JOINT DEVELOPMENT AGREEMENT

Exhibit 10.54

 

 

 

 

 

JOINT DEVELOPMENT AGREEMENT

By and Among

ADA-ES, INC.,

and

ENERGY CAPITAL PARTNERS I, LP

ENERGY CAPITAL PARTNERS I-A, LP

ENERGY CAPITAL PARTNERS I-B IP, LP

ENERGY CAPITAL PARTNERS I (CROWFOOT IP), LP

 

Dated as of October 1, 2008

 

 

 

 

 

 

* indicates portions of the exhibit that have been omitted pursuant to a request for confidential information. The non-public information has been filed with the Commission.

TABLE OF CONTENTS

 

 

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EXHIBITS

 

 

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JOINT DEVELOPMENT AGREEMENT

This JOINT DEVELOPMENT AGREEMENT, dated as of October 1, 2008 (the “ Effective Date ”), is made and entered into by and among ADA-ES, INC., a Colorado Corporation (“ ADA-ES ”), ENERGY CAPITAL PARTNERS I, LP, a Delaware limited partnership (“ ECP I ”), ENERGY CAPITAL PARTNERS I-A, LP, a Delaware limited partnership (“ ECP I-A ”), ENERGY CAPITAL PARTNERS I-B IP, LP, a Delaware limited partnership (“ ECP I-B ”), and ENERGY CAPITAL PARTNERS I (CROWFOOT IP), LP, a Delaware limited partnership (“ ECP Crowfoot ”). ECP I, ECP I-A, ECP I-B and ECP Crowfoot collectively, are referred to herein as individually as an “ ECP Party ” and collectively as the “ ECP Parties .” Each of the ECP Parties and ADA-ES is sometimes hereinafter referred to individually as a “ Party ” and collectively as the “ Parties .” Capitalized terms used but not otherwise defined herein shall have the meanings set forth in Section 10.1 (Definitions).

WHEREAS, the Parties are interested in developing, financing, constructing, owning and operating activated carbon production facilities and related assets (each a “ Project ” and collectively the “ Projects ”);

WHEREAS, ADA-ES has, at its sole expense, commenced a project to evaluate, locate, design and build an initial Project located in Coushatta, Red River Parish, Louisiana, the “ Red River Project ” and has invested substantial sums in and made substantial progress on the development of this initial Project, including, without limitation, the identification of a site, the submission of an air permit application and the execution of various agreements granting rights to purchase land and coal from the local coal mine, and has formed Red River Environmental Products, LLC, a Delaware limited liability company (the “ Red River Project Company ”), to own this initial Project;

WHEREAS, ADA-ES has, at its sole expense, commenced additional Projects located in Bowman, Morton County, North Dakota (the “ Morton Project ”) and Underwood, McLean County, North Dakota (the “ Underwood Project ”), and has formed Morton Environmental Products, LLC, a Delaware limited liability company (the “ Morton Project Company ”) and Underwood Environmental Products, LLC, a Delaware limited liability company (the “ Underwood Project Company ”), respectively, to own such additional Projects;

WHEREAS, ADA-ES has, at its sole expense, purchased equipment, entered into a material supply agreement, leased facilities and taken other actions to provide for the interim supply and processing of activated carbon in Murchison, Texas (the “ Murchison Project ”), has identified a potential additional facility for the interim processing of activated carbon, and has established Crowfoot Supply Company, LLC, a Delaware limited liability company (the “ Supply Company ”), to own the interim supply operations;

WHEREAS, ADA-ES has established Crowfoot Development, LLC, a new Delaware limited liability company (the “ Development Company ”), that will, on the Closing Date, serve as the vehicle through which the Parties jointly engage in the ownership and development, directly or indirectly, of activated carbon production and supply facilities, and will be governed by the terms and provisions of the Operating Agreement;

WHEREAS, ADA-ES desires to make a capital contribution to the Development Company consisting of the ADA-ES Contributed Assets in exchange for a 50% membership interest in the Development Company; and

WHEREAS, the ECP Parties desire to make a capital contribution to the Development Company consisting of the Initial ECP Capital Contribution in exchange for a 50% membership interest in the Development Company.

NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereto agree as follows:

ARTICLE I

FORMATION OF DEVELOPMENT COMPANY; INITIAL CONTRIBUTIONS

1.1 Formation of Development Company . As of the Effective Date, ADA-ES has formed the Development Company pursuant to the Certificate of Formation of Crowfoot Development, LLC filed on February 19, 2008 with the Secretary of State of the State of Delaware. At the Closing, the Parties will enter into the Operating Agreement and make the initial capital contributions to the Development Company described in this Article I .

1.2 ECP Initial Capital Contribution . Within 15 Business Days following the Closing, on the terms and subject to the conditions set forth in this Agreement, the ECP Parties hereby agree to contribute cash to the Development Company in the manner provided for in Section 2.3(b)(i) (Initial ECP Capital Contribution) in an aggregate amount equal to the Initial ECP Capital Contribution. Pursuant to the terms and subject to the conditions set forth in the Operating Agreement, the ECP Parties shall be obligated to fund additional capital requirements of the Development Company as more particularly set forth in the Operating Agreement.

1.3 ADA-ES Asset Contribution . At Closing, on the terms and subject to the conditions set forth in this Agreement, ADA-ES hereby agrees to transfer, convey, assign and deliver all of its right, title and interest in, to and under (a) the Underlying Assets to the Project Companies and the Supply Company, as applicable, and (b) the ADA-ES Contributed Assets to the Development Company, in each case in the manner forth in Section 2.2 (Contribution of Assets) hereof. At Closing, the Underlying Assets shall be free and clear of all Liens, except for Permitted Encumbrances and the ADA-ES Contributed Assets shall be free and clear of all Liens. Pursuant to the terms and subject to the conditions set forth in the Operating Agreement, ADA-ES shall be obligated to fund additional capital requirements of the Development Company as more particularly set forth in the Operating Agreement.

1.4 Contributed Assets . The “ Underlying Assets ” shall consist of:

(a) all Real Property and Real Property Leases relating to Real Property, and all rights with respect thereto, owned by any of the ADA-ES Entities on the Effective Date and on the Closing Date and used or held for use in connection with the Business or necessary to the conduct of the Business;

 

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(b) all Personal Property Leases, Business Contracts (other than the Development Company Assumed Contracts), Business Licenses (other than the Charter Documents of ADA-ES and each qualification of ADA-ES to do business as a foreign corporation in states outside of the State of Colorado), Prepaid Expenses, Business Books and Records, and all rights with respect thereto, owned, directly or indirectly, by any of the ADA-ES Entities on the Effective Date and on the Closing Date;

(c) all of the Tangible Personal Property for which ADA has incurred expenditures detailed on the ADA-ES Pre-Closing Contributed Capital Schedule attached hereto as Exhibit A , (such property, the “ Capitalized Tangible Personal Property ”), as adjusted after the Closing in accordance with Section 2.4 ; and

(d) all assets listed on Section 1.4 of the Disclosure Schedule .

The “ ADA-ES Contributed Assets ” shall consist of (i) ADA-ES’s 100% limited liability company interest in each of the Project Companies and the Supply Company immediately following the transfer of the Underlying Assets pursuant to Section 2.2(a) (Contribution of Assets), (ii) all Transferred Intellectual Property, all copies and tangible embodiments of the Transferred Intellectual Property (in whatever form or medium) and all past, present or future claims or causes of action arising out of or relating to any infringement, dilution, misappropriation or other violation of any of the Transferred Intellectual Property, (iii) all goodwill associated with the Business and (iv) the Development Company Assumed Contracts.

1.5 Excluded Assets . The following assets shall be excluded from and shall not be transferred as part of the Underlying Assets (the “ Excluded Assets ”):

(a) all assets of the ADA-ES Entities exclusively used or held for use in connection with any business conducted by the ADA-ES Entities other than the Business (the “ Other Businesses ”);

(b) all Intellectual Property primarily (but not exclusively) used or held for use in connection with the conduct of the Other Businesses, including the Intellectual Property listed on Part B of Section 4.6(a) of the Disclosure Schedule ; and

(c) all assets listed on Section 1.5 of the Disclosure Schedule .

1.6 Assumed Liabilities . At Closing, pursuant to the Contribution and Assumption Agreements described in Section 2.2 (Contribution of Assets) on the terms and subject to the conditions set forth in this Agreement, each AC Venture Company, as applicable, will, severally and not jointly, assume, and agree to pay, perform and discharge when due, all Liabilities under the Transferred IP accruing, arising out of or relating to events or occurrences happening after the Closing Date, and all Liabilities under the Real Property Leases, Personal Property Leases, Business Contracts and Business Licenses, in each case to the extent assigned to such AC Venture Company, as applicable, but excluding all of the Excluded Liabilities (such assumed liabilities, the “ Assumed Liabilities ”). The AC Venture Companies shall indemnify ADA-ES against any loss, cost or liability arising out of the Assumed Liabilities.

 

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1.7 Excluded Liabilities . Notwithstanding anything to the contrary in this Agreement, none of the AC Venture Companies shall assume or become responsible for, and shall not be deemed to have assumed or to have become responsible for, and ADA-ES shall retain and assume, any Liabilities other than the Assumed Liabilities (such Liabilities, the “ Excluded Liabilities ”), including the following:

(a) all Liabilities or obligations of the ADA-ES Entities to the extent arising out of, resulting from or relating to any Excluded Asset;

(b) all Liabilities of the ADA-ES Entities to the extent arising out of, resulting from or relating to any of the Other Businesses;

(c) all Liabilities with respect to the employees, officers, directors and consultants of the ADA-ES Entities, except to the extent arising from a Business Contract expressly assumed by an AC Venture Company pursuant to the Contribution and Assumption Agreement; and

(d) all Liabilities with respect to Benefit Plans of ADA-ES;

(e) all Liabilities associated with or arising from ADA-ES’s obligations under this Agreement or any of the Operative Agreements;

(f) all Liabilities arising from the breach, noncompliance or default at any time on or prior to the Closing Date of any term, covenant or provision of any of the Real Property Leases, Personal Property Leases, Business Contracts or Business Licenses;

(g) all other Liabilities due and payable prior to the Closing Date;

(h) all Liabilities arising from any violation of or default under, or failure of the Business to be operated in compliance with, applicable Laws at any time on or prior to the Closing Date;

(i) all Liabilities in respect of any of the Real Property Leases, Personal Property Leases, Business Contracts or Business Licenses that would be included in the Underlying Assets or the ADA-ES Contributed Assets but for the provisions of Section 1.8 (Third-Party Consents);

(j) all Liabilities incurred in connection with obtaining any consent, authorization or approval in connection with the consummation of the Transactions;

(k) all Liabilities for Taxes of the ADA-ES Entities (other than Taxes assumed by the AC Venture Companies pursuant to Section 5.2(b) (Tax Cooperation; Allocation of Taxes) and Taxes of the AC Venture Companies arising after the Closing Date);

(l) all Liabilities of the ADA-ES Entities with respect to brokers’ fees and expenses or similar fees and expenses contemplated by Section 4.22 (Brokers, Etc.), including all Liabilities arising out of or related to the Credit Suisse Letter other

 

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than the 1.875% Debt Financing Fee payable upon the closing of the credit facility in respect of the first line of the Red River Project pursuant to Section 5(a) thereof (the “ Debt Financing Fee ”).

(m) all Liabilities arising out of or relating to that certain Repayment Agreement (DE-FR26-04NT42059), dated April 6, 2004, by and between the United States Department of Energy and ADA-ES, including Revision M001 thereto and the Toxecon Sorbent Sales Repayment Agreement, dated February 18, 2004, by and among Norit Americas Inc., ADA-ES and ADA Environmental Solutions, LLC (except the payment obligation set forth in subparagraph (3) of Revision M001 thereto to be assumed by the Development Company on or after the Closing Date).

(n) all Losses and other Liabilities arising out of, resulting from or relating to (i) any Existing Actions or Proceedings, (ii) Actions or Proceedings brought by or against ADA-ES exclusively related to the Other Businesses and (iii) Actions or Proceedings arising out of or relating to the relationship between ADA-ES and Calgon Carbon Corporation, including that certain Memorandum of Understanding dated March 20, 2007, by and between Calgon Carbon Corporation and ADA-ES.

ADA-ES shall indemnify the AC Venture Companies against any loss, cost or liability arising out of the Excluded Liabilities.

1.8 Third-Party Consents . To the extent that any Real Property Lease, Personal Property Lease, Business Contract, Confidentiality Agreements or Business License is not assignable to any of the AC Venture Companies without the consent of another Person that is a party thereto, ADA-ES shall use its commercially reasonable efforts to obtain the consent of such other party to the assignment of any such Real Property Lease, Personal Property Lease, Business Contract or Business License to the applicable AC Venture Company in all cases in which such consent is required for such assignment. If any such consent shall not be obtained, ADA-ES and its Affiliates shall (i) continue to be bound thereby, (ii) cooperate with each AC Venture Company in any reasonable arrangement designed to provide to such AC Venture Company the benefits intended to be assigned to such AC Venture Company under the relevant Real Property Lease, Personal Property Lease, Business Contract or Business License, including enforcement of any and any rights of ADA-ES and its Affiliates against the other party thereto arising out of the breach or cancellation thereof by such other party or otherwise and (iii) enforce at the ECP Parties’ request, any rights of ADA-ES and its Affiliates under any such Real Property Lease, Personal Property Lease, Business Contract or Business License against the issuer thereof or the other party or parties thereto (including the right to elect to terminate such of the foregoing in accordance with the terms thereof upon the request of the ECP Parties). ADA-ES, without further consideration therefor, and without right of set-off, shall pay and remit to the appropriate AC Venture Company promptly all monies, rights and other considerations received in respect of such performance; provided that, the respective AC Venture Company shall reimburse ADA-ES for the direct, out-of-pocket costs reasonably incurred by ADA-ES after the Closing in performing ADA-ES’s obligations under such Contracts that cannot be assigned. Each of the AC Venture Companies shall use commercially reasonable efforts to perform any portion of any such lease, Contract or license of which the benefits are being provided to such AC Venture Company in accordance with this Section 1.8 to the same extent required of ADA -ES or its Affiliates in such lease, Contract or license. Nothing contained in this Section 1.8 shall limit or impair the ECP Parties’ rights in Section 7.3 (Conditions to Obligations of the ECP Parties).

 

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1.9 Allocations of Value . ADA-ES will prepare and deliver to the ECP Parties an allocation (the “ Allocation ”) of the value of the assets of the AC Venture Companies in accordance with the Internal Revenue Code of 1986, as amended (“ IRC ”), and the Treasury Regulations promulgated thereunder. The Allocation shall be delivered by ADA-ES to the ECP Parties within 60 days after the Closing Date for the ECP Parties’ comment or approval. The Parties shall work in good faith to resolve any disputes relating to the Allocation within 45 days from the date on which the Allocation is delivered to the ECP Parties. If the Parties are unable to resolve any such dispute within such 45 day period, such dispute shall be resolved promptly by a nationally recognized independent registered public accounting firm reasonably acceptable to ADA-ES and the ECP Parties that is not rendering (and during the preceding two-year period has not rendered) audit services to either ADA-ES or the ECP Parties or any of their respective Affiliates, the costs of which shall be shared equally by ADA-ES on the one hand and the ECP Parties on the other hand. The Parties shall file all Tax Returns consistent with the final agreed-upon allocation.

ARTICLE II

CLOSING

2.1 Location and Date . The closing of the Transactions (the “ Closing ”) shall be held at the offices of Latham & Watkins LLP on the date on which all conditions to the consummation of the Transactions set forth in Article VII (Conditions to Closing) have either been satisfied or waived. The date on which Closing occurs is referred to herein as the “ Closing Date .”

2.2 Contribution of Assets . At the Closing, ADA-ES shall:

(a) first, transfer or cause to be transferred, as applicable, the Underlying Assets together with the Assumed Liabilities directly related thereto, to the Project Companies and the Supply Company in the manner set forth on Exhibit B hereto and pursuant to the terms of a Contribution and Assumption Agreement, substantially in the form of Exhibit C-1 hereto, free and clear of all Liens other than Permitted Encumbrances; and

(b) second, immediately following consummation of the transfers contemplated by Section 2.2(a) , transfer or cause to be transferred, as applicable, the ADA-ES Contributed Assets (which, following the transfers contemplated by Section 2.2(a) , shall consist of 100% of the limited liability company interests of each of the Project Companies and the Supply Company, the Transferred Intellectual Property and the Development Company Assumed Contracts) together with the Assumed Liabilities directly related thereto, to the Development Company, pursuant to the terms of a Contribution and Assumption Agreement, substantially in the form of Exhibit C-2 (together with the form of Contribution and Assumption Agreement attached as Exhibit C-1 hereto the “ Contribution and Assumption Agreements ”) free and clear of all Liens.

 

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2.3 Actions and Deliveries at Closing . At the Closing (or at such other time specified below), on the terms and subject to the conditions set forth in this Agreement, each of ADA-ES and the ECP Parties, as applicable, shall make the following deliveries and take or cause to be taken the following actions (the “ Closing Actions and Deliveries ”):

(a) Mutual Closing Actions and Deliveries .

(i) Development Company Operating Agreement . Each Party and the Development Company shall execute and deliver to the other Parties the limited liability company agreement for the Development Company, substantially in the form of Exhibit D hereto (the “ Operating Agreement ”).

(ii) AC Venture Company Operating Agreement . ADA-ES and the ECP Parties shall cause the Development Company to execute and deliver to each Project Company and the Supply Company, and each Project Company and the Supply Company shall execute and deliver to the Development Company the following, as applicable: (A) the limited liability company agreement for the Red River Project Company, substantially in the form attached hereto as Exhibit E , (B) the limited liability company agreement for the Underwood Project Company, substantially in the form attached here to as Exhibit F , (C) the limited liability company agreement for the Morton Project Company, substantially in the form attached here to as Exhibit G and (D) the limited liability company agreement for the Supply Company, substantially in the form attached hereto as Exhibit H .

(iii) Master Services Agreement . ADA-ES shall execute and deliver to the Development Company, and ADA-ES and the ECP Parties shall cause the Development Company to execute and deliver to ADA-ES, the Master Services Agreement, substantially in the form attached hereto as Exhibit I (the “ Master Services Agreement ”).

(iv) Intellectual Property License Agreement . ADA-ES shall execute and deliver to the Development Company, and ADA-ES and the ECP Parties shall cause the Development Company to execute and deliver to ADA-ES, the Intellectual Property License Agreement, substantially in the form attached hereto as Exhibit J (the “ Intellectual Property License Agreement ”).

(v) W-9 Deliveries . Each Party shall deliver to the Development Company an IRS Form W-9.

(vi) Additional Actions . The Parties shall execute and deliver, or cause to be executed and delivered, all other documents, and take such other actions, in each case as shall be necessary or appropriate, to consummate the Transactions, all in accordance with the provisions of this Agreement.

(b) ECP Party Closing Actions and Deliveries .

(i) Initial ECP Capital Contribution . Within 15 Business Days following the Closing, the ECP Parties shall pay to the Development Company by wire transfer of immediately available funds a cash contribution of $16,863,273, the “ Initial ECP Capital Contribution ”). The Initial ECP Capital Contribution is based upon the assumption that

 

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ADA-ES has made, through 11:59 p.m., Mountain Time, on September 10, 2008, capital contributions to the Development Company equal to the aggregate amounts set forth on Exhibit A attached hereto, which details the categories and dollar amounts of such expenditures as of September 10, 2008 (the “ ADA-ES Pre-Closing Contributed Capital Schedule ”). The ADA-ES Pre-Closing Contributed Capital Schedule shall be subject to adjustment as set forth in Section 2.4 . In addition, the Parties acknowledge that the ECP Parties have made capital contributions to the Development Company (other than the Initial ECP Capital Contribution) in an amount equal to $200,000.

(ii) Certificate of Managing Member . The ECP Parties shall deliver to the Development Company and ADA-ES, dated as of the Closing Date, a duly executed certificate of the managing member of each of the ECP Parties, substantially in the form of Exhibit K hereto.

(c) ADA-ES Closing Actions and Deliveries .

(i) Conveyance of Assets . ADA-ES shall effect the transfers contemplated by Section 2.2 (Contribution of Assets). The Parties agree that the ADA-ES Contributed Assets are valued at $17,063,273. In furtherance of the foregoing, ADA-ES and the ECP Parties shall cause the Development Company to be admitted as the sole member of each of the Project Companies and the Supply Company.

(ii) Consents and Approvals . ADA-ES will deliver to the ECP Parties, in form and substance reasonably satisfactory to ADA-ES and the ECP Parties and without any material or commercially unreasonable amendment or change to the terms and conditions of the Real Property Leases, Personal Property Leases, Business Contracts and Business Licenses (each lawfully transferred, if not already in the correct name, in the name of the Development Company or its designee), all authorizations, consents, Orders and approvals of all Governmental Authorities and officials and all third party consents (or waivers in lieu thereof) listed on Section 2.3(c)(ii) of the Disclosure Schedule .

(iii) ECP Membership Interest . ADA-ES shall cause the Development Company to issue to the ECP Parties, pro rata in proportion to their relative Capital Commitments (as defined in the Operating Agreement), the ECP Membership Interest.

(iv) Secretary’s Certificate . ADA-ES will deliver to the Development Company and the ECP Parties, dated as of the Closing Date, a duly executed certificate of the Secretary of ADA-ES, substantially in the form of Exhibit L hereto.

(v) IP Assignments . ADA-ES will deliver to the Development Company and the ECP Parties duly executed instruments of assignment with respect to patents and patent applications, trademark and service mark registrations and applications, copyright registrations and applications included in the Underlying Assets, substantially in the form of Exhibit M attached hereto.

 

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(vi) Legal Opinions . ADA-ES will deliver to the Development Company and the ECP Parties, dated as of the Closing Date, legal opinions of Schuchat, Herzog & Brenman, LLC and Fox Rothschild LLP, substantially in the form of Exhibit N-1 and Exhibit N-2 attached hereto.

2.4 Post-Closing Adjustments .

(a) Delivery of ADA-ES Closing Date Contributed Capital Schedule . On or before October 15, 2008, ADA-ES shall prepare in good faith and deliver to the ECP Parties a detailed statement that will supplement the ADA-ES Pre-Closing Contributed Capital Schedule setting forth in reasonable detail ADA-ES’s capital contributions to the Development Company between September 11, 2008 and the Closing Date (such supplement to Exhibit A referred to as the “ ADA-ES Closing Date Contributed Capital Schedule ”).

(b) Review and Audit by ECP Parties . The ECP Parties shall have 10 Business Days following receipt of the proposed ADA-ES Closing Date Contributed Capital Schedule to review such schedule and to accept or object to all or any portion of the capital contributions detailed therein. The ECP Parties, and their authorized representatives, shall be entitled, at their option, to conduct a review of the relevant books and records of ADA-ES that relate to the capital contributions detailed on the ADA-ES Closing Date Contributed Capital Schedule (and make copies thereof), including, without limitation, any relevant accounting work papers. ADA-ES shall make all such books and records reasonably available to the ECP Parties for review and shall otherwise provide all information, cooperation and assistance reasonably requested by the ECP Parties in connection with such review.

(c) Acceptance or Objection by ECP Parties . Unless the ECP Parties deliver written notice to ADA-ES on or prior to the 10th Business Day following the ECP Parties’ receipt of the ADA-ES Closing Date Contributed Capital Schedule, the ECP Parties shall be deemed to have accepted such ADA-ES Closing Date Contributed Capital Schedule. If the ECP Parties so notify ADA-ES of such an objection to the ADA-ES Closing Date Contributed Capital Schedule, the parties shall within 10 days following the date of such notice (the “ Negotiation Period ”) negotiate in good faith to resolve their differences. Any resolution by them as to any disputed amount shall be final, binding, conclusive and nonappealable, and judgment upon any such determination may be entered in any court of competent jurisdiction. Any such resolution, including through the use of a Neutral Auditor as hereinafter provided, shall be reflected on a mutually agreeable final ADA-ES Closing Date Capital Contribution Schedule. The final schedule that is established pursuant to this Section 2.4(c) or Section 2.4(d) is referred to herein as the “ Final ADA-ES Contributed Capital Schedule .”

(d) Resolution of Disputes by Neutral Auditor . If, at the conclusion of the Negotiation Period, the parties have not resolved their disputes, then all amounts remaining in dispute shall, at the election of either Party, be submitted to an auditor who shall be selected by the mutual agreement of the parties (“ Neutral Auditor ”). The Neutral Auditor shall be engaged no later than 10 days after an election by a Party to submit its objections to the Neutral Auditor, and each party agrees to execute, if requested by the Neutral Auditor, a reasonable engagement letter. The Neutral Auditor shall be a nationally recognized independent registered

 

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accounting firm that is not rendering (and during the preceding two-year period has not rendered) audit services to either ADA-ES or the ECP Parties or any of their respective Affiliates. If the parties are unable to agree on such Neutral Auditor, then the respective accounting firms of ADA-ES and the ECP Parties shall choose the Neutral Auditor. All fees and expenses of the Neutral Auditor shall be borne equally by ADA-ES and the ECP Parties. The Neutral Auditor shall act as an arbitrator to determine, based solely on the presentations by ADA-ES and the ECP Parties, and not by independent review, only those issues still in dispute. The Neutral Auditor’s determination shall be made within 30 days of its engagement, shall be set forth in a written statement delivered to ADA-ES and the ECP Parties and shall be final, binding, conclusive and nonappealable. Such determination will be reflected in the Final ADA-ES Contributed Capital Schedule.

(e) Immediately upon the acceptance or other determination of the Final ADA-ES Capital Contribution Schedule, ADA-ES shall (i) assign and convey to the Red River Project Company all Tangible Personal Property reflected on such Final ADA-ES Contributed Capital schedule, and (ii) be deemed to have made a capital contribution to the Development Company in an amount equal to the total expenditures set forth on such ADA-ES Closing Date Contributed Capital Schedule (the “ ADA-ES Adjustment Amount ”) pursuant to and in accordance with Section 3.3(c)(i) of the Operating Agreement.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE ECP PARTIES

Each ECP Party hereby represents and warrants, severally and not jointly and solely with respect to itself and not with respect to any other ECP Party to ADA-ES, as of each of the Effective Date and the Closing Date, as follows:

3.1 Corporate Existence of the ECP Party . The ECP Party is a limited partnership duly formed, validly existing and in good standing under the Laws of the State of Delaware and has the power and authority to execute and deliver this Agreement and the Operative Agreements to which it is a party, to perform its obligations hereunder and thereunder and to consummate the Transactions.

3.2 Authority . The execution and delivery by the ECP Party of this Agreement and the Operative Agreements to which it is a party, and the performance by such ECP Party of its obligations hereunder and thereunder, have been duly and validly authorized by all requisite action on the part of such ECP Party under the laws of the State of Delaware and under its Charter Documents. This Agreement has been duly and validly executed and delivered by the ECP Party and constitutes, and upon the execution and delivery by the ECP Party of the Operative Agreements to which it is a party, such Operative Agreements will constitute legal, valid and binding obligations of the ECP Party enforceable against the ECP Party in accordance with their terms, except as such enforceability may be limited by bankruptcy laws and other Laws affecting creditors’ rights generally, and general principles of equity that restrict the availability of equitable remedies.

 

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3.3 No Conflicts . The execution and delivery by the ECP Party of this Agreement does not, and the execution and delivery by the ECP Party of the Operative Agreements to which it is a party, the performance by the ECP Party of its obligations under this Agreement and such Operative Agreements and the consummation of the Transactions will not:

(a) conflict with or result in a violation or breach of any of the terms, conditions or provisions of the Charter Documents of the ECP Party;

(b) conflict with or result in a violation or breach of any term or provision of any Law or Order applicable to the ECP Party or any of its assets and properties (other than such conflicts, violations or breaches which could not reasonably be expected to have a material adverse effect on the validity or enforceability of this Agreement, the Operative Agreements to which it is a party or the Transactions); or

(c) except as could not reasonably be expected to have a material adverse effect on the validity or enforceability of this Agreement, the Operative Agreements to which the ECP Party is a party or the Transactions, (i) conflict with or result in a material violation or breach of, (ii) constitute (with or without notice or lapse of time or both) a material default or result in the imposition of any fees or penalties under, (iii) give rise to any right of termination, amendment, acceleration or cancellation of, (iv) require the ECP Party to obtain any material consent, approval or action of, make any filing with or give any notice to any Person as a result or under the terms of, or (v) result in the creation or imposition of any material Lien upon the ECP Party or any of their assets or properties under any contract, lease, mortgage, instrument or other document or agreement or authorization of a Governmental Authority to which the ECP Party is a party or by which any of the ECP Party’s assets and properties are bound.

3.4 Governmental Approvals and Filings . Except for any filing or consent required under the HSR Act, no material consent, approval or action of, filing with or notice to any Governmental Authority on the part of the ECP Party is required in connection with the execution, delivery and performance of this Agreement or any of the Operative Agreements to which it is a party or the consummation of the Transactions, except where the failure to obtain any such consent, approval or action, to make any such filing or to give any such notice would not adversely affect the ability of the ECP Party to consummate the Transactions or to perform its obligations hereunder or thereunder.

3.5 Accredited Investor . The ECP Party is an “accredited investor” as that term is defined in Rule 501 of Regulation D under the Securities Act and is acquiring the portion of the ECP Membership Interest for investment solely for its own account and not with a view to or in connection with the distribution thereof. The ECP Party has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of its investment in the Development Company and its membership interest therein and has concluded that it is able to bear these risks and fully understands and acknowledges that its investment in the Development Company and its membership interest therein is a speculative investment which involves a high degree of risk. The ECP Party further understands and agrees that the ECP Membership Interest and other interests in the Development Company will be governed by, and subject to the restrictions set forth in, the Operating Agreement.

 

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3.6 Brokers, Etc. All negotiations relative to this Agreement, the Operative Agreements and the Transactions have been carried out by the ECP Party without the intervention or assistance of any Person on behalf of the ECP Party that might give rise to any valid claim by any Person against the ECP Party or the ADA-ES Entities for a finder’s fee, brokerage commission or similar payment.

3.7 Legal Proceedings . There are no Actions or Proceedings pending or, to the ECP Party’s Knowledge, threatened that could reasonably be expected to result in a Material Adverse Effect on the ECP Party or that question the validity of this Agreement, or of the Operative Agreements or of any action taken or to be taken pursuant to or in connection with the provisions of this Agreement or the Operative Agreements. There are no judgments, Orders, decrees, citations, fines or penalties heretofore assessed against the ECP Party that could reasonably be expected to result in a Material Adverse Effect on the ECP Party or that impair, estop, impede, restrain, ban or otherwise materially adversely affect the ECP Party’s ability to satisfy or perform any of its obligations pursuant to this Agreement under any federal, state or local Law.

3.8 Availability of Funds . The ECP Party has, on the Effective Date, and at the Closing will have, access to liquid capital or committed sources of capital sufficient to permit the ECP Party to perform timely its obligations under this Agreement and the Operative Agreements to which it is a party which are required to be performed on or within the 15 Business Days following the Closing Date and to its Knowledge there is no occurrence, event or condition with respect to it that would prevent it from performing all of its obligations under this Agreement after Closing.

3.9 No Other Representations or Warranties . The ECP Party acknowledges that, except for the representations and warranties of ADA-ES contained in Article IV (Representations and Warranties of ADA-ES) of this Agreement, neither ADA-ES nor any of its directors, officers, employees, Affiliates, agents, advisors or representatives makes, has made or shall be deemed to have made any representation or warranty, express or implied.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF ADA-ES

ADA-ES hereby represents and warrants to the ECP Parties, as of each of the Effective Date and the Closing Date, as follows:

4.1 Corporate Existence of ADA-ES . ADA-ES is a corporation duly organized, validly existing and in good standing under the Laws of the State of Colorado with full power and authority to execute and deliver this Agreement and the Operative Agreements to which it is a party, to perform its obligations hereunder and thereunder and to consummate the Transactions.

4.2 AC Venture Companies . Each of the AC Venture Companies is a limited liability company duly organized, validly existing and in good standing under the Laws of the State of Delaware with full power and authority to own and operate its respective assets, properties and businesses, including their respective Projects.

 

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4.3 Authority . The execution and delivery by ADA-ES of this Agreement and the Operative Agreements to which it is a party, and the performance by ADA-ES of its obligations hereunder and thereunder, have been duly and validly authorized by all requisite action on the part of ADA-ES under the laws of the State of Colorado and under its Charter Documents. This Agreement has been duly and validly executed and delivered by ADA-ES and constitutes, and upon the execution and delivery by ADA-ES of the Operative Agreements to which it is a party, such Operative Agreements will constitute legal, valid and binding obligations of ADA-ES enforceable against ADA-ES in accordance with their terms except as such enforceability may be limited by bankruptcy laws and other Laws affecting creditors’ rights generally, and general principles of equity that restrict the availability of equitable remedies.

4.4 No Conflicts . The execution and delivery by ADA-ES of this Agreement and the Operative Agreements to which it is a party do not, and the performance by ADA-ES of its obligations under this Agreement and such Operative Agreements and the consummation of the Transactions will not:

(a) conflict with or result in a violation or breach of any of the terms, conditions or provisions of the Charter Documents of any of the ADA-ES Entities;

(b) subject to obtaining the consents, approvals and actions, making the filings and giving the notices disclosed on Section 4.4(b) of the Disclosure Schedule , conflict with or result in a violation or breach of any term or provision of any Law or Order applicable to the ADA-ES Entities or any of their assets or properties (other than such conflicts, violations or breaches which could not reasonably be expected to have a material adverse effect on the validity or enforceability of this Agreement, the Operative Agreements to which it is a party or the Transactions); or

(c) except as disclosed on Section 4.4(c) of the Disclosure Schedule or as could not reasonably be expected to adversely affect the validity or enforceability of this Agreement, the Operative Agreements to which it is a party or the Transactions, (i) conflict with or result in a material violation or breach of, (ii) constitute (with or without notice or lapse of time or both) a material default or result in the imposition of any fees or penalties under, (iii) give rise to any right of termination, amendment, acceleration or cancellation of, (iv) require the ADA-ES Entities to obtain any material consent, approval (other than the consents and approvals already listed in Section 2.3(c)(ii) of the Disclosure Schedule ), or action of, make any filing with or give any notice to any Person (other than those filings and consents with Governmental Authorities listed in Section 4.5 of the Disclosure Schedule ) as a result or under the terms of or (v) result in the creation or imposition of any material Lien upon the ADA-ES Entities or any of their assets or properties under any Contract, lease, mortgage, instrument or other document or agreement or authorization of a Governmental Authority to which the ADA-ES Entities are a party or by which any of their assets and properties are bound.

 

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4.5 Governmental Approvals and Filings . Except as disclosed on Section 4.5 of the Disclosure Schedule , or any filing or consent required under the HSR Act, no material consent, approval or action of, filing with or notice to any Governmental Authority on the part of any of the ADA-ES Entities is required in connection with the execution, delivery and performance of this Agreement or any of the Operative Agreements to which they are a party or the consummation of the Transactions, except where the failure to obtain any such consent, approval or action, to make any such filing or to give any such notice would not adversely affect the ability of the ADA-ES Entities to consummate the Transactions or to perform their respective obligations hereunder or thereunder. For the sake of clarity, “performance” of the Operative Agreements as used in this representation is not intended to extend to the need of each Project Company to obtain permits and approvals necessary for activated carbon production and supply.

4.6 Intellectual Property .

(a) Part A of Section 4.6(a) of the Disclosure Schedule contains a true and complete list of all Transferred Intellectual Property that constitutes patents, patent applications, patent disclosures and invention disclosures, trademark and service mark registrations and applications, copyright registrations and applications, internet domain names, and material unregistered trademarks, service marks and copyrights, including all such Intellectual Property required in connection with the construction and operation of the Projects. Part B of Section 4.6(a) of the Disclosure Schedule contains a true and complete list of all other patents, patent applications, patent disclosures and invention disclosures, trademark and service mark registrations and applications, copyright registrations and applications, internet domain names, and material unregistered trademarks, service marks and copyrights used or held for use in connection with the Business, including all such Intellectual Property required in connection with the construction and operation of the Projects (other than Transferred Intellectual Property). Except as disclosed in Section 4.6(a) of the Disclosure Schedule, with respect to each item of Intellectual Property required to be listed on Section 4.6(a) of the Disclosure Schedule , (i) one of the ADA-ES Entities is the sole owner and possesses all right, title and interest in and to the item, (ii) none of the ADA-ES Entities has granted to any Person any license, option or other rights in or to such item, (iii) no action, suit, proceeding, hearing, investigation, charge, complaint, claim or demand is pending or, to ADA-ES’s Knowledge, is threatened that challenges the validity, enforceability, registration, use or ownership of the item and (iv) any registration with, application to, filing with and/or issuance from any Governmental Authorities with respect to the item is subsisting, unexpired and in full force and effect.

(b) Except as disclosed in Section 4.6(b) of the Disclosure Schedule , (i) the ADA-ES Entities are in possession of and have good title to, or have valid rights under Contract to use, all the Transferred Intellectual Property and the Licensed IP, free and clear of all Liens, except for Permitted Encumbrances, (ii) there are no material restrictions on the direct or indirect transfer of any Contract, or any interest therein, held by the Business in respect of any Transferred Intellectual Property, (iii) none of the ADA-ES Entities has received any notice that it is in material default (or with the giving of notice or lapse of time or both, would be in material default) under any Contract to use any of the Transferred Intellectual Property or Licensed IP, (iv) to ADA-ES’s Knowledge, no rights of any of the ADA-ES Entities in the Transferred Intellectual Property or the Licensed IP is being

 

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infringed, diluted, misappropriated or otherwise violated by any other Person, nor is the conduct of the Business infringing, diluting, misappropriating or otherwise violating any of the rights of Intellectual Property of any other Person, (v) except for the Intellectual Property used by ADA-ES in the provision of services to the Company pursuant to the Master Services Agreement, the Underlying Assets, the ADA-ES Contributed Assets and the Licensed IP include all Intellectual Property used or held for use as of the Effective Date and the Closing Date, as applicable, in connection with or necessary for the conduct of the Business, including, without limitation, the making of activated carbon and developing, constructing, owning, activating and supplying activated carbon production facilities and related assets and (vi) the execution, delivery and performance of this Agreement and the Operative Agreements, and the consummation of the Transactions, will not result in the loss or impairment of, or give rise to any right of any third Person to terminate the right of the ADA-ES Entities to own or use, any of the Transferred Intellectual Property or Licensed IP, nor require the consent of any Person in respect thereof.

(c) Except as disclosed in Section 4.6(c) of the Disclosure Schedule , all former and current officers, directors, employees, personnel, consultants, advisors, agents and of each of the ADA-ES Entities, and each of their predecessors, who have contributed to or participated in the conception or development of Intellectual Property for any of the ADA-ES Entities have entered into valid and binding proprietary rights agreements with one of the ADA-ES Entities, as applicable, vesting or assigning ownership of such Intellectual Property in such ADA-ES Entity. The ADA-ES Entities are taking and have taken all steps necessary to maintain, police and protect each item of the Intellectual Property used or held for use in connection with the Business or necessary to the conduct of the Business.

4.7 Liabilities . The AC Venture Companies and the Business do not have any Liabilities, other than Liabilities in respect of any Business Contract, Business License, Real Property Lease or Tangible Personal Property Lease, liabilities assumed pursuant to Section 5.2(b), and the Debt Financing Fee, in each case to the extent the same constitute Assumed Liabilities.

4.8 Legal Proceedings . Except for those Actions or Proceedings disclosed on Section 4.8 of the Disclosure Schedule (“ Existing Actions or Proceedings ”), (a) there are no Actions or Proceedings pending or, to ADA-ES’s Knowledge, threatened against, relating to or affecting the AC Venture Companies, the Underlying Assets or the Business, (b) there are no Orders outstanding against the AC Venture Companies or the Business, (c) there are no Actions or Proceedings pending or, to ADA-ES’s Knowledge, threatened that could be reasonably expected to result in a Material Adverse Effect on ADA-ES, the AC Venture Companies or the Business or that question the validity of this Agreement or the Operative Agreements or of any action taken or to be taken pursuant to or in connection with the provisions of this Agreement or the Operative Agreements and (d) there are no judgments, Orders, decrees, citations, fines or penalties heretofore assessed against the ADA-ES Entities that could be reasonably expected to result in a Material Adverse Effect on ADA-ES, the AC Venture Companies or the Business or that impair, estop, impede, restrain, ban or otherwise materially adversely affect the ADA-ES Entities’ ability to satisfy or perform any of their obligations pursuant to this Agreement under any federal, state or local Law.

 

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4.9 Compliance with Laws and Orders . Except as disclosed on Section 4.9 of the Disclosure Schedule , (a) the Business is not in violation of or in default under, and has materially complied with, each Law and Order applicable to the Business, including, without limitation, the development, construction, ownership, operation, maintenance and use of the Projects and (b) the ADA-ES Entities have not received any notification of any asserted present or past material failure to comply with such Laws or Orders.

4.10 Benefit Plans . Except as disclosed on Section 4.10 of the Disclosure Schedule , the AC Venture Companies do not (a) have any employees, (b) sponsor, maintain, participate in or contribute to (or have any obligation to do so), or otherwise have any present or future liability (whether absolute or contingent, including, without limitation, any such liability pursuant to Title IV of ERISA) with respect to any Benefit Plan or (c) have any present or future liability with respect to any current or former employee of the ADA-ES Entities (including, without limitation, any wages, incentive compensation, vacation pay, expense reimbursement, statutory deductions or withholdings, employment termination costs or employee benefits). Except as disclosed in Section 4.10 of the Disclosure Schedule , the execution of, shareholder approval of or consummation of the Transactions contemplated by this Agreement will not entitle any member of the Team to any form of compensation payment or benefit from the AC Venture Companies or the Business.

4.11 Underlying Assets . As of the Effective Date, ADA-ES has, and the respective AC Venture Companies have, and as of the Closing Date, the AC Venture Companies to which the Underlying Assets are transferred shall have, good and marketable title to, and be the lawful owner of, the Underlying Assets and the ADA-ES Contributed Assets. The Underlying Assets, the ADA-ES Contributed Assets, the provision of services by ADA-ES to the Development Company and its Affiliates pursuant to the Master Services Agreement, and the Licensed IP constitute all assets, properties and contract rights of each of the ADA-ES Entities used or held for use in connection with the operation of the Business or necessary to the conduct of the Business. The transfer of the Underlying Assets by ADA-ES to the Project Companies and Supply Company pursuant to this Agreement, the transfer of the ADA-ES Contributed Assets to the Development Company pursuant to this Agreement, the licensing of the Licensed IP by ADA-ES to the Development Company pursuant to the Intellectual Property License Agreement and the provision of services by ADA-ES to the Development Company and its Affiliates pursuant to the Master Services Agreement, will effectively convey to the AC Venture Companies all assets, properties and contract rights of each of the ADA-ES Entities used or held for use in connection with the operation of the Business or necessary to the conduct of the Business (whether owned, leased, held under license or otherwise). Except for the provision of services pursuant to the Master Services Agreement and the Licensed IP, there are no shared assets, properties or contract rights of each of the ADA-ES Entities used or held for use in connection with the operation of the Business or necessary to the conduct of the Business (whether owned, leased, held under license or otherwise) which are used or held for use in connection with the Business and in connection with the Other Businesses.

4.12 Real Property .

(a) Section 4.12(a) of the Disclosure Schedule identifies all Owned Real Property owned, used, held or operated in connection with the Business. Except as disclosed on Section 4.12(a) of the Disclosure Schedule , the Red River Project

 

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Company owns and has good, marketable and indefeasible title to the Owned Real Property and the Improvements thereon, free and clear of all Liens, except for Permitted Encumbrances and all Liens that will be released as of the Closing Date. All Liens against the Owned Real Property (other than Permitted Encumbrances) will be released as of the Closing Date.

(b) Section 4.12(b) of the Disclosure Schedule identifies all of the options for real property held or owned by ADA-ES or the AC Venture Companies relating to the Projects or any additional projects being contemplated or developed in connection with the Business (the “ Real Property Options ”). Each of the Real Property Options is a legal, valid and binding agreement, enforceable in accordance with its terms, of the Person who is the optionee thereunder and, to ADA-ES’s Knowledge, each other Person that is a party thereto, and has been assigned to an AC Venture Company on or before the Closing Date and may be exercised in accordance with its terms by such AC Venture Company, to purchase the property more particularly described therein. As to each of the Real Property Options, there is presently no material default (or any condition or event which, after notice or lapse of time or both, would constitute a default) thereunder, nor are there any pending or, to ADA-ES’s Knowledge, threatened claims by any Person alleging any such material default. Except as set forth in Section 4.12(b) of the Disclosure Schedule , (i) the enforceability of the Real Property Options will not be impaired in any material respect by the execution or delivery of this Agreement or the consummation of the Transactions, (ii) neither the execution and delivery of this Agreement, nor the consummation of the Transactions, will entitle any optionor under the Real Property Options to terminate such Real Property Options prior to the scheduled expiration thereof and (iii) none of the ADA-ES Entities are currently participating in any discussions or negotiations regarding termination of any of the Real Property Options prior to the scheduled expiration of such Real Property Options (whether by reason of a breach or alleged breach by the optionee thereunder or otherwise).

(c) Section 4.12(c) of the Disclosure Schedule identifies all of the Leased Real Property and Real Property Leases owned, used, held or operated in connection with the Business. Each of ADA-ES and the Red River Project Company has a valid and subsisting leasehold estate in and the right to quiet enjoyment of the real properties subject to the Real Property Leases, subject to the terms of such Real Property Leases, free and clear of all Liens, except for Permitted Encumbrances, Liens that will be released as of the Closing Date and the Liens disclosed on Section 4.12(c) of the Disclosure Schedule . All Liens against the AC Venture Companies’ interests in the Leased Real Property (which, for the avoidance of doubt, excludes mortgages by the landlord of such Leased Real Property), other than Permitted Encumbrances, will be released as of the Closing Date. Each of the Real Property Leases is a legal, valid and binding agreement, enforceable in accordance with its terms, of the Person who is the “tenant” or “lessee” thereunder and, to ADA-ES’s Knowledge, each other Person that is a party thereto, and from and after the Closing Date, will be enforceable against the Red River Project Company or Crowfoot Supply Company, LLC, respectively, and, to the Knowledge of ADA-ES, each other Person that is a party thereto. As to each Real Property Lease, there is presently no material default (or any condition or event which, after notice or lapse of time or both, would constitute a

 

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default) thereunder, nor are there any pending or, to ADA-ES’s Knowledge, threatened claims by any Person alleging any such material default. Except as set forth in Section 4.12(c) of the Disclosure Schedule , (i) the enforceability of the Real Property Leases will not be impaired in any material respect by the execution or delivery of this Agreement or the consummation of the Transactions, (ii) neither the execution and delivery of this Agreement, nor the consummation of the Transactions, will entitle the “landlord” or “lessor” under any Real Property Lease to terminate such Real Property Lease prior to the scheduled expiration thereof and (iii) none of the ADA-ES Entities are currently participating in any discussions or negotiations regarding termination of any Real Property Lease prior to the scheduled expiration of such Real Property Lease (whether by reason of a breach or alleged breach by the tenant thereunder or otherwise).

(d) To the extent in the ADA-ES Entities’ possession or Control, ADA-ES has delivered or made available to the ECP Parties prior to the execution of this Agreement true and complete copies of the Real Property Leases, Easements, Real Property Options and all deeds, certificates of occupancy, title insurance commitments or policies, title reports, title opinions, surveys and similar documents with respect to the Real Property, the Real Property Leases, Real Property Options and/or the Easements. Except as disclosed on Section 4.12(d) of the Disclosure Schedule , the Real Property Leases reflect the entire agreement with the landlord thereunder with respect thereto. Except as disclosed on Section 4.12(d) of the Disclosure Schedule , the Real Property Options reflect the entire agreement with the counterparty thereunder with respect thereto.

(e) Except as disclosed on Section 4.12(e) of the Disclosure Schedule , the Improvements and the Easement Improvements are in good operating condition and in a state of good maintenance and repair, ordinary wear and tear excepted. Except as set forth in Section 4.12(e) of the Disclosure Schedule , none of the ADA-ES Entities have received written notice from any Governmental Authority that any portion of the Real Property, or any of the Improvements or Easement Improvements located thereon, currently violates any applicable Laws in any material respect, including those Laws relating to zoning, building, land use, health and safety, fire, air, sanitation and noise control. Except as set forth in Section 4.12(e) of the Disclosure Schedule , except for any applicable Permitted Encumbrances, no Real Property is subject to any written governmental decree or Order specifically issued with respect to such Real Property (or, to ADA-ES’s Knowledge, any threatened or proposed Order) requiring the repair, removal or alteration of any Improvements or Easement Improvements located on such Real Property.

(f) Except as disclosed on Section 4.12(f) of the Disclosure Schedule , there are no condemnation or appropriation proceedings pending or, to ADA-ES’s Knowledge, threatened against any of the Real Property, the Improvements or the Easement Improvements.

(g) Except as disclosed on Section 4.12(g) of the Disclosure Schedule , there are no options, rights of first refusal, preferential purchase rights or similar rights in effect for any Person to purchase any of the Owned Real Property, or to ADA-ES’s Knowledge, any of the Leased Real Property or, except for the Real Property Options, the real property related to the Real Property Options.

(h) The Murchison Project is supplied with utilities and other services necessary (i) for the operation of the business located thereon in accordance with past practice and (ii) for the future operation of the Business as presently planned to be

 

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conducted by the Murchison Project, including future phases of development currently planned in due course, or has rights to connect to such services and utilities and has legal access to such services and utilities, including, without limitation, gas, electricity, water, telephone, sanitary sewer and storm sewer, all of which services are adequate in accordance with all applicable laws and are provided via public roads or via permanent, irrevocable, appurtenant easements benefiting such Real Property.

(i) There are no shared facilities or services at the Real Property which are shared between the Business and any of the Other Businesses.

(j) Each parcel of Real Property abuts on and has direct vehicular access to a public road, or has access to a public road via a permanent, irrevocable, appurtenant easement benefiting the parcel, and access to each parcel of Real Property is provided by paved, gravel, dirt or other improved public right-of-way with adequate curb cuts available.

(k) There are no Improvements on the Owned Real Property. The Improvements on the Leased Real Property comply with all Laws, including, without limitation, all federal, state and local statutes, ordinances, codes, Orders, requirements, rules and regulations, and the terms of any entitlements benefiting the Real Property on which such Improvements are located, independently and without benefit of any restrictions or burdens imposed upon other real property, or other rights with respect to any other real property, such as, for example: (i) parking facilities needed for the Improvements but located on real property not constituting Real Property as defined in this Agreement; (ii) development restrictions affecting such other real property or (iii) other use or construction limitations affecting such other real property.

4.13 Capitalized Tangible Personal Property . Except as disclosed on Section 4.13 of the Disclosure Schedule , the Business is in possession of and has good title to, or has valid leasehold interests in or valid rights under Contract to use, the Capitalized Tangible Personal Property free and clear of all Liens, except for the Permitted Encumbrances, and all items of such Capitalized Tangible Personal Property are in good operating condition and in a state of good maintenance and repair, ordinary wear and tear excepted. All Liens disclosed on Section 4.13 of the Disclosure Schedule will be released as of the Closing Date.

4.14 LLC Interests .

(a) ADA-ES owns each of the AC Venture Company Interests free and clear of all Liens. The AC Venture Company Interests constitute all of the outstanding equity interests in each of the AC Venture Companies. None of the AC Venture Companies is obligated to issue any equity interests, or any security convertible into or exercisable or exchangeable for such interests, or any options, warrants, plans, conversion rights or other contractual rights to any of the foregoing and no Person has any right of first refusal or any preemptive rights in connection with any of the AC Venture Company Interests or the Transactions. Except as disclosed on Section 4.14 of the Disclosure Schedule , none of the AC Venture Companies owns an equity or other interest in any other Person. After giving effect to the Transactions contemplated hereby, except as

 

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specifically provided in this Agreement and the Operating Agreement, none of ADA-ES or any of its Affiliates shall have any rights to the Project Companies or the Supply Company or any property thereof. Except as specifically contemplated by this Agreement and the Transactions, there are no outstanding preemptive or other rights, plans, options, warrants, conversion rights or agreements for the purchase or acquisition from any AC Venture Company of any of its membership interests.

(b) The membership interests in the Development Company, including the ECP Membership Interest, to be issued at the Closing to the ECP Parties pursuant to this Agreement and the Operating Agreement, when issued and delivered in accordance with the terms hereof and thereof, will be duly authorized, validly issued and entitled to the benefits under, and subject to the restrictions of, the Operating Agreement. Except to the extent provided in the Operating Agreement, the Development Company is not obligated to issue any other interests in the Development Company, or any security convertible into or exerc