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PURCHASE AGREEMENT
BETWEEN
SYNTROLEUM/SWEETWATER COMPANY, L.L.C.
AND
ENRON CAPITAL & TRADE RESOURCES CORP.
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CONFIDENTIAL
PURCHASE AGREEMENT
This Purchase Agreement is entered into effective as of the 12th day
of January, 1998, by and among SYNTROLEUM/SWEETWATER COMPANY, L.L.C., a
Delaware limited liability company (the "Company"), and ENRON CAPITAL & TRADE
RESOURCES CORP., a Delaware corporation ("ECT").
RECITALS
A. The Company is engaged in the business of designing,
constructing and operating the Plant.
B. The Company, in order to obtain additional equity capital to
further its business operations, desires to sell and issue to ECT Membership
Interest on the terms set forth in this Agreement.
NOW, THEREFORE, in consideration of the premises and in
consideration of the agreements and benefits set forth in this Agreement and
other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the Company and ECT agree as follows.
1. DEFINITIONS
The following terms (whether or not underscored) when used in this
Agreement, including its preamble and recitals, shall, except where the
context otherwise requires, have the following meanings (such meanings to be
equally applicable to the singular and plural forms thereof).
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CONFIDENTIAL
1.01 "ACT" means the Delaware Limited Liability Company Act, Title
6, Delaware Code, Sections 18-101 et seq., as it may be amended from time to
time, and any successor to such Act.
1.02 "ADVERSE CONSEQUENCES" means all actions, suits, proceedings,
hearings, investigations, charges, complaints, claims, demands, injunctions,
judgments, orders, decrees, rulings, damages, dues, penalties, fines, costs,
reasonable amounts paid in settlement, liabilities, obligations, taxes,
liens, losses, expenses, and fees, including court costs and reasonable
attorneys' fees and expenses.
1.03 "AFFILIATE" of a Person means (i) any other Person directly, or
indirectly through one or more intermediaries, controlling, controlled by or
under common control with such Person; (ii) any officer, director, partner,
employer, or direct or indirect beneficial owner of any 10% or greater equity
or voting interest of such Person; or (iii) any other Person for which a
Person described in clause (ii) acts in any such capacity.
1.04 "AGREEMENT" means this Purchase Agreement.
1.05 "ASSETS" of a Person means all of the assets, properties,
businesses and rights of such Person of every kind, nature, character and
description, whether real, personal or mixed, tangible or intangible, accrued
or contingent, or otherwise relating to or utilized in such Person's
business, directly or indirectly, in whole or in part, whether or not claimed
on the books and records of such Person, and whether or not owned in the name
of such Person or any Affiliate of such Person and wherever located.
1.06 "CAPITAL COMMITMENT" means the amount which ECT has agreed to
contribute to the capital of the Company under SECTION 2.01.
1.07 "CAPITAL CONTRIBUTION" means the contributions to the capital
of the Company made in cash by ECT under SECTIONS 2.01(a) AND (b).
1.08 "CLASS B MEMBER" means SLH, ECT and any Person otherwise
admitted to the Company as a Class B Member pursuant to the Company Agreement.
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CONFIDENTIAL
1.09 "CLASS B UNITS" means the units of Class B Membership Interest
issued to ECT under this Agreement.
1.10 "CLOSING" means either the First Closing or the Second Closing
as the context requires.
1.11 "CLOSING DATE" means either the First Closing Date or the
Second Closing Date as the context requires.
1.12 "COMPANY" means Syntroleum/Sweetwater Company, L.L.C., a
Delaware limited liability company.
1.13 "COMPANY AGREEMENT" means that certain First Amended and
Restated Operating Agreement dated as of the Effective Date between SLH, ECT
and the Company as amended, amended or restated, or otherwise modified from
time to time.
1.14 "CONSENT" means any consent, approval, authorization,
clearance, exemption, waiver, or similar affirmation by any Person pursuant
to any Contract, Law, Order, or Permit.
1.15 "CONTRACT" means any written or oral agreement, arrangement,
authorization, commitment, contract, indenture, instrument, lease, license,
obligation, plan, practice, restriction, understanding or undertaking of any
kind or character, or other document to which any Person is a party or that
is binding on any Person or its capital securities, Assets or business.
1.16 "DEFAULT" means (i) any breach or violation of or default under
any Contract, Order or Permit, (ii) any occurrence of any event that with the
passage of time or the giving of notice or both would constitute a breach or
violation of or default under any Contract, Order or Permit, or (iii) any
occurrence of any event that with or without the passage of time or the
giving of notice would give rise to a right to terminate or revoke, change or
renegotiate the current terms of, or to accelerate, increase, or impose any
Liability under, any Contract, Order or Permit.
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1.17 "ECT" means Enron Capital and Trade Resources Corp., a Delaware
corporation.
1.18 "EFFECTIVE DATE" means the date set forth in the first
paragraph of this Agreement.
1.19 "ENVIRONMENTAL LAWS" means all Laws relating to pollution or
protection of human health or the environment (including ambient air, surface
water, ground water, land surface or subsurface strata) and which are
administered, interpreted or enforced by the United States Environmental
Protection Agency and state and local agencies with jurisdiction over, and
including common law in respect of, pollution or protection of the
environment, including the Comprehensive Environmental Response Compensation
and Liability Act, as amended, 42 U.S.C. 9601 ET SEQ. ("CERCLA"), the
Resource Conservation and Recovery Act, as amended, 42 U.S.C. 6901 ET SEQ.
("RCRA"), and other Laws relating to emissions, discharges, releases or
threatened releases of any Hazardous Material, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of any Hazardous Material.
1.20 "ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
1.21 "FINAL CLOSING" means the payment by ECT to the Company of the
remaining balance of its Capital Commitment and admission of Additional Class
B members, if any, to the Company and consummation of the other transactions
contemplated for the Final Closing, all as provided in this Agreement.
1.22 "FINAL CLOSING DATE" means the date on which the Final Closing
occurs.
1.23 "FIRST CLOSING" means the execution by Syntroleum, SLH and ECT
of the Company Agreement and this Agreement, the payment by ECT to the
Company of the first $1,000,000 of ECT's Capital Commitment and the admission
of ECT to the Company as a Class B Member, and consummation of the other
transactions contemplated for the First Closing, all as provided in this
Agreement.
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1.24 "FIRST CLOSING DATE" means the date on which the First Closing
occurs.
1.25 "GAAP" means generally accepted accounting principles,
consistently applied during the periods involved.
1.26 "HAZARDOUS MATERIAL" means (i) any hazardous substance,
hazardous material hazardous waste, regulated substance or toxic substance
(as those terms are defined by any applicable Environmental Laws) and (ii)
any chemicals, pollutants, contaminants, petroleum, petroleum products, or
oil (and specifically shall include asbestos requiring abatement, removal, or
encapsulation pursuant to the requirements of governmental authorities and
any polychlorinated biphenyls).
1.27 "INTELLECTUAL PROPERTY" means copyrights, patents, trademarks,
service marks, service names, trade names and all applications therefor,
technology rights and licenses, computer software (including any source or
object codes therefor or documentation relating thereto), trade secrets,
franchises, know-how, inventions, and other intellectual property rights.
1.28 "INTERNAL REVENUE CODE" means the Internal Revenue Code of
1986, as amended, and the rules and regulations promulgated thereunder.
1.29 "KNOWLEDGE" as used with respect to a Person (including
references to such Person being aware of a particular matter) means those
facts that are known or should reasonably have been known after due inquiry
by the chairman, president, chief financial officer, chief accounting
officer, general counsel, any assistant or deputy general counsel, or any
vice president of such Person.
1.30 "LAW" means any code, law, ordinance, regulation, reporting or
licensing requirement, rule, or statute applicable to a Person or its Assets,
Liabilities or business, including those promulgated, interpreted or enforced
by any Regulatory Authority.
1.31 "LIABILITY" means any direct or indirect, primary or secondary,
liability, indebtedness, obligation, penalty, cost, or expense (including
costs of investigation, collection and defense), claim, deficiency, guaranty
or endorsement of or by any Person
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(other than endorsements of notes, bills, checks, and drafts presented for
collection or deposit in the ordinary course of business) of any type,
whether accrued, absolute or contingent, liquidated or unliquidated, matured
or unmatured, or otherwise.
1.32 "LICENSE AGREEMENT" means the site license agreement between
Syntroleum and the Company dated as of the Effective Date pursuant to which
the Company has received a non-exclusive site license to practice the
Syntroleum Process at the Plant.
1.33 "LIEN" means any conditional sale agreement, default of title,
easement, encroachment, encumbrance, hypothecation, infringement, lien,
mortgage, pledge, reservation, restriction, security interest, title
retention or other security arrangement, or any adverse right or interest,
charge, or claim of any nature whatsoever of, on, or with respect to any
property or property interest, other than (i) Liens for current property
Taxes not yet due and payable, and (ii) Liens which do not materially impair
the use of the Assets subject to, such Lien.
1.34 "LITIGATION" means any action, arbitration, cause of action,
claim, complaint, criminal prosecution, demand letter, governmental or other
examination or investigation, hearing, inquiry, administrative or other
proceeding, or notice (written or oral) by any Person alleging potential
Liability or requesting information relating to or affecting a Party, its
business, its Assets (including Contracts related to it), or the transactions
contemplated by this Agreement.
1.35 "MANAGER" means the manager of the Company as set forth in the
Company Agreement.
1.36 "MATERIAL" for purposes of this Agreement shall be determined
in light of the facts and circumstances of the matter in question, provided
that any specific monetary amount stated in this Agreement shall determine
materiality in that instance.
1.37 "MATERIAL ADVERSE EFFECT" on a Party means an event, change, or
occurrence which, individually or together with any other event, change or
occurrence, has a material adverse impact on (i) the financial position,
business, or results of operations of such Party and its Subsidiaries, taken
as a whole, or (ii) the ability of such
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Party to perform its obligations under this Agreement or the other
transactions contemplated by this Agreement.
1.38 "MEMBER" means each Person who executes a counterpart of the
Company Agreement as a member.
1.39 "MEMBERSHIP INTEREST" means a Member's entire interest in the
Company including any right to participate in the management or affairs of
the Company, including, the right to vote on, consent to or otherwise
participate in any decision of the Members or Managers granted under the
Company Agreement or by the applicable provisions of the Act and such other
rights and privileges that the Member may enjoy by being a Member.
1.40 "1933 ACT" means the Securities Act of 1933, as amended.
1.41 "1934 ACT" means the Securities Exchange Act of 1934, as
amended.
1.42 "OPTION AGREEMENT" means the agreement between Syntroleum and
ECT dated as of the Effective Date granting certain options to such parties
with respect to the purchase, sale or exchange of ECT's Membership Interest.
1.43 "ORDER" means any administrative decision or award, decree,
injunction, judgment, order, quasi-judicial decision or award, ruling, or
writ of any federal, state, local or foreign or other court, arbitrator,
mediator, tribunal, administrative agency or Regulatory Authority.
1.44 "PARTY" means either the Company or ECT, and PARTIES means both
the Company and ECT.
1.45 "PERMIT" means any federal, state, local, and foreign
governmental approval, authorization, certificate, easement, filing,
franchise, license, notice, permit, or right to which any Person is a party
or that is or may be binding upon or inure to the benefit of any Person or
its securities, Assets or business.
1.46 "PERSON" means a natural person or any legal, commercial or
governmental entity, such as, but not limited to, a corporation, general
partnership, joint
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venture, limited partnership, limited liability company, trust, business
association, group acting in concert, or any person acting in a
representative capacity.
1.47 "PLANT" means the commercial facility to be designed and
constructed by the Company in Sweetwater County, Wyoming to practice the
Syntroleum Process under the License Agreement.
1.48 "REGULATORY AUTHORITIES" means, collectively, all federal and
state regulatory agencies having jurisdiction over the Parties and their
respective Subsidiaries.
1.49 "SECURITIES LAWS" means the 1933 Act, the 1934 Act, the
Investment Company Act of 1940, as amended, the Investment Advisors Act of
1940, as amended, the Trust Indenture Act of 1939, as amended, and the rules
and regulations of any Regulatory Authority promulgated thereunder.
1.50 "SLH" means SLH Corporation, a Kansas corporation.
1.51 "SUBSIDIARIES" means all Persons of which a Party owns or
controls 50% or more of the outstanding equity securities either directly or
through an unbroken chain of entities as to each of which 50% or more of the
outstanding equity securities is owned directly or indirectly by its parent;
provided, there shall not be included any such entity acquired through
foreclosure or any such entity the equity securities of which are owned or
controlled in a fiduciary capacity.
1.52 "SWEETWATER DISCLOSURE MEMORANDUM" means the written
information entitled "Sweetwater Disclosure Memorandum" delivered to ECT
prior to the First Closing and as supplemented in writing prior to the Final
Closing describing in reasonable detail the matters contained therein and,
with respect to each disclosure made therein, specifically referencing each
Section of this Agreement under which such disclosure is being made.
Information disclosed with respect to one Section shall not be deemed to be
disclosed for purposes of any other Section not specifically referenced with
respect thereto.
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1.53 "SWEETWATER FINANCIAL STATEMENTS" means the balance sheet of
the Company as of November 30, 1997 and related statements of operations,
stockholders' equity, and cash flows (including related notes and schedules,
if any) with respect to period ended November 30, 1998.
1.54 "SYNTROLEUM" means Syntroleum Corporation, an Oklahoma
corporation.
1.55 "SYNTROLEUM PROCESS" shall have the meaning given in the
License Agreement.
1.56 "TAX" or "TAXES" shall mean any federal, state, county, local,
or foreign income, profits, franchise, gross receipts, payroll, sales,
employment use, property, withholding, excise, occupancy, and other taxes,
assessments, charges, fares, or impositions, including interest, penalties,
and additions imposed thereon or with respect thereto.
2. PURCHASE AND SALE OF MEMBERSHIP INTEREST
2.01 PURCHASE AND SALE. Subject to the terms and conditions of this
Agreement, ECT agrees to contribute $15,450,000 to the capital of the Company as
follows:
(a) At the First Closing the Company agrees to sell to ECT, and
ECT agrees to purchase from the Company, four (4) Class B Units,
representing four percent (4%) of the aggregate Membership Interest in
the Company, for a Capital Contribution of $1,000,000, payable in cash
or immediately available funds at First Closing.
(b) At the Final Closing the Company agrees to sell to ECT, and
ECT agrees to purchase from the Company, that number of additional
Class B Units sufficient to represent an additional seven percent (7%)
of the aggregate Membership Interest in the Company for a Capital
Contribution of $14,450,000, payable in cash or immediately available
funds at Final Closing.
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2.02 CLOSING.
(a) The purchase and sale of Membership Interest at the First
Closing pursuant to in SECTION 2.01(a) of this Agreement shall take place at
10:00 a.m. at the offices of Syntroleum Corporation, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇, on January ___, 1998 or at such other
time and place as ECT and the Company agree in writing.
(b) The purchase and sale of the Membership Interest at the Final
Closing pursuant to in SECTION 2.01(b) of this Agreement shall take place at
the offices of Syntroleum Corporation, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇▇▇▇, at the time and on the date agreed upon by ECT and the
Company, but in no event later than five business days after satisfaction of
the conditions set forth in SECTION 6.02(c) or at such other time and place
as ECT and the Company agree in writing.
3. ADDITIONAL AGREEMENTS AND CLOSING DELIVERIES
3.01 FIRST CLOSING DELIVERIES.
(a) At the First Closing, the Company will execute and
deliver to ECT the following:
(i) an original of this Agreement;
(ii) an original of the Option Agreement;
(iii) an original of the Company Agreement;
(iv) a Company certificate representing ECT's Membership Interest;
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(v) a certified copy of the Certificate of Organization of the
Company, as currently in force and effect;
(vi) resolutions of the Members of the Company authorizing the
execution, delivery and performance of this Agreement and all
related documents and agreements, such resolutions to be certified
by the Manager of the Company as being true and correct and subject
to no modifications or amendments;
(vii) a Certificate of the Secretary of State of the State of
Delaware establishing that the Company is in existence and a
certificate of the proper official of the State of Delaware
establishing that the Company is in good standing to transact
business in the State of Delaware dated not more than 10 days prior
to Closing;
(viii) a Certificate of the Secretary of State of the State of
Wyoming establishing that the Company is duly qualified to transact
business and in good standing in the State of Wyoming;
(ix) the certificates, instruments and documents referred to
in SECTIONS 6.02(a) and (b); and
(x) such other documents, agreements, and instruments otherwise
required by this Agreement or as may be reasonably requested by ECT.
(b) At the First Closing, ECT will execute and deliver to the
Company the following:
(i) an original of this Agreement;
(ii) an original of the Option Agreement;
(iii) an original of the Company Agreement;
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(iv) the sum of $1,000,000 in cash or other immediately
available funds, payable to the Company;
(v) resolutions of the Board of Directors of ECT authorizing
the execution, delivery and performance of this Agreement, and all
related documents and agreements, such resolutions to be certified
by the Secretary of ECT as being true and correct and subject to no
modifications or amendments;
(vi) a Certificate of the Secretary of State of the State
of Delaware establishing that ECT is in existence and a certificate
of the proper official of the State of Delaware establishing that
the Company is in good standing to transact business in the State
of Delaware dated not more than 10 days prior to Closing;
(vii) the certificates, instruments and documents referred
to in SECTIONS 6.02(a) and (b); and
(viii) such other documents, agreements and instruments
otherwise required by this Agreement or as may be reasonably
requested by the Company.
3.02 FINAL CLOSING DELIVERIES.
(a) At the Final Closing, the Company will execute and deliver
to ECT the following:
(i) a Company certificate representing ECT's additional
Membership Interest;
(ii) a certified copy of the Certificate of Organization and a
copy of the Company Agreement certified by the Manager of the Company,
as currently in force and effect;
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(iii) resolutions of the Members of the Company authorizing the
execution, delivery and performance of this Agreement and all related
documents and agreements, such resolutions to be certified by the
Manager of the Company as being true and correct and subject to no
modifications or amendments;
(iv) a Certificate of the Secretary of State of the State of
Delaware establishing that the Company is in existence and a
certificate of the proper official of the State of Delaware
establishing that the Company is in good standing to transact
business in the State of Delaware dated not more than 10 days prior
to Closing;
(v) a Certificate of the Secretary of State of the State of
Wyoming establishing that the Company is duly qualified to transact
business and in good standing in the State of Wyoming;
(vi) the certificates, instruments and documents referred to
in SECTION 6.02(c); and
(vii) such other documents, agreements, and instruments
otherwise required by this Agreement or as may be reasonably
requested by ECT.
(b) At the Final Closing, ECT will execute and deliver to the
Company the following:
(i) the sum of $14,450,000 in cash or other immediately available
funds, payable to the Company;
(ii) resolutions of the Board of Directors of ECT authorizing
the execution, delivery and performance of this Agreement, and all
related documents and agreements, such resolutions to be certified
by the Secretary of ECT as being true and correct and subject to no
modifications or amendments;
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(iii) a Certificate of the Secretary of State of the State of
Delaware establishing that the Company is in existence and a
certificate of the proper official of the State of Delaware
establishing that the Company is in good standing to transact
business in the State of Delaware dated not more than 10 days prior
to Closing;
(iv) the certificates, instruments and documents referred to in
SECTION 6.02(c); and
(v) such other documents, agreements and instruments otherwise
required by this Agreement or as may be reasonably requested by the
Company.
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to ECT that the following
statements are true and correct as of the Effective Date and will be true and
correct at Closing, except as expressly qualified or modified in this
Agreement or by the Sweetwater Disclosure Memorandum.
4.01 ORGANIZATION, STANDING, AND POWER. The Company is a limited
liability company duly organized, validly existing, and in good standing
under the Laws of the State of Delaware, and has the power and authority to
carry on its business as now conducted and to own, lease and operate its
Assets. The Company is duly qualified or licensed to transact business as a
foreign limited liability company in good standing in the states of the
United States where the character of its Assets or the nature or conduct of
its business requires it to be so qualified or licensed, except for such
jurisdictions in which the failure to be so qualified or licensed is not
reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on the Company.
4.02 AUTHORITY. The Company has the power and authority necessary to
execute, deliver, and perform its obligations under this Agreement and to
consummate the
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transactions contemplated by this Agreement. The execution, delivery, and
performance of this Agreement and the consummation of the transactions
contemplated by this Agreement, have been validly authorized by all necessary
action in respect thereof on the part of the Company. This Agreement
represents a legal, valid, and binding obligation of the Company, enforceable
against the Company in accordance with its terms except in all cases as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, receivership, conservatorship, moratorium, or similar Laws
affecting the enforcement of creditors' rights generally and except that the
availability of the equitable remedy of specific performance or injunctive
relief is subject to the discretion of the court before which any proceeding
may be brought.
4.03 NO BREACH. Neither the execution and delivery of this Agreement
by the Company, nor the consummation by the Company of the transactions
contemplated by this Agreement, nor compliance by the Company with any of the
provisions of this Agreement, will (i) conflict with or result in a breach of
any provision of the Company's Certificate of Organization or the Company
Agreement, or (ii) constitute or result in a Default under, or require any
consent pursuant to, or result in the creation of any Lien on any Asset of
any of the Company under, any Contract or Permit of the Company, or, (iii)
violate any Law or Order applicable to the Company or any of its material
Assets.
4.04 NO NOTICE OR CONSENT. No notice to, filing with, or consent of,
any public body or authority is necessary for the consummation by the Company
of the transactions contemplated in this Agreement.
4.05 SUBSIDIARIES. The Company has no subsidiaries.
4.06 ABSENCE OF CERTAIN UNDISCLOSED LIABILITIES. The Company has no
Liabilities that are reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on the Company, except Liabilities which
are accrued or reserved against in the consolidated balance sheet of the
Company as of November 30, 1997 included in the Sweetwater Financial
Statements delivered prior to the date of this Agreement or reflected in the
notes thereto and except as disclosed in SECTION 4.06 of the Sweetwater
Disclosure Memorandum. Except as disclosed in SECTION 4.06 of the Sweetwater
Disclosure
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Memorandum, the Company has not incurred or paid any Liability since November
30, 1997, except for such Liabilities incurred or paid in the ordinary course
of business consistent with past business practice and which are not
reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on the Company. Except as disclosed in SECTION 4.06 of the
Sweetwater Disclosure Memorandum, the Company is not directly or indirectly
liable, by guarantee, indemnity, or otherwise, upon or with respect to, or
obligated by, discount or repurchase agreement or in any other way, to
provide funds in respect to, or obligated to guarantee or assume any
Liability of any Person for any amount in excess of $100,000.
4.07 TAX MATTERS. All Tax returns required to be filed by or on
behalf of any of the Company have been timely filed or requests for
extensions have been timely filed, granted, and have not and all Tax returns
filed are complete and accurate in all material respects. All Taxes shown on
filed Tax returns have been paid. There is no audit examination, deficiency,
or refund litigation with respect to any Taxes.
4.08 ASSETS. Except as disclosed in SECTION 4.08 of the Sweetwater
Disclosure Memorandum, the Company has good and marketable title, free and
clear of all Liens, to all of its Assets. All tangible properties used in the
business of the Company are in good condition, reasonable wear and tear
excepted, and are usable in the ordinary course of business consistent with
the Company's past practices. All Assets which are material to the Company's
business held under leases or subleases by the Company are held under valid
Contracts enforceable in accordance with their respective terms (except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, or other Laws affecting the enforcement of
creditors' rights generally and except that the availability of the equitable
remedy of specific performance or injunctive relief is subject to the
discretion of the court before which any proceedings may be brought), and
each such contract is in full force and effect. The Assets of the Company
include all Assets required to operate the business of the Company as
presently conducted.
4.09 INSURANCE. SECTION 4.09 of the Sweetwater Disclosure Memorandum
sets forth the following information with respect to each insurance policy
(including policies
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providing property, casualty, liability, and workers' compensation coverage
and bond and surety arrangements) to which the Company is a party, a named
insured, or otherwise the beneficiary of coverage.
(a) the name, address, and telephone number of the agent;
(b) the name of the insurer, the name of the policyholder, and
the name of each covered insured;
(c) the policy number and the period of coverage;
(d) the scope (including an indication of whether the coverage
was on a claims made, occurrence, or other basis) and amount (including
a description of how deductibles and ceilings are calculated and
operate) of coverage; and
(e) a description of any retroactive premium adjustments or
other loss-sharing arrangements.
With respect to each such insurance policy: (i) the policy
is legal, valid, binding, enforceable, and in full force and
effect; (ii) the policy will continue to be legal, valid, binding,
enforceable, and in full force and effect on identical terms
following the consummation of the transactions contemplated by this
Agreement; (iii) neither the Company nor any other party to the
policy is in breach or Default (including with respect to the
payment of premiums or the giving of notices), and no event has
occurred which, with notice or the lapse of time, would constitute
such a breach or Default, or permit termination, modification, or
acceleration, under the policy; and (iv) no party to the policy has
repudiated any provision thereof.
4.10 INTELLECTUAL PROPERTY.
(a) The Company owns or has the right to use pursuant to a
Contract, all Intellectual Property necessary for the operation of the
business of the Company as presently conducted and as presently
proposed to be conducted. Each item of Intellectual Property owned or
used by the Company immediately prior to Closing
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will be owned or available for use by the Company on identical
terms and conditions immediately subsequent to Closing. The Company
has taken all reasonably necessary action to maintain and protect
each item of Intellectual Property that it owns or uses.
(b) To its Knowledge, the Company has not interfered with,
infringed upon, misappropriated, or otherwise come into conflict
with any Intellectual Property rights of third parties, and the
Company has not received any charge, complaint, claim, demand, or
notice alleging any such interference, infringement,
misappropriation, or violation (including any claim that the
Company must license or refrain from using any Intellectual
Property rights of any third party). To the Knowledge of the
Company, no third party has interfered with, infringed upon,
misappropriated, or otherwise come into conflict with any
Intellectual Property rights of the Company.
(c) SECTION 4.10(c) of the Sweetwater Disclosure Memorandum
identifies each item of Intellectual Property that any third party
owns and that the Company uses pursuant to a Contract. The Company
has delivered to ECT correct and complete copies of all such
Contracts (as amended to date). With respect to each item of
Intellectual Property identified in SECTION 4.10(c) of the
Sweetwater Disclosure Memorandum:
(i) the Contract covering the item is legal, valid, binding,
enforceable, and in full force and effect;
(ii) the Contract will continue to be legal, valid, binding,
enforceable, and in full force and effect on identical terms
following Closing;
(iii) no party to the Contract is in breach or Default,
and no event has occurred which with notice or lapse of time
would constitute a breach or Default or permit termination,
modification, or acceleration thereunder;
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(iv) no party to the Contract had repudiated any
provision thereof;
(v) to the Knowledge of the Company, the underlying item
of Intellectual Property is not subject to any outstanding
injunction, judgment, order, decree, ruling, or charge;
(vi) to the Knowledge of the Company, no action, suit,
proceeding, hearing, investigation, charge, complaint, claim,
or demand is pending is threatened which challenges the
legality, validity, or enforceability of the underlying item
of Intellectual Property; and
(vii) the Company has not granted any sublicense or
similar right with respect to the Contract.
4.11 ENVIRONMENTAL MATTERS. To the Knowledge of the Company, the
Company, its facilities, and properties are, and have been, in compliance
with all Environmental Laws. There is no Litigation pending or to the
Knowledge of the Company, threatened, before any court, governmental agency,
or authority or other forum in which the Company or any of its properties or
facilities has been or, with respect to threatened Litigation, may be named
as a defendant (i) for alleged noncompliance with any Environmental Law, or
(ii) relating to the release into the environment of any Hazardous Material,
whether or not occurring at, on, under, adjacent to, or affecting (or
potentially affecting) a site owned, leased, or operated by the Company or
any of its properties or facilities, nor is there any reasonable basis for
any such Litigation. To the Knowledge of the Company there have been no
releases of Hazardous Material in, on, under, adjacent to, or affecting (or
potentially affecting) any properties or facilities of the Company.
4.12 COMPLIANCE WITH LAWS. The Company is not in violation of any Laws,
Orders, or Permits applicable to its business or employees conducting its
business and has not received any notification or communication from any
agency or department of federal, state, or local government or any Regulatory
Authority or the staff thereof (i) asserting that the Company is not in
compliance with any of the Laws or Orders which such governmental
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authority or Regulatory Authority enforces, (ii) threatening to revoke any
Permits, or (iii) requiring the Company to enter into or consent to the
issuance of a cease and desist order, formal agreement, directive,
commitment, or memorandum of understanding, or to adopt any Company
resolution or similar undertaking. Copies of all material reports,
correspondence, notices and other documents relating to any inspection,
audit, monitoring or other form of review or enforcement action by a
Regulatory Authority have been made available to ECT.
4.13 LABOR RELATIONS. The Company is not the subject of any Litigation
asserting that it has committed an unfair labor practice (within the meaning
of the National Labor Relations Act or comparable state law) or seeking to
compel it to bargain with any labor organization as to wages or conditions of
employment, nor is the Company a party to any collective bargaining
agreement, nor is there any strike or other labor dispute involving the
Company, pending or threatened, or to the Knowledge of the Company, is there
any activity involving any Company employees seeking to certify a collective
bargaining unit or engaging in any other organization activity.
4.14 MATERIAL CONTRACTS. SECTION 4.14 of the Sweetwater Disclosure
Memorandum lists the following Contracts to which the Company is a party:
(a) any agreement (or group of related agreements) for the
lease of real or personal property to or from any Person providing for
lease payments in excess of $100,000 per annum;
(b) any agreement (or group of related agreements) for the
purchase or sale of raw materials, commodities, supplies, products, or
other personal property, or for the furnishing or receipt of services,
the performance of which will extend over a period of more than one
year and involve consideration in excess of $100,000;
(c) any agreement concerning a partnership or joint venture;
(d) any agreement (or group of related agreements) under which
it has created, incurred, assumed, or guaranteed any indebtedness for
borrowed money, or
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any capitalized lease obligation, in excess of $100,000 or under which
it has imposed a Lien on any of its Assets;
(e) any agreement concerning confidentiality or noncompetition;
(f) any agreement with Syntroleum;
(g) any profit sharing, Membership Interest option, Membership
Interest purchase, Membership Interest appreciation, deferred
compensation, severance, or other Material plan or arrangement for the
benefit of its current or former members, Managers, and employees;
(h) any collective bargaining agreement;
(i) any agreement for the employment of any individual on a
full-time, part-time, consulting, or other basis providing annual
compensation in excess of $100,000 or providing severance benefits;
(j) any agreement under which it has advanced or loaned any
amount to any of its Members, Managers, and employees outside the
ordinary course of business;
(k) any agreement under which the consequences of a Default or
termination could have a Material Adverse Effect on the business,
financial condition, operations, results of operations, or future
prospects of any of the Company; or
(l) any other agreement (or group of related agreements) the
performance of which involves consideration in excess of $100,000.
The Company has delivered to ECT a correct and complete copy of each
written Contract listed in SECTION 4.14 of the Sweetwater Disclosure
Memorandum (as amended to date) and a written summary setting forth the terms
and conditions or each oral Contract referred to in SECTION 4.14 of the
Sweetwater Disclosure Memorandum. With respect to each such Contract (i) the
Contract is legal, valid, binding, enforceable, and in full force
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and effect; (ii) the Contract will continue to be legal, valid, binding,
enforceable, and in full force and effect on identical terms following the
consummation of the transactions contemplated by this Agreement; (iii) no
party is in breach or Default, and no event has occurred which with notice or
lapse of time would constitute a breach or Default, or permit termination,
modification, or acceleration, under the Contract and (iv) no party has
repudiated any provision of the Contract.
4.15 LEGAL PROCEEDINGS. There is no Litigation instituted or pending,
or, to the Knowledge of the Company, threatened (or unasserted but considered
probable of assertion and which if asserted would have at least a reasonable
probability of an unfavorable outcome) against the Company, or against any
Asset, of the Company that is reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on the Company, nor are there any
Orders of any Regulatory Authority, other governmental authority, or
arbitrator outstanding against the Company. SECTION 4.15 of the Sweetwater
Disclosure Memorandum includes a summary report of all Litigation as of the
date of this Agreement to which the Company is a party and which names the
Company as a defendant or crossdefendant, or for which the Company has
potential exposure.
4.16 EMPLOYEE BENEFITS. SECTION 4.14 of the Sweetwater Disclosure
Memorandum lists each employee benefit plan that the Company maintains or to
which the Company contributes. To the Knowledge of the Company, each such
employee benefit plan (and each related trust, insurance contract, or fund)
complies in form and in operation in all respects with the applicable
requirements of ERISA and the Internal Revenue Code, except where the failure
to comply would not have a Material Adverse Effect on the financial condition
of the Company.
4.17 STATEMENTS TRUE AND CORRECT. No statement, certificate, instrument,
or other writing furnished or to be furnished by the Company or any Affiliate
thereof to ECT pursuant to this Agreement or any other document, agreement,
or instrument referred to herein or will contain any untrue statement of
material fact or omit any statement of material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
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4.18 LIMITATION ON REPRESENTATIONS. The Company shall not be deemed
to have made any representation or warranty to ETC other than as expressly
made by the Company in this ARTICLE 4. Without limiting the generality of the
foregoing, and notwithstanding any otherwise express representations and
warranties made by the Company in this ARTICLE 4, the Company makes no
representation or warranty to ECT with respect to (a) any projections,
estimates or budgets heretofore delivered or made available to ECT of future
revenues, expenses or expenditures or future results of operations except
that the Company represents and warrants that all such projections, estimates
and budgets were prepared on the basis of assumptions, data, information,
tests or conditions believed by the Company to be reasonable at the time such
projections, estimates or budgets were furnished to ECT (with the exception
of the estimate of catalyst expense which is expected to be higher than
originally projected), or (b) except as expressly covered by a representation
and warranty contained in this ARTICLE 4, any other information or documents
(financial or otherwise) made available to ECT or its counsel, accountants or
advisors with respect to the Company.
5. REPRESENTATIONS AND WARRANTIES OF ECT
ECT represents and warrants that the following statements are true
and correct as of the Effective Date and will be true and correct at Closing.
5.01 ORGANIZATION, STANDING, AND POWER. ECT is a corporation duly
organized, validly existing, and in good standing under the Laws of the State
of Delaware, and has the power and authority to carry on its business as now
conducted and to own, lease and operate its Assets. ECT is duly qualified or
licensed to transact business as a foreign corporation in good standing in
the states of the United States where the character of its Assets or the
nature or conduct of its business requires it to be so qualified or licensed,
except for such jurisdictions in which the failure to be so qualified or
licensed is not reasonably likely to have, individually or in the aggregate,
a Material Adverse Effect on ECT.
5.02 AUTHORITY. ECT has the corporate power and authority necessary
to execute, deliver, and perform its obligations under this Agreement and to
consummate the
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transactions contemplated by this Agreement. The execution, delivery, and
performance of this Agreement and the consummation of the transactions
contemplated by this Agreement, have been validly authorized by all necessary
corporate action in respect thereof on the part of ECT. This Agreement
represents a legal, valid, and binding obligation of ECT, enforceable against
ECT in accordance with its terms except in all cases as such enforceability
may be limited by applicable bankruptcy, insolvency, reorganization,
receivership, conservatorship, moratorium, or similar Laws affecting the
enforcement of creditors' rights generally and except that the availability
of the equitable remedy of specific performance or injunctive relief is
subject to the discretion of the court before which any proceeding may be
brought.
5.03 NO BREACH. Neither the execution and delivery of this Agreement
by ECT, nor the consummation by ECT of the transactions contemplated by this
Agreement, nor compliance by ECT with any of the provisions of this
Agreement, will (i) conflict with or result in a breach of any provision of
ECT's Certificate of Incorporation or bylaws, or (ii) constitute or result
in a Default under, or require any consent pursuant to, or result in the
creation of any lien on any Asset of any of ECT under, any Contract or Permit
of ECT, or, (iii) violate any Law or Order applicable to ECT or any of its
material Assets.
5.04 NO NOTICE OR CONSENT. No notice to, filing with, or consent of,
any public body or authority is necessary for the consummation by ECT of the
transactions contemplated in this Agreement.
5.05 INVESTOR STATUS. ECT is an "accredited investor" as that term
is defined in Rule 501 of Regulation D promulgated by the Securities and
Exchange Commission under the 1933 Act.
5.06 SPECULATIVE NATURE AND RISK. ECT acknowledges the speculative
nature of and the risks associated with an investment in the Company. ECT
confirms that it has fully considered and understands for purposes of this
investment, in consultation with its legal, accounting, tax, or other
advisors, that (a) the Company has limited financial operating history, (b)
the Membership Interest is a speculative investment which involves
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a high degree of risk, and (c) there are substantial restrictions on the
transferability of, and there will be no public market for, the Membership
Interest.
5.07 DUE DILIGENCE INVESTIGATION. ECT acknowledges that (a) it has
had the opportunity to visit with the Company and meet with its officers
(including officers of the Manager) and other representatives to discuss the
business and the Assets, Liabilities, financial condition, cash flow and
operations of the Company, and (b) all materials and information regarding
the Company requested by ECT have been provided to ECT to ECT's reasonable
satisfaction. ECT confirms that in making its decision to acquire the
Membership Interest it has made and relied upon the independent examination,
investigation, analysis and evaluation of the Company, including ECT's own
estimate of the value of the Company's business, made by it or its
representatives, including its own professional legal, accounting, tax, and
other advisors. ECT acknowledges that it and such representatives have been
given the opportunity to examine all relevant documents and to ask questions
of, and to received answers from the Company or a person(s) acting on its
behalf concerning the Company and to obtain any additional information it
deems appropriate to the extent the Company possesses such information or can
acquire it without unreasonable effort or expense. ECT further acknowledges
that it has undertaken such due diligence (including a review of the Assets,
Liabilities, books, records and contracts of the Company) as ECT deems
adequate, including that described above.
5.08 LIMITED TRANSFERABILITY. ECT acknowledges that the Membership
Interest issued to ECT under this Agreement has not been and will not be
registered under the 1933 Act or the securities Laws of any other state and
is being offered, and will be sold, pursuant to applicable exemptions from
such registration and will be issued as "restricted securities" as defined by
Rule 144 promulgated pursuant to the 1933 Act. The Membership Interest may
not be resold in the absence of an effective registration thereof under the
1933 Act and applicable state securities Laws or unless, in the opinion of
the Company's counsel, an applicable exemption from registration is available.
5.09 ACQUISITION FOR INVESTMENT. ECT is acquiring the Membership
Interest issued or to be issued to ECT under this Agreement for its own
account, for investment
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purposes only and not with a view to, or for sale in connection with, a
distribution, as that term is used in Section 2(11) of the 1933 Act in a
manner which would require registration under the 1933 Act or any state
securities Laws.
5.10 FURTHER RESTRICTIONS. ECT acknowledges that it is aware that
substantial restrictions exist with respect to the transferability of the
Membership Interest under the terms of the Company Agreement. Additionally,
since the Membership Interest is not registered under the 1933 Act, as
amended, or any applicable state securities Laws, none of such securities
shall be sold, transferred, pledged or hypothecated absent registration under
the 1933 Act and such state securities Laws, or unless such sale, transfer,
pledge or hypothecation is exempt from registration under such Laws. ECT may
only transfer any of such securities if such transfer is in accordance with
applicable Law and in accordance with the terms of the Company Agreement and
if such transfer is in accordance with or has been registered under such Laws
or counsel to the Company has rendered an opinion that such transfer is
exempt from such registration.
5.11 RESTRICTIVE LEGEND. ECT understands and acknowledges that the
certificates evidencing the Membership Interest issued pursuant to this
Agreement shall bear the following restrictive legend:
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED OR THE SECURITIES LAWS OF
ANY STATE. THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT
BE SOLD OR TRANSFERRED FOR VALUE IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION THEREOF UNDER THE SECURITIES ACT OF 1933 AND/OR THE
SECURITIES ACT OF ANY STATE HAVING JURISDICTION OR AN OPINION OF
COUNSEL TO THE CORPORATION THAT SUCH REGISTRATION IS NOT REQUIRED UNDER
SUCH ACT OR ACTS.
or such other restrictive legend as counsel to the Company may reasonably
deem appropriate at the time of such issuance. Additionally, the certificates
evidencing the Membership Interest issued pursuant to the Agreement shall
bear a restrictive legend with respect to the transfer restrictions set forth
in the Company Agreement.
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6. CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE
6.01 CONDITIONS TO OBLIGATIONS OF EACH PARTY. The respective
obligations of each Party to perform this Agreement and consummate the
transactions contemplated by this Agreement are subject to the satisfaction
of the following conditions, unless waived by both Parties pursuant to
SECTION 8.07 of this Agreement:
(a) Each Party shall have obtained any and all Consents
required for consummation of the transactions or for the preventing of
any Default under any Contract, Order or Permit of such Party which, if
not obtained or made, is reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on such Party.
(b) no action, suit, or proceeding shall be pending or
threatened before any court or quasi-judicial or Regulatory Authority
of any federal, state, local, or foreign jurisdiction or before any
arbitrator wherein an unfavorable injunction, judgment, order, decree,
ruling, or charge would (i) prevent consummation of any of the
transactions contemplated by this Agreement, (ii) cause any of the
transactions contemplated by this Agreement to be rescinded following
consummation, (iii) affect adversely the right of ECT to own the
Membership Interest, or (iv) affect adversely the right of the Company
to own its Assets and to operate its business (and no such injunction,
judgment, order, decree, ruling, or charge shall be in effect).
6.02 CONDITIONS TO OBLIGATIONS OF ECT.
(a) The obligations of ECT to perform this Agreement and
consummate the transactions contemplated by this Agreement are subject
to the satisfaction of the following conditions, unless waived by ECT
pursuant to SECTION 8.07 of this Agreement:
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(i) For purposes of this SECTION 6.02(a)(i), the
accuracy of the representations and warranties of the Company
set forth in this Agreement shall be assessed as of the date
of this Agreement and as of the Closing Date with the same
effect as though all such representations and warranties had
been made on and as of the Closing Date (provided that
representations and warranties which are confined to a
specified date shall speak only as of such date). The
representations and warranties of the Company set forth in
this Agreement shall be true and correct in all material
respects.
(ii) Each and all of the agreements and covenants of
the Company to be performed and complied with pursuant to this
Agreement and the other agreements contemplated by this
Agreement prior to the Closing Date shall have been duly
performed and complied with in all material respects.
(iii) The Company shall have delivered to ECT (i) a
certificate, dated as of the Closing Date and signed on its
behalf by its chief executive officer, to the effect that the
conditions set forth in this SECTION 6.02(a) of this Agreement
have been satisfied, and (ii) certified copies of resolutions
duly adopted by the Members of the Company evidencing the
taking of all action necessary to authorize the execution,
delivery and performance of this Agreement, and the
consummation of the transactions contemplated by this
Agreement, all in such reasonable detail as ECT and its
counsel shall request.
(iv) ECT shall have received an opinion of ▇▇▇▇
▇▇▇▇▇▇▇▇, Vice President and General Counsel of the Company,
dated as of the Closing, in form and substance reasonably
acceptable to ECT.
(v) all actions to be taken by the Company in
connection with consummation of the transactions contemplated
by this Agreement and all certificates, opinions, instruments,
and other documents required to effect
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the transaction contemplated by this Agreement will be
reasonably satisfactory in form and substance to ECT.
(b) In addition to satisfaction of the conditions set forth in
SECTION 6.02(a), the obligations of ECT to perform this Agreement and
consummate the transactions contemplated by this Agreement at the First
Closing are subject to the satisfaction of the following conditions,
unless waived by ECT pursuant to SECTION 8.07 of this Agreement:
(i) the Company shall have delivered to ECT a
written review of the Syntroleum Process conducted by ▇▇▇▇▇▇
and ▇▇▇▇▇, Inc. acceptable to ECT;
(ii) preliminary technical, financial, operational
and managerial aspects of the Company and Plant shall be
acceptable to ECT;
(iii) the Company shall have delivered to ECT a
patent infringement comfort letter and a description of the
patents relating to the Syntroleum Process;
(iv) SLH shall have contributed $1,500,000 in cash to
the capital of the Company;
(v) Syntroleum shall have contributed $500,000 in
cash to the capital of the Company;
(vi) there shall not have occurred any material
adverse change in the business, affairs and prospects
(financial or otherwise) of the Company;
(vii) there shall be no Defaults or events of Default
existing under any Contracts to which the Company is a Party;
(viii) ECT shall have received internal credit and
management approvals to enter into this Agreement; and
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(ix) the License Agreement shall have been executed
by the Company and Syntroleum on terms acceptable to ECT.
(x) ECT and Syntroleum shall have entered into a
50,000 barrel capacity Volume License Agreement on terms
(including a waiver of the payment required by Section 5.01 of
the License Agreement) acceptable to ECT and Syntroleum.
(c) In addition to satisfaction of the conditions set forth in
SECTION 6.02(a), the obligations of ECT to perform this Agreement and
consummate the transactions contemplated by this Agreement at the Final
Closing are subject to the satisfaction of the following conditions,
unless waived by ECT pursuant to SECTION 8.07 of this Agreement.
(i) any change in management of the Company,
including technical, financial and operational capabilities,
shall be acceptable to all Members;
(ii) there shall not have occurred any material
adverse change in the business, affairs and prospects
(financial or otherwise) of the Company;
(iii) all documents (including authorizing documents
and legal opinions) required for Capital Contributions and
senior and subordinated loans necessary to finance the design,
engineering and construction of the Plant and working capital
needs of the Company, including (x) aggregate Capital
Contributions to the Company of no less than $46,350,000, (y)
a senior term loan in the principal amount of $156,000,000,
and (z) a subordinated Loan in the principal amount of
$35,000,000, will be on terms and with parties satisfactory to
all Members;
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(iv) the Company shall not be in Default, nor shall
there have occurred any event which, with the passage of time,
would result in a Default, under any Contract to which the
Company is a party;
(v) the Company shall have completed, to the
satisfaction of all Members, at the Company's expense and
using independent engineering and environmental consultants
acceptable to all Members, a technical review (including
environmental review and site audit) and analysis of the Plant
with respect to the integrity and feasibility of all
engineering, site conditions, permits, environmental
requirements, design, technology, capacity, construction,
completion schedule, final cost budget and operating
specifications;
(vi) the Company shall have executed a fixed price
turnkey agreement for the engineering, procurement and
construction of the Plant containing provisions for liquidated
damages for delay and underperformance, provisions for
performance tests, provisions for performance and payment
bonds or guarantees, and such other terms customary for such
an agreement in form and substance satisfactory to all
Members;
(vii) the Company shall have executed natural gas
supply contracts sufficient to supply the Plant's feedstock
requirements and product offtake contracts in form and
substance satisfactory to all Members;
(viii) all Members shall have completed due diligence
to their satisfaction regarding market, competition, cost,
strategy and management plans for the Plant, including review
by an independent consultant of Plant financial proforma
assumptions used by the Company;
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(ix) all Members shall have received internal credit
and management approvals to enter into this Agreement and make
their respective Capital Contributions;
(x) the Company shall have received all Permits and
approvals necessary to design, construct and operate the Plant
(except for any Permits which cannot be obtained until a later
stage of design, construction or completion of the Plant, and
the Company shall have no reason to believe that any such
Permits that have not been obtained will not be obtained as
and when required for the design, construction and operation
of the Plant in accordance with applicable Laws);
(xi) the Company shall have received certificates of
insurance and brokers' opinion letter(s) satisfactory to all
Members demonstrating insurance coverage in types and amounts
and with insurers which are rated "A" or better by A. M. Best
& Company, which will include title, property, builders risk,
comprehensive general liability, auto liability, excess
liability, worker's compensation, business interruption and
key man life insurance and which policies will contain
provisions that the policies will not be invalidated by any
acts or omissions of the insurer, will require insurer to
provide at least 30 days written notice of cancellation or
material change, will list lenders, and their affiliates as
their applicable interests appear, and include insurer's
waiver of rights of subrogation, set-off and counterclaim
against lenders;
(xii) the Company shall have entered into employment
agreements with senior management of the Company in form and
substance satisfactory to all Members;
(xiii) the Company shall have received mortgagee and
owner title insurance policies acceptable to the lenders and
all Members;
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(xiv) the final economics of the design, engineering,
construction, start up and operation of the Plant shall not be
materially different than those presented by the Company in
the proformas provided to each Member;
(xv) the terms of the waste water treatment and other
utility purchase agreements shall be acceptable to all
Members;
(xvi) all Members shall be satisfied with the parties
engaged by the Company to design, engineer, construct, start
up and operate the Plant; and
(xvii) all construction and term loan conditions
precedent to funding such loans shall have been met.
(xviii) the Company shall have paid ECT's legal
expenses incurred in connection with the transactions
contemplated by this Agreement up to $100,000.
6.03 CONDITIONS TO OBLIGATIONS OF THE COMPANY. The obligations of
the Company to perform this Agreement and consummate the transactions
contemplated by this Agreement are subject to the satisfaction of the
following conditions, unless waived by The Company pursuant to SECTION 8.07
of this Agreement:
(a) For purposes of this SECTION 6.03(a), the accuracy of the
representations and warranties of ECT set forth in this Agreement shall
be assessed as of the date of this Agreement and as of the Closing Date
with the same effect as though all such representations and warranties
had been made on and as of the Closing Date (provided that
representations and warranties which are confined to a specified date
shall speak only as of such date). The representations and warranties
of ECT set forth in this Agreement shall be true and correct in all
material respects.
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(b) Each and all of the agreements and covenants of ECT to be
performed and complied with pursuant to this Agreement and the other
agreements contemplated by this Agreement prior to the Closing shall
have been duly performed and complied with in all material respects.
(c) ECT shall have delivered to the Company (i) a certificate,
dated as of the Closing Date and signed on its behalf by an authorized
officer, to the effect that the conditions set forth in the SECTION
6.03 of this Agreement have been satisfied, and (ii) certified copies
of resolutions duly adopted by ECT's Board of Directors evidencing the
taking of all corporate action necessary to authorize the execution,
delivery and performance of this Agreement, and the consummation of the
transactions contemplated by this Agreement, all in such reasonable
detail as the Company and its counsel shall request.
(d) The Company shall have received an opinion of ▇▇▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇▇ L.L.P., counsel to ECT, dated as of the Closing Date, in form
and substance reasonably acceptable to the Company.
(e) All actions to be taken by ECT in connection with
consummation of the transactions contemplated by this Agreement and all
certificates, opinions, instruments, and other documents required to
effect the transaction contemplated by this Agreement will be
reasonably satisfactory in form and substance to the Company.
7. INDEMNIFICATION
7.01 SURVIVAL. All of the representations and warranties of the
Parties contained in this Agreement shall survive the Closing (even if the
damaged Party knew or had reason to know of any representation or breach of
warranty at the time of Closing) and continue in full force and effect for a
period of three years thereafter.
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7.02 INDEMNIFICATION FOR BENEFIT OF ECT. In the event the Company
breaches any of its representations, warranties or covenants contained in
this Agreement, and provided that ECT makes a written claim for
indemnification against the Company pursuant to SECTION 7.04 below within the
survival period set forth in SECTION 7.01, then the Company agrees to
indemnify ECT from and against the entirety of any Adverse Consequences ECT
shall suffer through and after the date of the claim for indemnification (but
excluding any Adverse Consequences ECT shall suffer after the end of the
survival period to the extent a claim therefore is not made prior to the end
of such survival period) caused by the breach.
7.03 INDEMNIFICATION FOR BENEFIT OF THE COMPANY. In the event ECT
breaches any of its representations, warranties or covenants contained in
this Agreement, and provided that the Company makes a written claim for
indemnification against ECT pursuant to SECTION 7.04 below within the
survival period set forth in SECTION 7.01, then ECT agrees to indemnify the
Company from and against the entirety of any Adverse Consequences the Company
shall suffer through and after the date of the claim for indemnification (but
excluding Adverse Consequences the Company shall suffer after the end of any
applicable survival period to the extent a claim therefore is not made prior
to the end of such survival period) caused by the breach.
7.04 MATTERS INVOLVING THIRD PARTIES.
(a) If any third party shall notify any Party (the
"Indemnified Party") with respect to any matter (a "Third Party Claim")
which may give rise to a claim for indemnification against any other
Party (the "Indemnifying Party") under this ARTICLE 7, then the
Indemnified Party shall promptly (and in any event within five business
days after receiving notice of the Third Party Claim) notify the
Indemnifying Party thereof in writing.
(b) An Indemnifying Party will have the right to assume and
thereafter conduct the defense of the Third Party Claim with counsel of
its choice
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reasonably satisfactory to the Indemnified Party; provided however,
that the Indemnifying Party will not consent to the entry of any
judgment or enter into any settlement with respect to the Third Party
Claim without the prior written consent of the Indemnified Party (not
to be withheld unreasonably) unless the judgment or proposed
settlement involves only the payment of money damages and does not
impose an injunction or other equitable relief upon the Indemnified
Party.
(c) Unless and until an Indemnifying Party assumes the defense
of the Third Party Claim as provided in SECTION 7.04(b) above, the
Indemnified Party may defend against the Third Party Claim in any
manner he or it reasonably may deem appropriate. In no event will the
Indemnified Party consent to the entry of any judgment or enter into
any settlement with respect to the Third Party Claim without the prior
written consent of the Indemnifying Party (not to be withheld
unreasonably).
7.05 DETERMINATION OF ADVERSE CONSEQUENCES. The Parties shall make
appropriate adjustments for tax benefits and insurance coverage in
determining Adverse Consequences for purposes of this ARTICLE 7.
7.06 OTHER INDEMNIFICATION PROVISIONS. The indemnification
provisions in this ARTICLE 7 are in addition to, and not in derogation of,
any statutory, equitable, or common law remedy any Party may have for any
breach of a representation, warranty, or covenant.
8. MISCELLANEOUS
8.01 EXPENSES AND ATTORNEY FEES. Except for payment by the Company
of up to $100,000 of ECT's legal fees, as provided in SECTION 6.02(c)(xviii),
each Party shall pay all of its own legal and due diligence expenses incurred
in connection with the negotiation, execution and performance of this
Agreement.
8.02 NOTICES. Any notice relating to this Agreement shall be deemed
sufficiently given and served for all purposes if given by a telegram filed,
charges
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prepaid, or a writing deposited in the United States mail, postage prepaid
and registered or certified within the Continental United States, or a
writing sent by Federal Express or other nationally or internationally
recognized overnight courier service, or a writing sent by telecopy or
facsimile transmission (which shall request confirmation of receipt)
addressed as follows:
If to the Company:
Syntroleum/Sweetwater Company, L.L.C.
c/o Syntroleum Corporation
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Office of the President
with a copy to:
Syntroleum Corporation
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Office of the General Counsel
with a copy to:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇ & ▇▇▇▇▇, L.L.P.
One Shell Plaza
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
If to ECT:
Enron Capital & Trade Resources Corp.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Director
with a copy to:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, L.L.P.
South Tower Pennzoil Place
Suite 2900
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
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8.03 HEADINGS. The section, subsection and paragraph headings
throughout this Agreement are for convenience and reference only, and the
words contained therein shall not be held to expand, modify, amplify or aid
in the interpretation, construction or meaning of this Agreement.
8.04 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each signed by different persons and all of said counterparts
together shall constitute one and the same instrument, and such instrument
shall be deemed to have been made, executed and delivered on the date first
hereinabove written, irrespective of the time or times when the same or any
counterparts thereof actually may have been executed and delivered.
8.05 BROKERS AND FINDERS. Each of the Parties represents and
warrants that neither it nor any of its officers, directors, employees, or
Affiliates has employed any broker or finder or incurred any Liability for
any financial advisory fees, investment bankers' fees, brokerage fees,
commissions, or finders' fees in connection with this Agreement or the
transactions contemplated in this Agreement. In the event of a claim by any
broker or finder based upon his or its representing or being retained by or
allegedly representing or being retained by the Company or ECT, each of the
Company and ECT, as the case may be, agrees to indemnify and hold the other
Party harmless of and from any Liability in respect of such claim.
8.06 ENTIRE AGREEMENT. Except as otherwise expressly provided in
this Agreement, this Agreement (including the documents and instruments
referred to in this Agreement) constitutes the entire agreement between the
Parties with respect to the transactions contemplated hereunder and
supersedes all prior arrangements or understandings with respect thereto,
written or oral (except for the Confidentiality Agreement between the Parties
dated April 23, 1997). Nothing in this Agreement expressed or implied, is
intended to confer upon any Person, other than the Parties or their
respective successors, any rights, remedies, obligations, or liabilities
under or by reason of this Agreement.
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8.07 WAIVERS. Prior to Closing, a Party shall have the right to
waive any Default in the performance of any term of this Agreement by the
Company, to waive or extend the time for the compliance or fulfillment by the
other Party any and all of its obligations under this Agreement, and to waive
any or all of the conditions precedent to the obligations of a Party under
this Agreement, except any condition which, if not satisfied, would result in
the violation of any Law. No such waiver shall be effective unless in writing
signed by the Party granting such a waiver. The failure of any Party at any
time or times to require performance of any provision hereof shall in no
manner affect the right of such Party at a later time to enforce the same or
any other provision of this Agreement. No waiver of any condition or of the
breach of any term contained in this Agreement in one or more instances shall
be deemed to be or construed as a further or continuing waiver of such
condition or breach or a waiver of any other condition or of the breach of
any other term of this Agreement.
8.08 ASSIGNMENT. Except as expressly contemplated in this Agreement,
neither this Agreement nor any of the rights, interests or obligations
hereunder shall be assigned (which, for the purpose of this SECTION 8.08,
includes the sale or other transfer of a majority of the voting securities of
a Party) by any Party hereto (whether by operation of Law or otherwise)
without the prior written consent of the other Party, except for (a) an
assignment by a Party to a Person which is 100% owned by such Party, or (b)
an assignment by ECT to any Affiliate of ECT which is not engaged in business
or operations which could reasonably be deemed to be in competition with the
primary business or operations of the Company (including subsequent
assignments by any such Affiliate to any other Affiliate which meets the
foregoing conditions), each of which assignments may be made without the
consent of the other Party, provided that written notice of any such
assignment shall be promptly given to the other Party. Subject to the
preceding sentence, this Agreement will be binding upon, inure to the benefit
of and be enforceable by the Parties and their respective successors and
assigns.
8.09 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the Laws of the State of Delaware, without
regard to any applicable conflicts of Laws. The Parties expressly and
irrevocably consent and submit to the
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jurisdiction of any federal or state court sitting in Wilmington, Delaware
and agree that, to the fullest extent allowed by law, such Delaware federal
and state courts shall have jurisdiction over any action, suit or proceeding
arising out of or relating to this Agreement. The Parties each irrevocably
waive, to the fullest extent allowed by law, any objection either of them may
have to the laying of venue of any such suit, action or proceeding brought in
any state or federal court sitting in Wilmington, Delaware based upon a claim
that such court is inconvenient or otherwise an objectionable forum. Any
process in any action, suit or proceeding arising out of or relating to this
Agreement may, among other methods, be served upon any Party by delivering it
or mailing it to their respective addresses set forth herein. Any such
delivery or mail service shall be deemed to have the same force and effect as
personal service in Wilmington, Delaware. The parties agree that the
provisions of this SECTION 8.09 relating to jurisdiction and venue shall not
be deemed to be the consent by any party to the exclusive jurisdiction or
venue of any federal or state court sitting in Wilmington, Delaware.
8.10 INTERPRETATION. Neither this Agreement nor any uncertainty or
ambiguity herein shall be construed or resolved against any Party, whether
under any rule of construction or otherwise. No Party to this Agreement shall
be considered the draftsman. The Parties acknowledge and agree that this
Agreement has been reviewed, negotiated and accepted by all Parties and their
attorneys and shall be construed and interpreted according to the ordinary
meaning of the words used so as fairly to accomplish the purposes and
intentions of all parties. Any singular term in this Agreement shall be
deemed to include the plural, and any plural term the singular. Whenever the
words "include," "includes" or "Including" are used in this Agreement, they
shall be deemed followed by the words "without limitation".
8.11 SEVERABILITY. Any term or provision of this Agreement which is
invalid or unenforceable in any Jurisdiction shall, as to that jurisdiction,
be ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other Jurisdiction. If any
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provision of this Agreement is so broad as to be unenforceable, the provision
shall be interpreted to be only so broad as is enforceable.
8.12 LIMITATION ON DAMAGES. In no event shall a Party be liable to
the other Party for any special, indirect, consequential, incidental,
punitive, or exemplary damages, including without limitation, lost profits or
savings, regardless of the form of action giving rise to such a claim for
such damages, whether in contract or tort including negligence, even if a
Party has been advised of the possibility of such damages. In the event a
Party is found, despite provisions of this SECTION 8.12, liable to another
Party for special, indirect, consequential, incidental, punitive, or
exemplary damages, then the maximum limit of such damages is agreed to be
$5,000.
IN WITNESS WHEREOF, each of the Parties has caused this Agreement to
be executed on its behalf as of the Effective Date.
SYNTROLEUM/SWEETWATER COMPANY, L.L.C.
By Syntroleum Corporation, Manager
[SEAL]
By /s/ ▇▇▇▇ ▇. ▇▇▇▇
--------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇, President
ENRON CAPITAL & TRADE RESOURCES CORP.
By /s/ J. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
--------------------------------------------
Title: Vice President
----------------------------------------
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