|
Execution Copy
ASSET PURCHASE AGREEMENT
BY AND AMONG
MIDWEST RENEWABLE ENERGY, LLC,
ETHANEX PHASE I, LLC,
ETHANEX PHASE II, LLC,
ETHANEX PHASE III, LLC
ETHANEX SUTHERLAND LAND, LLC,
ETHANEX SUTHERLAND, LLC
AND
ETHANEX ENERGY, INC.
Dated as of
February 10, 2008
TABLE OF CONTENTS
Page(s)
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1.
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DEFINITIONS
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2
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(a)
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Certain
Definitions
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2
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(b)
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Interpretation
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10
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(c)
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Additional
Defined Terms
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10
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| 2. |
PURCHASE AND SALE OF ASSETS
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13
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(a)
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Phase
I Closing
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13
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(b)
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Phase
II Closing
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14
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(c)
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Phase
III Closing
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15
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(d)
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Excluded
Assets
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15
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3.
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LIABILITIES
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16
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(a)
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Assumption
of Liabilities in Phase I
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16
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(b)
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Assumption
of Liabilities in Phase II
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16
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(c)
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Assumption
of Liabilities in Phase III
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17
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(d)
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Excluded
Liabilities
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18
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(e)
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No
Expansion of Third Party Rights
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19
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4.
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CLOSING; PURCHASE PRICE; ADJUSTMENT
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19
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(a)
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Closing
Dates and Location
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19
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(b)
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Payment
of the Purchase Price; Adjustments
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20
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(c)
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Purchase
Price Adjustment
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24
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(d)
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Determination
of Purchase Price Adjustments
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25
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(e)
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Access
During Determinations
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31
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(f)
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Determination
Definitions
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31
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5.
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REPRESENTATIONS OF SELLER
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31
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(a)
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Core
Representations and Warranties of Seller
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31
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(b)
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Additional
Representations
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32
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6.
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REPRESENTATIONS AND WARRANTIES OF BUYER GROUP, ETHANEX SUTHERLAND,
AND ETHANEX
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42
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(a)
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Representations
of Ethanex Sutherland, Phase I Buyer, Phase II Buyer, Phase
III Buyer and RE LLC
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42
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(b)
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Ethanex’s
Representations
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44
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7.
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COVENANTS
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47
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(a)
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Confidentiality
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48
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(b)
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Notice
of Developments
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49
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(c)
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HSR
Act Compliance
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49
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(d)
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Notices
and Consents
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49
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(e)
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Further
Assurances; Satisfaction of Covenants, etc
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50
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(f)
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Access
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51
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(g)
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Exclusivity
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51
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Table of Contents
(continued)
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(h)
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Continuity
and Maintenance of Operations
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51
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(i)
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License
Agreements
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53
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(j)
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Completion
of Phase II Plan
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53
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(k)
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Completion
of Phase III Plan
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54
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(l)
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Risk
of Loss
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55
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(m)
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Employees
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55
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(n)
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Financing
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56
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(o)
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Publicity
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56
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(p)
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Funded
Debt; Release of Liens
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57
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(q)
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Subsidiaries
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57
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(r)
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Further
Action Regarding Financial Statements and
Financing
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57
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(s)
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Lease
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58
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(t)
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Post-Closing
Remittances
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58
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(u)
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LB
536 Credits
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59
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(v)
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Real
Estate Taxes
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59
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(w)
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JV
Agreement
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59
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(x)
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Required Stockholder Approval
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59
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(y)
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Additional
Seller Obligations
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60
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(z)
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Seller
Financing Requirement
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60
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(aa)
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Fractionation
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61
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(bb)
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Prohibition
on Certain Actions
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61
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(cc)
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Use
of Funds
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62
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(dd)
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Technical
Services Agreement
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62
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(ee)
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Compliance
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62
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(ff)
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LB
775 Agreement
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62
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(gg)
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Rezoning
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63
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(hh)
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TIF
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63
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8.
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CONDITIONS PRECEDENT TO THE PARTIES’
OBLIGATIONS
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63
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(a)
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Consents
from Governmental Authorities
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63
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(b)
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Restrictions
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63
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9.
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CONDITIONS PRECEDENT TO ETHANEX’S, ETHANEX
SUTHERLAND’S, AND THE BUYER GROUP’S
OBLIGATIONS
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63
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(a)
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General
Conditions
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63
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(b)
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Phase
I Closing Conditions
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64
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(c)
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Phase
II Closing Conditions
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67
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(d)
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Phase
III Closing Conditions
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70
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10.
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CONDITIONS PRECEDENT TO SELLER’S
OBLIGATIONS
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71
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(a)
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Representations
and Warranties of Ethanex, Ethanex Sutherland and the Buyer
Group
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71
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(b)
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Covenants
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71
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Table of Contents
(continued)
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(c)
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Delivery
of Certificates and Documents
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72
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(d)
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Escrow
Agreement
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72
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(e)
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Start-Up
Services Agreement
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72
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(f)
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Assumption
Agreements
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72
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(g)
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JV
Agreement
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72
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(h)
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Investor
Rights Agreement
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72
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(i)
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Required
Stockholder Approval
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72
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11.
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SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS;
INDEMNIFICATION
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72
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(a)
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Survival
of Representations, Warranties and Covenants
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73
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(b)
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Indemnification
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73
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(c)
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Assertion
of Claims; Notice of and Right to Defend Third Party
Claims
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77
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(d)
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Limitations
on Liability
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78
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(e)
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Collection
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79
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(f)
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Exclusive
Remedy
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80
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(g)
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No
Third Party Beneficiaries
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80
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(h)
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Insurance
Proceeds
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80
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12.
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TERMINATION
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80
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(a)
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Termination
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80
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(b)
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Surviving
Obligations
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82
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(c)
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Alternative
Transaction Upon Financing Failure
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82
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13.
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FEES AND EXPENSES
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82
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| 14. |
ENTIRE AGREEMENT
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83
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| 15. |
PARTIES OBLIGATED AND BENEFITED
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83
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| 16. |
NOTICES
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83
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| 17. |
AMENDMENTS AND WAIVERS
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84
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| 18. |
SEVERABILITY
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84
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| 19. |
SECTION HEADINGS AND TERMS
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84
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| 20. |
COUNTERPARTS
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85
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| 21. |
GOVERNING LAW; CONSENT TO JURISDICTION
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85
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| 22. |
SPECIFIC PERFORMANCE
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85
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| 23. |
FURTHER ASSURANCES
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85
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Table of Contents
(continued)
| 24. |
CONSTRUCTION
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85
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| 25. |
WAIVER OF JURY TRIAL
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85
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| 26. |
BULK SALES
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86
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| 27. |
INSURANCE
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86
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INDEX OF SCHEDULES AND EXHIBITS
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Exhibits
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A
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Description
of Owned Real Property
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B
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Phase
I Assets
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C
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Phase
II Assets
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D
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Phase
III Assets
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E
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Performance
Test Protocol
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F
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Phase
II Plan
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G
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Phase
III Plan
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H
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Start-Up
Services Agreement Terms
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I
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Process
Specifications and Consideration Adjustment
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J
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Material
Consents
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K
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Bill
of Sale
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L
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Warranty
Deed
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M
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Required
Permits for Phase I
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N
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Investor
Rights Agreement
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O
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Required
Permits for Phase II
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P
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Assumption
Agreements
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Q
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JV
Term Sheet
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Schedules
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1(a)(iv)
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Assumed
Contracts
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2(d)(viii)
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Other
Excluded Assets
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3(a)(iii)
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Phase
I Liabilities
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3(b)(iii)
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Phase
II Liabilities
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3(c)(iii)
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Phase
III Liabilities
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3(d)(xi)
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Other
Excluded Liabilities
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5(a)(iii)
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Seller
Consents
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5(b)(ii)
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Undisclosed
Liabilities
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5(b)(iv)(A)
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Third-Party
Property Rights
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5(b)(iv)(B)
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Lease
Real Property
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5(b)(iv)(G)
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Exceptions
to Access
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5(b)(iv)(H)
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Exceptions
to Installed Systems
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5(b)(iv)(L)
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Exceptions
to Title
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5(b)(iv)(M)
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Exceptions
to Sufficiency
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5(b)(vi)
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Litigation
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5(b)(vii)
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Material
Contracts
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5(b)(viii)(A)
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Intellectual
Property Matters
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5(b)(x)
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Plans
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5(b)(xi)
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Insurance
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5(b)(xii)
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Affiliate
Transactions
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5(b)(xiii)
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Permits
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5(b)(xiv)
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Environmental
Matters
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5(b)(xv)
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Suppliers
and Customers
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7(h)
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Exceptions
to Continuity and Operations of Business
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7(m)
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Hired
Employees
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Table of Contents
(continued)
|
Ethanex Schedules
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6(b)(ii)(B)
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Conflicts
with Constituent Documents
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6(b)(iii)
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Litigation
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6(b)(vi)
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Absence
of Changes
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6(b)(viii)
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Brokers’
Fees
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7(m)
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Hired
Employees
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THIS
ASSET PURCHASE AGREEMENT (“
Agreement ”)
is made as of February 10, 2008 ,
by and among MIDWEST RENEWABLE ENERGY, LLC, a Nebraska limited
liability company (“
Seller ”),
ETHANEX ENERGY, INC., a Nevada corporation (“
Ethanex ”),
Ethanex Sutherland Land, LLC, a Delaware limited liability company
that is wholly owned by Ethanex Sutherland (“
RE LLC ”),
Ethanex Sutherland, LLC, a Delaware limited liability company that
is wholly owned by Ethanex (“
Ethanex Sutherland ”),
Ethanex Phase I, LLC, a Delaware limited liability company that is
wholly owned by Ethanex Sutherland (“
Phase I Buyer ”),
Ethanex Phase II, LLC, a Delaware limited liability company that is
wholly owned by Ethanex Sutherland (“
Phase II Buyer ”),
and Ethanex Phase III, LLC, a Delaware limited liability company
that is wholly owned by Ethanex Sutherland (“
Phase III Buyer ,”
and together with Phase I Buyer, Phase II Buyer and RE LLC,
“
Buyers ”
or the “
Buyer Group ”).
R E C I T A L S
A.
Seller
is engaged in the business of operating an ethanol production
plant, which is located on that certain parcel of real
property owned by Seller and described on
Exhibit A hereto
(the “
Owned Real Property ”).
B.
Seller
owns, licenses or leases the assets generally described
on
Exhibit B hereto,
which assets represent an operating ethanol production plant (the
“
Existing Plant ”)
with a current production capacity of 26 million gallons per year
(the “
Phase I Assets ”).
C.
Seller
owns, leases, licenses or is developing the assets generally
described on
Exhibit C hereto
and is in the process of adding to these assets and completing
construction involving these assets (and the additional assets)
(the “
Phase II Assets ”)
as the first part of a two-phase expansion of the Existing Plant,
which is intended to increase the current production capacity of
the Existing Plant by an additional 42.5 million gallons per
year.
D.
Seller
owns, leases, licenses or is developing the assets generally
described on
Exhibit D hereto
and is in the process of adding to these assets and completing
construction involving these assets (and the additional assets)
(the “
Phase III Assets ”)
as the second part of a two-phase expansion of the Existing Plant,
which expansion is intended to increase the current production
capacity of the Existing Plant by an additional 42.5 million
gallons per year.
E.
Seller
desires to sell to Phase I Buyer and Phase I Buyer desires to
purchase from Seller the Phase I Assets, on the terms and
subject to the conditions hereinafter set forth.
F.
Seller
desires to sell to Phase II Buyer and Phase II Buyer desires
to purchase from Seller the Phase II Assets, on the terms and
subject to the conditions hereinafter set forth.
G.
Seller
desires to sell to Phase III Buyer and Phase III Buyer desires
to purchase from Seller the Phase III Assets, on the terms and
subject to the conditions hereinafter set forth.
H.
Seller
desires to sell to RE LLC and RE LLC desires to purchase from
Seller the Owned Real Property and the Loop Real Property, on
the terms and subject to the conditions hereinafter set
forth.
I.
Seller
and Buyers also desire that Buyers assume certain enumerated
liabilities that are related exclusively to the Business on
the terms and subject to the conditions hereinafter set
forth.
J.
The
Buyers are wholly owned, indirect subsidiaries of
Ethanex.
NOW,
THEREFORE, in consideration of the mutual covenants and
agreements herein set forth and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto, intending to be legally
bound, do represent, warrant, covenant and agree as
follows:
| |
(a)
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Certain
Definitions. The following capitalized terms, when used in this
Agreement, shall have the meaning set forth below:
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(i)
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“
2007 Audited Financials ”
shall mean the audited balance sheet, statement of operations and
statement of cash flows of Seller as of and for each of the fiscal
years ended December 31, 2006 and 2007, including the notes
thereto.
|
| |
(ii)
|
“
Acquisition Proposal ”
shall mean a proposal (other than by the Buyer or its Affiliates)
relating to any merger, consolidation, business combination, sale
or other disposition of any material portion of the Seller’s
assets pursuant to one or more transactions, the sale of any equity
interests of the Seller (including, without limitation, by way of a
tender offer) or a similar transaction or business combination
involving one or more third parties (other than the Buyers, Ethanex
Sutherland, or Ethanex) and the Seller.
|
| |
(iii)
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“
Affiliate ”
shall mean, with respect to any Person, any other Person
controlling, controlled by or under common control with such
Person, with “control” for such purpose meaning the
possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of a Person, whether
through the ownership of voting securities or voting interests, by
contract or otherwise.
|
| |
(iv)
|
“
Assumed Contracts ”
shall mean those agreements set forth on
Schedule 1(a)(iv) .
|
| |
(v)
|
”
Business ”
shall mean the operation of the Existing Plant and the Phase II
Plan and Phase III Plan.
|
| |
(vi)
|
“
Business Day ”
shall mean any day other than a Saturday, a Sunday or a day on
which banking institutions in New York, New York are required or
authorized to be closed.
|
| |
(vii)
|
“
Buyer Confidential Information ”
shall mean, collectively, the Buyer Group Confidential Information
and, mean all information relating to the business and affairs of
the Buyer Group, other than information that is as of the date
hereof or subsequently becomes generally available to the public
through no fault of, or breach of any confidentiality obligation
by, the Seller or any of its Affiliates, agents or representatives,
with respect to (i) after the Phase I Closing, the Phase I Assets
(ii) after the Phase II Closing, the Phase II Assets, and (iii)
after the Phase III Closing, the Phase III Assets.
|
| |
(viii)
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“
Buyer Group Confidential Information ”
shall mean, collectively, all information relating to the business
and affairs of the Buyer Group, Ethanex Sutherland, Ethanex and
their respective Affiliates (including, without limitation, all
nonpublic information concerning the terms of the Transactions)
other than information that is as of the date hereof or
subsequently becomes generally available to the public through no
fault of, or breach of any confidentiality obligation by, the
Seller or any of its Affiliates, agents or
representatives.
|
| |
(ix)
|
“
Code ”
shall mean the Internal Revenue Code of 1986, as amended, and the
rules and regulations promulgated thereunder as in effect from time
to time.
|
| |
(x)
|
“
Common Stock ”
shall mean common stock, par value $.001, of Ethanex.
|
| |
(xi)
|
“
Completion of the Phase II Plan ”
shall mean the completion of the Phase II Plan to the
specifications set forth in the Phase II Plan and successful
completion of the performance test in accordance with the
performance test protocol set forth on
Exhibit E .
|
| |
(xii)
|
“
Completion of the Phase III Plan ”
shall mean the completion of the Phase III Plan to the
specifications set forth in the Phase III Plan and successful
completion of the performance test in accordance with the
performance test protocol set forth on
Exhibit E .
|
| |
(xiii)
|
“
DOJ ”
shall mean the Antitrust Division of the United States Department
of Justice.
|
| |
(xiv)
|
“
Environmental Law ”
shall mean any Legal Requirement (including, without limitation,
all common law) relating to or concerning pollution or the
protection of the environment, including those relating to
emissions, discharges, releases or threatened releases of Hazardous
Substances into the environment and natural resources (including
ambient air, surface water, ground water or land), or otherwise
relating to the manufacture, processing, distribution, use,
generation, treatment, storage, disposal, transport or handling of,
or exposure of persons to, Hazardous Substances, including without
limitation the Comprehensive Environmental Response, Compensation
and Liability Act of 1980 (42 U.S.C. §§ 9601 et
seq.) (“
CERCLA ”);
the Hazardous Materials Transportation Authorization Act of 1994
(49 U.S.C. §§ 5101 et seq.); the Federal
Insecticide, Fungicide, and Rodenticide Act (7 U.S.C.
§§ 136 et seq.); the Solid Waste Disposal Act (42
U.S.C. §§ 6901 et seq.); the Toxic Substance Control
Act (15 U.S.C. §§ 2601 et seq.); the Clean Air Act
(42 U.S.C. §§ 7401 et seq.); the Federal Water
Pollution Control Act (33 U.S.C. §§ 1251 et seq.);
and the Safe Drinking Water Act (42 U.S.C. §§ 300(f)
et seq.), each as from time to time amended, and any and all
regulations promulgated thereunder, and all analogous state and
local counterparts or equivalents and any transfer of ownership
notification or approval statutes.
|
| |
(xv)
|
“
Ethanex Request ”
means any request by Ethanex to alter the Phase II Plan prior to
the Phase II Closing or the Phase III Plan prior to the Phase III
Closing Date, which is actually implemented by the
Seller.
|
| |
(xvi)
|
“
Equity Securities ”
shall mean (x) in the case of a limited liability company, limited
liability interests and options, warrants or other rights
convertible into, or exercisable or exchangeable for, directly or
indirectly, or otherwise entitling any Person to acquire, directly
or indirectly, such limited liability interests, and (y) in the
case of a corporation, stock and options, warrants or other rights
convertible into, or exercisable or exchangeable for, directly or
indirectly, or otherwise entitling any Person to acquire, directly
or indirectly, stock.
|
| |
(xvii)
|
“
ERISA ”
shall mean the Employee Retirement Income Security Act of 1974, as
amended.
|
| |
(xviii)
|
“
Escrow Agent ”
shall mean Team Bank N.A.
|
| |
(xix)
|
“
Escrow Agreement ”
shall mean an escrow agreement in form and substance reasonably
acceptable to Ethanex and the Seller and consistent with the terms
of this Agreement among the Escrow Agent, the Seller, Ethanex,
Ethanex Sutherland and the Buyer Group to be dated as of the Phase
I Closing Date, pursuant to which the Phase I Escrow Amount, the
Phase II Escrow Amount and the Phase III Escrow Amount shall be
deposited into the Indemnity Escrow Account as set forth in this
Agreement.
|
| |
(xx)
|
“
Escrow Period ”
shall mean eighteen (18) months following the last to occur of the
Phase I Closing, the Phase II Closing and the Phase III
Closing.
|
| |
(xxi)
|
“
FTC ”
shall mean the Federal Trade Commission.
|
| |
(xxii)
|
“
Funded Debt ”
shall mean, without duplication, (a) all obligations of Seller
under indebtedness for borrowed money or with respect to deposits
or advances of any kind (other than advances due from customers
incurred in the ordinary course of business and consistent with
past practice), (b) all obligations of Seller evidenced by bonds,
debentures, notes or similar instruments, (c) all obligations of
Seller upon which interest charges are paid, (d) all obligations of
Seller in respect of capitalized leases that, individually, involve
an aggregate future liability in excess of $5,000 or for the
deferred purchase price of goods or services (other than trade
payables or accruals incurred in the ordinary course of business
and consistent with past practice), (e) all obligations of Seller
in respect of banker’s acceptances or letters of credit
issued or created for the account of Seller, (f) all indebtedness
or obligations of the types referred to in the preceding clauses
(a) through (e) of any other Person secured by any Encumbrance on
any assets of Seller, even though such Seller has not assumed or
otherwise become liable for the payment thereof, (g) all guarantees
by Seller of obligations of the type described in clauses (a)
through (f) above of any other Person, and (h) payment obligations
in respect of interest under any interest rate swap or other hedge
agreement or arrangement entered into by Seller with respect to any
indebtedness or obligation described in clauses (a) through (g)
above. “
Funded Debt ”
shall include the Phase I Funded Debt, the Phase II Funded Debt,
the Phase III Funded Debt and the Owned Real Property Funded
Debt.
|
| |
(xxiii)
|
“
GAAP ”
shall mean generally accepted accounting principles as in effect
from time to time in the United States of America.
|
| |
(xxiv)
|
“
Governmental Authority ”
shall mean the government of the United States of America and any
state, commonwealth, territory or possession thereof and any
political subdivision or quasi-governmental authority of any of the
same, including, but not limited to, courts, tribunals,
departments, commissions, bureaus, agencies, boards, counties,
municipalities, provinces, parishes and other
instrumentalities.
|
| |
(xxv)
|
“
Governmental Authorizations ”
shall mean, collectively, all authorizations, agreements, licenses,
permits, approvals, easements, registrations, qualifications,
leases, variances and similar rights for and with respect to the
construction, ownership or operation of the Seller obtained from
any Governmental Authority or pursuant to any Legal
Requirements.
|
| |
(xxvi)
|
“
Hammer Mill Cost ”
shall mean the estimated aggregate cost of the actual hammer mill
and ancillary equipment and all related installation costs
(including but not limited to hammer mills, baghouses, blowers,
scalpers, structural towers and foundation, pneumatic conveying,
electrical and controls)
that
will not be incurred by Seller as a result of the installation of
the Fractionation Plant, such avoided costs to be mutually
determined by Seller and Ethanex. If such Hammer Mill Cost is not
mutually determined by Seller and Ethanex at least 45 days prior to
the Phase II Closing Date, then Seller and Ethanex shall
immediately engage, and shall use their reasonable best efforts to
cause, the Independent Engineer to determine the Hammer Mill Cost
not later than five (5) days prior to the Phase II Closing Date,
which determination shall be final and binding;
provided that
in no event shall the Phase II Closing occur until the Hammer Mill
Cost has been finally determined either by mutual agreement of
Ethanex and Seller or by a determination of the Independent
Engineer.
|
| |
(xxvii)
|
“
Hammer Mill Difference ”
shall mean the difference between (i) the Hammer Mill Cost and (ii)
the out-of-pocket costs of any temporary hammer mills utilized in
connection with the Completion of the Phase II Plan, which
categories of cost shall be mutually agreed upon by Ethanex and
Seller.
|
| |
(xxviii)
|
“
Hazardous Material ”
shall mean any hazardous material, pollutant, contaminant, waste,
toxic substance, hazardous substance or nuisance substance which is
regulated by or forms the basis of liability now or hereafter under
any Environmental Laws.
|
| |
(xxix)
|
“
HSR Act ”
shall mean the Hart Scott Rodino Antitrust Improvements Act of
1976, as amended, and the rules and regulations promulgated
thereunder as in effect from time to time.
|
| |
(xxx)
|
“
Intellectual Property ”
shall mean trademarks, trade names, service marks, service names,
fictitious names, logos and Internet domain names, together with
all goodwill, registrations and applications related to the
foregoing; patents and industrial designs (including any
continuations, divisionals, continuations-in-part, renewals,
reissues, and applications for any of the foregoing); copyrights
(including any registrations and applications for any of the
foregoing); computer software and related documentation; mask works
and registrations and applications for registrations thereof; trade
secrets and confidential business information (including research
and development, know-how, data, databases, customer and supplier
lists, pricing and cost information, and business and marketing
plans and proposals); and all other intellectual property and
proprietary rights.
|
| |
(xxxi)
|
“
Interim Financials ”
shall mean the unaudited balance sheet, statement of operations and
statement of cash flows of Seller as of and for the quarterly
period ending March 31, 2008, including the notes
thereto.
|
| |
(xxxii)
|
“
Inventory ”
shall mean
raw materials, work-in-process, finished goods, manufacturing
supplies and spare parts, to the extent owned by Seller and to be
included in the Purchased Assets, each of a type and nature
historically associated with operations of the Existing Plant and
reflected in the Annual Financial Statements with respect to the
Phase I Assets or, with respect to the Phase II Assets and the
Phase III Assets, that would be consistent with the type and nature
associated with a project similar to the Phase II Plan and the
Phase III Plan and with the manner in which the Phase I Assets were
reflected in the Annual Financial Statements, and shall include,
without limitation, corn, enzymes, chemicals, denaturants, wet or
dry distillers grains, and ethanol.
|
| |
(xxxiii)
|
“
Knowledge of Ethanex ”
shall mean the actual knowledge of Albert Knapp, III, David
McKittrick and Bryan Sherbacow.
|
| |
(xxxiv)
|
“
Legal Requirements ”
shall mean any currently existing statute, ordinance, code, law,
rule, regulation, permit or permit condition, administrative or
judicial decree, order or other requirement, standard or procedure
enacted or adopted by any Governmental Authority, including
judicial decisions applying or interpreting common law or statutory
law.
|
| |
(xxxv)
|
“
Liability ”
shall mean any liability (whether known or unknown, whether
asserted or unasserted, whether absolute or contingent, whether
accrued or unaccrued, whether liquidated or unliquidated, and
whether due or to become due and regardless of when or by whom
asserted), including, without limitation, any liability for
Taxes.
|
| |
(xxxvi)
|
“
Lien ”
shall mean any mortgage, lien (statutory or otherwise), security
interest, security agreement, conditional sale or other title
retention agreement, pledge, option, charge, assessment,
restrictive agreement, restriction, encumbrance, adverse interest,
adverse claim, voting agreement, restriction on transfer or any
exception to or defect in title or other ownership
interest.
|
| |
(xxxvii)
|
“
Material Adverse Effect ”
means any change, effect, event, occurrence, state of facts,
development or circumstance that, individually or in the aggregate
with any other change, effect, event, occurrence, state of facts or
development, has had, or would reasonably be expected to have, a
material adverse effect on the business, assets, liabilities,
condition (financial or otherwise) or results of operations of the
Seller or would reasonably be expected to prevent or materially
impede the consummation by Seller of the Transactions;
provided, however ,
that a Material Adverse Effect will not be deemed to have occurred
if such change, effect, event, occurrence, state of facts,
development or circumstance results from: (i) economic conditions
generally in the United States (provided that the Seller is not
disproportionately affected thereby), (ii) any action taken by the
Seller that is required by the terms of this Agreement or the
Related Agreement or is taken with Ethanex’s express prior
written consent, (iii)
conditions generally affecting the industry in which the Seller
participates (provided that the Seller is not disproportionately
affected thereby), or (iv) any changes in GAAP after the date
hereof ;
provided, further
that solely for purposes of determining whether there has been a
“Material Adverse Effect” for purposes of Section
9(b)(xv), a Material Adverse Effect will not be deemed to have
occurred if such change, effect, event, occurrence, state of facts,
development or circumstance (x) results from, in addition to the
matters set forth in the immediately preceding proviso: (I)
national or international political or social conditions, including
the engagement by the United States in hostilities or the
escalation thereof (provided that the Seller is not
disproportionately affected thereby) or (II) a general decline or
disruption in financial, banking, or securities markets or (y) is
cured by or on behalf of the Seller before the Phase I Closing
Date.
|
| |
(xxxviii)
|
“
Net Phase II Costs ”
shall mean the aggregate amount by which the Phase II Completion
Costs are either decreased (the amount of such decrease, the
“
Negative Phase II Net Cost Amount ”)
or increased (the amount of such increase, the “
Positive Phase II Net Cost Amount ”)
solely because of complying with an Ethanex Request, including but
not limited to any increase or decrease in the construction cost
required for the Phase II Plan to operate with the contemplated
Fractionation Plant.
|
| |
(xxxix)
|
“
Net Phase III Costs ”
shall mean the aggregate amount by which the Phase III Completion
Costs are either decreased (the amount of such decrease, the
“
Negative Phase III Net Cost Amount ”)
or increased (the amount of such increase, the “
Positive Phase III Net Cost Amount ”)
solely because of complying with an Ethanex Request, including but
not limited to any increase or decrease in the construction cost
required for the Phase III Plan to operate with the contemplated
Fractionation Plant.
|
| |
(xl)
|
“
NOV Violations ”
shall mean, collectively, those notices of violation set forth in
that certain letter to Seller from the United States Environmental
Protection Agency, Article Number 7004 2510 0006 9720 8490, dated
on or around June 8, 2007, and those certain letters to Seller from
the Nebraska Department of Environmental Quality, dated May 5, 2007
and September 17, 2007.
|
| |
(xli)
|
“
Person ”
shall mean any natural person, corporation, partnership, trust,
unincorporated organization, association, limited liability
company, Governmental Authority or other entity.
|
| |
(xlii)
|
“
Phase I Closing Date Inventory ”
shall mean the Inventory as of the Phase I Closing, valued in
accordance with Section 4(d)(i)(A), but only to the extent such
Inventory will be included in the Phase I Assets.
|
| |
(xliii)
|
“
Phase I Escrow Make-Up ”
means an amount equal to the difference between (i) all amounts
recovered by Ethanex, the Buyer Group or Ethanex Sutherland from
the Indemnity Escrow Account prior to the Phase II Closing and (ii)
the Phase I Escrow Amount (provided that in no event shall the
Phase I Escrow Make-Up exceed $1,000,000.00).
|
| |
(xliv)
|
“
Phase I Indemnification Excess Amount ”
shall mean the amount equal to any Losses finally determined and
due and owing to Ethanex, the Buyer Group or Ethanex Sutherland
pursuant to Article 11 hereof but not paid to them as of the Phase
II Closing Date after (i) exhausting the Phase I Escrow Amount,
(ii) setting off all such amount against any amounts owing from any
of Ethanex, the Buyer Group or Ethanex Sutherland to the Seller
pursuant to the terms of this Agreement or the Related Agreements
(other than the Purchase Price) as of the Phase II Closing Date
(the “
Set-off Amount ”),
and (iii) recovering such Losses or any portion thereof directly
from Seller.
|
| |
(xlv)
|
“
Phase I Indemnification Residual Excess Amount
”
shall mean any amount of the Phase I Indemnification Excess Amount
that remains unsatisfied after making a reduction to the Phase II
Purchase Price as contemplated by Section 4(b)(iv)(A)
hereof.
|
| |
(xlvi)
|
“
Phase I Inventory Target ”
shall mean $2,000,000.00.
|
| |
(xlvii)
|
“
Phase II Closing Date Inventory ”
shall mean the Inventory valued as of the Phase II Closing, valued
in accordance with Section 4(d)(ii)(A), but only to the extent such
Inventory will be included in the Phase II Assets.
|
| |
(xlviii)
|
“
Phase II Escrow Make-Up ”
means an amount equal to the difference between (i) all Losses
recovered by Ethanex, the Buyer Group or Ethanex Sutherland from
the Indemnity Escrow Account after the Phase II Closing but prior
to the Phase III Closing and (ii) $2,000,000.00 (provided that the
Phase II Escrow Make-Up shall in no event exceed
$2,000,000.00).
|
| |
(xlix)
|
“
Phase II Indemnification Amount ”
shall mean the amount equal to any Losses finally determined and
due and owing to Ethanex, the Buyer Group or Ethanex Sutherland
pursuant to Article 11 hereof but not paid to them as of the Phase
III Closing Date (which may include any Phase I Indemnification
Residual Excess Amount) after (i) exhausting the Phase I Escrow
Amount, (ii) exhausting the Phase II Escrow Amount, (ii) applying
any Set-off Amount as of the Phase III Closing, and (iii)
recovering such Losses or any portion thereof directly from the
Seller.
|
| |
(l)
|
“
Phase II Plan ”
means that plan for the development and completion of the plan
relating to the Phase II Assets set forth on
Exhibit F attached
hereto.
|
| |
(li)
|
“
Phase II Inventory Target ”
shall mean $2,000,000.00.
|
| |
(lii)
|
“
Phase III Closing Date Inventory ”
shall mean the Inventory valued as of the Phase III Closing, valued
in accordance with Section 4(d)(iii)(A), but only to the extent
such Inventory will be included in the Phase III
Assets.
|
| |
(liii)
|
“
Phase III Inventory Target ”
shall mean $2,000,000.00.
|
| |
(liv)
|
“
Phase III Plan ”
means that plan for the development and completion of the plan
relating to the Phase III Assets set forth on
Exhibit G attached
hereto.
|
| |
(lv)
|
“
Process Specifications ”
means those process specification set forth with respect to the
Phase II Plan and the Phase III Plan on
Exhibit I .
|
| |
(lvi)
|
“
Purchased Assets ”
means collectively the Phase I Assets, the Phase II Assets, the
Phase III Assets, the Owned Real Property and the Loop Real
Property.
|
| |
(lvii)
|
“
Realized Value of the LB 536 Credits ”
shall mean the actual value to Phase I Buyer for those certain
credits allowed for motor fuel taxes pursuant to Nebraska
Legislative LB 536, as promulgated as of the date of this
Agreement, as determined by the net price for which Phase I Buyer
is able to sell such credits to third parties.
|
| |
(lviii)
|
“
Regulation S-X ”
shall mean Regulation S-X, as may be amended from time to time,
adopted under the Securities Act.
|
| |
(lix)
|
“
Related Agreement ”
shall mean each of (i) the Start-Up Services Agreement, (ii) the
Escrow Agreement, (iii) the Assumption Agreements, (iv) the
Warranty Deed, (v) the warranty deed regarding the Loop Real
Property, (vi) the Investor Rights Agreement, and (vii) any other
written agreement or certificate, other than this Agreement, that
is executed and delivered by Ethanex, Ethanex Sutherland, the
Buyers, as the case may be, and Seller pursuant to or
contemporaneously with this Agreement.
|
| |
(lx)
|
“
Required Stockholder Approval ”
shall mean the requisite approval of the stockholders of Ethanex
(i) to amend the certificate of incorporation of Ethanex to
increase the authorized shares of capital stock of Ethanex and to
make any other changes to the terms of the capital stock of Ethanex
(including authorizing new and additional classes of capital
stock), as may be necessary to allow the Stock Consideration to be
issued and to permit the debt and equity financing necessary to
complete the Transactions to be obtained and (ii) as otherwise
required by applicable laws and regulations to permit the
consummation of the Transactions.
|
| |
(lxi)
|
“
SEC ”
shall mean the United States Securities and Exchange
Commission.
|
| |
(lxii)
|
“
Seller Confidential Information ”
shall mean all information relating to the business and affairs of
Seller or its Affiliates other than information that is as of the
date hereof or subsequently becomes generally available to the
public through no fault of, or breach of any confidentiality
obligation by, the Buyers, Ethanex Sutherland, or Ethanex or any of
their respective Affiliates, agents or
representatives.
|
| |
(lxiii)
|
“
Seller Financing Requirement ”
shall mean that, with respect to the Phase II Plan, Seller shall
have obtained third-party financing in an amount sufficient to
complete the Phase II Plan on or prior to the Phase II Deadline or,
with respect to the Phase III Plan, Seller shall have obtained
third-party financing in an amount sufficient to complete the Phase
III Plan on or prior to the Phase III Deadline.
|
| |
(lxiv)
|
“
Seller’s Knowledge ”
or “
Knowledge of Seller ”
shall mean the actual knowledge of James Jandrain, Randy Kramer,
David Litzen and Troy Gavin.
|
| |
(lxv)
|
“
Start-Up Services Agreement ”
shall mean that certain agreement by and between Seller and Phase I
Buyer in form and substance mutually agreed upon by Seller and
Ethanex, which shall include terms including but not limited to
those terms set forth on
Exhibit H hereto.
|
| |
(lxvi)
|
“
Stock Consideration ”
shall mean collectively the Phase II Stock Consideration and the
Phase III Stock Consideration.
|
| |
(lxvii)
|
“
Transactions ”
shall mean, collectively, (i) the purchase and sale of the
Purchased Assets (including the Owned Real Property and the Loop
Real Property), (ii) the assumption of the Assumed Liabilities and
(iii) the other transactions contemplated by this Agreement
and the Related Agreements.
|
(b)
Interpretation .
In this Agreement, unless a clear contrary intention appears: (i)
the singular number includes the plural number and vice versa; (ii)
reference to any Person includes such Person’s successors and
assigns but, if applicable, only if such successors and assigns are
not prohibited by this Agreement, and reference to a Person in a
particular capacity excludes such Person in any other capacity or
individually; (iii) reference to any gender includes each other
gender; (iv) reference to any agreement, document or instrument
means such agreement, document or instrument as amended or modified
and in effect from time to time in accordance with the terms
thereof; (v) reference to any Legal Requirement means such Legal
Requirement as amended, modified, codified, replaced or reenacted,
in whole or in part, and in effect from time to time, including
rules and regulations promulgated thereunder, and reference to any
section or other provision of any Legal Requirement means that
provision of such Legal Requirement from time to time in effect and
constituting the substantive amendment, modification, codification,
replacement or reenactment of such section or other provision; (vi)
“hereunder,” “hereof,”
“hereto,” and words of similar import shall be deemed
references to this Agreement as a whole and not to any particular
Article, Section or other provision hereof; (vii)
“including” (and with correlative meaning
“include”) means including without limiting the
generality of any description preceding such term; (viii)
“or” is used in the inclusive sense of
“and/or”; (ix) with respect to the determination of any
period of time, “from” means “from and
including” and “to” means “to but
excluding”; and (x) references to documents, instruments or
agreements shall be deemed to refer as well to all addenda,
exhibits, schedules or amendments thereto.
(c)
Additional Defined Terms. The following terms are defined in the
respective Sections set forth below:
|
Term
|
|
Section
|
|
Agreement
|
|
Recitals
|
|
Annual
Financial Statements
|
|
5(b)(i)(A)
|
|
Assumed
Liabilities
|
|
3(c)
|
|
Buyers
|
|
Recitals
|
|
Buyer
Group
|
|
Recitals
|
|
Cap
|
|
11(d)(ii)
|
|
Cash
Consideration
|
|
4(b)(i)(C)
|
|
Closings
|
|
4(a)
|
|
Debt
Engagement Letter
|
|
6(b)(v)
|
|
Department
of Revenue
|
|
7(ff)
|
|
Equity
Engagement Letters
|
|
6(b)(v)
|
|
Ethanex
|
|
Recitals
|
|
Ethanex
Recommendation Change
|
|
7(x)(iv)
|
|
Ethanex
Sutherland
|
|
Recitals
|
|
Ethanex
Schedules
|
|
6(b)
|
|
Ethanex
SEC Documents
|
|
6(b)(iv)
|
|
Ethanex
Stockholder Meeting
|
|
7(x)(iii)
|
|
Exchange
Act
|
|
6(b)(iv)
|
|
Extended
Phase II Deadline
|
|
7(j)(iii)
|
|
Extended
Phase III Deadline
|
|
7(k)(iii)
|
|
Excluded
Assets
|
|
2(d)
|
|
Excluded
Liabilities
|
|
3(d)
|
|
Existing
Plant
|
|
Recitals
|
|
Financing
Documents
|
|
7(r)(iv)
|
|
Financing
Letters
|
|
6(b)(v)
|
|
Fractionation
Plant
|
|
7(aa)
|
|
Hired
Employees
|
|
7(m)
|
|
Indemnitee
|
|
11(c)(i)
|
|
Indemnitor
|
|
11(c)(i)
|
|
Indemnity
Escrow Account
|
|
4(b)(iii)(B)
|
|
Independent
Accountant
|
|
4(d)(i)(A)
|
|
Investor
Rights Agreement
|
|
9(c)(v)
|
|
Inventory
Adjustment Reports
|
|
4(d)(iii)(A)
|
|
JV
Agreement
|
|
7(w)
|
|
Latest
Balance Sheet
|
|
5(b)(i)(A)
|
|
Latest
Financial Statements
|
|
5(b)(i)(A)
|
|
Loop
Real Property
|
|
9(b)(vi)
|
|
Losses
|
|
11(b)(i)
|
|
Material
Consents
|
|
9(a)(i)
|
|
Material
Contracts
|
|
5(b)(vii)
|
|
Minimum
Loss
|
|
11(d)(i)(A)
|
|
Monthly
Financials
|
|
7(r)(i)
|
|
Negative
Phase II Net Cost Amount
|
|
1(a)(xxxviii)
|
|
Negative
Phase III Net Cost Amount
|
|
1(a)(xxxix)
|
|
Net
Cost Adjustment Reports
|
|
4(d)(iii)(B)
|
|
Owned
Real Property
|
|
Recitals
|
|
Owned
Real Property Funded Debt
|
|
7(p)
|
|
Permits
|
|
5(b)(xiii)
|
|
Permitted
Encumbrances
|
|
5(b)(iv)(K)
|
|
Phase
I Assets
|
|
Recitals
|
|
Phase
I Assumed Liabilities
|
|
3(a)
|
|
Phase
I Buyer
|
|
Recitals
|
|
Phase
I Closing
|
|
4(a)
|
|
Phase
I Closing Certificate
|
|
7(p)
|
|
Phase
I Closing Date
|
|
4(a)
|
|
Phase
I Escrow Amount
|
|
4(b)(iii)(C)
|
|
Phase
I Financing Condition
|
|
9(b)(iv)
|
|
Phase
I Funded Debt
|
|
7(p)
|
|
Phase
I Inventory Adjustment Report
|
|
4(d)(i)(A)
|
|
Phase
I Inventory Objection Notice
|
|
4(d)(i)(A)
|
|
Phase
I Purchase Price
|
|
4(b)(i)(A)
|
|
Phase
I Termination Date
|
|
12(a)(ii)
|
|
Phase
II Adjustment
|
|
4(b)(ii)(A)
|
|
Phase
II Assets
|
|
Recitals
|
|
Phase
II Assumed Liabilities
|
|
3(b)
|
|
Phase
II Buyer
|
|
Recitals
|
|
Phase
II Cash Consideration
|
|
4(b)(i)(B)
|
|
Phase
II Closing
|
|
4(a)
|
|
Phase
II Closing Certificate
|
|
7(p)
|
|
Phase
II Closing Date
|
|
4(a)
|
|
Phase
II Completion Cost
|
|
4(b)(ii)(A)
|
|
Phase
II Completion Date
|
|
4(b)(ii)(A)
|
|
Phase
II Escrow Amount
|
|
4(b)(iv)(B)
|
|
Phase
II Funded Debt
|
|
7(p)
|
|
Phase
II Deadline
|
|
4(b)(ii)(A)
|
|
Phase
II Inventory Adjustment Report
|
|
4(d)(ii)(A)
|
|
Phase
II Inventory Objection Notice
|
|
4(d)(ii)(A)
|
|
Phase
II Net Cost Adjustment Report
|
|
4(d)(ii)(B)
|
|
Phase
II Net Cost Objection Notice
|
|
4(d)(ii)(B)
|
|
Phase
II Premium
|
|
4(b)(ii)(A)
|
|
Phase
II Purchase Price
|
|
4(b)(i)(B)
|
|
Phase
II Stock Consideration
|
|
4(b)(i)(B)
|
|
Phase
III Adjustment
|
|
4(b)(ii)(C)
|
|
Phase
III Assets
|
|
Recitals
|
|
Phase
III Assumed Liabilities
|
|
3(c)
|
|
Phase
III Buyer
|
|
Recitals
|
|
Phase
III Cash Consideration
|
|
4(b)(i)(C)
|
|
Phase
III Closing
|
|
4(a)
|
|
Phase
III Closing Certificate
|
|
7(p)
|
|
Phase
III Closing Date
|
|
4(a)
|
|
Phase
III Completion Cost
|
|
4(b)(ii)(C)
|
|
Phase
III Completion Date
|
|
4(b)(ii)(C)
|
|
Phase
III Deadline
|
|
4(b)(iii)(C)
|
|
Phase
III Escrow Amount
|
|
4(b)(v)(B)
|
|
Phase
III Funded Debt
|
|
7(p)
|
|
Phase
III Inventory Adjustment Report
|
|
4(d)(iii)(A)
|
|
Phase
III Inventory Objection Notice
|
|
4(d)(iii)(A)
|
|
Phase
III Net Cost Adjustment Report
|
|
4(d)(iii)(B)
|
|
Phase
III Net Cost Objection Notice
|
|
4(d)(iii)(B)
|
|
Phase
III Premium
|
|
4(b)(ii)(C)
|
|
Phase
III Purchase Price
|
|
4(b)(i)(C)
|
|
Phase
III Stock Consideration
|
|
4(b)(i)(C)
|
|
Plan
or Plans
|
|
5(b)(x)(A)
|
|
Positive
Phase II Net Cost Amount
|
|
1(a)(xxxviii)
|
|
Positive
Phase III Net Cost Amount
|
|
1(a)(xxxix)
|
|
Purchase
Price
|
|
4(b)(i)
|
|
RE
LLC
|
|
Recitals
|
|
Real
Property Laws
|
|
5(b)(iv)(F)
|
|
Recommendation
|
|
7(x)(iv)
|
|
Recoverable
Costs
|
|
4(b)(ii)(C)
|
|
Returns
|
|
5(b)(v)(A)
|
|
Schedules
|
|
Article
5
|
|
Securities
Act
|
|
5(b)(xix)
|
|
Seller
|
|
Recitals
|
|
Seller
Consents
|
|
5(a)(iii)
|
|
Seller’s
Expense Statement
|
|
13
|
|
Seller
Phase I Real Estate Taxes
|
|
7(v)
|
|
Seller
Phase II Real Estate Taxes
|
|
7(v)
|
|
Set-off
Amount
|
|
1(a)(x1iv)
|
|
775
Agreement
|
|
7(ff)
|
|
775
Date
|
|
7(ff)
|
|
Shareholder
Approval Document
|
|
7(x)(i)
|
|
Surveys
|
|
9(b)(x)(C)
|
|
S-X
Auditor
|
|
7(r)(iii)
|
|
S-X
2007 Audited Financials
|
|
7(r)(iii)
|
|
TIF
Agreement
|
|
7(hh)
|
|
TIF
Assignment Date
|
|
7(hh)
|
|
TIF
Determination Date
|
|
7(hh)
|
|
Third-Party
Claim
|
|
11(c)(i)
|
|
Title
Commitments
|
|
9(b)(x)(A)
|
|
Title
Company
|
|
9(b)(x)(A)
|
|
Title
Policies
|
|
9(b)(x)(B)
|
|
Unpaid
Cost to Complete Phase II
|
|
4(b)(ii)(E)
|
|
Unpaid
Cost to Complete Phase III
|
|
4(b)(ii)(E)
|
|
Unrecovered
Phase II Costs
|
|
4(b)(ii)(A)
|
|
WARN
Act
|
|
5(b)(ix)(C)
|
|
Warranty
Deed
|
|
9(b)(x)(D)
|
|
West
LB
|
|
6(b)(v)
|
|
2.
|
PURCHASE
AND SALE OF ASSETS
|
| |
(i)
|
Purchased Assets .
At
the Phase I Closing and in reliance upon the representations,
warranties and agreements and subject to the terms and conditions
set forth in this Agreement, (A) Seller shall sell, assign,
transfer, convey and deliver to Phase I Buyer, free and clear of
all Liens, other than Permitted Encumbrances, and Phase I Buyer
shall purchase and accept from Seller, all of Seller’s right,
title and interest in and to, including all proceeds therefrom, all
of the Phase I Assets and (B) Seller shall sell, assign, transfer,
convey and deliver to RE LLC, free and clear of all Liens, other
than Permitted Encumbrances, and RE LLC shall purchase and accept
from Seller, all of Seller’s right, title and interest in and
to the Owned Real Property.
|
| |
(ii)
|
Limitations on Assignability .
Notwithstanding anything in this Agreement to the contrary, to the
extent that any of the Assumed Contracts included in the Phase I
Assets are not assignable without the consent of a third party,
neither this Agreement, nor any of the instruments or documents
executed and delivered in connection herewith or contemplated
hereby, shall constitute an assignment or assumption thereof, or
attempted assignment or attempted assumption thereof, if such
assignment or attempted assignment, or assumption or attempted
assumption, would constitute a breach thereof. Without in any way
limiting Seller’s obligation hereunder to obtain all consents
and waivers necessary for the sale, transfer, assignment and
delivery of the Assumed Contracts included within the Phase I
Assets to the Phase I Buyer hereunder, if any such consent is not
obtained or if such assignment is not permitted irrespective of
consent and if the Phase I Closing shall occur, the Seller shall
cooperate with the Phase I Buyer following the Phase I Closing Date
in any reasonable arrangement designed to provide the Phase I Buyer
with the rights and benefits (subject to the obligations) under any
such Assumed Contract, including enforcement for the benefit of the
Phase I Buyer (at such Buyer’s cost) of any and all rights of
the Seller against any other party arising out of any breach or
cancellation of any such Assumed Contract by such other party and,
if requested by the Phase I Buyer, acting as an agent on behalf of
such Phase I Buyer or as such Phase I Buyer shall otherwise
reasonably require (and Seller shall have no liability for actions
taken in good faith on behalf of Phase I Buyer as its agent that
were within the scope of such agency relationship).
|
| |
(i)
|
Purchased Assets .
.
At
the Phase II Closing and in reliance upon the representations,
warranties and agreements and subject to the terms and conditions
set forth in this Agreement, (A) Seller shall sell, assign,
transfer, convey and deliver to Phase II Buyer, free and clear of
all Liens, other than Permitted Encumbrances, and Phase II Buyer
shall purchase and accept from Seller, all of Seller’s right,
title and interest in and to, including all proceeds therefrom, all
of the Phase II Assets and (B) Seller shall sell, assign, transfer,
convey and deliver to RE LLC, free and clear of all Liens, other
than Permitted Encumbrances, and RE LLC shall purchase and accept
from Seller, all of Seller’s right, title and interest in and
to the Loop Real Property.
|
| |
(ii)
|
Limitations on Assignability .
Notwithstanding anything in this Agreement to the contrary, to the
extent that any of the contracts included in the Phase II Assets
are not assignable without the consent of a third party, neither
this Agreement, nor any of the instruments or documents executed
and delivered in connection herewith or contemplated hereby, shall
constitute an assignment or assumption thereof, or attempted
assignment or attempted assumption thereof, if such assignment or
attempted assignment, or assumption or attempted assumption, would
constitute a breach thereof. Without in any way limiting
Seller’s obligation hereunder to obtain all consents and
waivers necessary for the sale, transfer, assignment and delivery
of the contracts included within the Phase II Assets to the Phase
II Buyer hereunder, if any such consent is not obtained or if such
assignment is not permitted irrespective of consent and if the
Phase II Closing shall occur, the Seller shall cooperate with the
Phase II Buyer following the Phase II Closing Date in any
reasonable arrangement designed to provide the Phase II Buyer with
the rights and benefits (subject to the obligations) under any such
contract, including enforcement for the benefit of the Phase II
Buyer (at such Buyer’s cost) of any and all rights of the
Seller against any other party arising out of any breach or
cancellation of any such contract by such other party and, if
requested by the Phase II Buyer, acting as an agent on behalf of
such Phase II Buyer or as such Phase II Buyer shall otherwise
reasonably require (and Seller shall have no liability for actions
taken in good faith on behalf of Phase II Buyer as its agent that
were within the scope of such agency relationship).
|
| |
(i)
|
Purchased Assets .
At the Phase III Closing and in reliance upon the representations,
warranties and agreements and subject to the terms and conditions
set forth in this Agreement, Seller shall sell, assign, transfer,
convey and deliver to Phase III Buyer, free and clear of all Liens,
other than Permitted Encumbrances, and Phase III Buyer shall
purchase and accept from Seller, all of Seller’s right, title
and interest in and to, including all proceeds therefrom, all Phase
III Assets.
|
| |
(ii)
|
Limitations on Assignability .
Notwithstanding anything in this Agreement to the contrary, to the
extent that any of the contracts included in the Phase III Assets
are not assignable without the consent of a third party, neither
this Agreement, nor any of the instruments or documents executed
and delivered in connection herewith or contemplated hereby, shall
constitute an assignment or assumption thereof, or attempted
assignment or attempted assumption thereof, if such assignment or
attempted assignment, or assumption or attempted assumption, would
constitute a breach thereof. Without in any way limiting
Seller’s obligation hereunder to obtain all consents and
waivers necessary for the sale, transfer, assignment and delivery
of the contracts included within the Phase III Assets to the Phase
III Buyer hereunder, if any such consent is not obtained or if such
assignment is not permitted irrespective of consent and if the
Phase III Closing shall occur, the Seller shall cooperate with the
Phase III Buyer following the Phase III Closing Date in any
reasonable arrangement designed to provide the Phase III Buyer with
the rights and benefits (subject to the obligations) under any such
contract, including enforcement for the benefit of the Phase III
Buyer (at such Buyer’s cost) of any and all rights of the
Seller against any other party arising out of any breach or
cancellation of any such contract by such other party and, if
requested by the Phase III Buyer, acting as an agent on behalf of
such Phase III Buyer or as such Phase III Buyer shall otherwise
reasonably require (and Seller shall have no liability for actions
taken in good faith on behalf of Phase III Buyer as its agent that
were within the scope of such agency relationship).
|
| |
(d)
|
Excluded Assets. Seller
is not selling, and Buyers are not purchasing, any of the following
assets, all of which shall be retained by Seller (the
“
Excluded Assets ”):
|
| |
(i)
|
Equity Interests .
Any equity interest in Seller;
|
| |
(ii)
|
Claims .
Any claims (including benefits arising therefrom) which relate to
Liabilities of Seller or its Affiliates or their officers,
directors, employees or agents, which are not Assumed Liabilities
or which relate to any of the Excluded Assets;
|
| |
(iii)
|
Agreement Rights .
Rights of Seller or any of its Affiliates under this Agreement and
any Related Agreements;
|
| |
(iv)
|
Company Records .
The minute books, seal and other records having to do with the
organization of Seller;
|
| |
(v)
|
Insurance .
All insurance policies (including the proceeds thereof) owned by
Seller or its Affiliates;
|
| |
(vi)
|
Employee Benefit Plans; Plan Assets .
All employee benefit plans which cover, are maintained for the
benefit of or relate to any of the employees of the Business and
assets held in trust or otherwise by or for the benefit of any
current or former employees of Seller or its Affiliates under such
plan;
|
| |
(vii)
|
Tax Sharing Agreement; Tax Records .
Any rights or benefits under any tax sharing agreements and the
income Tax Returns and other original income tax records of Seller
or its Affiliates; and
|
| |
(viii)
|
Other Excluded Assets .
All assets set forth with particularity on
Schedule 2(d)(viii) .
|
| |
(a)
|
Assumption of Liabilities in Phase I. At
the Phase I Closing, Phase I Buyer and RE LLC shall assume the
following (and only the following) Liabilities of Seller
(collectively, the “
Phase I Assumed Liabilities ”):
|
| |
(i)
|
Purchased Asset Liabilities Subsequent to Closing
.
All Liabilities relating to, associated with or arising from Phase
I Buyer’s and RE LLC’s ownership, possession, use,
operation or sale or other disposition after the Phase I Closing
Date of any of the Phase I Assets and Owned Real Property,
respectively, and, for the avoidance of doubt, the parties agree
that, after the Phase I Closing, Phase I Buyer shall assume and be
responsible for all risk of operation, condition, fitness,
performance and nonperformance of the Phase I Assets, and that
Seller shall have no liability or obligation with respect thereto,
or with respect to the operation or condition of the Phase I
Assets, including no liability or obligation as a result of the
Phase I Assets failing to operate as designed or the failure of the
Phase I Assets to meet any specification or operating parameters
following the Phase I Closing Date;
|
| |
(ii)
|
Contract, License and Lease Liabilities .
All Liabilities of Seller or its Affiliates under each of the
Assumed Contracts to the extent any such Liability is related to
the operation of the Business from and after the Phase I Closing
Date;
|
| |
(iii)
|
Liabilities Agreed Upon by Parties .
Liabilities, if any, set forth with particularity on
Schedule 3(a)(iii) ;
and
|
| |
(iv)
|
Transfer Taxes .
One half of the amount of all Liabilities for transfer,
recordation, sales, mortgage deed and similar taxes, duties or
levies arising solely as a result of the transfer of the Phase I
Assets and the Owned Real Property to Phase I Buyer and RE LLC,
respectively, by virtue of the consummation of the Transactions
contemplated hereby.
|
| |
(b)
|
Assumption of Liabilities in Phase II. At
the Phase II Closing, Phase II Buyer and RE LLC shall assume the
following (and only the following) Liabilities of Seller
(collectively, the “
Phase II Assumed Liabilities ”):
|
| |
(i)
|
Purchased Asset Liabilities Subsequent to Closing
.
All Liabilities relating to, associated with or arising from Phase
II Buyer’s and RE LLC’s ownership, possession, use,
operation or sale or other disposition after the Phase II Closing
Date of any of the Phase II Assets and Loop Real Property,
respectively, and, for the avoidance of doubt, the parties agree
that, after the Phase II Closing, Phase II Buyer shall assume and
be responsible for all risk of operation, condition, fitness,
performance and nonperformance of the Phase II Assets, and that
Seller shall have no liability or obligation with respect thereto,
or with respect to the operation or condition of the Phase II
Assets, including no liability or obligation as a result of the
Phase II Assets failing to operate as designed or the failure of
the Phase II Assets to meet any specification or operating
parameters following the Phase II Closing Date;
|
| |
(ii)
|
Contract, License and Lease Liabilities .
All Liabilities of Seller or its Affiliates under each of the
contracts assumed by Phase II Buyer pursuant to Section 3(b)(iii)
to the extent any such Liability is related to the operation of the
Business from and after the Phase II Closing Date;
|
| |
(iii)
|
Liabilities Agreed Upon by Parties .
Liabilities, if any, set forth with particularity on
Schedule 3(b)(iii) ;
and
|
| |
(iv)
|
Transfer Taxes .
One half of the amount of all Liabilities for transfer,
recordation, sales, mortgage deed and similar taxes, duties or
levies arising solely as a result of the transfer of the Phase II
Assets and the Loop Real Property to Phase II Buyer and RE LLC,
respectively, by virtue of the consummation of the Transactions
contemplated hereby.
|
| |
(c)
|
Assumption of Liabilities in Phase III. At
the Phase III Closing, Phase III Buyer shall assume the following
(and only the following) Liabilities of Seller (collectively, the
“
Phase III Assumed Liabilities ,”
and together with the Phase I Assumed Liabilities and the Phase II
Assumed Liabilities, the “
Assumed Liabilities ”):
|
| |
(i)
|
Purchased Asset Liabilities Subsequent to Closing
.
All Liabilities relating to, associated with or arising from Phase
III Buyer’s ownership, possession, use, operation or sale or
other disposition after the Phase III Closing Date of any of the
Phase III Assets and, for the avoidance of doubt, the parties agree
that, after the Phase III Closing, Phase III Buyer shall assume and
be responsible for all risk of operation, condition, fitness,
performance and nonperformance of the Phase III Assets, and that
Seller shall have no liability or obligation with respect thereto,
or with respect to the operation or condition of the Phase III
Assets, including no liability or obligation as a result of the
Phase III Assets failing to operate as designed or the failure of
the Phase III Assets to meet any specification or operating
parameters following the Phase III Closing Date;
|
| |
(ii)
|
Contract, License and Lease Liabilities .
All Liabilities of Seller or its Affiliates under each of the
contracts assumed by Phase III Buyer pursuant to Section 3(c)(iii)
to the extent any such Liability is related to the operation of the
Business from and after the Phase III Closing Date;
|
| |
(iii)
|
Liabilities Agreed Upon by Parties .
Liabilities, if any, set forth with particularity on
Schedule 3(c)(iii) ;
and
|
| |
(iv)
|
Transfer Taxes .
One half of the amount of all Liabilities for transfer,
recordation, sales, mortgage deed and similar taxes, duties or
levies arising solely as a result of the transfer of the Phase III
Assets to Phase III Buyer by virtue of the consummation of the
Transactions contemplated hereby.
|
Except
for the
Assumed Liabilities, none of Ethanex or any of the Buyers
shall assume any other Liabilities of Seller or its Affiliates
by virtue of this Agreement.
| |
(d)
|
Excluded Liabilities . Except for the Assumed Liabilities, none
of Ethanex, Ethanex Sutherland, or any of the Buyers shall assume
or be obligated to pay, perform or otherwise discharge (and Seller
shall retain, pay, perform or otherwise discharge) any Liabilities
related to the Business or the Purchased Assets (collectively,
“
Excluded Liabilities ”),
including the following:
|
| |
(i)
|
Liabilities Prior to Closing .
All Liabilities of the Business which arise prior to the Phase I
Closing Date, including accounts payable and other current
Liabilities of Seller, and any such Liabilities of any predecessor
to Seller and any Person with respect to which Seller is a
successor-in-interest;
|
| |
(ii)
|
Excluded Asset Liabilities .
All Liabilities relating exclusively to Excluded
Assets;
|
| |
(iii)
|
Liabilities Associated with the Purchase Agreement
.
All Liabilities for legal, accounting and investment banking fees
and other expenses incurred in connection with the preparation of
and performance under this Agreement and the sale of the Purchased
Assets to the Buyers;
|
| |
(iv)
|
Seller’s Liabilities .
Any Liabilities of Seller arising out of or relating to its
performance under this Agreement (regardless of whether such
performance is required prior to or after any Closing Date),
including any Liability or obligation arising under the
indemnification obligations of Seller under Article
11;
|
| |
(v)
|
Indebtedness .
Any Funded Debt;
|
| |
(vi)
|
Taxes .
All Liabilities or obligations for Taxes with respect to (a) the
Business as owned and operated by the Seller, (b) the Phase I
Assets for taxable periods, or portions thereof, ending on or
before the Phase I Closing Date, (c) the Phase II Assets for
taxable periods, or portions thereof, ending on or before the Phase
II Closing Date, (d) the Phase III Assets for taxable periods, or
portions thereof, ending on or before the Phase III Closing Date,
(e) the Owned Real Property for taxable periods, or portions
thereof, ending on or before the Phase I Closing Date, and (f) the
Loop Real Property for taxable periods, or portions thereof, ending
on or before the Phase II Closing Date;
|
| |
(vii)
|
Employee Benefit Plans .
All Liabilities with respect to any current or former employee or
any Plan, including, without limitation, any Plan currently or
formerly maintained or contributed to by any other entity that is
or was treated as a single employer with Seller under Section 414
of the Code;
|
| |
(viii)
|
Environmental Laws .
All Liabilities pursuant to any Environmental Laws arising from or
related to any action, event, circumstance or condition occurring
or existing prior to the Phase I Closing Date;
|
| |
(ix)
|
Violations of Law .
All Liabilities arising from or related to any compliance or
noncompliance with Legal Requirements applicable to Seller, the
Business as owned and operated by Seller or the Owned Real Property
(prior to the Phase I Closing Date), the Phase I Assets (prior to
the Phase I Closing), the Phase II Assets and the Loop Real
Property (prior to the Phase II Closing), the Phase III Assets
(prior to the Phase III Closing), (other than any such Liabilities
arising from or related to any contract to the extent such
Liabilities are being assumed by a Buyer pursuant to Sections
3(a)(ii), 3(a)(iii), 3(b)(iii) and 3(c)(iii) above), or any
Liabilities related to or arising from or otherwise related to the
NOV Liabilities;
|
| |
(x)
|
Phase II and Phase III Completion Costs .
Subject to Sections 3(b)(i) and 3(c)(i), all Liabilities and other
costs related to the construction of and the Completion of the
Phase II Plan or the Completion of the Phase III Plan (except for
those Liabilities that are expressly assumed pursuant to Sections
3(b)(i) and 3(c)(i) and where a member of the Buyer Group elects to
assume the Completion of the Phase II Plan or the Phase III Plan,
in which case the provisions of Section 4(b)(ii)(A) and (C) shall
apply); and,
|
| |
(xi)
|
Other Liabilities .
Any Liabilities set forth on
Schedule 3(d)(xi) .
|
| |
(e)
|
No Expansion of Third Party Rights. The
assumption by the Buyers of the Assumed Liabilities shall in no way
expand the rights or remedies of any third party against Ethanex,
any Buyer or Seller or their respective Affiliates as compared to
the rights and remedies which such third party would have had
against Seller or its Affiliates had a Buyer not assumed such
Liabilities. Without limiting the foregoing, the assumption by the
Buyers of the Assumed Liabilities shall not create any third party
beneficiary rights.
|
|
4.
|
CLOSING; PURCHASE PRICE; ADJUSTMENT
|
| |
(a)
|
Closing Dates and Location . The consummation of the sale and
delivery of the Phase I Assets to the Phase I Buyer and the Owned
Real Property to RE LLC and the receipt of the consideration
therefor by payment as provided in this Article 4 shall constitute
the “
Phase I Closing .”
The consummation of the sale and delivery of the Phase II Assets to
the Phase II Buyer and the Loop Real Property to RE LLC and the
receipt of the consideration therefor by payment as provided in
this Article 4 shall constitute the “
Phase II Closing .”
The consummation of the sale and delivery of the Phase III Assets
to the Phase III Buyer and the receipt of the consideration
therefor by payment as provided in this Article 4 shall constitute
the “
Phase III Closing ”
(which together with the Phase I Closing and the Phase II Closing
shall be the “
Closings ”)
Unless otherwise agreed by the parties or unless this Agreement
shall be terminated pursuant to the terms hereof, each of the
Closings shall take place at 10:00 a.m., local time, at the offices
of Kirkland & Ellis LLP, 655 15th Street, NW, Washington, DC
20006, or such other place as is mutually and reasonably acceptable
to the Seller and Ethanex, and shall occur on the date that is
three (3) Business Days following satisfaction or waiver of all of
the conditions to the applicable Closing set forth in Articles 9
and 10, other than those conditions which by their terms may only
be satisfied on the respective Closing Date. The date on which the
Phase I Closing actually occurs shall constitute the “
Phase I Closing Date, ”
the date on which the Phase II Closing actually occurs shall
constitute the “
Phase II Closing Date ,”
and the date on which the Phase III Closing actually occurs shall
constitute the “
Phase III Closing Date ”;
provided ,
that in no event shall the Phase III Closing occur prior to the
Phase II Closing.
|
| |
(b)
|
Payment of the Purchase Price; Adjustments .
|
| |
(i)
|
The
purchase price (the “
Purchase Price ”)
for the Purchased Assets shall be the aggregate amount of Two
Hundred Twenty Million Dollars ($220,000,000),
plus the
assumption of the Assumed Liabilities, subject to adjustment in
accordance with this Section 4(b) and Sections 4(c) and 4(d) below.
The Purchase Price shall be payable as follows:
|
| |
(A)
|
Fifty
Million Dollars ($50,000,000) in cash (the “
Phase I Purchase Price ”),
subject to adjustment in accordance with Sections 4(c)(i) and
4(d)(i)(A), shall be payable at the Phase I Closing as provided in
Section 4(b)(iii),
|
| |
(B)
|
Sixty
Million Dollars ($60,000,000) in cash, subject to adjustment in
accordance with Sections 4(b)(ii)(A) and (B), 4(c)(ii), 4(d)(ii)(A)
and 4(d)(ii)(B) (the “
Phase II Cash Consideration ”),
and Twenty-Five Million Dollars ($25,000,000) payable in shares of
Common Stock ( with
the number of shares being equal to the sum of (i) $6,250,000,
divided by the average reported closing price per share of the
Common Stock for the ten trading days ending with the last trading
day before the Phase I Closing Date plus (ii) $18,750,000, divided
by the average reported closing price per share of the Common Stock
for the ten trading days ending with the last trading day before
the Phase II Closing Date )
(the “
Phase II Stock Consideration ,”
and together with the Phase II Cash Consideration, the
“
Phase II Purchase Price ”),
shall be payable and issuable, respectively, at the Phase II
Closing as provided in Section 4(b)(iv); and
|
| |
(C)
|
Sixty
Million Dollars ($60,000,000) in cash, subject to adjustment in
accordance with Sections 4(b)(ii)(A), (C) and (D), 4(c)(iii),
4(d)(iii)(A) and 4(d)(iii)(B) (the “
Phase III Cash Consideration ,”
and with the Phase I Purchase Price and the Phase II Cash
Consideration, the “
Cash Consideration ”),
and Twenty-Five Million Dollars ($25,000,000) payable in shares of
Common Stock ( with
the number of shares being equal to the sum of (i) $6,250,000,
divided by the average reported closing price per share of the
Common Stock for the ten trading days ending with the last trading
day before the Phase I Closing Date plus (ii) $18,750,000, divided
by the average reported closing price per share of the Common Stock
for the ten trading days ending with the last trading day before
the Phase III Closing Date )
(the “
Phase III Stock Consideration ,”
and together with the Phase III Cash Consideration, the
“
Phase III Purchase Price ”),
shall be payable and issuable, respectively, at the Phase III
Closing as provided in Section 4(b)(v).
|
| |
(ii)
|
Phase II and Phase III Completion Adjustments
|
| |
(A) |
If the Completion of the Phase II Plan has not
occurred (as finally determined pursuant to Section 7(j)) by
March 1, 2009 (the “
Phase II Deadline ”),
or by the Extended Phase II Deadline, if applicable pursuant to
Section 7(j) hereof, the Phase II Purchase Price shall be reduced
by an amount equal to 150% of the Unpaid Cost to Complete the Phase
II Plan (such amount, the “
Phase II Adjustment ”).
Phase II Buyer will then assume the Completion of the Phase II Plan
within a commercially reasonable time, and the date upon which the
Completion of the Phase II Plan is completed shall be the
“
Phase II Completion Date ”.
If the sum of (i) the actual cost of Completion of the Phase II
Plan (the “
Phase II Completion Cost ”)
plus (ii)
a premium equal to (A) if a Seller Financing Requirement has not
been met, 5% of the Phase II Completion Cost, or (B) if the Phase
II Plan is not completed for any reason other than the failure of a
Seller Financing Requirement, 10% of the Phase II Completion Cost
(the “
Phase II Premium ”)
is less than amount of the Phase II Adjustment, within five (5)
Business Days following the Phase II Completion Date, Phase II
Buyer shall pay to Seller an amount equal to the remainder. If the
actual cost of Completion of the Phase II Plan
plus the
Phase II Premium is greater than the Phase II Adjustment (such
excess, the “
Unrecovered Phase II Costs ”),
Phase II Buyer shall not be obligated to pay any additional amount
to Seller, and such difference shall be deducted from the Phase III
Cash Consideration (and in such event, the “Phase III
Purchase Price” shall mean such reduced amount, subject to
further adjustment in accordance with Section 4(b)(ii)(C) or (D)
below). |
| |
(B)
|
If
the Completion of the Phase II Plan has occurred but the Process
Specifications of the Phase II Expansion are not met, the Phase II
Cash Consideration shall be reduced in accordance with
Exhibit I attached
hereto and the Phase II Closing shall proceed with the Phase II
Buyer being required to pay the reduced Phase II Cash
Consideration.
|
| |
(C)
|
If
the Completion of the Phase III Plan has not occurred (as finally
determined pursuant to Section 7(k)) by June 30, 2009 (the
“
Phase III Deadline ”),
or
by the Extended Phase III Deadline, if applicable pursuant to
Section 7(k) hereof, the Phase III Purchase Price (as adjusted in
accordance with Section 4(b)(ii)(A), if applicable) shall be
reduced by an amount equal to 150% of the Unpaid Cost to Complete
the Phase III Plan (the “
Phase III Adjustment ”).
Phase III Buyer will then assume the Completion of the Phase III
Plan within a commercially reasonable time, and the date upon which
the Completion of the Phase III Plan is completed shall be the
“
Phase III Completion Date ”.
If the sum of (i) the actual cost of Completion of the Phase III
Plan (the “
Phase III Completion Cost ”)
plus (ii)
a premium equal to (A) if a Seller Financing Requirement has not
been met, 5% of the Phase III Completion Cost, or (B) if the Phase
III Plan is not complete for any reason other than the failure of a
Seller Financing Requirement, 10% of the Phase III Completion Cost
(the “
Phase III Premium ”)
is less than the amount of the Phase III Adjustment, within five
(5) Business Days following the Phase III Completion Date, Phase
III Buyer shall pay to Seller an amount equal to the remainder. If
the actual cost of Completion of the Phase III Plan
plus the
Phase III Premium is greater than the Phase III Adjustment, Phase
III Buyer shall not be obligated to pay an additional amount to
Seller, and such difference (the “
Recoverable Costs ”)
shall be recoverable pursuant to Article 11 hereof.
|
| |
(D)
|
If
the Completion of the Phase III Plan has occurred but the Process
Specifications of the Phase III Expansion are not met, the Phase
III Cash Consideration (as adjusted in accordance with Section
4(b)(ii)(A), if applicable) shall be reduced in accordance
with
Exhibit I attached
hereto and the Phase III Closing shall proceed with the Phase III
Buyer being required to pay the reduced Phase III Cash
Consideration.
|
| |
(E)
|
For
purposes of this Section 4(b)(ii): (i) “
Unpaid Cost to Complete the Phase II Plan ”
shall mean the estimated unpaid cost to complete the Completion of
the Phase II Plan as of the Phase II Closing Date, as mutually
determined in good faith by the Seller and Ethanex within 5
business days following the earlier to occur of the Phase II
Deadline and the Extended Phase II Deadline, and (ii)
“
Unpaid Cost to Complete the Phase III Plan ”
shall mean the estimated unpaid cost to complete the Completion of
the Phase III Plan as of the Phase III Closing Date, as mutually
determined in good faith by the Seller and Ethanex within 5
business days following the earlier to occur of the Phase III
Deadline and the Extended Phase III Deadline. If the Seller and
Ethanex cannot agree on the Unpaid Cost to Complete the Phase II
Plan or the Unpaid Cost to Complete the Phase III Plan within the
periods set forth in the immediately preceding sentence, the
parties will engage R.W. Beck, Inc., as an independent engineer, to
resolve the dispute as soon as practicable, but in any event no
later than 10 days following the date R.W. Beck, Inc. is engaged by
the parties, and the parties shall each pay 50% of the costs of
such engagement.
|
| |
(iii)
|
On the Phase I Closing Date :
|
| |
(A)
|
the
Phase I Buyer shall pay for the Phase I Assets, by wire transfer of
immediately available funds, an aggregate amount equal to
$49,500,000.00,
minus the
Phase I Escrow Amount;
|
| |
(B)
|
RE
LLC shall pay for the Owned Real Property, by wire transfer of
immediately available funds, an aggregate amount equal to
$500,000.00,
minus the
Owned Real Property Debt;
|
| |
(C)
|
the
Phase I Buyer shall deliver or cause to be delivered to the Escrow
Agent an amount equal to $1,000,000.00 (the “
Phase I Escrow Amount ”),
to be held by the Escrow Agent in a separate interest bearing
account (the “
Indemnity Escrow Account ”)
pursuant to the Escrow Agreement;
|
| |
(D)
|
the
Seller shall provide, and cause to be filed, if applicable, UCC-3
Termination Statements and any other forms of or evidence of
release of any Liens (other than Permitted Encumbrances) on the
Phase I Assets and the Owned Real Property;
|
| |
(E)
|
the
Phase I Buyer shall assume those certain Phase I Assumed
Liabilities as set forth in Section 3(a);
|
| |
(F)
|
RE
LLC shall assume those certain Phase I Assumed Liabilities as set
forth in Section 3(a);
|
| |
(G)
|
the
Seller shall deliver to RE LLC the Warranty Deed for the Owned Real
Property; and
|
| |
(H)
|
the
Seller shall deliver to the Phase I Buyer the Phase I
Assets.
|
| |
(iv)
|
On the Phase II Closing Date :
|
| |
(A)
|
the
Phase II Buyer shall pay, by wire transfer of immediately available
funds, an aggregate amount equal to $59,820,000.00,
minus the
Phase II Escrow Amount,
minus the
Phase I Escrow Make-Up, if any,
minus any
Phase I Indemnification Excess Amount,
minus the
Hammer Mill Difference, subject to adjustment and partial deferral
in accordance with Sections 4(b)(ii)(A) or (B), as the case may
be;
|
| |
(B)
|
RE
LLC shall pay for the Loop Real Property, by wire transfer of
immediately available funds, an aggregate amount equal to
$180,000.00,
minus the
Phase II Funded Debt encumbering the Loop Real
Property;
|
| |
(C)
|
the
Phase II Buyer shall deliver or cause to be delivered to the Escrow
Agent an amount equal to $1,000,000.00
plus the
Phase I Escrow Make-Up, if any (the “
Phase II Escrow Amount ”),
to be held by the Escrow Agent in the Indemnity Escrow Account
pursuant to the Escrow Agreement;
|
| |
(D)
|
the
Seller shall provide, and cause to be filed, if applicable, UCC-3
Termination Statements and any other forms of or evidence of
release of the Liens (other than Permitted Encumbrances) on the
Phase II Assets and the Loop Real Property;
|
| |
(E)
|
Ethanex
shall issue, and the Phase II Buyer shall deliver, certificates
representing the Phase II Stock Consideration;
|
| |
(F)
|
Phase
II Buyer shall assume those certain Phase II Assumed Liabilities as
set forth in Section 3(b);
|
| |
(G)
|
RE
LLC shall assume those certain Phase II Assumed Liabilities as set
forth in Section 3(b);
|
| |
(H)
|
Seller
shall deliver to RE LLC the special warranty deed required by
Section 9(c)(viii)(D) for the Loop Real Property; and,
|
| |
(I)
|
the
Seller shall deliver to the Phase II Buyer the Phase II
Assets.
|
| |
(v)
|
On the Phase III Closing Date :
|
| |
(A)
|
the
Phase III Buyer shall pay, by wire transfer of immediately
available funds, an aggregate amount equal to the Phase III Cash
Consideration,
minus the
Phase III Escrow Amount,
minus the
Phase II Escrow Make-Up, if any,
minus any
Phase I Indemnification Residual Amount,
minus any
Phase II Indemnification Amount, subject to adjustment and partial
deferral in accordance with Sections 4(b)(ii)(C) and (D), as the
case may be;
|
| |
(B)
|
the
Phase III Buyer shall deliver or cause to be delivered to the
Escrow Agent an amount equal to $1,000,000.00
plus the
Phase II Escrow Make-Up, if any (the “
Phase III Escrow Amount ”),
to be held by the Escrow Agent in the Indemnity Escrow Account
pursuant to the Escrow Agreement;
|
| |
(C)
|
Ethanex
shall issue, and the Phase III Buyer shall deliver, certificates
representing the Phase III Stock Consideration,
|
| |
(D)
|
Seller
shall deliver to the Phase III Buyer the Phase III
Assets;
|
| |
(E)
|
the
Seller shall provide, and cause to be filed, if applicable, UCC-3
Termination Statements and any other forms of or evidence of
release of any Liens on the Phase III Assets; and
|
| |
(F)
|
Phase
III Buyer shall assume the Phase III Assumed
Liabilities.
|
| |
(c)
|
Purchase Price Adjustment .
Any adjustments as determined finally in accordance with Section
4(d) shall be paid in immediately available funds to an account
designated by the Seller or Ethanex, as the case may be, within
five (5) days of the date that the applicable adjustment is
determined, as follows:
|
| |
(i)
|
.
Phase I Purchase Price Adjustment .
The Phase I Purchase Price shall be subject to a post-Closing
adjustment as follows: (i) it shall be increased on a
dollar-for-dollar basis by the amount that the Phase I Closing Date
Inventory exceeds the Phase I Inventory Target or (ii) decreased on
a dollar-for-dollar basis by the amount that the Phase I Closing
Date Inventory is less than the Phase I Inventory
Target.
|
| |
(ii)
|
Phase II Purchase Price Adjustment .
The Phase II Purchase Price shall be subject to a post-Closing
adjustment as follows: (x)(i) it shall be increased on a
dollar-for-dollar basis by the amount that the Phase II Closing
Date Inventory exceeds the Phase II Inventory Target or (ii)
decreased on a dollar-for-dollar basis by the amount that the Phase
II Closing Date Inventory is less than the Phase II Inventory
Target and (y) (i) it shall be increased by a Positive Phase II Net
Cost Amount or (ii) decreased by a Negative Phase II Net Cost
Amount.
|
| |
(iii)
|
Phase III Purchase Price Adjustment .
The Phase III Purchase Price shall be subject to a post-Closing
adjustment as follows: (x)(i) it shall be increased on a
dollar-for-dollar basis by the amount that the Phase III Closing
Date Inventory exceeds the Phase III Inventory Target or (ii)
decreased on a dollar-for-dollar basis by the amount that the Phase
III Closing Date Inventory is less than the Phase III Inventory
Target and (y) (i) it shall be increased by a Positive Phase III
Net Cost Amount or (ii) decreased by a Negative Phase III Net Cost
Amount.
|
| |
(d)
|
Determination of Purchase Price Adjustments .
|
| |
(i)
|
Phase I Closing Date Adjustments .
|
| |
(A)
|
Inventory .
On the Phase I Closing Date, Seller shall cause a physical
inventory to be taken of the Inventory by employees or
representatives of Seller. Seller shall set forth the value of the
Inventory as of the Phase I Closing Date in a report (the
“
Phase I Inventory Adjustment Report ”).
Seller shall permit representatives or employees of Ethanex to
observe the taking of such physical inventory and Ethanex shall
have the right to undertake confirmatory testing counts of the
Inventory during the taking of such physical inventory, at its own
cost, so long as such observance or confirmatory testing does not
disrupt the normal business operations of Seller. The cost of
conducting the physical inventory shall be borne by Seller. The
Phase I Inventory Adjustment Report (i) shall be prepared from the
Seller’s books and records in accordance with GAAP,
consistently applied, and (ii) shall be delivered to Ethanex no
later than five (5) days after the Phase I Closing Date. If Ethanex
disagrees with Seller’s calculation of the adjustments to the
Phase I Purchase Price, Ethanex shall promptly, but in no event
later than five (5) days following receipt of the Phase I Inventory
Adjustment Report, deliver to Seller written notice (the
“
Phase I Inventory Objection Notice ”)
describing in reasonable detail its dispute by specifying those
items or amounts of Inventory as to which it disagrees, together
with its determination of such disputed amounts; provided, that
Ethanex shall be deemed to have agreed with all items and amounts
that are not disputed. If the dispute is not resolved by the
parties within five (5) days following the date of Seller’s
receipt of the Phase I Inventory Objection Notice, the parties
shall engage an independent accounting firm reasonably acceptable
to Ethanex and the Seller (the “
Independent Accountant ”),
which shall resolve the dispute within thirty (30) days following
such engagement. The Independent Accountant shall act as an expert
and not as an arbitrator to determine, based solely on the written
submissions of the Seller, on the one hand, and Ethanex, on the
other hand, and not by independent investigation, only the specific
items under dispute by the parties. The Independent Accountant
shall render a written report as to the resolution of the dispute
and the resulting computations. The Independent Accountant’s
determination of the disputed items or amounts shall, absent
manifest error, be final and binding on the parties. In resolving
any disputed item, the Independent Accountant (i) shall be
bound by the provisions of this Agreement and (ii) may not
assign a value to any item greater than the greatest value for such
item claimed by either party in the Phase I Inventory Adjustment
Report or the Phase I Inventory Objection Notice, as applicable, or
less than the smallest value for such item claimed by either party
in the Phase I Inventory Adjustment Report or the Phase I Inventory
Objection Notice, as applicable. Ethanex, on the one hand, or the
Seller, on the other hand, shall make appropriate payment to the
other of any additional amounts determined to be payable by them in
respect of the Phase I Purchase Price within five (5) Business Days
following either the resolution of the dispute by the parties or
the receipt of the Independent Accountant’s final
determination, as the case may be;
provided ,
that to the extent the amount reflected in the Phase I Inventory
Adjustment Report is not in dispute such amount shall be paid
before resolution of the dispute by the parties or receipt of the
Independent Accountant’s final determination. All fees and
costs of the Independent Accountant shall be borne by and allocated
between the Seller, on the one hand, and Ethanex, on the other
hand, on a
pro
rata basis
based on the differences between the Independent Accountant’s
determination of the disputed amounts to the net adjustments to the
Purchase Price (as finally determined by the Independent Accountant
or the parties) and each of the Seller’s and Ethanex’s
respective determinations of such disputed amounts. If Ethanex does
not raise any objections to the Phase I Inventory Adjustment Report
within the periods described herein, the Phase I Inventory
Adjustment Report will become final and binding upon all
parties.
|
| |
(ii)
|
Phase II Closing Date Adjustments .
|
| |
(A)
|
Inventory .
On the Phase II Closing Date, Seller shall cause a physical
inventory to be taken of the Inventory by employees or
representatives of Seller. Seller shall set forth the value of the
Inventory as of the Phase II Closing Date in a report (the
“
Phase II Inventory Adjustment Report ”).
Seller shall permit representatives or employees of Ethanex to
observe the taking of such physical inventory and Ethanex shall
have the right to undertake confirmatory testing counts of the
Inventory during the taking of such physical inventory, at its own
cost, so long as such observance or confirmatory testing does not
disrupt the normal business operations of Seller. The cost of
conducting the physical inventory shall be borne by Seller. The
Phase II Inventory Adjustment Report (i) shall be prepared from the
Seller’s books and records in accordance with GAAP,
consistently applied, and (ii) shall be delivered to Ethanex no
later than five (5) days after the Phase II Closing Date. If
Ethanex disagrees with Seller’s calculation of the
adjustments to the Phase II Purchase Price, Ethanex shall promptly,
but in no event later than five (5) days following receipt of the
Phase II Inventory Adjustment Report, deliver to Seller written
notice (the “
Phase II Inventory Objection Notice ”)
describing in reasonable detail its dispute by specifying those
items or amounts of Inventory as to which it disagrees, together
with its determination of such disputed amounts; provided, that
Ethanex shall be deemed to have agreed with all items and amounts
that are not disputed. If the dispute is not resolved by the
parties within five (5) days following the date of Seller’s
receipt of the Phase II Inventory Objection Notice, the parties
shall engage an Independent Accountant, which shall resolve the
dispute within thirty (30) days following such engagement. The
Independent Accountant shall act as an expert and not as an
arbitrator to determine, based solely on the written submissions of
the Seller, on the one hand, and Ethanex, on the other hand, and
not by independent investigation, only the specific items under
dispute by the parties. The Independent Accountant shall render a
written report as to the resolution of the dispute and the
resulting computations. The Independent Accountant’s
determination of the disputed items or amounts shall, absent
manifest error, be final and binding on the parties. In resolving
any disputed item, the Independent Accountant (i) shall be
bound by the provisions of this Agreement and (ii) may not
assign a value to any item greater than the greatest value for such
item claimed by either party in the Phase II Inventory Adjustment
Report or the Phase II Inventory Objection Notice, as applicable,
or less than the smallest value for such item claimed by either
party in the Phase II Inventory Adjustment Report or the Phase II
Inventory Objection Notice, as applicable. Ethanex, on the one
hand, or the Seller, on the other hand, shall make appropriate
payment to the other of any additional amounts determined to be
payable by them in respect of the Phase II Purchase Price within
five (5) Business Days following either the resolution of the
dispute by the parties or the receipt of the Independent
Accountant’s final determination, as the case may be;
provided ,
that to the extent the amount reflected in the Phase II Inventory
Adjustment Report is not in dispute such amount shall be paid
before resolution of the dispute by the parties or receipt of the
Independent Accountant’s final determination. All fees and
costs of the Independent Accountant shall be borne by and allocated
between the Seller, on the one hand, and Ethanex, on the other
hand, on a
pro
rata basis
based on the differences between the Independent Accountant’s
determination of the disputed amounts to the net adjustments to the
Purchase Price (as finally determined by the Independent Accountant
or the parties) and each of the Seller’s and Ethanex’s
respective determinations of such disputed amounts. If Ethanex does
not raise any objections to the Phase II Inventory Adjustment
Report within the periods described herein, the Phase II Inventory
Adjustment Report will become final and binding upon all
parties.
|
| |
(B)
|
Net Costs .
Seller shall prepare a report setting forth its determination of
the Net Phase II Cost, with a detailed description of such
underlying costs and supporting receipts therefor (the
“
Phase II Net Cost Adjustment Report ”).
The Phase II Net Cost Adjustment Report (i) shall be prepared from
the Seller’s books and records in accordance with GAAP,
consistently applied, and (iii) shall be delivered to Ethanex no
later than one (1) day after the Phase II Closing Date. If Ethanex
disagrees with Seller’s calculation of the adjustments to the
Phase II Purchase Price, Ethanex shall promptly, but in no event
later than five (5) days following receipt of the Phase II Net Cost
Adjustment Report, deliver to Seller written notice (the
“
Phase II Net Cost Objection Notice ”)
describing in reasonable detail its dispute by specifying those
items of the Net Phase II Costs as to which it disagrees, together
with its determination of such disputed amounts; provided, that
Ethanex shall be deemed to have agreed with all items and amounts
that are not disputed. If the dispute is not resolved by the
parties within five (5) days following the date of Seller’s
receipt of the Phase II Net Cost Objection Notice, the parties
shall engage an Independent Engineer, which shall resolve the
dispute within thirty (30) days following such engagement. The
Independent Engineer shall act as an expert and not as an
arbitrator to determine, based solely on the written submissions of
the Seller, on the one hand, and Ethanex, on the other hand, and
not by independent investigation, only the specific items under
dispute by the parties. The Independent Engineer shall render a
written report as to the resolution of the dispute and the
resulting computations. The Independent Engineer’s
determination of the disputed items or amounts shall, absent
manifest error, be final and binding on the parties. In resolving
any disputed item, the Independent Engineer (i) shall be bound
by the provisions of this Agreement and (ii) may not assign a
value to any item greater than the greatest value for such item
claimed by either party in the Phase II Net Cost Adjustment Report
or the Phase II Net Cost Objection Notice, as applicable, or less
than the smallest value for such item claimed by either party in
the Phase II Net Cost Adjustment Report or the Phase II Net Cost
Objection Notice, as applicable. Ethanex, on the one hand, or the
Seller, on the other hand, shall make appropriate payment to the
other of any additional amounts determined to be payable by them in
respect of the Phase II Purchase Price within five (5) Business
Days following either the resolution of the dispute by the parties
or the receipt of the Independent Engineer’s final
determination, as the case may be;
provided ,
that to the extent the amount reflected in the Phase II Net Cost
Adjustment Report is not in dispute such amount shall be paid
before resolution of the dispute by the parties or receipt of the
Independent Engineer’s final determination. All fees and
costs of the Independent Engineer shall be borne by and allocated
between the Seller, on the one hand, and Ethanex, on the other
hand, on a
pro
rata basis
based on the differences between the Independent Engineer’s
determination of the disputed amounts to the net adjustments to the
Purchase Price (as finally determined by the Independent Engineer
or the parties) and each of the Seller’s and Ethanex’s
respective determinations of such disputed amounts. If Ethanex does
not raise any objections to the Phase II Net Cost Adjustment Report
within the periods described herein, the Phase II Net Cost
Adjustment Report will become final and binding upon all
parties.
|
| |
(iii)
|
Phase
III Closing Date Adjustments.
|
| |
(A)
|
Inventory .
On the Phase III Closing Date, Seller shall cause a physical
inventory to be taken of the Inventory by employees or
representatives of Seller. Seller shall set forth the value of the
Inventory as of the Phase III Closing Date in a report (the
“
Phase III Inventory Adjustment Report ”
and together with the Phase I Inventory Adjustment Report and the
Phase II Inventory Adjustment Report, the “
Inventory Adjustment Reports ”).
Seller shall permit representatives or employees of Ethanex to
observe the taking of such physical inventory and Ethanex shall
have the right to undertake confirmatory testing counts of the
Inventory during the taking of such physical inventory, at its own
cost, so long as such observance or confirmatory testing does not
disrupt the normal business operations of Seller. The cost of
conducting the physical inventory shall be borne by Seller. The
Phase III Inventory Adjustment Report (i) shall be prepared from
the Seller’s books and records in accordance with GAAP,
consistently applied, and (ii) shall be delivered to Ethanex no
later than five (5) days after the Phase III Closing Date. If
Ethanex disagrees with Seller’s calculation of the
adjustments to the Phase III Purchase Price, Ethanex shall
promptly, but in no event later than five (5) days following
receipt of the Phase III Inventory Adjustment Report, deliver to
Seller written notice (the “
Phase III Inventory Objection Notice ”)
describing in reasonable detail its dispute by specifying those
items or amounts of Inventory as to which it disagrees, together
with its determination of such disputed amounts; provided, that
Ethanex shall be deemed to have agreed with all items and amounts
that are not disputed. If the dispute is not resolved by the
parties within five (5) days following the date of Seller’s
receipt of the Phase III Inventory Objection Notice, the parties
shall engage an Independent Accountant, which shall resolve the
dispute within thirty (30) days following such engagement. The
Independent Accountant shall act as an expert and not as an
arbitrator to determine, based solely on the written submi | |
