ASSET PURCHASE AGREEMENT BY AND AMONG MIDWEST RENEWABLE ENERGY, LLC, ETHANEX PHASE I, LLC, ETHANEX PHASE II, LLC, ETHANEX PHASE III, LLC ETHANEX SUTHERLAND LAND, LLC, ETHANEX SUTHERLAND, LLC AND ETHANEX ENERGY, INC. Dated as of February 10, 2008
Execution
Copy
BY
AND AMONG
MIDWEST
RENEWABLE ENERGY, LLC,
ETHANEX
PHASE I, LLC,
ETHANEX
PHASE II, LLC,
ETHANEX
PHASE III, LLC
ETHANEX
▇▇▇▇▇▇▇▇▇▇ LAND, LLC,
ETHANEX
▇▇▇▇▇▇▇▇▇▇, LLC
AND
Dated
as of
February
10, 2008
TABLE
OF CONTENTS
Page(s)
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1.
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DEFINITIONS
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2
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(a)
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Certain
Definitions
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2
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(b)
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Interpretation
|
10
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(c)
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Additional
Defined Terms
|
10
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| 2. |
PURCHASE
AND SALE OF ASSETS
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13
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(a)
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Phase
I Closing
|
▇▇
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(▇)
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▇▇▇▇▇
▇▇ ▇▇▇▇▇▇▇
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▇▇
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(▇)
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▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇
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▇▇
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(▇)
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Excluded
Assets
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15
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3.
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LIABILITIES
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16
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(a)
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Assumption
of Liabilities in Phase I
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16
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(b)
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Assumption
of Liabilities in Phase II
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16
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(c)
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Assumption
of Liabilities in Phase III
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17
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(d)
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Excluded
Liabilities
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18
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(e)
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No
Expansion of Third Party Rights
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19
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4.
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CLOSING;
PURCHASE PRICE; ADJUSTMENT
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19
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(a)
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Closing
Dates and Location
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19
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(b)
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Payment
of the Purchase Price; Adjustments
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20
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(c)
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Purchase
Price Adjustment
|
24
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(d)
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Determination
of Purchase Price Adjustments
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25
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(e)
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Access
During Determinations
|
31
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(f)
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Determination
Definitions
|
31
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5.
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REPRESENTATIONS
OF SELLER
|
31
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(a)
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Core
Representations and Warranties of Seller
|
31
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(b)
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Additional
Representations
|
32
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6.
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REPRESENTATIONS
AND WARRANTIES OF BUYER GROUP, ETHANEX ▇▇▇▇▇▇▇▇▇▇, AND
ETHANEX
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42
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(a)
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Representations
of Ethanex ▇▇▇▇▇▇▇▇▇▇, Phase I Buyer, Phase II Buyer, Phase III
Buyer and
RE LLC
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42
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(b)
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Ethanex’s
Representations
|
44
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7.
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COVENANTS
|
47
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(a)
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Confidentiality
|
48
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(b)
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Notice
of Developments
|
49
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|
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(c)
|
HSR
Act Compliance
|
49
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|
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(d)
|
Notices
and Consents
|
49
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|
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(e)
|
Further
Assurances; Satisfaction of Covenants, etc
|
50
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|
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(f)
|
Access
|
51
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|
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(g)
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Exclusivity
|
51
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|
i
Table
of Contents
(continued)
|
(h)
|
Continuity
and Maintenance of Operations
|
51
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|
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(i)
|
License
Agreements
|
53
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(j)
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Completion
of Phase II Plan
|
53
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(k)
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Completion
of Phase III Plan
|
54
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(l)
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Risk
of Loss
|
55
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(m)
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Employees
|
55
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(n)
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Financing
|
56
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(o)
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Publicity
|
56
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|
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(p)
|
Funded
Debt; Release of Liens
|
57
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|
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(q)
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Subsidiaries
|
57
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|
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(r)
|
Further
Action Regarding Financial Statements and Financing
|
57
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|
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(s)
|
Lease
|
58
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|
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(t)
|
Post-Closing
Remittances
|
58
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|
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(u)
|
LB
536 Credits
|
59
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|
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(v)
|
Real
Estate Taxes
|
59
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|
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(w)
|
JV
Agreement
|
59
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|
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(x)
|
Required
Stockholder Approval
|
59
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|
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(y)
|
Additional
Seller Obligations
|
60
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|
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(z)
|
Seller
Financing Requirement
|
60
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|
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(aa)
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Fractionation
|
61
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(bb)
|
Prohibition
on Certain Actions
|
61
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|
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(cc)
|
Use
of Funds
|
62
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|
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(dd)
|
Technical
Services Agreement
|
62
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|
(ee)
|
Compliance
|
62
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|
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(ff)
|
LB
775 Agreement
|
62
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(gg)
|
Rezoning
|
63
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(hh)
|
TIF
|
63
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8.
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CONDITIONS
PRECEDENT TO THE PARTIES’ OBLIGATIONS
|
63
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|
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(a)
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Consents
from Governmental Authorities
|
63
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|
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(b)
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Restrictions
|
63
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9.
|
CONDITIONS
PRECEDENT TO ETHANEX’S, ETHANEX ▇▇▇▇▇▇▇▇▇▇’▇, AND THE BUYER GROUP’S
OBLIGATIONS
|
63
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|
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(a)
|
General
Conditions
|
63
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(b)
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Phase
I Closing Conditions
|
64
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|
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(c)
|
Phase
II Closing Conditions
|
▇▇
|
|
|
(▇)
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▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
|
▇▇
|
|
|
▇▇.
|
CONDITIONS
PRECEDENT TO SELLER’S OBLIGATIONS
|
71
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|
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(a)
|
Representations
and Warranties of Ethanex, Ethanex ▇▇▇▇▇▇▇▇▇▇ and the Buyer
Group
|
71
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|
|
(b)
|
Covenants
|
71
|
|
ii
Table
of Contents
(continued)
|
(c)
|
Delivery
of Certificates and Documents
|
72
|
|
|
(d)
|
Escrow
Agreement
|
72
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|
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(e)
|
Start-Up
Services Agreement
|
72
|
|
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(f)
|
Assumption
Agreements
|
72
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|
|
(g)
|
JV
Agreement
|
72
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|
|
(h)
|
Investor
Rights Agreement
|
72
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|
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(i)
|
Required
Stockholder Approval
|
72
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|
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11.
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SURVIVAL
OF REPRESENTATIONS, WARRANTIES AND COVENANTS;
INDEMNIFICATION
|
72
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|
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(a)
|
Survival
of Representations, Warranties and Covenants
|
73
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|
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(b)
|
Indemnification
|
73
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|
|
(c)
|
Assertion
of Claims; Notice of and Right to Defend Third Party
Claims
|
77
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|
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(d)
|
Limitations
on Liability
|
78
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|
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(e)
|
Collection
|
79
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|
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(f)
|
Exclusive
Remedy
|
80
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|
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(g)
|
No
Third Party Beneficiaries
|
80
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|
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(h)
|
Insurance
Proceeds
|
80
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|
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12.
|
TERMINATION
|
80
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|
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(a)
|
Termination
|
80
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|
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(b)
|
Surviving
Obligations
|
82
|
|
|
(c)
|
Alternative
Transaction Upon Financing ▇▇▇▇▇▇▇
|
▇▇
|
|
|
▇▇.
|
FEES
AND EXPENSES
|
82
|
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| 14. |
ENTIRE
AGREEMENT
|
83
|
|
| 15. |
PARTIES
OBLIGATED AND BENEFITED
|
83
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| 16. |
NOTICES
|
83
|
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| 17. |
AMENDMENTS
AND WAIVERS
|
84
|
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| 18. |
SEVERABILITY
|
84
|
|
| 19. |
SECTION
HEADINGS AND TERMS
|
84
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| 20. |
COUNTERPARTS
|
85
|
|
| 21. |
GOVERNING
LAW; CONSENT TO JURISDICTION
|
85
|
|
| 22. |
SPECIFIC
PERFORMANCE
|
85
|
|
| 23. |
FURTHER
ASSURANCES
|
85
|
|
iii
Table
of Contents
(continued)
| 24. |
CONSTRUCTION
|
85
|
|
| 25. |
WAIVER
OF JURY TRIAL
|
85
|
|
| 26. |
BULK
SALES
|
86
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|
| 27. |
INSURANCE
|
86
|
|
iv
INDEX OF SCHEDULES AND EXHIBITS
|
Exhibits
|
|
|
A
|
Description
of Owned Real Property
|
|
B
|
Phase
I Assets
|
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C
|
Phase
II Assets
|
|
D
|
Phase
III Assets
|
|
E
|
Performance
Test Protocol
|
|
F
|
Phase
II Plan
|
|
G
|
Phase
III Plan
|
|
H
|
Start-Up
Services Agreement Terms
|
|
I
|
Process
Specifications and Consideration Adjustment
|
|
J
|
Material
Consents
|
|
K
|
▇▇▇▇
of Sale
|
|
L
|
Warranty
Deed
|
|
M
|
Required
Permits for Phase I
|
|
N
|
Investor
Rights Agreement
|
|
O
|
Required
Permits for Phase II
|
|
P
|
Assumption
Agreements
|
|
Q
|
JV
Term Sheet
|
|
Schedules
|
|
|
1(a)(iv)
|
Assumed
Contracts
|
|
2(d)(viii)
|
Other
Excluded Assets
|
|
3(a)(iii)
|
Phase
I Liabilities
|
|
3(b)(iii)
|
Phase
II Liabilities
|
|
3(c)(iii)
|
Phase
III Liabilities
|
|
3(d)(xi)
|
Other
Excluded Liabilities
|
|
5(a)(iii)
|
Seller
Consents
|
|
5(b)(ii)
|
Undisclosed
Liabilities
|
|
5(b)(iv)(A)
|
Third-Party
Property Rights
|
|
5(b)(iv)(B)
|
Lease
Real Property
|
|
5(b)(iv)(G)
|
Exceptions
to Access
|
|
5(b)(iv)(H)
|
Exceptions
to Installed Systems
|
|
5(b)(iv)(L)
|
Exceptions
to Title
|
|
5(b)(iv)(M)
|
Exceptions
to Sufficiency
|
|
5(b)(vi)
|
Litigation
|
|
5(b)(vii)
|
Material
Contracts
|
|
5(b)(viii)(A)
|
Intellectual
Property Matters
|
|
5(b)(x)
|
Plans
|
|
5(b)(xi)
|
Insurance
|
|
5(b)(xii)
|
Affiliate
Transactions
|
|
5(b)(xiii)
|
Permits
|
|
5(b)(xiv)
|
Environmental
Matters
|
|
5(b)(xv)
|
Suppliers
and Customers
|
|
7(h)
|
Exceptions
to Continuity and Operations of Business
|
|
7(m)
|
Hired
Employees
|
v
Table
of Contents
(continued)
|
Ethanex
Schedules
|
|
|
6(b)(ii)(B)
|
Conflicts
with Constituent Documents
|
|
6(b)(iii)
|
Litigation
|
|
6(b)(vi)
|
Absence
of Changes
|
|
6(b)(viii)
|
Brokers’
Fees
|
|
7(m)
|
Hired
Employees
|
vi
THIS
ASSET PURCHASE AGREEMENT (“Agreement”)
is
made as of February 10, 2008,
by and
among MIDWEST RENEWABLE ENERGY, LLC, a Nebraska limited liability company
(“Seller”),
ETHANEX ENERGY, INC., a Nevada corporation (“Ethanex”),
Ethanex ▇▇▇▇▇▇▇▇▇▇ Land, LLC, a Delaware limited liability company that is
wholly owned by Ethanex ▇▇▇▇▇▇▇▇▇▇ (“RE
LLC”),
Ethanex ▇▇▇▇▇▇▇▇▇▇, LLC, a Delaware limited liability company that is wholly
owned by Ethanex (“Ethanex
▇▇▇▇▇▇▇▇▇▇”),
Ethanex Phase I, LLC, a Delaware limited liability company that is wholly owned
by Ethanex ▇▇▇▇▇▇▇▇▇▇ (“Phase
I Buyer”),
Ethanex Phase II, LLC, a Delaware limited liability company that is wholly
owned
by Ethanex ▇▇▇▇▇▇▇▇▇▇ (“Phase
II Buyer”),
and
Ethanex Phase III, LLC, a Delaware limited liability company that is wholly
owned by Ethanex ▇▇▇▇▇▇▇▇▇▇ (“Phase
III Buyer,”
and
together with Phase I Buyer, Phase II Buyer and RE LLC, “Buyers”
or
the
“Buyer
Group”).
R
E C
I T A L S
A. Seller
is
engaged in the business of operating an ethanol production plant, which is
located on that certain parcel of real property owned by Seller and described
on
Exhibit
A
hereto
(the “Owned
Real Property”).
B. Seller
owns, licenses or leases the assets generally described on Exhibit
B
hereto,
which assets represent an operating ethanol production plant (the “Existing
Plant”)
with a
current production capacity of 26 million gallons per year (the “Phase
I Assets”).
C. Seller
owns, leases, licenses or is developing the assets generally described on
Exhibit
C
hereto
and is in the process of adding to these assets and completing construction
involving these assets (and the additional assets) (the “Phase
II Assets”)
as the
first part of a two-phase expansion of the Existing Plant, which is intended
to
increase the current production capacity of the Existing Plant by an additional
42.5 million gallons per year.
D. Seller
owns, leases, licenses or is developing the assets generally described on
Exhibit
D
hereto
and is in the process of adding to these assets and completing construction
involving these assets (and the additional assets) (the “Phase
III Assets”)
as the
second part of a two-phase expansion of the Existing Plant, which expansion
is
intended to increase the current production capacity of the Existing Plant
by an
additional 42.5 million gallons per year.
E. Seller
desires to sell to Phase I Buyer and Phase I Buyer desires to purchase from
Seller the Phase I Assets, on the terms and subject to the conditions
hereinafter set forth.
F. Seller
desires to sell to Phase II Buyer and Phase II Buyer desires to purchase from
Seller the Phase II Assets, on the terms and subject to the conditions
hereinafter set forth.
G. Seller
desires to sell to Phase III Buyer and Phase III Buyer desires to purchase
from
Seller the Phase III Assets, on the terms and subject to the conditions
hereinafter set forth.
H. Seller
desires to sell to RE LLC and RE LLC desires to purchase from Seller the Owned
Real Property and the Loop Real Property, on the terms and subject to the
conditions hereinafter set forth.
I. Seller
and Buyers also desire that Buyers assume certain enumerated liabilities that
are related exclusively to the Business on the terms and subject to the
conditions hereinafter set forth.
J. The
Buyers are wholly owned, indirect subsidiaries of Ethanex.
NOW,
THEREFORE, in consideration of the mutual covenants and agreements herein set
forth and for other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto, intending to be legally
bound, do represent, warrant, covenant and agree as follows:
|
1.
|
DEFINITIONS
|
|
(a)
|
Certain
Definitions. The following capitalized terms, when used in this Agreement,
shall have the meaning set forth
below:
|
|
(i)
|
“2007
Audited Financials”
shall mean the audited balance sheet, statement of operations and
statement of cash flows of Seller as of and for each of the fiscal
years
ended December 31, 2006 and 2007, including the notes
thereto.
|
|
(ii)
|
“Acquisition
Proposal”
shall mean a proposal (other than by the Buyer or its Affiliates)
relating
to any merger, consolidation, business combination, sale or other
disposition of any material portion of the Seller’s assets pursuant to one
or more transactions, the sale of any equity interests of the Seller
(including, without limitation, by way of a tender offer) or a similar
transaction or business combination involving one or more third parties
(other than the Buyers, Ethanex ▇▇▇▇▇▇▇▇▇▇, or Ethanex) and the Seller.
|
|
(iii)
|
“Affiliate”
shall mean, with respect to any Person, any other Person controlling,
controlled by or under common control with such Person, with “control” for
such purpose meaning the possession, directly or indirectly, of the
power
to direct or cause the direction of the management and policies of
a
Person, whether through the ownership of voting securities or voting
interests, by contract or
otherwise.
|
|
(iv)
|
“Assumed
Contracts”
shall mean those agreements set forth on Schedule
1(a)(iv).
|
|
(v)
|
”Business”
shall mean the operation of the Existing Plant and the Phase II Plan
and
Phase III Plan.
|
|
(vi)
|
“Business
Day”
shall mean any day other than a Saturday, a Sunday or a day on which
banking institutions in New York, New York are required or authorized
to
be closed.
|
|
(vii)
|
“Buyer
Confidential Information”
shall mean, collectively, the Buyer Group Confidential Information
and,
mean all information relating to the business and affairs of the
Buyer
Group, other than information that is as of the date hereof or
subsequently becomes generally available to the public through no
fault
of, or breach of any confidentiality obligation by, the Seller or
any of
its Affiliates, agents or representatives, with respect to (i) after
the
Phase I Closing, the Phase I Assets (ii) after the Phase II Closing,
the
Phase II Assets, and (iii) after the Phase III Closing, the Phase
III
Assets.
|
|
(viii)
|
“Buyer
Group Confidential Information”
shall mean, collectively, all information relating to the business
and
affairs of the Buyer Group, Ethanex ▇▇▇▇▇▇▇▇▇▇, Ethanex and their
respective Affiliates (including, without limitation, all nonpublic
information concerning the terms of the Transactions) other than
information that is as of the date hereof or subsequently becomes
generally available to the public through no fault of, or breach
of any
confidentiality obligation by, the Seller or any of its Affiliates,
agents
or representatives.
|
2
|
(ix)
|
“Code”
shall mean the Internal Revenue Code of 1986, as amended, and the
rules
and regulations promulgated thereunder as in effect from time to
time.
|
|
(x)
|
“Common
Stock”
shall mean common stock, par value $.001, of
Ethanex.
|
|
(xi)
|
“Completion
of the Phase II Plan”
shall mean the completion of the Phase II Plan to the specifications
set
forth in the Phase II Plan and successful completion of the performance
test in accordance with the performance test protocol set forth on
Exhibit
E.
|
|
(xii)
|
“Completion
of the Phase III Plan”
shall mean the completion of the Phase III Plan to the specifications
set
forth in the Phase III Plan and successful completion of the performance
test in accordance with the performance test protocol set forth on
Exhibit
E.
|
|
(xiii)
|
“DOJ”
shall mean the Antitrust Division of the United States Department
of
Justice.
|
|
(xiv)
|
“Environmental
Law”
shall mean any Legal Requirement (including, without limitation,
all
common law) relating to or concerning pollution or the protection
of the
environment, including those relating to emissions, discharges, releases
or threatened releases of Hazardous Substances into the environment
and
natural resources (including ambient air, surface water, ground water
or
land), or otherwise relating to the manufacture, processing, distribution,
use, generation, treatment, storage, disposal, transport or handling
of,
or exposure of persons to, Hazardous Substances, including without
limitation the Comprehensive Environmental Response, Compensation
and
Liability Act of 1980 (42 U.S.C. §§ 9601 et seq.) (“CERCLA”);
the Hazardous Materials Transportation Authorization Act of 1994
(49
U.S.C. §§ 5101 et seq.); the Federal Insecticide, Fungicide, and
Rodenticide Act (7 U.S.C. §§ 136 et seq.); the Solid Waste Disposal
Act (42 U.S.C. §§ 6901 et seq.); the Toxic Substance Control Act (15
U.S.C. §§ 2601 et seq.); the Clean Air Act (42 U.S.C. §§ 7401 et
seq.); the Federal Water Pollution Control Act (33 U.S.C. §§ 1251 et
seq.); and the Safe Drinking Water Act (42 U.S.C. §§ 300(f) et seq.),
each as from time to time amended, and any and all regulations promulgated
thereunder, and all analogous state and local counterparts or equivalents
and any transfer of ownership notification or approval
statutes.
|
|
(xv)
|
“Ethanex
Request”
means any request by Ethanex to alter the Phase II Plan prior to
the Phase
II Closing or the Phase III Plan prior to the Phase III Closing Date,
which is actually implemented by the
Seller.
|
|
(xvi)
|
“Equity
Securities”
shall mean (x) in the case of a limited liability company, limited
liability interests and options, warrants or other rights convertible
into, or exercisable or exchangeable for, directly or indirectly,
or
otherwise entitling any Person to acquire, directly or indirectly,
such
limited liability interests, and (y) in the case of a corporation,
stock
and options, warrants or other rights convertible into, or exercisable
or
exchangeable for, directly or indirectly, or otherwise entitling
any
Person to acquire, directly or indirectly,
stock.
|
3
|
(xvii)
|
“ERISA”
shall mean the Employee Retirement Income Security Act of 1974, as
amended.
|
|
(xviii)
|
“Escrow
Agent”
shall mean Team Bank N.A.
|
|
(xix)
|
“Escrow
Agreement”
shall mean an escrow agreement in form and substance reasonably acceptable
to Ethanex and the Seller and consistent with the terms of this Agreement
among the Escrow Agent, the Seller, Ethanex, Ethanex ▇▇▇▇▇▇▇▇▇▇ and
the
Buyer Group to be dated as of the Phase I Closing Date, pursuant
to which
the Phase I Escrow Amount, the Phase II Escrow Amount and the Phase
III
Escrow Amount shall be deposited into the Indemnity Escrow Account
as set
forth in this Agreement.
|
|
(xx)
|
“Escrow
Period”
shall mean eighteen (18) months following the last to occur of the
Phase I
Closing, the Phase II Closing and the Phase III
Closing.
|
|
(xxi)
|
“FTC”
shall mean the Federal Trade
Commission.
|
|
(xxii)
|
“Funded
Debt”
shall mean, without duplication, (a) all obligations of Seller under
indebtedness for borrowed money or with respect to deposits or advances
of
any kind (other than advances due from customers incurred in the
ordinary
course of business and consistent with past practice), (b) all obligations
of Seller evidenced by bonds, debentures, notes or similar instruments,
(c) all obligations of Seller upon which interest charges are paid,
(d)
all obligations of Seller in respect of capitalized leases that,
individually, involve an aggregate future liability in excess of
$5,000 or
for the deferred purchase price of goods or services (other than
trade
payables or accruals incurred in the ordinary course of business
and
consistent with past practice), (e) all obligations of Seller in
respect
of banker’s acceptances or letters of credit issued or created for the
account of Seller, (f) all indebtedness or obligations of the types
referred to in the preceding clauses (a) through (e) of any other
Person
secured by any Encumbrance on any assets of Seller, even though such
Seller has not assumed or otherwise become liable for the payment
thereof,
(g) all guarantees by Seller of obligations of the type described
in
clauses (a) through (f) above of any other Person, and (h) payment
obligations in respect of interest under any interest rate swap or
other
hedge agreement or arrangement entered into by Seller with respect
to any
indebtedness or obligation described in clauses (a) through (g) above.
“Funded
Debt”
shall include the Phase I Funded Debt, the Phase II Funded Debt,
the Phase
III Funded Debt and the Owned Real Property Funded
Debt.
|
|
(xxiii)
|
“GAAP”
shall mean generally accepted accounting principles as in effect
from time
to time in the United States of
America.
|
|
(xxiv)
|
“Governmental
Authority”
shall mean the government of the United States of America and any
state,
commonwealth, territory or possession thereof and any political
subdivision or quasi-governmental authority of any of the same, including,
but not limited to, courts, tribunals, departments, commissions,
bureaus,
agencies, boards, counties, municipalities, provinces, parishes and
other
instrumentalities.
|
4
|
(xxv)
|
“Governmental
Authorizations”
shall mean, collectively, all authorizations, agreements, licenses,
permits, approvals, easements, registrations, qualifications, leases,
variances and similar rights for and with respect to the construction,
ownership or operation of the Seller obtained from any Governmental
Authority or pursuant to any Legal
Requirements.
|
|
(xxvi)
|
“Hammer
Mill Cost”
shall mean the estimated aggregate cost of the actual hammer mill
and
ancillary equipment and all related installation costs (including
but not
limited to hammer ▇▇▇▇▇, baghouses, blowers, scalpers, structural
towers
and foundation, pneumatic conveying, electrical and controls) that
will not be incurred by Seller as a result of the installation of
the
Fractionation Plant, such avoided costs to be mutually determined
by
Seller and Ethanex. If such Hammer Mill Cost is not mutually determined
by
Seller and Ethanex at least 45 days prior to the Phase II Closing
Date,
then Seller and Ethanex shall immediately engage, and shall use their
reasonable best efforts to cause, the Independent Engineer to determine
the Hammer Mill Cost not later than five (5) days prior to the Phase
II
Closing Date, which determination shall be final and binding; provided
that in no event shall the Phase II Closing occur until the Hammer
Mill
Cost has been finally determined either by mutual agreement of Ethanex
and
Seller or by a determination of the Independent
Engineer.
|
|
(xxvii)
|
“Hammer
Mill Difference”
shall mean the difference between (i) the Hammer Mill Cost and (ii)
the
out-of-pocket costs of any temporary hammer ▇▇▇▇▇ utilized in connection
with the Completion of the Phase II Plan, which categories of cost
shall
be mutually agreed upon by Ethanex and Seller.
|
|
(xxviii)
|
“Hazardous
Material”
shall mean any hazardous material, pollutant, contaminant, waste,
toxic
substance, hazardous substance or nuisance substance which is regulated
by
or forms the basis of liability now or hereafter under any Environmental
Laws.
|
|
(xxix)
|
“HSR
Act”
shall mean the ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Antitrust Improvements Act of 1976,
as
amended, and the rules and regulations promulgated thereunder as
in effect
from time to time.
|
|
(xxx)
|
“Intellectual
Property”
shall mean trademarks, trade names, service marks, service names,
fictitious names, logos and Internet domain names, together with
all
goodwill, registrations and applications related to the foregoing;
patents
and industrial designs (including any continuations, divisionals,
continuations-in-part, renewals, reissues, and applications for any
of the
foregoing); copyrights (including any registrations and applications
for
any of the foregoing); computer software and related documentation;
mask
works and registrations and applications for registrations thereof;
trade
secrets and confidential business information (including research
and
development, know-how, data, databases, customer and supplier lists,
pricing and cost information, and business and marketing plans and
proposals); and all other intellectual property and proprietary
rights.
|
5
|
(xxxi)
|
“Interim
Financials”
shall mean the unaudited balance sheet, statement of operations and
statement of cash flows of Seller as of and for the quarterly period
ending March 31, 2008, including the notes
thereto.
|
|
(xxxii)
|
“Inventory”
shall mean raw
materials, work-in-process, finished goods, manufacturing supplies
and
spare parts, to the extent owned by Seller and to be included in
the
Purchased Assets, each of a type and nature historically associated
with
operations of the Existing Plant and reflected in the Annual Financial
Statements with respect to the Phase I Assets or, with respect to
the
Phase II Assets and the Phase III Assets, that would be consistent
with
the type and nature associated with a project similar to the Phase
II Plan
and the Phase III Plan and with the manner in which the Phase I Assets
were reflected in the Annual Financial Statements, and shall include,
without limitation, corn, enzymes, chemicals, denaturants, wet or
dry
distillers grains, and ethanol.
|
|
(xxxiii)
|
“Knowledge
of Ethanex”
shall mean the actual knowledge of ▇▇▇▇▇▇ ▇▇▇▇▇, III, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
and
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇.
|
|
(xxxiv)
|
“Legal
Requirements”
shall mean any currently existing statute, ordinance, code, law,
rule,
regulation, permit or permit condition, administrative or judicial
decree,
order or other requirement, standard or procedure enacted or adopted
by
any Governmental Authority, including judicial decisions applying
or
interpreting common law or statutory
law.
|
|
(xxxv)
|
“Liability”
shall mean any liability (whether known or unknown, whether asserted
or
unasserted, whether absolute or contingent, whether accrued or unaccrued,
whether liquidated or unliquidated, and whether due or to become
due and
regardless of when or by whom asserted), including, without limitation,
any liability for Taxes.
|
|
(xxxvi)
|
“Lien”
shall mean any mortgage, lien (statutory or otherwise), security
interest,
security agreement, conditional sale or other title retention agreement,
pledge, option, charge, assessment, restrictive agreement, restriction,
encumbrance, adverse interest, adverse claim, voting agreement,
restriction on transfer or any exception to or defect in title or
other
ownership interest.
|
|
(xxxvii)
|
“Material
Adverse Effect”
means any change, effect, event, occurrence, state of facts, development
or circumstance that, individually or in the aggregate with any other
change, effect, event, occurrence, state of facts or development,
has had,
or would reasonably be expected to have, a material adverse effect
on the
business, assets, liabilities, condition (financial or otherwise)
or
results of operations of the Seller or would reasonably be expected
to
prevent or materially impede the consummation by Seller of the
Transactions; provided,
however,
that a Material Adverse Effect will not be deemed to have occurred
if such
change, effect, event, occurrence, state of facts, development or
circumstance results from: (i) economic conditions generally in the
United
States (provided that the Seller is not disproportionately affected
thereby), (ii) any action taken by the Seller that is required by
the
terms of this Agreement or the Related Agreement or is taken with
Ethanex’s express prior written consent, (iii) conditions
generally affecting the industry in which the Seller participates
(provided that the Seller is not disproportionately affected thereby),
or
(iv) any changes in GAAP after the date hereof;
provided,
further
that solely for purposes of determining whether there has been a
“Material
Adverse Effect” for purposes of Section 9(b)(xv), a Material Adverse
Effect will not be deemed to have occurred if such change, effect,
event,
occurrence, state of facts, development or circumstance (x) results
from,
in addition to the matters set forth in the immediately preceding
proviso:
(I) national or international political or social conditions, including
the engagement by the United States in hostilities or the escalation
thereof (provided that the Seller is not disproportionately affected
thereby) or (II) a general decline or disruption in financial, banking,
or
securities markets or (y) is cured by or on behalf of the Seller
before
the Phase I Closing Date.
|
6
|
(xxxviii)
|
“Net
Phase II Costs”
shall mean the aggregate amount by which the Phase II Completion
Costs are
either decreased (the amount of such decrease, the “Negative
Phase II Net Cost Amount”)
or increased (the amount of such increase, the “Positive
Phase II Net Cost Amount”)
solely because of complying with an Ethanex Request, including but
not
limited to any increase or decrease in the construction cost required
for
the Phase II Plan to operate with the contemplated Fractionation
Plant.
|
|
(xxxix)
|
“Net
Phase III Costs”
shall mean the aggregate amount by which the Phase III Completion
Costs
are either decreased (the amount of such decrease, the “Negative
Phase III Net Cost Amount”)
or increased (the amount of such increase, the “Positive
Phase III Net Cost Amount”)
solely because of complying with an Ethanex Request, including but
not
limited to any increase or decrease in the construction cost required
for
the Phase III Plan to operate with the contemplated Fractionation
Plant.
|
|
(xl)
|
“NOV
Violations”
shall mean, collectively, those notices of violation set forth in
that
certain letter to Seller from the United States Environmental Protection
Agency, Article Number ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ 9720 8490, dated on or around
June
8, 2007, and those certain letters to Seller from the Nebraska Department
of Environmental Quality, dated May 5, 2007 and September 17,
2007.
|
|
(xli)
|
“Person”
shall mean any natural person, corporation, partnership, trust,
unincorporated organization, association, limited liability company,
Governmental Authority or other
entity.
|
|
(xlii)
|
“Phase
I Closing Date Inventory”
shall mean the Inventory as of the Phase I Closing, valued in accordance
with Section 4(d)(i)(A), but only to the extent such Inventory will
be
included in the Phase I Assets.
|
|
(xliii)
|
“Phase
I Escrow Make-Up”
means an amount equal to the difference between (i) all amounts recovered
by Ethanex, the Buyer Group or Ethanex ▇▇▇▇▇▇▇▇▇▇ from the Indemnity
Escrow Account prior to the Phase II Closing and (ii) the Phase I
Escrow
Amount (provided that in no event shall the Phase I Escrow Make-Up
exceed
$1,000,000.00).
|
7
|
(xliv)
|
“Phase
I Indemnification Excess Amount”
shall mean the amount equal to any Losses finally determined and
due and
owing to Ethanex, the Buyer Group or Ethanex ▇▇▇▇▇▇▇▇▇▇ pursuant
to
Article 11 hereof but not paid to them as of the Phase II Closing
Date
after (i) exhausting the Phase I Escrow Amount, (ii) setting off
all such
amount against any amounts owing from any of Ethanex, the Buyer Group
or
Ethanex ▇▇▇▇▇▇▇▇▇▇ to the Seller pursuant to the terms of this Agreement
or the Related Agreements (other than the Purchase Price) as of the
Phase
II Closing Date (the “Set-off
Amount”),
and (iii) recovering such Losses or any portion thereof directly
from
Seller.
|
|
(xlv)
|
“Phase
I Indemnification Residual Excess Amount”
shall mean any amount of the Phase I Indemnification Excess Amount
that
remains unsatisfied after making a reduction to the Phase II Purchase
Price as contemplated by Section 4(b)(iv)(A) hereof.
|
|
(xlvi)
|
“Phase
I Inventory Target”
shall mean $2,000,000.00.
|
|
(xlvii)
|
“Phase
II Closing Date Inventory”
shall mean the Inventory valued as of the Phase II Closing, valued
in
accordance with Section 4(d)(ii)(A), but only to the extent such
Inventory
will be included in the Phase II
Assets.
|
|
(xlviii)
|
“Phase
II Escrow Make-Up”
means an amount equal to the difference between (i) all Losses recovered
by Ethanex, the Buyer Group or Ethanex ▇▇▇▇▇▇▇▇▇▇ from the Indemnity
Escrow Account after the Phase II Closing but prior to the Phase
III
Closing and (ii) $2,000,000.00 (provided that the Phase II Escrow
Make-Up
shall in no event exceed
$2,000,000.00).
|
|
(xlix)
|
“Phase
II Indemnification Amount”
shall mean the amount equal to any Losses finally determined and
due and
owing to Ethanex, the Buyer Group or Ethanex ▇▇▇▇▇▇▇▇▇▇ pursuant
to
Article 11 hereof but not paid to them as of the Phase III Closing
Date
(which may include any Phase I Indemnification Residual Excess Amount)
after (i) exhausting the Phase I Escrow Amount, (ii) exhausting the
Phase
II Escrow Amount, (ii) applying any Set-off Amount as of the Phase
III
Closing, and (iii) recovering such Losses or any portion thereof
directly
from the Seller.
|
|
(l)
|
“Phase
II Plan”
means that plan for the development and completion of the plan relating
to
the Phase II Assets set forth on Exhibit
F
attached hereto.
|
|
(li)
|
“Phase
II Inventory Target”
shall mean $2,000,000.00.
|
|
(lii)
|
“Phase
III Closing Date Inventory”
shall mean the Inventory valued as of the Phase III Closing, valued
in
accordance with Section 4(d)(iii)(A), but only to the extent such
Inventory will be included in the Phase III
Assets.
|
|
(liii)
|
“Phase
III Inventory Target”
shall mean $2,000,000.00.
|
|
(liv)
|
“Phase
III Plan”
means that plan for the development and completion of the plan relating
to
the Phase III Assets set forth on Exhibit
G
attached hereto.
|
8
|
(lv)
|
“Process
Specifications”
means those process specification set forth with respect to the Phase
II
Plan and the Phase III Plan on Exhibit
I.
|
|
(lvi)
|
“Purchased
Assets”
means collectively the Phase I Assets, the Phase II Assets, the Phase
III
Assets, the Owned Real Property and the Loop Real
Property.
|
|
(lvii)
|
“Realized
Value of the LB 536 Credits”
shall mean the actual value to Phase I Buyer for those certain credits
allowed for motor fuel taxes pursuant to Nebraska Legislative LB
536, as
promulgated as of the date of this Agreement, as determined by the
net
price for which Phase I Buyer is able to sell such credits to third
parties.
|
|
(lviii)
|
“Regulation
S-X”
shall mean Regulation S-X, as may be amended from time to time, adopted
under the Securities Act.
|
|
(lix)
|
“Related
Agreement”
shall mean each of (i) the Start-Up Services Agreement, (ii) the
Escrow
Agreement, (iii) the Assumption Agreements, (iv) the Warranty Deed,
(v)
the warranty deed regarding the Loop Real Property, (vi) the Investor
Rights Agreement, and (vii) any other written agreement or certificate,
other than this Agreement, that is executed and delivered by Ethanex,
Ethanex ▇▇▇▇▇▇▇▇▇▇, the Buyers, as the case may be, and Seller pursuant
to
or contemporaneously with this
Agreement.
|
|
(lx)
|
“Required
Stockholder Approval”
shall mean the requisite approval of the stockholders of Ethanex
(i) to
amend the certificate of incorporation of Ethanex to increase the
authorized shares of capital stock of Ethanex and to make any other
changes to the terms of the capital stock of Ethanex (including
authorizing new and additional classes of capital stock), as may
be
necessary to allow the Stock Consideration to be issued and to permit
the
debt and equity financing necessary to complete the Transactions
to be
obtained and (ii) as otherwise required by applicable laws and regulations
to permit the consummation of the
Transactions.
|
|
(lxi)
|
“SEC”
shall mean the United States Securities and Exchange
Commission.
|
|
(lxii)
|
“Seller
Confidential Information”
shall mean all information relating to the business and affairs of
Seller
or its Affiliates other than information that is as of the date hereof
or
subsequently becomes generally available to the public through no
fault
of, or breach of any confidentiality obligation by, the Buyers, Ethanex
▇▇▇▇▇▇▇▇▇▇, or Ethanex or any of their respective Affiliates, agents
or
representatives.
|
|
(lxiii)
|
“Seller
Financing Requirement”
shall mean that, with respect to the Phase II Plan, Seller shall
have
obtained third-party financing in an amount sufficient to complete
the
Phase II Plan on or prior to the Phase II Deadline or, with respect
to the
Phase III Plan, Seller shall have obtained third-party financing
in an
amount sufficient to complete the Phase III Plan on or prior to the
Phase
III Deadline.
|
|
(lxiv)
|
“Seller’s
Knowledge”
or “Knowledge
of Seller”
shall mean the actual knowledge of ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇
▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇.
|
9
|
(lxv)
|
“Start-Up
Services Agreement”
shall mean that certain agreement by and between Seller and Phase
I Buyer
in form and substance mutually agreed upon by Seller and Ethanex,
which
shall include terms including but not limited to those terms set
forth on
Exhibit
H
hereto.
|
|
(lxvi)
|
“Stock
Consideration”
shall mean collectively the Phase II Stock Consideration and the
Phase III
Stock Consideration.
|
|
(lxvii)
|
“Transactions”
shall mean, collectively, (i) the purchase and sale of the Purchased
Assets (including the Owned Real Property and the Loop Real Property),
(ii) the assumption of the Assumed Liabilities and (iii) the other
transactions contemplated by this Agreement and the Related Agreements.
|
(b) Interpretation.
In this
Agreement, unless a clear contrary intention appears: (i) the singular number
includes the plural number and vice versa; (ii) reference to any Person includes
such Person’s successors and assigns but, if applicable, only if such successors
and assigns are not prohibited by this Agreement, and reference to a Person
in a
particular capacity excludes such Person in any other capacity or individually;
(iii) reference to any gender includes each other gender; (iv) reference to
any
agreement, document or instrument means such agreement, document or instrument
as amended or modified and in effect from time to time in accordance with the
terms thereof; (v) reference to any Legal Requirement means such Legal
Requirement as amended, modified, codified, replaced or reenacted, in whole
or
in part, and in effect from time to time, including rules and regulations
promulgated thereunder, and reference to any section or other provision of
any
Legal Requirement means that provision of such Legal Requirement from time
to
time in effect and constituting the substantive amendment, modification,
codification, replacement or reenactment of such section or other provision;
(vi) “hereunder,” “hereof,” “hereto,” and words of similar import shall be
deemed references to this Agreement as a whole and not to any particular
Article, Section or other provision hereof; (vii) “including” (and with
correlative meaning “include”) means including without limiting the generality
of any description preceding such term; (viii) “or” is used in the inclusive
sense of “and/or”; (ix) with respect to the determination of any period of time,
“from” means “from and including” and “to” means “to but excluding”; and (x)
references to documents, instruments or agreements shall be deemed to refer
as
well to all addenda, exhibits, schedules or amendments thereto.
(c)
Additional Defined Terms. The following terms are defined in the respective
Sections set forth below:
|
Term
|
Section
|
|
|
Agreement
|
Recitals
|
|
|
Annual
Financial Statements
|
5(b)(i)(A)
|
|
|
Assumed
Liabilities
|
3(c)
|
|
|
Buyers
|
Recitals
|
|
|
Buyer
Group
|
Recitals
|
|
|
Cap
|
11(d)(ii)
|
|
|
Cash
Consideration
|
4(b)(i)(C)
|
|
|
Closings
|
4(a)
|
|
|
Debt
Engagement Letter
|
6(b)(v)
|
|
|
Department
of Revenue
|
7(ff)
|
|
|
Equity
Engagement Letters
|
6(b)(v)
|
|
|
Ethanex
|
Recitals
|
|
|
Ethanex
Recommendation Change
|
7(x)(iv)
|
10
|
Ethanex
▇▇▇▇▇▇▇▇▇▇
|
Recitals
|
|
|
Ethanex
Schedules
|
6(b)
|
|
|
Ethanex
SEC Documents
|
6(b)(iv)
|
|
|
Ethanex
Stockholder Meeting
|
7(x)(iii)
|
|
|
Exchange
Act
|
6(b)(iv)
|
|
|
Extended
Phase II Deadline
|
7(j)(iii)
|
|
|
Extended
Phase III Deadline
|
7(k)(iii)
|
|
|
Excluded
Assets
|
2(d)
|
|
|
Excluded
Liabilities
|
3(d)
|
|
|
Existing
Plant
|
Recitals
|
|
|
Financing
Documents
|
7(r)(iv)
|
|
|
Financing
Letters
|
6(b)(v)
|
|
|
Fractionation
Plant
|
7(aa)
|
|
|
Hired
Employees
|
7(m)
|
|
|
Indemnitee
|
11(c)(i)
|
|
|
Indemnitor
|
11(c)(i)
|
|
|
Indemnity
Escrow Account
|
4(b)(iii)(B)
|
|
|
Independent
Accountant
|
4(d)(i)(A)
|
|
|
Investor
Rights Agreement
|
9(c)(v)
|
|
|
Inventory
Adjustment Reports
|
4(d)(iii)(A)
|
|
|
JV
Agreement
|
7(w)
|
|
|
Latest
Balance Sheet
|
5(b)(i)(A)
|
|
|
Latest
Financial Statements
|
5(b)(i)(A)
|
|
|
Loop
Real Property
|
9(b)(vi)
|
|
|
Losses
|
11(b)(i)
|
|
|
Material
Consents
|
9(a)(i)
|
|
|
Material
Contracts
|
5(b)(vii)
|
|
|
Minimum
Loss
|
11(d)(i)(A)
|
|
|
Monthly
Financials
|
7(r)(i)
|
|
|
Negative
Phase II Net Cost Amount
|
1(a)(xxxviii)
|
|
|
Negative
Phase III Net Cost Amount
|
1(a)(xxxix)
|
|
|
Net
Cost Adjustment Reports
|
4(d)(iii)(B)
|
|
|
Owned
Real Property
|
Recitals
|
|
|
Owned
Real Property Funded Debt
|
7(p)
|
|
|
Permits
|
5(b)(xiii)
|
|
|
Permitted
Encumbrances
|
5(b)(iv)(K)
|
|
|
Phase
I Assets
|
Recitals
|
|
|
Phase
I Assumed Liabilities
|
3(a)
|
|
|
Phase
I Buyer
|
Recitals
|
|
|
Phase
I Closing
|
4(a)
|
|
|
Phase
I Closing Certificate
|
7(p)
|
|
|
Phase
I Closing Date
|
4(a)
|
|
|
Phase
I Escrow Amount
|
4(b)(iii)(C)
|
|
|
Phase
I Financing Condition
|
9(b)(iv)
|
|
|
Phase
I Funded Debt
|
7(p)
|
|
|
Phase
I Inventory Adjustment Report
|
4(d)(i)(A)
|
|
|
Phase
I Inventory Objection Notice
|
4(d)(i)(A)
|
|
|
Phase
I Purchase Price
|
4(b)(i)(A)
|
|
|
Phase
I Termination Date
|
12(a)(ii)
|
11
|
Phase
II Adjustment
|
4(b)(ii)(A)
|
|
|
Phase
II Assets
|
Recitals
|
|
|
Phase
II Assumed Liabilities
|
3(b)
|
|
|
Phase
II Buyer
|
Recitals
|
|
|
Phase
II Cash Consideration
|
4(b)(i)(B)
|
|
|
Phase
II Closing
|
4(a)
|
|
|
Phase
II Closing Certificate
|
7(p)
|
|
|
Phase
II Closing Date
|
4(a)
|
|
|
Phase
II Completion Cost
|
4(b)(ii)(A)
|
|
|
Phase
II Completion Date
|
4(b)(ii)(A)
|
|
|
Phase
II Escrow Amount
|
4(b)(iv)(B)
|
|
|
Phase
II Funded Debt
|
7(p)
|
|
|
Phase
II Deadline
|
4(b)(ii)(A)
|
|
|
Phase
II Inventory Adjustment Report
|
4(d)(ii)(A)
|
|
|
Phase
II Inventory Objection Notice
|
4(d)(ii)(A)
|
|
|
Phase
II Net Cost Adjustment Report
|
4(d)(ii)(B)
|
|
|
Phase
II Net Cost Objection Notice
|
4(d)(ii)(B)
|
|
|
Phase
II Premium
|
4(b)(ii)(A)
|
|
|
Phase
II Purchase Price
|
4(b)(i)(B)
|
|
|
Phase
II Stock Consideration
|
4(b)(i)(B)
|
|
|
Phase
III Adjustment
|
4(b)(ii)(C)
|
|
|
Phase
III Assets
|
Recitals
|
|
|
Phase
III Assumed Liabilities
|
3(c)
|
|
|
Phase
III Buyer
|
Recitals
|
|
|
Phase
III Cash Consideration
|
4(b)(i)(C)
|
|
|
Phase
III Closing
|
4(a)
|
|
|
Phase
III Closing Certificate
|
7(p)
|
|
|
Phase
III Closing Date
|
4(a)
|
|
|
Phase
III Completion Cost
|
4(b)(ii)(C)
|
|
|
Phase
III Completion Date
|
4(b)(ii)(C)
|
|
|
Phase
III Deadline
|
4(b)(iii)(C)
|
|
|
Phase
III Escrow Amount
|
4(b)(v)(B)
|
|
|
Phase
III Funded Debt
|
7(p)
|
|
|
Phase
III Inventory Adjustment Report
|
4(d)(iii)(A)
|
|
|
Phase
III Inventory Objection Notice
|
4(d)(iii)(A)
|
|
|
Phase
III Net Cost Adjustment Report
|
4(d)(iii)(B)
|
|
|
Phase
III Net Cost Objection Notice
|
4(d)(iii)(B)
|
|
|
Phase
III Premium
|
4(b)(ii)(C)
|
|
|
Phase
III Purchase Price
|
4(b)(i)(C)
|
|
|
Phase
III Stock Consideration
|
4(b)(i)(C)
|
|
|
Plan
or Plans
|
5(b)(x)(A)
|
|
|
Positive
Phase II Net Cost Amount
|
1(a)(xxxviii)
|
|
|
Positive
Phase III Net Cost Amount
|
1(a)(xxxix)
|
|
|
Purchase
Price
|
4(b)(i)
|
|
|
RE
LLC
|
Recitals
|
|
|
Real
Property Laws
|
5(b)(iv)(F)
|
|
|
Recommendation
|
7(x)(iv)
|
|
|
Recoverable
Costs
|
4(b)(ii)(C)
|
|
|
Returns
|
5(b)(v)(A)
|
12
|
Schedules
|
Article
5
|
|
|
Securities
Act
|
5(b)(xix)
|
|
|
Seller
|
Recitals
|
|
|
Seller
Consents
|
5(a)(iii)
|
|
|
Seller’s
Expense Statement
|
13
|
|
|
Seller
Phase I Real Estate Taxes
|
7(v)
|
|
|
Seller
Phase II Real Estate Taxes
|
7(v)
|
|
|
Set-off
Amount
|
1(a)(x1iv)
|
|
|
775
Agreement
|
7(ff)
|
|
|
775
Date
|
7(ff)
|
|
|
Shareholder
Approval Document
|
7(x)(i)
|
|
|
Surveys
|
9(b)(x)(C)
|
|
|
S-X
Auditor
|
7(r)(iii)
|
|
|
S-X
2007 Audited Financials
|
7(r)(iii)
|
|
|
TIF
Agreement
|
7(hh)
|
|
|
TIF
Assignment Date
|
7(hh)
|
|
|
TIF
Determination Date
|
7(hh)
|
|
|
Third-Party
Claim
|
11(c)(i)
|
|
|
Title
Commitments
|
9(b)(x)(A)
|
|
|
Title
Company
|
9(b)(x)(A)
|
|
|
Title
Policies
|
9(b)(x)(B)
|
|
|
Unpaid
Cost to Complete Phase II
|
4(b)(ii)(E)
|
|
|
Unpaid
Cost to Complete Phase III
|
4(b)(ii)(E)
|
|
|
Unrecovered
Phase II Costs
|
4(b)(ii)(A)
|
|
|
WARN
Act
|
5(b)(ix)(C)
|
|
|
Warranty
Deed
|
9(b)(x)(D)
|
|
|
West
LB
|
6(b)(v)
|
|
2.
|
PURCHASE
AND SALE OF ASSETS
|
|
(a)
|
Phase
I Closing
|
|
(i)
|
Purchased
Assets.
At
the Phase I Closing and in reliance upon the representations, warranties
and agreements and subject to the terms and conditions set forth
in this
Agreement, (A) Seller shall sell, assign, transfer, convey and deliver
to
Phase I Buyer, free and clear of all Liens, other than Permitted
Encumbrances, and Phase I Buyer shall purchase and accept from Seller,
all
of Seller’s right, title and interest in and to, including all proceeds
therefrom, all of the Phase I Assets and (B) Seller shall sell, assign,
transfer, convey and deliver to RE LLC, free and clear of all Liens,
other
than Permitted Encumbrances, and RE LLC shall purchase and accept
from
Seller, all of Seller’s right, title and interest in and to the Owned Real
Property.
|
|
(ii)
|
Limitations
on Assignability.
Notwithstanding anything in this Agreement to the contrary, to the
extent
that any of the Assumed Contracts included in the Phase I Assets
are not
assignable without the consent of a third party, neither this Agreement,
nor any of the instruments or documents executed and delivered in
connection herewith or contemplated hereby, shall constitute an assignment
or assumption thereof, or attempted assignment or attempted assumption
thereof, if such assignment or attempted assignment, or assumption
or
attempted assumption, would constitute a breach thereof. Without
in any
way limiting Seller’s obligation hereunder to obtain all consents and
waivers necessary for the sale, transfer, assignment and delivery
of the
Assumed Contracts included within the Phase I Assets to the Phase
I Buyer
hereunder, if any such consent is not obtained or if such assignment
is
not permitted irrespective of consent and if the Phase I Closing
shall
occur, the Seller shall cooperate with the Phase I Buyer following
the
Phase I Closing Date in any reasonable arrangement designed to provide
the
Phase I Buyer with the rights and benefits (subject to the obligations)
under any such Assumed Contract, including enforcement for the benefit
of
the Phase I Buyer (at such Buyer’s cost) of any and all rights of the
Seller against any other party arising out of any breach or cancellation
of any such Assumed Contract by such other party and, if requested
by the
Phase I Buyer, acting as an agent on behalf of such Phase I Buyer
or as
such Phase I Buyer shall otherwise reasonably require (and Seller
shall
have no liability for actions taken in good faith on behalf of Phase
I
Buyer as its agent that were within the scope of such agency
relationship).
|
13
|
(b)
|
Phase
II Closing
|
|
(i)
|
Purchased
Assets.
.
At
the Phase II Closing and in reliance upon the representations, warranties
and agreements and subject to the terms and conditions set forth
in this
Agreement, (A) Seller shall sell, assign, transfer, convey and deliver
to
Phase II Buyer, free and clear of all Liens, other than Permitted
Encumbrances, and Phase II Buyer shall purchase and accept from Seller,
all of Seller’s right, title and interest in and to, including all
proceeds therefrom, all of the Phase II Assets and (B) Seller shall
sell,
assign, transfer, convey and deliver to RE LLC, free and clear of
all
Liens, other than Permitted Encumbrances, and RE LLC shall purchase
and
accept from Seller, all of Seller’s right, title and interest in and to
the Loop Real Property.
|
|
(ii)
|
Limitations
on Assignability.
Notwithstanding anything in this Agreement to the contrary, to the
extent
that any of the contracts included in the Phase II Assets are not
assignable without the consent of a third party, neither this Agreement,
nor any of the instruments or documents executed and delivered in
connection herewith or contemplated hereby, shall constitute an assignment
or assumption thereof, or attempted assignment or attempted assumption
thereof, if such assignment or attempted assignment, or assumption
or
attempted assumption, would constitute a breach thereof. Without
in any
way limiting Seller’s obligation hereunder to obtain all consents and
waivers necessary for the sale, transfer, assignment and delivery
of the
contracts included within the Phase II Assets to the Phase II Buyer
hereunder, if any such consent is not obtained or if such assignment
is
not permitted irrespective of consent and if the Phase II Closing
shall
occur, the Seller shall cooperate with the Phase II Buyer following
the
Phase II Closing Date in any reasonable arrangement designed to provide
the Phase II Buyer with the rights and benefits (subject to the
obligations) under any such contract, including enforcement for the
benefit of the Phase II Buyer (at such Buyer’s cost) of any and all rights
of the Seller against any other party arising out of any breach or
cancellation of any such contract by such other party and, if requested
by
the Phase II Buyer, acting as an agent on behalf of such Phase II
Buyer or
as such Phase II Buyer shall otherwise reasonably require (and Seller
shall have no liability for actions taken in good faith on behalf
of Phase
II Buyer as its agent that were within the scope of such agency
relationship).
|
14
|
(c)
|
Phase
III Closing.
|
|
(i)
|
Purchased
Assets.
At the Phase III Closing and in reliance upon the representations,
warranties and agreements and subject to the terms and conditions
set
forth in this Agreement, Seller shall sell, assign, transfer, convey
and
deliver to Phase III Buyer, free and clear of all Liens, other than
Permitted Encumbrances, and Phase III Buyer shall purchase and accept
from
Seller, all of Seller’s right, title and interest in and to, including all
proceeds therefrom, all Phase III Assets.
|
|
(ii)
|
Limitations
on Assignability.
Notwithstanding anything in this Agreement to the contrary, to the
extent
that any of the contracts included in the Phase III Assets are not
assignable without the consent of a third party, neither this Agreement,
nor any of the instruments or documents executed and delivered in
connection herewith or contemplated hereby, shall constitute an assignment
or assumption thereof, or attempted assignment or attempted assumption
thereof, if such assignment or attempted assignment, or assumption
or
attempted assumption, would constitute a breach thereof. Without
in any
way limiting Seller’s obligation hereunder to obtain all consents and
waivers necessary for the sale, transfer, assignment and delivery
of the
contracts included within the Phase III Assets to the Phase III Buyer
hereunder, if any such consent is not obtained or if such assignment
is
not permitted irrespective of consent and if the Phase III Closing
shall
occur, the Seller shall cooperate with the Phase III Buyer following
the
Phase III Closing Date in any reasonable arrangement designed to
provide
the Phase III Buyer with the rights and benefits (subject to the
obligations) under any such contract, including enforcement for the
benefit of the Phase III Buyer (at such Buyer’s cost) of any and all
rights of the Seller against any other party arising out of any breach
or
cancellation of any such contract by such other party and, if requested
by
the Phase III Buyer, acting as an agent on behalf of such Phase III
Buyer
or as such Phase III Buyer shall otherwise reasonably require (and
Seller
shall have no liability for actions taken in good faith on behalf
of Phase
III Buyer as its agent that were within the scope of such agency
relationship).
|
|
(d)
|
Excluded
Assets.
Seller is not selling, and Buyers are not purchasing, any of the
following
assets, all of which shall be retained by Seller (the “Excluded
Assets”):
|
|
(i)
|
Equity
Interests.
Any equity interest in Seller;
|
|
(ii)
|
Claims.
Any claims (including benefits arising therefrom) which relate to
Liabilities of Seller or its Affiliates or their officers, directors,
employees or agents, which are not Assumed Liabilities or which relate
to
any of the Excluded Assets;
|
|
(iii)
|
Agreement
Rights.
Rights of Seller or any of its Affiliates under this Agreement and
any
Related Agreements;
|
15
|
(iv)
|
Company
Records.
The minute books, seal and other records having to do with the
organization of Seller;
|
|
(v)
|
Insurance.
All insurance policies (including the proceeds thereof) owned by
Seller or
its Affiliates;
|
|
(vi)
|
Employee
Benefit Plans; Plan Assets.
All employee benefit plans which cover, are maintained for the benefit
of
or relate to any of the employees of the Business and assets held
in trust
or otherwise by or for the benefit of any current or former employees
of
Seller or its Affiliates under such
plan;
|
|
(vii)
|
Tax
Sharing Agreement; Tax Records.
Any rights or benefits under any tax sharing agreements and the income
Tax
Returns and other original income tax records of Seller or its Affiliates;
and
|
|
(viii)
|
Other
Excluded Assets.
All assets set forth with particularity on Schedule
2(d)(viii).
|
|
3.
|
LIABILITIES
|
|
(a)
|
Assumption
of Liabilities in Phase I.
At
the Phase I Closing, Phase I Buyer and RE LLC shall assume the following
(and only the following) Liabilities of Seller (collectively, the
“Phase
I Assumed Liabilities”):
|
|
(i)
|
Purchased
Asset Liabilities Subsequent to Closing.
All Liabilities relating to, associated with or arising from Phase
I
Buyer’s and RE LLC’s ownership, possession, use, operation or sale or
other disposition after the Phase I Closing Date of any of the Phase
I
Assets and Owned Real Property, respectively, and, for the avoidance
of
doubt, the parties agree that, after the Phase I Closing, Phase I
Buyer
shall assume and be responsible for all risk of operation, condition,
fitness, performance and nonperformance of the Phase I Assets, and
that
Seller shall have no liability or obligation with respect thereto,
or with
respect to the operation or condition of the Phase I Assets, including
no
liability or obligation as a result of the Phase I Assets failing
to
operate as designed or the failure of the Phase I Assets to meet
any
specification or operating parameters following the Phase I Closing
Date;
|
|
(ii)
|
Contract,
License and Lease Liabilities.
All Liabilities of Seller or its Affiliates under each of the Assumed
Contracts to the extent any such Liability is related to the operation
of
the Business from and after the Phase I Closing
Date;
|
|
(iii)
|
Liabilities
Agreed Upon by Parties.
Liabilities, if any, set forth with particularity on Schedule
3(a)(iii);
and
|
|
(iv)
|
Transfer
Taxes.
One half of the amount of all Liabilities for transfer, recordation,
sales, mortgage deed and similar taxes, duties or levies arising
solely as
a result of the transfer of the Phase I Assets and the Owned Real
Property
to Phase I Buyer and RE LLC, respectively, by virtue of the consummation
of the Transactions contemplated
hereby.
|
|
(b)
|
Assumption
of Liabilities in Phase II.
At
the Phase II Closing, Phase II Buyer and RE LLC shall assume the
following
(and only the following) Liabilities of Seller (collectively, the
“Phase
II Assumed Liabilities”):
|
16
|
(i)
|
Purchased
Asset Liabilities Subsequent to Closing.
All Liabilities relating to, associated with or arising from Phase
II
Buyer’s and RE LLC’s ownership, possession, use, operation or sale or
other disposition after the Phase II Closing Date of any of the Phase
II
Assets and Loop Real Property, respectively, and, for the avoidance
of
doubt, the parties agree that, after the Phase II Closing, Phase
II Buyer
shall assume and be responsible for all risk of operation, condition,
fitness, performance and nonperformance of the Phase II Assets, and
that
Seller shall have no liability or obligation with respect thereto,
or with
respect to the operation or condition of the Phase II Assets, including
no
liability or obligation as a result of the Phase II Assets failing
to
operate as designed or the failure of the Phase II Assets to meet
any
specification or operating parameters following the Phase II Closing
Date;
|
|
(ii)
|
Contract,
License and Lease Liabilities.
All Liabilities of Seller or its Affiliates under each of the contracts
assumed by Phase II Buyer pursuant to Section 3(b)(iii) to the extent
any
such Liability is related to the operation of the Business from and
after
the Phase II Closing Date;
|
|
(iii)
|
Liabilities
Agreed Upon by Parties.
Liabilities, if any, set forth with particularity on Schedule
3(b)(iii);
and
|
|
(iv)
|
Transfer
Taxes.
One half of the amount of all Liabilities for transfer, recordation,
sales, mortgage deed and similar taxes, duties or levies arising
solely as
a result of the transfer of the Phase II Assets and the Loop Real
Property
to Phase II Buyer and RE LLC, respectively, by virtue of the consummation
of the Transactions contemplated
hereby.
|
|
(c)
|
Assumption
of Liabilities in Phase III.
At
the Phase III Closing, Phase III Buyer shall assume the following
(and
only the following) Liabilities of Seller (collectively, the “Phase
III Assumed Liabilities,”
and together with the Phase I Assumed Liabilities and the Phase II
Assumed
Liabilities, the “Assumed
Liabilities”):
|
|
(i)
|
Purchased
Asset Liabilities Subsequent to Closing.
All Liabilities relating to, associated with or arising from Phase
III
Buyer’s ownership, possession, use, operation or sale or other disposition
after the Phase III Closing Date of any of the Phase III Assets and,
for
the avoidance of doubt, the parties agree that, after the Phase III
Closing, Phase III Buyer shall assume and be responsible for all
risk of
operation, condition, fitness, performance and nonperformance of
the Phase
III Assets, and that Seller shall have no liability or obligation
with
respect thereto, or with respect to the operation or condition of
the
Phase III Assets, including no liability or obligation as a result
of the
Phase III Assets failing to operate as designed or the failure of
the
Phase III Assets to meet any specification or operating parameters
following the Phase III Closing
Date;
|
|
(ii)
|
Contract,
License and Lease Liabilities.
All Liabilities of Seller or its Affiliates under each of the contracts
assumed by Phase III Buyer pursuant to Section 3(c)(iii) to the extent
any
such Liability is related to the operation of the Business from and
after
the Phase III Closing Date;
|
17
|
(iii)
|
Liabilities
Agreed Upon by Parties.
Liabilities, if any, set forth with particularity on Schedule
3(c)(iii);
and
|
|
(iv)
|
Transfer
Taxes.
One half of the amount of all Liabilities for transfer, recordation,
sales, mortgage deed and similar taxes, duties or levies arising
solely as
a result of the transfer of the Phase III Assets to Phase III Buyer
by
virtue of the consummation of the Transactions contemplated
hereby.
|
Except
for
the
Assumed Liabilities, none of Ethanex or any of the Buyers shall assume any
other
Liabilities of Seller or its Affiliates by virtue of this
Agreement.
|
(d)
|
Excluded
Liabilities. Except for the Assumed Liabilities, none of Ethanex,
Ethanex ▇▇▇▇▇▇▇▇▇▇, or any of the Buyers shall assume or be obligated
to
pay, perform or otherwise discharge (and Seller shall retain, pay,
perform
or otherwise discharge) any Liabilities related to the Business or
the
Purchased Assets (collectively, “Excluded
Liabilities”),
including the following:
|
|
(i)
|
Liabilities
Prior to Closing.
All Liabilities of the Business which arise prior to the Phase I
Closing
Date, including accounts payable and other current Liabilities of
Seller,
and any such Liabilities of any predecessor to Seller and any Person
with
respect to which Seller is a
successor-in-interest;
|
|
(ii)
|
Excluded
Asset Liabilities.
All Liabilities relating exclusively to Excluded
Assets;
|
|
(iii)
|
Liabilities
Associated with the Purchase Agreement.
All Liabilities for legal, accounting and investment banking fees
and
other expenses incurred in connection with the preparation of and
performance under this Agreement and the sale of the Purchased Assets
to
the Buyers;
|
|
(iv)
|
Seller’s
Liabilities.
Any Liabilities of Seller arising out of or relating to its performance
under this Agreement (regardless of whether such performance is required
prior to or after any Closing Date), including any Liability or obligation
arising under the indemnification obligations of Seller under Article
11;
|
|
(v)
|
Indebtedness.
Any Funded Debt;
|
|
(vi)
|
Taxes.
All Liabilities or obligations for Taxes with respect to (a) the
Business
as owned and operated by the Seller, (b) the Phase I Assets for taxable
periods, or portions thereof, ending on or before the Phase I Closing
Date, (c) the Phase II Assets for taxable periods, or portions thereof,
ending on or before the Phase II Closing Date, (d) the Phase III
Assets
for taxable periods, or portions thereof, ending on or before the
Phase
III Closing Date, (e) the Owned Real Property for taxable periods,
or
portions thereof, ending on or before the Phase I Closing Date, and
(f)
the Loop Real Property for taxable periods, or portions thereof,
ending on
or before the Phase II Closing
Date;
|
|
(vii)
|
Employee
Benefit Plans.
All Liabilities with respect to any current or former employee or
any
Plan, including, without limitation, any Plan currently or formerly
maintained or contributed to by any other entity that is or was treated
as
a single employer with Seller under Section 414 of the Code;
|
18
|
(viii)
|
Environmental
Laws.
All Liabilities pursuant to any Environmental Laws arising from or
related
to any action, event, circumstance or condition occurring or existing
prior to the Phase I Closing Date;
|
|
(ix)
|
Violations
of Law.
All Liabilities arising from or related to any compliance or noncompliance
with Legal Requirements applicable to Seller, the Business as owned
and
operated by Seller or the Owned Real Property (prior to the Phase
I
Closing Date), the Phase I Assets (prior to the Phase I Closing),
the
Phase II Assets and the Loop Real Property (prior to the Phase II
Closing), the Phase III Assets (prior to the Phase III Closing),
(other
than any such Liabilities arising from or related to any contract
to the
extent such Liabilities are being assumed by a Buyer pursuant to
Sections
3(a)(ii), 3(a)(iii), 3(b)(iii) and 3(c)(iii) above), or any Liabilities
related to or arising from or otherwise related to the NOV
Liabilities;
|
|
(x)
|
Phase
II and Phase III Completion Costs.
Subject to Sections 3(b)(i) and 3(c)(i), all Liabilities and other
costs
related to the construction of and the Completion of the Phase II
Plan or
the Completion of the Phase III Plan (except for those Liabilities
that
are expressly assumed pursuant to Sections 3(b)(i) and 3(c)(i) and
where a
member of the Buyer Group elects to assume the Completion of the
Phase II
Plan or the Phase III Plan, in which case the provisions of Section
4(b)(ii)(A) and (C) shall apply);
and,
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|
(xi)
|
Other
Liabilities.
Any Liabilities set forth on Schedule
3(d)(xi).
|
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(e)
|
No
Expansion of Third Party Rights.
The assumption by the Buyers of the Assumed Liabilities shall in
no way
expand the rights or remedies of any third party against Ethanex,
any
Buyer or Seller or their respective Affiliates as compared to the
rights
and remedies which such third party would have had against Seller
or its
Affiliates had a Buyer not assumed such Liabilities. Without limiting
the
foregoing, the assumption by the Buyers of the Assumed Liabilities
shall
not create any third party beneficiary rights.
|
|
4.
|
CLOSING;
PURCHASE PRICE; ADJUSTMENT
|
|
(a)
|
Closing
Dates and Location. The consummation of the sale and delivery of the
Phase I Assets to the Phase I Buyer and the Owned Real Property to
RE LLC
and the receipt of the consideration therefor by payment as provided
in
this Article 4 shall constitute the “Phase
I Closing.”
The consummation of the sale and delivery of the Phase II Assets
to the
Phase II Buyer and the Loop Real Property to RE LLC and the receipt
of the
consideration therefor by payment as provided in this Article 4 shall
constitute the “Phase
II Closing.”
The consummation of the sale and delivery of the Phase III Assets
to the
Phase III Buyer and the receipt of the consideration therefor by
payment
as provided in this Article 4 shall constitute the “Phase
III Closing”
(which together with the Phase I Closing and the Phase II Closing
shall be
the “Closings”)
Unless otherwise agreed by the parties or unless this Agreement shall
be
terminated pursuant to the terms hereof, each of the Closings shall
take
place at 10:00 a.m., local time, at the offices of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
LLP, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, or such other place
as is
mutually and reasonably acceptable to the Seller and Ethanex, and
shall
occur on the date that is three (3) Business Days following satisfaction
or waiver of all of the conditions to the applicable Closing set
forth in
Articles 9 and 10, other than those conditions which by their terms
may
only be satisfied on the respective Closing Date. The date on which
the
Phase I Closing actually occurs shall constitute the “Phase
I Closing Date,”
the date on which the Phase II Closing actually occurs shall constitute
the “Phase
II Closing Date,”
and the date on which the Phase III Closing actually occurs shall
constitute the “Phase
III Closing Date”;
provided,
that in no event shall the Phase III Closing occur prior to the Phase
II
Closing.
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19
|
(b)
|
Payment
of the Purchase Price; Adjustments.
|
|
(i)
|
The
purchase price (the “Purchase
Price”)
for the Purchased Assets shall be the aggregate amount of Two Hundred
Twenty Million Dollars ($220,000,000), plus
the assumption of the Assumed Liabilities, subject to adjustment
in
accordance with this Section 4(b) and Sections 4(c) and 4(d) below.
The
Purchase Price shall be payable as follows:
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|
(A)
|
Fifty
Million Dollars ($50,000,000) in cash (the “Phase
I Purchase Price”),
subject to adjustment in accordance with Sections 4(c)(i) and 4(d)(i)(A),
shall be payable at the Phase I Closing as provided in
Section 4(b)(iii),
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|
(B)
|
Sixty
Million Dollars ($60,000,000) in cash, subject to adjustment in accordance
with Sections 4(b)(ii)(A) and (B), 4(c)(ii), 4(d)(ii)(A) and 4(d)(ii)(B)
(the “Phase
II Cash Consideration”),
and Twenty-Five Million Dollars ($25,000,000) payable in shares of
Common
Stock (with
the number of shares being equal to the sum of (i) $6,250,000, divided
by
the average reported closing price per share of the Common Stock
for the
ten trading days ending with the last trading day before the Phase
I
Closing Date plus (ii) $18,750,000, divided by the average reported
closing price per share of the Common Stock for the ten trading days
ending with the last trading day before the Phase II Closing
Date)
(the “Phase
II Stock Consideration,”
and together with the Phase II Cash Consideration, the “Phase
II Purchase Price”),
shall be payable and issuable, respectively, at the Phase II Closing
as
provided in Section 4(b)(iv); and
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|
(C)
|
Sixty
Million Dollars ($60,000,000) in cash, subject to adjustment in accordance
with Sections 4(b)(ii)(A), (C) and (D), 4(c)(iii), 4(d)(iii)(A) and
4(d)(iii)(B) (the “Phase
III Cash Consideration,”
and with the Phase I Purchase Price and the Phase II Cash Consideration,
the “Cash
Consideration”),
and Twenty-Five Million Dollars ($25,000,000) payable in shares of
Common
Stock (with
the number of shares being equal to the sum of (i) $6,250,000, divided
by
the average reported closing price per share of the Common Stock
for the
ten trading days ending with the last trading day before the Phase
I
Closing Date plus (ii) $18,750,000, divided by the average reported
closing price per share of the Common Stock for the ten trading days
ending with the last trading day before the Phase III Closing
Date)
(the “Phase
III Stock Consideration,”
and together with the Phase III Cash Consideration, the “Phase
III Purchase Price”),
shall be payable and issuable, respectively, at the Phase III Closing
as
provided in Section 4(b)(v).
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20
|
(ii)
|
Phase
II and Phase III Completion
Adjustments
|
| (A) | If the Completion of the Phase II Plan has not occurred (as finally determined pursuant to Section 7(j)) by March 1, 2009 (the “Phase II Deadline”), or by the Extended Phase II Deadline, if applicable pursuant to Section 7(j) hereof, the Phase II Purchase Price shall be reduced by an amount equal to 150% of the Unpaid Cost to Complete the Phase II Plan (such amount, the “Phase II Adjustment”). Phase II Buyer will then assume the Completion of the Phase II Plan within a commercially reasonable time, and the date upon which the Completion of the Phase II Plan is completed shall be the “Phase II Completion Date”. If the sum of (i) the actual cost of Completion of the Phase II Plan (the “Phase II Completion Cost”) plus (ii) a premium equal to (A) if a Seller Financing Requirement has not been met, 5% of the Phase II Completion Cost, or (B) if the Phase II Plan is not completed for any reason other than the failure of a Seller Financing Requirement, 10% of the Phase II Completion Cost (the “Phase II Premium”) is less than amount of the Phase II Adjustment, within five (5) Business Days following the Phase II Completion Date, Phase II Buyer shall pay to Seller an amount equal to the remainder. If the actual cost of Completion of the Phase II Plan plus the Phase II Premium is greater than the Phase II Adjustment (such excess, the “Unrecovered Phase II Costs”), Phase II Buyer shall not be obligated to pay any additional amount to Seller, and such difference shall be deducted from the Phase III Cash Consideration (and in such event, the “Phase III Purchase Price” shall mean such reduced amount, subject to further adjustment in accordance with Section 4(b)(ii)(C) or (D) below). |
|
(B)
|
If
the Completion of the Phase II Plan has occurred but the Process
Specifications of the Phase II Expansion are not met, the Phase II
Cash
Consideration shall be reduced in accordance with Exhibit
I
attached hereto and the Phase II Closing shall proceed with the Phase
II
Buyer being required to pay the reduced Phase II Cash Consideration.
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|
(C)
|
If
the Completion of the Phase III Plan has not occurred (as finally
determined pursuant to Section 7(k)) by June 30, 2009 (the
“Phase
III Deadline”), or
by the Extended Phase III Deadline, if applicable pursuant to Section
7(k)
hereof, the Phase III Purchase Price (as adjusted in accordance with
Section 4(b)(ii)(A), if applicable) shall be reduced by an amount
equal to
150% of the Unpaid Cost to Complete the Phase III Plan (the “Phase
III Adjustment”).
Phase III Buyer will then assume the Completion of the Phase III
Plan
within a commercially reasonable time, and the date upon which the
Completion of the Phase III Plan is completed shall be the “Phase
III Completion Date”.
If the sum of (i) the actual cost of Completion of the Phase III
Plan (the
“Phase
III Completion Cost”)
plus
(ii) a premium equal to (A) if a Seller Financing Requirement has
not been
met, 5% of the Phase III Completion Cost, or (B) if the Phase III
Plan is
not complete for any reason other than the failure of a Seller Financing
Requirement, 10% of the Phase III Completion Cost (the “Phase
III Premium”)
is less than the amount of the Phase III Adjustment, within five
(5)
Business Days following the Phase III Completion Date, Phase III
Buyer
shall pay to Seller an amount equal to the remainder. If the actual
cost
of Completion of the Phase III Plan plus
the Phase III Premium is greater than the Phase III Adjustment, Phase
III
Buyer shall not be obligated to pay an additional amount to Seller,
and
such difference (the “Recoverable
Costs”)
shall be recoverable pursuant to Article 11 hereof.
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21
|
(D)
|
If
the Completion of the Phase III Plan has occurred but the Process
Specifications of the Phase III Expansion are not met, the Phase
III Cash
Consideration (as adjusted in accordance with Section 4(b)(ii)(A),
if
applicable) shall be reduced in accordance with Exhibit
I
attached hereto and the Phase III Closing shall proceed with the
Phase III
Buyer being required to pay the reduced Phase III Cash
Consideration.
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|
(E)
|
For
purposes of this Section 4(b)(ii): (i) “Unpaid
Cost to Complete the Phase II Plan”
shall mean the estimated unpaid cost to complete the Completion of
the
Phase II Plan as of the Phase II Closing Date, as mutually determined
in
good faith by the Seller and Ethanex within 5 business days following
the
earlier to occur of the Phase II Deadline and the Extended Phase
II
Deadline, and (ii) “Unpaid
Cost to Complete the Phase III Plan”
shall mean the estimated unpaid cost to complete the Completion of
the
Phase III Plan as of the Phase III Closing Date, as mutually determined
in
good faith by the Seller and Ethanex within 5 business days following
the
earlier to occur of the Phase III Deadline and the Extended Phase
III
Deadline. If the Seller and Ethanex cannot agree on the Unpaid Cost
to
Complete the Phase II Plan or the Unpaid Cost to Complete the Phase
III
Plan within the periods set forth in the immediately preceding sentence,
the parties will engage ▇.▇. ▇▇▇▇, Inc., as an independent engineer,
to
resolve the dispute as soon as practicable, but in any event no later
than
10 days following the date ▇.▇. ▇▇▇▇, Inc. is engaged by the parties,
and
the parties shall each pay 50% of the costs of such
engagement.
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|
(iii)
|
On
the Phase I Closing Date:
|
|
(A)
|
the
Phase I Buyer shall pay for the Phase I Assets, by wire transfer
of
immediately available funds, an aggregate amount equal to $49,500,000.00,
minus
the Phase I Escrow Amount;
|
|
(B)
|
RE
LLC shall pay for the Owned Real Property, by wire transfer of immediately
available funds, an aggregate amount equal to $500,000.00, minus
the Owned Real Property Debt;
|
|
(C)
|
the
Phase I Buyer shall deliver or cause to be delivered to the Escrow
Agent
an amount equal to $1,000,000.00 (the “Phase
I Escrow Amount”),
to be held by the Escrow Agent in a separate interest bearing account
(the
“Indemnity
Escrow Account”)
pursuant to the Escrow Agreement;
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22
|
(D)
|
the
Seller shall provide, and cause to be filed, if applicable, UCC-3
Termination Statements and any other forms of or evidence of release
of
any Liens (other than Permitted Encumbrances) on the Phase I Assets
and
the Owned Real Property;
|
|
(E)
|
the
Phase I Buyer shall assume those certain Phase I Assumed Liabilities
as
set forth in Section 3(a);
|
|
(F)
|
RE
LLC shall assume those certain Phase I Assumed Liabilities as set
forth in
Section 3(a);
|
|
(G)
|
the
Seller shall deliver to RE LLC the Warranty Deed for the Owned Real
Property; and
|
|
(H)
|
the
Seller shall deliver to the Phase I Buyer the Phase I Assets.
|
|
(iv)
|
On
the Phase II Closing Date:
|
|
(A)
|
the
Phase II Buyer shall pay, by wire transfer of immediately available
funds,
an aggregate amount equal to $59,820,000.00, minus
the Phase II Escrow Amount, minus
the Phase I Escrow Make-Up, if any, minus
any Phase I Indemnification Excess Amount, minus
the Hammer Mill Difference, subject to adjustment and partial deferral
in
accordance with Sections 4(b)(ii)(A) or (B), as the case may be;
|
|
(B)
|
RE
LLC shall pay for the Loop Real Property, by wire transfer of immediately
available funds, an aggregate amount equal to $180,000.00, minus
the Phase II Funded Debt encumbering the Loop Real
Property;
|
|
(C)
|
the
Phase II Buyer shall deliver or cause to be delivered to the Escrow
Agent
an amount equal to $1,000,000.00 plus
the Phase I Escrow Make-Up, if any (the “Phase
II Escrow Amount”),
to be held by the Escrow Agent in the Indemnity Escrow Account pursuant
to
the Escrow Agreement;
|
|
(D)
|
the
Seller shall provide, and cause to be filed, if applicable, UCC-3
Termination Statements and any other forms of or evidence of release
of
the Liens (other than Permitted Encumbrances) on the Phase II Assets
and
the Loop Real Property;
|
|
(E)
|
Ethanex
shall issue, and the Phase II Buyer shall deliver, certificates
representing the Phase II Stock Consideration;
|
|
(F)
|
Phase
II Buyer shall assume those certain Phase II Assumed Liabilities
as set
forth in Section 3(b);
|
|
(G)
|
RE
LLC shall assume those certain Phase II Assumed Liabilities as set
forth
in Section 3(b);
|
|
(H)
|
Seller
shall deliver to RE LLC the special warranty deed required by Section
9(c)(viii)(D) for the Loop Real Property;
and,
|
23
|
(I)
|
the
Seller shall deliver to the Phase II Buyer the Phase II Assets.
|
|
(v)
|
On
the Phase III Closing Date:
|
|
(A)
|
the
Phase III Buyer shall pay, by wire transfer of immediately available
funds, an aggregate amount equal to the Phase III Cash Consideration,
minus
the Phase III Escrow Amount, minus
the Phase II Escrow Make-Up, if any, minus
any Phase I Indemnification Residual Amount, minus
any Phase II Indemnification Amount, subject to adjustment and partial
deferral in accordance with Sections 4(b)(ii)(C) and (D), as the
case may
be;
|
|
(B)
|
the
Phase III Buyer shall deliver or cause to be delivered to the Escrow
Agent
an amount equal to $1,000,000.00 plus
the Phase II Escrow Make-Up, if any (the “Phase
III Escrow Amount”),
to be held by the Escrow Agent in the Indemnity Escrow Account pursuant
to
the Escrow Agreement;
|
|
(C)
|
Ethanex
shall issue, and the Phase III Buyer shall deliver, certificates
representing the Phase III Stock Consideration,
|
|
(D)
|
Seller
shall deliver to the Phase III Buyer the Phase III Assets;
|
|
(E)
|
the
Seller shall provide, and cause to be filed, if applicable, UCC-3
Termination Statements and any other forms of or evidence of release
of
any Liens on the Phase III Assets;
and
|
|
(F)
|
Phase
III Buyer shall assume the Phase III Assumed Liabilities.
|
|
(c)
|
Purchase
Price Adjustment.
Any adjustments as determined finally in accordance with Section
4(d)
shall be paid in immediately available funds to an account designated
by
the Seller or Ethanex, as the case may be, within five (5) days of
the
date that the applicable adjustment is determined, as
follows:
|
|
(i)
|
.
Phase
I Purchase Price Adjustment.
The Phase I Purchase Price shall be subject to a post-Closing adjustment
as follows: (i) it shall be increased on a dollar-for-dollar basis by
the amount that the Phase I Closing Date Inventory exceeds the Phase
I
Inventory Target or (ii) decreased on a dollar-for-dollar basis by
the
amount that the Phase I Closing Date Inventory is less than the Phase
I
Inventory Target.
|
|
(ii)
|
Phase
II Purchase Price Adjustment.
The Phase II Purchase Price shall be subject to a post-Closing adjustment
as follows: (x)(i) it shall be increased on a dollar-for-dollar basis
by the amount that the Phase II Closing Date Inventory exceeds the
Phase
II Inventory Target or (ii) decreased on a dollar-for-dollar basis
by the
amount that the Phase II Closing Date Inventory is less than the
Phase II
Inventory Target and (y) (i) it shall be increased by a Positive
Phase II
Net Cost Amount or (ii) decreased by a Negative Phase II Net Cost
Amount.
|
|
(iii)
|
Phase
III Purchase Price Adjustment.
The Phase III Purchase Price shall be subject to a post-Closing adjustment
as follows: (x)(i) it shall be increased on a dollar-for-dollar basis
by the amount that the Phase III Closing Date Inventory exceeds the
Phase
III Inventory Target or (ii) decreased on a dollar-for-dollar basis
by the
amount that the Phase III Closing Date Inventory is less than the
Phase
III Inventory Target and (y) (i) it shall be increased by a Positive
Phase
III Net Cost Amount or (ii) decreased by a Negative Phase III Net
Cost
Amount.
|
24
|
(d)
|
Determination
of Purchase Price Adjustments.
|
|
(i)
|
Phase
I Closing Date Adjustments.
|
|
(A)
|
Inventory.
On the Phase I Closing Date, Seller shall cause a physical inventory
to be
taken of the Inventory by employees or representatives of Seller.
Seller
shall set forth the value of the Inventory as of the Phase I Closing
Date
in a report (the “Phase
I Inventory Adjustment Report”).
Seller shall permit representatives or employees of Ethanex to observe
the
taking of such physical inventory and Ethanex shall have the right
to
undertake confirmatory testing counts of the Inventory during the
taking
of such physical inventory, at its own cost, so long as such observance
or
confirmatory testing does not disrupt the normal business operations
of
Seller. The cost of conducting the physical inventory shall be borne
by
Seller. The Phase I Inventory Adjustment Report (i) shall be prepared
from
the Seller’s books and records in accordance with GAAP, consistently
applied, and (ii) shall be delivered to Ethanex no later than five
(5)
days after the Phase I Closing Date. If Ethanex disagrees with Seller’s
calculation of the adjustments to the Phase I Purchase Price, Ethanex
shall promptly, but in no event later than five (5) days following
receipt
of the Phase I Inventory Adjustment Report, deliver to Seller written
notice (the “Phase
I Inventory Objection Notice”)
describing in reasonable detail its dispute by specifying those items
or
amounts of Inventory as to which it disagrees, together with its
determination of such disputed amounts; provided, that Ethanex shall
be
deemed to have agreed with all items and amounts that are not disputed.
If
the dispute is not resolved by the parties within five (5) days following
the date of Seller’s receipt of the Phase I Inventory Objection Notice,
the parties shall engage an independent accounting firm reasonably
acceptable to Ethanex and the Seller (the “Independent
Accountant”),
which shall resolve the dispute within thirty (30) days following
such
engagement. The Independent Accountant shall act as an expert and
not as
an arbitrator to determine, based solely on the written submissions
of the
Seller, on the one hand, and Ethanex, on the other hand, and not
by
independent investigation, only the specific items under dispute
by the
parties. The Independent Accountant shall render a written report
as to
the resolution of the dispute and the resulting computations. The
Independent Accountant’s determination of the disputed items or amounts
shall, absent manifest error, be final and binding on the parties.
In
resolving any disputed item, the Independent Accountant (i) shall be
bound by the provisions of this Agreement and (ii) may not assign a
value to any item greater than the greatest value for such item claimed
by
either party in the Phase I Inventory Adjustment Report or the Phase
I
Inventory Objection Notice, as applicable, or less than the smallest
value
for such item claimed by either party in the Phase I Inventory Adjustment
Report or the Phase I Inventory Objection Notice, as applicable.
Ethanex,
on the one hand, or the Seller, on the other hand, shall make appropriate
payment to the other of any additional amounts determined to be payable
by
them in respect of the Phase I Purchase Price within five (5) Business
Days following either the resolution of the dispute by the parties
or the
receipt of the Independent Accountant’s final determination, as the case
may be; provided,
that to the extent the amount reflected in the Phase I Inventory
Adjustment Report is not in dispute such amount shall be paid before
resolution of the dispute by the parties or receipt of the Independent
Accountant’s final determination. All fees and costs of the Independent
Accountant shall be borne by and allocated between the Seller, on
the one
hand, and Ethanex, on the other hand, on a pro rata
basis based on the differences between the Independent Accountant’s
determination of the disputed amounts to the net adjustments to the
Purchase Price (as finally determined by the Independent Accountant
or the
parties) and each of the Seller’s and Ethanex’s respective determinations
of such disputed amounts. If Ethanex does not raise any objections
to the
Phase I Inventory Adjustment Report within the periods described
herein,
the Phase I Inventory Adjustment Report will become final and binding
upon
all parties.
|
25
|
(ii)
|
Phase
II Closing Date Adjustments.
|
|
(A)
|
Inventory.
On the Phase II Closing Date, Seller shall cause a physical inventory
to
be taken of the Inventory by employees or representatives of Seller.
Seller shall set forth the value of the Inventory as of the Phase
II
Closing Date in a report (the “Phase
II Inventory Adjustment Report”).
Seller shall permit representatives or employees of Ethanex to observe
the
taking of such physical inventory and Ethanex shall have the right
to
undertake confirmatory testing counts of the Inventory during the
taking
of such physical inventory, at its own cost, so long as such observance
or
confirmatory testing does not disrupt the normal business operations
of
Seller. The cost of conducting the physical inventory shall be borne
by
Seller. The Phase II Inventory Adjustment Report (i) shall be prepared
from the Seller’s books and records in accordance with GAAP, consistently
applied, and (ii) shall be delivered to Ethanex no later than five
(5)
days after the Phase II Closing Date. If Ethanex disagrees with Seller’s
calculation of the adjustments to the Phase II Purchase Price, Ethanex
shall promptly, but in no event later than five (5) days following
receipt
of the Phase II Inventory Adjustment Report, deliver to Seller written
notice (the “Phase
II Inventory Objection Notice”)
describing in reasonable detail its dispute by specifying those items
or
amounts of Inventory as to which it disagrees, together with its
determination of such disputed amounts; provided, that Ethanex shall
be
deemed to have agreed with all items and amounts that are not disputed.
If
the dispute is not resolved by the parties within five (5) days following
the date of Seller’s receipt of the Phase II Inventory Objection Notice,
the parties shall engage an Independent Accountant, which shall resolve
the dispute within thirty (30) days following such engagement. The
Independent Accountant shall act as an expert and not as an arbitrator
to
determine, based solely on the written submissions of the Seller,
on the
one hand, and Ethanex, on the other hand, and not by independent
investigation, only the specific items under dispute by the parties.
The
Independent Accountant shall render a written report as to the resolution
of the dispute and the resulting computations. The Independent
Accountant’s determination of the disputed items or amounts shall, absent
manifest error, be final and binding on the parties. In resolving
any
disputed item, the Independent Accountant (i) shall be bound by the
provisions of this Agreement and (ii) may not assign a value to any
item greater than the greatest value for such item claimed by either
party
in the Phase II Inventory Adjustment Report or the Phase II Inventory
Objection Notice, as applicable, or less than the smallest value
for such
item claimed by either party in the Phase II Inventory Adjustment
Report
or the Phase II Inventory Objection Notice, as applicable. Ethanex,
on the
one hand, or the Seller, on the other hand, shall make appropriate
payment
to the other of any additional amounts determined to be payable by
them in
respect of the Phase II Purchase Price within five (5) Business Days
following either the resolution of the dispute by the parties or
the
receipt of the Independent Accountant’s final determination, as the case
may be; provided,
that to the extent the amount reflected in the Phase II Inventory
Adjustment Report is not in dispute such amount shall be paid before
resolution of the dispute by the parties or receipt of the Independent
Accountant’s final determination. All fees and costs of the Independent
Accountant shall be borne by and allocated between the Seller, on
the one
hand, and Ethanex, on the other hand, on a pro rata
basis based on the differences between the Independent Accountant’s
determination of the disputed amounts to the net adjustments to the
Purchase Price (as finally determined by the Independent Accountant
or the
parties) and each of the Seller’s and Ethanex’s respective determinations
of such disputed amounts. If Ethanex does not raise any objections
to the
Phase II Inventory Adjustment Report within the periods described
herein,
the Phase II Inventory Adjustment Report will become final and binding
upon all parties.
|
26
|
(B)
|
Net
Costs.
Seller shall prepare a report setting forth its determination of
the Net
Phase II Cost, with a detailed description of such underlying costs
and
supporting receipts therefor (the “Phase
II Net Cost Adjustment Report”).
The Phase II Net Cost Adjustment Report (i) shall be prepared from
the
Seller’s books and records in accordance with GAAP, consistently applied,
and (iii) shall be delivered to Ethanex no later than one (1) day
after
the Phase II Closing Date. If Ethanex disagrees with Seller’s calculation
of the adjustments to the Phase II Purchase Price, Ethanex shall
promptly,
but in no event later than five (5) days following receipt of the
Phase II
Net Cost Adjustment Report, deliver to Seller written notice (the
“Phase
II Net Cost Objection Notice”)
describing in reasonable detail its dispute by specifying those items
of
the Net Phase II Costs as to which it disagrees, together with its
determination of such disputed amounts; provided, that Ethanex shall
be
deemed to have agreed with all items and amounts that are not disputed.
If
the dispute is not resolved by the parties within five (5) days following
the date of Seller’s receipt of the Phase II Net Cost Objection Notice,
the parties shall engage an Independent Engineer, which shall resolve
the
dispute within thirty (30) days following such engagement. The Independent
Engineer shall act as an expert and not as an arbitrator to determine,
based solely on the written submissions of the Seller, on the one
hand,
and Ethanex, on the other hand, and not by independent investigation,
only
the specific items under dispute by the parties. The Independent
Engineer
shall render a written report as to the resolution of the dispute
and the
resulting computations. The Independent Engineer’s determination of the
disputed items or amounts shall, absent manifest error, be final
and
binding on the parties. In resolving any disputed item, the Independent
Engineer (i) shall be bound by the provisions of this Agreement and
(ii) may not assign a value to any item greater than the greatest
value for such item claimed by either party in the Phase II Net Cost
Adjustment Report or the Phase II Net Cost Objection Notice, as
applicable, or less than the smallest value for such item claimed
by
either party in the Phase II Net Cost Adjustment Report or the Phase
II
Net Cost Objection Notice, as applicable. Ethanex, on the one hand,
or the
Seller, on the other hand, shall make appropriate payment to the
other of
any additional amounts determined to be payable by them in respect
of the
Phase II Purchase Price within five (5) Business Days following either
the
resolution of the dispute by the parties or the receipt of the Independent
Engineer’s final determination, as the case may be; provided,
that to the extent the amount reflected in the Phase II Net Cost
Adjustment Report is not in dispute such amount shall be paid before
resolution of the dispute by the parties or receipt of the Independent
Engineer’s final determination. All fees and costs of the Independent
Engineer shall be borne by and allocated between the Seller, on the
one
hand, and Ethanex, on the other hand, on a pro rata
basis based on the differences between the Independent Engineer’s
determination of the disputed amounts to the net adjustments to the
Purchase Price (as finally determined by the Independent Engineer
or the
parties) and each of the Seller’s and Ethanex’s respective determinations
of such disputed amounts. If Ethanex does not raise any objections
to the
Phase II Net Cost Adjustment Report within the periods described
herein,
the Phase II Net Cost Adjustment Report will become final and binding
upon
all parties.
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27
|
(iii)
|
Phase
III Closing Date Adjustments.
|
|
(A)
|
Inventory.
On the Phase III Closing Date, Seller shall cause a physical inventory
to
be taken of the Inventory by employees or representatives of Seller.
Seller shall set forth the value of the Inventory as of the Phase
III
Closing Date in a report (the “Phase
III Inventory Adjustment Report”
and together with the Phase I Inventory Adjustment Report and the
Phase II
Inventory Adjustment Report, the “Inventory
Adjustment Reports”).
Seller shall permit representatives or employees of Ethanex to observe
the
taking of such physical inventory and Ethanex shall have the right
to
undertake confirmatory testing counts of the Inventory during the
taking
of such physical inventory, at its own cost, so long as such observance
or
confirmatory testing does not disrupt the normal business operations
of
Seller. The cost of conducting the physical inventory shall be borne
by
Seller. The Phase III Inventory Adjustment Report (i) shall be prepared
from the Seller’s books and records in accordance with GAAP, consistently
applied, and (ii) shall be delivered to Ethanex no later than five
(5)
days after the Phase III Closing Date. If Ethanex disagrees with
Seller’s
calculation of the adjustments to the Phase III Purchase Price, Ethanex
shall promptly, but in no event later than five (5) days following
receipt
of the Phase III Inventory Adjustment Report, deliver to Seller written
notice (the “Phase
III Inventory Objection Notice”)
describing in reasonable detail its dispute by specifying those items
or
amounts of Inventory as to which it disagrees, together with its
determination of such disputed amounts; provided, that Ethanex shall
be
deemed to have agreed with all items and amounts that are not disputed.
If
the dispute is not resolved by the parties within five (5) days following
the date of Seller’s receipt of the Phase III Inventory Objection Notice,
the parties shall engage an Independent Accountant, which shall resolve
the dispute within thirty (30) days following such engagement. The
Independent Accountant shall act as an expert and not as an arbitrator
to
determine, based solely on the written submissions of the Seller,
on the
one hand, and Ethanex, on the other hand, and not by independent
investigation, only the specific items under dispute by the parties.
The
Independent Accountant shall render a written report as to the resolution
of the dispute and the resulting computations. The Independent
Accountant’s determination of the disputed items or amounts shall, absent
manifest error, be final and binding on the parties. In resolving
any
disputed item, the Independent Accountant (i) shall be bound by the
provisions of this Agreement and (ii) may not assign a value to any
item greater than the greatest value for such item claimed by either
party
in the Phase III Inventory Adjustment Report or the Phase III Inventory
Objection Notice, as applicable, or less than the smallest value
for such
item claimed by either party in the Phase III Inventory Adjustment
Report
or the Phase III Inventory Objection Notice, as applicable. Ethanex,
on
the one hand, or the Seller, on the other hand, shall make appropriate
payment to the other of any additional amounts determined to be payable
by
them in respect of the Phase III Purchase Price within five (5) Business
Days following either the resolution of the dispute by the parties
or the
receipt of the Independent Accountant’s final determination, as the case
may be; provided,
that to the extent the amount reflected in the Phase III Inventory
Adjustment Report is not in dispute such amount shall be paid before
resolution of the dispute by the parties or receipt of the Independent
Accountant’s final determination. All fees and costs of the Independent
Accountant shall be borne by and allocated between the Seller, on
the one
hand, and Ethanex, on the other hand, on a pro rata
basis based on the differences between the Independent Accountant’s
determination of the disputed amounts to the net adjustments to the
Purchase Price (as finally determined by the Independent Accountant
or the
parties) and each of the Seller’s and Ethanex’s respective determinations
of such disputed amounts. If Ethanex does not raise any objections
to the
Phase III Inventory Adjustment Report within the periods described
herein,
the Phase III Inventory Adjustment Report will become final and binding
upon all parties.
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28
|
(B)
|
Net
Costs.
Seller shall prepare a report setting forth its determination of
the Net
Phase III Cost, with a detailed description of such underlying costs
and
supporting receipts therefor (the “Phase
III Net Cost Adjustment Report”
and together with the Phase II Net Cost Adjustment Report, the
“Net
Cost Adjustment Reports”).
The Phase III Net Cost Adjustment Report (i) shall be prepared from
the
Seller’s books and records in accordance with GAAP, consistently applied,
and (iii) shall be delivered to Ethanex no later than one (1) day
after
the Phase III Closing Date. If Ethanex disagrees with Seller’s calculation
of the adjustments to the Phase III Purchase Price, Ethanex shall
promptly, but in no event later than five (5) days following receipt
of
the Phase III Net Cost Adjustment Report, deliver to Seller written
notice
(the “Phase
III Net Cost Objection Notice”)
describing in reasonable detail its dispute by specifying those items
of
the Net Phase III Costs as to which it disagrees, together with its
determination of such disputed amounts; provided, that Ethanex shall
be
deemed to have agreed with all items and amounts that are not disputed.
If
the dispute is not resolved by the parties within five (5) days following
the date of Seller’s receipt of the Phase III Net Cost Objection Notice,
the parties shall engage an Independent Engineer, which shall resolve
the
dispute within thirty (30) days following such engagement. The Independent
Engineer shall act as an expert and not as an arbitrator to determine,
based solely on the written submissions of the Seller, on the one
hand,
and Ethanex, on the other hand, and not by independent investigation,
only
the specific items under dispute by the parties. The Independent
Engineer
shall render a written report as to the resolution of the dispute
and the
resulting computations. The Independent Engineer’s determination of the
disputed items or amounts shall, absent manifest error, be final
and
binding on the parties. In resolving any disputed item, the Independent
Engineer (i) shall be bound by the provisions of this Agreement and
(ii) may not assign a value to any item greater than the greatest
value for such item claimed by either party in the Phase III Net
Cost
Adjustment Report or the Phase III Net Cost Objection Notice, as
applicable, or less than the smallest value for such item claimed
by
either party in the Phase III Net Cost Adjustment Report or the Phase
III
Net Cost Objection Notice, as applicable. Ethanex, on the one hand,
or the
Seller, on the other hand, shall make appropriate payment to the
other of
any additional amounts determined to be payable by them in respect
of the
Phase III Purchase Price within five (5) Business Days following
either
the resolution of the dispute by the parties or the receipt of the
Independent Engineer’s final determination, as the case may be;
provided,
that to the extent the amount reflected in the Phase III Net Cost
Adjustment Report is not in dispute such amount shall be paid before
resolution of the dispute by the parties or receipt of the Independent
Engineer’s final determination. All fees and costs of the Independent
Engineer shall be borne by and allocated between the Seller, on the
one
hand, and Ethanex, on the other hand, on a pro rata
basis based on the differences between the Independent Engineer’s
determination of the disputed amounts to the net adjustments to the
Purchase Price (as finally determined by the Independent Engineer
or the
parties) and each of the Seller’s and Ethanex’s respective determinations
of such disputed amounts. If Ethanex does not raise any objections
to the
Phase III Net Cost Adjustment Report within the periods described
herein,
the Phase III Net Cost Adjustment Report will become final and binding
upon all parties.
|
29
|
(e)
|
Access
During Determinations.
During the preparation of the Inventory Adjustment Reports and the
Net
Cost Adjustment Reports and the periods of review or dispute as set
forth
in Section 4(d) above, the Seller, on the one hand, and Ethanex, on
the other hand, shall (i) provide each other and each other’s
authorized representatives with full access at all reasonable times,
and
in a manner so as not to interfere with the normal business operations
of
the Seller or Ethanex, in each case, respectively, to all relevant
books,
records, work papers, information and employees and auditors of such
Persons, and (ii) cooperate fully with each other and each other’s
authorized representatives, in each of clauses (i) and (ii), as
necessary or useful for the preparation, calculation and review of
the
Inventory Adjustment Reports and the Net Cost Adjustment Reports
or for
the resolution of any dispute between the Seller and Ethanex relating
thereto.
|
|
(f)
|
Determination
Definitions.
Each accounting term used in Section 4(d) shall have the meaning that
is applied thereto in accordance with GAAP and each account included
in
the Inventory Adjustment Reports and the Net Cost Adjustment Reports
shall
be calculated in accordance with GAAP, consistently applied.
|
|
5.
|
REPRESENTATIONS
OF SELLER
|
Seller
represents and warrants to each of Ethanex, Ethanex ▇▇▇▇▇▇▇▇▇▇, and the Buyer
Group as follows, except as set forth on the disclosure schedules relating
to
this Article 5 (the “Schedules”):
|
(a)
|
Core
Representations and Warranties of Seller.
|
|
(i)
|
Seller
is a limited liability company duly formed, validly existing and
in good
standing under the laws of the State of Nebraska and has all of the
requisite limited liability company power and authority to own, operate
or
lease its assets and properties, to conduct its business as currently
conducted and to enter into and perform the terms to be performed
by it of
this Agreement and each of the Related Agreements to which it is
a
party.
|
|
(ii)
|
Seller
has obtained the approval of its Board of Managers, and that is the
only
limited liability company action necessary to authorize and approve
its
execution, delivery and performance of this Agreement, the Related
Agreements and the Transactions, and no consent or approval of the
limited
liability company members of the Seller is required. Subject to the
due
execution and delivery by the other parties, this Agreement constitutes,
and each Related Agreement to which the Seller is a party, when executed
and delivered by the Seller will constitute, the legal, valid and
binding
obligation of Seller, enforceable against the Seller in accordance
with
their respective terms.
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30
|
(iii)
|
The
Seller’s execution, delivery and performance of this Agreement and the
Related Agreements to which it is a party and the consummation of
the
Transactions in accordance with, and subject to the conditions precedent
in, this Agreement and the applicable Related Agreements do not and
will
not: (i) violate any Legal Requirement applicable to the Seller, its
assets or properties; (ii) conflict with, violate or result in a
breach of any of the provisions of the Seller’s articles of organization
or operating agreement, if any; or (iii) conflict with, result in a
breach of or constitute a default (or an event which, with notice
or lapse
of time or both, could constitute a default) under, result in the
acceleration of, create in any party the right to accelerate, terminate,
suspend, modify or cancel, or require any notice under any agreement,
contract, lease, license, instrument, or other arrangement to which
the
Seller is a party or by which it is bound or to which any of its
assets is
subject (or result in the imposition of any Lien upon any of its
assets or
properties), except in the case of clause (i) or clause (iii), for
any
violation, conflict, breach, default, acceleration, failure to give
notice
or Lien that, individually or together with all other violations,
conflicts, breaches, defaults, accelerations, failures to give notice
or
Liens, would not have a Material Adverse Effect. Except for filings
required pursuant to the HSR Act, Seller does not need to give any
notice
to, make any filing with, or obtain any authorization, consent, or
approval of any Governmental Authority or other Person in order for
the
parties to consummate the transactions contemplated by this Agreement,
except as listed on Schedule
5(a)(iii)
(the “Seller
Consents”)
or where the failure to give notice, to file, or to obtain any
authorization, consent, or approval, individually or in the aggregate,
would not have a Material Adverse
Effect.
|
|
(iv)
|
Seller
has no subsidiaries and does not control directly or indirectly or
have
any direct or indirect equity participation in any corporation,
partnership, trust, joint venture or other business
association.
|
|
(v)
|
Seller
has no Liability to pay any fees or commissions to any broker, finder,
or
agent with respect to the
Transactions.
|
|
(b)
|
Additional
Representations.
|
|
(i)
|
(A) | Financial Statements. Seller has delivered to Buyer true and complete copies of (a) the unaudited balance sheet, as of December 31, 2007, of the Seller (the “Latest Balance Sheet”) and the unaudited statements of income and cash flows of the Seller for the twelve-month period ended December 31, 2007 (such statements and the Latest Balance Sheet being herein referred to as the “Latest Financial Statements”) and (b) the audited balance sheets, as of December 31, 2005 and 2006, of the Seller and the related audited consolidated statements of income and cash flows of the Seller for such years (collectively, the “Annual Financial Statements”). The Latest Financial Statements and the Annual Financial Statements present fairly, in all material respects, the financial condition of the Seller on a consolidated basis as of the dates thereof and results of operations as of dates and for the periods referred to therein. The Annual Financial Statements have been prepared in accordance with GAAP, consistently applied throughout the periods indicated. The Latest Financial Statements have been prepared in accordance with GAAP applicable to unaudited interim financial statements (and thus may not contain all notes and may not contain prior period comparative data which are required to be prepared in accordance with GAAP) on a basis that is consistent with the preparation of the Annual Financial Statements, subject to the absence of footnote disclosures and normal year-end adjustments (which will not be material, individually or in the aggregate). |
31
|
(B)
|
Audited
Financials.
The Audited Financials to be provided to Ethanex prior to the Phase
I
Closing pursuant to Section 7(r), shall present fairly, in all
material respects, the financial condition of the Seller as of such
dates
and the results of operations and cash flows of the Seller for such
periods therein referred to, in conformity with GAAP applied consistently
throughout the periods covered
thereby.
|
|
(C)
|
Monthly
and Interim Financials.
The Monthly Financials and the Interim Financials shall present fairly,
in
all material respects, the financial condition of Seller as of the
dates
and the results of operations and cash flows of the Seller for the
periods
therein referred to, in conformity with GAAP applied consistently
throughout the periods covered thereby, subject only to the absence
of
notes and to normal, recurring year-end adjustments (which will not
be
material individually or in the
aggregate).
|
|
(ii)
|
No
Undisclosed Liabilities.
Seller has no material liabilities or obligations (whether known
or
unknown, asserted or unasserted, absolute or contingent, accrued
or
unaccrued, liquidated or unliquidated, and due or to be come due)
of a
kind that would be required under GAAP to be reflected on the face
of the
Latest Balance Sheet, other than those (i) that are reflected in
the
Latest Balance Sheet, (ii) incurred in the ordinary course of business
after the date of the Latest Balance Sheet (excluding liabilities
for
breach of contract, tort or infringement), and which would not,
individually or in the aggregate, be reasonably expected to have
a
Material Adverse Effect and (iii) those set forth on Schedule
5(b)(ii).
|
|
(iii)
|
Absence
of Certain Changes.
Since the date of the Latest Balance Sheet, (x) there
has been no Material Adverse Effect with respect to the Seller, (y)
Seller
has not experienced any material damage, destruction or loss (whether
or
not covered by insurance) to the Phase I Assets, and (z) the Seller
has
operated in the ordinary course, consistent with past practice. Without
limiting the generality of the foregoing, since the Latest Balance
Sheet
date, Seller has not engaged in any transaction that would require
the
consent of Buyer pursuant to Section 7(h) if it occurred between
the date
hereof and the Phase I Closing.
|
|
(iv)
|
Properties.
|
|
(A)
|
Seller
owns no real property other than the Owned Real Property. With respect
to
the Owned Real Property: (a) Seller has good and marketable fee simple
title, free and clear of all Liens, except Permitted Encumbrances;
(b)
except as set forth on Schedule
5(b)(iv)(A),
Seller has not leased or otherwise granted to any Person the right
to use
or occupy such Owned Real Property or any portion thereof; and (c)
there
are no outstanding options, rights of first offer or rights of first
refusal to purchase such Owned Real Property or any portion thereof
or
interest therein.
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32
|
(B)
|
Except
as set forth on Schedule
5(b)(iv),
Seller does not lease any real property.
|
|
(C)
|
The
Owned Real Property comprises all of the real property used in the
business of Seller, and Seller is not a party to any agreement or
option
to purchase any real property or interest therein.
|
|
(D)
|
[Reserved.]
|
|
(E)
|
Seller
has not received written notice of any condemnation, expropriation
or
other proceeding in eminent domain affecting the Owned Real Property
or
any portion thereof or interest therein. There is no injunction,
decree,
order, writ or judgment outstanding, or any claim, litigation,
administrative action or similar proceeding, pending or, to the Knowledge
of Seller, threatened, against Seller or otherwise relating to the
ownership, lease, use or occupancy of the Owned Real Property or
any
portion thereof, or the operation of the business of Seller as currently
conducted thereon.
|
|
(F)
|
To
the Knowledge of Seller, the Owned Real Property is in material compliance
with all applicable building, zoning, subdivision, health and safety
and
other land use laws and all insurance requirements affecting the
Owned
Real Property (collectively, the "Real
Property Laws").
Seller has not received any notice of violation of any Real Property
Law
and, to the Knowledge of Seller, there is no basis for the issuance
of any
such notice or the taking of any action for such
violation.
|
|
(G)
|
The
Owned Real Property has direct access to a public street adjoining
the
Owned Real Property or has access to a public street via insurable
easements benefiting such parcel of Owned Real Property, and, except
as
set forth on Schedule
5(b)(iv),
such access is not dependent on any land or other real property interest
that is not included in the Owned Real Property. None of the Improvements
or any portion thereof is dependent for its access, use or operation
on
any land, building, improvement or other real property interest that
is
not included in the Owned Real
Property.
|
|
(H)
|
Except
as set forth on Schedule
5(b)(iv),
all water, oil, gas, electrical, steam, compressed air,
telecommunications, sewer, storm and waste water systems and other
utility
services or systems for the Owned Real Property have been installed
and
are operational and sufficient for the operation of the business
of Seller
as currently conducted thereon.
|
|
(I)
|
Seller’s
use or occupancy of the Owned Real Property or any portion thereof
and the
operation of the business of Seller as currently conducted thereon
is not
dependent on a "permitted
non-conforming use"
or "permitted
non-conforming structure"
or similar variance, exemption or approval from any Governmental
Authority.
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33
|
(J)
|
The
current use and occupancy of the Owned Real Property and the operation
of
the business of Seller as currently conducted thereon does not violate
in
any material respect any easement, covenant, condition, restriction
or
similar provision in any instrument of record or other unrecorded
agreement affecting such Owned Real
Property.
|
|
(K)
|
For
purposes of this Agreement, “Permitted
Encumbrances”
means: (i)
liens for Taxes or assessments and similar charges, which either
are (A)
not delinquent or (B) being contested in good faith and by appropriate
proceedings and for which appropriate reserves have been established
in
accordance with GAAP, (ii) mechanics’, materialmen’s or contractors’ liens
or encumbrances or any similar statutory lien or restriction for
amounts
not yet due and payable incurred in the ordinary course of business,
(iii)
zoning, entitlement, building and other land use regulations imposed
by
Governmental Authorities having jurisdiction over the Owned Real
Property
which are not violated by the current use and operation of the Owned
Real
Property, (iv) covenants, conditions, restrictions, easements, charges,
restrictions and other matters of record, or as would be shown on
an
“as-built” survey, which do not or would not materially impair the present
use or occupancy of the affected property in the operation of the
business
of the Seller currently conducted thereon, (v) Liens incurred or
deposits
made in the ordinary course of business in connection with workers’
compensation, unemployment insurance and other types of social security,
or to secure the performance of statutory obligations (none of which
are
individually or in the aggregate material to Seller), and (vi) Liens
and
encumbrances consented to by
Ethanex.
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|
(L)
|
Seller
has good
and marketable title to,
or a valid leasehold interest in or license of, the
properties and assets used by it, located on their premises, or shown
on
the Latest Balance Sheet or acquired after the date thereof, free
and
clear of all Liens (other than Permitted Encumbrances), except for
Permitted Encumbrances and except for properties and assets disposed
of in
the ordinary course of business since the date of the Latest Balance
Sheet. Without limiting the generality of the foregoing, Seller has
good
and marketable title to, or a valid leasehold interest in or license
of
(x) the Phase I Assets, (y) as at the Phase II Closing Date, the
Phase II
Assets, and (z) as at the Phase III Closing Date, the Phase III Assets,
all free and clear of any Liens or restriction on transfer, except
for
Permitted Encumbrances or as set forth on Schedule
5(b)(iv)(L).
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|
(M)
|
Except
as set forth on Schedule
5(b)(iv)(M),
the Phase I Assets and the Owned Real Property include all of the
assets,
properties and rights of every type and description, real, personal,
mixed, tangible and intangible that are used in, and are necessary
and
sufficient for, the operation of the Existing Plant as it is currently
operated by Seller (and without regard to the expansions contemplated
by
the Phase II Plan and the Phase III Plan).
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34
|
(v)
|
Taxes.
|
|
(A)
|
Seller
has filed (or has had filed on its behalf) all returns, declarations,
reports, estimates, information returns and statements that it was
required to file, in respect of any “Taxes,” as defined in subsection (b)
below (“Returns”).
Each such Return is correct and complete in all material respects.
Seller
has withheld and paid all Taxes required to have been withheld and
paid in
connection with amounts paid or owing to any employee, independent
contractor, creditor, stockholder, or other third party, and all
Forms W-2
and 1099 required with respect thereto have been properly
completed
and timely filed.
|
|
(B)
|
Any
nonqualified deferred compensation or retirement plans, contracts,
or
arrangements that are subject to Section 409A of the Code have been
operated based on good faith, reasonable interpretation of Section
409A of
the Code, within the meaning of Internal Revenue Service Notice 2005-1
and
regulations promulgated under §409A of the Code.
|
|
(C)
|
Seller
is not a party to any agreement, contract, arrangement or plan that
has
resulted or could result, separately or in the aggregate, in the
payment
of (i) any “excess parachute payment” within the meaning of Section 280G
of the Code (or any corresponding provision of state, local or foreign
Tax
law) and (ii) any amount that will not be fully deductible as a result
of
Section 162(m) of the Code(or any corresponding provision of state,
local
or foreign Tax law) .
|
|
(vi)
|
Litigation.
Schedule
5(b)(vi)
sets forth each instance in which the Seller (i) is subject to any
outstanding injunction, judgment, order, decree, ruling or charge
or (ii)
is a party or, to the Knowledge of the Seller, is threatened to be
made a
party to any material action, suit, proceeding, hearing, or investigation
of, in, or before (or that could come before) any Governmental Authority
or arbitrator.
|
|
(vii)
|
Material
Contracts.
|
Schedule
5(b)(vii)
lists
the following contracts and other agreements (“Material
Contracts”)
to
which Seller is a party:
|
(A)
|
collective
bargaining agreements or contracts with any labor union;
|
|
(B)
|
bonus,
pension, profit sharing, retirement, stock (or equity) option, stock
(or
equity) purchase or appreciation, severance or other form of deferred
compensation plan, other than as described in Schedule
5(b)(x)
or
disclosed pursuant to clause (D)
hereof;
|
|
(C)
|
hospitalization
insurance or other welfare benefit plan or practice, whether formal
or
informal, other than as described in Schedule
5(b)(x);
|
|
(D)
|
any
contracts for the employment of any officer, individual employee
or other
Person on a full-time or consulting basis (i) providing annual cash
or
other compensation in excess of $50,000, (ii) providing for the payment
of
cash or other compensation upon the consummation of the transactions
contemplated by this Agreement, or (iii) otherwise restricting its
ability
to terminate the employment of any person following the Phase I Closing
for any lawful reason or for no reason without penalty or liability;
|
35
|
(E)
|
any
contracts relating to the voting of the limited liability company
interests of Seller or the election of managers of Seller;
|
|
(F)
|
any
contracts or indentures (including any related security agreements
and
collateral documents) relating to the borrowing of money or to mortgaging
or pledging any of the assets of Seller, including any agreements
for any
commitment for future loans, credit or financing evidencing, or with
respect to indebtedness;
|
|
(G)
|
any
contracts for the guaranty of any obligation for borrowed money or
other
indebtedness;
|
|
(H)
|
any
contracts or leases under which it is lessee of, or holds or operates
any
property, real or personal, owned by any other party, for which the
annual
rental exceeds $25,000;
|
|
(I)
|
any
contracts or leases under which it is lessor of, or permits any third
party to hold or operate, any property, real or personal, for which
the
annual rental exceeds $25,000;
|
|
(J)
|
any
contracts which prohibit Seller from freely engaging or competing
in
business anywhere in the world or restricting the use of any Intellectual
Property;
|
|
(K)
|
any
contracts for sale of Seller’s services or products (including any vendor
or sales contract) reasonably likely to result in payments in excess
of
$200,000 in any 12-month period;
|
|
(L)
|
any
contracts or group of related contracts that, in accordance with
their
terms, involve payments by Seller of more than an aggregate of $100,000
in
any 12-month period and that are not cancelable by the Seller without
liability on thirty (30) or less days notice to the other party thereto;
|
|
(M)
|
any
contracts for capital expenditures in excess of
$100,000;
|
|
(N)
|
any
contracts regarding any partnership, joint venture, strategic alliance
or
business combination, other than this Agreement and the Related
Agreements;
|
|
(O)
|
any
settlement, conciliation or similar agreement, the performance of
which
will involve payment after the Phase I Closing Date of consideration
in
excess of $50,000 or that involve any non-monetary relief;
|
|
(P)
|
contracts
under which Seller has advanced (other than travel and entertainment
allowances to employees extended in the ordinary course of business)
or
loaned (other than accounts receivable from trade debtors in the
ordinary
course of business) any other Person amounts in the aggregate exceeding
$25,000;
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36
|
(Q)
|
contracts
with any officer, director, member or manager of Seller, or any Affiliate
or, to Seller’s Knowledge, any family member of any of the foregoing;
or,
|
|
(R)
|
commitments
to enter into any of the foregoing.
|
The
Seller has delivered to (or made available for inspection by) Buyer correct
and
complete copies of all the written Material Contracts, and has provided, in
writing, the material terms of any oral Material Contracts. Each of the Material
Contracts is in full force and effect, enforceable by and against the Seller
in
accordance with its terms. Seller is not in, and no event has occurred that
with
the passage of time or the giving of notice or both would result in, a default
under any of the Material Contracts, and to the Knowledge of the Seller, the
other parties thereto are not in default thereunder and such Material Contracts
are valid and binding obligations of the other parties thereto enforceable
in
accordance with their respective terms except for any defaults that
have
been cured or waived or that
would
not reasonably be expected to be material to the business of the Seller, as
the
case may be.
|
(viii)
|
Intellectual
Property Rights.
|
|
(A)
|
Schedule
5(b)(viii)(A)
lists all Intellectual Property owned by or licensed to Seller (other
than
“shrink wrap” or other commercially available, off-the-shelf
non-customized software) and used in the conduct of the business
of
Seller. Seller as indicated on Schedule
5(b)(viii)(A)
owns and possesses all right, title and interest, or holds a valid
license, in and to the Intellectual Property. Schedule
5(b)(viii)(A)
describes all Intellectual Property that has, under any written agreement,
been licensed to third parties and all Intellectual Property which
is
licensed from third parties.
|
|
(B)
|
To
the Knowledge of Seller, no third party is infringing or misappropriating
any of the Intellectual Property. Seller has not received any written
notice asserting that Seller is infringing, misappropriating or otherwise
violating any material intellectual property rights of any third
party.
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|
(ix)
|
Employees.
|
|
(A)
|
Seller
has complied in all material respects with all applicable laws relating
to
the employment of labor, including (without limitation) provisions
thereof
relating to wages, hours, equal opportunity, collective bargaining,
employee retirement, affirmative action, immigration, layoffs,
occupational safety and workers’ compensation, unemployment and the
payment of social security and other
Taxes.
|
|
(B)
|
Seller
is not a party to any collective bargaining agreement relationship,
and no
such relationship has existed with respect to Seller for the past
five (5)
years. There is no pending, or to Seller’s Knowledge, threatened lawsuit
relating to labor or employment issues, or any strike, slowdown,
picketing, work stoppage, or, to Seller’s Knowledge, any pending
application for certification of a collective bargaining agent involving
the Seller.
To Seller’s Knowledge, no union organizing activities are underway or
threatened at Seller.
|
37
|
(C)
|
Within
the past two (2) years, Seller has not implemented any plant closing
or
layoff of employees that could implicate the Worker Adjustment and
Retraining Notification Act of 1988, as amended (“WARN
Act”),
or any similar foreign, state or local law, regulation or ordinance,
and
no such action will be implemented without advance notification to
Buyers.
|
|
(x)
|
Employee
Benefit Plans.
|
|
(A)
|
Except
as disclosed in Schedule
5(b)(x),
with respect to all employees of the Seller and all dependents and
beneficiaries of such employees, Seller does not maintain, sponsor,
contribute or is required to contribute to, or has or could have
any
material liability with respect to any: (i) nonqualified deferred
compensation or retirement plans, contracts or arrangements; (ii)
qualified defined contribution plans (as defined in Section 3(34)
of
ERISA, or Section 414(i) of the Code); (iii) qualified defined benefit
plans (as defined in Section 3(35) of ERISA or Section 414(j) of
the
Code); (iv) employee welfare benefit plans (as defined in Section
3(1) of
ERISA); or (v) other material benefit or compensation plan, program,
agreement or arrangement of any kind. Each item disclosed on Schedule
5(b)(x)
pursuant to the foregoing is referred to herein individually as a
“Plan”
and collectively as the “Plans.”
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|
(B)
|
Seller
does not
maintain, sponsor, contribute to or has any current or potential
liability
with respect to: (i) any multi-employer plan, as defined in Section
3(37)
of ERISA; (ii)
any “multiple employer plan” within the meaning of Section 413(c) of the
Code or Section 210 of ERISA; (iii) any plan subject to Section 412
of the
Code or Section 302 or Title IV of ERISA; or (iv) any “multiple employer
welfare arrangement” as defined in Section 3(40) of ERISA.
Seller has no actual or potential liabilities (i) under Section 4201
of
ERISA for any complete or partial withdrawal from a multi-employer
plan or
(ii) for death or health benefits after separation from (or other
termination of) employment, other than health care continuation benefits
described in Section 4980B of the Code. Seller has complied
and is in compliance with the requirements of Section 4980B of the
Code.
Seller has no current or potential obligation or liability as a
consequence of at any time being considered a single employer under
Section 414 of the Code with any other
Person.
|
|
(C)
|
Except
as set forth on Schedule
5(b)(x),
neither the execution and delivery of this Agreement, nor the consummation
of the transactions contemplated hereby (either alone or in conjunction
with any other event) will: (i) result in any payment (including
severance, unemployment compensation (other than mandatory state
unemployment benefits), golden parachute, bonus, or otherwise) becoming
due to any Person under any Plan or otherwise; (ii) increase any
benefits
otherwise payable under any Plan or otherwise; or (iii) result in
the
acceleration of the time of payment or vesting of any such
benefits.
|
38
|
(xi)
|
Insurance.
Schedule
5(b)(xi)
lists each insurance policy maintained by Seller with respect to
the
properties, assets and operations of Seller and sets forth the date
of
expiration of each such insurance policy. All of such insurance policies
are in full force and effect. Seller is not in material default with
respect to its obligations under any of such insurance
policies.
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|
(xii)
|
Affiliate
Transactions.
Except as set forth on Schedule
5(b)(xii),
no officer or manager of Seller or any individual related by blood,
marriage or adoption to any such Person, or any entity in which any
of
such Persons owns any beneficial interest (other than any publicly
held
corporation whose stock is traded on a national securities exchange
or in
the over-the-counter market and less than one percent of the stock
of
which is beneficially owned by any of such Persons) (i) has borrowed
money
from or loaned money to Seller that is currently outstanding or otherwise
has any cause of action or claim against Seller, (ii) has any agreement
with Seller (other than normal employment arrangements) or (iii)
has any
material interest in any property used by
Seller.
|
|
(xiii)
|
Permits.
Schedule
5(b)(xiii)
lists all licenses, permits and certificates, from federal, state
and
local authorities (including, without limitation, federal and state
agencies regulating occupational health and safety) necessary to
conduct
its business and own and operate its properties (including but not
limited
to all
permits, licenses, certificates of compliance, approvals and other
authorizations required pursuant to Environmental Laws necessary
to
conduct its business)
(collectively, the “Permits”).
Seller has, in full force and effect, all Permits, except where the
failure of any of such Permits to be in full force and effect would
not
result in a Material Adverse Effect. To the Knowledge of Seller,
Seller
has conducted its business in compliance with all material terms
and
conditions of the Permits it holds.
Seller has not received any written notice from any Governmental
Authority
regarding (A) actual, alleged, possible, or potential violation of
or
failure to comply with any term or requirement of any Permit, or
(B)
actual, proposed, possible, or potential revocation, withdrawal,
suspension, cancellation, termination of, or modification to any
Permit.
|
|
(xiv)
|
Environmental.
|
|
(A)
|
Seller
has filed as of the date hereof all material reports and notifications
required to be filed under and pursuant to all applicable Environmental
Laws.
|
|
(B)
|
Without
limiting any other subsection of this Section 4.2(m), to the Knowledge
of
Seller, no aboveground or underground storage tanks are located on
or
under the Owned Real Property.
|
|
(C)
|
Except
as set forth on Schedule
5(b)(xiv),Seller
has not received written notice of any pending or, to Seller’s Knowledge,
threatened claims, actions, suits, proceedings, investigations,
assessments or complaints by any governmental authority arising under
or
pursuant to any Environmental Law.
|
39
|
(D)
|
Except
as set forth on Schedule
5(b)(xiv),Seller
has not received any written notice from any governmental authority
regarding any actual or alleged violation, in any material respect,
of
Environmental Laws or that Seller is, or might potentially be responsible
for, any Release of Hazardous Materials or any material or potentially
material liability arising under Environmental
Laws.
|
|
(E)
|
Seller
and the Owned Real Property are not listed on the United States
Environmental Protection Agency National Priorities List of Hazardous
Waste Sites, or any similar list of hazardous or solid waste sites
maintained by any federal, state or local
agency.
|
|
(F)
|
Seller
has not treated, stored, disposed of, arranged for or permitted the
disposal of, transported, handled, released, or exposed any Person
to any
Hazardous Materials, or owned or operated any property or facility
which
is or has been contaminated by any Hazardous Materials, so as to
give rise
to any current or future material or potentially material liabilities
of
Seller under any Environmental
Laws.
|
|
(G)
|
Seller
has not assumed, undertaken, become subject to, or provided an indemnity
with respect to, any liability of any other Person relating to any
Environmental Law or Hazardous
Materials.
|
|
(H)
|
Seller
has furnished to Buyer all material environmental audits, reports
or other
documents relating to Seller and its affiliates’ or predecessors’, past or
current properties, facilities or operations that are in their possession
or under their reasonable control.
|
|
(xv)
|
Suppliers
and Customers.
|
|
(A)
|
Schedule
5(b)(xv)
lists (i) the ten (10) largest suppliers of the Seller for the twelve
months ended December
31, 2007, based on and listing the dollar volume, and (ii) the ten
(10)
largest customers of the Seller for the twelve months ended December
31, 2007, based on and listing the gross sales. Schedule
5(b)(xv)
sets forth opposite the name of each such customer or supplier the
approximate percentage of net sales or purchases by the Seller
attributable to such customer or supplier for each such
period.
|
|
(B)
|
None
of the customers or suppliers listed on Schedule
5(b)(xv)
has delivered written notice to the Seller that it intends to cease
or
materially decrease purchasing from, selling to or dealing with the
Seller, except in the ordinary course of
business.
|
|
(xvi)
|
Inventory.
Subject to any applicable reserves reflected on the Latest Balance
Sheet
(subject to normal adjustments in the ordinary course of business
and in
accordance with past practice and the accounting principles used
in the
preparation of the Latest Balance Sheet, for the passage of time
through
the applicable Closing Date, none of which, individually or in the
aggregate, shall materially increase the size of the reserves, as
a
percentage of Inventory), the Inventory consists, in all material
respects, of items of a quality and quantity usable and, with respect
to
finished goods only, salable, in each case, in the ordinary course
of
business.
|
40
|
(xvii)
|
Powers
of Attorney.
To the Knowledge of Seller, there are no material outstanding powers
of
attorney executed on behalf of
Seller.
|
|
(xviii)
|
Compliance
with Legal Requirements.
Seller has complied in all material respects with all applicable
Legal
Requirements and no action, suit, proceeding, hearing, investigation,
charge, complaint, claim, demand, or notice has been delivered to
or filed
or commenced against any of them alleging any failure so to comply,
except
where the failure to comply would not have a Material Adverse
Effect.
|
|
(xix)
|
Securities
Laws Matters.
Seller is acquiring the Stock Consideration for its own account,
for
investment only, and not with a view to any resale or public distribution
thereof. Seller acknowledges that (a) the Stock Consideration not
been
registered under the Securities Act of 1933, as amended (the “Securities
Act”),
or any state securities laws, and is being offered and sold in reliance
upon federal and state exemptions for transactions not involving
any
public offering, and that Ethanex has no obligation to register such
Stock
Consideration (other than as set forth in the Investor Rights Agreement)
and (b) it must bear the economic risk of its investment in the Stock
Consideration for an indefinite period of time and the lack of liquidity
inherent in such investment. Seller is an “Accredited Investor” as such
term is defined in Rule 501 of Regulation D promulgated under the
Securities Act.
|
|
(xx)
|
Solvency.
Seller (i) is solvent (in that the fair value of its assets will
not be
less than the sum of its debts); (ii) has adequate capital and liquidity
with which to engage in its businesses; and (iii) has not incurred
debts
beyond its ability to pay as they become absolute and
matured.
|
|
(xxi)
|
Exclusivity
of Representations.
The representations and warranties made by the Seller in this Article
V
are the sole and exclusive representations and warranties being made
by
the Seller in connection with the transactions contemplated by this
Agreement. The Seller hereby disclaims any other express or implied
representation or warranty. The Seller is not, directly or indirectly,
making any representations or warranties regarding any pro-forma
financial
information, financial projections or other forward-looking statements
with respect to the Seller.
|
|
6.
|
REPRESENTATIONS
AND WARRANTIES OF BUYER GROUP,
ETHANEX ▇▇▇▇▇▇▇▇▇▇, AND ETHANEX
|
|
(a)
|
Representations
of Ethanex ▇▇▇▇▇▇▇▇▇▇, Phase I Buyer, Phase II Buyer, Phase III Buyer
and
RE LLC.
|
41
Each
of
Ethanex, jointly and severally, and Ethanex ▇▇▇▇▇▇▇▇▇▇, Phase I Buyer, Phase
II
Buyer, Phase III Buyer and RE LLC, severally and not jointly (except with
Ethanex), hereby represents and warrants to Seller as follows:
|
(i)
|
Existence.
It is a limited liability company duly formed, validly existing and
in
good standing under the laws of the State of Delaware and has all
of the
requisite organizational power and authority to own, operate or lease
its
assets and properties, to conduct its business as currently conducted
and
to enter into and perform the terms to be performed by it of this
Agreement and each of the Related Agreements to which it is a party.
|
|
(ii)
|
Authorization;
Enforceability; No Conflicts.
|
|
(A)
|
It
has taken all organizational action necessary to authorize and approve
its
execution, delivery and performance of this Agreement, the Related
Agreements, and the Transactions to which it is a party. Subject
to the
due execution and delivery by the other parties, this Agreement
constitutes, and each Related Agreement to which it is a party, when
executed and delivered by it will constitute, the legal, valid and
binding
obligation of it, enforceable against it in accordance with their
respective terms.
|
|
(B)
|
Its
execution, delivery and performance of this Agreement and the Related
Agreements to which it is a party and the consummation of the Transactions
in accordance with, and subject to the conditions precedent in, this
Agreement and the applicable Related Agreements do not and will not:
(i) violate any Legal Requirement applicable to it, its assets or
properties; (ii) conflict with, violate or result in a breach of any
of the provisions of it’s certificate of formation or operating agreement,
if any; or (iii) conflict with, result in a breach of or constitute a
default (or an event which, with notice or lapse of time or both,
could
constitute a default) under, result in the acceleration of, create
in any
party the right to accelerate, terminate, suspend, modify or cancel,
or
require any notice under any agreement, contract, lease, license,
instrument, or other arrangement to which it is a party or by which
it is
bound or to which any of its assets is subject (or result in the
imposition of any Lien upon any of its assets or properties), except
in
the case of clause (i) or clause (iii), for any violation, conflict,
breach, default, acceleration, failure to give notice or Lien that,
individually or together with all other violations, conflicts, breaches,
defaults, accelerations, failures to give notice or Liens, would
not have
a material adverse effect on its ability to consummate the Transactions
contemplated by this Agreement.
|
|
(C)
|
Except
for filings required pursuant to the HSR Act, it does not need to
obtain
any Governmental Authorization, or to make any filing with or give
any
notice to any Governmental Authority, in order for it to consummate
the
Transactions contemplated hereby and thereby, except where the failure
to
obtain any Governmental Authorization, individually or together with
all
other Governmental Authorizations not obtained, would not have a
material
adverse effect on its ability to consummate the Transactions contemplated
by this Agreement.
|
42
|
(iii)
|
Litigation.
There is no litigation at law or in equity or any claim, dispute,
action,
suit, complaint, arbitration or proceeding before any court, commission,
agency or other Governmental Authority or tribunal pending or, to
the
Knowledge of Ethanex, threatened against it that could prevent, limit,
impair, delay or otherwise interfere with the right or ability of
it to
consummate the Transactions.
|
| (iv) | Investment. It acknowledges that it is relying on its own due diligence investigation and analysis in entering into the transactions contemplated hereby. It is knowledgeable about the industries in which the Seller operates, is capable of evaluating the merits and risks of the transactions contemplated by this Agreement and is able to bear the substantial economic risk of such investment. |
|
(v)
|
Exclusivity
of Representations.
The representations and warranties made by it in this Section 6(a)
are the
sole and exclusive representations and warranties being made by it
in
connection with the transactions contemplated by this Agreement.
It hereby
disclaims any other express or implied representation or warranty.
It is
not, directly or indirectly, making any representations or warranties
regarding any pro-forma financial information, financial projections
or
other forward-looking statements.
|
|
(b)
|
Ethanex’s
Representations. Ethanex represents and warrants to the Seller as
follows, except as set forth on the disclosure schedules relating
to this
Article 6 (the “Ethanex
Schedules”)
and except as qualified by disclosures in the Ethanex SEC
Documents:
|
|
(i)
|
Existence.
Ethanex is a corporation duly incorporated, validly existing and
in good
standing under the laws of the State of Nevada and has all of the
requisite corporate power and authority to own, operate or lease
its
assets and properties, to conduct its business as currently conducted
and,
subject to the receipt of the Required Stockholder Approval, to enter
into
and perform the terms to be performed by it of this Agreement and
each of
the Related Agreements to which it is a party.
|
|
(ii)
|
Authorization;
Enforceability; No Conflicts.
|
|
(A)
|
Except
for receipt of the Required Stockholder Approval, Ethanex has taken
all
corporate action necessary to authorize and approve its execution,
delivery and performance of this Agreement, the Related Agreements,
and
the Transactions to which it is a party, and this Agreement constitutes
the legal, valid and binding obligation of Ethanex. Without limiting
the
foregoing, the Board of Directors of Ethanex (at a meeting duly called
and
held) (i) approved this Agreement and the transactions contemplated
hereby, (ii) authorized recommending to the Shareholders an amendment
to
the certificate of incorporation of Ethanex to increase the authorized
number of shares of Common Stock, and (iii) determined that the
transactions contemplated by this Agreement were in the best interests
of
the shareholders of Ethanex. Subject to the due execution and delivery
by
the other parties, this Agreement constitutes, and each Related Agreement
to which it is a party, when executed and delivered by it will constitute,
the legal, valid and binding obligation of Ethanex, enforceable against
Ethanex in accordance with their respective
terms.
|
43
|
(B)
|
Ethanex’s
execution, delivery and performance of this Agreement and the Related
Agreements to which it is a party and the consummation of the Transactions
in accordance with, and subject to the conditions precedent in, this
Agreement and the applicable Related Agreements do not and will not:
(i) violate any Legal Requirement applicable to Ethanex, its assets
or properties; (ii) except as set forth on Ethanex
Schedule 6(b)(ii)(B),
conflict with, violate or result in a breach of any of the provisions
of
Ethanex’s certificate of formation or operating agreement, if any; or
(iii) conflict with, result in a breach of or constitute a default
(or an event which, with notice or lapse of time or both, could constitute
a default) under, result in the acceleration of, create in any party
the
right to accelerate, terminate, suspend, modify or cancel, or require
any
notice under any agreement, contract, lease, license, instrument,
or other
arrangement to which Ethanex is a party or by which it is bound or
to
which any of its assets is subject (or result in the imposition of
any
Lien upon any of its assets or properties), except in the case of
clause
(i) or clause (iii), for any violation, conflict, breach, default,
acceleration, failure to give notice or Lien that, individually or
together with all other violations, conflicts, breaches, defaults,
accelerations, failures to give notice or Liens, would not have a
material
adverse effect on Ethanex or its ability to consummate the Transactions
contemplated by this Agreement.
|
|
(C)
|
Except
for filings required pursuant to the HSR Act, Ethanex does not need
to
obtain any Governmental Authorization, or to make any filing with
or give
any notice to any Governmental Authority, in order for it to consummate
the Transactions contemplated hereby and thereby, except where the
failure
to obtain any Governmental Authorization, individually or together
with
all other Governmental Authorizations not obtained, would not have
a
material adverse effect on Ethanex or its ability to consummate the
Transactions contemplated by this
Agreement.
|
|
(iii)
|
Litigation.
Except as set forth on Ethanex
Schedule 6(b)(iii),
there is no litigation at law or in equity or any claim, dispute,
action,
suit, complaint, arbitration or proceeding before any court, commission,
agency or other Governmental Authority or tribunal pending or, to
the
Knowledge of Ethanex, threatened against Ethanex that could prevent,
limit, impair, delay or otherwise interfere with the right or ability
of
Ethanex to consummate the
Transactions.
|
|
(iv)
|
SEC
Documents.
Ethanex
has timely filed or furnished with or to the SEC all forms, reports
and
other documents required to be filed or furnished by it since January
1,
2007 under the Securities Act and the Securities Exchange Act of
1934, as
amended (the “Exchange
Act”)
(such forms, reports and other documents, the "Ethanex
SEC Documents").
As of their respective filing dates, and after giving effect to any
amendments or supplements thereto, the Ethanex SEC Documents complied
as
to form in all material respects with the applicable requirements
of the
Securities Act or the Exchange Act, as the case may be, each as in
effect
on the date so filed, and did not contain any untrue statement of
a
material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein, in
light of
the circumstances under which they were made, not misleading. Giving
effect to the restatement that was included in Ethanex’s quarterly report
on Form 10-QSB/A, filed with the Securities and Exchange Commission
on
July 2, 2007, the financial statements (including, in each case,
the
notes, if any, thereto) of Ethanex included in the Ethanex SEC Documents
complied as to form of in all material respects with then applicable
accounting requirements and the published rules and regulations of
the SEC
with respect thereto, were prepared in accordance with GAAP as in
effect
on the respective dates thereof (except in the case of the unaudited
statements, as permitted by Form 10-Q under the Exchange Act) applied
on a
consistent basis during the periods involved (except as may be indicated
therein or in the notes thereto) and fairly present in all material
respects the condensed consolidated financial position of Ethanex
and its
subsidiaries as at the dates thereof and the condensed consolidated
results of their operations and their condensed consolidated cash
flows
for the periods then ended (subject, in the case of unaudited statements,
to normal year-end audit adjustments and to any other adjustments
described therein, all of which are of a recurring nature and none
of
which individually or in the aggregate would have a material adverse
effect on Ethanex).
|
44
|
(v)
|
Financing.
Ethanex has delivered to Seller a true and complete copy of an engagement
letter with WestLB AG, New York Branch (“WestLB”)
setting forth the terms and conditions on which WestLB has been engaged
to
seek to arrange up to $160 million of debt financing on and subject
to the
terms set forth in such letter, including the indicative term sheet
attached as an exhibit thereto (the “Debt
Engagement Letter”).
Ethanex has delivered to Seller a true and complete copy of the engagement
letters with ThinkEquity and Bank of Montreal appointing them as
placement
agents on its behalf to seek to secure privately placed equity investments
in Ethanex of up to $80 million in the aggregate on and in accordance
with
the terms of those engagement letters (the “Equity
Engagement Letters”).
Ethanex intends to obtain up to an additional $30 million of financing
from the sale of tax exempt bonds and has entered into an engagement
letter with ▇▇▇▇▇▇ Brothers to act as placement agent in seeking
to
complete the sale of such tax-exempt bonds (the “Bond
Engagement Letter”
and together with the Debt Engagement Letter and the Equity Engagement
Letter, the “Financing
Letters”).
Ethanex estimates that the proceeds from the financings contemplated
by
the Debt Engagement Letter, the Equity Engagement Letters and the
Bond
Engagement Letter, in the aggregate, will be sufficient to permit
the
Buyer Group to pay the cash portion of the Purchase Price and to
cover
applicable transaction expenses, fees and other costs to Ethanex
and its
Affiliates of completing the Transactions.
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|
(vi)
|
Absence
of Changes.
Except as disclosed in the Ethanex SEC Documents or on Ethanex
Schedule 6(b)(vi),
since September 30, 2007 there has not been any change in the assets,
liabilities, financial condition or operating results of Ethanex
from that
reflected in Ethanex’s financial statements, except changes in the
ordinary course of business that have not created, in the aggregate,
a
material adverse change on Ethanex excluding for this purpose, any
adverse
change arising out of or relating to: (i) changes in general business
or
economic conditions; (ii) changes in the industries in which Ethanex
operates; (iii) the announcement or performance of the Transactions
and obligations contemplated hereby; and (iv) the limited liquidity
of
Ethanex, as disclosed in the Ethanex SEC
Documents.
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45
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(vii)
|
Stock
Consideration.
All of the Stock Consideration issuable in accordance with this Agreement
will be, when so issued, duly authorized, validly issued, fully paid
and
non-assessable and free and clear of any Liens (other than those
created
under federal and state securities laws) and not subject to preemptive
or
other similar rights of the stockholders of Ethanex. As of the date
of
this Agreement, other than as set forth in the Ethanex SEC Documents,
in
connection with any incentive or other equity plan, as contemplated
by
this Agreement or as may by provided to Ethanex’s financing sources
(whether in connection with this Transaction or otherwise): (a) neither
Ethanex nor any of its subsidiaries has any outstanding commitments
to
issue or sell any Equity Securities, and no securities or obligations
evidencing any such right are outstanding; (b) there are no outstanding
obligations, written or otherwise, of Ethanex or any of its subsidiaries
to repurchase, redeem or otherwise acquire any Ethanex Equity Security;
(c) there are no preemptive rights in respect of any Ethanex Equity
Security; and (d) neither Ethanex nor any of its subsidiaries owns
any
Equity Securities of any Person other than its
subsidiaries.
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|
(viii)
|
Brokers’
Fees.
None of Ethanex, Ethanex ▇▇▇▇▇▇▇▇▇▇, or any of the Buyers has any
liability to pay any fees or commissions to any broker, finder or
agent
with respect to the Transactions except as set forth on Ethanex Schedule
6(b)(viii)
(which amounts shall be paid by Ethanex or its
Affiliates).
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(ix)
|
Investment.
Ethanex acknowledges that it is relying on its own due diligence
investigation and analysis in entering into the transactions contemplated
hereby. Ethanex is knowledgeable about the industries in which the
Seller
operates, is capable of evaluating the merits and risks of the
transactions contemplated by this Agreement and is able to bear the
substantial economic risk of such investment.
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(x)
|
Exclusivity
of Representations.
The representations and warranties made by Ethanex in this Section
6(b)
are the sole and exclusive representations and warranties being made
by
Ethanex in connection with the transactions contemplated by this
Agreement. Ethanex hereby disclaims any other express or implied
representation or warranty. Ethanex is not, directly or indirectly,
making
any representations or warranties regarding any pro-forma financial
information, financial projections or other forward-looking
statements.
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46
|
7.
|
COVENANTS
|
|
(a)
|
Confidentiality.
|
|
(i)
|
Buyer
Group Confidentiality Obligations.
From and after the date hereof until the Phase I Closing has occurred,
except with the Seller’s prior written consent, the Buyer Group, Ethanex
▇▇▇▇▇▇▇▇▇▇ and Ethanex shall maintain the confidentiality of the
Seller
Confidential Information, except (A) to other members of the Buyer
Group, Ethanex ▇▇▇▇▇▇▇▇▇▇ or Ethanex for the purposes of evaluating
the
Transactions, (B) to the extent required by applicable law,
(C) as necessary in connection with filings, approvals and rulings to
be obtained from any Governmental Authority, including, but not limited
to, the FTC, the DOJ, the SEC, and the IRS, including but not limited
to
Current Reports on Form 8-K (it being understood that any such filing
may
include the filing of a copy of this Agreement), (D) to the Buyer
Group’s equity and financing sources and their respective directors,
officers, employees or representatives who are informed by the Buyer
Group, Ethanex ▇▇▇▇▇▇▇▇▇▇ or Ethanex of the confidential nature of
the
Seller Confidential Information and have a confidentiality obligation
to
Ethanex or the Buyer Group, (E) as necessary to obtain any Seller
Consent or otherwise necessary for the consummation of the Transactions,
and (F) as otherwise permitted by the remainder of this
Section 7(a)(i). In the event any member of the Buyer Group, Ethanex
▇▇▇▇▇▇▇▇▇▇ or Ethanex, or any other Person to whom the Buyer Group,
Ethanex ▇▇▇▇▇▇▇▇▇▇ or Ethanex transmits Seller Confidential Information
pursuant to this Agreement, becomes legally compelled to disclose
any of
the Seller Confidential Information, Ethanex shall promptly notify
the
Seller so that the Seller may seek a protective order or other appropriate
remedy or waive compliance with the provisions of this
Section 7(a)(i), or both. In the event that such protective order or
other remedy is not obtained, or that Seller waives compliance with
the
provisions of this Section 7(a)(i), Ethanex shall, or shall cause
Ethanex ▇▇▇▇▇▇▇▇▇▇ or the applicable member of the Buyer Group to,
furnish
only that portion of the Seller Confidential Information that is
legally
required.
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|
(ii)
|
Seller’s
Confidentiality Obligations.
From and after the date hereof, except with Ethanex’s prior written
consent, the Seller shall maintain the confidentiality of the Buyer
Confidential Information, except (A) to the extent required by
applicable law, (B) as necessary in connection with filings,
approvals and rulings to be obtained from any governmental agency
or
authority, including, but not limited to, the FTC, the DOJ, the SEC,
and
the IRS (it being understood that any such filing may include the
filing
of a copy of this Agreement), (C) as necessary to obtain any Seller
Consent or otherwise necessary for the consummation of the Transactions,
(D) to the Seller’s financing sources with respect to the Completion of
the Phase II Plan and the Phase III Plan, if any, and their respective
directors, managers, officers, employees or representatives who are
informed by the Seller of the confidential nature of the Buyer
Confidential Information and have a confidentiality obligation to
the
Buyer, (E) to the Seller’s managers and members for the purposes of
evaluating the Transactions and (F) as otherwise permitted by the
remainder of this Section 7(a)(ii). In the event Seller, or any other
Person to whom the Seller transmits Buyer Confidential Information
pursuant to this Agreement, becomes legally compelled to disclose
any of
the Buyer Confidential Information, the Seller shall promptly notify
the
Buyer thereof so that Ethanex may seek a protective order or other
appropriate remedy or waive compliance with the provisions of this
Section 7(a)(ii), or both. In the event that such protective order or
other remedy is not obtained, or that Ethanex waives compliance with
the
provisions of this Section 7(a)(ii), the Seller shall furnish only
that portion of the Buyer Confidential Information that is legally
required.
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47
(b)
Notice
of Developments.
Each
party will give prompt written notice to the other of (a) any event,
circumstance or development that results (or would reasonably be expected
to
result on or prior to the applicable Closing Date) in a breach of any
representation or warranty made by it in this Agreement and (b) any material
failure of such party to comply with or satisfy any condition, covenant
or other
agreement to be complied with or satisfied by it hereunder. No disclosure
pursuant to this Section 7(b), however, shall be deemed to amend or supplement
the Schedules or the Ethanex Schedules, as the case may be, or to prevent
or
cure any misrepresentation, breach of warranty or breach of
covenant.
(c)
HSR
Act Compliance.
Seller
shall, on the one hand, and Ethanex, on the other hand, shall, promptly
prepare
and file any notifications and reports which may be required with respect
to
this Agreement and the Related Agreements by the HSR Act, including a request
for early termination of the waiting period, and respond promptly to inquiries
from the FTC or the DOJ resulting from the filings of such notifications,
and
otherwise shall use their reasonable best efforts to comply with the
requirements of such Act. Ethanex shall each pay the fee required for filing
such notification, if any. If any Governmental Authority requests information
or
documents concerning the transactions contemplated by this Agreement, each
party
agrees to (i) use its reasonable best efforts to make, or cause to be made,
as
soon as reasonably practicable and after consultation with the other parties,
an
appropriate response in compliance with such request (as contemplated under
this
section) and (ii) provide counsel for the other party with copies of all
submissions and/or filings made by such party, and all correspondence between
such party (and its advisors) with any governmental authority and any other
information supplied by such party and such party’s subsidiaries to a
Governmental Authority or received from such a Governmental Authority in
connection with the transactions contemplated hereby; provided,
however,
that
materials may be redacted as necessary to comply with contractual arrangements.
Each party shall, subject to applicable law, permit counsel for the other
party
to review in advance, and consider in good faith the views of the other
party in
connection with, any proposed written communication to any governmental
authority in connection with the transactions contemplated hereby. The
parties
agree not to participate, or to permit their subsidiaries to participate,
in any
substantive meeting or discussion, either in person or by telephone, with
any
Governmental Authority in connection with the Transactions contemplated
hereby
unless such party consults with the other party in advance and, to the
extent
not prohibited by such Governmental Authority, gives the other party the
opportunity to attend and participate. Each of the parties shall promptly
(x)
furnish to the other such necessary information and reasonable assistance
as the
other party may request in connection with the foregoing, and (y) inform
the
other of any communication from any Governmental Authority regarding any
of the
Transactions contemplated by this Agreement. The parties hereto shall use
their
respective, reasonable best efforts and take all necessary action to obtain
any
clearance under the HSR Act or authorization of any Governmental Authority
under
United States antitrust or competition Legal Requirements, necessary in
connection with the transactions contemplated hereby or to resolve any
objections that may be asserted by any governmental authority with respect
to
the transactions contemplated hereby. Notwithstanding the foregoing, none
of the
Seller or any of the Buyers shall be required to take any commercially
unreasonable action or any other action that would materially impair or
reduce
the overall benefits expected to be realized from the consummation of the
Transactions contemplated by this Agreement and the Related
Agreements.
|
(d)
|
Notices
and Consents.
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|
(i)
|
Seller
shall, and shall cause its respective Affiliates to, use commercially
reasonable efforts to expeditiously obtain all Seller Consents and
any
other consents to the Transactions required under any other agreement
to
which Seller is a party (including without limitation, the Assumed
Contracts), in each case in form and substance reasonably acceptable
to
Ethanex. Each of the Parties will give any notices to, or make any
filings
with, Governmental Authorities or, in the case of Assumed Contracts,
give
any notices to third parties that are required as a result of the
Transactions contemplated hereby. Ethanex, on the one hand, and the
Seller, on the other hand, shall prepare and deliver (or cause to
be
prepared and delivered) to one another all information required to
be
provided in any notice, filing, application, or similar request or
submission in sufficient time to enable the party charged hereunder
with
filing such notice, filing form, application or similar submission
to make
such filing within the time period set forth herein or by any other
applicable deadline. Except as set forth in this Section 7(d),
nothing herein shall require the expenditure or payment of any funds
(other than in respect of normal and usual attorneys’ fees, filing fees or
other normal costs of doing business) or the giving of any other
consideration in connection with obtaining any of the Seller Consents;
provided,
that the Seller shall, except as otherwise set forth herein, be liable
for
and timely perform and satisfy all obligations or liabilities under
each
Governmental Authorization or Material Contract of the Seller during
the
period prior to the applicable Closing Dates. Ethanex and the Seller
shall
reasonably cooperate in connection with obtaining such consents and
shall
promptly furnish to any Person from whom a Seller Consent is requested
such accurate and complete information regarding, as applicable,
Ethanex,
Seller and their respective Affiliates as such Person may reasonably
require in connection with obtaining any Seller Consent.
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48
|
(ii)
|
Except
as the parties may otherwise agree in writing, Seller shall not agree,
without Ethanex’s prior written consent, (1) to any adverse change to
the material terms of any Governmental Authorization, Assumed Contract
or
other obligation to which a Seller Consent or other consent relates
or
(2) to the imposition of any adverse condition to the assignment of
any such Governmental Authorization, Assumed Contract or other obligation
to which such Seller Consent or other consent relates to Ethanex
as a
condition to obtaining any Governmental Authorization, Seller Consent
or
other consent, and, in each case, Ethanex shall not be required to
accept
any such change or condition.
|
(e)
Further Assurances; Satisfaction of Covenants, etc.
Prior
to and following the Closings, Seller, on the one hand, and Ethanex, Ethanex
▇▇▇▇▇▇▇▇▇▇, and the Buyers, on the other hand, shall each execute such
documents
and other papers and take or cause to be taken such further actions as
may be
reasonably required to carry out the provisions of this Agreement and to
consummate and make effective the Transactions. Without
limiting the generality of the foregoing, on the terms and subject to the
conditions in this Agreement, Seller agrees to use its reasonable best
efforts
to take, or cause to be taken, all actions as may reasonably be necessary
to
consummate the Transactions contemplated by this Agreement and the Related
Agreements and to cause the conditions set forth in Articles 8 and 9 to
be
satisfied, and Ethanex, Ethanex ▇▇▇▇▇▇▇▇▇▇, and the Buyers agree to use
their
reasonable best efforts to take, or cause to be taken, all actions as may
reasonably be necessary to consummate the Transactions contemplated by
this
Agreement and by the Related Agreements and to cause the conditions set
forth in
Article 8 and 9 to be satisfied, in each case as soon as practicable after
the
date hereof. In
addition to the specific requirements to provide certain financial information
to Ethanex set forth in other provisions of this Agreement, Seller promptly
shall provide to Ethanex all information with respect to Seller that Ethanex
reasonably requires for inclusion in filings with the SEC (including Current
Reports on Form 8-K) with respect to Seller and its business, as well as
the
Transactions contemplated by this Agreement.
49
(f) Access.
Seller
shall, and shall cause its Affiliates to, afford Ethanex and the members of
the
Buyer Group, and their respective representatives, advisors and lenders, upon
reasonable advance notice and during normal business hours, such access to
the
properties, plants, personnel, equipment, facilities, books and records of
the
Seller as shall be reasonably necessary to enable the Ethanex, the members
of
the Buyer Group and their respective representatives, advisors and lenders
(a)
to investigate the business affairs or environmental compliance or liability
status for purposes of the Transactions and (b) to make orderly arrangements
for
the consummation of the Transactions.
Subject
to limitations necessary to permit Ethanex to comply with its obligations under
applicable securities laws, Ethanex shall provide Seller and its
representatives, advisors and lenders, upon reasonable advance notice and during
normal business hours, with a reasonable opportunity to ask questions of and
receive answers from Ethanex regarding the properties, plants, personnel,
equipment, facilities, books and records of Ethanex and the Buyer Group as
shall
be reasonably necessary to enable the Seller and its representatives, advisors
and lenders to make orderly arrangements for the consummation of the
Transactions.
(g)
Exclusivity. From the date of this Agreement, Seller shall not, and
it shall not authorize or permit any of its Affiliates or its or their
respective members, professionals, advisors, officers, managers, directors,
employees, members, representatives, other agents or other related parties
to,
directly or indirectly, (x) solicit, initiate or encourage the submission
of any Acquisition Proposal, (y) participate in any discussions or
negotiations regarding, or furnish to any Person any non-public information
with
respect to the Seller, or take any other action to facilitate, any Acquisition
Proposal or any inquiries or the making of any proposal that constitutes,
or may
reasonably be expected to lead to, any Acquisition Proposal or (z) enter
into any agreement, understanding or other arrangement with respect to
an
Acquisition Proposal. For purposes of avoiding doubt, the entry into and
performance of the Related Agreements shall not be deemed to violate this
Section 7(g).
(h)
Continuity and Maintenance of Operations.
From
the date of this Agreement until the last to occur of the Phase I Closing,
the
Phase II Closing, the Phase III Closing or termination in accordance with
Article 12, with respect to the assets and properties of the
Seller:
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(i)
|
Except
as described in Schedule 7(h),
as required by the terms of this Agreement or the other Related
Agreements, as contemplated by the Phase II Plan or the Phase III
Plan or
as approved in writing in advance by Ethanex,
and subject to changes in the Seller’s operations, assets and business
that results from or are required by the Closings (in each case from
and
after the applicable Closing Date):
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|
(A)
|
Seller
shall continue to operate in the ordinary course consistent with
past
practice and, prior to the Phase I Closing, make ordinary marketing,
advertising, capital, promotional and other similar expenditures
consistent with past practice and, to the extent consistent with
such
conduct and operation, use commercially reasonable efforts to
(a) prior to the Phase I Closing, preserve the current business
intact in all material respects, including preserving existing
relationships with franchising authorities, suppliers, customers
and
others having business dealings with the Seller, (b) continue the
Phase II Plan until the Phase II Closing, and (c) continue the Phase
III Plan until the Phase III Closing, provided that with respect
to the
Phase II Closing, “ordinary course” as it is used in this Section 7(h)
shall mean the ordinary course after giving effect to the Transactions
that occurred at the Phase I Closing, and provided further that with
respect to the Phase III Closing, “ordinary course” as it is used in this
Section 7(h) shall mean the ordinary course after giving effect to
the
Transactions that occurred at the Phase I Closing and Phase II Closings;
and
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50
|
(B)
|
the
Seller shall use commercially reasonable efforts to remain in material
compliance with all Legal Requirements;
and
|
|
(C)
|
without
limiting the generality of the foregoing, the Seller shall maintain
its
assets and properties consistent with past practice; until the Phase
I
Closing maintain the Owned Real Property in substantially the same
condition as exists as of the date of this Agreement, ordinary wear
and
tear excepted; until the Phase II Closing maintain the Loop Real
Property
in substantially the same condition as exists on the date the Seller
purchases such Loop Real Property (taking into account the construction
of
the two-rail loop thereon); prior to the Phase I Closing, maintain
insurance as in effect on the date of this Agreement, and thereafter
maintain a level of builders’ risk insurance that is customary and
adequate to insure the Phase II Assets and the Phase III Assets;
and keep
all of its business books, records and files in the ordinary course
of
business.
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(ii)
|
Seller
shall not, except in the ordinary course of business consistent with
past
practice, as required by the terms of this Agreement or the other
Related
Agreements, as contemplated by the Phase II Plan or the Phase III
Plan or
as approved in writing in advance by
Ethanex:
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|
(A)
|
modify,
amend, extend, terminate, renew, suspend, or abrogate any Governmental
Authorization or Material Contract relating to the assets or properties
of
the Seller or enter into any contract or agreement that would be
required
to be listed on Schedule
5(b)(viii);
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|
(B)
|
sell,
transfer or assign any of the Seller’s assets or properties to any
Affiliate or any other third party, other than (i) sales, transfers
or
assignments of inventory in the ordinary course of business and of
obsolete or worn-out equipment and (ii) distributions to members
that are
otherwise permitted by the terms of this Agreement and the Related
Agreements and that do not constitute Phase I Assets, Phase II Assets,
Phase III Assets, the Owned Real Property or the Loop Real Property;
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(C)
|
enter
into any contract or commitment or incur any indebtedness or other
Liability or obligation of any kind relating to the Seller’s assets except
as required in connection with the Completion of the Phase II Plan
and the
Completion of the Phase III Plan, any of which shall be reasonably
acceptable to Ethanex;
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(D)
|
take
any action that would result in the loss, lapse or abandonment of
any
Intellectual Property;
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51
|
(E)
|
make
any capital expenditure or series of capital expenditures that would
require payment in whole or in part after the Phase I Closing except
for
the capital expenditures described in the Phase II Plan and the Phase
III
Plan;
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(F)
|
redeem,
purchase or otherwise acquire any Equity Securities or rights or
obligations convertible into or exchangeable for any Equity Securities
or
obligations convertible into such, or any options, warrants or other
rights to purchase or subscribe to any of the foregoing;
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(G)
|
except
as required by GAAP or applicable law, not permit a change in its
methods
of maintaining its books, accounts or business records (in which
event
prior notice shall be given to Buyer), or any change any of its accounting
principles or the methods by which such principles are applied for
Tax or
financial reporting purposes in effect at the date of the Latest
Balance
Sheet;
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(H)
|
make
any loans or advances to any other Person;
or,
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(I)
|
agree
or commit to do any of the
foregoing.
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(iii)
|
Prior
to the Phase I Closing Date, Seller shall, with respect to any of
its
employees, except as required to comply with applicable law or as
required
to comply with existing contracts or plans that are disclosed on
Schedule 5(b)(x):
(i) increase or decrease in any manner the compensation or fringe
benefits of any employee (except for increases in the ordinary course
of
business consistent with past practice in connection with normal
salary
reviews), including
any such increase pursuant to any option, bonus, stock purchase,
pension,
profit-sharing, deferred compensation, retirement or other plan,
arrangement, contract or commitment;
(ii) voluntarily recognize any union as collective bargaining
representative of any of its employees; (iii) enter into a collective
bargaining agreement governing the terms or condition of employment
of any
of its employees; (iv) enter into any government contract giving rise
to affirmative action obligations relating to any of its employees;
or
(v) agree to do any of the foregoing.
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(i)
|
License
Agreements.
From the date of this Agreement until the last to occur of the Phase
I
Closing, the Phase II Closing and the Phase III Closing, Seller shall
not
enter into any technology license agreements (other than with respect
to
“shrink-wrap” or other commercially available, off-the-shelf,
non-customized technology for which the user must unilaterally agree
to
universally applicable licensing terms) that would in any way impair
the
use of the Purchased Assets or the operation of the Business without
the
prior consent of Ethanex (which consent shall not be unreasonably
withheld, delayed or conditioned).
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(j)
|
Completion
of Phase II Plan.
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|
(i)
|
From
the date hereof until the Completion of the Phase II Plan (or until
the
date the Phase II Buyer assumes Completion of the Phase II Plan pursuant
to Section 4(b)(ii)(A)), Seller shall deliver to Ethanex monthly
progress reports regarding the status of the Phase II Plan. In addition,
Seller shall permit Ethanex to conduct independent progress reviews
of the
status of the Phase II Plan not less than sixty (60) days and thirty
(30)
days prior to the Phase II Closing Date, which progress reviews shall
include the right of Ethanex to inspect the Seller’s compliance with the
Phase II Plan.
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52
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(ii)
|
The
work, and all activities of the Seller and/or its contractors in
connection with, in furtherance of, or in any way related to the
Phase II
Plan shall be performed in compliance in all material respects with
relevant and applicable laws, ordinances, rules and regulations (including
occupational safety and health standards) of any Governmental Authority
having jurisdiction over any aspect
thereof.
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(iii)
|
If the
Completion of the Phase II Plan has not occurred by the Phase II
Deadline,
then Ethanex, in its sole discretion, shall have the option to (i)
proceed
with the Phase II Closing and implement the Purchase Price reduction
arrangements contemplated by Section 4(b)(ii)(B) or (ii) postpone
the
Phase II Closing and extend the Phase II Deadline by up to 90 days,
or
such time as is permitted by Ethanex’s third-party lenders (the
“Extended
Phase II Deadline”),
to permit the Seller to continued pursuing the Completion of the
Phase II
Plan, which activities shall be subject to an additional inspection
and
verification process pursuant to this Section 7(j). In any event,
if
Seller disputes Ethanex’s determination of the Completion of the Phase II
Plan, Ethanex and the Seller shall engage ▇.▇. ▇▇▇▇, Inc. as an
independent engineer, to resolve the dispute as soon as practicable,
but
within any event no later than 30 days following the date ▇.▇. ▇▇▇▇,
Inc.
is engaged by the parties. ▇.▇. ▇▇▇▇, Inc.’s resolution of the dispute
shall be final and binding, absent manifest error. Notwithstanding
anything to the contrary contained herein, Ethanex shall be permitted
to
assume the Completion of the Phase II Plan during any such dispute
and
pending the determination of ▇.▇. ▇▇▇▇,
Inc.
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(k)
|
Completion
of Phase III Plan.
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(i)
|
From
the date hereof until the Completion of the Phase III Plan (or until
the
date Ethanex assumes Completion of the Phase III Plan pursuant to
Section 4(b)(ii)(C)), Seller shall deliver to Ethanex monthly
progress reports regarding the status of the Phase III Plan. In addition,
Seller shall permit Ethanex to conduct independent progress reviews
of the
status of the Phase III Plan not less than sixty (60) days and thirty
(30)
days prior to the Phase III Closing Date, which progress reviews
shall
include the right of Ethanex to inspect the Seller’s compliance with the
Phase III Plan.
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(ii)
|
The
work, and all activities of the Seller and/or its contractors in
connection with, in furtherance of, or in any way related to the
Phase III
Plan shall be performed in compliance in all material respects with
relevant and applicable laws, ordinances, rules and regulations (including
occupational safety and health standards) of any Governmental Authority
having jurisdiction over any aspect
thereof.
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|
(iii)
|
If
Ethanex determines that the Completion of the Phase III Plan has not
occurred by the Phase III Deadline, then Ethanex, in its sole discretion,
shall have the option to (i) proceed with the Phase III Closing and
implement the Purchase Price reduction arrangements contemplated
by
Section 4(b)(ii)(D) or (ii) postpone the Phase III Closing and extend
the
Phase III Deadline by up to 90 days, or such time as is permitted
by
Ethanex’s third-party lenders (the “Extended
Phase III Deadline”),
to permit the Seller to continued pursuing the Completion of the
Phase III
Plan, which activities shall be subject to an additional inspection
and
verification process pursuant to this Section 7(k). In any event,
if
Seller disputes Ethanex’s determination of the Completion of the Phase III
Plan, Ethanex and the Seller shall engage ▇.▇. ▇▇▇▇, Inc., as an
independent engineer, to resolve the dispute as soon as practicable,
but
within any event no later than 30 days following the date ▇.▇. ▇▇▇▇,
Inc.
is engaged by the parties. ▇.▇. ▇▇▇▇ Inc.’s resolution of the dispute
shall be final and binding, absent manifest error. Notwithstanding
anything to the contrary contained herein, Ethanex shall be permitted
to
assume the Completion of the Phase III Plan during any such dispute
and
pending the determination of ▇.▇. ▇▇▇▇,
Inc.
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53
(l)
Risk of Loss. Prior to the Phase I Closing, the Seller shall bear the
risk of loss with respect to any and all of the Phase I Assets and the
Owned
Real Property. After the Phase I Closing and prior to the Phase II Closing,
the
Seller shall bear the risk of loss with respect to any and all of the Phase
II
Assets and the Loop Real Property, except to the extent such loss occurs
because
of the operation by the Buyer Group of the Phase I Assets. After the Phase
I
Closing and prior to the Phase III Closing, the Seller shall bear the risk
of
loss with respect to any and all of the Phase III Assets, except to the
extent
such loss occurs because of the operation by the Buyer Group of the Phase
I
Assets and Phase II Assets.
(m) Employees.
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(i)
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Prior
to the Phase I Closing Date, Phase I Buyer or one of its Affiliates
shall
offer jobs to those employees of Seller listed on the attached
Schedule
7(m)
or
such persons’ respective replacements (the “Hired
Employees”).
These job offers (i) shall become effective only upon the occurrence
of
the Phase I Closing, (ii) shall reflect terms and conditions of employment
that are substantially similar in the aggregate to those terms and
conditions under which such Hired Employees are employed by Seller
as of
the Phase I Closing Date, and (iii) shall further be conditioned
upon such
Hired Employees being available to begin work for Phase I Buyer (or
its
Affiliate, as applicable) as of the Phase I Closing Date, subject
to any
reinstatement or leave rights they may have under the applicable
leave
policies of Seller or any applicable Legal
Requirement.
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(ii)
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Seller
shall be responsible for providing the group health plan continuation
coverages pursuant to Section 4980B of the Code, and Sections 601-609
of
ERISA, for all Hired Employees and their eligible dependents; provided,
however, that Phase I Buyer or an Affiliate shall be responsible
for
providing such coverages to Hired Employees and their eligible dependents
who become entitled to such coverages on account of “qualifying events”
that occur after the Phase I Closing Date.
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(iii)
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The
parties shall reasonably cooperate with each other and exchange any
information, filings or notices as appropriate to implement the provisions
of this Section 7(m). Phase I Buyer shall assist in providing any
information, filings or notices (including the notice required by
Section
204(h) of ERISA), if needed, to cease the benefit accruals; provided,
however,
that Seller shall be responsible for satisfying the requirements
of
Sections 204(h) and 4043 of ERISA and Section 4980F of the Code to
the extent they must be satisfied with respect to any Plan prior
to the
Phase I Closing Date.
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54
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(iv)
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Buyer
Plans.
Phase I Buyer's or one of its Affiliate’s benefit plans shall recognize
each Hired Employee's prior periods of service or seniority with
Seller
for purposes of benefit eligibility and vesting under any benefit
plan or
program or compensation arrangements provided to such Hired Employees
after the Phase I Closing Date and for purposes of vacation and paid
time
off benefit accrual. In addition, Phase I Buyer shall waive pre-existing
condition requirements, evidence-of-insurability provisions,
waiting-period requirements and all other similar provisions under
any
benefit plan or program or compensation arrangements provided to
the Hired
Employees after the Phase I Closing Date. Phase I Buyer shall also
apply
toward any deductible requirements and out-of-pocket maximum limits
under
its employee welfare benefit plans, any amounts paid by each Hired
Employee prior to the Phase I Closing under welfare benefit plans
during
the current plan year, to the extent permitted by the terms of the
applicable welfare plan.
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(v)
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Effective
as soon as practicable following the Phase I Closing Date, Phase
I Buyer
shall permit the Hired Employees to participate in Phase I Buyer’s (or an
Affiliate’s) 401(k) plan in accordance with and subject to the terms and
conditions of such plan.
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(n)
Financing. Ethanex and the members of the Buyer Group shall use their
reasonable best efforts to seek to obtain debt and equity financing contemplated
by Financing Letters on terms consistent with those set forth in the Financing
Letters or otherwise on terms reasonably acceptable to Ethanex. In this
regard,
Ethanex and the Buyer Group shall diligently and in good faith cooperate
with
the financing sources engaged under the Financing Letters (or, in the event
one
or more of the Financing Letters is terminated or financing thereunder
is not
available, with any alternative sources of financing that Ethanex is able
to
identify), including, among other things, using reasonable best efforts
to
assist the financing sources with due diligence, negotiate definitive financing
agreements and seek to satisfy all of the conditions to funding set forth
in
such definitive agreements. Ethanex shall keep the Seller fully informed
of any
significant developments relating to the proposed debt and equity financings
and
shall furnish to the Seller, promptly after receipt, copies of all final
documents and shall notify the Seller if Ethanex in good faith reasonably
believes that financing in an amount required to fund the cash portion
of the
Purchase Price and to pay applicable transaction expenses, fees and other
costs
to Ethanex and its Affiliates of completing the Transactions will not be
available pursuant to the transactions contemplated by the Financing Letters
or
otherwise.
(o)
Publicity. No party shall make any public announcement regarding the
Transactions without the consent of the others, except as a party determines
is
required by applicable laws and regulations. If a party determines it is
required to make a public announcement, that party shall give the others
as much
prior notice as is reasonably practicable and shall consult with the others
about the text of such announcement. Notwithstanding anything herein to
the
contrary, the Seller acknowledges and agrees that Ethanex shall be required
to
file one or more Current Reports on Form 8-K disclosing the Transactions
contemplated by this Agreement and attaching as an exhibit thereto a copy
of
this Agreement.
55
(p)
Funded Debt; Release of Liens. Not less than three (3) Business Days
prior to the Phase I Closing, the Seller shall cause to be delivered to
Ethanex
a certificate (the “Phase I Closing Certificate”) setting forth the
amount of Funded Debt encumbering the Phase I Assets (the “Phase I Funded
Debt”) and the Owned Real Property (the “Owned Real Property Funded
Debt”), UCC Termination Statements and any other required documentation
with
respect to the termination or release of any Lien imposed on the Owned
Real
Property and the Phase I Assets by the Phase I Funded Debt and the Owned
Real
Property Funded Debt that may be required by Ethanex’s financing sources or by
Ethanex, in its reasonable discretion. Not less than three (3) Business
Days
prior to the Phase II Closing, the Seller shall cause to be delivered to
Ethanex
a certificate (the “Phase II Closing Certificate”) setting forth the
amount of Funded Debt encumbering the Phase II Assets and the Loop Real
Property
(“Phase II Funded Debt”) that will be outstanding, UCC Termination
Statements and any other required documentation with respect to the termination
or release of any Lien imposed on the Phase II Assets and the Loop Real
Property
by the Phase II Funded Debt that may be required by Ethanex’s financing sources
or by Ethanex, in its reasonable discretion. Not less than three (3) Business
Days prior to the Phase III Closing, the Seller shall cause to be delivered
to
Ethanex a certificate (the “Phase III Closing Certificate”) setting forth
the amount of Funded Debt encumbering the Phase III Assets (“Phase III Funded
Debt”), UCC Termination Statements and any other required documentation
with
respect to the termination or release of any Lien imposed on the Phase
III
Assets by the Phase III Funded Debt that may be required by Ethanex’s financing
sources or by Ethanex, in its reasonable discretion. On or prior to the
Phase I
Closing, Seller shall cause all Liens on the Phase I Assets and the Owned
Real
Property (other than Permitted Encumbrances) to be released. On or prior
to the
Phase II Closing, Seller shall cause all Liens on the Phase II Assets and
the
Loop Real Property (other than Permitted Encumbrances) to be released.
On or
prior to the Phase III Closing, Seller shall cause all Liens on the Phase
III
Assets (other than Permitted Encumbrances) to be released.
(q)
Subsidiaries. Seller shall not create any subsidiaries prior to last to
occur of the Phase I Closing Date, the Phase II Closing Date, the Phase
III
Closing Date and termination of this Agreement pursuant to Article 12.
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(r)
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Further
Action Regarding Financial Statements and Financing.
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(i)
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From
the date hereof through the Phase I Closing, Seller shall deliver
to
Ethanex, within 45 days after the end of each month, (i) monthly
unaudited balance sheets and statements of income for Seller and
(ii) a monthly reporting package including any management discussion
and analysis of the financial condition and results of operations
of
Seller that is prepared for the board of managers of Seller (the
“Monthly
Financials”).
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(ii)
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Seller
shall use its reasonable best efforts to deliver to Ethanex, as promptly
as practicable, but in any event not later than March 15, 2008 the
2007
Audited Financials, accompanied by the report thereon of Seller’s
independent auditor, which report shall be unqualified.
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(iii)
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Seller
acknowledges and agrees that the 2007 Audited Financials will not
be
required to meet the requirements (in form and substance) of Regulation
S-X under the Securities Act for inclusion in a registration statement
on
Form S-1. Immediately following the delivery of the 2007 Financial
Statements to Ethanex, Seller agrees that it will use its reasonable
best
efforts to cooperate and assist an auditor (the “S-X
Auditor”)
to produce audited financial statements of the Seller that are compliant
with the requirements (in form and substance) of Regulation S-X (the
“S-X
2007 Audited Financials”)
for inclusion in a timely Current Report on Form 8-K by Ethanex;
provided
that Ethanex shall be responsible for the incremental cost to prepare
the
S-X 2007 Audited Financials. Seller further agrees that it will use
its
reasonable commercial efforts to obtain the consent of its auditor
to the
S-X Auditor’s use, and inclusion in the S-X 2007 Audited Financials, of
the 2007 Financial Statements in the Current Report on Form 8-K,
and any
subsequent filing of Ethanex in which such 2007 Audited Financials
are
utilized in subsequent financial statements, as required by the
SEC.
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56
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(iv)
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Seller
shall use reasonable best efforts to assist Ethanex in preparing
information relating to the business of Seller as may be required
requested to be included in any bank information memorandum, private
placement memorandum or other similar document (“Financing
Documents”)
and shall provide all cooperation reasonably necessary in connection
with
the arrangement Ethanex’s financing of the Purchase Price, in each case
including participation in meetings (including with potential bank
lenders), due diligence sessions, rating agency presentations, road
shows,
the drafting of the Financing Documents and similar documents, and
the
drafting of related documentation (including collateral documents)
and
certificates.
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(v)
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If,
following the Phase I Closing, Ethanex shall be required to deliver
to the
SEC additional financial statements (other than the financial statements
specified in this Section 7(r)) relating in whole or in part to any
period
prior to the Phase I Closing, Seller shall use its reasonable best
efforts
to assist such Buyer in the preparation of such supplemental financial
statements (provided that Ethanex shall reimburse Seller for its
reasonable out-of-pocket expenses, if any, associated with Seller’s
assistance), including without limitation providing Ethanex and the
Buyer
Group’s authorized representatives with full access at all reasonable
times, and in a manner so as not to interfere with the normal business
operations of the Seller, to all relevant books, records, work papers,
information and employees and auditors of Seller, to the extent necessary
in connection with the preparation of any such supplemental financial
statements.
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(s) Lease.
Ethanex
and Seller shall negotiate a mutually acceptable agreement, to be effective
on
the Phase I Closing Date, which shall provide that RE LLC or Phase I Buyer,
as
the case may be, shall grant Seller (and its agreed-upon contractors) access,
at
no cost to Seller, to the Owned Real Property in order to complete the Phase
II
Plan and the Phase III Plan.
(t) Post-Closing
Remittances.
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(i)
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Excluded
Assets and Excluded Liabilities.
Any asset (including the accounts receivable) or liability that is
an
Excluded Asset or an Excluded Liability and , all other remittances
and
all mail and other communications that comes into the possession,
custody
or control of any of the Buyer Group shall, within ten (10) business
days
following receipt by thereby, be transferred, assigned or conveyed
to
Seller at Seller’s cost. Until such transfer, assignment and conveyance,
such member of the Buyer Group shall not have any right, title or
interest
in or obligation or responsibility with respect to such asset or
liability
except that the applicable member of the Buyer Group shall hold such
asset
in trust for the benefit of Seller.
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57
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(ii)
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Acquired
Assets and Assumed Liabilities.
Any asset or liability (including accounts receivable) that is an
Purchased Asset or an Assumed Liability and all other remittances
and all
mail and other communications that comes into the possession, custody
or
control of Seller (or its respective successors-in-interest, assigns
or
affiliates) shall, within ten (10) business days following receipt
by
Seller, be transferred, assigned or conveyed by Seller (and its respective
successors-in-interest, assigns and affiliates) to the Phase I Buyer,
the
Phase II Buyer, Phase III Buyer or RE LLC, as the case may be at
such
person’s cost. Until such transfer, assignment and conveyance, Seller (and
its respective successors in-interest, assigns and affiliates) shall
not
have any right, title or interest in or obligation or responsibility
with
respect to such asset or liability except that Seller shall hold
such
asset in trust for the benefit of the applicable
Buyer.
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(iii)
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Accounts
Receivable.
To the extent each of Seller and a member of the Buyer Group have
an
outstanding account receivable from the same third-party, if, when
such
third party remits payment, such third party does not clearly specify
to
which account receivable such payment is to apply (i.e, the Sellers’ or a
member of the Buyer Group), then such payment shall be applied to
the
oldest outstanding amount first, until such amount is satisfied by
such
payment.
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(u) LB
536
Credits.
From
and after the Phase I Closing Date until May 1, 2012, Phase I Buyer shall pay
to
the Seller the Realized Value of the LB 536 Credits. Phase I Buyer shall use
reasonable commercial efforts to maximize the Realized Value of the LB 536
Credits.
(v) Real
Estate Taxes.
Seller
shall pay to the assessing authority, prior to the applicable due date, all
real
estate taxes imposed with respect to the Owned Real Property which are
attributable to any period, or portion thereof, prior to and including the
Phase
I Closing Date (“Seller
Phase I Real Estate Taxes”).
Buyer
shall be responsible for paying all real estate taxes imposed with respect
to
the Owned Real Property which are attributable to any period, or portion
thereof, following the Phase I Closing Date. Seller shall pay to the assessing
authority, prior to the applicable due date, all real estate taxes imposed
with
respect to the Loop Real Property which are attributable to any period, or
portion thereof, prior to and including the Phase II Closing Date (“Seller
Phase II Real Estate Taxes”).
Buyer
shall be responsible for paying all real estate taxes imposed with respect
to
the Loop Real Property which are attributable to any period, or portion thereof,
following the Phase II Closing Date.
(w) JV
Agreement.
On the
Phase I Closing Date, the parties shall execute an agreement in form and
substance reasonably acceptable to each of Seller and Ethanex (but which, in
any
event, shall conform to the terms set forth on Exhibit
Q
hereto),
which shall become effective only in accordance with Section 12(c) hereof,
(the
“JV
Agreement”).
The
executed JV Agreement shall be placed in escrow with Team Bank or such other
escrow agent as is mutually agreed upon by Ethanex and MRE on the Phase I
Closing Date and either (i) shall be released and become effective on the first
to occur of a failure of the condition set forth in Section 9(c)(iii) and
Section 9(d)(iii) or (ii) shall be destroyed by the Escrow Agent upon the
occurrence of the Phase III Closing. Prior to the Phase I Closing Date, Ethanex
will cause Ethanex ▇▇▇▇▇▇▇▇▇▇ to take all necessary limited liability company
action to approve the terms of, and the entry into according to the conditions
set forth in Section 12(c) hereof, the JV Agreement.
(x) Required
Stockholder Approval.
(i) On
a
timely basis, Ethanex shall prepare (and if required file with the SEC) a proxy
statement, information statement or other similar document, in accordance with
applicable Legal Requirements (the “Shareholder
Approval Document”),
as is
necessary and appropriate to obtain the Required Stockholder Approval, it being
acknowledged by the parties to this Agreement that Ethanex will not be able
to
complete the preparation of the Shareholder Approval Document (and, if required,
file it with the SEC) until such time as it has reached definitive agreements
with third parties for both the debt and equity financing required to complete
the Transactions contemplated by this Agreement. In addition to Seller’s other
obligations pursuant to this Agreement to provide certain financial information,
Seller shall provide Ethanex with such information about Seller’s business as
Ethanex reasonably requests for inclusion in the Shareholder Approval Document.
If filing is required with the SEC, Ethanex will use its reasonable best efforts
to have the Shareholder Approval Document declared effective (or otherwise
cleared for use) by the SEC as promptly as practicable after its filing with
the
SEC, and Seller shall assist Ethanex in such efforts, as reasonably requested
by
Ethanex.
58
(ii) Ethanex
will use its reasonable best efforts to cause the Shareholder Approval Document
to be mailed to its stockholders as promptly as practicable after it is complete
and such mailing is permitted by applicable Legal Requirements (including,
if
applicable, authorization by the SEC to mail the Shareholder Approval Document).
If prior to receipt of the Required Stockholder Approval any event occurs with
respect to the Seller, or any change occurs with respect to information supplied
by or on behalf of the Seller for inclusion in the Shareholder Approval Document
that is required to be described in an amendment of, or a supplement to, the
Shareholder Approval Document, the Seller shall promptly notify Ethanex of
such
event, and the Seller shall cooperate with Ethanex in the preparation (and,
if
required, filing) of any necessary amendment or supplement to the Shareholder
Approval Document.
(iii) Ethanex
shall, as soon as reasonably practicable, duly call, give notice of, convene
and
hold a meeting of its stockholders (the “Ethanex
Stockholders Meeting”)
for
the purpose of obtaining the Required Stockholder Approval, it being
acknowledged by the parties that the Ethanex Stockholders Meeting cannot and
will not be scheduled until at least 21 days after the Shareholder Approval
Document has been completed and is permitted to be mailed to Ethanex
stockholders in accordance with applicable Legal Requirements.
(iv) Subject
to the immediately succeeding sentence, Ethanex shall include in the Shareholder
Approval Document the recommendation of the board of directors of Ethanex in
favor of the Required Stockholder Approval (the “Recommendation”).
Neither the board of directors of Ethanex nor any committee thereof shall
directly or indirectly (A) withdraw (or modify or qualify in a manner adverse
to
Seller), or publicly propose to withdraw (or modify or qualify in a manner
adverse to Seller), the Recommendation or (B) take any other action or make
any
other public statement in connection with the Ethanex Stockholder Meeting
inconsistent with such Recommendation (any action described in this clause
(A)
or (B) being referred to as an “Ethanex
Recommendation Change”);
provided,
that
at
any time prior to obtaining the Required Stockholder Approval, the board of
directors of Ethanex (or a committee thereof) may effect an Ethanex
Recommendation Change if such board of directors (or a committee thereof, as
applicable) determines in good faith (after consultation with outside counsel)
that failure to take such action could violate its fiduciary duties under
applicable Legal Requirements.
(y) Additional
Seller Obligations.
From
and after the Phase III Closing Date (and conditioned on the occurrence of
the
Phase I Closing, the Phase II Closing and the Phase III Closing) until the
date
that is the eighteen-month anniversary thereof, Seller shall be required to
retain direct ownership, free and clear of any Liens, of no less than a number
of shares of the Phase III Stock Consideration that has an aggregate value
of
less than Ten Million Dollars ($10,000,000.00) (valued as of the date of the
Phase III Closing).
(z) Seller
Financing Requirement.
Seller
shall use its reasonable best efforts to seek to obtain financing contemplated
by the Seller Financing Requirement on terms reasonably acceptable to Seller.
In
this regard, Seller shall diligently and in good faith cooperate with financing
sources, including, among other things, using reasonable best efforts to assist
the financing sources with due diligence, negotiate definitive financing
agreements and seek to satisfy all of the conditions to funding set forth in
such definitive agreements. Seller shall keep Ethanex fully informed of any
significant developments relating to the proposed debt financing and shall
notify Ethanex if Seller in good faith reasonably believes that financing in
an
amount required to complete the Phase II Plan or the Phase III Plan, as the
case
may be.
59
(aa) Fractionation.
Ethanex
agrees to use its commercially reasonable best efforts to obtain necessary
permits and commence construction as soon as practical after the Phase I Closing
on a corn fractionation and corn oil extraction facility (the “Fractionation
Plant”).
The
Fractionation Plant will utilize ▇▇▇▇▇▇ manufactured milling equipment with
a
design capacity to process a minimum of 48 million bushels of corn per year
with
a starch loss from the fractionation process of not more than 4.4%. The
Fractionation Plant will also include a Crown Ironworks corn oil expelling
system with a design capability of expelling a minimum of .8 pounds of food
grade crude corn per bushel of corn, or an annual capacity of 19,200 tons per
year. Ethanex will use its commercially reasonable efforts to coordinate the
start-up of the Fractionation Plant with the start-up of the Phase II facility
and to reach full capacity at the time of the Phase III Closing.
(bb) Prohibition
on Certain Actions.
Until
the last to occur of the Phase II Closing and the Phase III Closing, (i) neither
Ethanex ▇▇▇▇▇▇▇▇▇▇, Phase I Buyer, Phase II Buyer, Phase III Buyer nor RE LLC
shall (v) make a distribution of any of the Phase I Assets, the Phase II Assets,
the Phase III Assets, the Loop Real Property or the Owned Real Property, as
the
case may be, to its members or any other transfer of their respective assets
(other than a grant of a security interest in the Purchased Assets to the
sources of the financing contemplated by the Financing Letters, alternative
financing obtained in lieu thereof or any additional debt, if any, necessary
to
consummate the Transactions contemplated by this Agreement and the Related
Agreements or to operate the Business or any refinancing thereof); (w) incur
any
debt, other than the financing contemplated by the Financing Letters or
alternative financing obtained in lieu thereof or any additional debt, if any,
necessary to consummate the Transactions contemplated by this Agreement and
the
Related Agreements or to operate the Business or any refinancing thereof, or
guarantee the debt of another member of the Buyer Group, Ethanex or any other
subsidiary of Ethanex, other than as may be required by the financing
contemplated by the Financing Letters or alternative financing obtained in
lieu
thereof or any additional debt, if any, necessary to consummate the Transactions
contemplated by this Agreement and the Related Agreements or to operate the
Business or any refinancing thereof; (x) permit any Liens, to encumber the
Phase
I Assets, the Phase II Assets, the Phase III Assets, the Loop Real Property
or
the Owned Real Property, as the case may be, other than Permitted Encumbrances,
Assumed Liabilities, and Liens that are imposed on the Phase I Assets, the
Owned
Real Property, the Loop Real Property, the Phase II Assets, or the Phase III
Assets by the financing contemplated by the Financing Letters or alternative
financing obtained in lieu thereof or any additional debt, if any, necessary
to
consummate the Transactions contemplated by this Agreement and the Related
Agreements or to operate the Business or any refinancing thereof; (y) make
any
loans or advances to any other Person other than in the ordinary course; or
(z)
operate any other business other than the Business and the Fractionation Plant;
(ii) Ethanex ▇▇▇▇▇▇▇▇▇▇ further shall (x) not amend its, or cause Phase I Buyer,
RE LLC, Phase II Buyer or Phase III Buyer to amend their, certificate of
formation or limited liability company agreement, if any, other than to reflect
purely administrative matters or changes that are required in order to
consummate the financing that is contemplated by the Financing Letters or
alternative financing obtained in lieu thereof or any additional debt, if any,
necessary to consummate the Transactions contemplated by this Agreement and
the
Related Agreements or to operate the Business or any refinancing thereof; or
(y)
continue to own all of the outstanding and issued limited liability company
interests of Phase I Buyer, Phase II Buyer, Phase III Buyer and RE LLC; and
(iii) Ethanex shall continue to own all of the outstanding and issued limited
liability company interests of Ethanex ▇▇▇▇▇▇▇▇▇▇ (except Ethanex shall not
be
prohibited from pledging or encumbering such interests as may be required in
order to consummate the financing that is contemplated by the Financing Letters
or alternative financing obtained in lieu thereof or any additional debt, if
any, necessary to consummate the Transactions contemplated by this Agreement
and
the Related Agreements or to operate the Business or any refinancing
thereof).
60
(cc) Use
of
Funds.Seller
shall use at least $30 million of the Phase I Purchase Price solely to complete
the Phase II Plan.
(dd) Technical
Services Agreement.
MRE
shall use its reasonable best efforts to cause KL Process Design Group, LLC
to
execute and deliver a technical services agreement with Phase I Buyer in form
and substance reasonably acceptable to Ethanex.
(ee) Compliance.
Ethanex
shall use its reasonable best efforts to cause the Buyer Group and RE LLC to
perform their respective covenants set forth in this Article 7.
(ff) LB
775
Agreement.
(i) If
the Phase I Closing occurs and the Nebraska Department of Revenue (“Department
of Revenue”)
has
indicated prior to December 31, 2008, that it will approve the transfer to
Phase
I Buyer at a date after the Phase I Closing Date of that certain Employment
and
Investment Growth Act Project Agreement by and between the Seller and the
Department of Revenue, dated July 6, 2006 (the “775
Agreement”),
the
parties agree that notwithstanding anything herein to the contrary:
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(A)
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following
the Phase I Closing, the Seller shall, on a date selected by Seller,
but
in any event immediately following December 31, 2008, notify the
Department of Revenue in accordance with applicable law, that the
project
contemplated by the Agreement has been transferred to, and the Agreement
has been assigned to Phase I Buyer (and the date such notice is provided
is herein called the “775
Date”);
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(B)
|
following
the 775 Date, Phase I Buyer shall assume and perform all obligations
remaining under the 775 Agreement and the 775 Agreement shall be
deemed to
be an Assumed Contract; and,
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(C)
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all
credits to which Seller is entitled pursuant to the 775 Agreement
prior to
the 775 Date (which credits shall be deemed to be Excluded Assets)
and all
Liabilities arising under the 775 Agreement related to periods prior
to
the 775 Date (including but not limited to any “recapture” obligations of
the Seller) shall be retained by Seller (and such Liabilities shall
be
deemed to be Excluded Liabilities).
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(ii)
If
the
Phase I Closing occurs and the Department of Revenue has indicated prior to
December 31, 2008, that it will not approve the transfer to Phase I Buyer of
the
775 Agreement at a date after the Phase I Closing Date, the parties agree that
notwithstanding anything herein to the contrary: (A) the 775 Agreement shall
be
deemed to be an Assumed Contract and shall be transferred to and assumed by
the
Phase I Buyer on the Phase I Closing Date, (B) after the Phase I Closing Date,
Phase I Buyer shall assume and perform all obligations remaining under the
775
Agreement; and, (C) all credits to which Seller is entitled pursuant to the
775
Agreement prior to the Phase I Closing Date (which credits shall be deemed
to be
Excluded Assets) and all Liabilities arising under the 775 Agreement related
to
periods prior to the Phase I Closing Date (including but not limited to any
“recapture” obligations of the Seller) shall be retained by Seller (and such
Liabilities shall be deemed to be Excluded Liabilities).
61
(iii) If,
prior
to December 31, 2008, the Department of Revenue determines that for any reason
the 775 Agreement may not be transferred by Seller to the Phase I Buyer at
any
time, the 775 Agreement shall not be an Assumed Contract hereunder, the credits
under the 775 Agreement shall be Excluded Assets and any and all Liabilities
arising from or related to the 775 Agreement shall be deemed to be Excluded
Liabilities, notwithstanding anything herein or on the Schedules and Exhibits
to
the contrary.
(gg) Rezoning.
Prior
to the Phase II Closing Date, the Seller shall have as required by applicable
Legal Requirements (i) applied to the Village of ▇▇▇▇▇▇▇▇▇▇ Planning Commission
to rezone the Loop Real Property, if necessary, such that the railroad track
contemplated by Section 9(c)(vi) may be constructed and fully utilized on the
Loop Real Property, and the Village of ▇▇▇▇▇▇▇▇▇▇ Planning Commission shall
have
granted permission for such rezoning, and such action shall be final, binding
and non-appealable or (ii) applied for, and received a final, binding and
non-appealable, special or conditional use permit from the Village of ▇▇▇▇▇▇▇▇▇▇
Planning Commission such that the railroad track contemplated by Section
9(c)(vi) may be constructed and fully utilized on the Loop Real
Property.
(hh) TIF.
If it
is determined (the date of determination being the “TIF
Determination Date”)
that
the Seller is obligated to comply with a tax increment financing program
pursuant to an agreement with the Village of ▇▇▇▇▇▇▇▇▇▇ (the “TIF
Agreement”),
notwithstanding anything herein to the contrary, the parties agree that (A)
the
TIF Agreement shall be deemed to have been disclosed to Ethanex and to be an
Assumed Contract and shall be transferred and assumed on the later of the Phase
I Closing Date or the TIF Determination Date (the “TIF
Assignment Date”),
(B)
Phase I Buyer shall assume and perform all obligations arising after the TIF
Assignment Date under the TIF Agreement and the TIF Agreement shall be deemed
to
be an Assumed Contract; and, (C) all Liabilities arising under the TIF Agreement
related to a period prior to the TIF Assignment Date shall be retained by Seller
(and such Liabilities shall be deemed to be Excluded Liabilities).
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8.
|
CONDITIONS
PRECEDENT TO THE PARTIES’
OBLIGATIONS
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The
obligations of the parties hereto to consummate the Transactions are subject
to
the satisfaction or waiver, at or prior to each of the Phase I Closing Date,
the
Phase II Closing Date and the Phase III Closing Date, of the following
conditions:
(a)
Consents from Governmental Authorities. All necessary notification
filings required under the HSR Act shall have been made with the FTC and
DOJ,
the prescribed waiting periods (and any extensions thereof) shall have
expired
or been terminated.
(b)
Restrictions. There shall be no injunction or court order restraining
consummation of any of the Transactions and there shall not have been adopted
any law or regulation making all or any portion of such Transactions
illegal.
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9.
|
CONDITIONS
PRECEDENT TO ETHANEX’S, ETHANEX ▇▇▇▇▇▇▇▇▇▇’▇, AND THE BUYER GROUP’S
OBLIGATIONS
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(a)
General Conditions. The obligations of Ethanex (in respect of the
issuance of the Stock Consideration in the case of the Phase II Closing
and the
Phase III Closing), Ethanex ▇▇▇▇▇▇▇▇▇▇, the Phase I Buyer, the Phase II
Buyer,
the Phase III Buyer and RE LLC (but only as to the Phase I Closing and
Phase II
Closing with respect to RE LLC) to consummate the Transactions are subject
to
the satisfaction or waiver by Ethanex, at or prior to each of the Phase
I
Closing Date, the Phase II Closing Date and the Phase III Closing Date,
of the
following condition:
62
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(i)
|
Material
Consents.
The Seller Consents set forth on Exhibit
J
that are specified as being required prior to the applicable Closing
shall
have been obtained prior to the applicable Closing Date, shall be
in full
force and effect and shall not impose any material condition that
is
adverse to the Buyer Group, Ethanex ▇▇▇▇▇▇▇▇▇▇, or Ethanex, except
as the
parties may otherwise agree (the “Material
Consents”).
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(b)
Phase I Closing Conditions. The obligations of the Phase I Buyer and RE
LLC to consummate the Transactions to occur at the Phase I Closing are
subject
to the satisfaction or waiver, at or prior to the Phase I Closing Date
of the
following conditions:
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(i)
|
Representations
and Warranties of Seller.
The representations and warranties of the Seller set forth in this
Agreement shall be true and correct in all respects (provided
that any such representation or warranty of the Seller contained
herein
that is subject to a materiality, Material Adverse Effect or similar
qualification will not be so qualified for purposes of determining
the
existence of any breach thereof) as of the date of this Agreement
and as
of the Phase I Closing Date as though made on and as of the Phase
I
Closing Date (except to the extent such representations and warranties
speak as of an earlier date), except for such breaches that would
not,
individually or in the aggregate with any other breaches, have, or
be
reasonably expected to have, a Material Adverse Effect; provided
that the foregoing shall not apply to the representations and warranties
of the Seller set forth in Section 5(b)(iv)(L) and Section 5(b)(iv)(M)
and
such representations and warranties set forth in Sections 5(b)(iv)(L)
and
5(b)(iv)(M) shall be true and correct in all material respects as
of the
date of this Agreement and on and as of the Phase I Closing Date.
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|
(ii)
|
Covenants.
The Seller shall have performed and complied in all material respects
with
all covenants and agreements required by this Agreement to be performed
or
complied with by it prior to or at the Phase I Closing. For purposes
of
avoiding doubt, neither Sections 7(j) or 7(k) shall be required to
be
satisfied as a condition to the Phase I Closing.
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|
(iii)
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Escrow
Agreement.
The Escrow Agreement shall have been executed by the Escrow Agent
and the
Seller at or prior to the Phase I
Closing.
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|
(iv)
|
Financing.
The Phase I Buyer and RE LLC shall have received (or shall have the
right
to receive on the Phase I Closing Date), either from third parties
or from
Ethanex, directly or indirectly, aggregate proceeds of at least $112
million, with the terms and conditions of such debt financing being
reasonably satisfactory to Ethanex (Ethanex agreeing that terms and
conditions not materially less favorable to it and the Buyer Group
than
those set forth in the indicative term sheet included as an exhibit
to the
Debt Engagement Letter shall be deemed reasonably satisfactory to
Ethanex)
(the “Phase
I Financing Condition”).
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|
(v)
|
Delivery
of Certificates and Documents.
Seller shall have delivered or caused to be delivered to the Phase
I Buyer
(or such other Person as applicable) the
following:
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|
(A)
|
a
certificate of an officer of Seller certifying that the conditions
set
forth in Sections 9(a) and 9(b)(i), (ii) and (xv) have been
met;
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63
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(B)
|
an
affidavit, under penalties of perjury, stating that Seller is not
and has
not been a United States real property holding corporation, dated
as of
the Closing Date and in form and substance required under Treasury
Regulation § 1.897-2(h);
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|
(C)
|
an
assignment and ▇▇▇▇ of sale executed by Seller, in substantially
the form
attached hereto as Exhibit
K
(the “▇▇▇▇
of Sale”),
and all such other instruments of sale, assignment and transfer as
are
necessary or appropriate to sell, assign and transfer to Phase I
Buyer and
to vest in Phase I Buyer title, subject to Permitted Encumbrances,
to the
Phase I Purchased Assets; and
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|
(D)
|
such
other documents, certificates or agreements as the Phase I Buyer
may
reasonably request.
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|
(vi)
|
Railroad
Loops.
The Seller shall have (i) acquired real estate that is, and secured
any
necessary easements or other rights-of-way that are, necessary and
sufficient to construct a four-loop railroad track (the “Loop
Real Property”)
and (ii) received a Memorandum of Understanding from Union Pacific
regarding any construction or installation and other items for which
Union
Pacific’s consent or approval is necessary with respect to the
construction of the four-loop railroad track necessary to service
the
Business.
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(vii)
|
EPC
Amendments.
Any amendments to the EPC agreement between KL Process and Seller
required
by Seller or any financing source of Ethanex, which amendments shall
be
reasonably acceptable to Ethanex.
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(viii)
|
Required
Stockholder Approval.
The Required Stockholder Approval shall have been
obtained.
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|
(ix)
|
JV
Agreement.
The Seller shall have executed and delivered to Team Bank, or such
other
escrow agent as is mutually agreed by Ethanex and Seller, the JV
Agreement.
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(x)
|
Owned
Real Property.
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|
(A)
|
RE
LLC shall have obtained, no later than 10 days prior to the Phase
I
Closing, a commitment for an ALTA Owner's Title Insurance Policy
or other
form of policy acceptable to Buyer for the Owned Real Property, issued
by
a title insurance company satisfactory to RE LLC (the "Title
Company"),
together with a copy of all documents referenced therein (the
"Title
Commitments");
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|
(B)
|
at
the Phase I Closing, RE LLC shall have obtained title insurance policies
from the Title Company (which may be in the form of a ▇▇▇▇-up of
a pro
forma of the Title Commitments) in accordance with the Title Commitments,
insuring Seller’s fee simple title to the Owned Real Property as of the
Phase I Closing Date (including all recorded appurtenant easements
insured
as separate legal parcels) with gap coverage from Seller through
the date
of recording, subject only to Permitted Encumbrances, in such amount
as RE
LLC reasonably determines to be the value of the Owned Real Property
insured thereunder and which shall include all requested endorsements
(the
"Title
Policies");
and each of the Title Policies shall include an extended coverage
endorsement (insuring over the general or standard exceptions), ALTA
Form
3.1 zoning (with parking and loading docks), a non-imputation (to
the
effect that title defects known to the employees, officers and directors
of Seller prior to the Phase I Closing shall not be deemed "facts
known to
the insured") and all other endorsements reasonably requested by
RE LLC,
in form and substance reasonably satisfactory to RE LLC (provided
that
Seller and RE LLC shall share equally all fees, costs and expenses
with
respect to the Title Commitments and Title Policies);
and
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64
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(C)
|
RE
LLC shall have obtained, no later than 10 days prior to the Phase
I
Closing, a survey for the Owned Real Property, dated no earlier than
the
date of this Agreement, prepared by a licensed surveyor reasonably
satisfactory to RE LLC, and conforming to 1999 ALTA/ACSM Minimum
Detail
Requirements for Land Title Surveys, including Table A Items Nos.
1, 2, 3,
4, 6, 7(a), 7(b)(1), 7(c), 8, 9, 10, 11(b)(2), 13, 14, 15, and 16,
and
such other standards as the Title Company and RE LLC reasonably require
as
a condition to the removal of any survey exceptions from the Title
Policies, and certified to RE LLC, RE LLC's lender and the Title
Company,
in a form reasonably satisfactory to each of such parties (the
"Surveys");
and the Surveys shall not disclose any encroachment from or onto
any of
the Owned Real Property or any portion thereof or any other survey
defect
that has not been cured or insured over to RE LLC's reasonable
satisfaction prior to the Phase I Closing other than Permitted
Encumbrances (provided that Seller and RE LLC shall share equally
all
fees, costs, and expenses with respect to the
Surveys).
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(D)
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Seller
shall have delivered a special warranty deed, in substantially the
form
attached hereto as Exhibit
L (“Warranty
Deed”),
executed by Seller conveying Seller’s right, title and interest in the
Owned Real Property to RE LLC and all such other instruments of sale,
assignment and transfer as are necessary or appropriate to sell,
assign
and transfer to RE LLC and to vest in RE LLC Seller’s right, title and
interest in the Owned Real
Property.
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(E)
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Seller
shall have paid to the Title Company, for further payment to the
appropriate state, county or city, as the case may be, taxing authority,
100% of the Seller Phase I Real Estate
Taxes.
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(xi)
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Delivery
of Financials.
Seller shall have furnished Ethanex with the 2007 Audited Financials,
in
compliance with the terms of this Agreement, not later than March
15,
2008. Taking into account both the line items reflected on the face
of the
financial statements and the information disclosed in the footnotes
to the
financial statements, the 2007 Audited Financials, as compared to
the
Latest Financial Statements shall not reflect (i) any material
reduction in current assets (excluding cash) or any material increase
in
current liabilities (other than Excluded Liabilities), in each case
as set
forth on the corresponding balance sheet as of December 31, 2007 or
(ii) any material reduction in Net Revenues or Net Income, in each
case individually (and not on an aggregated basis) as reflected in
the
corresponding statement of operations for the fiscal year ended
December 31, 2007.
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65
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(xii)
|
Ethanol
Agreement.
The Ethanol Agreement, dated April 27, 2007, by and between the Seller
and
KL Energy shall have been
terminated.
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(xiii)
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Water
Rights.
Seller shall have procured the right to water in an amount sufficient
to
operate the Business.
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(xiv)
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Permits.
Ethanex ▇▇▇▇▇▇▇▇▇▇, RE LLC or Phase I Buyer, as the case may be,
shall
have obtained the permits, consents, and authorizations set forth
on
Exhibit
M.
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(xv)
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Material
Adverse Change.
Since the date of this Agreement, there shall not have occurred any
fact,
change or event that, individually or in the aggregate, has had a
Material
Adverse Effect on the Seller.
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|
(xvi)
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Start-Up
Supply Agreement.
Seller shall have executed and delivered the Start-Up Services
Agreement.
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(xvii)
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Operation
of Existing Plant.
The Existing Plant shall be operating consistent with past practice
in all
material respects.
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(c)
|
Phase
II Closing Conditions.
The obligations of the Phase II Buyer and RE LLC to consummate the
Transactions to occur at the Phase II Closing are subject to the
satisfaction or waiver, at or prior to the Phase II Closing Date
of the
following conditions:
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|
(i)
|
Representations
and Warranties of Seller.
Each of the representations and warranties of the Seller set forth
in
Section 5(a); Section 5(b)(v)(A); Section 5(b)(vi) (but solely with
respect to any litigation pending, or to the Knowledge of Seller,
threatened against Seller that could prevent, limit, impair or otherwise
delay or otherwise interfere with Seller’s right or ability to consummate
the Transactions in accordance with the terms of this Agreement and
the
Related Agreements or Seller’s ownership of the Phase II Assets); the last
paragraph of Section 5(b)(vii), but solely with respect to a Material
Contract that is included in the Phase II Assets and will be assumed
by
and assigned to the Phase II Buyer; Section 5(b)(viii) but solely
with
respect to any Intellectual Property that is included in the Phase
II
Assets or the Completion of the Phase II Plan; Section 5(b)(xiii),
but
solely with respect to those Permits used in or necessary to the
Completion of the Phase II Plan and that are to be conveyed to the
Phase
II Buyer at the Phase II Closing; Section 5(b)(xvi); Section 5(b)(xviii);
Section 5(b)(xix); Section 5(b)(xx); and Section 5(b)(xxi) shall
be true
and correct in all respects (provided
that any such representation or warranty of the Seller contained
herein
that is subject to a materiality, Material Adverse Effect or similar
qualification will not be so qualified for purposes of determining
the
existence of any breach thereof) as of the date of this Agreement
and as
of the Phase II Closing Date as though made on and as of the Phase
II
Closing Date, except for such breaches that would not, individually
or in
the aggregate with any other breaches, have, or be reasonably expected
to
have, a material adverse effect on the operation of the Business
by the
Phase II Buyer, assuming completion of the Transactions contemplated
to
occur at the Phase II Closing; and, in addition, the representations
and
warranties of the Seller set forth in Section 5(b)(iv)(L), but solely
with
respect to the Phase II Assets, shall be true and correct in all
material
respects as of the date of this Agreement and on and as of the Phase
II
Closing Date.
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66
|
(ii)
|
Covenants.
The Seller shall have performed and complied in all material respects
with
all covenants and agreements required by this Agreement to be performed
or
complied with by it in whole or in part after the Phase I Closing
and
prior to or at the Phase II Closing. Without limiting the generality
of
the foregoing, either Completion of the Phase II Plan shall have
occurred,
in accordance with the terms of Section 7(j), or the Phase II Buyer
shall
have elected to proceed with the Phase II Closing pursuant to the
reduced
Purchase Price arrangements contemplated by Section 7(j) and Section
4(b)(ii)(B).
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|
(iii)
|
Financing.
The Phase II Buyer shall have received (or shall have the right to
receive
on the Phase II Closing Date), either from third parties or from
Ethanex,
directly or indirectly, aggregate proceeds of at least $60 million,
with
the terms and conditions of any debt financing being reasonably
satisfactory to Ethanex (Ethanex agreeing that terms and conditions
not
materially less favorable to it and the Buyer Group than those set
forth
in the indicative term sheet included as an exhibit to the Debt Engagement
Letter shall be deemed reasonably satisfactory to Ethanex).
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(iv)
|
Gas
Supply.
Seller shall have procured a supply of natural gas, and secured a
carrier
to carry such supply of natural gas, that is sufficient to operate
the
Business.
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(v)
|
Investor
Rights Agreement.
Seller shall have executed and delivered an agreement regarding certain
investor and issuer rights, substantially in the form set forth in
Exhibit
N
attached hereto (the “Investor
Rights Agreement”).
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(vi)
|
Railroad
Loop.
Seller shall have completed, and the Phase II Buyer shall have full
access
to, a two-loop railroad track (other than the necessary rail switching
and
signaling systems to be constructed or installed by the Union Pacific
Railroad) that services the
Business.
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(vii)
|
Permits.
Ethanex ▇▇▇▇▇▇▇▇▇▇ or Phase II Buyer, as the case may be, shall have
obtained the permits, consents, and authorizations set forth on
Exhibit
O.
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(viii)
|
Loop
Real Property.
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|
(A)
|
RE
LLC shall have obtained, no later than 10 days prior to the Phase
II
Closing, a commitment for an ALTA Owner's Title Insurance Policy
or other
form of policy acceptable to Buyer for the Loop Real Property, issued
by
the Title Company satisfactory to RE LLC, together with a copy of
the
Title Commitments;
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67
|
(B)
|
at
the Phase II Closing, RE LLC shall have obtained title insurance
policies
from the Title Company (which may be in the form of a ▇▇▇▇-up of
a pro
forma of the Title Commitments) in accordance with the Title Commitments,
insuring Seller’s fee simple title to the Loop Real Property as of the
Phase II Closing Date (including all recorded appurtenant easements
insured as separate legal parcels) with gap coverage from Seller
through
the date of recording, subject only to Permitted Encumbrances and
an
easement allowing the prior owner of the Loop Real Property ingress
and
egress to the Loop Real Property for the purpose of allowing such
prior
owner’s livestock to graze in the middle of the railroad loop thereupon,
in such amount as RE LLC reasonably determines to be the value of
the Loop
Real Property insured thereunder and which shall include all Title
Policies; and each of the Title Policies shall include an extended
coverage endorsement (insuring over the general or standard exceptions),
a
non-imputation (to the effect that title defects known to the employees,
officers and directors of Seller prior to the Phase II Closing shall
not
be deemed "facts known to the insured") and all other endorsements
reasonably requested by RE LLC, in form and substance reasonably
satisfactory to RE LLC (provided that Seller and RE LLC shall share
equally all fees, costs and expenses with respect to the Title Commitments
and Title Policies); and
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|
(C)
|
RE
LLC shall have obtained, no later than 10 days prior to the Phase
II
Closing, a survey for the Loop Real Property, dated no earlier than
the
date of this Agreement, prepared by a licensed surveyor reasonably
satisfactory to RE LLC, the Surveys; and the Surveys shall not disclose
any encroachment from or onto any of the Loop Real Property or any
portion
thereof or any other survey defect that has not been cured or insured
over
to RE LLC's reasonable satisfaction prior to the Phase II Closing
other
than Permitted Encumbrances (provided that Seller and RE LLC shall
share
equally all fees, costs, and expenses with respect to the
Surveys).
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(D)
|
Seller
shall have delivered a special warranty deed, in form and substance
reasonably acceptable to Ethanex, executed by Seller conveying Seller’s
right, title and interest in the Loop Real Property to RE LLC and
all such
other instruments of sale, assignment and transfer as are necessary
or
appropriate to sell, assign and transfer to RE LLC and to vest in
RE LLC
Seller’s right, title and interest in the Loop Real
Property.
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|
(E)
|
Seller
shall have paid to the Title Company, for further payment to the
appropriate state, county or city, as the case may be, taxing authority,
100% of the Seller Phase II Real Estate
Taxes.
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(ix)
|
Delivery
of Certificates and Documents.
Seller shall have delivered or caused to be delivered to the Phase
II
Buyer and RE LLC (or such other Person as applicable) the
following:
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(A)
|
a
certificate of an officer of Seller certifying that the conditions
set
forth in Sections 9(a) and 9(b)(i) and (ii) have been
met;
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68
|
(B)
|
an
affidavit, under penalties of perjury, stating that Seller is not
and has
not been a United States real property holding corporation, dated
as of
the Closing Date and in form and substance required under Treasury
Regulation § 1.897-2(h);
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(C)
|
a
▇▇▇▇ of Sale, and all such other instruments of sale, assignment
and
transfer as are necessary or appropriate to sell, assign and transfer
to
Phase II Buyer and to vest in Phase II Buyer title, subject to Permitted
Encumbrances, to the Phase II Purchased Assets;
and
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(D)
|
such
other documents, certificates or agreements as the Phase II Buyer or RE
LLC may reasonably request.
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(d)
|
Phase
III Closing Conditions.
The obligations of the Phase III Buyer to consummate the Transactions
to
occur at the Phase III Closing are subject to the satisfaction or
waiver,
at or prior to the Phase III Closing Date of the following
conditions:
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|
(i)
|
Representations
and Warranties of Seller.
Each of the representations and warranties of the Seller set forth
in
Section 5(a); Section 5(b)(v)(A); Section 5(b)(vi) (but solely with
respect to any litigation pending, or to the Knowledge of Seller,
threatened against Seller that could prevent, limit, impair or otherwise
delay or otherwise interfere with Seller’s right or ability to consummate
the Transactions in accordance with the terms of this Agreement and
the
Related Agreements or Seller’s ownership of the Phase III Assets); the
last paragraph of Section 5(b)(vii), but solely with respect to a
Material
Contract that is included in the Phase III Assets and will be assumed
by
and assigned to the Phase III Buyer; Section 5(b)(viii), but solely
with
respect to any Intellectual Property that is included in the Phase
III
Assets or the Completion of the Phase III Plan; Section 5(b)(xiii),
but
solely with respect to those Permits used in or necessary to the
Completion of the Phase III Plan and that are to be conveyed to the
Phase
III Buyer at the Phase III Closing; Section 5(b)(xvi); Section
5(b)(xviii); Section 5(b)(xix); Section 5(b)(xx); and Section 5(b)(xxi)
shall be true and correct in all respects (provided
that any such representation or warranty of the Seller contained
herein
that is subject to a materiality, Material Adverse Effect or similar
qualification will not be so qualified for purposes of determining
the
existence of any breach thereof) as of the date of this Agreement
and as
of the Phase III Closing Date as though made on and as of the Phase
III
Closing Date, except for such breaches that would not, individually
or in
the aggregate with any other breaches, have, or be reasonably expected
to
have, a material adverse effect on the operation of the Business
by the
Phase III Buyer after giving effect to the Transactions contemplated
to
occur at the Phase III Closing; and, in addition, the representations
and
warranties of the Seller set forth in Section 5(b)(iv)(L), but solely
with
respect to the Phase III Assets, shall be true and correct in all
material
respects as of the date of this Agreement and on and as of the Phase
III
Closing Date.
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(ii)
|
Covenants.
The Seller shall have performed and complied in all material respects
with
all covenants and agreements required by this Agreement to be performed
or
complied with by it in whole or in part after the Phase II Closing
and
prior to or at the Phase III Closing. Without limiting the generality
of
the foregoing, either Completion of the Phase III Plan shall have
occurred, in accordance with the terms of Section 7(k), or the Phase
III
Buyer shall have elected to proceed with the Phase III Closing pursuant
to
the reduced Purchase Price arrangements contemplated by Section 7(k)
and
Section 4(b)(ii)(D).
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69
|
(iii)
|
Financing.
The Phase III Buyer shall have received (or shall have the right
to
receive on the Phase III Closing Date), either from third parties
or from
Ethanex, directly or indirectly, aggregate proceeds of at least $60
million, with the terms and conditions of any debt financing being
reasonably satisfactory to Ethanex (Ethanex agreeing that terms and
conditions not materially less favorable to it and the Buyer Group
than
those set forth in the indicative term sheet included as an exhibit
to the
Debt Engagement Letter shall be deemed reasonably satisfactory to
Ethanex).
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(iv)
|
Delivery
of Certificates and Documents.
Seller shall have delivered or caused to be delivered to the Phase
III
Buyer (or such other Person as applicable) the
following:
|
|
(A)
|
a
certificate of an officer of Seller certifying that the conditions
set
forth in Sections 9(a) and 9(b)(i) and (ii) have been met;
|
|
(B)
|
a
▇▇▇▇ of Sale, and all such other instruments of sale, assignment
and
transfer as are necessary or appropriate to sell, assign and transfer
to
Phase III Buyer and to vest in Phase III Buyer title, subject to
Permitted
Encumbrances, to the Phase III Assets;
and
|
|
(C)
|
such
other documents, certificates or agreements as the Phase III Buyer
may
reasonably request.
|
|
10.
|
CONDITIONS
PRECEDENT TO SELLER’S
OBLIGATIONS
|
The
obligations of the Seller to consummate the Transactions are subject to the
satisfaction or waiver, at or prior to each of the Phase I Closing Date, the
Phase II Closing Date and the Phase III Closing Date of the following
conditions:
(a)
Representations and Warranties of Ethanex, Ethanex ▇▇▇▇▇▇▇▇▇▇ and the
Buyer
Group. The representations and warranties of Ethanex, Ethanex ▇▇▇▇▇▇▇▇▇▇
and
the Buyer Group set forth in this Agreement shall be true and correct in
all
respects (provided that any representation or warranty of Ethanex,
Ethanex ▇▇▇▇▇▇▇▇▇▇ or the Buyer Group contained herein that is subject
to a
materiality, Material Adverse Effect or similar qualification will not
be so
qualified for purposes of determining the existence of any breach thereof)
as of
the date of this Agreement and as of the Closing Date as though made on
and as
of the Closing Date (except to the extent such representations and warranties
speak as of an earlier date), except for such breaches that would not,
individually or in the aggregate with any other breaches on the part of
Buyer,
materially and adversely affect the ability of Ethanex, Ethanex ▇▇▇▇▇▇▇▇▇▇
or
the Buyer Group to consummate the Transactions contemplated by this Agreement.
(b)
Covenants. The Buyer Group, Ethanex ▇▇▇▇▇▇▇▇▇▇ and Ethanex shall have
performed and complied in all material respects with all covenants and
agreements required by this Agreement to be performed or complied with
by them
prior to or at each of the Phase I Closing, the Phase II Closing and the
Phase
III Closing, as applicable.
70
(c)
Delivery of Certificates and Documents. The Buyer Group, Ethanex
▇▇▇▇▇▇▇▇▇▇ and/or Ethanex shall have delivered or caused to be delivered
to the
Seller (or to such other Person as applicable) the
following:
|
(i)
|
a
certificate of an officers of each member of the Buyer Group, Ethanex
▇▇▇▇▇▇▇▇▇▇ and Ethanex as to (i) the organizational documents of such
member, (ii) all actions taken by and on behalf of such member to
authorize the execution, delivery and performance of this Agreement
and
the Related Agreements and (iii) the incumbency of officers signing
this Agreement and any Related Agreement on behalf of such
member;
|
|
(ii)
|
a
certificate of an officer of each member of the Buyer Group, Ethanex
▇▇▇▇▇▇▇▇▇▇ and Ethanex certifying that the conditions set forth in
Sections 10(a) and 10(b) have been met;
|
|
(iii)
|
the
payments pursuant to Section 4(b)(iii)(A), 4(b)(iv)(A) and 4(b)(v)(A),
as
the case may be; and,
|
|
(iv)
|
a
certificate representing the applicable portion of the Stock
Consideration, with respect to the Phase II Closing and the Phase
III
Closing, as applicable.
|
(d)
Escrow Agreement. The Escrow Agreement shall have been executed by the
Escrow Agent and Ethanex, Ethanex ▇▇▇▇▇▇▇▇▇▇, and the Buyer Group at or
prior to
the Phase I Closing.
(e)
Start-Up Services Agreement. Phase I Buyer shall have executed and
delivered the Start-Up Services Agreement at the Phase I
Closing.
(f) Assumption
Agreements.
Assumption agreements substantially in the forms attached hereto as Exhibit
P
shall be
executed and delivered (i) at the Phase I Closing by the Phase I Buyer with
respect to the Phase I Assumed Liabilities (for Phase I Assumed Liabilities
other than those related to the Owned Real Property) and by RE LLC with respect
to the Phase I Assumed Liabilities that related to the Owned Real Property,
(ii)
at the Phase II Closing by the Phase II Buyer with respect to the Phase II
Assumed Liabilities (for Phase II Assumed Liabilities other than those related
to the Loop Real Property) and by RE LLC with respect to the Phase II Assumed
Liabilities that related to the Loop Real Property, and (iii) at the Phase
III
Closing by the Phase III Buyer with respect to the Phase III Assumed
Liabilities.
(g) JV
Agreement.
Ethanex
▇▇▇▇▇▇▇▇▇▇ shall have executed and delivered to Team Bank, or such other escrow
agent as is mutually agreed by Ethanex and Seller, the JV Agreement on or prior
to the Phase I Closing Date.
(h) Investor
Rights Agreement.
Ethanex
shall have executed and delivered the Investor Rights Agreement on or prior
to
the Phase II Closing Date.
(i) Required
Stockholder Approval.
Prior
to the Phase I Closing Date, Ethanex shall have obtained the Required
Stockholder Approval.
71
|
11.
|
SURVIVAL
OF REPRESENTATIONS, WARRANTIES AND COVENANTS;
INDEMNIFICATION
|
(a)
Survival of Representations, Warranties and Covenants. The
representations, warranties and certifications of the parties contained
in this
Agreement and any claim with respect to any failure to perform any covenant
to
be performed prior to a Closing shall survive the applicable Closing for
a
period ending eighteen (18) months following the last to occur of the Phase I
Closing, the Phase II Closing and the Phase III Closing, except that the
representations and warranties in Section 5(a)(i), (ii) and (iv), Section
6(a)(i) and (ii)(A), and Section 6(b)(i), (ii)(A) and (viii) (the “Core
Representations”) shall survive the Closings indefinitely. Covenants and
agreements to be performed after the Closings shall survive in accordance
with
their respective terms. No claim for indemnification for breach of a
representation or warranty or any covenant, agreement or obligation may
be
asserted after the expiration of the applicable survival period for such
representation, warranty or covenant; provided, that the written
assertion of any claim by a party against another party hereunder with
respect
to the breach or alleged breach of any representation, warranty or any
covenant,
agreement or obligation or of a series of facts which would support such
breach,
shall extend the applicable survival period through the date on which such
claim
is conclusively resolved. None of the foregoing shall be deemed to affect
the
obligations of the parties to perform their respective obligations that
are
required to be performed after any of the Closings.
(b)
Indemnification.
|
(i)
|
Indemnification
by Ethanex.
Subject to the limitations and other terms and conditions in this
Section 11, from and after the Phase I Closing, Ethanex agrees to
indemnify, defend and hold harmless the Seller and its officers,
directors, employees, members, stockholders, partners, agents, managers
and representatives (the “Seller
Indemnified Parties”)
from and against any and all loss, Liability, damage or expense,
but
excluding any consequential or exemplary damages (except those payable
to
third parties pursuant to a Third Party Claim), (collectively,
“Losses”)
to the extent such Losses are based upon, arise out of or are related
to:
|
|
(A)
|
a
breach of any representation or warranty of the Buyer Group, Ethanex
▇▇▇▇▇▇▇▇▇▇ or Ethanex contained in this Agreement; provided
that, for purposes of this Section 11(b)(i)(A), if there is a breach
of any representation or warranty (after giving effect to any materiality
or material adverse effect qualification) then the determination
of the
Losses upon such breach of any representation or warranty shall be
made
without regard to any materiality or material adverse effect qualification
contained therein;
|
|
(B)
|
any
failure of the Buyer Group, Ethanex ▇▇▇▇▇▇▇▇▇▇ or Ethanex to perform
or
comply with any of the covenants, agreements or obligations of the
Buyer
Group, Ethanex ▇▇▇▇▇▇▇▇▇▇ or Ethanex set forth in this Agreement
or in any
Related Agreement;
|
|
(C)
|
any
Assumed Liability (except to the extent Seller has indemnified, or
is
obligated to indemnify, the Buyer Group, Ethanex ▇▇▇▇▇▇▇▇▇▇ or Ethanex
hereunder for any matter relating to or arising out of such Assumed
Liability); or
|
|
(D)
|
any
Liability to any broker or finder retained or alleged to have been
retained by the Buyer Group in connection with this Agreement or
the
Transactions.
|
72
|
(ii)
|
Indemnification
by Ethanex ▇▇▇▇▇▇▇▇▇▇.
Subject to the limitations and other terms and conditions in this
Section 11, from and after the Phase I Closing, Ethanex ▇▇▇▇▇▇▇▇▇▇
agrees to indemnify, defend and hold harmless the Seller Indemnified
Parties from and against any and all Losses to the extent such Losses
are
based upon, arise out of or are related
to:
|
|
(A)
|
a
breach of any representation or warranty of Ethanex ▇▇▇▇▇▇▇▇▇▇ contained
in this Agreement; provided
that, for purposes of this Section 11(b)(ii)(A), if there is a breach
of any representation or warranty (after giving effect to any materiality
or material adverse effect qualification) then the determination
of the
Losses upon such breach of any representation or warranty shall be
made
without regard to any materiality or material adverse effect qualification
contained therein;
|
|
(B)
|
any
failure of the Ethanex ▇▇▇▇▇▇▇▇▇▇ to perform or comply with any of
the
covenants, agreements or obligations of Ethanex ▇▇▇▇▇▇▇▇▇▇ set forth
in
this Agreement or in any Related Agreement;
|
|
(C)
|
any
Assumed Liability assumed solely by Ethanex ▇▇▇▇▇▇▇▇▇▇ (except to
the
extent Seller has indemnified, or is obligated to indemnify Ethanex
▇▇▇▇▇▇▇▇▇▇ hereunder for any matter relating to or arising out of
such
Assumed Liability); or
|
|
(D)
|
any
Liability to any broker or finder retained or alleged to have been
retained by the Ethanex ▇▇▇▇▇▇▇▇▇▇ in connection with this Agreement
or
the Transactions.
|
|
(iii)
|
Indemnification
by Phase I Buyer.
Subject to the limitations and other terms and conditions in this
Section 11, from and after the Phase I Closing, Phase I Buyer agrees
to indemnify, defend and hold harmless the Seller Indemnified Parties
from
and against any and all Losses to the extent such Losses are based
upon,
arise out of or are related to:
|
|
(A)
|
a
breach of any representation or warranty of Phase I Buyer contained
in
this Agreement; provided
that, for purposes of this Section 11(b)(iii)(A), if there is a
breach of any representation or warranty (after giving effect to
any
materiality or material adverse effect qualification) then the
determination of the Losses upon such breach of any representation
or
warranty shall be made without regard to any materiality or material
adverse effect qualification contained
therein;
|
|
(B)
|
any
failure of the Phase I Buyer to perform or comply with any of the
covenants, agreements or obligations of the Phase I Buyer set forth
in
this Agreement or in any Related Agreement;
|
|
(C)
|
any
Assumed Liability assumed solely by Phase I Buyer (except to the
extent
Seller has indemnified, or is obligated to indemnify Phase I Buyer
hereunder for any matter relating to or arising out of such Assumed
Liability); or
|
73
|
(D)
|
any
Liability to any broker or finder retained or alleged to have been
retained by the Phase I Buyer in connection with this Agreement or
the
Transactions.
|
|
(iv)
|
Indemnification
by Phase II Buyer.
Subject to the limitations and other terms and conditions in this
Section 11, from and after the Phase I Closing, Phase II Buyer agrees
to indemnify, defend and hold harmless the Seller Indemnified Parties
from
and against any and all Losses to the extent such Losses are based
upon,
arise out of or are related to:
|
|
(A)
|
a
breach of any representation or warranty of Phase II Buyer contained
in
this Agreement; provided
that, for purposes of this Section 11(b)(iv)(A), if there is a breach
of any representation or warranty (after giving effect to any materiality
or material adverse effect qualification) then the determination
of the
Losses upon such breach of any representation or warranty shall be
made
without regard to any materiality or material adverse effect qualification
contained therein;
|
|
(B)
|
any
failure of the Phase II Buyer to perform or comply with any of the
covenants, agreements or obligations of the Phase II Buyer set forth
in
this Agreement or in any Related Agreement;
|
|
(C)
|
any
Assumed Liability assumed solely by Phase II Buyer (except to the
extent
Seller has indemnified, or is obligated to indemnify Phase II Buyer
hereunder for any matter relating to or arising out of such Assumed
Liability); or
|
|
(D)
|
any
Liability to any broker or finder retained or alleged to have been
retained by the Phase II Buyer in connection with this Agreement
or the
Transactions.
|
|
(v)
|
Indemnification
by Phase III Buyer.
Subject to the limitations and other terms and conditions in this
Section 11, from and after the Phase I Closing, Phase III Buyer
agrees to indemnify, defend and hold harmless the Seller Indemnified
Parties from and against any and all Losses to the extent such Losses
are
based upon, arise out of or are related
to:
|
|
(A)
|
a
breach of any representation or warranty of Phase III Buyer contained
in
this Agreement; provided
that, for purposes of this Section 11(b)(v)(A), if there is a breach
of any representation or warranty (after giving effect to any materiality
or material adverse effect qualification) then the determination
of the
Losses upon such breach of any representation or warranty shall be
made
without regard to any materiality or material adverse effect qualification
contained therein;
|
|
(B)
|
any
failure of the Phase III Buyer to perform or comply with any of the
covenants, agreements or obligations of the Phase III Buyer set forth
in
this Agreement or in any Related Agreement;
|
|
(C)
|
any
Assumed Liability assumed solely by Phase III Buyer (except to the
extent
Seller has indemnified, or is obligated to indemnify Phase III Buyer
hereunder for any matter relating to or arising out of such Assumed
Liability); or
|
74
|
(D)
|
any
Liability to any broker or finder retained or alleged to have been
retained by the Phase III Buyer in connection with this Agreement
or the
Transactions.
|
|
(vi)
|
Indemnification
by RE LLC.
Subject to the limitations and other terms and conditions in this
Section 11, from and after the Phase I Closing, RE LLC agrees to
indemnify, defend and hold harmless the Seller Indemnified Parties
from
and against any and all Losses to the extent such Losses are based
upon,
arise out of or are related to:
|
|
(A)
|
a
breach of any representation or warranty of RE LLC contained in this
Agreement; provided
that, for purposes of this Section 11(b)(vi)(A), if there is a breach
of any representation or warranty (after giving effect to any materiality
or material adverse effect qualification) then the determination
of the
Losses upon such breach of any representation or warranty shall be
made
without regard to any materiality or material adverse effect qualification
contained therein;
|
|
(B)
|
any
failure of the RE LLC to perform or comply with any of the covenants,
agreements or obligations of the RE LLC set forth in this Agreement
or in
any Related Agreement;
|
|
(C)
|
any
Assumed Liability assumed solely by RE LLC (except to the extent
Seller
has indemnified, or is obligated to indemnify RE LLC hereunder for
any
matter relating to or arising out of such Assumed Liability); or
|
|
(D)
|
any
Liability to any broker or finder retained or alleged to have been
retained by the RE LLC in connection with this Agreement or the
Transactions.
|
|
(vii)
|
Indemnification
by the Seller.
Subject to the limitations and other terms and conditions in this
Section 11, from and after the Phase I Closing the Seller agrees to
indemnify, defend and hold harmless the Buyer Group, Ethanex ▇▇▇▇▇▇▇▇▇▇,
Ethanex, other Affiliates of Ethanex and each of their respective
officers, directors, employees, members, stockholders, partners,
agents,
representatives, manager and controlling Persons (the “Buyer
Indemnified Parties”),
from and against any and all Losses to the extent such Losses are
based
upon, arise out of or are related
to:
|
|
(A)
|
a
breach of any representation or warranty of the Seller contained
in this
Agreement; provided
that, for purposes of this Section 11(b)(vii)(A), if there is a
breach of any representation or warranty (after giving effect to
any
materiality or Material Adverse Effect qualification) then the
determination of the Losses upon such breach of any representation
or
warranty shall be made without regard to any materiality or Material
Adverse Effect qualification contained therein;
|
75
|
(B)
|
any
failure of the Seller to perform or comply with any of the covenants,
agreements or obligations of the Seller contained in this Agreement
or in
any Related Agreement;
|
|
(C)
|
any
Excluded Liability;
|
|
(D)
|
any
Recoverable Costs; and,
|
|
(E)
|
any
Phase I Funded Debt, Owned Real Property Funded Debt, Phase II Funded
Debt
or Phase III Funded Debt.
|
|
(c)
|
Assertion
of Claims; Notice of and Right to Defend Third Party
Claims.
|
|
(i)
|
If
any third party notifies any party (the “Indemnitee”)
with respect to any matter (a “Third-Party
Claim”)
that may give rise to a claim for indemnification against any other
party
(the “Indemnitor”)
under Section 11(b), then the Indemnitee shall promptly notify the
Indemnitor thereof in writing; provided,
however,
that no delay on the part of the Indemnitee in notifying the Indemnitor
shall relieve the Indemnitor from any obligation hereunder unless
(and
then solely to the extent) the Indemnitor is thereby
prejudiced.
|
|
(ii)
|
Any
Indemnitor will have the right to defend the Indemnitee against the
Third-Party Claim with counsel of his, her, or its choice reasonably
satisfactory to the Indemnitee so long as (i) the Indemnitor assumes
such defense on a timely basis, (ii) the Indemnitor provides the
Indemnitee with evidence reasonably acceptable to the Indemnitee
that the
Indemnitor will have the financial resources to defend against the
Third-Party Claim and fulfill its indemnification obligations hereunder,
(iii) the Third-Party Claim involves money damages only and does not
seek an injunction, and (iv) the Indemnitor conducts the defense of
the Third-Party Claim actively and
diligently.
|
|
(iii)
|
So
long as the Indemnitor is conducting the defense of the Third-Party
Claim
in accordance with Section 11(c)(ii) above, (i) the Indemnitee
may retain separate co-counsel at his, her, or its sole cost and
expense
and participate in the defense of the Third-Party Claim, provided
that if the defendants in any Third Party Claim include both the
Indemnitor and the Indemnitee, and the Indemnitee shall have reasonably
concluded that there may be legal defenses available to it that are
inconsistent with those defenses available to the Indemnitor, or
if there
is a conflict of interest that would prevent counsel for the Indemnitor
from also representing the Indemnitee, then the Indemnitee shall
have the
right to engage a single separate counsel at the cost and expense
of the
Indemnitor, (ii) the Indemnitee will not consent to the entry of any
judgment on or enter into any settlement with respect to the Third-Party
Claim without the prior written consent of the Indemnitor (not to
be
unreasonably withheld, conditioned or delayed), and (iii) the
Indemnitor will not consent to the entry of any judgment on or enter
into
any settlement with respect to the Third-Party Claim without the
prior
written consent of the Indemnitee (not to be unreasonably withheld,
conditioned or delayed) unless such settlement involves only the
payment
of money damages by the Indemnitor and does not impose an injunction
or
other equitable relief upon the Indemnitee. If the Indemnitor does
not
timely assume and conduct the defense of the Third-Party Claim, or
at any
time ceases to do so, then the Indemnitee may thereafter assume the
defense of the Third-Party Claim with a single counsel of his, her
or its
choice at the cost and expense of the
Indemnitor.
|
76
|
(iv)
|
Any
claim by an Indemnitee on account of a Loss that does not result
from a
Third-Party Claim will be asserted by giving the Indemnitor reasonably
prompt written notice thereof, describing such claim with reasonable
particularity and containing a reference to the provision(s) of this
Agreement under which such claim has arisen; provided,
that the failure of an Indemnitee to so notify promptly any Indemnitor
shall not relieve such Indemnitor from any Liability which it may
have to
the Indemnitee in connection therewith, unless (and then solely to
the
extent) such Indemnitor actually has been prejudiced by such failure
to
give notice. The Indemnitor will have a period of 60 days following
its
receipt of such notice within which to respond in writing to such
claim.
If the Indemnitor does not so respond within such 60 day period,
the
Indemnitor will be deemed to have accepted such claim and the Indemnitor
shall thereafter promptly pay to the Indemnitee the amount of Losses
claimed. If the Indemnitor responds within such 60-day period and
objects
to the claim, the Indemnitor and the Indemnitee shall thereafter
seek in
good faith to negotiate a mutually acceptable resolution of such
claim for
a period of thirty (30) days thereafter. If the claims is not finally
resolved by the end of such 30-day period, the Indemnitee will thereafter
be free to pursue such remedies as may be available to the Indemnitee
on
the terms and subject to the provisions of this
Agreement.
|
|
(d)
|
Limitations
on Liability.
|
|
(i)
|
(A)
Neither Ethanex, Ethanex ▇▇▇▇▇▇▇▇▇▇, nor the members of the Buyer
Group
shall have any liability for Losses under Section 11(b)(i)(A), Section
11(b)(ii)(A), Section 11(b)(iii)(A), Section 11(b)(iv)(A), Section
11(b)(v)(A), or Section 11(b)(vi)(A) and the Seller Indemnified Parties
shall not have the right to seek indemnification under Section
11(b)(i)(A), Section 11(b)(ii)(A), Section 11(b)(iii)(A), Section
11(b)(iv)(A), Section 11(b)(v)(A) or Section 11(b)(vi)(A), until
the
aggregate amount of the Losses incurred by the Seller Indemnified
Parties
exceeds Two Hundred Fifty Thousand Dollars ($250,000) (the “Minimum
Loss”),
and
|
| (B) Seller shall not have any liability for Losses under Section 11(b)(vii)(A), and the Buyer Indemnified Parties shall not have the right to seek indemnification under Section 11(b)(vii)(A), until the aggregate amount of the Losses incurred by the Buyer Indemnified Parties exceeds the Minimum Loss; |
| provided that the Minimum Loss shall not apply to any Losses (and there shall be first-dollar liability) resulting from any breach of or misrepresentation under the Core Representations or any of Section 5(b)(xiv). After the Minimum Loss is exceeded, the Buyer Indemnified Parties or Seller Indemnified Parties, as applicable, shall be entitled to indemnification for the entire amount of their respective Losses in excess of the Minimum Loss, subject to the other imitations on recovery and recourse set forth in this Article 11. |
|
(ii)
|
The
aggregate liability of (x) Seller, on the one hand, and (y) collectively,
Ethanex, Ethanex ▇▇▇▇▇▇▇▇▇▇ and the Buyer Group, on the other, for
all
Losses under Section 11(b)(i)(A), Section 11(b)(ii)(A), Section
11(b)(iii)(A), Section 11(b)(iv)(A), Section 11(b)(v)(A), Section
11(b)(vi)(A), or Section 11(b)(vii)(A), as applicable, shall not
exceed
ten percent (10%) of the aggregate Cash Consideration paid to Seller
pursuant to Section 4(b)(i) (the “Cap”)
except that the aggregate liability of Seller under Section 11(b)(vii)(A)
for Losses in respect of breaches of the representations and warranties
set forth in Section 5(b)(xiv) shall not exceed the Purchase Price.
|
77
|
(iii)
|
The
limitations set forth in Section 11(d) or elsewhere in this Article
11
shall not apply to any breach of or misrepresentation under a Core
Representation, to any claim for fraud or intentional misrepresentation
or
to the adjustments to the Purchase Price specified in Article
4.
|
|
(iv)
|
Notwithstanding
anything herein to the contrary, after the eighteen-month anniversary
of
the last to occur of the Phase I Closing, the Phase II Closing and
the
Phase III Closing (x) no Buyer Indemnified Party shall be able to
seek
indemnification from Seller for Losses related to Sections 11(b)(vii)(B),
(C), (D) or (E) and (y) no Seller Indemnified Party shall be able
to seek
indemnification from Ethanex, Ethanex ▇▇▇▇▇▇▇▇▇▇ or the Buyer Group
for
Losses related to Sections 11(b)(i)(B), (C), or (D); 11(b)(ii)(B),
(C), or
(D); 11(b)(iii)(B), (C), or (D); 11(b)(iv)(B), (C), or (D); or
11(b)(v)(B), (C), or (D); or 11(b)(vi)(B), (C), or (D); provided,
that (i) the written assertion of any claim by a party against another
party hereunder with respect to any alleged or actual Losses resulting
from the foregoing or of a series of facts which would support such
Losses
that has been made, or (ii) the existence of any claim that has already
been made and has not been finally determined (pursuant to a
non-appealable order), in each case, prior to of on the date that
is the
eighteenth-month anniversary of the last to occur of the Phase I
Closing,
the Phase II Closing and the Phase III Closing, shall extend the
eighteen-month period set forth in this Section 11(d)(iv) through
the date
on which such claim is conclusively
resolved.
|
|
(v)
|
To
the extent that the indemnified party recognizes Tax Benefits (as
defined
below) with respect to any taxable year as a result of any claim,
the
indemnified party shall pay the amount of such Tax Benefits (but
not in
excess of the indemnification payment or payments actually received
from
the indemnifying party with respect to such claim) to the indemnifying
party as such Tax Benefits are actually recognized by the indemnified
party. For this purpose, an indemnified party shall be deemed to
recognize
a tax benefit (“Tax
Benefit”)
with respect to a taxable year if, and to the extent that, the indemnified
party’s liability for Taxes for such taxable year, calculated by excluding
any Tax items attributable to the claim, exceeds the indemnified
party’s
actual liability for Taxes for such taxable year, calculated by taking
into account any Tax items attributable to the claim (to the extent
permitted by relevant Tax law and treating such Tax items as the
last
items claimed for any taxable
year).
|
|
(vi)
|
Any
payment pursuant to this Article 11 shall be treated as an adjustment
to the Purchase Price.
|
78
(e)
Collection. During the Escrow Period, if the Buyer Group, Ethanex
▇▇▇▇▇▇▇▇▇▇ or Ethanex suffers any Loss for which any of them is entitled
to
indemnification pursuant to this Article 11, such entity shall be required
to
(i) first, apply such Loss against the Indemnity Escrow Account, (ii)
second, off-set such Loss against any amount outstanding
and due to the
Seller pursuant to this Agreement or any other Related Agreement (other
than the
Purchase Price); (iii) third, proceed against the Seller directly for
such Losses and to the extent Seller has not satisfied in full the amount
of the
Loss as of an applicable Closing Date, deduct such Loss from the Purchase
Price
due on such Closing Date in accordance with the provisions of Section 4(b);
and
(iv) fourth, to the extent the sources set forth in subclauses (i)
through (iii) in this sentence have been fully exhausted, again proceed
against
the Seller directly (subject to the limitations set forth in this Article
11).
(f)
Exclusive Remedy. Notwithstanding any provision hereof, the parties agree
that (a) from and after the Phase I Closing, with respect to the Transactions
completed at the Phase I Closing; (b) from and after the Phase II Closing,
with
respect to the Transactions completed at the Phase I Closing and the Phase
II
Closing; and (c) from and after the Phase III Closing, with respect to
the
Transactions, subject to the additional indemnity in Article 26, the
indemnification provisions set forth in this Article 11 shall be the exclusive
remedy of the parties to this Agreement and their respective Affiliates,
except
with respect to claims for fraud or intentional misrepresentation (as to
which
this Agreement shall impose no limitations or restrictions). For the purpose
of
avoiding doubt, if the Phase II Closing and/or the Phase III Closing does
not
occur under circumstances governed by Section 12(c), no party shall be
entitled
to make any claims, or recover for any Losses pursuant to the indemnification
provisions of this Article 11 with respect to the failure of either or
both of
such Closings to occur or the failure of a party to comply with the terms
of
Section 12(c), and in such event the provisions of Section 12(c) and the
other
applicable provisions of this Agreement shall govern the rights and obligations
of the parties to this Agreement.
(g)
No
Third Party Beneficiaries. Neither this Section 11 nor any other
provision of this Agreement is intended to confer any third party beneficiary
rights, including but not limited to any extension of any statute of limitations
pertaining to suits, actions or proceedings brought by third
parties.
(h)
Insurance Proceeds. All Losses recoverable by Seller or the Buyer Group,
Ethanex ▇▇▇▇▇▇▇▇▇▇ or Ethanex shall be net of insurance proceeds actually
received by such Person and any amounts such Person actually recovers from
third
parties. The amount of any Losses shall be reduced to take into account
any net
Tax savings actually realized by such party arising from the incurrence
or
payment of any such Losses in the taxable year in which such Losses are
incurred
or in any preceding taxable year as a result of the use of net operating
loss
carrybacks. In computing the amount of any such Tax benefit, such party
that
actually realized such net Tax savings such shall be deemed to recognize
all
other income gain, loss, deduction, or credit before recognizing any item
arising from the incurrence or payment of any indemnified Losses.
|
12.
|
TERMINATION
|
|
(a)
|
Termination.
Subject to the provisions of Section 12(c) below, this Agreement
may be
terminated prior to Closing (whether or not before or after the Required
Stockholder Approval is obtained) only in accordance with the
following:
|
|
(i)
|
at
any time by mutual agreement of the Seller and
Ethanex;
|
|
(ii)
|
prior
to the Phase I Closing Date, by either of the Seller or Ethanex if
the
Phase I Closing hereunder has not taken place on or before June 1,
2008
(the “Phase
I Termination Date”)
other than by reason of a material breach or default of any of the
covenants or agreements contained in this Agreement or the Related
Agreements, (i) by the Seller, if the Seller is seeking to terminate
this Agreement or (ii) by the Buyer Group, Ethanex ▇▇▇▇▇▇▇▇▇▇, or
Ethanex if Ethanex is seeking to terminate this
Agreement;
|
79
| (iii) | by the Seller, at any time, if any of Ethanex, Ethanex ▇▇▇▇▇▇▇▇▇▇ or any of the Buyers has breached any material representation, warranty or covenant contained in this Agreement in any material respect, such that the conditions to Seller’s obligations to complete the next applicable Closing set forth in Articles 7 or 9 of this Agreement would not be satisfied, Seller has notified Ethanex of the breach, such breach has continued without cure for a period of thirty (30) days following notice of such breach and, as a result of such breach (i) prior to the Phase I Closing the conditions to the Phase I Closing contained in Articles 7 or 9 shall be incapable of being satisfied by the Phase I Termination Date; (ii) prior to the Phase II Closing the conditions to the Phase II Closing contained in Articles 7 or 9 shall be incapable of being satisfied by the Phase II Deadline (as may be extended by Ethanex pursuant to Section 7(j)); or (iii) prior to the Phase III Closing the conditions to the Phase III Closing contained in Articles 7 and 9 shall be incapable of being satisfied by the Phase III Deadline (as may be extended by Ethanex pursuant to Section 7(k); provided that the Seller is not then also in breach of any material representations, warranties or covenants in any material respect. |
|
(iv)
|
by
Ethanex, at any time, if Seller has breached any material representation,
warranty or covenant contained in this Agreement in any material
respect,
such that the conditions to the obligation of Ethanex, Ethanex ▇▇▇▇▇▇▇▇▇▇
and the Buyers to complete the next applicable Closing set forth
in
Articles 7 or 10 of this Agreement would not be satisfied, Ethanex
has
notified Seller of the breach, such breach has continued without
cure for
a period of thirty (30) days following notice of such breach and,
as a
result of such breach (i) prior to the Phase I Closing the conditions
to
the Phase I Closing contained in Articles 7 or 10 shall be incapable
of
being satisfied by the Phase I Termination Date; (ii) prior to the
Phase
II Closing the conditions to the Phase II Closing contained in Articles
7
or 10 shall be incapable of being satisfied by the Phase II Deadline
(as
may be extended by Ethanex pursuant to Section 7(j)); or (iii) prior
to
the Phase III Closing the conditions to the Phase III Closing contained
in
Articles 7 or 9 shall be incapable of being satisfied by the Phase
III
Deadline (as may be extended by Ethanex pursuant to Section 7(k));
provided
that neither Ethanex, Ethanex ▇▇▇▇▇▇▇▇▇▇, nor any of the Buyers is
then
also in breach of any material representations, warranties or covenants
in
any material respect.
|
|
(v)
|
prior
to the Phase I Closing Date, by either Ethanex or Seller at any time
after
the stockholders of Ethanex have voted at the Ethanex Stockholders
Meeting
and the Required Stockholder Approval is not obtained
thereat.
|
|
(vi)
|
prior
to the Phase I Closing Date, by either Ethanex or Seller at any time
after
an Ethanex Recommendation Change (and prior to the rescission or
reversal
thereof).
|
|
(vii)
|
prior
to the Phase I Closing Date, by Seller if Ethanex has not been informed
by
West LB that a “Successful Syndication” (as such term is defined in
paragraph 5 of the Debt Engagement Letter) has occurred by (and including)
May 1, 2008.
|
|
(viii)
|
at
any time after March 5, 2008, by Seller or Ethanex if, by such date,
either (i) Ethanex has not received interim financing of at least
$1.5
million or (ii) Ethanex has not entered into a legally binding agreement
pursuant to which it will have available to it interim financing
of at
least $1.5 million and all conditions to the funding of such commitment
have not been satisfied; provided, that this termination right may
not be
exercised after March 10, 2008.
|
80
(b)
Surviving Obligations. In the event of termination of this Agreement by
either Ethanex, on the one hand, or the Seller, on the other hand, pursuant
to
Section 12(a), (i) prompt written notice thereof shall be given to the
other parties, and this Agreement shall terminate, without further action
by any
of the parties hereto, and (ii) all obligations of the parties hereunder
shall terminate, except for the obligations set forth in Sections 7(a),
12(b),
12(c), 13 and 21, provided that nothing contained in this
Section 12(b) shall relieve any party from liability for any willful breach
or intentional misrepresentation of any representation, warranty or covenant
contained in this Agreement.
(c)
Alternative Transaction Upon Financing Failure. Notwithstanding anything
to the contrary in this Agreement, if the Phase I Closing occurs and all
of the
conditions to the Phase II Closing other than the condition in Section
9(c)(iii)
are satisfied (or are capable of being satisfied at the Phase II Closing)
or if
the Phase I Closing and the Phase II Closing have occurred and all of the
conditions to the Phase III Closing other than the condition in Section
9(d)(iii) are satisfied (or capable of being satisfied at the Phase III
Closing), then (i) the parties shall, upon notice from either Ethanex or
Seller,
cease to be obligated to complete the Transactions contemplated by the
terms of
Sections 2(b) and 2(c), as applicable, and such Transactions shall be terminated
and the obligations of the parties set forth in Articles 2 and 3 to take
the
actions that would be required to give effect to those transactions shall
also
be terminated and (ii) in lieu thereof, the parties hereto shall enter
into the
JV Agreement consistent with the terms and conditions set forth on Exhibit
Q attached hereto and otherwise acceptable to the parties. Upon the
release
of the JV Agreement from escrow and the negotiation, execution and delivery
of
any other related agreements that the parties mutually shall determine
are
necessary, (A) the obligations of the parties to this Agreement shall be
deemed
fully satisfied and performed in all respects and the parties shall have
no
further obligations or Liabilities hereunder, except for (1) their respective
indemnification obligations under Article 11, (2) their obligations under
those
of the Related Agreements as shall continue in effect by their terms or
as
otherwise agreed by the parties thereto and (3) their obligations under
the
covenants or other agreements set forth in this Agreement that have not
then
been fully performed and are expressly referenced in the JV Agreement as
remaining applicable, and (B) the parties shall thereafter look to the
JV
Agreement with respect to their respective obligations to complete additional
transactions and their additional rights and obligations with respect to
the
ownership and operation of the business that is the subject of this Agreement
and the Related Agreements. The parties acknowledge and agree that if this
Section 12(c) applies and Ethanex is unable to obtain the financing needed
to
complete the Phase II Closing or the Phase III Closing, as applicable (or
both),
the Seller shall not be entitled to seek money damages or injunctive or
other
equitable relief (including specific performance of the transactions
contemplated by Sections 4(b)(iv), 4(b)(v), but excluding specific performance
of the transactions contemplated by this Section 12(c)), and in such event
the
exclusive rights and obligations of the parties shall be as set forth in
this
Section 12(c), provided that nothing herein shall be deemed a waiver of,
and
each party shall retain all rights and remedies with respect to any claim
for
fraud or intentional misrepresentations.
|
13.
|
FEES
AND EXPENSES
|
Except
as
expressly set forth in this Agreement, each of the Buyer Group, Ethanex
▇▇▇▇▇▇▇▇▇▇, and Ethanex, on the one hand, and the Seller, on the other hand,
shall be responsible for, and shall pay, their own fees and expenses incurred
in
connection with the authorization, preparation, execution and performance of
this Agreement, including all fees and expenses of counsel, accountants, agents
and other representatives; provided,
however,
that if
(i) the Phase I Closing shall fail to occur solely because of the failure of
the
Phase I Financing Condition or (ii) this Agreement shall be terminated by either
Ethanex or Seller pursuant to Section 12(a)(v) or (vi), Ethanex shall promptly
reimburse Seller for up to One Hundred Fifty Thousand Dollars ($150,000.00)
of
the expenses set forth on the Seller’s Expense Statement. The “Seller’s
Expense Statement”
shall
mean a detailed listing of the Seller’s reasonable and direct expenses solely
incurred in connection with the negotiation of this Agreement and the
performance of its obligations with respect to the Phase I Closing, signed
by
the Seller’s Chief Financial Officer and delivered to Ethanex within five (5)
business days following a termination of this Agreement for the failure of
the
Phase I Financing Condition, which shall be reasonably acceptable to Ethanex
in
its sole discretion. Seller shall pay 50% and Ethanex shall pay 50% of any
and
all transfer Taxes, stamp and recording Taxes, sales, use and gross receipts
Taxes and other miscellaneous fees or costs associated therewith.
81
|
14.
|
ENTIRE
AGREEMENT
|
The
parties hereto agree that this Agreement, including the Schedules, Ethanex
Schedules and
all
Exhibits hereto, and any Related Agreement constitute the entire agreement
among
the parties with respect to the subject matter hereof and supersede all prior
understandings, agreements, writings and deliveries with respect thereto.
|
15.
|
PARTIES
OBLIGATED AND BENEFITED
|
Subject
to the limitations set forth below, this Agreement will be binding upon the
parties and their respective assigns and successors in interest and will inure
solely to the benefit of the parties and their respective assigns and successors
in interest, and except as expressly provided in this Agreement, no other Person
will be entitled to any of the benefits conferred by this Agreement. Without
the
prior written consent of the other parties, no party will assign any of its
rights under this Agreement or delegate any of its duties under this Agreement,
except that any member of the Buyer Group, Ethanex ▇▇▇▇▇▇▇▇▇▇, and Ethanex
shall
have the right to (a) assign its rights and obligations under this
Agreement to any Affiliate without the prior consent of the Seller, so long
as
the assigning party remains fully liable hereunder as if it remained the
responsible party hereto and (b) collaterally assign this Agreement to any
sources of financing solely to secure such party’s obligation in connection with
the Transactions.
|
16.
|
NOTICES
|
All
notices, requests, consents, and other communications under this Agreement
shall
be in writing and shall be delivered in person or mailed by first class
certified or registered mail, return receipt requested, postage prepaid, by
reputable overnight mail or courier or by facsimile, in either case, with
receipt confirmed, addressed as follows:
|
If
to Seller:
|
▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Telephone: (▇▇▇)
▇▇▇-▇▇▇▇
Fax:
(▇▇▇) ▇▇▇-▇▇▇▇
Attention:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇
Jandrian, CPA
|
82
|
With
a copy (which shall not constitute notice) to:
|
▇▇▇▇▇▇▇
North ▇▇▇▇▇▇ & ▇▇▇▇▇, PC LLO
First
National Tower, Suite 3700
▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Telephone: (▇▇▇)
▇▇▇-▇▇▇▇
Fax:
(▇▇▇) ▇▇▇-▇▇▇▇
Attention:
▇▇▇▇▇ ▇▇▇▇▇, Esq.
|
|
If
to the Buyer Group:
|
▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇
▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇)
▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇
▇. ▇▇▇▇▇, III
|
|
With
a copy (which shall not constitute notice) to:
|
▇▇▇▇▇▇▇▇
& ▇▇▇▇▇ LLP
▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Telephone: (▇▇▇)
▇▇▇-▇▇▇▇
Fax:
(▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇
▇. Director, Esq.
|
or
at
such other address or addresses as may have been furnished in writing by any
party to the others in accordance with the provisions of this Section 16.
Notices and other communications provided in accordance with this
Section 16 shall be deemed delivered upon receipt. The furnishing of any
notice or communication required hereunder may be waived in writing by the
party
entitled to receive such notice. Failure or delay in delivering copies of any
notice to persons designated above to receive copies shall in no way adversely
affect the effectiveness of such notice or communication.
|
17.
|
AMENDMENTS
AND WAIVERS
|
Except
as
otherwise expressly set forth in this Agreement, any term of this Agreement
may
be amended and the observance of any term of this Agreement may be waived
(either generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Seller and Ethanex. Any
amendment or waiver effected in accordance with this Section 17 shall be
binding upon all parties hereto. No waivers of or exceptions to any term,
condition or provision of this Agreement, in any one or more instances, shall
be
deemed to be, or construed as, a further or continuing waiver of any such term,
condition or provision.
|
18.
|
SEVERABILITY
|
If
any
provision of this Agreement shall be determined by a court or other tribunal
of
competent jurisdiction to be invalid, inoperative or unenforceable because
of
the conflict of such provision with any constitution, statute, common law
principle, rule of public policy or for any other reason, such circumstance
shall have no effect or render any other provision or provisions contained
herein invalid, inoperative or unenforceable, but this Agreement shall be
reformed and construed as if such invalid, inoperative or unenforceable
provision had never been contained herein and such provision reformed so that
it
would be valid, operative and enforceable to the maximum extent
permitted.
83
|
19.
|
SECTION
HEADINGS AND TERMS
|
The
section headings in this Agreement are for convenience and reference purposes
only and shall not in any way affect the meaning or interpretation of this
Agreement.
|
20.
|
COUNTERPARTS
|
This
Agreement may be executed in two or more counterparts (including by facsimile
or
electronic mail), each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument, and shall become
effective when counterparts that together contain the signatures of each party
hereto shall have been delivered to the Seller, Ethanex, Ethanex ▇▇▇▇▇▇▇▇▇▇,
and
the Buyer Group.
|
21.
|
GOVERNING
LAW; CONSENT TO
JURISDICTION
|
The
internal law, without regard for conflicts of laws principles, of the State
of
Delaware shall govern all questions concerning the construction, validity and
interpretation of this Agreement and the performance of the obligations imposed
by this Agreement. Each
party submits
itself to the exclusive personal jurisdiction of (A) the courts of the State
of
Delaware located
in the City of Wilmington;
and (B) the United States District Court for the District of Delaware with
respect to any dispute arising out of this Agreement or any transaction
contemplated hereby to the extent such courts would have subject matter
jurisdiction with respect to such dispute
|
22.
|
SPECIFIC
PERFORMANCE
|
Except
as
otherwise provided in Section 12(c), the parties hereto acknowledge that money
damages may not be an adequate remedy for violations of this Agreement and
that
any party may, in its sole discretion, apply to a court of competent
jurisdiction for specific performance or injunctive or other relief as such
court may deem just and proper in order to enforce this Agreement or prevent
any
violation hereof by any of the parties hereto and, to the extent permitted
by
applicable Legal Requirements, each party hereof waives any objection to the
imposition of such relief. Any such specific or equitable relief granted shall
not be exclusive and an Indemnitee shall also be entitled to seek
indemnification to the extent permitted by Article 11.
|
23.
|
FURTHER
ASSURANCES
|
Each
party hereto shall execute, acknowledge and deliver any further assurance,
documents and instruments reasonably requested by any other party hereto for
the
purpose of giving effect to the Transactions or the intentions of the parties
with respect thereto.
|
24.
|
CONSTRUCTION
|
In
the
interpretation and construction of this Agreement, the parties acknowledge
that
the terms hereof reflect extensive negotiations between the parties and that
this Agreement shall not be deemed, for the purpose of construction and
interpretation, drafted by any party hereto.
|
25.
|
WAIVER
OF JURY TRIAL
|
EACH
OF
THE BUYER GROUP, ETHANEX ▇▇▇▇▇▇▇▇▇▇, ETHANEX AND SELLER HEREBY IRREVOCABLY
WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM
(WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THE ACTIONS OF THE
PARTIES HERETO IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT
OF THIS AGREEMENT.
84
|
26.
|
BULK
SALES
|
Ethanex
hereby waives compliance by Seller with the provisions of any so-called bulk
transfer laws of any jurisdiction in connection with the sale of the Purchased
Assets. Notwithstanding any such waiver, Seller agrees to indemnify Ethanex,
Ethanex ▇▇▇▇▇▇▇▇▇▇, and the Buyer Group and their respective Affiliates against
all liability, damage or expense which any of them may suffer due to the failure
to so comply or to provide notice required by any such law.
|
27.
|
INSURANCE
|
Each
of
Ethanex, the Buyer Group and Ethanex ▇▇▇▇▇▇▇▇▇▇ acknowledges that the Purchased
Assets are covered by certain insurance policies and insurable risk programs
which have been made available by Seller or its Affiliates. As of (i) with
respect to the Phase I Assets, on the Phase I Closing Date, (ii) with respect
to
the Phase II Assets, the Phase II Closing Date, and (iii) with respect to the
Phase III Assets, the Phase III Closing Date, such coverages shall no longer
apply, Buyer shall have no rights with respect to such coverages, policies
or
programs, and Buyer will be responsible for implementing its own insurance
policies and programs in respect to the Business and the Phase I Assets, the
Phase II and Phase III Assets, as the case may be. All such policies and
programs, and all rights and claims relating thereto, shall be retained by
Seller and its Affiliates.
***
End of Page. Signature Page Follows ***
85
IN
WITNESS WHEREOF,
the
parties hereto have caused this Asset Purchase Agreement to be executed by
their
duly authorized representatives on the day and year first above
written.
| MIDWEST RENEWABLE ENERGY LLC | ||
| |
|
|
| By: | /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ | |
|
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ |
||
| Title: Chairman of the Board | ||
| ETHANEX ▇▇▇▇▇▇▇▇▇▇, LLC | ||
| |
|
|
| By: | /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ | |
|
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ |
||
| Title: Chief Operating Officer | ||
| ETHANEX PHASE I, LLC | ||
| |
|
|
| By: | /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ | |
|
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ |
||
| Title: Chief Operating Officer | ||
| ETHANEX PHASE II, LLC | ||
| |
|
|
| By: | /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ | |
|
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ |
||
| Title: Chief Operating Officer | ||
| ETHANEX PHASE III, LLC | ||
| |
|
|
| By: | /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ | |
|
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ |
||
| Title: Chief Operating Officer | ||
| ETHANEX ▇▇▇▇▇▇▇▇▇▇ LAND, LLC | ||
| |
|
|
| By: | /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ | |
|
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ |
||
| Title: Chief Operating Officer | ||
| ETHANEX ENERGY, INC. | ||
| |
|
|
| By: | /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ | |
|
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ |
||
| Title: Chief Operating Officer | ||
Signature
Page to the Asset Purchase Agreement
INVESTOR
RIGHTS AGREEMENT
THIS
INVESTOR RIGHTS AGREEMENT
(this
“Agreement”)
is
made as of the Effective Date by and among Ethanex Energy, Inc., a Nevada
corporation (the “Company”)
and
Midwest Renewable Energy, LLC (”MRE”).
Capitalized terms used but not otherwise defined herein are defined in
Section
10
hereof.
WHEREAS,
pursuant to an Asset Purchase Agreement, dated [ ], 2008 (the “APA”),
among
the Company, MRE, Ethanex Phase I, LLC (”Phase
I LLC”),
Ethanex Phase II, LLC (“Phase
II LLC”),
Ethanex Phase III, LLC (“Phase
III LLC”),
Ethanex ▇▇▇▇▇▇▇▇▇▇ Land, LLC (“Land
LLC”),
and
Ethanex ▇▇▇▇▇▇▇▇▇▇, LLC, (i) on the Phase I Closing Date MRE sold (a) the
Owned
Real Property to Land LLC and (b) the Phase I Assets to Phase I LLC; (ii)
on the
Phase II Closing Date, MRE sold the Phase II Assets to Phase II LLC and (iii)
on
the Phase III Closing Date, MRE will sell to Phase III LLC the Phase III
Assets
unless the APA is terminated in accordance with Section 12(c) thereof.
WHEREAS,
as
partial consideration for the Phase II Assets and the Phase III Assets, the
Company has issued to MRE the Phase II Stock Consideration.
WHEREAS,
as
partial consideration for the Residual Assets, on the Phase III Closing Date,
the Company shall issue to MRE the Phase III Stock Consideration (and together
with the Phase II Stock Consideration, the “Shares”
it
being understood, however, that the term “Shares”
shall
not include the Phase III Stock Consideration if the APA is terminated pursuant
to Section 12(c) thereof prior to the Phase III Closing Date).
NOW,
THEREFORE,
in
consideration of the mutual promises made herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the
parties hereto, intending to be legally bound, agree as follows:
1. Restrictions
on Transfer.
MRE
agrees that, prior to the six-month anniversary of (i) the Phase II Closing,
with respect to the Phase II Stock Consideration and (ii) the Phase III Closing,
with respect to the Phase III Stock Consideration, it will not, directly
or
indirectly, sell, transfer or otherwise dispose of any interest in
(“Transfer”)
the
Shares, provided that MRE may Transfer Shares pursuant to any tender offer
or
exchange offer that is recommended by the Board of Directors of the Company
(“Board”).
After
the six-month anniversary of (i) the Phase II Closing, with respect to the
Phase
II Stock Consideration, and (ii) the Phase III Closing, with respect to the
Phase III Stock Consideration, and for the remaining term of this Agreement,
MRE
may Transfer any interest in the Shares, provided, that (x) such Transfer,
unless it is made in a registered public offering or pursuant to a tender
or
exchange offer to the Company’s stockholders, is not knowingly made to any
person or “group” (within the meaning of Section 13(d)(3) of the Exchange Act)
acquiring all of MRE’s Shares in the acquisition or that would, after giving
effect to its acquisition of such Shares, beneficially own or have the right
to
acquire more than 4.9% of the Company’s common stock then outstanding, unless
such person or group has entered into a standstill agreement with the Company
containing terms and conditions substantially equivalent to those in this
Agreement (it being understood that MRE has no duty to inquire as to the
beneficial ownership of any such person or group when MRE sells the Shares
in a
transaction on an exchange on which the Shares are listed at the time), and
(y)
(i) such Transfer is pursuant to an effective registration statement under
the
Securities Act, (ii) such Transfer is made after the termination of sale
restrictions pursuant to Rule 144 of the Securities Act or any successor
to such
rule or (iii) MRE shall have delivered to the Company an opinion of counsel,
which opinion and counsel shall be reasonably satisfactory to the Company,
to
the effect that such Transfer is exempt from the provisions of Section 5
of the
Securities Act.
2. Standstill
Provisions
(a) Restrictions.
MRE
agrees that, during the term of this Agreement, without the Company’s prior
written consent, MRE will not:
(i) acquire,
announce an intention to acquire, or offer or propose to acquire, or agree
to
acquire, directly or indirectly, by purchase or otherwise, beneficial ownership
of any of the Company’s common or preferred stock or direct or indirect rights
to options to acquire (through purchase, exchange, conversion or otherwise)
any
of the Company’s common stock or preferred stock (collectively, the
“Securities”), if (x) MRE owns at such time more than 4.9% of the Company’s
outstanding securities (on an as converted to common stock basis) or (y)
immediately after any such acquisition, MRE would beneficially own, in the
aggregate, Securities representing more than 4.9% of the Company’s outstanding
securities (on an as converted to common stock basis);
(ii) seek
representation on the Board or the removal of any of the Company’s directors or
a change in the composition or size of the Board;
(iii) make
any
statement or proposal, whether written or oral, to the Board of the Company,
or
to any director, officer or agent of the Company, or make any public
announcement or proposal whatsoever with respect to a merger or other business
combination, sale or transfer of assets, recapitalization, dividend, share
repurchase, liquidation or other extraordinary corporate transaction with
the
Company or any other transaction which could result in a change of control,
solicit or encourage any person to make such a proposal, or take any action
which might require the Company to make a public announcement regarding the
possibility of any transaction referred to in this Section 2(iii) or similar
transaction or advise, assist or encourage any other person in connection
with
the foregoing;
(iv) make,
or
in any way participate, directly or indirectly, in any “solicitation” of
“proxies” (as such terms are defined in Rule 14a-1 under the Exchange Act) to
vote any Securities, seek to advise, encourage or influence any person or
entity
with respect to the voting of any Securities, initiate or propose any
shareholder proposal or induce or attempt to induce any other person to initiate
any shareholder proposal;
(v) deposit
any Securities into a voting trust or subject any Securities to any arrangement
or agreement with respect to the voting of any Securities other than this
Agreement;
(vi) form,
join or in any way participate in a “group” (with the meaning of Section
13(d)(3) of the Exchange Act) with respect to any Securities, other than
a group
which MRE is a member of as of the date hereof;
(vii) otherwise
act, alone or in concert with others, to seek to exercise any control or
influence over the management, Board or policies of the Company;
2
(viii)
make a
public request to the Company (or its directors, officers, shareholders,
employees or agents) to take any action in respect of the foregoing matters,
or
(ix) disclose
any intention, plan or arrangement inconsistent with the foregoing.
3. Piggyback
Registrations.
(a) Right
to Piggyback.
After
the one-year anniversary of the Phase II Closing Date, with respect to the
Phase
II Stock Consideration, and of the Phase III Closing Date, with respect to
the
Phase III Closing Date, whenever the Company proposes to register any of
its
securities under the Securities Act and the registration form to be used
may be
used for the registration of the Shares (a “Piggyback
Registration”),
the
Company shall give prompt written notice to all holders of the Shares of
its
intention to effect such a registration and shall, subject to the provisions
of
Sections
3(c)
and
(d)
below,
include in such registration all Shares with respect to which the Company
has
received written requests for inclusion therein within 20 days after the
receipt
of the Company’s notice. Notwithstanding anything to the contrary contained
herein, the Company may determine not to proceed with a registration that
is the
subject of such notice.
(b) Piggyback
Expenses.
The
Registration Expenses of the holders of the Shares shall be paid by the
Company in
all
Piggyback Registrations.
(c) Priority
on Primary Registrations1.
If a
Piggyback Registration is an underwritten primary registration on behalf
of the
Company, and the managing underwriters advise the Company in writing that
in
their opinion the number of securities requested to be included in such
registration exceeds the number which can be sold in an orderly manner in
such
offering within a price range acceptable to the Company, the Company shall
include in such registration the number which can be so sold in the following
order of priority: (i) first,
the
securities the Company proposes to sell, (ii) second,
the
shares requested to be included in such registration pursuant to any
registration rights agreements outstanding as of the Phase I Closing ,
(iii)third,
the Shares requested to be included in such registration (pro
rata
among the holders of such Shares on the basis of the number of shares of
the
Company’s common stock owned by each such holder), and (iv) fourth,
other
securities requested to be included in such registration.
(d) Priority
on Secondary Registrations2.
If a
Piggyback Registration is an underwritten secondary registration on behalf
of
holders of the Company’s securities, and the managing underwriters advise the
Company in writing that in their opinion the number of securities requested
to
be included in such registration exceeds the number which can be sold in
an
orderly manner in such offering within a price range acceptable to the holders
initially requesting such registration, the Company shall include in such
registration the number which can be so sold in the following order of priority:
(i) first,
the
securities requested to be included therein by the holders requesting such
registration and the Shares requested to be included in such registration,
pro
rata among the holders of any such securities on the basis of the number
of
securities so requested to be included therein owned by each such holder,
and
(ii) second,
other
securities requested to be included in such registration.
(e) Selection
of Underwriters.
If any
Piggyback Registration is a primary registration of an underwritten offering
for
the Company, the Company will have the sole right to select the investment
banker(s) and manager(s) for the offering.
___________________
1
Subject
to approval by Ethanex’s financing sources.
2
Subject
to approval by Ethanex’s financing sources.
3
4. [Reserved]
5. Lockup
Agreement. MRE
shall
not effect any public sale or distribution (including sales pursuant to Rule
144) of equity securities of the Company, or any securities convertible into
or
exchangeable or exercisable for such securities, during (i) with respect
to any
underwritten primary or secondary registration or any underwritten Piggyback
Registration in which Shares are included, the seven days prior to and the
90-day period beginning on the effective date of such registration, and (ii)
upon notice from the Company of the commencement of an underwritten distribution
in connection with any Shelf Registration, the seven days prior to and the
90-day period beginning on the date of commencement of such distribution,
in
each case except as part of such underwritten registration, and in each case
unless the underwriters managing the registered public offering otherwise
agree.
MRE agrees to execute a customary lock-up agreement in favor of the Company’s
underwriters to such effect and, in any event, that the Company’s underwriters
in any relevant offering shall be third party beneficiaries of this Section
5.
6. Registration
Procedures.
Whenever the Company initiates a registration of securities that includes
Shares
pursuant to the terms of this Agreement, the Company shall use its commercially
reasonable efforts to effect the registration and the sale of such Shares
in
accordance with the intended method of disposition thereof, and pursuant
thereto
the Company shall as expeditiously as reasonably possible:
(a) prepare
and file with the SEC a registration statement with respect to such Shares
and
use its commercially reasonable efforts to cause such registration statement
to
become effective; provided that a reasonable time before filing a registration
statement or prospectus or any amendments or supplements thereto, the Company
shall furnish to the counsel selected by MRE copies of all such documents
proposed to be filed, which documents shall be subject to the review and
comment
of such counsel;
(b) notify
each holder of Shares of the effectiveness of each registration statement
filed
hereunder and prepare and file with the SEC such amendments and supplements
to
such registration statement and the prospectus used in connection therewith
as
may be necessary to keep such registration statement effective for a period
of
not less than 90 days or any longer period required by the terms of any
agreement pursuant to which the applicable registration statement was initiated
(or, if sooner, until all Shares have been sold under such Registration
Statement) and comply with the provisions of the Securities Act with respect
to
the disposition of all securities covered by such registration statement
during
such period in accordance with the intended methods of disposition by the
sellers thereof set forth in such registration statement;
(c) furnish
to MRE such number of copies of such registration statement, each amendment
and
supplement thereto, the prospectus included in such registration statement
(including each preliminary prospectus) and such other documents as such
seller
may reasonably request in order to facilitate the disposition of the Shares
owned by MRE;
(d) use
its
commercially reasonable efforts (i) to register or qualify such Shares under
such other securities or blue sky laws of such jurisdictions as any seller
reasonably requests, (ii) to keep such registration or qualification in effect
for so long as such registration statement remains in effect, and (iii) to
do
any and all other acts and things which may be reasonably necessary or advisable
to enable MRE to consummate the disposition in such jurisdictions of the
Shares
owned by it (provided that the Company shall not be required to (i) qualify
generally to do business in any jurisdiction where it would not otherwise
be
required to qualify but for this subsection, (ii) subject itself to taxation
in
any such jurisdiction or (iii) consent to general service of process in any
such
jurisdiction);
4
(e) notify
MRE (i) at any time when a prospectus relating thereto is required to be
delivered under the Securities Act, (A) upon discovery that, or upon the
happening of any event as a result of which, the prospectus included in such
registration statement contains an untrue statement of a material fact or
omits
any fact necessary to make the statements therein not misleading, and, at
the
request of MRE, the Company shall prepare a supplement or amendment to such
prospectus so that, as thereafter delivered to the purchasers of such Shares,
such prospectus shall not contain an untrue statement of a material fact
or omit
to state any fact necessary to make the statements therein not misleading,
(B)
as soon as the Company becomes aware of any request by the SEC or any Federal
or
state governmental authority for amendments or supplements to a registration
statement or related prospectus covering Shares or for additional information
relating thereto, (C) as soon as the Company becomes aware of the issuance
or
threatened issuance by the SEC of any stop order suspending or threatening
to
suspend the effectiveness of a registration statement covering the Shares
or (D)
of the receipt by the Company of any notification with respect to the suspension
of the qualification or exemption from qualification of any Share for sale
in
any jurisdiction, or the initiation or threatening of any proceeding for
such
purpose; and (ii) when each registration statement or any amendment thereto
has
been filed with the SEC and when each registration statement or any
post-effective amendment thereto has become effective;
(f) cause
all
such Shares (i) to be included for listing or quotation on the same primary
exchange or recognized trading or quotation system (such as the NASD OTC
Bulletin Board) as the Company’s publicly traded common stock, and (ii) to be
registered with or approved by such other governmental agencies or authorities
as may be necessary to enable the sellers thereof to consummate the disposition
of the Shares;
(g) provide
and cause to be maintained a transfer agent and registrar for all such Shares
from and after the effective date of such registration statement;
and
(h) enter
into such customary agreements (including underwriting agreements in customary
form) and take all such other actions as MRE or the underwriters, if any,
reasonably request in order to expedite or facilitate the disposition of
such
Shares (including effecting a stock split, a combination of shares, or other
recapitalization).
7. Registration
Expenses.
All
expenses incurred by the Company in complying with its obligations under
this
Agreement shall be paid by the Company, except that the Company shall not
be
liable for any fees, discounts or commissions to any underwriter or any fees
or
disbursements of counsel for MRE, in either case in respect of the Shares
sold
by MRE.
8. Indemnification;
Contribution.
(a) The
Company agrees to indemnify, to the extent permitted by law, MRE, its officers,
directors, employees, agents and Affiliates and each Person that controls
(within the meaning of the Securities Act) MRE against all losses, claims,
damages, liabilities and expenses, including attorneys’ fees and disbursements
and expenses of investigation, resulting from any untrue or alleged untrue
statement of material fact contained in any registration statement, prospectus
or preliminary prospectus or any amendment thereof or supplement thereto,
any
omission or alleged omission of a material fact required to be stated therein
or
necessary to make the statements therein not misleading, or violation or
alleged
violation by the Company of the Securities Act, the Exchange Act, any applicable
state securities law or any rule or regulation promulgated under the Securities
Act, the Exchange Act or any applicable state securities law, except insofar
as
the same are caused by or contained in any information furnished in writing
to
the Company by MRE expressly for use therein or by MRE’s failure to deliver a
copy of the registration statement or prospectus or any amendments or
supplements thereto.
5
(b) In
connection with any registration statement in which MRE is participating,
MRE
shall furnish to the Company in writing such information and affidavits as
the
Company reasonably requests for use in connection with any such registration
statement or prospectus and, to the extent permitted by law, shall indemnify
the
Company, its directors, officers, employees, agents and Affiliates and each
Person who controls the Company (within the meaning of the Securities Act
and
the Exchange Act) against any losses, claims, damages, liabilities and expenses
resulting from any untrue or alleged untrue statement of material fact contained
in the registration statement, prospectus or preliminary prospectus or any
amendment thereof or supplement thereto or any omission or alleged omission
of a
material fact required to be stated therein or necessary to make the statements
therein not misleading, but only to the extent that such untrue statement
or
omission is contained in any writing furnished by MRE for use in such
registration statement, prospectus or preliminary prospectus or any amendment
or
supplement thereto.
(c) Any
Person entitled to indemnification hereunder shall (i) give prompt written
notice to the indemnifying party of any claim with respect to which it seeks
indemnification (provided that the failure to give prompt notice shall not
impair any Person’s right to indemnification hereunder to the extent such
failure has not prejudiced the indemnifying party) and (ii) unless in such
indemnified party’s reasonable judgment (x) a conflict of interest between such
indemnified and indemnifying parties may exist with respect to such claim
or (y)
such indemnified party has one or more defenses to such claim that are not
available to the indemnifying party, permit such indemnifying party to assume
the defense of such claim with counsel reasonably satisfactory to the
indemnified party. If such defense is assumed, the indemnifying party shall
not
settle such claim unless the indemnified party is released and discharged
of any
liability and the indemnifying party shall not be subject to any liability
for
any settlement made by the indemnified party without its consent (but such
consent shall not be unreasonably withheld). An indemnifying party who is
not
entitled to, or elects not to, assume the defense of a claim shall not be
obligated to pay the fees and expenses of more than one counsel for all parties
indemnified by such indemnifying party with respect to such claim, unless
in the
reasonable judgment of any indemnified party a conflict of interest may exist
between such indemnified party and any other of such indemnified parties
with
respect to such claim.
9. Participation
in Underwritten Registrations.
(a) No
Person
may participate in any registration hereunder which is underwritten unless
such
Person (i) agrees to sell such Person’s securities on the basis provided in any
underwriting arrangements approved by the Person or Persons entitled hereunder
to approve such arrangements and (ii) completes and executes all questionnaires,
powers of attorney, indemnities, underwriting agreements and other documents
required under the terms of such underwriting arrangements.
10. Black-Out
Periods.
(a) Notwithstanding
anything to the contrary in this Agreement, at any time after the filing
of a
registration statement contemplated herein, the Company, by written notice
to
MRE (a “Suspension Notice”), may direct MRE to suspend sales of the Shares
pursuant to a registration statement for such times as the Company reasonably
may determine is necessary and advisable if any of the following events shall
occur: (1) a majority of the Board of Directors of the Company shall have
determined in good faith that (A) the offer or sale of any Shares would
materially impede, delay or interfere with any proposed financing, offer
or sale
of securities, acquisition, merger, tender offer, business combination,
corporate reorganization or other significant transaction involving the Company
or (B) after the advice of counsel, the sale of Shares pursuant to the
registration statement would require disclosure of material non-public
information not otherwise required to be disclosed under applicable law;
or (2)
a majority of the Board of Directors of the Company shall have determined
in
good faith, after the advice of counsel, that the Company is required by
law,
rule or regulation or that it is in the best interests of the Company to
supplement the registration statement or file a post-effective amendment
to the
registration statement in order to incorporate information into the registration
statement for the purpose of (A) including in the registration statement
any
prospectus required under Section 10(a)(3) of the Securities Act; (B) reflecting
in the prospectus included in the registration statement any facts or events
arising after the effective date of the registration statement (or of the
most
recent post-effective amendment) that, individually or in the aggregate,
represents a fundamental change in the information set forth therein; or
(C)
including in the prospectus included in the registration statement any material
information with respect to the plan of distribution not disclosed in the
registration statement or any material change to such information. Any period
in
which the use of the registration statement has been suspended in accordance
with this Section 10(a) is sometimes referred to herein as a “Blackout Period.”
Upon the occurrence of any such suspension, the Company shall use its
commercially reasonable efforts to cause the registration statement to become
effective or to promptly amend or supplement the registration statement on
a
post-effective basis or to take such other action as is necessary to permit
resumed use of the registration statement, so as to permit MRE to resume
sales
of the Shares as soon as possible.
6
(b) MRE
shall
not effect any sales of the Shares pursuant to such registration statement
(or
such filings) at any time after it has received a Suspension Notice from
the
Company and prior to receipt of an End of Suspension Notice (as defined below).
If so directed by the Company, MRE will deliver to the Company all copies
(other
than permanent file copies) then in MRE’s possession of the prospectus covering
the Shares at the time of receipt of the Suspension Notice. MRE may recommence
effecting sales of the Shares pursuant to the registration statement (or
such
filings) following its receipt of further written notice to such effect (an
“End
of Suspension Notice”) from the Company, which End of Suspension Notice shall be
given by the Company to MRE in the manner described above promptly following
the
conclusion of any Suspension Event and its effect.
11. Effective
Time.
This
Agreement shall be effective as of the date hereof.
12. Definitions.
“Affiliate”
of
any
particular Person means any other Person directly or indirectly controlling,
controlled by or under common control with such Person and any direct or
indirect partner or member of a Person which is a partnership or limited
liability company.
“Agreement”
has
the
meaning specified in the preamble hereto.
“Board”
means
the board of directors of the Company.
“Company”
has
the
meaning specified in the preamble hereto.
“control”
(including the terms “controlling,” “controlled by” and “under common control
with”) means the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of a person, whether through
the ownership of voting shares, by contract, or otherwise.
7
“Exchange
Act”
means
the Securities Exchange Act of 1934, as amended from time to time.
“Owned
Real Property”
shall
have the meaning given such term in the APA.
“Person”
means
an individual, a partnership, a corporation, a limited liability company,
an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization and a governmental entity or any department, agency or political
subdivision thereof.
“Phase
I Assets”
shall
have the meaning given such term in the APA.
“Phase
I Closing Date”
shall
have the meaning given such term in the APA.
“Phase
II Assets”
shall
have the meaning given such term in the APA.
“Phase
II Closing Date”
shall
have the meaning given such term in the APA.
“Phase
III Closing Date”
shall
have the meaning given such term in the APA.
“Piggyback
Registration”
has
the
meaning specified in Section
3(a).
“Shares”
has
the
meaning specified in the recitals.
“Registration
Expenses”
has
the
meaning specified in Section
8(a).
“Residual
Assets”
shall
have the meaning given such term in the APA.
“Securities
Act”
means
the Securities Act of 1933, as amended from time to time.
“SEC”
means
the United States Securities and Exchange Commission or any successor
governmental agency.
“Shelf
Registration”
means
registration under the Securities Act of all or a portion of the Shares on
Form
S-3 (or any successor form) in accordance with and pursuant to Rule 415
promulgated under the Securities Act (or any successor rule then in effect).
“Subsidiary”
means,
with respect to any Person, any corporation, limited liability company,
partnership, association or other business entity of which (i) if a corporation,
a majority of the total voting power of shares of stock entitled (without
regard
to the occurrence of any contingency) to vote in the election of directors,
managers or trustees thereof is at the time owned or controlled, directly
or
indirectly, by that Person or one or more of the other Subsidiaries of that
Person or a combination thereof, or (ii) if a limited liability company,
partnership, association or other business entity, a majority of the membership,
partnership or other similar ownership interest thereof is at the time owned
or
controlled, directly or indirectly, by any Person or one or more of the other
Subsidiaries of that Person or a combination thereof. For purposes hereof,
a
Person or Persons shall be deemed to have a majority ownership interest in
a
limited liability company, partnership, association or other business entity
if
such Person or Persons shall be allocated a majority of the gains or losses
of
such limited liability company, partnership, association or other business
entity or shall be or control (or have the power to control) a managing
director, manager or general partner of such limited liability company,
partnership, association or other business entity.
8
13. Amendment,
Modification and Waivers; Further Assurances
(a) Amendment.
This
Agreement may be amended with the consent of the Company and the Company
may
take any action herein prohibited, or omit to perform any act herein required
to
be performed by it, only if the Company shall have obtained the written consent
of MRE to such amendment, action or omission to act; provided
that if
any such amendment or waiver is to a provision in this Agreement that requires
a
specific vote to take an action thereunder or to take an action with respect
to
the matters described therein, such amendment or waiver shall not be effective
unless such specific vote is obtained with respect to such amendment or
waiver.
(b) Effect
of Waiver.
No
waiver of any terms or conditions of this Agreement shall operate as a waiver
of
any other breach of such terms and conditions or any other term or condition,
nor shall any failure to enforce any provision hereof operate as a waiver
of
such provision or of any other provision hereof. No written waiver hereunder,
unless it by its own terms explicitly provides to the contrary, shall be
construed to effect a continuing waiver of the provisions being waived and
no
such waiver in any instance shall constitute a waiver in any other instance
or
for any other purpose or impair the right of the party against whom such
waiver
is claimed in all other instances or for all other purposes to require full
compliance with such provision.
(c) Further
Assurances.
Each of
the parties hereto shall execute all such further instruments and documents
and
take all such further action as any other party hereto may reasonably require
in
order to effectuate the terms and purposes of this Agreement.
14. Miscellaneous.
(a) No
Inconsistent Agreements.
Notwithstanding anything to the contrary in this Agreement, this Agreement
shall
not, in any way, limit the Company’s right to grant registration rights, or
other similar rights, to equity investors who participate in financing the
transactions contemplated by the APA; provided, however, other than such
rights
granted to such equity investors, the Company shall not hereafter enter into
any
agreement with respect to its securities which is inconsistent with or violates
the rights granted to the holders of Shares in this Agreement.. Moreover,
the
parties hereto acknowledge and agree that the rights granted to such equity
investors do not violate the terms of this Agreement.
(b) Adjustments
Affecting Shares.
The
Company shall not take any action, or permit any change to occur, with respect
to its securities which would materially and adversely affect the ability
of MRE
to include such Shares in a registration undertaken pursuant to this Agreement
or which would materially and adversely affect the marketability of such
Shares
in any such registration (including effecting a stock split or a combination
of
shares).
(c) Remedies;
Specific Performance.
Any
Person having rights under any provision of this Agreement shall be entitled
to
enforce such rights specifically, to recover damages caused by reason of
any
breach of any provision of this Agreement and to exercise all other rights
existing in their favor. The parties hereto agree and acknowledge that money
damages would not be an adequate remedy for any breach of the provisions
of this
Agreement and that any party may in its sole discretion apply to any court
of
law or equity of competent jurisdiction for specific performance and/or
injunctive relief (without posting any bond or other security) in order to
enforce or prevent violation of the provisions of this Agreement and shall
not
be required to prove irreparable injury to such party or that such party
does
not have an adequate remedy at law with respect to any breach of this Agreement
(each of which elements the parties admit). The parties hereto further agree
and
acknowledge that each and every obligation applicable to it and contained
in
this Agreement shall be specifically enforceable against it and hereby waives
and agrees not to assert any defenses against an action for specific performance
of their respective obligations hereunder.
9
(d) Successors
and Assigns.
All
covenants and agreements in this Agreement by or on behalf of any of the
parties
hereto shall bind and inure to the benefit of the respective successors and
assigns of the parties hereto (including any trustee in bankruptcy) whether
so
expressed or not. Neither this Agreement nor any of the rights, interests
or
obligations hereunder shall be assigned or delegated without the prior written
consent of the other party.
(e) Severability.
Whenever possible, each provision of this Agreement shall be interpreted
in such
manner as to be effective and valid under applicable law, but if any provision
of this Agreement is held to be prohibited by or invalid under applicable
law,
such provision shall be ineffective only to the extent of such prohibition
or
invalidity, without invalidating the remainder of this Agreement.
(f) Counterparts.
This
Agreement may be executed in two or more counterparts (including by facsimile
or
electronic mail), any one of which need not contain the signatures of more
than
one party, but all such counterparts taken together shall constitute one
and the
same Agreement.
(g) Descriptive
Headings; Interpretation; No Strict Construction.
The
descriptive headings of this Agreement are inserted for convenience only
and do
not constitute a substantive part of this Agreement. Whenever required by
the
context, any pronoun used in this Agreement shall include the corresponding
masculine, feminine or neuter forms, and the singular forms of nouns, pronouns,
and verbs shall include the plural and vice versa. References to sections
are to
sections of this Agreement unless otherwise stated. Reference to any agreement,
document, or instrument means such agreement, document, or instrument as
amended
or otherwise modified from time to time in accordance with the terms thereof,
and, if applicable, hereof. The words “include”, “includes” or “including” in
this Agreement shall be deemed to be followed by “without limitation”. The use
of the words “or,” “either” or “any” shall not be exclusive. The parties hereto
have participated jointly in the negotiation and drafting of this Agreement.
If
an ambiguity or question of intent or interpretation arises, this Agreement
shall be construed as if drafted jointly by the parties hereto, and no
presumption or burden of proof shall arise favoring or disfavoring any party
by
virtue of the authorship of any of the provisions of this
Agreement.
(h) Governing
Law.
All issues and questions concerning the construction, validity, enforcement
and
interpretation of this Agreement shall be governed by, and construed in
accordance with, the laws of the State of [______], without giving effect
to any
choice of law or conflict of law rules or provisions (whether of the State
of
[____]or any other jurisdiction) that would cause the application of the
laws of
any jurisdiction other than the State of [______]. In furtherance of the
foregoing, the internal law of the State of [______] shall control the
interpretation and construction of this Agreement (and all schedules and
exhibits hereto), even though under that jurisdiction’s choice of law or
conflict of law analysis, the substantive law of some other jurisdiction
would
ordinarily apply.
(i) Notices.
All
notices, demands or other communications to be given or delivered under or
by
reason of the provisions of this Agreement shall be in writing and shall
be
deemed to have been given when (a) delivered personally to the recipient,
(b)
faxed to the recipient (with hard copy sent to the recipient by reputable
overnight courier service (charges prepaid) that same day) if faxed before
5:00
p.m. New York, New York time on a business day, and otherwise on the next
business day, or (c) one business day after being sent to the recipient by
reputable overnight courier service (charges prepaid). Such notices, demands
and
other communications shall be sent to the Company at the address set forth
below
and to any holder of Shares at such address as indicated by the Company’s
records, or at such address or to the attention of such other person as the
recipient party has specified by prior written notice to the sending party.
The
Company’s address is:
10
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▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇
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||
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▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
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||
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Attn:
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▇▇▇▇▇▇
▇. ▇▇▇▇▇, III
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Telephone:
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(▇▇▇) ▇▇▇-▇▇▇▇
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Facsimile:
|
(▇▇▇)
▇▇▇-▇▇▇▇
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with
a copy to:
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||
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_______________
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||
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_______________
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||
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Attn:______________
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||
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Facsimile:
____________
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||
If
any
time period for giving notice or taking action hereunder expires on a day
which
is a Saturday, Sunday or legal holiday in the State of New York or the
jurisdiction in which the Company’s principal office is located, the time period
shall automatically be extended to the business day immediately following
such
Saturday, Sunday or legal holiday.
(j) Delivery
by Facsimile.
This
Agreement, the agreements referred to herein, and each other agreement or
instrument entered into in connection herewith or therewith or contemplated
hereby or thereby, and any amendments hereto or thereto, to the extent signed
and delivered by means of a facsimile machine, shall be treated in all manner
and respects as an original agreement or instrument and shall be considered
to
have the same binding legal effect as if it were the original signed version
thereof delivered in person. At the request of any party hereto or to any
such
agreement or instrument, each other party hereto or thereto shall reexecute
original forms thereof and deliver them to all other parties. No party hereto
or
to any such agreement or instrument shall raise the use of a facsimile machine
to deliver a signature or the fact that any signature or agreement or instrument
was transmitted or communicated through the use of a facsimile machine as
a
defense to the formation or enforceability of a contract and each such party
forever waives any such defense.
(k) Waiver
of Jury Trial.
Each of
the parties to this Agreement hereby agrees to waive its respective rights
to a
jury trial of any claim or cause of action based upon or arising out of this
Agreement. The scope of this waiver is intended to be all-encompassing of
any
and all disputes that may be filed in any court and that relate to the subject
matter of this Agreement, including contract claims, tort claims and all
other
common law and statutory claims. Each party hereto acknowledges that this
waiver
is a material inducement to enter into this Agreement, that each has already
relied on this waiver in entering into this Agreement, and that each will
continue to rely on this waiver in their related future dealings. Each party
hereto further warrants and represents that it has reviewed this waiver with
its
legal counsel and that it knowingly and voluntarily waives its jury trial
rights
following consultation with legal counsel. THIS WAIVER IS IRREVOCABLE, MEANING
THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING (OTHER THAN BY A
MUTUAL
WRITTEN WAIVER SPECIFICALLY REFERRING TO THIS SECTION 11(K) AND EXECUTED
BY EACH
OF THE PARTIES HERETO), AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT
AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT. In
the
event of litigation, this Agreement may be filed as a written consent to
a trial
by the court.
11
(l) Arm’s
Length Agreement.
Each of
the parties to this Agreement agrees and acknowledges that this Agreement
has
been negotiated in good faith, at arm’s length, and not by any means prohibited
by law.
(m) Sophisticated
Parties; Advice of Counsel.
Each of
the parties to this Agreement specifically acknowledges that (a) it is a
knowledgeable, informed, sophisticated Person capable of understanding and
evaluating the provisions set forth in this Agreement and (b) it has been
fully
advised and represented by, or has had the opportunity to retain, legal counsel
of its own independent selection and has relied wholly upon its independent
judgment and the advice of such counsel in negotiating and entering into
this
Agreement.
15. Rule
144.
The
Company will use its commercially reasonable best efforts to timely file
all
reports required to be filed by the Company after the date hereof under the
Securities Act and the Exchange Act and the rules and regulations adopted
by the
Commission thereunder, and if the Company is not a reporting company, for
a
period of that shall end on the first to occur of (i) the two-year anniversary
of the date the Company became a non-reporting company and (ii) the date
that
MRE is no longer an “affiliate” for purposes of Rule 144, it will make publicly
available in accordance with Rule 144(c) such information as is required
for MRE
to sell Shares under Rule 144.
*
* * *
*
12
IN
WITNESS WHEREOF, the parties hereto have executed this Investor Rights Agreement
as of the date first written above.
|
__________________________________________
|
|
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By:
|
|
|
Its:
|
|
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MIDWEST
RENEWABLE ENERGY, LLC.
|
|
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__________________________________________
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By:
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|
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Its:
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13
Final
Exhibit
Q
to
the Asset Purchase Agreement
SUMMARY
OF PRINCIPAL TERMS
OF JOINT VENTURE AGREEMENT
All
defined terms used but not defined herein shall have the meanings given such
terms in the Asset Purchase Agreement (“Agreement”) to which this Exhibit Q is
attached.
|
Ethanex
▇▇▇▇▇▇▇▇▇▇ LLC:
|
Ethanex
▇▇▇▇▇▇▇▇▇▇ LLC (“▇▇▇▇▇▇▇▇▇▇”)
is a Delaware limited liability company formed by Ethanex Energy,
Inc.
(“Ethanex”).
▇▇▇▇▇▇▇▇▇▇ will be treated as a partnership for U.S. federal
income tax
purposes.
▇▇▇▇▇▇▇▇▇▇
is a wholly owned subsidiary of Ethanex. ▇▇▇▇▇▇▇▇▇▇ has four
wholly owned
subsidiaries - Ethanex ▇▇▇▇▇▇▇▇▇▇ Land, LLC, Ethanex Phase I
LLC, Ethanex
Phase II LLC and Ethanex Phase III LLC.
|
|
Formation
of JV upon Termination of Agreement:
|
Upon
the occurrence of a termination of the Agreement pursuant to
Section 11(c)
of the Agreement because of (i) the failure of the Phase II Closing
to
occur (the “Phase
II Closing Failure”)
or (ii) the failure of the Phase III Closing to occur (the “Phase
III Closing Failure”):
· first,
Midwest Renewable Energy, LLC (“MRE”)
will form a wholly owned limited liability company (“MRE
JV LLC”)
and will contribute, if a Phase II Closing Failure occurs, the
Phase II
Assets, the Phase III Assets, the Residual Purchased Assets,
the Phase II
Assumed Liabilities, and the Phase III Liabilities to MRE JV
LLC (the
“Phase
II Asset Contribution”),
or, if a Phase III Closing Failure occurs, the Residual Purchased
Assets
(the “Phase
III Asset Contribution”);
· second,
MRE shall assign to MRE JV LLC, and MRE JV LLC shall assume,
the Phase II
Funded Debt and the Phase III Funded Debt (the “Assumption,”
and together with the Phase II Asset Contribution, the “Phase
II Contribution”
and together with the Phase III Asset Contribution, the “Phase
III Contribution”);
· third,
Ethanex shall cause the operating agreement of ▇▇▇▇▇▇▇▇▇▇ to
be amended
and restated to (a) divide the equity capital of ▇▇▇▇▇▇▇▇▇▇ into
two
classes of units of limited liability company interests (“Units”),
which shall consist of Class A Units (“Class
A Units”)
and Class B Units (“Class
B Units”)
and (b) otherwise to reflect the provisions of this term sheet
and be in
form and substance reasonably acceptable to Ethanex and MRE
· fourth,
the units of ▇▇▇▇▇▇▇▇▇▇ owned by Ethanex will be converted into
Class A
Units;
· fifth,
MRE will contribute 100% of the units of MRE JV LLC to ▇▇▇▇▇▇▇▇▇▇
in
exchange for Class B Units.
Holders
of Units are referred to herein each as a “Member”
and collectively as the “Members”.
|
|
Capitalization:
|
Following
a Phase II Closing Failure:
1.
the value of the Class A Units shall be equal to (i) $50,000,000,
plus
(ii) the capital cost of the construction and implementation (determined
in accordance with GAAP, excluding indirect overhead allocations)
of the
fractionation process, which shall be completed prior to or in
connection
with the Completion of the Phase II Plan (the “Fractionation
Cost”),1 minus
(iii) the Ethanex Debt;2
2.
the value of the Class B Units shall be equal to the value of the
MRE JV
LLC units, which shall be equal to (i) $93,500,000.00,3 plus
(ii) the Book Value of the Phase III Assets (net of attributable
debt)
contributed to MRE JV LLC as of the date of the LLC Agreement (such
assets
being referred to as the “Initial
Phase III Asset Credit”),
minus
(iii) the Phase II Funded Debt. “Book
Value”
shall mean the costs as recorded on the books and records of MRE
(or MRE
JV LLC) in accordance with GAAP;
3.
after the Completion of the Phase III Plan, a number of additional
Class B
Units shall be issued to MRE having a value equal to (i)
$93,500,000.00,4 minus
(ii) Initial Phase III Asset Credit, minus
(iii) the Phase III Funded Debt; and
4.
at such time that the facility is operating on fractionated corn,
an
additional number of Class A Units will be issued to Ethanex having
a
value equal to the product of (i) $2.00 multiplied
by
(ii) the Increased Capacity5.
Following
a Phase III Closing Failure:
1.
the value of the Class A Units shall be equal to (i) $135,000,000,
plus
(ii) the Fractionation Cost, minus
(iii) the Ethanex Debt; and
2.
the value of the Class B Units shall be equal to the value of the
MRE JV
LLC units, which shall be equal to (i) $93,500,000.00,6minus
(iii) the Phase III Funded
Debt.
|
____________________
| 1 |
The LLC Agreement will contain provisions to
address the
consequences of the fractionation process not being in place at
the Phase
II Closing Date.
|
| 2 |
“Ethanex Debt” shall mean the consolidated debt of each
of ▇▇▇▇▇▇▇▇▇▇, Phase I Buyer, Phase II Buyer, if applicable, and
RE
LLC.
|
| 3 |
This number is $85m (the Phase II purchase
price) plus a
10% penalty.
|
| 4 |
This number is $85m (the Phase III purchase
price) plus
a 10% penalty.
|
| 5 |
“Increased Capacity” shall mean an amount equal to the
number of gallons by which each of Phase II and Phase III are producing
over 42.5 million gallons. Currently, MRE must deliver Phase II
at a per
year 42.5-million gallon capacity, and Phase III at a per year
42.5-million gallon capacity. Ethanex expects, with the addition
of
fractionation, that the Phase II will be a 54-million gallon facility
and
Phase III will be a 52-million gallon facility. Thus, the Increased
Capacity would be 21 million gallons.
|
| 6 |
This number is $85m (the Phase III purchase
price) plus
a 10% penalty.
|
2
|
Adjustments
to Units:
|
1.
In the event that the Fractionation Plant does not demonstrate
the
capacity to fractionate 48 million bushels of corn, Ethanex shall
give
back to ▇▇▇▇▇▇▇▇▇▇, to be returned to treasury Units, a number
of Class A
Units equal to the quotient of (i) an amount equal to the product
of (a)
the actual capacity to fractionate corn subtracted from 48 million
number
of bushels of corn actually produced multiplied
by
2.58 (b) multiplied
by
$2.00, divided
by
(ii) the value per Class A Unit as determined by the calculation
set forth
in “Capitalization.”
2.
In the event that the Fractionation Plant does not demonstrate
the
capacity to expel corn oil at a rate of 19,200 tons per year, Ethanex
shall give back to ▇▇▇▇▇▇▇▇▇▇, to be returned to treasury Units,
a number
of Class A Units equal to (i) the product of (x) 19,200 minus
the demonstrated expulsion rate (y) multiplied
by
850, divided
by
(ii) the value per Class A Unit as determined by the calculation
set forth
in “Capitalization.”
3.
At such time that the facility is operating on fractionated corn,
an
additional number of Class A Units will be issued to Ethanex having
a
value equal to the product of (i) $2.00 multiplied
by
(ii) the Increased Capacity.
4.
In the event that the Phase III Plan is not complete by the Phase
III
Completion Date, MRE shall give back to ▇▇▇▇▇▇▇▇▇▇, to be returned
to
treasury Units, a number of Class B Units equal to the quotient
of (i) the
amount of any adjustment as determined in accordance with the terms
of
Exhibit I to the Agreement, divided
by
(ii) the value per Class B Unit as determined by the calculation
set forth
in “Capitalization.”
|
|
Completion
of the Phase III Plan:
|
MRE
shall be solely responsible for execution of and the costs associated
with
the Completion of the Phase III Plan.
|
|
Board
of Managers:
|
▇▇▇▇▇▇▇▇▇▇
will be managed by a Board of Managers.
Following
a Phase II Closing Failure, the Board of Managers will be composed
of five
(5) managers, two (2) of which shall be designated by the holders
of Class
A Units (for so long as any of the Class A Units are outstanding)
(the
“Class
A Managers”),
three (3) of which shall be designated by the holders of the Class
B Units
(for so long as any of the Class B Units are outstanding) (the
“Class
B Managers”).
Following
a Phase III Closing Failure, the Board of Managers will be composed
of
five (5) managers, three (3) Class A Managers (for so long as any
of the
Class A Units are outstanding) and two (2) Class B Managers (for
so long
as any of the Class B Units are outstanding).
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3
|
Following
a Phase II Closing Failure, the initial Chairman of the Board of
Managers
shall be designated by the Class B Managers and shall serve for
a two-year
term. Following a Phase III Closing Failure, the initial Chairman
of the
Board of Managers shall be designated by the Class B Managers and
shall
serve for a two-year term. Thereafter, the Chairman shall be designated
by
a majority vote of the Managers.
Each
Manager will be entitled to one vote on all matters presented for
a vote
to the Board of Managers. All decisions to be made by the Board
of
Managers will require the approval of the Board of Managers by
majority
vote, except as set forth below in “Special
Approval Rights”
and “Extraordinary
Board Actions.”
A quorum shall exist if a majority of the total number of managers
constituting the entire Board of Managers is present, which majority
must
include at least one (1) manager designated by Ethanex and one
(1) manager
designated by MRE. The Board of Managers may form committees of
the Board
of Managers; provided
that
at least one manager designated by Ethanex and one manager designated
by
MRE shall serve on each committee.
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|
|
Subject
to the special approval requirements set forth below in “Special
Approval Rights”,
the Board of Managers may authorize the issuance of additional
Units of an
existing class or the creation of additional classes of Units having
such
powers, designations and preferences and rights as may be determined
by
such Board of Managers, and the Board of Managers will have the
authority
to make such amendments to the LLC Agreement (as defined below)
as are
necessary or appropriate to give effect to the foregoing, subject
to the
limitations set forth in the “Amendments”
section below.
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|
|
Voting
Rights of Units:
|
Each
Class A Unit and each Class B Unit will be entitled to one vote
on matters
submitted to a vote of the Members, and the vote of Members holding
a
majority of the outstanding Units entitled to vote on any matter
submitted
to the Members (voting together as a single class) shall constitute
the
required approval of the Members, subject to the special approval
requirements set forth below in “Special
Approval Rights”
and to the obligations of Members set forth below under “Drag-Along
Rights”.
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|
Special
Approval Rights of Members:
|
Without
the approval of the holders of a majority of the Units, which,
following a
Phase II Closing Failure, shall include a majority of the holders
of the
Class A Units, or which, following a Phase III Closing Failure,
shall
include a majority of the holders of the Class B Units, the Board
shall
not approve:
· any
changes to the capitalization of ▇▇▇▇▇▇▇▇▇▇ or changes to the constituent
documents of ▇▇▇▇▇▇▇▇▇▇;
· any
equity financings;
· any
debt financings in excess of $20 million;
· any
dividends or distributions, other than distributions for taxes,
that would
have the effect of causing a material deterioration in the consolidated
financial leverage of ▇▇▇▇▇▇▇▇▇▇;
· material
acquisitions or dispositions of assets outside the ordinary course
of
business or other extraordinary transactions (other than transactions
effected pursuant to the Drag-Along Rights);
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4
|
· any
material deviation from the Phase III Plan following a Phase II
Closing
Failure;
· material
changes to the accounting policies and/or tax election of ▇▇▇▇▇▇▇▇▇▇;
and
· the
liquidation of ▇▇▇▇▇▇▇▇▇▇.
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|
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Extraordinary
Board Actions:
|
The
Board of Managers shall not approve any transaction with an affiliate
of
either Member without the consent of a majority of the Managers,
which
consent must include a majority of the managers designated by the
Member
who is not the affiliate.
Following
a Phase II Closing Condition, without the approval of at least
one Class A
Manager, or, following a Phase III Closing Condition, without the
approval
of at least one Class B Manager, the Board of Managers shall
not
· adopt
an annual budget that is prepared on a basis that is materially
different
from past practices or is outside of the ordinary course of business
or
approve any material deviation from such annual budget;
· approve
▇▇▇▇▇▇▇▇▇▇ entering into any contract that would require ▇▇▇▇▇▇▇▇▇▇
to
make payments to a third-party in excess of $1 million per annum
and would
otherwise be outside of the ordinary course of the Business;
· approve
any capital expenditure in excess of $5 million or is otherwise
outside of
the ordinary course of the Business;
· approve
any material capital investment in, or any material loan to, any
person
outside of the ordinary course of the Business;
· make
any material change in the nature of the Business as it exists
on the date
of the LLC Agreement; or
· approve
any unit or other equity-based incentive plans.
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|
Distributions
and Allocations:
|
▇▇▇▇▇▇▇▇▇▇
shall make all distributions of cash and other property to the
Members on
a pro
rata basis
based on the number of Units owned.
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|
Liquidation:
|
In
the event of any liquidation, dissolution or winding up of ▇▇▇▇▇▇▇▇▇▇,
any
distribution of cash or other property shall be made in accordance
with
the foregoing distribution provisions, after satisfaction of the
debts and
liabilities of ▇▇▇▇▇▇▇▇▇▇ and reservation of funds for the
liquidation.
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|
Allocation
of Profits and Losses:
|
Profits
and losses will be allocated among the Members in a manner consistent
with
the foregoing distribution provision and the requirements of the
Internal
Revenue Code.
|
|
Indemnification/
Exculpation:
|
▇▇▇▇▇▇▇▇▇▇
shall indemnify its officers and managers against expenses, liabilities,
judgments and amounts paid in settlement in respect of actions,
suits or
proceedings brought against such individual by reason of the fact
that
such individual is or was an officer or manager to the fullest
extent
permitted by the Delaware General Corporation Law (the “DGCL”),
to be applied as if ▇▇▇▇▇▇▇▇▇▇ were a Delaware corporation. ▇▇▇▇▇▇▇▇▇▇
may
obtain insurance to cover the losses described above, even if
indemnification would not be available therefor. In addition, ▇▇▇▇▇▇▇▇▇▇
may advance expenses incurred in connection with investigating
and
defending any such action, suit or proceeding.
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5
|
Fiduciary
Duties:
|
Subject
to, and as limited by, the other provisions of this Summary of
Principal
Terms and the LLC Agreement, the officers and managers of ▇▇▇▇▇▇▇▇▇▇
shall, in the performance of their duties as such, owe to ▇▇▇▇▇▇▇▇▇▇
and
its Members the fiduciary duties owed by officers and managers
of a
corporation organized under the laws of the State of Delaware to
such
corporation and its stockholders, subject to exculpation from liability
to
▇▇▇▇▇▇▇▇▇▇ for breaches to the extent permitted by Section 102(b)(7)
of
the DGCL and the renouncement of any expectancy or interest in
corporate
opportunities as permitted by Section 122(17) of the DGCL.
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|
Subsidiaries:
|
The
officers and managers of the subsidiaries shall be entitled to
the same
protections afforded to the managers and officers of ▇▇▇▇▇▇▇▇▇▇
as set
forth in “Indemnification/Exculpation”
above.
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Reports
to Members:
|
Subject
to delays caused by events outside of its reasonable control, the
tax
matters partner of ▇▇▇▇▇▇▇▇▇▇ will furnish, or will cause to be
furnished,
a Form K-1 and such other tax information reasonably required by
all
Members for United States federal and state income tax reporting
purposes.
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|
Transfer:
|
No
Member may transfer its Units to any person other than (i) a wholly
owned
subsidiary of such member or (ii) another Member without the consent
of
the other Members, except with respect to transfers effected pursuant
to
the “Drag-Along
Rights”
discussed below.
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Drag-Along
Rights:
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Members
holding 2/3 of the outstanding Units will have the right to cause
a
Company Sale to occur and require the other Members to cooperate
with and
participate in such Company Sale on the same terms and conditions
(provided
that in connection with such Company Sale all Units are redeemed
in full).
Such
cooperation will include each Member voting its Units to approve
the
transaction, selling its Units in the transaction and entering
into any
sale agreements necessary for consummation of the transaction as
requested
by ▇▇▇▇▇▇▇▇▇▇ and/or the selling Member; provided
that
such Member being dragged-along receives the same consideration
in such
sale as other holders of Units
holding similar Units and
that such agreements limit the Member’s indemnification obligations to the
amount of net proceeds received by the Member in such transaction
on a
several basis.
“Company
Sale”
means:
· any
merger, consolidation or other business combination of ▇▇▇▇▇▇▇▇▇▇
or any
of its subsidiaries with any entity in which the Members of ▇▇▇▇▇▇▇▇▇▇
immediately prior to such transaction cease to own at least 50%
of the
voting power of the voting securities of the entity resulting from
such
transaction;
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· the
sale, transfer, lease, assignment or other disposition of all or
substantially all of ▇▇▇▇▇▇▇▇▇▇ assets (determined on a consolidated
basis
with its subsidiaries); or
· the
sale, transfer, assignment or other disposition of 50% or more
of the
voting Units of ▇▇▇▇▇▇▇▇▇▇;
in
each case, in one or a series of related transactions.
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Consolidation
of Units:
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After
the third anniversary of the date of the LLC Agreement, any Member
(the
“Exercising
Member”)
may deliver a notice (the “Put
Notice”)
to another Member (the “Deciding
Member”)
requesting that the Deciding Member purchase all, but not less
than all,
of the Exercising Member’s Units. Such Put Notice shall state a value per
Unit, as determined by a reputable, independent third-party engaged
by the
Exercising Member that has experience in valuing non-liquid equity
positions (the “Preliminary Appraiser’s
Price”).
Within
30 days of receiving the Put Notice the Deciding Member shall notify
the
Exercising Member of whether or not they dispute the Preliminary
Appraiser’s Price. In the event of a dispute, the Deciding Member will
select a similarly qualified appraiser to determine a value per
Unit.
Simultaneously, the appraisers engaged by each party will select
a third
appraiser to independently determine a value per Unit. The value
per Unit
that is the middle appraisal between the high and low appraised
value per
Unit will then become the Appraiser’s Price.
Within
30 days of the determination of the Appraiser’s Price, the Deciding Member
shall notify the Exercising Member whether it desires to (i) purchase
the
Exercising Member’s Units at the Appraiser’s Price or (ii) sell all, but
not less than all, of the Deciding Member’s Units to the Exercising Member
at the Appraiser’s Price. If, when the Deciding Member elects to have the
Exercising Member to purchase its Units, the Exercising Member
shall have
the right, within five (5) days of such notification, to accept
to
purchase such Units. If the Deciding Member elects to purchase
the
Exercising Member’s Units or if the Deciding Member elects to put back to
the Exercising Member and the Exercising Member elects to purchase
the
Deciding Member’s Units, in either case, the consummation of such
transaction effectuating such decision shall occur within 60 days
of the
date such Deciding Member so notifies the Exercising Member of
its
election.
In
the event that neither the Deciding Party nor the Exercising Party
elects
to purchase the other member’s Units pursuant to the foregoing paragraph,
then the Board of Managers shall engage a nationally recognized
investment
banker to sell all of the Units of ▇▇▇▇▇▇▇▇▇▇ pursuant to an orderly
marketing plan, provided, however, that no sale can be consummated
if the
value per Unit in such proposed sale is less than 85% of the Appraiser’s
Price.
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Documentation:
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Each
of the Members agrees to work together in good faith to negotiate
a
definitive limited liability company agreement (“LLC
Agreement”)
consistent with the terms set forth in this Summary of Principal
Terms, as
well as any agreements and documentation required by the lenders
to
▇▇▇▇▇▇▇▇▇▇ and other required instruments and agreements consistent
with
this Summary of Principal Terms and customary for an equity investment
of
this type, prior to the Phase I Closing
Date.
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Amendments:
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Subject
to applicable law and the approval rights set forth in “Special
Approval Rights”, the
LLC Agreement may be modified and amended by the Board of Managers,
without the consent of the Members; provided
that
no modification or amendment may be adopted that is disproportionately
adverse to any Member or any class of Members, without the prior
written
consent of such Member or class of Members, as
applicable.
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