EXHIBIT 10.1
ASSET PURCHASE AGREEMENT
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THIS AGREEMENT is made and entered into this 22nd day of
December,
2006 by and between Gateway Processing Company, a Texas corporation
("Seller"),
and HNNG Development, LLC, a Delaware limited liability company
("Buyer").
Seller and Buyer are each a "party" and together are " parties" to
this
Agreement.
RECITALS
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WHEREAS, pursuant to that certain First Amended and Restated
Agreement
to Develop Natural Gas Treatment Projects Using Mehra Gas Treating
Units, dated
January 1, 2004, as amended January 1, 2005, by and between
Advanced Extraction
Technologies, Inc., a Texas corporation ("AET"), and Seller (the
"Restated
Agreement"), Seller has certain rights to the gas treating process
as described
in the Restated Agreement (the "AET Intellectual Property");
and
WHEREAS, Seller desires to transfer to Buyer the Assets, as
hereinafter defined, and Buyer desires to acquire such Assets, all
upon the
terms and conditions set forth herein;
AGREEMENT
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ARTICLE 1 PURCHASE OF ASSETS AND ASSUMPTION OF LIABILITIES
1.1 Assets. Subject to the terms and conditions hereof and subject
to
the representations and warranties made herein, on the dates
hereinafter set
forth, Seller shall validly sell, assign, transfer, grant, deliver
and convey to
Buyer, and Buyer shall purchase from Seller, Seller's entire right,
title and
interest in and to the following assets, free and clear of any
mortgages, liens,
pledges, charges, claims, leases, restrictions or encumbrances of
any kind
whatsoever:
(a) the Restated Agreement and the AET Intellectual Property;
(b) any and all files, records, reports, maps and other
information related to the Restated Agreement, or otherwise related
to
projects to treat high nitrogen natural gas or to invest in
high
nitrogen natural gas properties; provided, however, that all
such
items regarding the two (2) NRU Projects of Seller referenced
in
Section 9.5 shall not be included and considered Other Assets
except
as provided in Section 9.5; and
(c) any and all goodwill relating to the foregoing;
wherever located and whether or not reflected on Seller's balance
sheet
(hereinafter collectively called the "Assets"). The Assets to be
transferred by
Seller hereunder shall include only those described or referred to
in Section
1.1 and no other assets or properties of Seller shall be
transferred hereunder.
The parties agree that: (i) Seller's entire right, title and
interest in and to
the Other Assets shall be sold, transferred and assigned to Buyer
effective as
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of the Closing Date; and (ii) Seller's entire right, title and
interest in and
to the Agreement/IP Assets shall be sold, transferred and assigned
to Buyer
effective as of the Transfer Date.
1.2 Liabilities. Subject to the terms and conditions of this
Agreement, Buyer will, as of the Transfer Date, assume and agree to
discharge
the obligations and liabilities of Seller arising under the express
written
terms of the Restated Agreement, provided such obligations and
liabilities arise
or accrue after the close of business on the Transfer Date and,
provided,
further, that such obligations or liabilities do not result from
any action or
inaction of Seller taken or not taken on or prior to the Transfer
Date
(collectively, the "Assumed Liabilities"). Any and all other
obligations and
liabilities of Seller or its affiliates, whether accrued or
contingent or due or
not due, which are not expressly described in the definition of the
Assumed
Liabilities as specifically assumed herein by Buyer, (collectively,
the
"Retained Liabilities") shall be and remain the sole obligations
and liabilities
of Seller and its affiliates to pay and discharge, and Buyer shall
not be
obligated in any respect therefor.
ARTICLE 2 PURCHASE PRICE
2.1 Aggregate Purchase Price. The aggregate purchase price for
the
Assets and the covenants set forth in Article 9 as hereinafter
provided (the
"Purchase Price") shall be an amount equal to Six Hundred Thousand
Dollars
($600,000.00), plus the assumption by Buyer of the Assumed
Liabilities as
provided in Section 1.2 hereof, payable by Buyer to Seller as
provided in
Section 2.2 below. The Purchase Price shall be subject to a
discount as provided
in the last sentence of Section 2.2 below.
2.2 Payment of the Purchase Price. Subject to the terms and
conditions
of this Agreement, Buyer shall pay the Purchase Price by (i)
assuming as of the
Transfer Date the Assumed Liabilities to be assumed pursuant to
Section 1.2
above pursuant to the Assumption Agreement; (ii) delivering to
Seller on the
date hereof an amount in immediately available funds equal to Two
Hundred
Thousand Dollars ($200,000.00) (the "Cash Payment"); and (iii)
delivering to
Seller on the date hereof a Promissory Note, substantially in the
form attached
hereto as Exhibit B, in the original principal amount of Four
Hundred Thousand
Dollars ($400,000.00) (the "Note"). The Note shall reflect that a
prepayment of
the total balance due on the Note, less One Hundred Thousand
Dollars
($100,000.00), on or before the 90th day after the Closing Date
shall result in
a discount that reduces the total Purchase Price to Five Hundred
Thousand
Dollars ($500,000.00).
2.3 Allocation of Purchase Price. The Purchase Price shall be
allocated among the Assets in the manner specified on Schedule 2.3
attached
hereto. Seller and Buyer shall cooperate with each other in the
preparation,
execution and filing of (a) all information returns and supplements
thereto
required to be filed with the Internal Revenue Service by the
parties under
Section 1060 of the Code and the Treasury Regulations promulgated
thereunder
relating to the allocation of the Purchase Price and (b) all
similar filings
required to be filed with respect to the transactions contemplated
by this
Agreement with the Internal Revenue Service and other appropriate
taxing
authorities.
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ARTICLE 3 CLOSING
3.1 Closing. The closing of the transactions contemplated in
this
Agreement (the "Closing") is taking place simultaneously with the
execution of
this Agreement at the offices of Seller located at 500 Dallas
Street, Suite
2615, Houston, Texas 77002, at 10:00 am (local time) on the date
hereof (the
"Closing Date"). The Closing may, with the consent of the parties,
take place by
delivering an exchange of documents and signatures by facsimile
transmission or
electronic mail with originals to follow by overnight mail service
or courier.
3.2 Deliveries by Seller. At the Closing, Seller is hereby
delivering
to Buyer the following:
(a) (i) a written consent to the assignment of the Restated
Agreement to Buyer by AET; and (ii) the written statement of AET
that
as of the date hereof to AET's knowledge no defaults or events
of
default have occurred and are continuing under the Restated
Agreement,
substantially in the form of Exhibit F attached hereto; and
(b) the First General Conveyance, duly executed by Seller.
3.3 Deliveries by Buyer. At the Closing, Buyer is hereby delivering
to
Seller the following:
(a) the First General Conveyance, duly executed by Buyer; and
(b) the Note, duly executed by Buyer.
ARTICLE 4 SELLER'S REPRESENTATIONS AND WARRANTIES
Seller hereby makes the following representations and warranties
to
Buyer, each of which is true and correct on the date hereof and
will be true and
correct on the Transfer Date, each of which shall be unaffected by
any
investigation heretofore or hereafter made by Buyer and each of
which shall
survive the Closing and the transactions contemplated hereby:
4.1 Authorization for Agreement. Seller has all necessary
corporate
power and authority to execute, deliver, and perform this Agreement
and the
other agreements and instruments to be executed and delivered by it
in
connection with the transactions contemplated hereby and thereby,
has taken all
necessary corporate action to authorize the execution and delivery
of this
Agreement and such other agreements, instruments and documents and
the
consummation of the transactions contemplated hereby and thereby.
This Agreement
is, and the other agreements, instruments and documents to be
executed and
delivered by Seller in connection with the transactions
contemplated hereby
shall be, the legal, valid, and binding obligations of Seller,
enforceable in
accordance with their terms, except to the extent the
enforceability hereof and
thereof may be limited by bankruptcy, insolvency, moratorium,
reorganization or
other laws relating to or affecting creditors' rights generally or
by general
principles of equity (regardless of whether such enforceability is
considered in
a proceeding in equity or at law).
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4.2 Corporate. Seller is a corporation duly organized, validly
existing and in good standing under the laws of the State of Texas
and has all
requisite corporate power and authority to own its property and
operate its
business as and where it is now being conducted, and to perform all
its
obligations under this Agreement and any other agreements,
instruments or
documents to be delivered in connection herewith to which it is a
party. Except
for the prior consent of AET required to assign the Restated
Agreement to Buyer,
Seller has complete and unrestricted power and authority to sell,
assign,
transfer, convey and deliver all the Assets to Buyer pursuant to
the terms of
this Agreement, free and clear of any mortgages, liens, pledges,
charges,
claims, leases, restrictions or encumbrances of any kind. Neither
the execution
and delivery of this Agreement nor the consummation of the
transactions
contemplated hereby requires the consent or approval of or the
giving of notice
to, registration, filing or recording with or the taking of any
other action by
Seller in respect of any federal, state or local governmental
authority or any
third party, other than the requirement to obtain the prior consent
of AET to
the assignment of the Restated Agreement.
4.3 Title to Assets. Seller has, and on the Closing Date will
transfer
to Buyer, good and marketable title to the Other Assets, free and
clear of all
mortgages, liens, pledges, charges, claims, leases, restrictions or
encumbrances
of any nature whatsoever, and subject to no restrictions with
respect to
transferability. Seller has, and on the Transfer Date will transfer
to Buyer,
good and marketable title to the Agreement/IP Assets, free and
clear of all
mortgages, liens, pledges, charges, claims, leases, restrictions or
encumbrances
of any nature whatsoever, and subject to no restrictions with
respect to
transferability. Upon Seller's and Buyer's execution and delivery
of this
Agreement and the First General Conveyance, Buyer will own good and
marketable
title to the Other Assets, free and clear of all mortgages, liens,
pledges,
charges, claims, leases, restrictions or encumbrances of any nature
whatsoever.
Upon Seller's and Buyer's execution and delivery of this Agreement,
the
Assumption Agreement and the Second General Conveyance, Buyer will
own good and
marketable title to the Agreement/IP Assets, free and clear of all
mortgages,
liens, pledges, charges, claims, leases, restrictions or
encumbrances of any
nature whatsoever. Upon Seller's and Buyer's execution and delivery
of this
Agreement, the Assumption Agreement, and the General Conveyances,
Buyer will own
good and marketable title to all of the Assets, free and clear of
all mortgages,
liens, pledges, charges, claims, leases, restrictions or
encumbrances of any
nature whatsoever.
4.4 No Litigation or Adverse Events. There are no (i)
outstanding
orders, judgments, injunctions, awards or decrees of any court,
arbitrator, or
governmental or regulatory body involving Seller; (b) suits,
actions or legal,
administrative, arbitration or other proceedings or, to Seller's
knowledge,
threatened suits, actions or legal, administrative, arbitration or
other
proceedings involving Seller; or (c) to Seller's knowledge,
investigations by
any governmental agency, which could adversely affect the Assets or
materially
adversely affect the ability of Seller to consummate the
transactions
contemplated by this Agreement or any other agreements, instruments
or documents
to be delivered in connection herewith to which Seller is a
party.
4.5 No Violation.
(a) The execution and delivery of this Agreement and all other
agreements, instruments and documents contemplated and
delivered
hereby by Seller
and the consummation of the transactions contemplated
hereby and thereby will not conflict with or violate or constitute
a
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breach or default under the Articles of Incorporation or Bylaws
of
Seller or any provision of any mortgage, trust indenture, lien,
lease,
agreement, instrument, order, judgment, decree or other restriction
of
any kind or character to which Seller is subject or result in
the
creation or imposition of any lien, claim, charge or encumbrance
of
any nature whatsoever upon the Assets.
(b) The consummation of the transactions contemplated hereby by
Seller, and the consummation by Seller of the transactions
contemplated by the agreements, instruments and documents
delivered
hereby by Seller, will not cause any violation or breach of, any
laws,
statutes, ordinances or regulations or any health, safety or
environmental laws, statutes, ordinances or regulations or other
laws,
statutes, ordinances or regulations.
4.6 No Brokers. Seller has not employed or authorized anyone to
represent it as a broker, finder or consultant in connection with
the
transactions contemplated by this Agreement, and no broker,
consultant, finder
or other person is entitled to any commission, finder's or
consulting fee from
Seller in connection with such transactions. Seller will indemnify
and hold
harmless Buyer from and against any and all losses, claims,
demands, damages,
costs and expenses, including, without limitation, reasonable
attorneys' fees
and expenses Buyer may sustain or incur as a result of any claim
for a
commission or fee by a broker, finder or consultant acting on
behalf of Seller.
4.7 Restated Agreement in Full Force and Effect. The Restated
Agreement is valid, binding and in full force and effect, has not
been amended
or supplemented in any manner or respect, and upon assignment and
assumption,
with applicable consents if necessary, will be enforceable by Buyer
following
the Transfer Date in accordance with its terms. There are no
defaults by Seller
under the Restated Agreement and Seller knows of no defaults
thereunder by any
other party thereto, and, to Seller's knowledge, no event has
occurred that with
the lapse of time or action or inaction by any party thereto would
result in a
violation thereof or a default thereunder. None of the rights under
the Restated
Agreement will be impaired by the consummation of the transactions
contemplated
by this Agreement, and all such rights will inure to and be
enforceable by Buyer
after the Transfer Date without the authorization, consent,
approval, permit or
licenses of, or filing with, any other person, except the consent
of AET
required under the terms of the Restated Agreement.
ARTICLE 5 BUYER'S REPRESENTATIONS AND WARRANTIES
Buyer hereby makes the following representations and warranties
to
Seller, each of which is true and correct on the date hereof and
will be true
and correct on the Transfer Date, each of which shall be unaffected
by any
investigation heretofore or hereafter made by Seller and each of
which shall
survive the Closing and the transactions contemplated hereby:
5.1 Authorization for Agreement. Buyer has all necessary power
and
authority to execute, deliver, and perform this Agreement and the
other
agreements and instruments to be executed and delivered by it in
connection with
the transactions contemplated hereby and thereby, has taken all
necessary action
to authorize the execution and delivery of this Agreement and such
other
agreements, instruments and documents and the consummation of the
transactions
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contemplated hereby and thereby. This Agreement is, and the other
agreements,
instruments and documents to be executed and delivered by Buyer in
connection
with the transactions contemplated hereby shall be, the legal,
valid, and
binding obligations of Buyer, enforceable in accordance with their
terms, except
to the extent the enforceability hereof and thereof may be limited
by
bankruptcy, insolvency, moratorium, reorganization or other laws
relating to or
affecting creditors' rights generally or by general principles of
equity
(regardless of whether such enforceability is considered in a
proceeding in
equity or at law).
5.2 Corporate. Buyer is a company duly organized, validly existing
and
in good standing under the laws of the State of Delaware and has
all requisite
power and authority to own its property and operate its business as
and where it
is now being conducted. Buyer has complete and unrestricted power
and authority
to purchase the Assets to be sold to Buyer under this Agreement and
execute and
deliver the Note to Seller pursuant to the terms of this Agreement.
Neither the
execution and delivery of this Agreement nor the consummation of
the
transactions contemplated hereby requires the consent or approval
of or the
giving of notice to, registration, filing or recording with or the
taking of any
other action by Buyer in respect of any federal, state or local
governmental
authority or any third party.
5.3 No Litigation or Adverse Events. There are no (i)
outstanding
orders, judgments, injunctions, awards or decrees of any court,
arbitrator, or
governmental or regulatory body involving Buyer, (b) suits, actions
or legal,
administrative, arbitration or other proceedings or, to Buyer's
knowledge,
threatened suits, actions or legal, administrative, arbitration or
other
proceedings involving Buyer, or (c) to Buyer's knowledge,
investigations by any
governmental agency, which could adversely affect the ability of
Buyer to
consummate the transactions contemplated by this Agreement.
5.4 No Violation.
(a) The execution and delivery of this Agreement and all other
agreements, instruments and documents contemplated hereby by Buyer
and
the consummation of the transactions contemplated hereby and
thereby
will not conflict with or violate or constitute a breach or
default
under the organizational documents of Buyer or any provision of
any
mortgage, trust indenture, lien, lease, agreement, instrument,
order,
judgment, decree or other restriction of any kind or character
to
which Buyer is subject.
(b) To the knowledge of Buyer, the consummation of the
transactions contemplated hereby by Buyer, and the consummation
by
Buyer of the transactions contemplated by the agreements,
instruments
and documents delivered hereby by Buyer, will not cause any
violation
or breach of, any laws, statutes, ordinances or regulations or
any
health, safety
or environmental laws, statutes, ordinances or
regulations or other laws, statutes, ordinances or regulations.
5.5 No Brokers. Buyer has not employed or authorized anyone to
represent it as a broker, finder or consultant in connection with
the
transactions contemplated by this Agreement, and no broker,
consultant, finder
or other person is entitled to any commission, finder's or
consulting fee from
Buyer in connection with such transactions. Buyer will indemnify
and hold
harmless Seller from and against any and all losses, claims,
demands, damages,
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costs and expenses, including, without limitation, reasonable
attorneys' fees
and expenses Seller may sustain or incur as a result of any claim
for a
commission or fee by a broker, finder or consultant acting on
behalf of Buyer.
ARTICLE 6 CONDITIONS PRECEDENT TO CERTAIN OF BUYER'S
OBLIGATIONS
The obligation of Buyer to purchase the Agreement/IP Assets and
to
assume the Assumed Liabilities shall be subject to the satisfaction
prior to or
on the Transfer Date of the following conditions, unless waived in
writing by
Buyer:
6.1 Representations and Warranties. The representations and
warranties
of Seller contained in Section 4 shall be true and correct in all
material
respects as of the Transfer Date, except that any such
representations and
warranties shall be true and correct in all respects where such
representation
and warranty is qualified with respect to materiality in Section 4,
as the case
may be.
6.2 Performance. Seller shall have performed and complied with
all
covenants, agreements, obligations and conditions contained in this
Agreement
that are required to be performed or complied with by Seller on or
before the
Transfer Date.
6.3 Compliance Certificate. An authorized officer of Seller
shall
deliver to Buyer on the Transfer Date a certificate certifying that
the
conditions specified in Sections 6.1 and 6.2 have been
fulfilled.
6.4 Second General Conveyance and Assumption Agreement. Seller
shall
have delivered to Buyer the Second General Conveyance and the
Assumption
Agreement each duly executed by Seller.
ARTICLE 7 CONDITIONS PRECEDENT TO CERTAIN OF SELLER'S
OBLIGATIONS
The obligation of Seller to sell, assign and transfer the
Agreement/IP
Assets to Buyer shall be subject to the satisfaction prior to or on
the Transfer
Date of the following conditions, unless waived in writing by
Seller:
7.1
Representations and Warranties. The representations and
warranties
of Buyer contained in Section 5 shall be true and correct in all
material
respects as of the Transfer Date, except that any such
representations and
warranties shall be true and correct in all respects where such
representation
and warranty is qualified with r
