Exhibit 10.72.1
SHARE EXCHANGE AGREEMENT
THIS SHARE EXCHANGE AGREEMENT (the "Exchange Agreement") is made and
entered into, effective as of May 2, 2001, by and among HEADWATERS INCORPORATED,
a Delaware corporation ("Headwaters"), HEADWATERS SUB CORPORATION, a New Jersey
corporation and a wholly-owned subsidiary of Headwaters ("Merger Sub"),
HYDROCARBON TECHNOLOGIES, INC., a New Jersey corporation ("HTI"), and each of
the individuals listed on the signature pages hereto (the "Transferors").
(Headwaters, HTI, Merger Sub, and the Transferors are referred to collectively
herein as the "Parties.")
RECITALS
A. Each of the Transferors owns shares of common stock, $.01 par value
per share, of HTI (the "HTI Common Stock"). Each Transferor owns the number of
shares of HTI Common Stock set forth opposite his or her name on the signature
pages hereto.
B. In order to enable Headwaters to directly acquire one hundred
percent (100%) of the capital stock of HTI, the Parties are entering into this
Exchange Agreement, under which each Transferor agrees with Headwaters, among
other things, to exchange all of the Transferor's interest in HTI Common Stock
(each an "Exchange, and collectively the "Exchanges"), representing in the
aggregate for all Transferors up to approximately ninety-seven percent (97%) of
the outstanding shares of HTI Common Stock, to Merger Sub in exchange for cash
and shares of Headwaters Common Stock (the "Headwaters Shares"), as provided
herein.
C. In connection with the execution of this Exchange Agreement,
Headwaters, HTI, Merger Sub, and certain individual HTI shareholders (the "HTI
Founders") are entering into an Agreement and Plan of Reorganization dated as of
May 2, 2001 (the "Merger Agreement"), pursuant to which Headwaters and HTI will
enter into a business combination transaction pursuant to which Merger Sub will
merge with and into HTI following the Exchanges (the "Merger").
D. Headwaters, Merger Sub, HTI, and the Transferors each desire to make
certain representations and warranties and other agreements in connection with
the Exchanges and the Merger.
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements herein contained, the Parties do hereby agree as follows:
ARTICLE I
THE share Exchange
1.1 The Share Exchange. Subject to the satisfaction of the conditions
precedent set forth in Articles VI and VII below, as of the Closing (as defined
herein), each Transferor hereby agrees to transfer to Merger Sub, and Merger Sub
agrees to accept, the number of shares of HTI Common Stock shown opposite such
Transferor's name on the signature pages hereto (each such share an
"Exchanged Share" and collectively the "Exchanged Shares"), in exchange for the
consideration provided herein. The Parties agree that the Exchanges shall be
part of a single transaction. As a result, the obligation of each Transferor to
transfer the Exchanged Shares to Merger Sub is conditioned on the simultaneous
transfer by each other Transferor of such Transferor's HTI Common Stock or
waiver by Merger Sub, in its sole discretion, of the obligations of such
non-transferring Transferors.
1.2 Closing. The closing of the Exchanges (the "Closing") shall take
place at the offices of HTI or Headwaters, at a time and date to be specified by
the Parties after the last of the conditions precedent set forth in Articles VI
and VII below shall have been satisfied or waived, and shall occur immediately
prior to the closing of the Merger, pursuant to Section 1.2 of the Merger
Agreement, or at such other time, date, and location as the Parties agree in
writing (the date of the Closing being the "Closing Date").
1.3 Effect on Capital Stock.
(a) Definitions. For purposes of this Exchange Agreement:
(i) Business Plan shall mean the business plan
prepared by HTI and dated February 2000.
(ii) Business Unit shall mean the business unit of
Headwaters after the Merger that includes the business and operations of HTI as
they existed immediately prior to the Effective Time (as defined in the Merger
Agreement), which business unit shall include only HTI's business and operations
unless consented to in writing by the Representative.
(iii) EBITDA shall mean earnings before interest,
taxes, depreciation, and amortization of the Business Unit, after elimination of
intracompany transfers and costs incurred in connection with the transactions
contemplated hereby and by the Merger Agreement, as reported on Headwaters'
statement of operations prepared in accordance with GAAP consistently applied in
accordance with HTI's practices in effect immediately prior to the Closing, and
without the effect of any restatement of the financial statements of HTI or the
Business Unit unless HTI (in the case of any pre-Closing restatement) or the
Representative (in the case of any post-Closing restatement) consents thereto in
writing.
(iv) 2001 Actual EBITDA shall mean EBITDA of the
Business Unit for the year ended December 31, 2001 (calculated to reflect the
elimination of intracompany transfers and costs incurred in connection with the
transactions contemplated hereby and by the Merger Agreement), not including
revenues from any sale of material assets or other extraordinary corporate
events; provided that, for this purpose, a sale of Chemsampco or its assets or
the nonexclusive licensing of intellectual property rights of the Business Unit
in the ordinary course of business will not be considered a sale of material
assets or an extraordinary corporate event.
(v) 2001 Projected EBITDA shall mean $3,670,000;
provided that, if, with the consent of Headwaters, HTI's financial statements
are restated in a manner that would affect 2001 Actual EBITDA, 2001 Projected
EBITDA will be correspondingly adjusted.
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(vi) 2002 Actual EBITDA shall mean the EBITDA of the
Business Unit for the year ended December 31, 2002 (calculated to reflect the
elimination of intracompany transfers and costs incurred in connection with the
transactions contemplated hereby and by the Merger Agreement), not including
revenues from any sale of material assets or other extraordinary corporate
events; provided that, for this purpose, a sale of Chemsampco or its assets or
the nonexclusive licensing of intellectual property rights of the Business Unit
in the ordinary course of business will not be considered a sale of material
assets or an extraordinary corporate event.
(vii) 2002 Projected EBITDA shall mean $3,362,000;
provided that, if, with the consent of Headwaters, HTI's financial statements
are restated in a manner that would affect 2002 Actual EBITDA, 2002 Projected
EBITDA will be correspondingly adjusted.
(viii) Fully Diluted Number shall mean the aggregate
of (1) the number of shares of HTI Common Stock outstanding immediately prior to
the Closing, plus (2) the number of shares of HTI Common Stock underlying all
vested and unvested HTI Stock Options (as defined below) outstanding immediately
prior to the Closing.
(ix) GAAP shall mean generally accepted accounting
principles.
(x) Headwaters Common Stock shall mean the common
stock, $0.01 par value per share, of Headwaters.
(xi) HTI Stock Options shall mean all options
pursuant to HTI's Stock Option Plan or pursuant to any other agreement of HTI.
(xii) Merger Shares shall mean the number of shares
of HTI Common Stock outstanding immediately prior to the Closing, minus the
number of Exchanged Shares.
(xiii) Purchaser Representative shall mean that
person or entity selected by HTI, which shall assist the Transferors in
evaluating the merits and risks of the investment decision contemplated
hereunder, and which shall satisfy the requirements of Rule 501(b) of Regulation
D promulgated under the Securities Act of 1933, as amended (the "Securities
Act"), as required by securities laws for the protection of non-accredited
investors.
(xiv) Representative shall mean a three-member
committee initially consisting of Xxxxxx X. Xxxxxxx, X.X. (Xxxx) Xxx, Ph.D., and
Xxxxx Xxxxxx, acting together as representative for the Transferors as set out
in this Exchange Agreement. The decisions of the Representative, including
without limitation the designation of new members if a vacancy on such committee
should occur, shall be made by majority vote.
(b) Share Exchange Consideration. At Closing, Merger Sub shall
acquire the Exchanged Shares, the aggregate consideration for which (the
"Exchange Consideration") shall consist of shares of Headwaters Common Stock and
cash, as set out below, subject to the provisions of this Section 1.3:
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(i) Stock Consideration. The stock portion of the
Exchange Consideration (the "Stock Consideration") shall consist of 1,330,154
shares of Headwaters Common Stock; and
(ii) Cash Consideration. The cash portion of the
Exchange Consideration (the "Cash Consideration") shall consist of (A)
$2,893,750, less any costs to be borne by HTI pursuant to Section 5.6(c), minus
(B) that amount which is equal to $14,468,750 divided by the Fully Diluted
Number and then multiplied by the number of Merger Shares; provided that the
cash portion of any payment(s) provided for in Section 1.3(c) may be adjusted
pursuant to Section 1.3(f).
(c) Conversion of HTI Common Stock. Subject to Section 1.2
hereof, at the Closing, by virtue of the Exchanges, and without any action on
the part of the Transferors, each Exchanged Share, and all rights to accrued
dividends in respect thereof, will be transferred to Merger Sub in exchange for
the right to receive, on the dates specified below, the following aggregate
consideration for each Exchanged Share; provided that twenty percent (20%) of
each of the Closing Stock Amount and the Closing Cash Amount (as defined below)
to each Transferor shall be placed into escrow (for which purpose, the numbers
of shares of stock of each Transferor to be placed into escrow shall be rounded
to the next whole number of shares), pursuant to the terms of an Escrow
Agreement in substantially the form attached hereto as Exhibit A (the "Escrow
Agreement"), until the Final Release Date (as defined in the Escrow Agreement);
and provided further that each Transferor will be deemed to be the record holder
of the shares of Headwaters Common Stock held in escrow:
(i) at the Closing,
(x) (A) an amount of cash equal to fifty
percent (50%) of the Cash Consideration,
plus the aggregate exercise price of any
vested HTI Stock Options exercised
between the date hereof and the
Effective Time, minus fifty percent
(50%) of the Merger Consideration (as
defined in the Merger Agreement),
divided by (B) the Fully Diluted Number
(the "Closing Cash Amount"); and
(y) the right to receive a number of shares
of Headwaters Common Stock equal to
fifty percent (50%) of the Stock
Consideration divided by the Fully
Diluted Number (the "Closing Stock
Amount");
(ii) at March 31, 2002, or such later time as is set
forth in Section 1.3(d), up to an additional twenty-five percent (25%) of the
Cash Consideration and the Stock Consideration (the "First Contingent Payment")
shall be deemed earned and shall be paid, in each case divided by the Fully
Diluted Number, in the event that HTI:
(x) has 2001 Actual EBITDA equal to or in
excess of (the 2001 Projected EBITDA
(the "2001 EBITDA Test"), in which event
the full First Contingent Payment shall
be deemed to have been earned and shall
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be paid, in each case divided by the
Fully Diluted Number; or, if the 2001
EBITDA Test is not met:
(y) has entered into a coal liquefaction
license agreement with the Shenhua Group
of the Peoples' Republic of China
("PRC") ("Shenhua"), containing terms
that can reasonably be expected to
result in license revenues consistent
with the Business Plan, and containing
other commercial terms and conditions
common in this type of agreement, by
March 31, 2002, and such license
agreement, if entered into prior to
October 31, 2001, is still in effect as
of October 31, 2001 (the "Shenhua
Test"), in which event sixty percent
(60%) each of the cash and stock
portions of the First Contingent Payment
shall be deemed to have been earned and
shall be paid, in each case divided by
the Fully Diluted Number; and
(z) has entered into a heavy oil licensing
agreement, containing terms that can
reasonably be expected to result in
license revenues consistent with the
Business Plan, and containing other
commercial terms and conditions common
in this type of agreement, with
PetroChina Company Limited, PRC
("PetroChina") by March 31, 2002, and
such license agreement, if entered into
prior to October 31, 2001, is still in
effect as of October 31, 2001 (the
"PetroChina Test"), in which event forty
percent (40%) each of the cash and stock
portions of the First Contingent Payment
shall be deemed to have been earned and
shall be paid, in each case divided by
the Fully Diluted Number
(collectively, the "First Milestone").
Notwithstanding the foregoing,
(A) in addition to any amounts earned pursuant to Section
1.3(c)(ii)(y) or (z), if HTI fails to satisfy the 2001 EBITDA Test and
one or both of the Shenhua Test and the PetroChina Test, but has 2001
Actual EBITDA of greater than eighty percent (80%) of 2001 Projected
EBITDA, a portion of each of the cash and stock components of the First
Contingent Payment (in each case divided by the Fully Diluted Number)
shall be deemed earned and shall be paid that is, in each case, equal
to the ratio of (i) 2001 Actual EBITDA minus eighty percent (80%) of
2001 Projected EBITDA to (ii) twenty percent (20%) of 2001 Projected
EBITDA. For purposes of clarity, if 2001 Actual EBITDA is eighty
percent (80%) (or less) of 2001 Projected EBITDA, the amount deemed to
have been earned and that shall be paid (the "Amount Earned") will be
zero; if eighty-five percent (85%), the Amount Earned will be
twenty-five percent (25%) of the First Contingent Payment; if ninety
percent (90%), the Amount Earned will be fifty percent (50%) of the
First Contingent Payment; if ninety-five percent (95%), the Amount
Earned will be seventy-five percent (75%) of the First Contingent
Payment (in each case divided by the Fully Diluted Number);
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(B) in addition to any amounts earned pursuant to Section
1.3(c)(ii)(y), (z), or (A), if (i) HTI fails to satisfy the 2001 EBITDA
Test and (ii) fails to sign a license agreement with either or both
Shenhua and/or PetroChina by March 31, 2002, but executes one or both
of the aforesaid license agreements with Shenhua and/or PetroChina, as
applicable, in a form otherwise satisfying the Shenhua Test and/or the
PetroChina Test, as applicable, after March 31, 2002, but by March 31,
2003, half of each of the cash and stock portions of the First
Contingent Payment that would have been deemed to have been earned if
HTI had met the Shenhua Test and/or the PetroChina Test, as applicable,
shall be deemed to have been earned and shall be paid;
provided that in no event shall the aggregate amounts paid pursuant to
this Section 1.3(c)(ii) exceed the amount of the First Contingent
Payment.
(iii) at March 31, 2003, or such later time as is set
forth in Section 1.3(d), an additional twenty-five percent (25%) of the Cash
Consideration and twenty-five percent (25%) of the Stock Consideration (the
"Second Contingent Payment"), in each case divided by the Fully Diluted Number,
shall be deemed earned and shall be paid in the event that the 2002 Actual
EBITDA is equal to or exceeds the 2002 Projected EBITDA (the "Second
Milestone"); provided that, if the 2002 Actual EBITDA is greater than eighty
percent (80%) of 2002 Projected EBITDA, but less than the 2002 Projected EBITDA,
a portion of the Second Contingent Payment (in each case divided by the Fully
Diluted Number) shall be deemed earned and shall be paid that is, in each case,
equal to the ratio of (i) 2002 Actual EBITDA minus eighty percent (80%) of 2002
Projected EBITDA to (ii) twenty percent (20%) of 2002 Projected EBITDA. For
purposes of clarity, if 2002 Actual EBITDA is eighty percent (80%) of 2002
Projected EBITDA (or less), the Second Contingent Payment will be zero; if
eighty-five percent (85%), the Amount Earned will be twenty-five percent (25%)
of the Second Contingent Payment; if ninety percent (90%), the Amount Earned
will be fifty percent (50%) of the Second Contingent Payment; if ninety-five
percent (95%), the Amount Earned will be seventy-five percent (75%) of the
Second Contingent Payment (in each case divided by the Fully Diluted Number) .
(The First Milestone and the Second Milestone shall each be referred to herein
as a "Milestone".)
(d) Requirements as to Contingent Payments. With respect to
the First Contingent Payment and the Second Contingent Payment (collectively,
the "Contingent Payments"):
(i) Headwaters shall complete its calculations as to
whether the EBITDA-related Milestones have been satisfied as promptly as
practicable following the appropriate year-end, and in any event by the date
which is 90 days following the end of the year in which such EBITDA-related
Milestone is to be achieved. Headwaters will pay the Contingent Payments that
are not EBITDA-related within fifteen (15) days after such Contingent Payments
are earned. Each of the Milestones will stand alone and must be achieved
separately.
(ii) Headwaters agrees not to cause the Business Unit
to dividend any cash or profits or make any other distributions from the
Business Unit during the periods in which the Milestones are to be achieved.
Headwaters agrees to make funds available to the Business Unit to be used for
reasonable and budgeted operating expenses of the Business Unit, and to provide
other general operational assistance and advice to the Business Unit. Subject to
Headwaters' sole
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discretion, Headwaters agrees to make other resources available to the Business
Unit, upon the Business Unit's reasonable request therefor, to assist the
Business Unit in achieving the Milestones. Headwaters will also maintain an
independent profit and loss statement for the Business Unit that will include
the business and operations of the Business Unit after the consummation of the
Merger for the period through and including the calculation of the Second
Milestone. The Business Unit will make commercially reasonable efforts to
achieve the performance objectives set forth in the Business Plan. Headwaters
will refrain from taking any action, including without limitation engaging in
any activities which compete with those of the Business Unit, which may impair
achievement of each of the Milestones within the time periods set forth in this
Section 1.3.
(iii) The Business Unit shall provide recommendations
to Headwaters concerning the proposed sales price for each product of the
Business Unit. Headwaters shall consider such recommendations in establishing
pricing, but shall have ultimate authority for establishing the prices of such
products, provided that such prices shall be commercially reasonable. In the
event that any product of the Business Unit is combined with or incorporated
into another Headwaters product for resale (an "Integrated Product"), rather
than being sold on a "stand-alone" basis, the price of such Integrated Product
for purposes of this Exchange Agreement shall be determined to be an amount
equal to not less than the price at which such product would be sold if it were
sold commercially on a stand-alone basis. Such price determination shall be made
by Headwaters with the consent of the Representative (which consent shall not be
unreasonably withheld).
(iv) In the event that, after the Signing Date, there
has occurred (i) a merger or consolidation of Headwaters with or into any other
corporation or corporations pursuant to which the stockholders of Headwaters
immediately prior to the transaction own less than fifty percent (50%) of the
voting securities of the surviving corporation or a sale of all or substantially
all of the assets of Headwaters (an "Acquisition"), or (ii) any merger,
consolidation, reorganization, sale of all or substantially all of the assets or
of any material asset of the Business Unit, or any spin-off of the securities of
any entity conducting the business of the Business Unit (a "Spin Off"), or (iii)
a material violation of this Exchange Agreement by Headwaters such that one or
more Milestones could not reasonably be achieved within the time periods
established in Section 1.3, all unpaid Contingent Payments shall be deemed to be
earned. Any Contingent Payment which is accelerated pursuant to subsection (i)
or (ii) of the preceding sentence shall be paid at the consummation of the event
described in such subsection; any Contingent Payment which is accelerated
pursuant to subsection (iii) of the preceding sentence shall be payable at the
earlier of the date such payment would otherwise be due or five business days
after final resolution of any dispute regarding the occurrence of an applicable
event (provided, however, that if the Contingent Payment is not made at such
date, Transferors shall be entitled to interest at the then applicable legal
interest rate for judgments from the date any such payment is due to the date
payment is made); and provided, further, that if the payment to be made
hereunder is the result of a breach of this Exchange Agreement that affects the
achievability of one or more Milestones, only the Contingent Payment relating to
the affected Milestone shall be paid pursuant to this subsection.
(v) In the event that, after the Effective Time,
Headwaters materially modifies or alters the business plan or operations of the
Business Unit, including, without limitation, Headwaters causing the termination
without cause of (i) more than fifty percent (50%) of the
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operational and maintenance employees, or more than twenty percent (20%) of the
other employees, who were employed by HTI as of the Closing Date or (ii) any
employment agreement to which HTI is a party on the Closing Date, in each case
such that one or more Milestones could not reasonably be achieved within the
time periods established in Section 1.3, all unpaid Contingent Payments with
respect to the affected Milestone(s) shall be deemed earned and payable in full
on the date on which such Contingent Payment(s) would otherwise be due.
(vi) Headwaters agrees to provide promptly all
information as reasonably requested by the Representative to the Representative
or a designated accountant, and to make available for inspection and review to
the Representative or a designated accountant, during business hours upon
reasonable prior notice, the books and records of Headwaters relating to the
Business Unit, including, but not limited to, all production reports and
projections, purchase orders, and worksheets for the period under review and the
computations underlying the determination of whether the Milestones have been
achieved.
(vii) Headwaters shall deliver to the Representative
no later than five days prior to the payment date of each year for a Contingent
Payment, a certificate signed by an officer of Headwaters containing a detailed
summary of all computations, including any adjustments, as described above,
performed by Headwaters in arriving at the Contingent Payment for such year (the
"Contingent Payment Certificate"). The Representative shall have a period of
sixty (60) days after receipt of the Contingent Payment Certificate to dispute
any amounts reflected thereon; provided that the Representative shall notify
Headwaters in writing of each disputed item in reasonable detail and shall
specify the amount thereof in dispute within such sixty (60) day period.
Headwaters agrees to cooperate with any such confirmation request and make
available to the Representative or his designated accountant, at all reasonable
times, for inspection and review, the books and records of Headwaters relating
to the Business Unit, including, but not limited to, all worksheets for the
period under review and the aforementioned computations. If no objections are
raised within such sixty (60) day period or if the Representative consents in
writing to the amounts reflected in the Certificate prior to the end of such
period, the Contingent Payment Certificate and the Contingent Payment shall be
final, binding, and conclusive upon all of the parties hereto and Headwaters
shall make the Contingent Payment within ten (10) business days after the
earlier of the expiration of such sixty (60) day period or its receipt of the
written consent of the Representative. If, during his review of the Contingent
Payment Certificate and accompanying worksheets and records, the Representative
or his designated accountant disagrees with the computation prepared by
Headwaters and such disagreement cannot, with good faith effort, be promptly
settled, Headwaters and the Representative shall appoint a mutually satisfactory
independent certified public accountant (the "Resolution Accountant") to review
the computations of both Headwaters and the Representative. The determination of
the Resolution Accountant, which shall be based on GAAP, shall be delivered
within ninety (90) days after the appointment of the Resolution Accountant and
shall be binding on Headwaters and the Transferors. The fees and costs of the
Resolution Accountant shall be borne one-half by Headwaters and one-half by the
Transferors. Within three (3) business days after the Resolution Accountant
makes his determination, Headwaters shall pay the Transferors the Contingent
Payment as so finally determined.
(e) No Fractional Shares. No fractional shares of Headwaters
Common Stock shall be issued to any holder of HTI Common Stock in the Exchanges.
To the extent that application
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of the conversion procedures of Section 1.3(c) to shares of HTI Common Stock
held by a Transferor would result in a fractional number of shares of Headwaters
Common Stock being issued to the Transferor in the Exchange, the number of
shares of Headwaters Common Stock issuable to such holder in respect of all such
shares in the Merger shall be rounded up to the next whole number of shares of
Headwaters Common Stock.
(f) Adjustments for Tax-Free Reorganization. At HTI's option,
Headwaters and HTI, without the necessity of obtaining the approval of any
Transferor, shall cooperate with making any necessary, nonmaterial adjustments
to reduce the Closing Cash Amount and the cash portion of any Contingent
Payments in order to achieve an 80%-20% stock-to-cash ratio based on the closing
price of Headwaters Common Stock required to be used for purposes of determining
tax-free reorganization treatment for the transaction comprised of the Exchanges
and the Merger.
(g) Representative's Holdback. Notwithstanding anything to the
contrary contained herein, at the time the First Contingent Payment (or any
portion thereof) is paid, Headwaters shall deduct from the First Contingent
Payment, or from such portion thereof as is then payable, and deliver to the
Representative one hundred thousand dollars ($100,000) in cash, which amount
will be held by the Representative and applied as the Representative, in its
sole discretion, deems desirable or appropriate to expenses incurred in
connection with this Exchange Agreement, the Escrow Agreement, or the Merger
Agreement. The Representative shall deliver the balance of such amount remaining
after application to such expenses to the Transferors at such time as the
Representative determines, in its sole discretion, that such amounts will not be
needed for application to such expenses.
1.4 Exchange Procedures. Promptly after the Closing, Headwaters shall
mail to each Transferor (i) a letter of transmittal, which shall specify that
delivery shall be effected, and risk of loss and title to the HTI Share
certificate or certificates (the "Certificates") shall pass, only upon delivery
of the Certificates to Headwaters, and which shall be in such form and have such
other provisions as Headwaters may reasonably specify ("the Letter of
Transmittal") and (ii) instructions for use in effecting the transfer of the
Certificates in exchange for the applicable portion of the Exchange
Consideration pursuant to Section 1.3. Upon surrender of Certificates for
cancellation to Headwaters, together with the Letter of Transmittal, duly
completed and validly executed in accordance with the instructions thereto, the
holders of such Certificates shall be entitled to receive in exchange therefor
the applicable portion of the Exchange Consideration pursuant to Section 1.3.
Notwithstanding the foregoing, Headwaters shall cooperate with the Transferors
to cause the Letters of Transmittal to be made available prior to the Closing
Date so they may be completed by the Transferors before the Closing.
1.5 Tax Treatment. The parties intend that the Exchanges, the Merger,
and the other transactions contemplated herein and therein (i) will not be
consummated unless all such transactions are consummated and (ii) will be a
reorganization within the meaning of Section 368 of the Internal Revenue Code
and hereby adopt this Exchange Agreement and the Merger Agreement as a "plan of
reorganization" within the meaning of Sections 1.368-2(g) and 1.368-3(a) of the
Treasury Regulations. Notwithstanding the foregoing, each Transferor
acknowledges and agrees that he or she must consult with his or her tax advisors
concerning tax treatment of the Exchanges and the Merger
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and that neither HTI nor Headwaters is responsible for the tax treatment of the
Exchanges or the Merger.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF ALL TRANFERORS
Each Transferor, severally and not jointly, hereby makes the following
representations and warranties to Headwaters and Merger Sub:
2.1 Authority. Such Transferor has all requisite power and authority to
enter into this Exchange Agreement, and to consummate the transactions
contemplated hereby and thereby. The execution and delivery of this Exchange
Agreement and the consummation of the transactions contemplated hereby and
thereby, have been duly and validly authorized by all necessary action on the
part of such Transferor, and no other action on the part of such Transferor is
necessary to authorize such execution and delivery. This Exchange Agreement has
been duly and validly executed and delivered by such Transferor and, assuming
the valid authorization, execution, and delivery thereof by the other parties
thereto, constitutes valid and binding obligations of such Transferor,
enforceable against such Transferor in accordance with its terms, except as
enforceability may be limited by bankruptcy and other similar laws and general
principles of equity.
2.2 Title to the HTI Common Stock. As of the date hereof such
Transferor is, and at the time of Closing such Transferor will be, the owner
(both beneficially and of record) of the shares of HTI Common Stock set forth
opposite such person's name on the signature pages hereto. Except for the shares
of HTI Common Stock and HTI Stock Options set forth opposite such person's name
on the signature pages hereto, such Transferor is not the record or beneficial
owner (as defined in Rule 13d-3 under the Securities Exchange Act of 1934, as
amended (the "Exchange Act")) of, and does not have any other rights of any
nature to acquire any shares of HTI Common Stock. Such Transferor owns, and at
the time of Closing will own, all of the shares of HTI Common Stock set forth
opposite such person's name on the signature pages hereto free and clear of all
liens, claims, pledges, options, rights of first refusal, agreements,
limitations on voting rights, charges, and other encumbrances of any nature
whatsoever, subject to whatever rights, if any, HTI may have to repurchase such
shares (which rights HTI shall waive as of the Closing). Such Transferor has,
and at the time of Closing will have, sole power of disposition with respect to
all of the shares of HTI Common Stock set forth opposite such person's name on
the signature pages hereto. Upon delivery by such Transferor of its shares of
HTI Common Stock, Merger Sub will receive valid and marketable title thereto
free and clear of any lien, claim, security interest, or other encumbrance.
2.3 No Conflict with Other Instruments. The execution and delivery of
the Transferor Agreements by the Transferors do not, and the performance of the
Transferor Agreements by the Transferors will not, to the knowledge of such
Transferor after reasonable inquiry, conflict with or violate any law, rule,
regulation, order, judgment, or decree applicable to any Transferor, or by which
any Transferor, or any of their respective properties, is bound or affected.
2.4 Investment Intent. The Headwaters Shares to be issued to such
Transferor upon consummation of the transactions contemplated hereby are being
acquired by such Transferor for such person's own account pursuant to this
Exchange Agreement and not for any other person, and
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for investment only and with no intention of distributing or reselling such
Headwaters Shares or any part thereof or any interest therein in any transaction
that would be in violation of the securities laws of the United States, or any
state thereof. Such Transferor has no contract, undertaking, agreement, or
arrangement with any person to sell or transfer to such person, except as
permitted hereunder, any of the Headwaters Shares.
2.5 No Registration of the Headwaters Shares. Such Transferor
understands that the Headwaters Shares are not being registered under the
Securities Act of 1933, as amended (the "Securities Act") on the ground that the
transactions contemplated hereby are exempt from the registration requirements
thereof, and that Headwaters' reliance on an exemption under the Securities Act
is predicated on such Transferor's representations set forth herein.
2.6 Knowledge and Experience. Such Transferor, either alone or with his
or her Purchaser Representative, is able to fend for himself or herself in the
transactions contemplated by this Exchange Agreement, has such knowledge and
experience in financial and business matters as to be capable of evaluating the
merits and risks of its investment, has the ability to bear the economic risks
of its investment, and has been furnished with or has had access to all
information such person deemed necessary for such person's full and complete
evaluation of Headwaters, and such Transferor has had during the course of this
transaction and prior to the Exchange the opportunity to ask questions of and
receive answers from Headwaters, its employees, and representatives concerning
financial affairs of Headwaters, and all questions which have been asked have
been adequately answered.
2.7 Holding Period. Pursuant to Section 5.1 to this Exchange Agreement,
Headwaters has agreed to file a registration statement on Form S-3 registering
the resale of the Headwaters Shares by Transferors. Notwithstanding such
agreement by Headwaters, such Transferor understands and agrees that, if a
registration statement covering the securities under the Securities Act is not
in effect and an exemption from the registration requirements is not available
when he or she desires to sell the Headwaters Shares, he or she may be required
to hold such Headwaters Shares for an indeterminate period. Such Transferor
understands that any sale of the Headwaters Shares which might be made by him or
her in reliance upon Rule 144 under the Securities Act may be made only in
limited amounts in accordance with the terms and conditions of that rule.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF ACCREDITED INVESTORS
Each Transferor who is identified on the signature pages hereto as an
"accredited investor" hereby represents and warrants to Headwaters and Merger
Sub that such person satisfies at least one of the following suitability
standards:
(a) that he or she is a natural person whose individual
net worth, or joint net worth with that person's
spouse, at the time of his or her purchase exceeds
$1,000,000; or
(b) that he or she is a natural person who had (i) an
individual income in excess of $200,000 in each of
the two most recent years and who reasonably expects
11
an income in excess of $200,000 in the current year
or (ii) a joint income with that person's spouse in
excess of $300,000 in each of the two most recent
years and who reasonably expects a joint income in
excess of $300,000 in the current year.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF HEADWATERS AND MERGER SUB
Each of Headwaters and Merger Sub represents and warrants to the
Transferors, except as set forth in the disclosure letter supplied by Headwaters
to the Transferors on or before the date hereof and certified by a duly
authorized officer of Headwaters and Merger Sub (the "Headwaters Disclosure
Letter"), as follows:
4.1 Organization of Headwaters. Each of Headwaters and Merger Sub is a
corporation duly organized, validly existing, and in good standing under the
laws of the jurisdiction of its incorporation, has the corporate power to own,
lease, and operate its property and to carry on its business as now being
conducted, and is duly qualified to do business and is in good standing as a
foreign corporation in each jurisdiction in which the failure to be so qualified
would have a material adverse effect on the business, assets (including
intangible assets), financial condition, or results of operations (a "Material
Adverse Effect") of Headwaters and its subsidiaries taken as a whole.
4.2 Authority.
(a) Each of Headwaters and Merger Sub has all requisite
corporate power and authority to enter into this Exchange Agreement and to
consummate the transactions contemplated hereby. The execution and delivery of
this Exchange Agreement and the consummation of the transactions contemplated
hereby have been duly authorized by all necessary corporate action on the part
of Headwaters and Merger Sub. This Exchange Agreement has been duly executed and
delivered by Headwaters and Merger Sub and, assuming the due authorization,
execution, and delivery by each of the Transferors, constitutes valid and
binding obligations of Headwaters and Merger Sub, enforceable in accordance with
its terms, except as enforceability may be limited by bankruptcy and other
similar laws and general principles of equity. The execution and delivery of
this Exchange Agreement by Headwaters and Merger Sub do not, and the performance
of this Exchange Agreement by Headwaters and Merger Sub will not, (i) conflict
with or violate the Certificate of Incorporation or Bylaws of Headwaters and
Merger Sub or the equivalent organizational documents of any of Headwaters'
other subsidiaries, (ii) conflict with or violate any law, rule, regulation,
order, judgment, or decree applicable to Headwaters or any of its subsidiaries
or by which its or any of their respective properties is bound or affected
pursuant to any note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise, or other instrument or obligation to which
Headwaters or any of its subsidiaries is a party or by which Headwaters or any
of its subsidiaries or its or any of their respective properties are bound or
affected, except, with respect to clause (ii), for the consent of Zion's First
National Bank, and for any such conflicts, violations, defaults, or other
occurrences that would not have a Material Adverse Effect on Headwaters and its
subsidiaries taken as a whole. The Headwaters Disclosure Letter lists all
consents, waivers, and approvals under any of Headwaters' or any of its
subsidiaries' agreements, contracts, licenses, or leases required to be obtained
in connection with the consummation of the transactions contemplated
12
hereby which, if not obtained, would have a Material Adverse Effect on
Headwaters and its subsidiaries taken as a whole or have a material adverse
effect on the ability of the Parties to consummate the Exchanges.
(b) No consent, approval, order, or authorization of, or
registration, declaration, or filing with, any Governmental Entity is required
by or with respect to Headwaters or Merger Sub in connection with the execution
and delivery of this Exchange Agreement or the consummation of the transactions
contemplated hereby, except for
(i) the filing with the Securities and Exchange
Commission (the "SEC") of a Form D under Regulation D under the
Securities Act, any required state filings related to the Exchanges,
and such reports under the Exchange Act as may be required in
connection with this Exchange Agreement and the transactions
contemplated hereby; and
(ii) such other consents, authorizations, filings,
approvals, and registrations which, if not obtained or made, would not
have a Material Adverse Effect on Headwaters and its subsidiaries taken
as a whole or have a material adverse effect on the ability of the
Parties to consummate the Exchanges.
4.3 No Material Misrepresentations. This Exchange Agreement, taken
together with the Headwaters Disclosure Letter, contains no untrue statement of
material fact and, when this Exchange Agreement is taken in its entirety,
contains no untrue statement of a material fact and does not omit to state a
material fact necessary to make the statements contained herein not misleading
as of the date hereof.
4.4 Available Funds. Headwaters and Merger Sub, collectively, have
sufficient capital available to consummate the transactions contemplated by this
Exchange Agreement and are not relying on obtaining additional financing in
connection with such transactions.
4.5 SEC Documents. Headwaters has filed all required reports,
schedules, forms, statements, and other documents with the SEC since October 1,
1999 (collectively, and in each case including all exhibits and schedules
thereto and documents incorporated by reference therein, the "Headwaters SEC
Documents"). As of their respective dates, the Headwaters SEC Documents complied
in all material respects with the requirements of the Securities Act or the
Exchange Act, as the case may be, and the rules and regulations of the SEC
promulgated thereunder applicable to such Headwaters SEC Documents. As of their
respective dates, none of the Headwaters SEC Documents (including any and all
financial statements therein) contained any untrue statement of a material fact
or failed to state any material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances under
which they were made, not misleading. The consolidated financial statements of
Headwaters included in the Headwaters SEC Documents comply as to form in all
material respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto, have been prepared in
accordance with GAAP (except, in the case of unaudited consolidated quarterly
statements, as permitted by Form 10-Q of the SEC) applied on a consistent basis
during the period involved (except as may be indicated in the notes thereto),
and present fairly, in all material respects, the consolidated financial
position of
13
Headwaters and its subsidiaries at the respective dates thereof and the
consolidated results of operations and cash flows for the periods specified
(subject, in the case of unaudited quarterly statements, to normal year-end
audit adjustments). Except as reflected or reserved against in the Headwaters
Financial Statements or otherwise disclosed in the Headwaters Disclosure Letter,
Headwaters and its subsidiaries have no material liabilities or other
obligations (including contingent liabilities and obligations) except, (i) since
the date of the most recent audited balance sheet included in the Headwaters
Financial Statements, liabilities and obligations incurred in the ordinary
course of business or (ii) that would not be required to be reflected or
reserved against in the consolidated balance sheet of Headwaters and its
subsidiaries prepared in accordance with GAAP.
4.6 Absence of Certain Changes or Events. Except as disclosed in the
Headwaters SEC Documents or in the Headwaters Disclosure Letter, since the date
of the most recent audited balance sheet included in the Headwaters SEC
Documents, there is not and has not been (a) any material adverse change to
Headwaters, or (b) any condition, event, or occurrence that could reasonably be
expected to prevent or materially delay Headwaters from consummating the
transactions contemplated by this Exchange Agreement; provided that, for
purposes of this Section 4.6, a change in the price of Headwaters Common Stock
shall not be deemed to constitute a "material adverse change".
4.7 Shares Reserved. Headwaters has authorized and reserved, and shall
keep available, for issuance and delivery, the number of shares of Headwaters
Common Stock issuable in connection with the Exchanges. Upon issuance, such
shares will be validly issued, fully paid, and nonassessable.
4.8 Securities Law Compliance. Headwaters shall take such steps as may
be necessary to comply with the securities and blue sky laws of all
jurisdictions that are applicable to the issuance of the Headwaters Common Stock
pursuant hereto. HTI and the Transferors shall use their best efforts to assist
Headwaters as may be necessary to comply with the securities and blue sky laws
of all jurisdictions which are applicable in connection with the issuance of
Headwaters Common Stock pursuant hereto.
4.9 Nasdaq National Market Listing. Headwaters shall authorize for
listing on the Nasdaq National Market the shares of Headwaters Common Stock
issuable pursuant hereto and shall use its best efforts to maintain such listing
on the Nasdaq National Market (or such other principal stock exchange on which
shares of Headwaters Common Stock are then listed).
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 Registration.
(a) Registration Rights.
(i) Headwaters will prepare and file with the SEC
within 60 days of the Closing Date (the "Required Filing Date") a "shelf"
registration statement on Form S-3 (or other appropriate form) (as the same may
be amended, the "Registration Statement") pursuant to Rule 415
14
under the Securities Act providing for the resale from time to time by the
Transferors of the shares of Headwaters Common Stock issuable in connection with
the Exchange (including the Stock Consideration included in the First and Second
Contingent Payments, except such shares as to which it has then been determined
that such shares will not be earned) and all shares of Headwaters Common Stock
issued in connection therewith by way of a stock dividend or stock split or in
connection with a combination of shares, reclassification, recapitalization,
merger or consolidation or reorganization (the "Headwaters Shares"), through or
to brokers or dealers or directly to investors pursuant to the prospectus
contained in the Registration Statement (or another prospectus contained in and
forming a part of an effective registration statement under the Securities Act)
or in transactions that are exempt from the requirements of registration under
the Securities Act, at a fixed price or prices, which may be changed from time
to time, at market prices prevailing at the time of such sale, at prices related
to such market prices or at negotiated prices; provided, however, that such
transactions shall not include an underwritten public offering. Headwaters shall
use its reasonable efforts to cause the Registration Statement to become
effective, provided that, in any event, any obligation to maintain the
effectiveness of the Registration Statement shall terminate on the earlier of
(i) all Headwaters Shares having been sold under the Registration Statement and
(ii) the first date on which all Headwaters Shares can be sold in a three-month
period, one year from the Closing Date. By written notice to the Transferors,
Headwaters may stop the use of the Registration Statement for such resales for a
period of no longer than 90 days in aggregate after the date of the notice if
Headwaters or its subsidiaries are engaged in confidential negotiations or other
confidential business activities, disclosure of which, in the reasonable
determination of the Headwaters Board of Directors, would be required in such
registration statement (but would not be required if such registration statement
were not filed).
(ii) Headwaters will use its reasonable best efforts
to prepare and file with the SEC such amendments and supplements to the
Registration Statement and the prospectus contained therein as may be necessary
to keep such Registration Statement effective for a period ending on the date on
which all of the Headwaters Shares can be sold in a three-month period, or such
shorter period as shall terminate when all Headwaters Shares covered by such
registration statement have been sold;
(iii) Headwaters will as soon as reasonably
practicable, furnish to each Transferor, prior to filing the Registration
Statement, copies of such registration statement as proposed to be filed, and
thereafter furnish to such Transferor such number of copies of such Registration
Statement, each amendment and supplement thereto (in each case, if specified by
such Transferor, including all exhibits thereto), the prospectus included in
such Registration Statement (including each preliminary prospectus) and such
other documents as such Transferor may reasonably request in order to facilitate
the disposition of Headwaters Shares owned by such Transferor.
(iv) Headwaters will promptly notify the Transferors
at any time when a prospectus relating thereto is required to be delivered under
the Securities Act within the period that Headwaters is required to keep the
Registration Statement effective of the happening of any event as a result of
which the prospectus included in such Registration Statement (as then in effect)
contains an untrue statement of a material fact or omits to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances then existing, not
15
misleading, and Headwaters will promptly prepare and file a supplement or
amendment to such prospectus so that, as thereafter delivered to the purchasers
of such Headwaters Shares, such prospectus will not contain an untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances then existing, not misleading; provided, however, that
notwithstanding the foregoing, if the Headwaters Board of Directors determines
in its good faith judgment that the filing of any supplement or amendment to the
Registration Statement to keep such Registration Statement available for use by
the Transferors for resales of Headwaters Shares would require the disclosure of
material information that Headwaters has a bona fide business purpose for
preserving as confidential, then upon written notice of such determination by
Headwaters to each Transferor, the obligation of Headwaters to supplement or
amend the Registration Statement will be suspended until Headwaters notifies the
Transferors in writing that the reasons for suspension of such obligations on
the part of Headwaters no longer exist and Headwaters amends or supplements the
Registration Statement as may be required; provided that the aggregate number of
days (whether or not consecutive) during which Headwaters may delay the filing
of any such supplement or amendment (together with the number of days referred
to in Section 5.1(a) hereof) shall in no event exceed ninety (90) days in any
twelve (12) month period.
(v) Headwaters will promptly notify each Transferor
of any stop order issued by the SEC and take all reasonable actions to obtain
the removal of any such stop order.
(vi) Before filing any registration statement or
prospectus or any amendments or supplements thereto, Headwaters will furnish to
counsel selected by the Representative copies of such documents, which shall be
subject to the reasonable approval of such counsel.
(b) Conditions and Limitations. Headwaters' obligations under
Section 5.1(a) shall be subject to the following limitations:
(i) Headwaters shall not be required to file more
than one Registration Statement pursuant to this Agreement.
(ii) Headwaters shall have received the information
and documents specified in Section 5.1(c) and each Transferor shall have
observed or performed its other covenants and conditions contained in such
section and, as a condition to registration of its Headwaters Shares, each
Transferor shall agree in the Letter of Transmittal to perform the covenants and
conditions applicable to him or her contained in such Section 5.1(c); provided
that the failure of a Transferor to have observed and performed such other
covenants and conditions shall not excuse Headwaters' obligations hereunder with
respect to Transferors who have so observed and performed such covenants and
conditions.
(iii) Each Transferor agrees that, upon receipt of
any notice from Headwaters of the happening of any event of the kind described
in Section 5.1(a)(iv), such Transferor will forthwith discontinue disposition of
Headwaters Shares until such Transferor's receipt of the copies of the
supplemented or amended prospectus contemplated by Section 5.1(a)(iv) hereof,
and, if so directed by Headwaters, such Transferor will deliver to Headwaters
(at
16
Headwaters' expense) all copies, other than permanent file copies then in such
Transferor's possession, of the prospectus covering such Headwaters Shares at
the time of receipt of such notice.
(iv) Each Transferor agrees that, upon receipt of any
notice from Headwaters stating that Headwaters has determined to effect a
registered underwritten public offering of securities and has taken substantial
steps to effect such offering, such Transferor will forthwith discontinue
disposition of Headwaters Shares until such Transferor's receipt of notice from
Headwaters that such dispositions may be continued, provided that the aggregate
number of days (whether or not consecutive) during which Headwaters may suspend
use of the Registration Statement pursuant to this Section shall in no event
exceed ninety (90) days in any twelve (12) month period, and provided further
that the officers and directors of Headwaters have agreed to refrain from sales
during such period.
(c) Information from and Certain Covenants of Transferors.
Headwaters may require the Transferors to furnish to Headwaters such information
regarding the Transferors and the distribution of such Headwaters Shares as
Headwaters may from time to time reasonably request in writing to carry out its
obligations as to the Registration Statement. Each Transferor agrees to notify
Headwaters as promptly as practicable of any inaccuracy or change in information
previously furnished by such Transferor to Headwaters or of the occurrence of
any event in either case as a result of which any prospectus relating to such
registration contains an untrue statement of a material fact regarding such
Transferor or the distribution of such Headwaters Shares or omits to state any
material fact regarding such Transferor or the distribution of such Headwaters
Shares required to be stated therein or necessary to make the statements therein
not misleading in light of the circumstances then existing, and promptly to
furnish to Headwaters any additional information required to correct and update
any previously furnished information or required so that such prospectus shall
not contain, with respect to such Transferor or the distribution of such
Headwaters Shares, an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances then existing, not misleading. Each
Transferor shall execute all consents, powers of attorney, and other documents
reasonably required to be signed by him or her in order to cause such
registration statement to become effective. Each Transferor covenants that, in
disposing of his or her Headwaters Shares, he or she will comply with all
applicable securities laws, including the prospectus delivery requirements under
the Securities Act.
(d) Registration Expenses. All Registration Expenses will be
borne by Headwaters. Any broker's fee, underwriting discount, and commission
applicable to the sale of Headwaters Shares shall be borne by the holder of the
Headwaters Shares to which such broker's fee, discount, or commission relates,
and each Transferor shall be responsible for all fees and expenses incurred by
such Transferor in connection with any registration under this Article IX other
than Registration Expenses. For purposes of this Section 5.1(d), "Registration
Expenses" shall mean all expenses incident to Headwaters' performance of or
compliance with Section 5.1, including, without limitation, all registration and
filing fees, messenger and delivery expenses incurred by Headwaters, internal
expenses incurred by Headwaters (including, without limitation, all salaries and
expenses of its officers and employees performing legal or accounting duties),
all expenses relating to the preparation, printing, distribution, and
reproduction of the registration statement and the prospectus, the fees and
expenses incurred in connection with the listing of the shares of Headwaters
Common
17
Stock on any securities exchange, fees and disbursements of counsel for
Headwaters and of its independent public accountants, and the fees and
disbursements of one counsel for the Transferors who are selling Headwaters
Shares pursuant to the Registration Statement.
(e) Indemnification.
(i) Headwaters agrees to indemnify and hold harmless
each Transferor who has sold Headwaters Shares pursuant to the Registration
Statement from and against any and all losses, claims, damages, liabilities, and
expenses (including reasonable costs of investigation and defense) arising out
of or based upon any untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement or the final prospectus contained
therein or in any amendment or supplement thereto, or arising out of or based
upon any omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
except insofar as such losses, claims, damages, liabilities, or expenses arise
out of, or are based upon, any such untrue statement or omission or allegation
thereof based upon information furnished in writing to Headwaters by such
Transferor or on such Transferor's behalf expressly for use therein.
(ii) Each Transferor agrees to indemnify and hold
harmless Headwaters, its officers, directors, and agents and each person, if
any, who controls Headwaters within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act, from and against any and all
losses, claims, damages, liabilities, and expenses (including reasonable costs
of investigation and defense) arising out of or based upon any untrue statement
or alleged untrue statement of a material fact by such Transferor contained in
the Registration Statement or the prospectus contained therein or in any
amendment or supplement thereto, or arising out of or based upon any omission or
alleged omission by such Transferor to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading,
provided that such losses, claims, damages, liabilities, or expenses arise out
of, or are based upon, any such untrue statement or omission or allegation
thereof based upon information furnished in writing to Headwaters by such
Transferor or on such Transferor's behalf expressly for use therein.
Notwithstanding the foregoing, no Transferor shall be obligated to pay hereunder
more than the net proceeds realized by him or her upon his or her sale of
Headwaters Shares included in the Registration Statement.
(iii) The provisions of Section 9.3 (but not the
liability limitations in Section 9.1) shall apply to any actions or proceedings
subject to the indemnification provisions of this Section 5.1.
5.2 Transfer Restrictions. Each Transferor agrees that, so long as
required by law, the Exchanged Shares and any securities issued in exchange for
or in respect thereof shall be subject to a transfer restriction substantially
to the following effect, which shall be conspicuously stamped or otherwise
imprinted on each certificate evidencing Exchanged Shares:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR UNDER THE
SECURITIES OR BLUE SKY LAWS OF ANY STATE, AND MAY NOT BE OFFERED, SOLD,
PLEDGED, TRANSFERRED, OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN
18
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND OTHER
APPLICABLE LAWS OR PURSUANT TO AN EXEMPTION FROM THE SECURITIES ACT OR
OTHER LAWS.
5.3 Legal Requirements. Each of Headwaters, HTI, and the Transferors
will take all reasonable actions necessary or desirable to comply promptly with
all legal requirements which may be imposed on them with respect to the
consummation of the transactions contemplated by this Exchange Agreement
(including furnishing all information required in connection with approvals of
or filings with any Governmental Entity, and prompt resolution of any litigation
prompted hereby) and will promptly cooperate with and furnish information to any
Party necessary in connection with any such requirements imposed upon any of
them or their respective subsidiaries in connection with the consummation of the
transactions contemplated by this Exchange Agreement.
5.4 Notification of Certain Matters. Subject to the terms and
provisions of this Exchange Agreement, each Party will give prompt notice to the
other Parties of the occurrence, or failure to occur, of any event, which
occurrence or failure to occur would be reasonably likely to cause (a) any
representation or warranty contained in this Exchange Agreement to be untrue or
inaccurate in any material respect at any time from the date of this Exchange
Agreement to the Closing Date, or (b) any material failure of such Party, as the
case may be, or of any officer, director, employee, or agent thereof, to comply
with or satisfy any covenant, condition, or agreement to be complied with or
satisfied by him, her, or it under this Exchange Agreement. Notwithstanding the
above, the delivery of any notice pursuant to this section will not limit or
otherwise affect the remedies available hereunder to the Party receiving such
notice.
5.5 Commercially Reasonable Efforts and Further Assurances. Subject to
the respective rights and obligations of Headwaters and the Transferors under
this Exchange Agreement, each of the Parties will use its commercially
reasonable efforts to effectuate the Exchanges and the other transactions
contemplated hereby and to fulfill and cause to be fulfilled the conditions to
Closing under this Exchange Agreement. Each Party, at the reasonable request of
another Party, will execute and deliver such other instruments and do and
perform such other acts and things as may be necessary or desirable for
effecting completely the consummation of the transactions contemplated hereby.
5.6 Purchaser Representative and Representative.
(a) Each Transferor expressly designates and appoints the
individuals comprising the Representative as his or her true and lawful
attorney-in-fact and agent and expressly authorizes the Representative (i) to
execute and deliver, in his or her name, the Escrow Agreement in such form as
the Representative deems desirable or appropriate, the execution of such
agreement to be conclusive evidence of such determination, and (ii) to take all
actions and carry out all responsibilities of the Representative under this
Exchange Agreement, the Escrow Agreement, and the Merger Agreement, which
actions shall include, without limitation, (A) receiving a portion of the
Exchange Consideration pursuant to Section 1.3(g) hereof and paying from such
amount any expenses incurred in connection with this Exchange Agreement, the
Escrow Agreement, or the Merger Agreement, and (B) acting on his or her behalf
in connection with any disputes or disagreements arising under this Exchange
Agreement (including without limitation Section 1.3
19
hereof), the Escrow Agreement, or the Merger Agreement, including, without
limitation, agreeing to any resolution thereof.
(b) The Transferors agree that the Purchaser Representative
and the individuals comprising the Representative will not be liable for any act
done or omitted as Purchaser Representative or Representative, respectively,
hereunder while acting in good faith and such act is not an act of willful
misconduct in the performance of his, her or its obligation.
(c) Headwaters shall pay up to forty thousand dollars
($40,000) of the costs of retaining the Purchaser Representative. The remainder
of such costs, if any, shall be borne by HTI and shall constitute a reduction to
the Cash Consideration.
5.7 Treatment of Exchanges and Merger as a Qualifying Reorganization.
Each of HTI and the Transferors shall (a) treat the Exchanges and the Merger as
a reorganization under Section 368 of the Code, (b) report the Exchanges, the
Merger, and all related transactions consistently therewith in any and all Tax
Returns filed by him, her, or it, (c) take all such actions as may be reasonably
required to cause the Exchanges and the Merger to be treated as a qualifying
reorganization, and (d) take no action which could disqualify the Exchanges and
the Merger from reorganization status under Section 368 of the Code.
ARTICLE VI
CONDITIONS TO OBLIGATIONS OF HEADWATERS AND MERGER SUB
The obligations of Headwaters and Merger Sub hereunder are subject to
the satisfaction, or waiver thereof by Headwaters and Merger Sub, of the
following conditions:
6.1 No Actions or Proceeding. No judgment, writ, order, injunction,
award, or decree of or by any Governmental Entity shall have been issued that
would, and no action or proceeding shall have been instituted by or before any
Governmental Entity seeking to, enjoin or prevent the consummation of the
transactions contemplated hereby and under the Merger Agreement. Notwithstanding
the generality of the foregoing, no person shall have (i) commenced, or shall
have notified either HTI, Headwaters, or any Transferor that it intends to
commence, an action or proceeding or (ii) provided HTI, Headwaters, or any
Transferor with notice, in either case which allege(s) that any of the
intellectual property presently embodied, or proposed to be embodied, in HTI's
products or design environments infringes or otherwise violates the intellectual
property rights of such person or is available for licensing from a potential
licensor providing the notice, or otherwise alleges that HTI does not otherwise
own or have the right to exploit such intellectual property.
6.2 Representations and Warranties. The representations and warranties
of the Transferors shall be true and correct in all material respects on and as
of the Closing Date, with the same effect as though such representations and
warranties had been made on and as of such date, and each and all of the
agreements of the Transferors to be performed or complied with pursuant to the
terms of this Exchange Agreement shall have been duly performed and complied
with in all material respects.
20
6.3 No Material Adverse Effect. No event shall have occurred since the
date of this Exchange Agreement that has had or would reasonably be expected to
have a Material Adverse Effect on HTI.
6.4 Merger Agreement. Each of the conditions precedent to the closing
under Article V of the Merger Agreement shall have been satisfied or waived by
Headwaters.
6.5 Exchanges. Transferors shall have offered, pursuant to this
Exchange Agreement, to exchange at least ninety percent (90%) of the outstanding
shares of HTI Common Stock.
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF THE TRANSFERORS
The obligations of the Transferors hereunder are subject to the
satisfaction, or waiver thereof by each Transferor, of the following conditions:
7.1 No Actions or Proceedings. No judgment, writ, order, injunction,
award, or decree of or by any Governmental Entity shall have been issued that
would, and no action or proceeding shall have been instituted by or before any
Governmental Entity seeking to, enjoin or prevent the consummation of the
transactions contemplated hereby.
7.2 Representations and Warranties. The representations and warranties
of Headwaters and Merger Sub shall be true and correct in all material respects
on and as of the Closing Date, with the same effect as though such
representations and warranties had been made on and as of such date, except for
changes which, in the aggregate, would not have a material adverse effect on the
financial condition, properties, business, prospects, or results of operations
of Headwaters and its subsidiaries, taken as a whole, and each and all of the
agreements of Headwaters and Merger Sub to be performed or complied with
pursuant to the terms of this Exchange Agreement shall have been duly performed
and complied with in all material respects.
7.3 Merger Agreement. Each of the conditions precedent to the closing
under Article VI of the Merger Agreement shall have been satisfied or waived by
HTI.
ARTICLE VIII
SURVIVAL OF REPRESENTATIONS AND WARRANTIES
Notwithstanding any investigation made by or on behalf of Headwaters
and Merger Sub or the Transferors, the representations and warranties of the
Transferors and of Headwaters and Merger Sub contained in this Exchange
Agreement shall be continuing representations and warranties and shall survive
the Closing Date until the second anniversary thereof.
ARTICLE IX
INDEMNITY OF HEADWATERS
9.1 Indemnification of Headwaters. Each of the Transferors shall
jointly, but not severally, indemnify, defend, and hold harmless Headwaters,
Merger Sub, and the Surviving Corporation, and their respective employees,
officers, directors, stockholders, controlling persons,
21
and affiliates (collectively, the "Indemnified Persons") from and against his or
her pro rata share of any claims, damages, costs (including, without limitation,
interest on any loss from the date thereof to the date of payment), or expenses
(including, without limitation, attorneys' fees and disbursements)
(collectively, the "Losses") arising out of (i) any misrepresentation in or
breach of the representations, warranties, or covenants of the Transferors
contained herein or made to Headwaters or Merger Sub in any exhibit,
certificate, or other instrument or document furnished or to be furnished by the
Transferors pursuant to this Exchange Agreement or in connection with the
transactions contemplated herein and (ii) any misrepresentation in or breach of
the representations, warranties, or covenants of HTI contained in the Merger
Agreement or made to Headwaters or Merger Sub in any exhibit, certificate, or
other instrument or document furnished or to be furnished by HTI pursuant to the
Merger Agreement or in connection with the transactions contemplated therein;
provided, however, that, (A) the liability of all of the Transferors, other than
officers and directors of HTI as of the Signing Date, pursuant to this Section
9.1 shall not exceed the sum of (i) the amounts in the Escrow Account (as
defined in the Escrow Agreement) and (ii) any future Contingent Payments that
ultimately are earned; and (B) the liability of any Transferor who is an officer
or director of HTI as of the Signing Date shall not exceed the total Exchange
Consideration he or she has received, including his or her portion of any
amounts in the Escrow Account, plus any future Contingent Payments that
ultimately are earned. Notwithstanding the foregoing, no payments shall be made
pursuant to this Section 9.1 unless and until the aggregate amount of such
Losses exceeds $150,000 (the "Threshhold"), in which case Headwaters shall be
entitled to the full amount of the Losses in excess of $150,000, after deducting
any amounts otherwise to be paid with respect to Dissenting Shares pursuant to
Section 1.7 of the Merger Agreement. Notwithstanding the immediately preceding
sentence, Losses resulting from any misrepresentation in or breach of the
representations and warranties in Section 2.2 of the Merger Agreement, relating
to HTI's capital structure, shall not be subject to the Threshhold.
9.2 Indemnification for Dissenting Shares. The Indemnified Persons
shall be indemnified from and against any Losses as a result of claims asserted
against Headwaters by holders of Dissenting Shares (as defined in the Merger
Agreement), and shall be entitled to recover the full amount of such Losses,
after deducting any amounts otherwise to be paid with respect to such Dissenting
Shares pursuant to Section 1.3(c) hereof; provided that any such Losses shall
first be satisfied from Merger Consideration that, in the absence of the
exercise of dissenters' rights, would have been paid with respect to such
shares.
9.3 Notice. Promptly after service of notice of any claim or of process
on any Indemnified Person by any third person in any matter in respect of which
indemnity may be sought pursuant to Section 5.1(e) or this Article IX,
Headwaters shall notify the Transferors at the Transferors' addresses set forth
on the signature pages attached hereto. The Transferors may, at their option,
assume the defense of any such claim or process or settlement thereof.
Regardless of whether any such third-party claim is defended by Headwaters or
the Transferors, the defending Party(ies) shall (i) settle or defend such claim
or proceeding with reasonable diligence; (ii) cooperate with the other Parties
in the investigation and analysis of such claim or proceeding; (iii) afford the
other Parties reasonable access to such relevant information as he, she, or it
may have in its possession; and (iv) keep the other Parties reasonably informed
regarding such claim or proceeding. The generality of the foregoing
notwithstanding, the Transferors shall not settle any such claim or proceeding
without the consent of Headwaters, which consent shall not be unreasonably
withheld;
22
provided that if Headwaters shall withhold such consent, the Transferors shall
continue to defend such claim or proceeding and all defense costs from the date
of such refusal to consent onward shall be payable by the Transferors, subject
to the maximum limits of such indemnity under this Article IX. If the
Transferors shall become obligated to indemnify and hold harmless any
Indemnified Person pursuant to this Article IX, such obligation will be the
joint, and not several, obligation of the Transferors only and in no event will
the Transferors be entitled to any contribution from the Surviving Corporation
with respect to such indemnity obligation of the Transferors, nor shall the
Transferors assert any claim against the Surviving Corporation, whether for
contribution or otherwise, with respect to any such indemnity obligation of the
Transferors.
9.4 Survival of Indemnification Obligation. The indemnification
provided in this Article IX shall survive the Closing Date for the periods
specified Article VIII with respect to the representations and warranties of the
Transferors herein, and for the periods specified in Article VII of the Merger
Agreement with respect to the representations and warranties of HTI therein, and
for any additional period required to resolve any claim under this Article IX.
9.5 Notice of Claim.
(a) At any time prior to the end of the period specified in
Article VIII, Headwaters may give the Transferors a written notice which states
the general nature of a claim for indemnity ("Claim") pursuant to this Article
IX with reasonable detail as to the alleged basis of the indemnity claim
("Notice of Claim"), together with notice that Headwaters intends to apply all
or part of the escrow to the payment of the Losses specified in such Notice of
Claim. In the event that a Loss has not been liquidated or determined,
Headwaters may, at any time prior to the end of the period specified in Article
IX, give the Representative a Notice of Claim in which Headwaters describes the
general nature of the Claim and makes a good faith estimate of the Loss.
(b) If the Representative does not give written notice to
Headwaters within thirty (30) days after the receipt of such Notice of Claim
that he protests the Claim set forth in the Notice of Claim, then Headwaters
shall be entitled to indemnification for such Claim and all Losses hereunder,
including the right of offset as set forth in Section 9.5(d) below.
(c) If the Representative does give written notice to
Headwaters within 30 days after the receipt of such Notice of Claim that he
protests the Claim, Headwaters and the Representative will use their best
efforts to resolve such disagreement amicably prior to initiating use of the
Dispute Resolution procedures specified in Section 12.4. Upon resolution of such
dispute, Headwaters shall be entitled to indemnification for such Claim and all
Losses hereunder, including the right of offset as set forth in Section 9.5(d)
below.
(d) Any indemnification of Headwaters shall be applied first
against the Headwaters Common Stock in the Escrow Account, valued at the Signing
Price (as defined in the Merger Agreement), then against the cash in the Escrow
Account. Notwithstanding the foregoing, the Representative, at its sole
discretion, may determine to have any indemnification Claim satisfied by having
cash in the Escrow Account paid in lieu of, or before, Headwaters Common Stock.
Any person required by Article IX to indemnify Headwaters from funds other than
amounts in the Escrow Account or future Contingent Payments may satisfy such
obligations in cash or in Headwaters
23
Common Stock, valued at the Signing Price (as defined in the Merger Agreement).
9.6 No Limitation of Remedies. Notwithstanding anything contained in
this Exchange Agreement to the contrary, nothing shall preclude or limit
Headwaters' rights to exercise any other remedy Headwaters may have in law or
equity regarding intentional misrepresentation or any remedies available to
Headwaters under the Non-Compete Agreement (as defined in the Merger Agreement)
with any HTI Founder, provided, however, that other than for intentional
misrepresentation, or as provided in any other agreement, Headwaters' or the
Surviving Corporation's sole remedy hereunder shall be limited to Sections 9.1
and 9.2 of this Exchange Agreement.
ARTICLE X
COSTS INCIDENT TO AGREEMENT
Except as otherwise expressly provided herein, each of the Parties will
pay all the costs incurred by such Party incident to the preparation, execution,
or delivery of this Exchange Agreement or the performance of such Party's
obligations hereunder, including, without limitation, the fees and disbursements
of its attorneys, accountants, investment bankers, consultants, brokers, and
persons providing other services.
ARTICLE XI
TERMINATION
11.1 Termination. Except as provided in Section 11.2 below, this
Exchange Agreement and the Merger Agreement may be terminated and the Merger and
the Exchanges abandoned at any time prior to the Closing:
(a) upon termination of the Merger Agreement;
(b) by Headwaters, if it is not in material breach of its
obligations under this Exchange Agreement or the Merger Agreement and there has
been a breach of any representation, warranty, covenant, or agreement contained
in this Agreement on the part of HTI or a Transferor, and as a result of such
breach the conditions set forth in Section 6.2 would not then be satisfied;
provided, however, that if such breach is curable by HTI or such Transferor
within thirty (30) days through the exercise of its reasonable best efforts,
then, for so long as HTI or such Transferor continues to exercise such
reasonable best efforts, Headwaters may not terminate this Exchange Agreement or
the Merger Agreement under this Section 11.1(b) unless such breach is not cured
within thirty (30) days (but no cure period shall be required for a breach which
by its nature cannot be cured); or
(c) by HTI or a Transferor, if he, she, or it is not in
material breach of its obligations under this Exchange Agreement or the Merger
Agreement, and there has been a breach of any representation, warranty,
covenant, or agreement contained in this Exchange Agreement or the Merger
Agreement on the part of Headwaters or Merger Sub, and as a result of such
breach the conditions set forth in Section 7.2 would not then be satisfied;
provided, however, that if such breach is curable by Headwaters or Merger Sub
within thirty (30) days through the exercise of its reasonable
24
best efforts, then, for so long as Headwaters or Merger Sub continues to
exercise such reasonable best efforts, HTI or such Transferor may not terminate
this Exchange Agreement and the Merger Agreement under this Section 11.1(c)
unless such breach is not cured within thirty (30) days (but no cure period
shall be required for a breach which by its nature cannot be cured).
Where action is taken to terminate this Exchange Agreement and the
Merger Agreement pursuant to Section 11.1, it shall be sufficient for such
action to be authorized by the Board of Directors (as applicable) of the party
taking such action.
11.2 Effect of Termination. In the event of termination of this
Exchange Agreement as provided in Section 11.1, this Exchange Agreement shall
forthwith become void and there shall be no liability or obligation on the part
of Headwaters, Merger Sub, HTI, or any of the Transferors, or their respective
officers, directors, or stockholders, provided that the provisions of this
Article XI shall remain in full force and effect and survive any termination of
this Exchange Agreement.
11.3 Amendment. Except as is otherwise required by applicable law,
prior to the Closing, this Exchange Agreement may be amended by the Parties at
any time by execution of an instrument in writing signed by Headwaters, Merger
Sub, HTI, and a majority in interests of the Transferors who have signed this
Exchange Agreement. Except as is otherwise required by applicable law, after the
Closing, this Exchange Agreement may be amended by the Parties at any time by
execution of an instrument in writing signed by Headwaters, Merger Sub, HTI, and
a majority in interests of the Transferors who have signed this Exchange
Agreement.
11.4 Extension; Waiver. At any time prior to the Closing, Headwaters,
Merger Sub, HTI, and a majority in interests of the Transferors who have signed
this Exchange Agreement may, to the extent legally allowed, (i) extend the time
for the performance of any of the obligations of another Party, (ii) waive any
inaccuracies in the representations and warranties made to such Party contained
herein or in any document delivered pursuant hereto, and (iii) waive compliance
with any of the agreements or conditions for the benefit of such Party contained
herein. Any agreement on the part of a Party to any such extension or waiver
shall be valid only if set forth in an instrument in writing signed by or on
behalf of such Party.
ARTICLE XII
MISCELLANEOUS
12.1 Successors and Assigns. This Exchange Agreement shall be binding
upon the Parties, their legal representatives, successors in interest,
assignees, transferees, creditors (including judgment creditors), trustees
(including trustees in bankruptcy), receivers, including, without limitation,
assignees, transferees, pledgees, holders of security interests in and liens
upon any of such stock, and trustees, and all persons with notice or knowledge,
or chargeable with notice or knowledge, of the provisions hereof. This Exchange
Agreement cannot be amended or modified except by a written agreement executed
by the Parties. This Exchange Agreement and the rights, duties, and obligations
hereunder may not be assigned by any Party without the prior written consent of
the other Parties; provided, however, that this Exchange Agreement may be
assigned by Headwaters on behalf of itself and Merger Sub to any directly or
indirectly wholly-owned subsidiary
25
of Headwaters, provided that Headwaters and Merger Sub shall continue to be
bound by this Exchange Agreement after such assignment.
12.2 Notices. Any notices or other communications required or permitted
hereunder shall be in writing and shall be deemed sufficiently given only if
delivered in person or sent by telegram, telecopy, or telex or by first-class or
air mail or by recognized air courier service, postage or other charges prepaid,
addressed as follows:
If to a Transferor, to the address listed on the signature pages
hereto.
If to HTI:
Hydrocarbon Technologies, Inc.
0000 Xxx Xxxx Xxxxxx
Xxxxxxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxx, President
Copy to:
Xxxxxxx X. Xxxxx
Smith, Stratton, Wise, Xxxxx & Xxxxxxx
000 Xxxxxxx Xxxx Xxxx
Xxxxxxxxx, XX 00000
Facsimile Number: (000) 000-0000
If to Headwaters or Merger Sub:
Headwaters Incorporated
00000 X. Xxxxxxxx Xxxxx
Xxxxx 000
Xxxxxx, XX 00000
Attention: Xxxx X. Xxxxxx, Chief Executive Officer
Facsimile Number: (000) 000-0000
Copy to:
Xxxxx X. Xxxxxxxx, Esq.
Pillsbury Winthrop LLP
00 Xxxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Facsimile Number: (000) 000-0000
or to such other address as the addressee may have specified in a notice duly
given to the sender as provided herein. Such notice or communication will be
deemed to have been given as of the date so delivered, telegraphed, telecopied,
telexed, mailed, or sent by courier.
12.3 Entire Agreement. This Exchange Agreement and the Merger
Agreement, including the Exhibits and Schedules attached hereto and thereto, and
the Headwaters Disclosure Letter constitute the entire understanding of the
Parties relating to the subject matter hereof and supersede
26
all prior and contemporaneous agreements and understandings, whether oral or
written, relating to the subject matter hereof.
12.4 Dispute Resolution. In the event of any dispute relating to this
Exchange Agreement, the parties to the dispute, including the Representative in
his capacity as Representative, shall first use their reasonable best efforts to
resolve the dispute amicably. If, after ten (10) days, they have been unable to
do so, the Chief Executive Officer of Headwaters shall meet with the
Representative and the Chief Executive Officer of the Surviving Corporation
within ten (10) days to attempt to resolve the dispute. If such dispute has
still not been resolved after such meeting, the Board of Directors of Headwaters
shall meet with the Representative within ten (10) days to attempt to resolve
the dispute. Only after such dispute resolution procedures have been followed
may any Party (or the Representative acting in his capacity of Representative)
initiate litigation.
12.5 Remedies. In the event of a breach, or a threatened or attempted
breach, of any provision of this Exchange Agreement by any Party, any other
Party shall, in addition to all other remedies, be entitled to (i) a temporary
or permanent injunction against such breach without the necessity of showing any
actual damages and (ii) a decree for the specific performance of the Exchange
Agreement.
12.6 Adjustments.All references to shares of HTI Common Stock or
Headwaters Common Stock herein shall be adjusted to reflect fully the effect of
any stock split, reverse stock split, stock dividend (including any dividend or
distribution of securities convertible into Headwaters Common Stock or HTI
Common Stock), reorganization, recapitalization, or other like change with
respect to Headwaters Common Stock or HTI Common Stock occurring on or after the
date hereof.
12.7 Waiver. The waiver by any Party of the breach of any of the terms
and conditions of, or any right under, this Exchange Agreement shall not be
deemed to constitute the waiver of any other breach of the same or any other
term or condition or of any similar right. No such waiver shall be binding or
effective unless expressed in writing and signed by the Party giving such
waiver.
12.8 Governing Law. This Exchange Agreement shall be governed by and
construed in accordance with the laws of the State of New Jersey.
27
IN WITNESS WHEREOF, the parties hereto have executed this Exchange
Agreement as of the day and year first above written.
HEADWATERS INCORPORATED
By: /s/ Xxxx X. Xxxxxx
---------------------------------------
Xxxx X. Xxxxxx, Chief Executive Officer
HYDROCARBON TECHNOLOGIES, INC.
By: /s/ Xxxxxx X. Xxxxxxx
---------------------------------------
Xxxxxx X. Xxxxxxx, President
HEADWATERS SUB CORPORATION
By: /s/ Xxxx X. Xxxxxx
-----------------------------
Title: President
28
"TRANSFERORS"
Signature:
/s/ Xxxxxx X. Xxxxxxx
Printed Name:
Xxxxxx X. Xxxxxxx
Address:
0000 Xxxxxxxxxx Xx.
Xxxxxxx, XX
00000
Number of Shares of HTI Common Stock Owned:
319,555
Number of Options to Acquire HTI Common
Stock Owned:
72,000
I represent that I am an "accredited
investor" (see Article III of the Agreement)
Yes [X] No [ ]
Date: 5/1/01
29
"TRANSFERORS"
Signature:
/s/ Xxxxx X. Xxxxxx
Printed Name:
Xxxxx X. Xxxxxx
Address:
000 Xxxxxxx Xx
Xxxxxxxxxxxx, XX
00000
Number of Shares of HTI Common Stock Owned:
145,677
Number of Options to Acquire HTI Common
Stock Owned:
28,500
I represent that I am an "accredited
investor" (see Article III of the Agreement)
Yes [X] No [ ]
Date: 5/1/01
30
"TRANSFERORS"
Signature:
/s/ Lap-Keung (Theo) Xxx
Printed Name:
Lap-Keung (Theo) Xxx
Address:
00 Xxxx Xxxxxxx Xx.
Xxxx Xxxxxxx, XX
00000
Number of Shares of HTI Common Stock Owned:
227,879
Number of Options to Acquire HTI Common
Stock Owned:
39,000
I represent that I am an "accredited
investor" (see Article III of the Agreement)
Yes [X] No [ ]
Date: May 1, 2001
31
"TRANSFERORS"
Signature:
/s/ Xxxxxxx X. Xxxxxx
Printed Name:
Xxxxxxx X. Xxxxxx
Address:
0000 Xxxxxxxx Xx.
XxXxxx, XX
00000-0000
Number of Shares of HTI Common Stock Owned:
87,246
Number of Options to Acquire HTI Common
Stock Owned:
0
I represent that I am an "accredited
investor" (see Article III of the Agreement)
Yes [X] No [ ]
Date: May 1, 2001
32
