ASSET PURCHASE AGREEMENT
by and between
**
**
and
COVOL TECHNOLOGIES, INC.
POCAHONTAS SYNFUEL, L.L.C.
SYNFUEL INVESTMENTS, INC.
January 13, 2000
** This Exhibit contains confidential material which has been omitted
pursuant to a Confidential Treatment Request. The omitted information has been
filed separately with the Securities and Exchange Commission.
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TABLE OF CONTENTS
Page
RECITALS ..................................................................1
ARTICLE I DEFINITIONS......................................................2
1.1 Affiliate................................................2
1.2 Agreement................................................2
1.3 As-Built Drawings........................................2
1.4 Xxxx of Sale.............................................3
1.5 Books and Records........................................3
1.6 Buyer's Closing Certificate..............................3
1.7 Buyer's Financing Statement(s)...........................3
1.8 Buyer Indemnified Persons................................3
1.9 Buyer's Officer Certificate..............................3
1.10 Closing..................................................3
1.11 Closing Date.............................................3
1.12 Code.....................................................4
1.13 Commercial Operation Date................................4
1.14 Confidentiality Agreement................................4
1.15 Construction Agreement...................................4
1.16 Contracts................................................4
1.17 Cooperation Agreement....................................4
1.18 Copyrights...............................................4
1.19 Covol Process............................................4
1.20 Effective Time...........................................4
1.21 Environmental Claim......................................5
1.22 Environmental Condition..................................5
1.23 Environmental Laws.......................................5
1.24 Excluded Assets..........................................5
1.25 Excluded Liabilities.....................................5
1.26 Facility.................................................6
1.27 Facility Site............................................6
1.28 Fixed Assets.............................................6
1.29 [Intentionally Omitted].................................6
1.30 Hazardous Substances.....................................6
1.31 Initial Consideration....................................6
1.32 Intellectual Property....................................6
1.33 IRS......................................................6
1.34 Knowledge of Buyer.......................................7
1.35 Knowledge of Sellers.....................................7
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1.36 Law......................................................7
1.37 Lender...................................................7
1.38 Lender Release...........................................7
1.39 License and Binder Purchase Agreement....................7
1.40 Licenses.................................................7
1.41 Lien.....................................................7
1.42 Losses...................................................8
1.43 Material Adverse Effect..................................8
1.44 New Facility Site........................................8
1.45 Opinions of Sellers' Counsel.............................8
1.46 Party....................................................8
1.47 Patents..................................................8
1.48 Payoff Amount............................................8
1.49 Permitted Liens..........................................9
1.50 Person...................................................9
1.51 Pocahontas' Account......................................9
1.52 Product..................................................9
1.53 Purchase Consideration...................................9
1.54 Real Property Owners.....................................9
1.55 Release..................................................9
1.56 Relocation Period........................................9
1.57 Remaining Initial Consideration.........................10
1.58 Required Consents.......................................10
1.59 Section 29 Product......................................10
1.60 Sellers' Affidavits.....................................10
1.61 Sellers' Closing Certificates...........................10
1.62 Sellers' Indemnified Persons............................10
1.63 Sellers' Intellectual Property..........................11
1.64 Sellers' Officer Certificates...........................11
1.65 Solvent.................................................11
1.66 Subsequent Consideration................................11
1.67 Trademarks..............................................11
1.68 Trade Secrets...........................................11
1.69 Transaction Documents...................................12
1.70 Transfer Taxes..........................................12
1.71 UCC.....................................................12
1.72 UCC Termination Statement(s)............................12
1.73 Use and Non-Disturbance Agreement.......................12
ARTICLE II PURCHASE AND SALE..............................................12
2.1 Purchase and Sale; Assignment...........................12
2.2 Payment of the Purchase Consideration...................13
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2.3 Deliveries at Closing...................................13
2.4 Allocation of Purchase Price............................15
2.5 No Assumption of Liabilities............................15
2.6 Prorations..............................................16
2.7 Sales Tax Exemption.....................................16
ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLERS ....................16
3.1 Corporate Standing......................................16
3.2 Authorizations; Binding Agreements......................17
3.3 No Consents.............................................18
3.4 Taxes...................................................18
3.5 Brokers or Finders Fees.................................18
3.6 No Imposition of Liens..................................19
3.7 Title to Assets; Good Title Conveyed....................19
3.8 Condition of Assets.....................................19
3.9 Litigation..............................................20
3.10 Compliance with Laws....................................20
3.11 Status of Contracts.....................................20
3.12 Consents................................................21
3.13 Books and Records.......................................21
3.14 Environmental Matters...................................21
3.15 Liabilities.............................................22
3.16 Agreements with Related Persons.........................22
3.17 Adequacy of the Purchased Assets........................22
3.18 Section 29 Issues.......................................23
3.19 Intellectual Property...................................24
3.20 Product Liability.......................................24
3.21 Ownership...............................................24
3.22 Full Disclosure.........................................25
3.23 Solvency................................................25
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER........................25
4.1 Organization and Standing...............................25
4.2 Authorizations; Binding Agreements......................26
4.3 Brokers or Finders Fees.................................27
4.4 No Actions Affecting Enforcement of the
Agreement and the other Transaction Documents...........27
4.5 Consents................................................27
ARTICLE V CERTAIN UNDERSTANDINGS AND AGREEMENTS...........................28
5.1 Subsequent Actions......................................28
5.2 Public Announcements....................................29
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5.3 Confidentiality.........................................29
5.4 Taxes...................................................29
5.5 Use of and Access to Facility...........................30
5.6 Damage to Facility......................................31
ARTICLE VI CONDITIONS PRECEDENT TO THE OBLIGATIONS
OF BUYER................................................31
6.1 No Termination; Compliance with Agreement...............32
6.2 Actions.................................................32
6.3 Instruments Satisfactory................................32
6.4 No Litigation...........................................32
6.5 Representations and Warranties..........................32
6.6 Material Adverse Change.................................33
6.7 Board Approval..........................................33
6.8 Financing Statements....................................33
6.9 Consents................................................34
ARTICLE VII CONDITIONS PRECEDENT TO THE OBLIGATIONS
OF SELLERS..............................................34
7.1 No Termination; Compliance with Agreement...............34
7.2 Actions.................................................34
7.3 Instruments Satisfactory................................35
7.4 No Litigation...........................................35
7.5 Representations and Warranties..........................35
7.6 Consents................................................35
ARTICLE VIII INDEMNITIES AND ADDITIONAL COVENANTS.........................36
8.1 Sellers' Indemnity......................................36
8.2 Buyer's Indemnity.......................................38
8.3 Bulk Sales Compliance. .................................40
8.4 Additional Instruments..................................40
8.5 Access to Books, Records and Employees..................40
ARTICLE IX TERMINATION....................................................41
9.1 Termination.............................................41
9.2 Rights on Termination; Waiver...........................42
ARTICLE X MISCELLANEOUS...................................................42
10.1 Entire Agreement; Amendment.............................42
10.2 Expenses................................................43
10.3 Governing Law; Consent to Jurisdiction;
Waiver of Jury Trial....................................43
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10.4 Assignment..............................................44
10.5 Notices.................................................45
10.6 Counterparts; Headings..................................46
10.7 Interpretation..........................................46
10.8 Severability............................................47
10.9 No Reliance.............................................48
10.10 Parties in Interest.....................................48
10.11 Specific Performance. .................................48
10.12 Time of Essence.........................................48
10.13 Representations, Warranties and Covenants...............48
10.14 Election of Remedies....................................49
10.15 ** Undertaking..........................................49
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EXHIBITS AND SCHEDULES
SCHEDULE 1.16 Contracts
SCHEDULE 1.27 Facility Site
SCHEDULE 1.28 Fixed Assets
SCHEDULE 1.49 Permitted Liens
SCHEDULE 3.5 Brokers or Finders Fees of Sellers
SCHEDULE 3.7 Exceptions to Title
SCHEDULE 3.8 Condition of Assets
SCHEDULE 3.9 Sellers' Litigation
SCHEDULE 3.11 Default under the Contracts
SCHEDULE 3.12 Sellers' Required Consents
SCHEDULE 3.14 Environmental Matters
SCHEDULE 3.16 Agreements With Related Persons
SCHEDULE 4.3 Brokers or Finders Fees of Buyer
SCHEDULE 4.4 Buyer's Litigation
SCHEDULE 4.5 Buyer's Required Consents
EXHIBIT A [Intentionally Omitted]
EXHIBIT B Xxxx of Sale
EXHIBIT C [Intentionally Omitted]
EXHIBIT D Officer's Certificate of Buyer
EXHIBIT E Lender Release
EXHIBIT F License and Binder Purchase Agreement
EXHIBIT G-1 Opinion of Pillsbury Madison & Sutro, LLP, Counsel to Sellers
EXHIBIT G-2 Opinion of Xxxxxx Xxxxxxxx, General Counsel of Sellers
EXHIBIT G-3 Opinion of Xxxxxxx & Xxxxx, Counsel to Sellers
EXHIBIT H [Intentionally Omitted]
EXHIBIT I-1 Officer's Certificate of Covol
EXHIBIT I-2 Officer's Certificate of Synfuel
EXHIBIT I-3 Officer's Certificate of Pocahontas
EXHIBIT J Use and Non-Disturbance Agreement
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ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT, made as of January 13, 2000, by and between
**, a Kentucky corporation ("Buyer"); and, for the sole and limited purpose of
Section 10.15, **, a Kentucky corporation ("**"), and POCAHONTAS SYNFUEL,
L.L.C., a Utah limited liability company ("Pocahontas"); COVOL TECHNOLOGIES,
INC., a Delaware corporation ("Covol"); and SYNFUEL INVESTMENTS, INC., a Utah
corporation ("Synfuel" and together with Pocahontas and Covol, "Sellers").
RECITALS
WHEREAS, Covol constructed a solid synthetic fuel manufacturing
facility located near Xxxxx Xxxx, XxXxxxxx Xxxxxx, Xxxx Xxxxxxxx;
WHEREAS, pursuant to a Xxxx of Sale dated September 29, 1999, Covol
sold a one percent (1%) undivided interest in such solid synthetic fuel
manufacturing facility to Synfuel in exchange for three hundred (300) shares of
capital stock of Synfuel, which constitutes one hundred percent (100%) of the
outstanding capital stock of Synfuel;
WHEREAS, pursuant to a Xxxx of Sale dated September 29, 1999, Synfuel
sold its one percent (1%) interest and Covol sold its remaining ninety-nine
percent (99%) interest in such solid synthetic fuel manufacturing facility to
Pocahontas in exchange for a one percent (1%) member interest and a ninety-nine
percent (99%) member interest, respectively, in Pocahontas;
WHEREAS, Pocahontas continues to own the fixed assets that comprise
such solid synthetic fuel manufacturing facility;
WHEREAS, Sellers own certain books, records and information relating to
the engineering, design, construction, operation and maintenance of such solid
synthetic fuel manufacturing facility and the substantiation of the eligibility
of solid synthetic fuel produced at such solid synthetic fuel manufacturing
facility to qualify for credit under Section 29(a) of the Code;
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WHEREAS, Pocahontas and, to the extent each of Covol and Synfuel have
retained any right, title or interest in any of such fixed assets and books,
records and information, Covol and Synfuel desire to sell, convey, transfer,
deliver and assign such fixed assets and books, records and information to
Buyer, and Buyer desires to purchase and accept such fixed assets and books,
records and information from each of Sellers, as applicable, all on the terms
and subject to the conditions set forth herein; and
WHEREAS, Covol and Synfuel, as the sole owners of Pocahontas, will
derive substantial benefit from the sale of such fixed assets and books, records
and information to Buyer and the other transactions contemplated by this
Agreement.
NOW, THEREFORE, in consideration of the Recitals and of the mutual
covenants, conditions and agreements set forth herein and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, it is hereby agreed by the Parties that:
ARTICLE I
DEFINITIONS
Unless the context otherwise requires, when used in this Agreement, the
following capitalized terms shall have the meanings specified:
1.1 Affiliate shall mean, as to any Person, any other Person
that, directly or indirectly through one or more intermediaries, controls, is
controlled by or is under common control with such Person.
1.2 Agreement shall mean this Asset Purchase Agreement,
together with the Exhibits and Schedules attached hereto, as the same may be
amended from time to time in accordance with the terms hereof.
1.3 As-Built Drawings shall mean the "as-built" construction
drawings provided to Covol by, or on behalf of, TIC The Industrial Company
pursuant to the Construction Agreement, and all other design and construction
drawings owned or in the possession of Sellers which relate to the completed
Facility.
2
1.4 Xxxx of Sale shall mean the Xxxx of Sale to be entered
into by each of Sellers in favor of Buyer relating to the Facility, in the form
of Exhibit B attached hereto.
1.5 Books and Records shall mean original or true and complete
copies of all books, records, files, data, drawings (including, but not limited
to, the As-Built Drawings), operation and parts manuals and information of
Sellers relating to the engineering, design, construction, operation and
maintenance of the Facility and the substantiation of the eligibility of Product
produced at the Facility to qualify for credit under Section 29(a) of the Code.
1.6 Buyer's Closing Certificate shall mean the certificate of
an officer of Buyer, certifying as to the satisfaction of the conditions set
forth in Article VII.
1.7 Buyer's Financing Statement(s) shall mean all filings
(including, but not limited to, UCC financing statements), registrations and
recordings which Buyer may, in its sole discretion, require to be filed by or on
behalf of Buyer with respect to its right, title and/or interest in the
Facility.
1.8 Buyer Indemnified Persons shall have the meaning set forth
in Section 8.1(a).
1.9 Buyer's Officer Certificate shall mean a certificate of
the corporate secretary (or equivalent officer) of Buyer, in the form of Exhibit
D attached hereto, certifying as to the matters set forth in Exhibit D attached
hereto.
1.10 Closing shall mean the meeting of the Parties to be held
at 11:00 a.m., local time, on the Closing Date, at the offices of Skadden, Arps,
Slate, Xxxxxxx & Xxxx, 1440 New York Avenue, N.W., Washington, D.C., or such
other time and place as the Parties may mutually agree in writing.
1.11 Closing Date shall mean January 14, 2000 or, if later,
five (5) business days following the date on which all conditions set forth in
Articles VI and VII have been satisfied or waived by the applicable Parties, as
the case may be, or such other date as the Parties may mutually agree in
writing.
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1.12 Code shall mean the Internal Revenue Code of 1986, as
amended, and the regulations thereunder.
1.13 Commercial Operation Date shall mean the first date after
the Closing Date on which the Facility has produced at least 14,000 tons of
commercially saleable Section 29 Product at the New Facility Site over a
consecutive 14-day period beginning after the Closing Date.
1.14 Confidentiality Agreement shall mean the Letter
Agreement, dated March 24, 1999, between Covol and **.
1.15 Construction Agreement shall mean the Construction
Agreement, dated December 26, 1996, Contract No. TIC002WV, between Covol and TIC
The Industrial Company, as amended.
1.16 Contracts shall mean all of the agreements entered into
by or on behalf of Sellers relating to the engineering, design, construction,
operation and/or maintenance of the Facility, all as listed on Schedule 1.16
attached hereto.
1.17 Cooperation Agreement shall mean that certain Cooperation
Agreement to be entered into between Covol and the Real Property Owners with
respect to the payment of certain monies, the release of certain liens with
respect to the Facility Site and the execution and delivery by the Real Property
Owners of the Use and Non-Disturbance Agreement.
1.18 Copyrights shall mean U.S. and foreign registered and
unregistered copyrights (including, but not limited to, those in computer
software and databases), rights of publicity and all registrations and
applications to register the same.
1.19 Covol Process shall mean Covol's proprietary synthetic
coal fuel production process for manufacturing solid synthetic fuel which is
defined as "Coal Briquetting Technology" in and is the subject of the License
and Binder Purchase Agreement.
1.20 Effective Time shall mean 12:01 a.m., Eastern Time, on
the Closing Date.
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1.21 Environmental Claim shall mean any claim, action, cause
of action, investigation or notice (written or oral) by any Person alleging
actual or potential liability for investigatory, cleanup or governmental
response costs, or natural resources or property damages, or personal injuries,
attorney's fees or penalties relating to (i) the presence, or Release into the
environment, of any Hazardous Substance at the Facility Site, now or in the
past, or (ii) circumstances forming the basis of any violation, or alleged
violation, of any Environmental Law.
1.22 Environmental Condition shall mean the presence or
Release to the environment of Hazardous Substances, including, but not limited
to, any migration of Hazardous Substances through air, soil or groundwater at,
to or from the Facility Site regardless of when such presence or Release
occurred or is discovered.
1.23 Environmental Laws shall mean all laws, statutes,
regulations, ordinances, administrative or judicial orders or decrees, or the
common law, in each case, as amended from time to time, relating to (a)
pollution or protection of the environment, natural resources or human health
and safety, including Laws relating to Releases or threatened Releases of
Hazardous Substances or otherwise relating to the manufacture, formulation,
generation, processing, distribution, use, treatment, storage, Release,
transport, investigation, remediation, abatement, cleanup or handling of
Hazardous Substances, (b) record keeping, notification, disclosure and reporting
requirements respecting Hazardous Substances, and (c) the management or use of
natural resources.
1.24 Excluded Assets shall mean all real and personal property
of any nature and kind located at the Facility Site and not listed on Schedule
1.27 attached hereto, including, but not limited to, any foundations (concrete
or otherwise), underground pilings, footings and piers, concrete flooring,
containment structures, buried pipes or other structures, feedstock, work in
progress, finished goods, chemical binder and any other inventory and accounts.
1.25 Excluded Liabilities shall have the meaning set forth in
Section 2.5.
1.26 Facility shall mean, collectively, the Books and Records
and the Fixed Assets.
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1.27 Facility Site shall mean that certain parcel of land
located in XxXxxxxx County near North Fork, West Virginia, where the Fixed
Assets are located, as more specifically described in Schedule 1.27 attached
hereto.
1.28 Fixed Assets shall mean all tangible personal property
which constitute part of the solid synthetic fuel manufacturing facility located
at the Facility Site as of the Effective Time, including, but not limited to,
all fixed assets, chattels, machinery, equipment, computer hardware, fixtures,
furniture, furnishings, handling equipment, implements, parts, tools and
accessories of all kinds which are listed on Schedule 1.28 attached hereto;
provided, however, that "Fixed Assets" shall not include the Excluded Assets.
1.29 [Intentionally Omitted]
1.30 Hazardous Substances shall mean (a) any petrochemical or
petroleum products, oil or coal ash, radioactive materials, radon gas, asbestos
in any form that is or could become friable, urea formaldehyde foam insulation
and transformers or other equipment that contain dielectric fluid which may
contain polychlorinated biphenyls, (b) any chemicals, materials or substances
defined as or included in the definition of "hazardous substances," "hazardous
wastes," "hazardous materials," "hazardous constituents," "restricted hazardous
materials," "extremely hazardous substances," "toxic substances,"
"contaminants," "pollutants," "toxic pollutants" or words of similar meaning and
regulatory effect under any applicable Environmental Law and (c) any other
chemical, material or substance, exposure to which is prohibited, limited or
regulated by any applicable Environmental Law.
1.31 Initial Consideration shall have the meaning set forth in
Section 2.2.
1.32 Intellectual Property shall mean all Trademarks, Patents,
Copyrights, Trade Secrets and Licenses.
1.33 IRS shall mean the Internal Revenue Service.
1.34 Knowledge of Buyer shall mean the actual knowledge, after
due inquiry, of Buyer.
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1.35 Knowledge of Sellers shall mean the actual knowledge,
after due inquiry, of Sellers.
1.36 Law shall mean any federal, state, local or other law or
governmental requirement of any kind, and the rules, regulations and orders
promulgated thereunder.
1.37 Lender shall mean AJG Financial Services, Inc., a
Delaware corporation.
1.38 Lender Release shall mean the Acknowledgment and Release
in favor of Covol and Pocahontas to be entered into by Lender, in the form of
Exhibit E attached hereto.
1.39 License and Binder Purchase Agreement shall mean that
certain License and Binder Purchase Agreement to be entered into between Buyer
and Covol, in the form of Exhibit F attached hereto.
1.40 Licenses shall mean all licenses and agreements pursuant
to which Sellers have acquired rights in or to any Trademarks, Patents or
Copyrights used by or for the benefit of the operation of the Facility, or
licenses and agreements pursuant to which Sellers have licensed or transferred
the right to use any such Trademarks, Patents or Copyrights which constitutes a
part of the Facility.
1.41 Lien shall mean any interest in property of any nature
(including, but not limited to, real and personal property and tangible and
intangible property) securing an obligation, whether such interest is based on
common law, statute or contract, and including any restriction on the use,
voting, transfer, receipt of income or other exercise of any attributes of
ownership, any security interest or lien arising from a mortgage, claims,
encumbrance, pledge, charge, easement, servitude, security agreement,
conditional sale or trust receipt or a lease, consignment or bailment for
security purposes. The term "Lien" shall also include reservations, exceptions,
covenants, conditions, restrictions, leases, subleases, licenses, options,
rights of first refusal, occupancy agreements, pledges, equities, charges,
assessments, covenants, reservations, defects in title, encroachments and other
burdens, and other title exceptions and encumbrances affecting property of any
nature, whether accrued or unaccrued, or absolute or contingent.
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1.42 Losses shall have the meaning set forth in Section
8.1(a).
1.43 Material Adverse Effect shall mean a material adverse
effect on (a) the operation and maintenance of the Facility at the Facility Site
or the New Facility Site, (b) Buyer's good, valid and marketable title to all or
any portion of the Facility, free and clear of all Liens, and (c) the ability of
Buyer to produce commercially saleable Section 29 Product from the Facility at
the New Facility Site.
1.44 New Facility Site shall mean that certain parcel of land
located in ** County, Kentucky, where the Facility is to be relocated.
1.45 Opinions of Sellers' Counsel shall mean the opinions of:
(a) Pillsbury Madison & Sutro, LLP, counsel to Sellers, in the form of Exhibit
G-1; (b) Xxxxxx Xxxxxxxx, General Counsel of Sellers, in the form of Exhibit G-2
and (c) Xxxxxxx & Xxxxx, counsel to Sellers, in the form of Exhibit G-3 .
1.46 Party shall mean each of, and Parties shall mean all of,
Buyer, ** (for the sole and limited purpose of Section 10.15), Pocahontas, Covol
and Synfuel.
1.47 Patents shall mean issued U.S. and foreign patents and
pending patent applications, patent disclosures and any and all divisions,
continuations, continuations-in-part, reissues, re-examinations and extension
thereof, any counterparts claiming priority therefrom, utility models, patents
of importation/confirmation, certificates of invention and like statutory
rights.
1.48 Payoff Amount shall mean an amount equal to the total
outstanding principal, accrued but unpaid interest and other costs and expenses,
if any, owed by Covol and/or Pocahontas to Lender as of the Closing Date in
complete satisfaction of the then outstanding debt with Lender pursuant to that
certain Loan and Security Agreement, dated February 26, 1998, between Covol and
Lender and the Secured Draw Down Promissory Note, dated February 26, 1998, by
Covol in favor of Lender, which amount Covol shall certify in Sellers' Closing
Certificates.
1.49 Permitted Liens shall mean (a) Liens (but only for
amounts not yet due and payable) securing taxes, assessments or governmental
charges or levies, and (b) Liens which are (i) not in excess of $5,000.00 or of
an immaterial nature
8
which do not have a Material Adverse Effect and (ii) disclosed on Schedule 1.49
attached hereto.
1.50 Person shall mean a natural person, partnership,
corporation, limited liability company, business trust, joint stock company,
trust, unincorporated association, joint venture, administrative agency or
commission or other governmental or other regulatory authority or agency or
other entity or organization.
1.51 Pocahontas' Account shall mean such account in
Pocahontas' name as shall be set forth in Sellers' Closing Certificates.
1.52 Product shall mean the solid synthetic fuel produced and
sold at the Facility using and pursuant to the Covol Process.
1.53 Purchase Consideration shall have the meaning given to
such term in Section 2.2.
1.54 Real Property Owners shall mean Black Diamond
Enterprises, Inc., a Virginia corporation, Bygoma Energy, L.L.C., a West
Virginia limited liability company, Xxxxxx Xxxxxxx, an individual past the age
of majority in, and resident of, Virginia, and Xxxxx Xxxxx, an individual past
the age of majority in, and resident of Virginia.
1.55 Release shall mean any release, spill, leak, discharge,
disposal of, pumping, pouring, emitting, emptying, injecting, leaching, dumping
or allowing to escape into or through the environment.
1.56 Relocation Period shall mean the Use Period (as defined
in the Use and Non-Disturbance Agreement) and any Extended Use Period(s) (as
defined in the Use and Non-Disturbance Agreement).
1.57 Remaining Initial Consideration shall mean an amount
equal to the greater of (i) the amount of the difference between the Initial
Consideration and the Payoff Amount and (ii) zero (0).
1.58 Required Consents shall mean (a) in the case of Sellers,
all consents, approvals and waivers of any Persons that are required in
connection with the sale, conveyance, transfer, delivery and assignment of the
Facility by Sellers to
9
Buyer and the execution and delivery by Sellers of this Agreement and the
Transaction Documents and the performance of their obligations hereunder and
thereunder and (b) in the case of Buyer, all consents, approvals and waivers of
any Persons that are required in connection with the purchase and acceptance of
the Facility by Buyer and the execution and delivery by Buyer of this Agreement
and the Transaction Documents and the performance of its obligations hereunder
and thereunder, in each case, including, but not limited to, (i) any consents,
approvals and waivers from parties to loan agreements, contracts, leases or
other agreements and from governmental authorities, whether federal, state or
local and (ii) any consents, approvals or resolutions of directors or
shareholders of any Party or any other Person.
1.59 Section 29 Product shall mean Product which constitutes a
"qualified fuel" pursuant to the terms of Section 29(c)(1)(C) of the Code and
with respect to which Section 29 of the Code is applicable pursuant to the terms
of Sections 29(f) and 29(g) of the Code.
1.60 Sellers' Affidavits shall mean such affidavits of
directors, officers and/or employees of Sellers as Buyer may request (i) to
substantiate Sellers' representations and warranties in Section 3.18 and (ii) as
to such other matters as Buyer may reasonably request.
1.61 Sellers' Closing Certificates shall mean the certificate
of an officer of each Seller, certifying as to the satisfaction of the
conditions set forth in Article VI and to such other matters as are expressly
provided for herein or which Buyer may request.
1.62 Sellers' Indemnified Persons shall have the meaning set
forth in Section 8.2(a).
1.63 Sellers' Intellectual Property shall mean all
Intellectual Property that is used in connection with the Facility.
1.64 Sellers' Officer Certificates shall mean certificates of
the corporate secretary (or equivalent officer) of each Seller, in the form of
Exhibits I-1, I-2 and I-3 attached hereto, certifying as to the matters set
forth in Exhibits I-1, I-2 and I-3 attached hereto and such other matters as
Buyer may reasonably request.
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1.65 Solvent shall mean as to each Seller, (a) the assets of
such Seller, both at a fair valuation and at present fair salable value, exceed
its debts, (b) the present fair salable value of such Seller's assets exceeds
the amount that will be required to pay its profable liability on its existing
debts as they become absolute and matured, (c) such Seller is generally paying
its debts as they become due, (d) such Seller will have sufficient capital with
which to conduct its business as presently conducted and as proposed to be
conducted and (e) such Seller has not incurred debts, and does not intend to
incur debts, beyond its ability to pay such debts as they mature. For purposes
of this definition, (i) "debt" means any liability on a claim, and (ii) "claim"
means (x) a right to payment, whether or not such right is reduced to judgment,
liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed,
undisputed, secured, or unsecured or (y) a right to an equitable remedy for
breach of performance if such breach gives rise to a payment, whether or not
such right to an equitable remedy is reduced to judgment, fixed, contingent,
matured, unmatured, disputed, undisputed, secured or unsecured; provided, that
with respect to any contingent debts, such debts shall be computed at the amount
which, in light of all the facts and circumstances existing at the time,
represents the amount which can reasonably be expected to become an actual or
matured debt.
1.66 Subsequent Consideration shall have the meaning set forth
in Section 2.2.
1.67 Trademarks shall mean U.S. and foreign registered and
unregistered trademarks, trade dress, service marks, logos, trade names,
corporate names and all registrations and applications to register the same.
1.68 Trade Secrets shall mean all categories of trade secrets
as defined in the Uniform Trade Secrets Act, including business information.
1.69 Transaction Documents shall mean this Agreement, the Xxxx
of Sale, the Use and Non-Disturbance Agreement, the Cooperation Agreement, the
Lender Release, the UCC Termination Statement(s) and those agreements and
instruments to be executed and delivered as provided in Section 2.3.
1.70 Transfer Taxes shall mean any property transfer or gains
tax, sales tax, conveyance fee, use tax, stamp tax, stock transfer tax or other
similar tax, including any related penalties, interest and additions to tax.
11
1.71 UCC shall mean the Uniform Commercial Code of the State
of New York.
1.72 UCC Termination Statement(s) shall mean those filings
(including, but not limited to, UCC termination statements), registrations and
recordings which Buyer may, in its sole discretion, require to terminate any
filings (including, but not limited to, UCC financing statements), registrations
or recordings with respect to the Facility, including, but not limited to, UCC
termination statements terminating all of Lender's UCC financing statements and
other filings with respect to the Facility.
1.73 Use and Non-Disturbance Agreement shall mean the Use and
Non-Disturbance Agreement to be entered into between Buyer and each of the Real
Property Owners, in the form of Exhibit J attached hereto.
ARTICLE II
PURCHASE AND SALE
2.1 Purchase and Sale; Assignment.
Buyer and Sellers hereby agree that at the Closing, and upon
all of the terms and subject to all of the conditions of this Agreement:
(a) Pocahontas shall sell, convey, transfer, deliver
and assign to Buyer, and Buyer shall purchase and accept from Pocahontas, the
Fixed Assets and the Books and Records, free and clear of all Liens; and
(b) Covol and Synfuel shall, to the extent to which
they have any right, title or interest in, to and under the Fixed Assets and the
Books and Records, convey, transfer, deliver and assign to Buyer, and Buyer
shall purchase and accept from Covol and Synfuel, the Fixed Assets and the Books
and Records, free and clear of all Liens.
2.2 Payment of the Purchase Consideration.
In consideration of Sellers' sale, conveyance, transfer,
delivery and assignment of the Facility to Buyer on the Closing Date in
accordance with this Agreement, Buyer shall:
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(a) on the Closing Date, make a cash payment to
Pocahontas in the amount of ** ($**) (the "Initial Consideration") payable by
wire transfer in readily available funds as follows: (i) the Payoff Amount to
Xxxxxx Trust & Savings Bank, ABA # 071 000 288, Account # 160-4586, AJG
Financial Services, Inc., for the account of Lender and (ii) the Remaining
Initial Consideration to Pocahontas' Account; and
(b) on the Commercial Operation Date, make a cash
payment to Pocahontas in the amount of ** Dollars ($**) (the "Subsequent
Consideration" and together with the payments described in clauses (a)(i),
(a)(ii) of this Section 2.2, the "Purchase Consideration") payable by wire
transfer in readily available funds to Pocahontas' Account; provided, however,
that Buyer shall have no obligation to make payment to Sellers of the Subsequent
Consideration in the event that the Commercial Operation Date is not achieved.
2.3 Deliveries at Closing.
(a) By Sellers to Buyer. At the Closing, Sellers
shall deliver, or cause to be delivered, to Buyer the following documents, each
fully executed (other than by Buyer) and dated as of the Closing Date, and
otherwise in form and substance satisfactory to Buyer:
(i) the Xxxx of Sale;
(ii) the License and Binder Purchase
Agreement;
(iii) the Use and Non-Disturbance Agreement
and the Cooperation Agreement;
(iv) the agreements listed on Schedule 3.5
attached hereto;
(v) the Lender Release;
(vi) the UCC Termination Statement(s);
(vii) the Buyer Financing Statement(s);
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(viii) the Sellers' Required Consents
specified on Schedule 3.12 attached hereto;
(ix) the Opinions of Sellers' Counsels;
(x) the Sellers' Affidavits;
(xi) the Sellers' Closing Certificates;
(xii) the Sellers' Officers Certificates;
and
(xii) all such other agreements, deeds,
endorsements, assignments and other instruments as Buyer may, in its sole
discretion, request to vest in Buyer good, valid and marketable title to the
Facility, free and clear of all Liens, and to consummate the transactions
contemplated herein.
(b) By Buyer to Sellers. At the Closing, Buyer shall
deliver, or cause to be delivered, to Sellers the following documents, each
executed by Buyer and dated as of the Closing Date by Buyer and otherwise in
form and substance satisfactory to Sellers:
(i) the License and Binder Purchase
Agreement;
(ii) the Use and Non-Disturbance Agreement;
(iii) the Buyer's Required Consents
specified on Schedule 4.5 attached hereto;
(iv) the agreements listed on Schedule 4.3
attached hereto;
(v) the Buyer's Closing Certificate; and
(vi) the Buyer's Officers Certificates.
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2.4 Allocation of Purchase Price.
On the Closing Date, or at a later time agreed to by the Parties, not
to exceed thirty (30) days following the Closing Date, the Purchase
Consideration shall be allocated among the Fixed Assets, in accordance with the
allocation to be agreed to by the Parties and set forth in writing. Such
allocation shall be intended to comply with the requirements of Section 1060 of
the Code, and no Party shall take any position inconsistent with such allocation
for income tax purposes, except that Buyer's cost for the Fixed Assets may
differ from the amount so allocated to the extent necessary to reflect Buyer's
capitalized acquisition costs other than the Purchase Consideration.
2.5 No Assumption of Liabilities.
Notwithstanding anything to the contrary in this Agreement or any of
the Transaction Documents, Buyer does not and will not assume any liability or
obligation of Sellers of whatever nature or kind, whether absolute or
contingent, accrued or unaccrued, asserted or unasserted, known or unknown, or
otherwise, including, but not limited to, (i) any liability or obligation of
Sellers arising out of, in respect of, or relating to the ownership or use of
the Facility or performance by Sellers under any of the Contracts or (ii) any
liabilities or obligations of Sellers arising out of the Environmental
Conditions at, on, under or related to the Facility Site or arising in
connection with or under Environmental Law in connection with the operation of
the Facility (collectively, the "Excluded Liabilities").
2.6 Prorations.
As of the Closing Date, any utility charges, personal property taxes,
assessments or other governmental charges or levies relating to the Facility
shall be prorated as of the Effective Time. Such prorations may be estimated as
necessary and final settlement shall be made within ninety (90) days of the
Closing Date.
2.7 Sales Tax Exemption.
All Transfer Taxes incurred in connection with this Agreement and the
Transaction Documents and the transactions contemplated hereby and thereby
15
shall be borne by Sellers. Sellers, at their expense, shall prepare and file, to
the extent required by applicable Law, all necessary tax returns and other
documentation with respect to all such Transfer Taxes. To the extent applicable,
at the Closing, Buyer shall deliver to Sellers appropriate sales tax exemption
certificates relating to the transfer of the Facility.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLERS
Each Seller represents and warrants to Buyer that all of the statements
by such Seller and each of the other Sellers contained in this Article III are
true and complete as of the date of this Agreement (or, if made as of a
specified date, as of such date), and will be true and complete as of the
Closing Date as though made on the Closing Date:
3.1 Corporate Standing.
(a) Each Seller is a corporation or limited liability company
duly organized and validly existing and in good standing under the laws of its
state of organization or incorporation.
(b) Each Seller has the power to own its property and to
execute, deliver and perform this Agreement and each of the Transaction
Documents to which it is a party, and to carry on its business as now being
conducted.
(c) Each Seller is duly qualified to do business in and is in
good standing as a foreign corporation or limited liability company, authorized
to do business under the laws of the States of Utah and West Virginia.
3.2 Authorizations; Binding Agreements.
(a) Each Seller has full corporate power and authority to
execute and deliver this Agreement and the other Transaction Documents to which
it is a party and to consumate the transactions contemplated herein and therein.
(b) The execution, delivery and performance by each Seller of
this Agreement and the other Transaction Documents to which it is a party and
each conveyance, assignment, agreement and other document herein and therein
16
contemplated to be executed by each Seller, has been duly authorized by all
necessary corporate and company action.
(c) No vote of, or consent by, the holders of any class or
series of stock or indebtedness having general voting rights and debt
convertible into securities having such rights issued by each Seller is
necessary to authorize the execution and delivery by it of this Agreement or the
other Transaction Documents to which it is a party or the consummation by it of
the transactions contemplated hereby and thereby.
(d) This Agreement and the other Transaction Documents and the
conveyances, assignments, agreements, and other documents herein contemplated to
be executed, delivered and performed by each Seller is, or will be upon
execution, legal, valid and binding obligations of each such Seller, duly
enforceable against such Seller in accordance with its terms (subject, however,
to the effects of bankruptcy, insolvency, reorganization, moratorium and similar
laws from time to time in effect relating to the rights and remedies of
creditors as well as to general principles of equity).
(e) This Agreement and the other Transaction Documents and the
conveyances, assignments, agreements and other documents herein and therein
contemplated to be executed, delivered and performed by each Seller (i) does not
and will not result in any violation of, conflict with or default under the
terms of any of such Seller's organizational documents (nor, to the Knowledge of
Sellers, does there exist any condition which upon the passage of time or the
giving of notice would cause such violation, conflict or default), and (ii)
subject only to Sellers' Required Consents, does not and will not result in any
violation of, conflict with or default under any Contract, any collective
bargaining agreement, any permit, or any other material lease, venture,
indenture, mortgage, agreement, contract, judgment, order or other obligation or
restriction to which such Seller or the Facility may be bound or encumbered
(nor, to the Knowledge of Sellers, does there exist any condition which upon the
passage of time or the giving of notice would cause such violation, conflict or
default).
3.3 No Consents.
Subject only to Sellers' Required Consents, each Seller has obtained
all permits, licenses, franchises, authorizations, variances, exemptions,
concessions,
17
leases, instruments, orders, consents or approvals of governmental entities and
third parties necessary to construct, maintain and operate the Facility at the
Facility Site and to execute, deliver and perform this Agreement and the other
Transaction Documents to which it is a party.
3.4 Taxes.
All tax returns and reports relating to the Facility and the conduct of
the construction, maintenance and operation of the Facility required by law
(including all federal, state and local property tax, severance and franchise
tax laws) to be filed by Sellers prior to the Closing have been timely filed or
will be caused to be timely filed, including those tax returns relating to
periods prior to Closing that are not yet due. All taxes, assessments, fees,
interest, penalties and other governmental charges relating to the Facility or
the conduct of the construction, maintenance and operation of the Facility prior
to Closing have been paid when due and payable or payment has been provided for.
3.5 Brokers or Finders Fees.
Except as set forth in Schedule 3.5 attached hereto, there are no
obligation or liability, contingent or otherwise, for broker's or finder's fees
created by Sellers with respect to the matters provided for in this Agreement
and the other Transaction Documents. No obligation or liability for broker's or
finder's fees created by Sellers with respect to the matters provided for in
this Agreement and the other Transaction Documents shall be imposed upon Buyer
or the Facility.
3.6 No Imposition of Liens.
The execution, delivery and performance of this Agreement and the other
Transaction Documents by each Seller shall not result in the imposition of any
Lien, other than Permitted Liens, upon the Facility.
3.7 Title to Assets; Good Title Conveyed.
Except as set forth on Schedule 3.7 attached hereto, Sellers own good,
valid and marketable title to all of the Facility, free and clear of any and all
Liens, except for Permitted Liens. The Xxxx of Sale and the deeds, endorsements,
assignments and other instruments to be executed and delivered by Sellers to
Buyer
18
at the Closing will be valid and binding obligations of Sellers, enforceable in
accordance with their respective terms, and will effectively vest in Buyer good,
valid and marketable title to all of the Facility, free and clear of any and all
Liens, except for Permitted Liens.
3.8 Condition of Assets.
Except as set forth on Schedule 3.8 attached hereto, the Facility is in
good operating condition and repair and is adequate and substantially fit for
the production and sale of Section 29 Product at a rate of at least 360,000 tons
per year, and the Facility has been constructed in conformance with that degree
of skill and judgment normally exercised by recognized engineering and
construction firms of similar size and experience to that of the contractors
under the Contracts, and the assets comprising the Facility conform to the
standards of material and workmanship prevailing in applicable industries, are
free from material defects in design, material and workmanship, are of good
quality and are not in need of maintenance or repairs, except for ordinary,
routine maintenance and repairs which are not material in nature or cost.
3.9 Litigation.
Except as disclosed on Schedule 3.9 attached hereto, there are no
actions, suits, inquiries, proceedings or investigations by or before any court
or governmental or other regulatory or administrative agency or commission
pending or, to the Knowledge of Sellers, threatened against or involving Sellers
or the Facility, or which questions or challenges the validity of this Agreement
or any of the Transaction Documents or any action taken or to be taken by
Sellers pursuant to this Agreement or any of the Transaction Documents in
connection with the transactions contemplated herein or therein, and to the
Knowledge of Sellers, there is no valid basis for any such action, suit,
inquiry, proceeding or investigation. There are no outstanding or unsatisfied
judgments, orders or decrees against Sellers or the Facility.
19
3.10 Compliance with Laws.
Each Seller has complied in a timely manner and in all material
respects with all orders, writs, injunctions, decrees, judgments, rulings, laws,
rules and regulations and ordinances of all federal, state and local governments
and agencies thereof that affect the business, properties or assets (including,
but not limited to, the Facility) of such Seller, and no notice, charge, claim,
action or assertion has been received by any Seller or has been filed, commenced
or, to the Knowledge of Sellers, threatened against any Seller or the Facility
alleging any violation of any of the foregoing.
3.11 Status of Contracts.
Schedule 1.16 attached hereto is a true, correct and complete list of
all agreements entered into by or on behalf of Sellers relating to the
engineering, design, construction, operation and/or maintenance of the Facility
which commit one or more Sellers to spend more than $15,000.00. Except as
described in Schedule 3.11 attached hereto, each of the Contracts is valid,
binding and enforceable against Sellers in accordance with its terms (subject,
however, to the effects of bankruptcy, insolvency, reorganization, moratorium
and similar laws from time to time in effect relating to the rights and remedies
of creditors as well as to general principles of equity), and there is no
violation of, conflict with or default under the Contracts, the consequence of
which could reasonably be expected to have a Material Adverse Effect. Sellers
have not received any notice from any party to any Contract that such party
intends to terminate, cancel or refuse to renew the same or that such party
intends to offset any amount due thereunder or assert any defense to the
enforceability thereof.
3.12 Consents.
Schedule 3.12 attached hereto is a true, correct and complete list of
all of Sellers' Required Consents.
3.13 Books and Records.
The Books and Records shall be complete and correct in all material
respects.
20
3.14 Environmental Matters.
Except as set forth on Schedule 3.14 attached hereto:
(a) Sellers have not operated the Facility or conducted
business or other activities at or from the Facility, in connection with the
construction of the Facility or otherwise, in a manner that constituted or
constitutes a violation of any applicable Environmental Law.
(b) Sellers have heretofore delivered to Buyer true and
complete copies of all environmental studies made in the last five (5) years
relating to the Facility and the Facility Site.
(c) There is no civil, criminal or administrative action,
suit, demand, claim, hearing, notice of violation, investigation, proceeding,
notice or demand letter, or request for information, existing or pending, or to
the Knowledge of Sellers, threatened, relating to the Facility or the Facility
Site, relating in any way to the Environmental Laws or Hazardous Substances,
including, but not limited to, claims, notices or requests for information
arising under the federal Comprehensive Environmental Response, Compensation and
Liability Act, 42 U.S.C. ss. 9601, et seq. or analogous state or local laws.
(d) Sellers have not, and no other Person has, Released,
discharged, or otherwise disposed of any Hazardous Substances on, beneath or
adja cent to the Facility or the Facility Site, except for (i) Releases of
Hazardous Substances subject to and in compliance with a permit or authorization
pursuant to applicable Environmental Law or (ii) Releases, discharges or
disposals that are not reasonably likely to result in a claim against Sellers or
Buyer.
(e) Sellers have not received any notice or order from any
governmental agency or private or public entity advising them that they are
responsi ble for or potentially responsible for investigation, remediation or
cleanup of any Hazardous Substances at any location, including, but not limited
to, the Facility or Facility Site, and have not entered into any agreements or
consent decrees or order, or been the subject of unilateral orders, concerning
such investigation, remediation or cleanup, nor are Sellers aware of any facts
which might reasonably give rise to such notice, order, decree or agreement.
21
(f) All tanks on or under the Facility Site have been emptied,
all lines on or under the Facility Site have been purged and all containments on
or under the Facility Site have been emptied.
3.15 Liabilities.
Except for liabilities underlying any Permitted Liens, Sellers have no
liabilities which could reasonably be expected to have a Material Adverse Effect
following the Closing, nor has any condition existed or any event occurred which
could reasonably be expected to give rise to any such liability.
3.16 Agreements with Related Persons.
There are no contracts, licenses, agreements or arrangements with any
Affiliate of Sellers in connection with the construction, maintenance, ownership
and operation of the Facility, other than as disclosed on Schedule 3.16 attached
hereto.
3.17 Adequacy of the Purchased Assets.
Except as described in Schedule 3.8 attached hereto, the Facility,
together with (i) the technology and know-how being licensed to Buyer by Covol
pursuant to the License and Binder Purchase Agreement, (ii) the chemical binder
to be supplied to Buyer by Covol under the License and Binder Purchase
Agreement, and (iii) relocation-specific rights and assets (including but not
limited to relocation construction contracts, feedstock raw materials, real
property rights, permits, etc.) which Buyer may arrange for but which are not
the subject of this Agreement, constitute all of the assets and technology
rights reasonably expected to be necessary for the production by Buyer of
Section 29 Product at the New Facility Site at the rate of at least 360,000 tons
per year.
3.18 Section 29 Issues.
(a) The Facility satisfies the requirements of Sections
29(f)(1)(B) and (g)(1)(A) of the Code of having been placed "in service" prior
to July 1, 1998 pursuant to a binding written contract in effect prior to
January 1, 1997 and effective at all times thereafter through completion of
construction.
22
(b) The Construction Agreement was, and the parties thereto
treated the Construction Agreement as, a valid and binding agreement,
enforceable in accordance with its terms at all times from December 26, 1996
until July 1, 1998, and neither party to the Construction Agreement provided or
received any notice of default, breach, termination or intent to terminate prior
to July 1, 1998.
(c) The sale of the Product produced at the Facility using the
Covol Process constitutes a "qualified fuel" for purposes of Section 29(c)(1)(C)
of the Code and is eligible for the credit under Section 29(a) of the Code.
(d) The sale and relocation of the Facility will not cause the
Facility to fail to satisfy the placed in-service requirements of Section 29(f)
and (g) of the Code or otherwise cause the sale of the Product produced at the
Facility using the Covol Process not to be eligible for the credit under Section
29(a) of the Code.
(e) There have not been any grants, tax-exempt financing or
subsidized energy financing provided in connection with the Facility within the
meaning of Section 29(b)(3) of the Code.
(f) No rulings have been requested from the IRS with respect
to the Facility or the Construction Agreement prior to the date of this
Agreement.
3.19 Intellectual Property.
Sellers own, or are licensed or otherwise possess legally
enforceable rights to use Sellers' Intellectual Property, and the consummation
of the transactions contemplated herein and in the Transaction Documents will
not alter or impair such ability in any respect. There are no oppositions,
cancellations, invalidity proceedings, interferences or re-examination
proceedings presently pending with respect to Sellers' Intellectual Property.
The conduct of the business of the Facility and Sellers' Intellectual Property
does not infringe any Intellectual Property rights or any other proprietary
right of any Person, and Sellers have not received any written notice from any
other Person pertaining to or challenging the right of Sellers to use any of
Sellers' Intellectual Property. Sellers have not made any claim of a violation
or infringement by others of its rights to or in connection with Sellers'
Intellectual Property which is still pending.
23
3.20 Product Liability. There are not presently pending, or,
to the Knowledge of Sellers, threatened, and, to the Knowledge of Sellers, there
is no basis for, any civil, criminal or administrative actions, suits, demands,
claims, hearings, notices of violation, investigations, proceedings or demand
letters relating to any alleged hazard or alleged defect in design, manufacture,
materials or workmanship, including any failure to warn or alleged breach of
express or implied warranty or representation, relating to any Product produced
at the Facility.
3.21 Ownership.
(a) Synfuel is a wholly owned subsidiary of Covol, with Covol
owning all the outstanding capital stock of Synfuel, free and clear of all Liens
and all material claims or charges of any kind, and all such outstanding capital
stock of Synfuel is validly issued, fully paid and nonassessable, and there are
no outstanding options, rights or agreements of any kind relating to the
issuance, sale or transfer of any capital stock or other equity securities of
Synfuel.
(b) Pocahontas is an indirect wholly owned subsidiary of
Covol, with Covol owning directly a ninety-nine percent (99%) member interest
and indirectly, through its ownership of Synfuel, a one percent (1%) member
interest in Pocahontas, in each case, free and clear of all Liens and all
material claims or charges of any kind, and all such member interests of
Pocahontas are validly issued, fully paid and nonassessable, and there are no
outstanding options, rights or agreements of any kind relating to the issuance,
sale or transfer of any member interest or other equity securities of
Pocahontas.
3.22 Full Disclosure. Sellers have not failed to disclose to Buyer any
facts material to the business, results of operations, assets, liabilities,
financial condition or prospects of the Facility. No representation or warranty
by any Seller contained in this Agreement or any of the Transaction Documents to
which such Seller is a party and no statement contained in any document,
certificate or other writing furnished or to be furnished by any Seller to Buyer
or any of its representatives pursuant to the provisions hereof or thereof or in
connection with the transactions contemplated herein or therein, contains or
will contain any untrue statement of material fact or omits or will omit to
state any material fact necessary, in light of the circumstances under which it
was made, in order to make the statements herein or therein not misleading.
24
3.23 Solvency. Each of the Sellers is and, after giving effect to the
transactions contemplated in this Agreement and the Transaction Documents, will
be Solvent.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Sellers that all of the statements
contained in this Article IV are true and complete as of the date of this
Agreement (or, if made as of a specified date, as of such date), and will be
true and complete as of the Closing Date as though made on the Closing Date:
4.1 Organization and Standing.
Buyer is a corporation duly organized, validly existing, and in good
standing under the laws of the Commonwealth of Kentucky and has the power to own
its own property, and to execute, deliver and perform this Agreement and each of
the Transaction Documents to which it is a party, and to carry on its business
as now being conducted.
4.2 Authorizations; Binding Agreements.
(a) Buyer has full corporate power and authority to execute
and deliver this Agreement and the other Transaction Documents to which Buyer is
a party and to consummate the transactions contemplated herein and therein.
(b) The execution, delivery and performance by Buyer of this
Agreement and the other Transaction Documents to which it is a party and of each
conveyance, assignment, agreement and other document herein and therein
contemplated to be executed by it have been fully authorized by all necessary
corporate action (other than approval by Buyer's board of directors).
(c) No vote of, or consent by, the holders of any class or
series of stock or indebtedness having general voting rights and debt
convertible into securities having such rights issued by Buyer is necessary to
authorize the execution and delivery by Buyer of this Agreement or the other
Transaction Documents to which it is a party or the consummation by it of the
transactions contemplated hereby and thereby.
25
(d) This Agreement and the other Transaction Documents to
which Buyer is a party and the conveyances, assignments, agreements and other
documents herein and therein contemplated to be executed, delivered and
performed by Buyer are, or will be upon execution, legal, valid and binding
obligations of Buyer, duly enforceable against Buyer in accordance with their
terms (subject, however, to the effects of bankruptcy, insolvency,
reorganization, moratorium and similar laws from time to time in effect relating
to the rights and remedies of creditors as well as to general principles of
equity).
(e) This Agreement and the other Transaction Documents to
which Buyer is a party and the conveyances, assignments, agreements and other
documents herein and therein contemplated to be executed, delivered and
performed by Buyer (i) do not and will not result in any violation of, conflict
with or default under the terms of Buyer's organizational documents, and (ii)
subject only to Buyer's Required Consents, do not and will not result in any
violation of, conflict with or default under any material permit, lease,
venture, indenture, mortgage, agreement, contract, judgment, order or other
obligation or restriction to which Buyer is bound (nor, to the Knowledge of
Buyer, does there exist any condition which upon the passage of time or the
giving of notice would cause such violation, conflict or default).
4.3 Brokers or Finders Fees.
Except as set forth on Schedule 4.3 attached hereto, there are no
obligations or liabilities, contingent or otherwise, for broker's or finder's
fees created by Buyer with respect to the matters provided for in this Agreement
and the other Transaction Documents.
4.4 No Actions Affecting Enforcement of the Agreement and the other
Transaction Documents.
Except as disclosed on Schedule 4.4 attached hereto, there are no
actions, suits, inquiries, proceedings or investigations by or before any court
or governmental or other regulatory or administrative agency or commission
pending or, to the Knowledge of Buyer, threatened against or involving Buyer, or
which questions or challenges the validity of this Agreement or any of the
Transaction Documents to which Buyer is a party or any action taken or to be
taken by Buyer
26
pursuant to this Agreement or any of the Transaction Documents to which it is a
party in connection with the transactions contemplated herein or therein, and to
the Knowledge of Buyer there is no valid basis for any such action, suit,
inquiry, proceeding or investigation.
4.5 Consents.
Schedule 4.5 attached hereto is a true, correct and complete list of
all of Buyer's Required Consents.
ARTICLE V
CERTAIN UNDERSTANDINGS AND AGREEMENTS
5.1 Subsequent Actions.
(a) Subject to the terms and conditions herein provided, each
of the Parties agrees to use commercially reasonable efforts to take, or cause
to be taken, all action, and to do, or cause to be done, all things necessary,
proper and advisable under applicable Law, and to obtain the Required Consents,
necessary to consummate and make effective the transactions contemplated by this
Agreement, including, but not limited to, Buyer agrees to use commercially
reasonable efforts (i) to relocate the Facility to the New Facility Site, (ii)
to produce and sell Section 29 Product from the Facility at the New Facility
Site, (iii) to achieve the Commercial Operation Date by no later than December
31, 2000 and (iv) to provide Sellers with monthly production records indicating
the quantity of Product produced at the Facility at the New Facility Site.
(b) If at any time after the Effective Time, Buyer will
consider or be advised that any deeds, bills of sale, instruments of conveyance,
financing statements, powers of attorney, assignments, assurances or any other
actions or things are necessary or desirable to vest, perfect or confirm
ownership (of record or otherwise) in the Facility, its right, title or interest
in, to or under any or all of the Facility or otherwise to carry out this
Agreement, Sellers shall execute and deliver all deeds, bills of sale,
instruments of conveyance, financing statements, powers of attorney, assignments
and assurances and take or do, or cause to be taken or done, all such other
actions and things as may be requested by Buyer in order to
27
vest, perfect or confirm any and all right, title and interest in, to and under
such rights, properties or assets in the Facility or otherwise to carry out this
Agreement.
(c) In case at any time after the Effective Time any further
action is necessary, proper or desirable to carry out the purposes of this
Agreement, as soon as reasonably practicable, each Party shall take or cause its
proper officers or directors to take, all such necessary, proper or desirable
action. Buyer and Sellers will execute any additional instruments necessary to
consummate the transactions contemplated hereby.
5.2 Public Announcements.
Buyer and Sellers will consult with each other before issuing any press
release or otherwise making any public statement with respect to this Agreement
and the transactions contemplated herein, and shall not issue or cause the
publication of any such press release or make, or cause to be made, any such
public statement prior to such consultation or as to which the other Party
reasonably objects, except as may be required by Law or by obligations pursuant
to any listing agreement with any national securities exchange or inter-dealer
quotation system.
5.3 Confidentiality.
Notwithstanding the execution of this Agreement, the confidentiality
provisions of the Confidentiality Agreement shall remain in full force and
effect and shall survive the Closing; provided, however, that notwithstanding
anything to the contrary contained in the Confidentiality Agreement, this
Agreement or any of the Transaction Documents, the provisions of the
Confidentiality Agreement shall not apply to (a) any documents or information
that Buyer shall disclose to Affiliates or to other Persons as may be necessary
for Buyer (i) to consummate the transactions contemplated in this Agreement and
the Transaction Documents, (ii) to operate and maintain the Facility or (iii) to
produce and sell Product at the New Facility Site and (b) any documents prepared
in connection with a proceeding before or filed with, or other disclosure made
to, a court, arbitration tribunal or mediation service in order to enforce
Buyer's rights arising in connection with the termination of this Agreement
pursuant to Article IX.
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5.4 Taxes.
(a) Following Closing, Sellers shall timely file all tax
returns and reports relating to the Facility and the conduct of the
construction, maintenance and operation of the Facility prior to Closing which
have not been filed or were not yet due to be filed prior to Closing, and
Sellers shall timely pay all taxes, assessments, fees, interest, penalties and
governmental charges relating to the Facility or the conduct of the
construction, maintenance and operation of the Facility prior to Closing which
have not been paid or were not yet due and payable prior to Closing.
(b) Following Closing, Buyer may seek one or more Private
Letter Rulings from the IRS as to matters relating to the Facility and Section
29 of the Code. Sellers shall cooperate with and assist Buyer, as reasonably
requested by Buyer, in connection with seeking such Private Letter Rulings.
5.5 Use of and Access to Facility.
Beginning on the date of this Agreement and ending on the last day of
the Relocation Period:
(a) Sellers shall (i) afford, or cause to be afforded, to
Buyer and its authorized representatives reasonable access to the Facility and
to all books and records relating to the Facility (whether on or off the
Facility Site), (ii) permit Buyer to make such inspections and to make copies of
such books and records as it may reasonably require, and (iii) furnish Buyer
with such financial and operating data and other information concerning the
Facility as Buyer may from time to time reasonably request. Buyer and its
authorized representatives shall conduct all such inspections in a manner that
will minimize disruptions to the business and operations of Sellers and/or the
Facility.
(b) Sellers agree that Buyer and its authorized
representatives (including its designated engineers or consultants) may at any
time enter into and upon all or any portion of the Facility or the Facility Site
in order to investigate and assess, as Buyer deems necessary or appropriate in
its sole and absolute discretion, the environmental condition of such properties
or the business conducted thereat. Such investigation may include, but need not
be limited to, the performance of soil and surface or ground water sampling,
monitoring, borings or testing and any other tests, investigations, audits,
assessments, studies, inspections or
29
other procedures relating to environmental conditions or Hazardous Substances.
Sellers shall cooperate with Buyer and its authorized representatives in
conducting such investigation, shall provide, or cause to be provided, Buyer and
its authorized representatives full access to the Facility and the Facility
Site, together with full permission to conduct such investigation.
(c) Sellers shall grant and provide, or cause to be granted
and provided, to Buyer (at no additional cost to Buyer) such access (including,
but not limited to, rights of ingress and egress) to the Facility Site as Buyer
may reasonably request in order to permit Buyer to remove the Facility from the
Facility Site for a period of up to (12) months beginning on the Closing Date
(for purposes of this Section, the "Use Period"); provided, however, that during
the Use Period the maintenance of the roads that are to be used by Buyer on the
Plant Property (as defined in the Use and Non-Disturbance Agreement) shall be at
Buyer's expense; provided further that Buyer shall have no obligation to
maintain such roads for use by any other Person. During the Use Period, Sellers
shall permit Buyer (at no additional cost to Buyer) to store all or such portion
of the Facility at the Facility Site as Buyer may require.
(d) Sellers shall provide, or cause to be provided, to Buyer,
all utilities (including, without limitation, gas, electric, water, waste
disposal and telephone) required in connection with the maintenance, removal and
relocation of the Facility by Buyer, provided that Buyer shall reimburse Sellers
for any actual costs or expenses so incurred on behalf of Buyer. Buyer agrees to
provide, or cause to be provided, at its own cost, security at the Facility Site
for so long as the Facility is located at the Facility Site.
5.6 Damage to Facility.
In the event that after the date of this Agreement but before the
Closing Date, the Facility shall have been materially and adversely affected by
reason of any loss, taking, condemnation, destruction or physical damage,
whether or not insured against, Sellers agree that they shall use reasonable
best efforts, at their own expense, to repair the Facility such that it is in
materially the same condition as it was prior to such loss, taking,
condemnation, destruction or physical damage.
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ARTICLE VI
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BUYER
Each and every obligation of Buyer to be performed on the Closing Date
shall be subject to the satisfaction prior to or at the Closing of the following
express conditions precedent, in each case, in form and substance satisfactory
to Buyer:
6.1 No Termination; Compliance with Agreement.
This Agreement shall not have been terminated in accordance with its
terms, and Sellers shall have performed and complied in all material respects
with all of their obligations under this Agreement which are to be performed or
complied with by them prior to or on the Closing Date.
6.2 Actions.
Each Seller shall have taken all actions, corporate or otherwise,
necessary in connection with the execution and delivery of this Agreement and
the Transaction Documents to which it is a party and the performance of its
obligations hereunder and thereunder.
6.3 Instruments Satisfactory.
Each of Sellers shall deliver, or cause to be delivered, to Buyer the
documents specified in Section 2.3(a), each fully executed (other than by Buyer)
and dated as of the Closing Date, and otherwise in form and substance
satisfactory to Buyer.
6.4 No Litigation.
No investigation, suit, action or other proceedings shall be threatened
or pending before any court or governmental authority that seeks restraint,
prohibition, damages or other relief in connection with the execution and
delivery of this Agreement or the Transaction Documents or the consummation of
the transactions contemplated hereby and thereby.
31
6.5 Representations and Warranties.
(a) The representations and warranties made by Sellers in this
Agreement and the Transaction Documents shall be true and correct in all
respects (subject to any express qualifications or limitations stated herein or
therein, other than the qualifications and limitations set forth in the provisio
to Sellers' representations and warranties in the last sentence of Section 3.1)
as of the Closing Date with the same force and effect as though such
representations and warranties had been made on the Closing Date.
(b) Between the date of this Agreement and the Closing Date,
the Facility shall not have suffered any material adverse change in its assets
or operations by reason of any loss, taking, condemnation, destruction, physical
damage or otherwise, whether or not insured against.
6.6 Material Adverse Change.
(a) The Fixed Assets shall not have been materially and
adversely affected by reason of any loss, taking, condemnation, destruction or
physical damage, whether or not insured against.
(b) There shall not have occurred any Material Adverse Effect.
(c) Neither any investigation of the Facility or Sellers by
Buyer, nor any document delivered to Buyer as contemplated by this Agreement,
shall have revealed any facts or circumstances which, in the sole and exclusive
judgment of Buyer, reflect in a material adverse way on the financial condition,
assets, liabilities (absolute, accrued, contingent or otherwise), business,
operations or prospects of Sellers or the Facility.
6.7 Board Approval.
Buyer shall have obtained approval of its Board of Directors to execute
and deliver this Agreement and the Transaction Documents and to perform its
obligations hereunder and thereunder.
6.8 Financing Statements.
32
Sellers shall have executed, or cause to be executed on its behalf,
Buyer's Financing Statements, and such financing statements shall have been
filed in the appropriate jurisdiction.
6.9 Consents.
All consents and approvals of any Person (including, but not limited
to, Sellers' Required Consents) necessary to the consummation of the Closing and
the execution and delivery by Sellers of this Agreement and the Transaction
Documents and the performance of their respective obligations hereunder and
thereunder, including, but not limited to, (i) any consents, approvals and
waivers from parties to loan agreements, contracts, leases or other agreements
and from governmental authorities, whether federal, state or local and (ii) any
consents, approvals or resolutions of directors or shareholders of any Party or
any other Person, shall have been obtained, and a copy of each such consent or
approval shall have been provided to Buyer at or prior to Closing.
ARTICLE VII
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SELLERS
Each and every obligation of Sellers to be performed on the Closing
Date shall be subject to the satisfaction prior to or at the Closing of the
following express conditions precedent, in each case, in form and substance
satisfactory to Sellers:
7.1 No Termination; Compliance with Agreement.
This Agreement shall not have been terminated in accordance with its
terms, and Buyer shall have performed and complied in all material respects with
all of its obligations under this Agreement which are to be performed or
complied with by it prior to or on the Closing Date.
7.2 Actions.
Buyer shall have taken all actions, corporate or otherwise, necessary
in connection with the execution and delivery of this Agreement and the
Transaction
33
Documents to which it is a party and the performance of its obligations
hereunder and thereunder.
7.3 Instruments Satisfactory.
Buyer shall deliver, or cause to be delivered, to Sellers the documents
specified in Section 2.3(b), each executed by Buyer and dated as of the Closing
Date, and otherwise in form and substance satisfactory to Buyer.
7.4 No Litigation.
No investigation, suit, action or other proceeding shall be threatened
or pending before any court or governmental authority that seeks restraint,
prohibition, damages or other relief in connection with this Agreement or the
Transaction Documents or the consummation of the transactions contemplated
hereby and thereby.
7.5 Representations and Warranties.
The representations and warranties made by Buyer in this Agreement and
the Transaction Documents shall be true and correct in all respects (subject to
any express qualifications or limitations stated herein or therein) as of the
Closing Date with the same force and effect as though such representations and
warranties had been made on the Closing Date.
7.6 Consents.
All consents and approvals of any Person (including, but not limited
to, Buyer's Required Consents) necessary to the consummation of the Closing and
the execution and delivery by Buyer of this Agreement and the Transaction
Documents to which it is a party and the performance of their respective
obligations hereunder and thereunder, including, but not limited to, (i) any
consents, approvals and waivers from parties to loan agreements, contracts,
leases or other agreements and from governmental authorities, whether federal,
state or local and (ii) any consents, approvals or resolutions of directors or
shareholders of any Party or any other Person, shall have been obtained, and a
copy of each such consent or approval shall have been provided to Sellers at or
prior to Closing.
34
ARTICLE VIII
INDEMNITIES AND ADDITIONAL COVENANTS
8.1 Sellers' Indemnity.
(a) Sellers shall indemnify and hold harmless from and
against, and agree to defend promptly Buyer, any Affiliate of Buyer and the
officers, directors, employees, agents, representatives and advisors of Buyer or
any Affiliate of Buyer (collectively, "Buyer Indemnified Persons") from, and
reimburse Buyer Indemnified Persons for, any and all losses, damages, costs,
expenses, liabilities, judgments, settlements, obligations and claims of any
kind, including, but not limited to, environmental penalties, costs (including,
but not limited to, costs of remediation) and liabilities (whether involving
personal injury or property damage), reasonable attorneys' fees and other legal
costs and expenses (hereinafter referred to collectively as "Losses"), that any
Buyer Indemnified Person may at any time suffer or incur, or become subject to,
as a result of or in connection with: (i) any breach or inaccuracy of any of the
representations and warranties made by Sellers in this Agreement, the
Transaction Documents or any other agreement or instrument delivered by Sellers
pursuant hereto or thereto; (ii) any failure of Sellers (before or after the
Closing Date) to carry out, perform, satisfy and discharge any of its covenants,
agreements, undertakings, liabilities or obligations under this Agreement, the
Transaction Documents or under any of the agreements and instruments delivered
by Sellers pursuant to hereto or thereto; (iii) claims by third parties
(including governmental authorities) against Buyer relating to the construction,
operation, maintenance and ownership by Sellers of the Facility and the
performance by Sellers under the Contracts, in each case under this clause (iii)
for the period prior to the Effective Time; (iv) any of the matters referenced
in Schedules 3.5 and 3.11 attached hereto; (v) any violations of, or failure to
operate the Facility in accordance with, necessary permits prior to the
Effective Time; (vi) failure by Sellers to satisfy and perform any of their
obligations herein or under the Transaction Documents after the Closing and any
cost incurred to satisfy and perform any such obligation or resulting from any
additional or modified terms under any Contracts (or substitute contracts)
required for or resulting from the satisfaction and performance of such
obligations; and (vii) any of the events, circumstances or conditions described
in Section 3.14, any
35
pollution or threat to human health or the environment that (A) is related in
any way to Sellers' (or any other owner's (including, but not limited to, each
of the Real Property Owners) or operator's) management, use, control, ownership
or operation of the Facility or Facility Site prior to the Closing, including
all on-site and off-site activities involving Hazardous Substances, and (B)
occurred, existed, arises out of conditions or circumstances that occurred or
existed, or was caused, in whole or in part, on or before the Closing Date; or
any Environmental Claim against the Facility or any Person whose liability for
such Environmental Claim was assumed or retained either contractually or by
operation of law; and (viii) any and all Excluded Liabilities.
(b) In the event a claim against a Buyer Indemnified Person
arises that Buyer reasonably believes is covered by the indemnity provisions of
Section 8.1(a), notice shall be given promptly by Buyer to Sellers containing
details reasonably sufficient for Sellers to identify the nature and basis of
the claim. Provided that Sellers admit in writing to Buyer that such claim is
covered by the indemnity provisions of Section 8.1(a), Sellers shall have the
right to contest and defend by all appropriate legal proceedings such claim and
to control all settlements (unless Buyer agrees to assume the cost of settlement
and to forgo such indemnity) and to select lead counsel to defend any and all
such claims at the sole cost and expense of Sellers; provided, however, that (i)
Sellers may not effect any settlement that could result in any cost, expense or
liability to Buyer unless Buyer consents in writing to such settlement and
Sellers agree to indemnify Buyer therefor and (ii) in the event that Buyer
reaches a settlement with respect to such a claim, Sellers shall not
unreasonably withhold their consent to such settlement. Buyer may select counsel
to participate with Sellers' counsel in any such defense, in which event Buyer's
counsel shall be at its own sole cost and expense. In connection with any such
claim, action or proceeding, the Parties shall cooperate with each other and
provide each other with access to relevant books and records in their
possession.
(c) Sellers shall not be required to indemnify and hold
harmless Buyer Indemnified Persons pursuant to Section 8.1(a)(i) in respect of
the representations and warranties made by Sellers herein unless such right to
indemnification is asserted by Buyer (whether or not such Losses have actually
been incurred) by notice to Sellers within twelve (12) months after the Closing
Date, with the exception of (i) the representations and warranties set forth in
Sections 3.4 and 3.19, which must be asserted by Buyer within the applicable
statute of limitations or any extensions thereof required by any applicable
authority relating to the taxes or assessments giving rise to the Loss, plus
sixty (60) days, (ii) the representations and
36
warranties set forth in Section 3.12, which must be asserted by Buyer within the
applicable statute of limitations for the violation of the underlying law that
forms the basis of such claim, plus sixty (60) days, (iii) the representations
and warranties set forth in Sections 3.1, 3.2, and 3.7, which shall be without
time limitation, and (iv) the representations and warranties set forth in
Section 3.14, which must be asserted within twenty-four (24) months after the
Closing Date.
(d) Notwithstanding the foregoing, Sellers shall not be
required to indemnify Buyer Indemnified Persons under Section 8.1(a)(i) in
respect of the representations and warranties made by Sellers (other than in the
case of fraud or misrepresentation) unless the amount of all Losses for which
indemnification is sought by Buyer under Section 8.1(a)(i) exceeds, in the
aggregate, $75,000.00, in which event, Sellers' indemnity obligation hereunder
would apply to all such Losses. Sellers' aggregate indemnification obligation
pursuant to Section 8.1(a)(i) shall in no event exceed the Purchase
Consideration paid to Sellers.
(e) Subject to Section 10.11, the indemnification provided in
this Section 8.1, including the limitations with respect thereto, shall be the
exclusive remedy for Buyer with respect to Losses as a result of or in
connection with the matters described in Section 8.1(a)(i), notwithstanding any
provisions in this Agreement or any other such agreement or instrument to the
contrary.
8.2 Buyer's Indemnity.
(a) Buyer hereby indemnifies and holds harmless from and
against, and agrees to defend promptly Sellers, any Affiliate of Sellers and the
officers, directors, employees, agents, representatives and advisors of Sellers
or any Affiliate of Sellers (collectively, "Sellers' Indemnified Persons") from
and reimburse Sellers' Indemnified Persons for, any and all Losses that Sellers'
Indemnified Persons may at any time suffer or incur, or become subject to, as a
result of or in connection with: (i) any breach or inaccuracy of any of the
representations and warranties made by Buyer in this Agreement or any other
agreement or instrument delivered by Buyer pursuant hereto; (ii) any failure by
Buyer to carry out, perform, satisfy and discharge any of its covenants,
agreements, undertakings, liabilities or obligations under this Agreement or
under any of the agreements and instruments delivered by Buyer pursuant to this
Agreement; and (iii) claims by third parties (including governmental
authorities) against Sellers relating to the operation and ownership by Buyer of
the Facility for the period following the Effective Time.
37
(b) In the event a claim against a Sellers' Indemnified Person
arises that is covered by the indemnity provisions of Section 8.2(a), notice
shall be given promptly by Sellers to Buyer containing detail reasonably
sufficient for Buyer to identify the nature and basis of the claim. Provided
that Buyer admits in writing to Sellers that such claim is covered by the
indemnity provisions of Section 8.2(a), Buyer shall have the right to contest
and defend by all appropriate legal proceedings such claim and to control all
settlements (unless Sellers agrees to assume the cost of settlement and to forgo
such indemnity) and to select lead counsel to defend any and all such claims at
the sole cost and expense of Buyer; provided, however, that (i) Buyer may not
effect any settlement that could result in any cost, expense or liability to
Sellers unless Sellers consents in writing to such settlement and Buyer agrees
to indemnify Sellers therefor and (ii) in the event that Sellers reach a
settlement with respect to such a claim, Buyer shall not unreasonably withhold
their consent to such settlement. Sellers may select counsel to participate with
Buyer's counsel in any such defense, in which event Sellers' counsel shall be at
the sole cost and expense of Sellers. In connection with any such claim, action
or proceeding, the Parties shall cooperate with each other and provide each
other with access to relevant books and records in their possession.
(c) Buyer shall not be required to indemnify and hold harmless
Sellers' Indemnified Persons pursuant to Section 8.2(a)(i) in respect of the
representations and warranties made by Buyer herein unless such right to
indemnification is asserted by Sellers (whether or not such Losses have actually
been incurred) by notice to the Buyer within twelve (12) months after the
Closing Date, with the exception of the representations and warranties set forth
in Sections 4.1 and 4.2, which shall be without time limitation.
(d) Notwithstanding the foregoing, Buyer shall not be required
to indemnify Sellers' Indemnified Persons under Section 8.2(a)(i) in respect of
the representations and warranties made by Buyer (other than in the case of
fraud or misrepresentation) unless the amount of all Losses for which
indemnification is sought by Sellers under Section 8.2(a)(i) exceeds, in the
aggregate, $75,000.00, in which event, Buyer's indemnity obligation hereunder
would apply to all such Losses. Buyer's aggregate indemnification obligation
pursuant to Section 8.2(a)(i) shall in no event exceed the Purchase
Consideration paid to Sellers.
(e) Subject to Section 10.11, the indemnification provided in
this Section 8.2, including the limitations with respect thereto, shall be the
38
exclusive remedy for Sellers with respect to Losses as a result of or in
connection with the matters described in Section 8.2(a)(i), notwithstanding any
provisions in this Agreement or any other such agreement or instrument to the
contrary.
8.3 Bulk Sales Compliance.
To the extent applicable, Sellers shall comply with the provisions of
the bulk sales law of any U.S. jurisdiction, and Sellers covenants and agrees to
pay and discharge when due all claims of any governmental entities and creditors
of Sellers and its subsidiaries that could be asserted against Buyer by reason
of such non-compliance. Sellers agrees to indemnify and hold Buyer harmless from
and against and shall on demand reimburse Buyer for any and all Losses suffered
by Buyer by reason of Sellers' failure to pay and discharge any such claims.
8.4 Additional Instruments.
At any time and from time to time after the Closing, at either Party's
request and without further consideration, Sellers or Buyer, as the case may be,
shall execute and deliver such other instruments of sale, transfer, conveyance,
assignment and confirmation and take such other action (including, but not
limited to, the filings of liens and execution of financing statements) as
Sellers or Buyer may reasonably deem necessary or desirable in order to more
effectively transfer, convey, and assign to Buyer, and confirm Buyer's title to
and interest in and responsibility and liability for, the Facility and the
consummation of the transactions contemplated herein. Without limiting the
generality of the foregoing, Sellers will cooperate with and assist Buyer in
renewing, or transferring, into Buyer's name those permits for which Buyer
requests such assistance and cooperation at the appropriate time for such
renewal or transfer as determined by Buyer.
8.5 Access to Books, Records and Employees.
From and after the Closing Date, Buyer will authorize and permit
Sellers and its respective representatives to have access during normal business
hours, upon reasonable notice and for reasonable purposes and in such manner as
will not unreasonably interfere with the conduct of Buyer's business, to Books
and Records and within the control of Buyer that relate to the Facility. From
and after the Closing Date, Sellers will authorize and permit Buyer and its
representatives to have access during normal business hours, upon reasonable
notice and for reasonable
39
purposes and in such manner as will not unreasonably interfere with the conduct
of Sellers' business, to all books and records, files, documents and other
correspondence related to the Facility prior to the Effective Time, which are
not included among the Books and Records. Buyer and Sellers agree to maintain
all books, records, files, documents and other correspondence related to the
Facility prior to the Effective Time for a period of seven (7) years after the
Closing Date.
ARTICLE IX
TERMINATION
9.1 Termination.
This Agreement may be terminated and the transactions contemplated
hereby may be abandoned at any time prior to the Closing Date as follows:
(a) by mutual written agreement of all of the Parties;
(b) by either Buyer or Sellers if any court, arbitral
tribunal, administrative agency or commission or other governmental or other
regulatory authority or agency shall issue an order, decree or ruling or take
any other action, which permanently restrains, enjoins or otherwise prohibits
the acquisition by Buyer of the Facility and such order, decree, ruling or other
action shall have become final and non-appealable;
(c) by either Buyer or Sellers if the other Party or Parties,
as the case may be, shall have breached in any material respect any of its or
their, as the case may be, representations, warranties, covenants or other
agreements contained in this Agreement or any of the Transaction Documents,
which breach cannot be or has not been cured within thirty (30) days after the
giving of written notice thereof by such non-breaching Party; or
(d) by either Sellers or Buyer if the Closing Date shall not
have occurred on or before January 31, 2000; provided, however, that the right
to terminate this Agreement pursuant to this clause (d) shall not be available
to any Party whose failure to fulfill any obligation under this Agreement has
been the cause of, or resulted in, the failure of the Closing Date to occur
prior to such date.
9.2 Rights on Termination; Waiver.
40
(a) If this Agreement is terminated pursuant to Section 9.1,
all further obligations of the Parties under or pursuant to this Agreement shall
terminate and there shall be no liability or obligation thereafter on the part
of either Party to the other Party or Parties, as the case may be, except with
respect to any fraud or breach of this Agreement prior to such termination.
(b) If any of the conditions set forth in Article VI of this
Agreement have not been satisfied, Buyer may nevertheless elect to waive such
conditions and proceed with the consummation of the transactions contemplated
hereby. If any of the conditions set forth in Article VII of this Agreement have
not been satisfied, Sellers may nevertheless elect to waive such conditions and
proceed with the consummation of the transactions contemplated hereby.
ARTICLE X
MISCELLANEOUS
10.1 Entire Agreement; Amendment.
(a) This Agreement and the documents referred to herein and to
be delivered pursuant hereto constitute the entire agreement between the Parties
pertaining to the subject matter hereof, and supersede all prior and
contemporaneous agreements, understandings, negotiations and discussions of the
Parties, whether oral or written, and there are no warranties, representations
or other agreements between the Parties in connection with the subject matter
hereof, except as specifically set forth herein or therein.
(b) No amendment, supplement, modification, waiver or
termination of this Agreement shall be binding unless executed in writing by all
of the Parties. No waiver of any of the provisions of this Agreement shall be
deemed or shall constitute a waiver of any other provision of this Agreement,
whether or not similar, nor shall such waiver constitute a continuing waiver
unless otherwise expressly provided.
10.2 Expenses.
Except as otherwise specifically provided herein, each of the Parties
shall pay the fees and expenses of their respective counsel, accountants and
other
41
experts and all other costs and expenses incident to the negotiation and
preparation of this Agreement and consummation of the transactions contemplated
hereby.
10.3 Governing Law; Consent to Jurisdiction; Waiver of Jury Trial.
(a) THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS
OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO THE PRINCIPLES THEREOF
RELATING TO CONFLICTS OF LAW EXCEPT SECTION 5-1401 OF THE NEW YORK GENERAL
OBLIGATIONS LAW OR ANY SUCCESSOR PROVISION THERETO).
(b) Each Seller, in respect of itself and its properties, (i)
agrees to be subject to (and hereby irrevocably submits to) the non-exclusive
jurisdiction of any Federal court located in the Commonwealth of Kentucky or any
Kentucky state court in the event of any dispute arising out of or relating to
this Agreement or the transactions contemplated hereby, (ii) agrees that it
shall not attempt to deny or defeat such jurisdiction by motion or other request
for leave from any such court and irrevocably waives, to the fullest extent it
may effectively do so under applicable Law, any objection to the laying of the
venue of any such action in any such court and any claim that any such action
brought in any such court has been brought in an inconvenient forum, (iii)
agrees that it shall not bring any action arising out of or relating to this
Agreement or any transactions contemplated hereby in any court other than a
Federal or state court sitting in the Commonwealth of Kentucky, and (iv)
irrevocably agrees that all disputes arising out of or relating to this
Agreement and the transactions contemplated hereby that are brought by Sellers
may be determined in any Federal or state court sitting in the Commonwealth of
Kentucky.
(c) Buyer, in respect of itself and its properties, (i) agrees
to be subject to (and hereby irrevocably submits to) the non-exclusive
jurisdiction of any Federal court located in the State of Utah or any Utah state
court in the event of any dispute arising out of or relating to this Agreement
or the transactions contemplated hereby, (ii) agrees that it shall not attempt
to deny or defeat such jurisdiction by motion or other request for leave from
any such court and irrevocably waives, to the fullest extent it may effectively
do so under applicable Law, any objection to the laying of the venue of any such
action in any such court and any
42
claim that any such action brought in any such court has been brought in an
inconvenient forum, (iii) agrees that it shall not bring any action arising out
of or relating to this Agreement or any transactions contemplated hereby in any
court other than a Federal or state court sitting in the State of Utah, and (iv)
irrevocably agrees that all disputes arising out of or relating to this
Agreement and the transactions contemplated hereby and that are brought by Buyer
may be determined in any Federal or state court sitting in the State of Utah.
(d) Either Party may make service on the other Party by
sending or delivering a copy of the process to the Party to be served at the
address and in the manner provided for the giving of notices in Section 10.5,
provided that nothing in this Section 10.3, shall affect the right of any Party
to serve legal process in any other manner permitted by law or in equity.
(e) EACH OF THE PARTIES IRREVOCABLY WAIVES ALL RIGHT OF TRIAL
BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF, OR IN
CONNECTION WITH, THIS AGREEMENT OR THE TRANSACTION DOCUMENTS OR ANY MATTER
ARISING HEREUNDER OR THEREUNDER.
10.4 Assignment.
This Agreement and each Party's respective rights, interests and
obligations hereunder may not be assigned, by operation of law or otherwise,
without the prior written consent of the other Party or Parties, as the case may
be; provided, however, that Buyer may assign, in its sole discretion, any or all
of its rights, interests and/or obligations under this Agreement to an Affiliate
without such consent.
10.5 Notices.
All communications, notices and disclosures required or permitted by
this Agreement shall be in writing and shall be deemed to have been given at the
earlier of the date (a) when delivered personally or by messenger or by
overnight delivery service to an officer of the other Party or (b) when received
via telecopy, telex or other electronic transmission, in all cases addressed to
the Person for whom it is intended at his address set forth below or to such
other address as a Party shall have designated by notice in writing to the other
Party in the manner provided by this Section:
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If to Buyer: **
Fax: **
Attn: President
With a copy to: **
Fax **
Attn: General Counsel
If to **: **
Fax: **
Attn: President
If to Sellers: Covol Technologies, Inc.
0000 Xxxxx Xxxxxxxx Xxxx
Xxxx, Xxxx 00000-0000
Fax: (000) 000-0000
Attn: Xxxxx X. Xxxx
With a copy to: Covol Technologies, Inc. Pillsbury Madison & Sutro LLP
0000 Xxxxx Xxxxxxxx Xxxx 000 Xxxxxxxxxx Xxxxxx
Xxxx, Xxxx 00000-0000 Xxx Xxxxxxxxx, XX 00000
Fax: (000) 000-0000 Fax: (000) 000-0000
Attn: General Counsel Attn: Xxxxx X. Xxxxxxxx, Esq.
10.6 Counterparts; Headings.
This Agreement may be executed in several counterparts, each of which
shall be deemed an original, but such counterparts shall together constitute but
one and the same Agreement. The Table of Contents and Article and Section
headings in this Agreement are inserted for convenience of reference only and
shall not constitute a part hereof.
10.7 Interpretation.
Unless the context requires otherwise:
(a) When a reference is made in this Agreement to an article
or section, such reference shall be to an article or section of this Agreement.
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(b) Whenever the words "include", "includes" or "including"
are used in this Agreement they shall be deemed to be followed by the words
"without limitation."
(c) The words "hereof", "herein" and "herewith" and words of
similar import shall, unless otherwise stated, be construed to refer to this
Agreement as a whole and not to any particular provision of this Agreement, and
article, section, paragraphs, exhibit and schedule references are to the
articles, sections, paragraphs, exhibits and schedules of this Agreement.
(d) The meaning assigned to each term defined herein shall be
equally applicable to both the singular and the plural forms of such term, and
words denoting any gender shall include all genders. Where a word or phrase is
defined herein, each of its other grammatical forms shall have a corresponding
meaning.
(e) A reference to any Party to this Agreement or any other
agreement or document shall include such Party's successors and permitted
assigns.
(f) A reference to any legislation or to any provision of any
legislation shall include any amendment to, and any modification or reenactment
thereof, any legislative provision substituted therefor and all regulations and
statutory instruments issued thereunder or pursuant thereto.
(g) All references to contracts, agreements, leases or other
understandings or arrangements shall refer to oral as well as written matters.
(h) The specificity of any representation or warranty
contained herein shall not be deemed to limit the generality of any other
representation or warranty contained herein.
(i) The Parties have participated jointly in the negotiation
and drafting of this Agreement. In the event an ambiguity or question of intent
or interpretation arises, this Agreement shall be construed as if drafted
jointly by the Parties, and no presumption or burden of proof shall arise
favoring or disfavoring any Party by virtue of the authorship of any provisions
of this Agreement.
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10.8 Severability.
Any term or provision of this Agreement that is held by a court of
competent jurisdiction or other authority to be invalid, void or unenforceable
in any situation in any jurisdiction shall not affect the validity or
enforceability of the remaining terms and provisions hereof or the validity or
enforceability of the offending term or provision in any other situation or in
any other jurisdiction. If the final judgment of a court of competent
jurisdiction or other authority declares that any term or provision hereof is
invalid, void or unenforceable, the parties agree that the court making such
determination shall have the power to reduce the scope, duration, area or
applicability of the term or provision, to delete specific words or phrases, or
to replace any invalid, void or unenforceable term or provision with a term or
provision that is valid and enforceable and that comes closest to expressing the
intention of the invalid or unenforceable term or provision.
10.9 No Reliance.
No third party is entitled to rely on any of the representations,
warranties and agreements contained in this Agreement. Buyer and Sellers assume
no liability to any third party because of any reliance on the representations,
warranties and agreements of Buyer or Sellers contained in this Agreement.
Nothing contained in this Agreement shall be construed as creating a partnership
or joint venture or any agency relationship between the Parties, or any other
relationship other than Buyer and Sellers as provided herein.
10.10 Parties in Interest.
This Agreement shall be binding upon and inure solely to the benefit of
each Party, and nothing in this Agreement, express or implied, is intended to or
shall confer upon any other Person any rights, benefits or remedies of any
nature whatsoever under or by reason of this Agreement.
10.11 Specific Performance.
The Parties agree that irreparable damage would occur in the event that
any of the provisions of this Agreement were not performed in accordance with
the terms hereof or were otherwise breached. It is accordingly agreed that the
Parties shall be entitled to an injunction or injunctions to prevent breaches of
this Agreement
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and to enforce specifically the terms and provisions of this Agreement, in
addition to any other remedy at law or equity.
10.12 Time of Essence.
Each of the Parties hereby agrees that, with regard to all dates and
time periods set forth or referred to in this Agreement, time is of the essence.
10.13 Representations, Warranties and Covenants.
The representations and warranties of each Party shall be deemed to be
material and to have been relied upon by the other Party. The representations,
warranties, covenants and agreements of Sellers and Buyer contained herein shall
survive the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby and, as to the representations and warranties,
shall be effective until the relevant time limitation for making any indemnity
claim with respect to such representations and warranties under Sections 8.1 and
8.2. shall have been reached.
10.14 Election of Remedies.
Neither the exercise of nor the failure to exercise a right of set-off,
or to give notice of a claim under this Agreement, will constitute an election
of remedies or limit Buyer in any manner in the enforcement of any other
remedies that may be available to any of them, whether at law or in equity.
10.15 ** Undertaking.
In the event that Buyer shall fail to pay Pocahontas all or any portion
of the Subsequent Consideration in accordance with the terms of this Agreement,
** agrees that it shall, subject to the terms and conditions of this Agreement,
pay to Pocahontas the unpaid amount of the Subsequent Consideration which is due
and payable under this Agreement; provided, however, that in no event shall **
be obligated to pay pursuant to this Section 10.15 in excess of an amount equal
to the Subsequent Consideration, less the amount of any payment or payments made
by, or on behalf of Buyer, to Pocahontas pursuant to Section 2.2(b).
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, each Party has caused this Purchase Agreement to be
executed in its name by a duly authorized officer as of the day and year first
above written.
**
By:
-----------------------------------------
Name:
Title:
COVOL TECHNOLOGIES, INC.
By: /Xxxx X. Xxxxxx/
-----------------------------------------
Name: Xxxx X. Xxxxxx
Title: Chairman and Chief Executive Officer
SYNFUEL INVESTMENTS, INC.
By: /Xxxxx X. Xxxx/
-----------------------------------------
Name: Xxxxx X. Xxxx
Title: President
POCAHONTAS SYNFUEL, L.L.C.
By: Covol Technologies, Inc., Manager
By: /Xxxxx X. Xxxx/
-----------------------------------------
Name: Xxxxx X. Xxxx
Title: President
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For the sole and limited purpose of Section
10.15 of this Asset Purchase Agreement
**
By: /**/
-----------------------------------------
Name: **
Title: **
49
