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EXHIBIT 1
[Execution Version]
PURCHASE AND SALE AGREEMENT
DATED AS OF DECEMBER 21, 1999
BETWEEN
SE THUNDERBIRD L.P.
AS PURCHASER
AND
ENRON NORTH AMERICA CORP.
AS SELLER
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THIS PURCHASE AND SALE AGREEMENT (this "Agreement") is entered into as
of December 21, 1999 and is by and among SE THUNDERBIRD L.P., a Delaware limited
partnership (the "Purchaser"), and ENRON NORTH AMERICA CORP., a Delaware
corporation (the "Seller").
R E C I T A L S:
A. The Seller owns the Kafus Shares and the Quanta Convertible Note,
both as defined below, and certain rights associated therewith.
B. Subject to the terms and conditions of this Agreement and in
exchange for the consideration set forth herein, the Seller hereby agrees to
sell to the Purchaser, and the Purchaser hereby agrees to purchase from the
Seller, such assets.
NOW, THEREFORE, in consideration of the premises and mutual covenants
and agreements set forth herein, and for good and valuable consideration, the
receipt and sufficiency of which is acknowledged by all parties, the parties
hereto agree as follows:
ARTICLE 1.
DEFINITIONS
Section 1.1 Definitions. Unless the context otherwise requires, the
following capitalized terms used in this Agreement shall have the following
meanings:
"Affiliate" means any other Person that directly or indirectly, through
one or more intermediaries, controls, or is controlled by, or is under
common control with, a Person.
"Ancillary Agreements" means the agreements and instruments to be
delivered pursuant to Section 2.1(a) of this Agreement.
"Disputed Claims" is defined in Section 6.7(a).
"Kafus" means Kafus Industries, Ltd., a British Columbia corporation.
"Kafus Shares" means 1,999,999 shares of common stock, without par
value, of Kafus.
"Person" means an individual, a corporation, a partnership, an
association, a limited liability company, a joint stock company, a
trust or other unincorporated organization.
"Closing Date" is defined in Section 2.1(a)
"Companies" means Kafus and Quanta.
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"Purchase Price" means the aggregate of the purchase prices set forth
in Sections 2.1(a)(1) and (2).
"Purchased Assets" means the Kafus Shares and the Quanta Convertible
Note, and all rights to be transferred to the Purchaser pursuant to the
Ancillary Agreements.
"Purchase Price" means the sum of the amounts payable pursuant to
Sections 2.1(a).
"Quanta" means Quanta Services, Inc., a Delaware corporation.
"Quanta Convertible Note" means the Convertible Promissory Note due
2010 dated October 5, 1998 issued by Quanta Services, Inc. to Enron
Capital & Trade Resources Corp. in the original principal amount of
Twelve Million Three Hundred Thirty-Seven Thousand Five Hundred Dollars
($12,337,500).
"Securities Act" means the Securities Act of 1933, as amended, and all
the rules and regulations promulgated thereunder.
ARTICLE 2.
CONVEYANCE OF THE PURCHASED ASSETS
Section 2.1 Conveyance of Purchased Assets. On the date first set forth
above (the "Closing Date"):
(a) The Seller shall sell, transfer, assign, set over and otherwise
convey to the Purchaser, and the Purchaser shall purchase from the Seller, all
of the right, title and interest of the Seller in and to the Purchased Assets in
exchange for payment, in immediately available funds, of the Purchase Price, as
follows.
(1) The Purchaser shall pay to the Seller $14,999,992.50 in
consideration of the Purchased Assets that relate to Kafus, and the Seller shall
deliver to the Purchaser (i) the stock certificates representing the Kafus
Shares, (ii) a duly executed Partial Assignment and Assumption Agreement in form
and substance satisfactory to the parties and (iii) a duly executed Transfer of
Shares in form and substance satisfactory to the parties.
(2) The Purchaser shall pay to the Seller $25,136,826.59 in
consideration of the Purchased Assets that relate to the Quanta Convertible
Note, and the Seller shall deliver to the Purchaser (i) the Quanta Convertible
Note, indorsed over to the Purchaser by the Seller, but without recourse to the
Seller and without transfer warranties to the Purchaser (other than those set
forth in Section 3.1 hereof), (ii) a duly executed Partial Assignment and
Assumption Agreement in form and substance satisfactory to the parties and (iii)
a duly executed Allonge to Convertible Promissory Note in form and substance
satisfactory to the parties.
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(b) The parties expressly intend that this is an absolute sale of the
Purchased Assets and both parties agree to account for the transactions
contemplated hereunder in this manner.
(c) Payments for the Purchased Assets shall be made by wire transfer of
immediately available federal funds to the following account: ECT- Finance 0000
Xxxxx Xxxxxx, Xxxxxxx, Xxxxx 00000-0000, CitiBank NY, NY, Account: 4075-9492,
ABA#: 000000000, Tax ID#: 00-0000000.
Section 2.2 Closing. The closing for the sale of the Purchased Assets
shall occur at the offices of Xxxxxxxxx & Xxxxxxxxx, L.L.P. at Pennzoil Place,
South Tower, 000 Xxxxxxxxx Xxxxxx, Xxxxxxx, Xxxxx 00000 on the Closing Date or
at such other time or place as the Purchaser and the Seller may agree.
Section 2.3 Costs and Expenses. All costs and expenses (including legal
fees, professional fees, and other transaction costs) incurred by either party
hereto in connection with the transfer and delivery of the Purchased Assets in
the manner contemplated herein shall be borne by the party that incurred such
costs and/or expenses.
Section 2.4 Payments to Purchaser. The Seller hereby agrees that from
and after the Closing Date it shall pay over to the Purchaser, as assignee of
the Purchased Assets, all amounts received by the Seller with respect to the
Purchased Assets. Any amounts received by the Seller contrary to the preceding
sentence shall be received by the Seller in trust for the benefit of the
Purchaser and shall be immediately paid by the Seller to and as directed by the
Purchaser.
ARTICLE 3.
REPRESENTATIONS AND WARRANTIES
Section 3.1 Representations and Warranties of the Seller. The
Seller hereby represents and warrants to the Purchaser that as of the Closing
Date:
(a) The Seller has taken all steps necessary to transfer all
of the Seller's right, title and interest in and to the Purchased Assets to the
Purchaser.
(b) Immediately prior to the transfers contemplated by this
Agreement, the Seller was the sole owner and holder of the Purchased Assets,
free and clear of any and all liens, pledges, charges or security interests of
any nature.
(c) The Seller (i) is duly organized, validly existing and in
good standing under the laws of Delaware, (ii) has the full right, power and
authority to enter into and perform its obligations under this Agreement and the
Ancillary Agreements and to consummate the transactions contemplated hereby and
(iii) has obtained all requisite company or similar authorizations, consents or
approvals applicable to do so.
(d) This Agreement and the Ancillary Agreements have been duly
executed and delivered by the Seller and constitute the legal, valid and binding
obligations of the Seller enforceable against it in accordance with their terms,
except as the enforceability thereof may be limited by any
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applicable bankruptcy, reorganization, insolvency, moratorium or similar laws
affecting creditors' rights generally and by general principles of equity.
(e) The outstanding principal balance of the Quanta
Convertible Note is $12,337,500, all interest payments due thereunder have been
paid when due and no principal or interest thereunder has been prepaid, forgiven
or postponed, and to the knowledge of Seller there exists no material default or
event of default thereunder.
(f) Since September 30, 1999, to the knowledge of the Seller
there has not occurred any material adverse change or any threatened material
adverse change in the business, operations, properties, assets or condition
(financial or otherwise) of the Companies, other than those disclosed to the
public and those disclosed to the Purchaser in writing prior to the date hereof.
(g) To the knowledge of Seller, no action, suit or proceeding
has been commenced against any of the Companies before any court or arbitrator
or any governmental body, agency or official except for such action, suit or
proceeding that could not reasonably be expected to have a material and adverse
effect on the business, operations, properties, assets or condition (financial
or otherwise) of such Company.
(h) All material information given by the Seller to the
Purchaser in connection with the transactions contemplated by this Agreement was
true and correct in all material respects on the date such information was given
and on the date hereof.
(i) Any approvals, filings and consents relating to the
transfer of the Purchased Assets from the Seller to the Purchaser required to be
obtained from or made with any governmental or quasi-governmental agency,
entity, or body from whom approval is required under applicable law have been
made or obtained.
(j) Assuming that the Purchaser's representations set forth in
this Agreement are true and correct, the sale of the Purchased Assets in the
manner contemplated by this Agreement by the Seller will be exempt from the
registration requirements of the Securities Act by reason of Section 4(2)
thereof.
(k) No agent, broker or other Person acting pursuant to
authority of the Seller is entitled to any commission or finder's fee in
connection with the transactions contemplated by this Agreement.
Except as set forth in this Section 3.1, the Seller makes no
representation or warranty whatsoever to the Purchaser concerning the Purchased
Assets. Without limiting the generality of the foregoing, the Seller makes no
representation or warranty concerning the Companies, their respective assets,
financial performance, financial condition, and prospects, or any other matter
affecting them.
Section 3.2 Representations and Warranties of the Purchaser.
The Purchaser hereby makes the following representations and warranties to the
Seller:
(a) The Purchaser is an "accredited investor" within the
meaning of Rule 501
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under the Securities Act and is acquiring the Purchased Assets for its own
account and not with a view toward their distribution.
(b) The Purchaser is able to bear the economic risk of an
investment in the Purchased Assets and can afford to sustain a total loss of
such investment and has such knowledge and experience in financial and business
matters that it is capable of evaluating the merits and risks of the proposed
investment in the Companies. The Purchaser has had an adequate opportunity to
ask questions and receive answers from the officers of the Companies and the
Seller concerning all matters relating to the transactions described herein. The
Purchaser has asked all questions in the nature described in the preceding
sentence, and such questions have been answered to their satisfaction.
(c) The Purchaser is aware of all facts, risks and other
matters disclosed in the periodic financial and other reports filed by Quanta
with U.S. Securities and Exchange Commission and by Kafus and its subsidiaries
with its Canadian equivalent. The Purchaser acknowledges that copies of the same
have been made available to it, either directly or through the xxx.xxxxx.xxx and
xxx.xxx.xxx website.
(d) The Purchaser is aware that the Kafus Shares and the
shares issuable pursuant to the Quanta Convertible Note are restricted
securities within the meaning of Rule 144 under the Securities Act and therefore
may not be sold, transferred or otherwise disposed of unless they are registered
and/or qualified under the Securities Act and applicable state securities laws,
or unless an exemption from the registration or qualification requirements is
otherwise available.
(e) The Purchaser (i) is duly organized, validly existing and
in good standing under the laws of the State of Delaware, (ii) has the full
right, power and authority to enter into and perform its obligations under this
Agreement and the Ancillary Agreements and to consummate the transactions
contemplated hereby, and (iii) has obtained all requisite company and similar
authorizations, consents or approvals applicable to do so.
(f) This Agreement and the Ancillary Agreements have been duly
executed and delivered by the Purchaser and constitute the legal, valid and
binding obligations of the Purchaser enforceable against the Purchaser in
accordance with their terms, except as the enforceability thereof may be limited
by any applicable bankruptcy, reorganization, insolvency, moratorium or similar
laws affecting creditors' rights generally and by general principles of equity.
(g) No agent, broker or other Person acting pursuant to
authority of the Purchaser is entitled to any commission or finder's fee in
connection with the transactions contemplated by this Agreement.
(h) The Purchaser is not a Prohibited Person within the
meaning of the Stockholders and Warrantholders Agreement.
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ARTICLE 4.
CONDITIONS TO CLOSING
Section 4.1 Condition to the Obligations of Each Party. The
obligations of the Purchaser and the Seller to consummate the transactions
contemplated by this Agreement are subject to the satisfaction of the following
conditions:
(a) As of the Closing Date, all approvals, filings, waivers
and consents relating to the transfer of the Purchased Assets from the Seller to
the Purchaser required to be made or obtained pursuant to any applicable
documents or agreements shall have been made or obtained.
(b) All actions, proceedings, instruments and documents
required to carry out this Agreement or incidental hereto and all other related
legal matters shall be reasonably satisfactory to each party and its counsel. No
action or proceeding before a court or any other governmental agency or body
shall have been instituted or threatened to restrain or prohibit the
transactions contemplated herein and no governmental agency or body shall have
taken any other action or made any request of the Seller or the Purchaser as a
result of which either party deems it inadvisable to proceed with the
transactions hereunder.
Section 4.2 Conditions to the Obligations of Purchaser. The
obligation of the Purchaser to consummate the transactions contemplated by this
Agreement is subject to the satisfaction of the following further conditions:
(a) The Seller shall have performed in all material respects
all of its obligations under this Agreement required to be performed by it on or
prior to the Closing Date.
(b) The representations and warranties of the Seller contained
in this Agreement shall be true in all material respects at and as of the
Closing Date.
Section 4.3 Conditions to the Obligations of the Seller. The
obligation of the Seller to consummate the transactions contemplated by this
Agreement is subject to the satisfaction of the following further conditions:
(a) The Purchaser shall have performed in all material
respects all of its obligations under this Agreement required to be performed by
it on or prior to the Closing Date.
(c) The representations and warranties of the Purchaser
contained in this Agreement shall be true in all material respects at and as of
the Closing Date, as if made at and as of such date.
ARTICLE 5.
AGREEMENTS
Section 5.1 Conflict of Interests. The parties acknowledge and
understand that (a) the Seller and its Affiliates have and may continue to
maintain certain investments in the Companies that are different in character
from the Purchased Assets and (b) that they have certain rights to appoint
directors, participate in the management of the Companies, vote their securities
and take other actions
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with respect to such debt and equity investments. The parties further understand
that, as result of such investments and rights, the interest of the Seller and
its Affiliates on the one hand and of the Purchaser on the other hand may
conflict. The parties therefore hereby agree that, except as expressly set forth
herein: (i) that the Seller and its Affiliates shall have no duties whatsoever
to the Purchaser with respect to their management and control of the Companies
(fiduciary or otherwise), (ii) that none of such rights need be exercised on
behalf of or for the benefit of the Purchaser, (iii) that the Seller and its
Affiliates shall have no duty to disclose information concerning their
intentions with respect to their investments or with respect to the Companies
and (iv) that the Purchaser hereby waives all conflicts of interest arising from
any action or omission by the Seller or any of its Affiliates with respect to
such investments and rights.
Section 5.2 Retention of Certain Rights. Except as expressly
provided to the contrary in any Ancillary Agreement, the Seller's and its
Affiliates' preemptive rights to acquire additional securities of the Companies
and to nominate and maintain directors are retained by their holder and shall
not be assigned or conveyed to the Purchaser, either pursuant to this Agreement
or pursuant to any Ancillary Agreement.
Section 5.3 Limitation of Liability. It is expressly understood and
agreed by the parties hereto that, notwithstanding any other term of this
Agreement, (i) the Purchaser shall not be permitted to recover punitive,
consequential, economic or indirect damages from the Seller, whether by way of
indemnification or under any other legal document, causes of action, or theory
of recovery, and (ii) the Seller's maximum liability with respect to this
Agreement and the Ancillary Agreements shall not exceed the Purchase Price.
ARTICLE 6.
MISCELLANEOUS
Section 6.1 Notices. All notices, demands and requests that may be
given or that are required to be given hereunder shall be sent by United States
certified mail, postage prepaid, return receipt requested, to the parties at
their respective addresses as follows:
If to the Seller:
Enron North America Corp.
0000 Xxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000
Attn: Xxxxx Xxxxx
with a copy to:
Enron North America Corp.
0000 Xxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000
Attn: Xxxxx Xxxxxx Xxxxxx
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If to the Purchaser:
SE Thunderbird L.P.
c/o The Corporation Trust Company
Corporation Trust Center
0000 Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxx Xxxxxx Xxxxxx
Xxxxxxxx 00000
with a copy to:
SE Thunderbird L.P.
c/o Enron Corp.
0000 Xxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000
Attn: Xxxxxxx Xxxxxxxx
Section 6.2 Counterparts. For the purpose of facilitating the
execution and proving of this Agreement, as herein provided and for other
purposes, this Agreement may be executed simultaneously in any number of
counterparts, each of which counterparts shall be deemed to be an original, and
such counterparts shall constitute but one and the same instrument.
Section 6.3 Governing Law. This Agreement shall be construed in
accordance with the laws of the State of Texas.
Section 6.4 Specific Performance. Any party hereto may enforce
specific performance of this Agreement.
Section 6.5 Further Assurances. The parties hereto agree to execute
and deliver such other instruments and take such other actions as may be
necessary to effectuate the purposes and to carry out the terms of this
Agreement.
Section 6.6 Entire Agreement. This Agreement constitutes the entire
agreement of the parties with respect to its subject matter and supersedes all
oral communications and prior writing with respect thereto.
Section 6.7 Arbitration.
(a) Any and all claims, counterclaims, demands, causes of action,
disputes, controversies, and other matters in question arising under this
Agreement or the alleged breach of any provision hereof (all of which are
referred to herein as "Disputed Claims"), whether such Disputed Claims arise at
law or in equity, under state or federal law, for damages or any other relief,
shall be resolved by binding arbitration in the manner set forth herein.
(b) The validity, construction, and interpretation of this
agreement to arbitrate and all procedural aspects of the arbitration conducted
pursuant to this agreement to arbitrate and the rules governing the conduct of
arbitration (including the time for filing an answer, the time for the filing
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of counter Disputed Claims, the times for amending the pleadings, the
specificity of the pleadings, the extent and scope of discovery, the issuance of
subpoenas, the time for the designation of experts, whether the arbitration is
to be stayed pending resolution of related litigation involving third parties
not bound by this Agreement, the receipt of evidence, and the like) shall be
decided by the arbitrators. In deciding the substance of the parties' Disputed
Claims, the arbitrators shall refer to the substantive laws of the State of
Texas for guidance (excluding Texas choice-of-law principles that might call for
the application of some other state's law); provided, however, that IT IS
EXPRESSLY AGREED THAT NOTWITHSTANDING ANY OTHER PROVISION IN THIS AGREEMENT TO
THE CONTRARY, THE ARBITRATORS SHALL HAVE ABSOLUTELY NO AUTHORITY TO AWARD
CONSEQUENTIAL DAMAGES (SUCH AS LOSS OF PROFIT), INCIDENTAL, TREBLE, EXEMPLARY OR
PUNITIVE DAMAGES OF ANY TYPE UNDER ANY CIRCUMSTANCES REGARDLESS OF WHETHER SUCH
DAMAGES MAY BE AVAILABLE UNDER TEXAS LAW, THE LAW OF ANY OTHER STATE, OR FEDERAL
LAW, OR UNDER THE UNITED STATES ARBITRATION ACT OR UNDER ANY OTHER RULES OF
ARBITRATION. The arbitrators shall have the authority to assess the costs and
expenses of the arbitration proceeding (including the arbitrators' fees and
expenses) against either or both parties. However, each party shall bear its own
attorneys fees and the arbitrators shall have no authority to award attorneys
fees.
(c) The arbitration proceedings shall be conducted in Houston, Texas by
three arbitrators in accordance with the American Arbitration Association
Commercial Arbitration Rules. Within 30 days of the notice of initiation of the
arbitration procedure, the parties shall select three arbitrators. Each party
shall select one person to act as arbitrator and the two arbitrators so selected
shall select a third arbitrator within 10 days of their appointment. If the
arbitrators selected by the parties are unable or fail to agree upon the
identity of the third, within the time set forth herein, the third arbitrator
shall be selected by the American Arbitration Association. The arbitration shall
be governed by the United States Arbitration Act, 9 U.S.C. Sections 1-16, as
such Act is modified by this Agreement and judgment upon the award rendered by
the arbitrators may be entered by an court having jurisdiction thereof.
(d) All fees of the arbitrators and other administrative charges
related to the arbitration shall be borne equally by the parties.
(e) The parties hereby agree that the arbitration proceeding and the
arbitrators' award are to remain confidential and none of the parties or their
counsel will divulge or discuss, directly or indirectly, in the newspaper,
electronic media, or other public or private forum, or with any third parties,
the arbitration proceedings and/or the arbitrators' award except: (i) to the
extent required by a court of law or any federal, state, or local government,
agency or regulatory body or to the extent required to comply with applicable
securities laws or stock exchange requirements; (2) to the extent further agreed
by the parties hereto; or (3) to the extent necessary under subsection (f)
below.
(f) The award of the arbitrators shall be final and binding on the
parties, and judgment thereon may be entered in a court of competent
jurisdiction.
[signature pages follow]
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IN WITNESS WHEREOF, the parties hereto have caused their names to be
signed hereto by their respective officers thereunto duly authorized, all as of
the day and year first above written.
SE THUNDERBIRD L.P. ENRON NORTH AMERICA CORP.
By: Blue Heron I LLC, its general partner
By: Whitewing Associates L.P., its sole
member
By: Whitewing Management LLC, its general
partner
By: Egret I LLC, its managing member By:
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Name:
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Title:
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By:
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Name:
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Title:
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