conduct of the construction, maintenance and operation of the Alabama Project.
The construction, maintenance and operation of the Alabama Project are in
compliance with the Permits, the consequence of which could not reasonably be
expected to have a material adverse effect on the Purchase Assets or the
construction, operation or maintenance of the Alabama Project, and no additional
permits, licenses, franchises, authorizations, variances, exemptions,
concessions, leases, instruments, orders or approvals of any Governmental Entity
are necessary to lawfully conduct the construction, maintenance and operation of
the Alabama Project. The Sellers have not received any notice from any party to
any Permit that such party intends to terminate, cancel or refuse to renew the
same or that such party intends to assert any defense to the enforceability
thereof. No action other than the execution of appropriate transfer documents by
Sellers and Buyer is required to transfer such Permits to Buyer, subject only to
such consents as are set forth on Schedule 4.1(c).
(o) Leases. Schedule 4.1(o) contains a true, correct and complete list
of the Property Leases. There is no violation of, conflict with or default under
the Property Leases (nor, to the best of either Seller's knowledge after due
inquiry, does there exist any condition which upon the passage of time or the
giving of notice would cause such violation, conflict or default), except for
such violations, conflicts and defaults the consequences of which could not
reasonably be expected to have a material adverse effect on the Purchased Assets
or the construction, maintenance or operation of the Alabama Project. The
14
Sellers have not received any notice from any party to any Property Lease that
such party intends to terminate, cancel or refuse to renew the same or that such
party intends to assert any defense to the enforceability thereof. No action
other than the execution of appropriate transfer documents by Sellers and Buyer
is required to transfer such Property Leases to Buyer, subject only to such
consents as are set forth on Schedule 4.1(c).
(p) No Fee Property. The Purchased Assets do not include any interest
in real property other than the Property Leases, and no other interest in real
property is held or used by the Sellers in connection with the construction,
maintenance and operation of the Alabama Project.
(q) Personal Property. Schedule 4.1(q) is a true, correct and complete
list of the Personal Property (excluding Inventory) used or held by Sellers in
connection with the Purchased Assets and the construction, maintenance and
operation of the Alabama Project. Sellers are the beneficial owners of and have
title to the Personal Property (including Inventory) free and clear of all
Liens, other than Permitted Liens. No action other than the execution of
appropriate transfer documents by Sellers and Buyer is required to transfer such
Personal Property (including Inventory) to Buyer.
(r) Inventory. The Inventory (i) is reflected on Schedule 4.1(r)
hereto in accordance with GAAP, and (b) all unusable Inventory has been written
off in accordance with GAAP. The values at which such Inventories are carried
reflect an inventory valuation policy stating inventory based on actual physical
count and at the lower of Sellers' cost or fair market value, in accordance with
GAAP.
(s) Complete Project. The Purchased Assets will constitute, upon
completion of construction in accordance with the Contracts and Permits, a fully
operational coal briquette and extrusion manufacturing facility with all real
property, personal property, agreements, contracts, leases, purchase orders,
files, reports, records, data, permits, licenses, franchises, authorizations,
variances, exemptions, concessions, leases, instruments, orders or approvals of
any Governmental Entity necessary to conduct the construction, maintenance and
operation of the Alabama Project.
(t) ERISA and Labor Matters. Neither Seller has initiated any ERISA
Plans, nor is either Seller party to any collective bargaining agreements. The
15
transfer of the Purchased Assets does not obligate Buyer to employ any of
Sellers' employees or require Buyer's assumption of any liabilities, obligations
or costs incurred as a result of, in connection with, arising under or related
to Sellers' employment of any employee.
(u) Agreements with Related Persons. There are no contracts, licenses,
agreements or arrangements with any Related Person in connection with the
construction, maintenance and operation of the Alabama Project, other than as
disclosed on Schedule 4.1(u).
4.2 Changes Prior to Closing. Prior to and at the Closing, Sellers shall
provide Buyer with a list ("Sellers' Disclosure List") of any knowledge acquired
or events occurring after the date hereof that cause Sellers' representations
and warranties in Section 4.1 to be untrue in any respect, or are reasonably
likely to cause them to be untrue in any respect, if such representations and
warranties were to be made on and as of the Effective Time.
4.3 Representations and Warranties of Buyer. Buyer represents and warrants
that as of the date hereof, the facts set forth below in this Section 4.3 are
and shall be true:
(a) Corporate Standing. Buyer is a limited liability company duly
organized, validly existing, and in good standing under the laws of the State of
Oregon, has power to own its own property, and to execute, deliver and perform
this Agreement and each of the other Transaction Documents, and to carry on its
business as now being conducted. Buyer is qualified to do business and is in
good standing as a foreign limited liability company authorized to do business
under the laws of the State of Alabama.
(b) 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
corporate actions. 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,
16
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), do not and will not result in any violation of, conflict
with or default under the terms of Buyer's organizational documents, and do not
and will not do not result in any violation of, conflict with or default under
the terms of any permit, lease, venture, indenture, mortgage, agreement,
contract, judgment, order or other obligation or restriction to which Buyer is
bound (nor, to the best of Buyer's knowledge after due inquiry, does there exist
any condition which upon the passage of time or the giving of notice would cause
such violation, conflict or default).
(c) No 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.
(d) Single Purpose Entity. Buyer was formed for the purpose of
acquiring the Purchased Assets and does not conduct any operations other than in
connection with acquisition and operation of the Alabama project in accordance
with the Transaction Documents.
4.4 Changes Prior to Closing. Prior to and at the Closing, Buyer shall
provide Sellers with a list ("Buyer's Disclosure List") of any knowledge
acquired or events occurring after the date hereof that cause Buyer's
representations and warranties in Section 4.3 to be untrue in any respect, or is
reasonably likely to be untrue in any respect, if such representations and
warranties were to be made on and as of the Effective Time.
4.5 Joint Obligations. The following shall apply with equal force to
Sellers and Buyer:
(a) Buyer and Sellers shall each promptly give the other written
notice of the existence or occurrence of any item to be reflected on Sellers'
Disclosure Statement or Buyer's Disclosure Statement.
(b) Neither Party shall intentionally perform any act which, if
performed (or omit to perform any act which, if omitted to be performed) would
prevent or excuse the performance of this Agreement by either party hereto or
which, except as a result of the conduct of the business in the usual and
17
ordinary course, would result in any representation or warranty herein contained
being untrue in any respect if made on and as of the Closing.
ARTICLE V
CONDUCT OF BUSINESS
5.1 Operations by Sellers. During the period from the date hereof to the
Effective Time:
(a) Sellers shall maintain the Purchased Assets and conduct the
construction, maintenance and operation of the Alabama Project in compliance
with this Agreement and the other Transaction Documents, the Contracts, the
Property Leases and the Permits and each applicable order, writ, injunction,
decree, judgment, ruling, law, rule or regulation of any Governmental Entity,
and pay all fees, assessments and costs arising in connection with the
execution, delivery and performance of this Agreement and the Transaction
Documents and the construction, maintenance and operation of the Alabama
Project.
(b) Sellers may remove any items included in the Retained Assets;
provided, however, such removal does not damage or impair the Purchased Assets
or interfere with the conduct of the construction, maintenance and operation of
the Alabama Project in any manner.
(c) Buyer and its duly authorized agents, employees, and
representatives, at their sole risk and expense, shall have access to the
Purchased Assets and the Alabama Project for familiarization and orientation
purposes; provided, however, that such access and observation does not
unreasonably interfere with or delay the conduct of construction, maintenance
and operation of the Alabama Project. Sellers shall cooperate in orienting
Buyer's personnel to the construction, maintenance and operation of the Alabama
Project.
(d) Sellers shall use reasonable efforts to preserve intact Sellers'
relationships with suppliers, customers and others having business dealings with
respect to the Purchased Assets and the construction, maintenance and operation
of the Alabama Project.
(e) Sellers shall take all necessary actions to maintain the Purchased
Assets in their present condition, quantity and state of repair, reasonable wear
and tear excepted.
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(f) Sellers shall take all commercially reasonable actions (i) to
construct the Alabama Project as soon as practicable, (ii) to secure the
consents and permits identified in Schedule 4.1(c), and (iii) to conduct the
construction, maintenance and operation of the Alabama Project in accordance
with commercially reasonable practices.
(g) Sellers shall continue to carry and maintain in full force and
effect the existing casualty and liability insurance as provided in the Loan
Document through and including the Effective Time.
(h) Sellers shall comply with all applicable bulk sales laws, if any,
in effect in any jurisdiction in which the Purchased Assets are located and
where Sellers have their place of business.
5.2 Negative Covenants. During th period from the date hereof and the
Effective Time, Sellers shall:
(a) not sell, lease, assign, hypothecate or agree to sell, lease,
assign, hypothecate or otherwise transfer or dispose of, any of the Purchased
Assets;
(b) not enter into any lease, contract, agreement, commitment,
arrangement or transaction relating to the Purchased Assets or the Alabama
Project except in the normal course of construction, maintenance and operation
of the Alabama Project and in accordance with past practice, or terminate,
cancel or modify or in any way impair any of the Contracts, Property Leases or
Permits;
(c) not subject to any Lien, other than Permitted Liens, any of the
Purchased Assets, or permit or allow any of the Purchased Assets to become
subject to any Lien, other than Permitted Liens;
(d) not fail to pay any taxes, debts or other obligations relating to
the Purchased Assets, as the same become due and payable;
(e) not enter into any lease, contract, agreement, commitment,
arrangement or transaction or do any other act or omit to do any act that might
adversely affect the Purchased Assets or the construction, maintenance and
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operation of the Alabama Project or the consummation of the transactions
contemplated by this Agreement and the other Transaction Documents; and
5.3 Additional Covenants.
(a) None of the Sellers and Buyer shall issue any public statement
with respect to the Alabama Project or the transactions contemplated by this
Agreement and the other Transaction Documents without the prior written consent
of the other parties, which consent shall not be unreasonably withheld;
provided, however, that the consenting party shall have two (2) Business Days to
review the proposed public statement.
(b) Seller shall do or cause to be done all things necessary to
preserve, renew and keep in full force and effect the Contracts, including the
Construction Contract, and shall not breach, violate or commit any event of
default under the same. In the event of any breach, violation or event of
default with respect to the Contracts, Sellers shall give immediate notice
thereof to Buyer.
(c) Prior to June 30, 1997, Sellers shall construct the Alabama
Project to conform with the representations set forth in the Letter Ruling.
(d) So long as the Promissory Note is outstanding, Buyer shall (i) not
engage in any other business other than the operation and maintenance of the
Alabama Project, (ii) not transfer the Purchased Assets or any assets acquired
by Buyer to be used in connection with the operation and maintenance of the
Alabama Project, and (iii) maintain in full force and effect hazard and
liability insurance with respect to the Alabama Project, in such amounts as are
commercially reasonable in accordance with industry standards.
(e) Sellers shall not issue any public statement that, either directly
or indirectly, makes reference to PacifiCorp or any of its directors, officers,
agents, representatives, subsidiaries and Affiliates without the prior written
consent of Buyer, which consent shall not be unreasonably withheld.
(f) During the term of the Operation and Maintenance Agreement, and
subject to clauses (a) and (e) of this Section 5.3, Sellers shall have the right
to (i) make and use photographs and videotapes of the Alabama Project for
promotional purposes and (ii) conduct tours of the Alabama Project for potential
20
investors and purchasers of Covol's products and services; provided, however,
that such activities shall not interfere with the construction, operation or
maintenance of the Alabama Project; provided, further, that Covol shall
reimburse Buyer for any cost incurred by Buyer as a result of such activities,
including any incremental increase in insurance costs.
ARTICLE VI
DESTRUCTION OF ASSETS
If, prior to the Closing, all or any material part of the Purchased Assets
shall be destroyed by fire, flood, or other casualty (including condemnation),
and the items affected by such destruction have not been effectively restored
before the Closing Date at least to their condition immediately prior to such
destruction, either Buyer or Sellers may elect not to proceed with the Closing
and to terminate this Agreement. If Buyer and Sellers nonetheless elect to
proceed with the Closing, or if less than a material part of the Purchased
Assets shall have been destroyed, then notwithstanding any such destruction, the
Closing shall take place and the Purchase Price shall be reduced by an amount
equal to the amount of such destruction measured by the costs of restoring such
Purchased Assets as are destroyed to their condition immediately prior to such
destruction, less the amount of any insurance proceeds paid or payable without
contingency to Sellers on account of such destruction (which Sellers shall make
available to Buyer). If Sellers elect not to proceed with the Closing as
provided in the first sentence of this Article VI, Buyer may, within ten (10)
days after receiving notice of such election from Sellers, elect to proceed with
the Closing without any restoration of destroyed Purchased Assets or reduction
in the Purchase Price. For purposes of this Article VI, any of the Purchased
Assets shall be considered material if the loss of such assets would materially
adversely affect the ability of Buyer to operate the Alabama Project.
ARTICLE VII
CONDITIONS PRECEDENT TO CLOSING; TERMINATION
7.1 Conditions Precedent to the Obligations of Buyer. All obligations of
Buyer under this Agreement are subject to the fulfillment on or before the
Closing Date of each of the following conditions:
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(a) Correctness of Representations and Warranties. The representations
and warranties of Sellers contained in this Agreement and in the related
Exhibits and Schedules, to be delivered to Buyer pursuant hereto and in
connection herewith shall be true on the date hereof and on the Closing Date as
though such representations and warranties were made on and as of the Closing
Date.
(b) No Adverse Change in Purchased Assets and Alabama Project. The
Purchased Assets and the Alabama Project shall not be or shall not have been
threatened or affected, or interfered with, in a material adverse way, whether
or not covered by insurance, as a result of fire, explosion, earthquake,
disaster, accident, labor dispute, any action of the United States or other
governmental authority, riots, civil disturbances, uprising, activity of the
Armed Forces, or act of God or the public enemy.
(c) Compliance with Agreement. Sellers shall have performed and
complied in all material respects with all obligations under this Agreement
which are to be performed or complied with by them prior to the Closing Date.
(d) Certification of Compliance. Sellers shall have delivered to Buyer
a certificate dated the Closing Date, certifying as to the fulfillment of the
conditions set forth in this Section 7.1.
(e) Absence of Litigation. No suit, action or other proceeding or
investigation shall be threatened or pending before any court or governmental
agency to restrain or prohibit, or to obtain damages or other relief in
connection with this Agreement or the other Transaction Documents, or the
consummation of the transactions contemplated by this Agreement or the
Transaction Documents.
(f) Consents. Sellers shall have obtained (and delivered copies
thereof to Buyer) 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 as set forth on
Schedule 4.1(c).
(g) Further Assurances. Buyer shall have received such further
instruments and documents as it may reasonably require to carry out effectively
22
the transactions contemplated by this Agreement and the Transaction Documents
and to evidence the fulfillment of the agreements contained in this Agreement
and the Transaction Documents and the performance of all conditions to the
consummation of such transactions.
(h) Opinion of Counsel. Buyer shall have received from counsel to
Sellers, opinions of counsel to the Sellers, dated as of the Closing Date, in
form and substance reasonably satisfactory to Buyer and its counsel.
(i) Letter Ruling; Initial Production. Buyer shall have received
either (i) a letter ruling (the "Letter Ruling") from the Internal Revenue
Service setting forth the specific terms of the proposed transaction and
confirming to the satisfaction of Buyer, among other things, (a) the
availability and calculation of the credit available under Section 29 (the
"Section 29 Credits") of the Internal Revenue Code of 1986, as amended (the
"1986 Code"), (b) that the construction contract for the Alabama Project
satisfies the requirements of the Section 29 Credits, and (c) that the
allocation of the Section 29 Credits to the various members of Buyer is valid
under the 1986 Code, or (ii) a certificate of the Sellers (together with such
other evidence as Buyer requests) certifying that the Alabama Project is ready
to be placed into commercial operation.
(j) Covol shall be the general partner of Alabama Synfuel, with an 80%
partnership interest.
(k) Covol shall assign to Buyer the coal sale contracts set forth on
Schedule 7.1(l).
(l) Sellers shall have assigned the Construction Contract to Buyer as
a Purchased Asset and Contract under the terms of this Agreement.
(m) Other Deliveries. The other deliveries referred to in Section 8.2
shall be made at Closing.
7.2 Conditions Precedent to the Obligations of Sellers. All obligations of
Sellers under this Agreement are subject to fulfillment on or before the Closing
Date of each of the following conditions:
(a) Correctness of Warranties and Representations. The representations
and warranties of Buyer contained in this Agreement and in the related Exhibits
23
and Schedules, to be delivered to Sellers pursuant hereto and in connection
herewith shall be true on the date hereof and on the Closing Date as though such
representations and warranties were made on and as of the Closing Date.
(b) Compliance with Agreement. Buyer shall have performed and complied
in all material respects with all obligations under this Agreement which are to
be formed or complied with by it prior to the Closing Date.
(c) Certification of Compliance. Buyer shall have delivered to Seller
a certificate dated the Closing Date, certifying as to the fulfillment of the
conditions set forth in this Section 8.1.
(d) Absence of Litigation. No suit, action or other proceeding or
investigation shall be threatened or pending before any court or governmental
agency to restrain or prohibit, or to obtain damages or other relief in
connection with this Agreement or the Transaction Documents, or the consummation
of the transactions contemplated by this Agreement or the Transaction Documents.
(e) Opinion of Counsel. Sellers shall have received an opinion of
Stoel Rives LLP, counsel to the Buyer, dated as of the Closing Date, in form and
substance reasonably satisfactory to Sellers and their counsel.
(f) Other Deliveries. The other deliveries referred to in Section 8.2
shall be made at Closing.
(g) Further Assurances. Sellers shall have received such further
instruments and documents as it may reasonably require to carry out effectively
the transactions contemplated by this Agreement and the other Transaction
Documents and to evidence the fulfillment of the agreements contained in this
Agreement and the other Transaction Documents and the performance of all
conditions to the consummation of such transactions.
7.3 Termination. This Agreement may be terminated prior to the Closing as
follows:
(a) at the election of the Sellers, if any one or more of the
conditions to the obligation of Sellers to close has not been fulfilled as of
the Closing Date;
24
(b) at the election of the Buyer, if any one or more of the conditions
to the obligation of Buyer to close has not been fulfilled as of the Closing
Date;
(c) at the election of the Sellers, if the Buyer has breached any
representation, warranty, covenant or agreement contained in this Agreement,
which breach cannot be or is not cured within thirty (30) days after the
occurrence of such breach, but in no event after December 31, 1997;
(d) at the election of the Buyer, if either of the Sellers has
breached any representation, warranty, covenant, or agreement contained in this
Agreement, which breach cannot be or is not cured within thirty (30) days after
the occurrence of such breach, but in no event after December 31, 1997;
(e) at the election of the Buyer or Sellers, if any legal proceeding
is commenced or threatened by any Governmental Entity or other person directed
against the consummation of the Closing and either the Buyer or the Sellers, as
the case may be, reasonably and in good xxxxx xxxx it impractical or inadvisable
to proceed in view of such legal proceeding or threat thereof;
(f) upon the election of Buyer or Sellers pursuant to Article VI, if
there has been damage or destruction of the Purchased Assets giving them an
election to terminate this Agreement if such damage or destruction is not or
cannot be cured within thirty (30) days of the occurrence thereof, but in no
event after December 31, 1997; or
(g) at any time on or prior to the Effective Time, by mutual written
consent of the Sellers and the Buyer.
A party who terminates this Agreement in accordance with this Section
7.3 shall have no liability to the other party in respect of such termination,
but any cause of action held by a party related to a breach of this Agreement
prior to such termination shall survive.
ARTICLE VIII
CLOSING
8.1 Time and Place of Closing. The closing of the transaction contemplated
by this Agreement (the "Closing") shall be at 9:00 a.m., Mountain Time, on such
date as the parties shall mutually agree, not later than the earlier of (i) ten
25
(10) business days following the satisfaction or waiver of the condition set
forth in Section 7.1(i) hereto or (ii) December 31, 1997 (the "Closing Date"),
at the offices of Stoel Rives, LLP, 000 Xxxxx Xxxx Xxxxxx, Xxxxx 00, Xxxx Xxxx
Xxxx, Xxxx 00000-0000, or at such other time or place as the parties shall
mutually agree.
8.2 Actions at Closing. At the Closing, the following events shall occur,
each being a condition precedent to the other and each being declared to have
occurred simultaneously with the other:
(a) Buyer shall pay to Sellers the Purchase Price by executing and
delivering to Alabama Synfuel the Promissory Note.
(b) Sellers shall execute, acknowledge and deliver to Buyer the deeds,
bills of sale, assignments and other documents necessary to transfer all of
Sellers' right, title, and interest in and to the Purchased Assets to Buyer.
(c) The Parties shall execute, acknowledge and deliver to each other
the Operation and Maintenance Agreement substantially in the form attached
hereto as Exhibit D.
(d) The Parties shall execute, acknowledge and deliver to each other
the Licensing and Binder Purchase Agreement substantially in the form attached
hereto as Exhibit E.
(e) The Parties shall execute, acknowledge and deliver to each other
the Covenant Not to Compete substantially in the form attached hereto as Exhibit
F.
(f) The Parties shall execute, acknowledge and deliver to each other
the Call Option Agreement substantially in the form attached hereto as Exhibit
G.
(g) The Parties shall enter into a sublease, license agreement,
easement or such other arrangement as is mutually agreeable to the Parties, with
respect to locating a facility in which to conduct the manufacture of the
proprietary binder material used in connection with the operation of the Alabama
Project.
(h) Sellers shall deliver original executed copies of all required
permits, licenses, franchises, authorizations, variances, exemptions,
26
concessions, leases, instruments, orders, consents and approvals of Governmental
Entities and third parties necessary to execute, deliver and perform this
Agreement and the Transaction Documents as set forth on Schedule 4.1(c).
(i) Sellers shall take all steps necessary to put Buyer in actual
possession and control of the Purchased Assets and the Alabama Project.
(j) Sellers shall deliver to Buyer, at agreed locations, the Files and
Records.
ARTICLE IX
APPROVALS AND CONSENTS
Sellers, at their sole expense, shall make every reasonable effort prior to
the Closing to obtain all required permits, licenses, franchises,
authorizations, variances, exemptions, concessions, leases, instruments, orders,
consents and approvals of Governmental Entities and third parties necessary to
execute, deliver and perform this Agreement and the Transaction Documents as set
forth on Schedule 4.1(c). Buyer shall make every reasonable effort to cooperate
in connection with obtaining all required permits, licenses, franchises,
authorizations, variances, exemptions, concessions, leases, instruments, orders,
consents and approvals of Governmental Entities and third parties necessary to
execute, deliver and perform this Agreement and the Transaction Documents as set
forth on Schedule 4.1(c); provided, however, that Buyer shall not be obligated
to incur any cost or expense associated with such transfer or application.
ARTICLE X
CROSS INDEMNIFICATION
10.1 Obligations of Sellers. Sellers shall indemnify, defend and hold
harmless Buyer and its directors, officers, agents, representatives,
subsidiaries and Affiliates from and against any and all claims, demands or
suits (by any party, including any Governmental Entity), losses, liabilities,
damages, obligations, payments, costs and expenses (including the costs and
expenses of defending any and all actions, suits, proceedings, demands and
assessments which shall include reasonable attorneys' fees and court costs)
resulting from, relating to, arising out of, or incurred in connection with any
of the following:
27
(a) Any breach by either Seller of any of Sellers' representations,
warranties and covenants contained in this Agreement; and
(b) All liabilities and obligations assumed or retained by Sellers
under this Agreement.
10.2 Obligations of Buyer. Buyer shall indemnify, defend, and hold harmless
Sellers, and their respective directors, officers, agents, representatives,
subsidiaries and Affiliates, from and against any and all claims, demands, or
suits (by any party including any Governmental Entity), losses, liabilities,
damages, obligations, payments, costs and expenses (including the original costs
of defending any and all actions, suits, proceedings, demands and assessment
which shall include reasonable attorneys' fees and court costs) resulting from,
relating to, arising out of or incurred in connection with any of the following:
(a) Any breach by Buyer of any of Buyer's representations, warranties
and covenants contained in this Agreement; and
(b) All obligations and liabilities assumed by Buyer under this
Agreement.
10.3 Indemnity Procedures.
(a) Notwithstanding any provision to the contrary included in this
Article X, each party hereto waives the right, for itself and its respective
Affiliates, to be indemnified by the other party hereto to the extent of any
insurance proceeds or other recovery it receives with respect to the liabilities
for which indemnification would otherwise be required hereunder. (For the
purposes of this paragraph, insurance proceeds shall not include any payments
received pursuant to an insurance program under which the party seeking
indemnification or an Affiliate of such party bears the ultimate cost.)
(b) A party claiming indemnification under this Article X (the
"Indemnitee") shall notify in writing the party from whom indemnification is
claimed (the "Indemnitor") in reasonable detail of the nature, basis and
estimated amount of the claim within a reasonable time after discovery by the
Indemnitee of the basis therefor or the assertion thereof by a third party
28
against the Indemnitee. Notice of a claim filed in any court or administrative
agency, or submitted to arbitration, shall be given the Indemnitor within ten
(10) days of the Indemnitee's receipt of knowledge of such filing but failure to
provide notice within the 10 days shall not result in forfeiture of
indemnification rights except to the extent that the ability of the Indemnitor
to defend against the claim is materially impaired. In the event of such notice
by the Indemnitee to the Indemnitor of a third party claim, the Indemnitor shall
have twenty (20) days after receipt thereof in which to admit or deny
responsibility for indemnification of the Indemnitee by written notice to the
Indemnitee, and
(i) as to claims with respect to which the Indemnitee and the
Indemnitor may share responsibility, each party may elect to participate in the
defense of the claim through counsel of its choice and at its expense, and
neither party shall settle or compromise the claim without the consent of the
other;
(ii) if the Indemnitor denies responsibility or fails to admit or deny
responsibility for a claim within twenty (20) days of the notice, the Indemnitee
shall have the sole option and right to defend the claim, including the right to
settle or compromise the claim without consent of the Indemnitor, by counsel of
its choice; and
(iii) except with respect to a claim as to which the Indemnitee and
the Indemnitor share responsibility, if the Indemnitor admits responsibility for
indemnification, the Indemnitor may at the same time elect to control the
defense of the claim by counsel of its choice and at its expense, which counsel
shall consult with the Indemnitee or its counsel at the Indemnitee's expense,
and except as limited herein shall in such case have the right to settle or
compromise the claim as the Indemnitor deems fit, and the Indemnitee shall
cooperate in such defense and agree to and accept any money settlement or
compromise approved by the Indemnitor. If the Indemnitor does not so elect to
control the defense, the Indemnitee shall appear and defend the claim by counsel
of its choice, and the Indemnitor may participate in such defense by counsel of
its choice at its expense, which counsel shall be consulted by and shall assist
counsel for the Indemnitee, in which case the Indemnitor shall reimburse the
Indemnitee for its reasonable legal fees and expenses on a monthly basis.
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ARTICLE XI
REMEDIES AND SURVIVAL
11.1 Survival of Representations, etc.. All of the warranties, covenants
and agreements of the parties hereto contained in this Agreement and in any
certificates or documents delivered at Closing in connection with the
transactions contemplated hereby shall survive Closing of this transaction, the
sale and purchase herein, and any reorganization, or merger by any of the
parties hereto or permitted assignment of this Agreement. No examination or
investigation by or on behalf of any party shall in any way modify, affect or
diminish the obligations of the party with respect to the representations,
warranties and covenants contained herein or in any of the other Transaction
Documents. No warranty or representation of any party herein or in any of the
other Transaction Documents shall be deemed waived or modified by any fact or
matter within the actual or imputed knowledge any party hereto, nor shall any
party hereto be estopped from claiming damages for breach of any warranty or
representation herein or in any other Transaction Document by virtue of such
knowledge, as it is the expressed intention of the parties that each party shall
be fully responsible for the falsity of any warranty or representation herein or
in any other Transaction Document notwithstanding such knowledge. Each party
hereto expressly waives all defenses based on such knowledge to any claim by
party to this Agreement or the other Transaction Documents for breach of
warranties and representations of such party in this Agreement or any other
Transaction Documents.
11.2 Procedure. Notice of any claim shall be given by a party (for purposes
of this Article XI the "claiming party")to the other party (for purposes of this
Article XI the "defaulting party") as soon as reasonably practicable after the
claiming party becomes aware thereof and, if the claim in question is as a
result of or in connection with a liability to or from, or a dispute with, any
other third party, the claiming party shall take reasonable steps in connection
with such liability or dispute so as to recover or minimize or resolve such
liability or dispute. The claiming party shall give to the defaulting party full
facilities to investigate the subject matter of the claim and, at the request of
the defaulting party, to allow it at its own expense to participate in, or have
the conduct of (as it may elect), all proceedings of whatsoever nature against
the relevant third party arising out of, or in connection with, such liability
30
or dispute, in the name of the claiming party as it may consider necessary in
order to mitigate any such claim. The claiming party shall not accept or pay or
compromise any such liability or claim without providing the defaulting party a
reasonable opportunity to dispute the same.
ARTICLE XII
MISCELLANEOUS
12.1 Books, Records and Assistance by Personnel.
(a) Buyer agrees that for a period of four (4) years following the
Closing, Buyer shall take all necessary actions to ensure that all relevant
records relating to the Purchased Assets, with respect to periods ending on or
before the Effective Time that are in the possession or control of Buyer or its
Affiliates (whether acquired before or after the Closing) shall be retained
intact and shall be opened for inspection by representatives of Sellers at any
time during regular business hours, and that Sellers may, during such period at
its expense, make such excerpts therefrom as Sellers may reasonably request.
(b) Sellers agree that for a period of four (4) years following the
Closing, Sellers shall take all necessary actions to ensure that all of their
relevant records relating to the Purchased Assets that are not required to be
delivered to Buyer hereunder, shall be retained intact and shall be opened for
inspection by representatives of Buyer at any time during regular business hours
and that Buyer may during such periods at its own expense make such excerpts
therefrom as Buyer may reasonably request.
(c) Buyer and Sellers shall each use their respective best efforts to
cooperate with the other as requested from time to time and make their employees
available to the other at requesting party's expense (including the fully
allocated costs and out-of-pocket expenses of the party of whom cooperation is
being requested) to the extent that the requesting party may reasonably require
for its corporate purposes including attendance at depositions or legal
proceedings, or audits requested by the requesting party to be performed by
their employees or independent accountants relating to any period through or
including the Closing.
(d) Each party shall provide the other party with reasonable access to
all relevant documents, data and other information which may be required by
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the other party for the purpose of preparing tax returns and responding to any
audit by any taxing jurisdiction. Each party shall cooperate with all reasonable
requests of the other party made in connection with contesting the imposition of
taxes. Notwithstanding anything to the contrary in this Agreement, neither party
to this Agreement shall be required at any time to disclose to the other party
any tax return or other confidential tax information.
12.2 Assignment. This Agreement shall not be assigned in whole or in part
by Sellers without the prior written consent of Buyer, or assigned in whole or
in part by Buyer without the prior written consent of Sellers.
12.3 Notices. All notices required or permitted to be given under this
Agreement shall be in writing. Notices may be served by certified or registered
mail, postage paid with return receipt requested; by private courier, prepaid;
by telex, facsimile, or other telecommunication device capable of transmitting
or creating a written record; or personally. Mailed notices shall be deemed
delivered five days after mailing, property addressed. Couriered notices shall
be deemed delivered when delivered as addressed, or if the addressee refuses
delivery, when presented for delivery notwithstanding such refusal. Telex or
telecommunicated notices shall be deemed delivered when receipt is either
confirmed by confirming transmission equipment or acknowledged by the addressee
or its office. Personal delivery shall be effective when accomplished. Unless a
party changes its address by giving notice to the other party as provided
herein, notices shall be delivered to the parties at the following addresses:
Sellers: Covol Technologies, Inc.
0000 Xxxxx Xxxxxxxx Xxxx
Xxxx, Xxxx 00000
Telephone: (000)000-0000
Telecopier: (000)000-0000
Attn.: Xx. Xxxxx X. Xxxxxxxx
32
Alabama Synfuel #1 Ltd.
c/o Covol Technologies, Inc.
0000 Xxxxx Xxxxxxxx Xxxx
Xxxx, Xxxx 00000
Telephone: (000)000-0000
Telecopier: (000)000-0000
Attn.: Xx. Xxxxx X. Xxxxxxxx
With a copy
to: Xxxxxxx Xxxxx Xxxxxxx & Xxxxxxxxx
000 Xxxxx Xxxx Xxxxxx, Xxxxx 0000
Xxxx Xxxx Xxxx, Xxxx 00000-0000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
Attn.: Mr. Xxxxxxx Xxxxx
Buyer: Birmingham Syn Fuel, L.L.C.
c/o PacifiCorp Financial Services, Inc.
000 XX Xxxxxxxxx
Xxxxx 000
Xxxxxxxx, Xxxxxx 00000
Telephone: (000)0000000
Telecopier: (000)000-0000
Attn.: Xx. Xxxxxxx Xxxxxx
With a copy
to: Stoel Rives LLP
000 XX Xxxxxxxxx
Xxxxx 000
Xxxxxxxx, Xxxxxx 00000-0000
Telephone: (000)000-0000
Telecopier: (000)000-0000
Attn.: Xxxx X. Xxxxxx, Esq.
12.4 Expenses and Fees. Each party hereto agrees to pay, without right of
reimbursement from the other, the costs incurred by it incident to the
preparation of this Agreement, and the fees and disbursements of counsel,
accountants and consultants employed by it in connection with the negotiation of
this Agreement and the consummation of the transaction contemplated herein. All
sales, use, or similar taxes imposed by or due to any taxing authority in
connection with, or as a result of, the sale by Seller of the Purchased Assets
shall be the sole responsibility of Seller.
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12.5 Successors and Assigns. Except as otherwise provided herein, this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and permitted assigns.
12.6 Waiver. Buyer or Sellers, by written notice to the other, may: (i)
extend a time for performance of any of the obligations or other actions under
this Agreement; (ii) waive by express written waiver any inaccuracy in the
representations or warranties contained in this Agreement or any document
delivered pursuant to this Agreement; (iii) waive by express written waiver any
compliance with the conditions or covenants contained in this Agreement; or (iv)
waive or modify by express written waiver or agreement performance of any of the
obligations performed under this Agreement; provided, however, that neither such
party may without the consent of the other grant such extension of time, waiver
of inaccuracies or compliance or waiver or modification of warranties,
conditions or covenants hereunder. Except as provided in this section, no action
taken pursuant to this Agreement (including without limitation the acts taken at
the Closing) shall be deemed to constitute a waiver of compliance with any
representations, warranties or covenants contained in this Agreement and shall
not operate or be construed as a waiver of any subsequent breach of a similar or
dissimilar nature.
12.7 Entire Agreement. This Agreement, together with the other Transaction
Documents, constitutes the entire agreement of the parties relating to the
subject matter hereof. There are no promises, terms, conditions, obligations, or
warranties other than those contained herein and/or in the Transaction
Documents. The Transaction documents supersede all prior communications,
representations, or agreements, verbal or written, among the parties relating to
the subject matter hereof.
12.8 Amendments, Supplements and Etc. This Agreement may be amended or
supplemented at any time only by an additional written agreement executed by the
parties hereto.
12.9 Applicable Law. This Agreement and the legal relations among the
parties hereto shall be governed by and construed in accordance with the
substantive laws of the State of Utah without giving effect to the principles of
conflict of laws thereof.
12.10 Execution and Counterparts. This Agreement may be executed in two or
more counterparts, each which shall be deemed an original, but all of which
together shall constitute one and the same agreement.
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12.11 Titles and Headings. Titles and headings to paragraphs herein are
inserted for convenience of reference only and are not intended to be a part of
or to affect the meaning or interpretation of this Agreement.
12.12 Third Parties. Nothing herein expressed or implied is intended or
shall be construed to confer upon or give any person or entity other than the
parties hereto and their successors and assigns any right or remedies by reason
of this Agreement as a third party beneficiary or otherwise.
12.13 Further Assurances. The parties agree from time to time to execute
such additional documents as are necessary to effect the intent of the parties
as manifested by this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement by
their duly authorized representatives the day and year first above written.
SELLERS:
COVOL TECHNOLOGIES, INC.
By:______________________________________
Name:
Title:
ALABAMA SYNFUEL #1 LTD.
By:______________________________________
Name:
Title:
35
BUYER:
BIRMINGHAM SYN FUEL, L.L.C.
By:_______________________________________
Name:
Title:
