As filed with the Securities and Exchange Commission on April 24, 2007.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10
REGISTRATION STATEMENT
Pursuant to Section 12(b) or (g) of The Securities Exchange Act of 1934
FUTUREFUEL CORP.
(Exact name of registrant as specified in its charter)
Delaware 20-3340900
(State of incorporation) (IRS Employer
Identification No.)
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8235 Forsyth Blvd., 4th Floor
Clayton, Missouri 63105
(805) 565-9800
(Address, including zip code and telephone number, of
registrant's principal executive offices)
Douglas D. Hommert, Executive Vice President
FutureFuel Corp.
8235 Forsyth Blvd., 4th Floor
Clayton, Missouri 63105
(314) 854-8520
(Name, address, including zip code, and telephone number of agent for service)
Securities to be registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
n/a n/a
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Securities to be registered pursuant to Section 12(g) of the Act:
Common Stock
(Title of class)
Table of Contents
Page
Item 1. - Business ............................................................................ 1
Item 1A. - Risk Factors ....................................................................... 29
Item 2. - Financial Information ............................................................... 38
Item 3. - Properties .......................................................................... 47
Item 4. - Security Ownership of Certain Beneficial Owners and Management ...................... 48
Item 5. - Directors and Executive Officers .................................................... 50
Item 6. - Executive Compensation .............................................................. 53
Item 7. - Certain Relationships and Related Transactions, and Director Independence ........... 58
Item 8. - Legal Proceedings ................................................................... 61
Item 9. - Market Price of and Dividends on Our Common Equity/Related Shareholder Matters ...... 62
Item 10. - Recent Sales of Unregistered Securities ............................................ 64
Item 11. - Description of Securities to be Registered ......................................... 67
Item 12. - Indemnification of Directors and Officers .......................................... 72
Item 13. - Financial Statements and Supplementary Data ........................................ 73
Item 14. - Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 104
Item 15. - Financial Statements and Exhibits .................................................. 105
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You should rely only on the information contained in this document or to which we have referred you. We have not authorized anyone to provide you with information that is different. This document may only be used where it is legal to sell these securities. The information in this document may only be accurate on the date of this document.
Item 1. - Business
General Development of the Business
The Company
FutureFuel Corp. (the "Company" or "we", "our" or "us") is a Delaware corporation incorporated on August 12, 2005 under the name "Viceroy Acquisition Corporation". We were formed to serve as a vehicle for the acquisition by way of an asset acquisition, merger, capital stock exchange, share purchase or similar transaction (a "business combination") of one or more operating businesses in the oil and gas industry ("target business").
On July 12, 2006, we completed an offering of 22,500,000 units, each unit consisting of one share of our common stock and one warrant to acquire one share of our common stock. The units were issued at $8.00 per unit. In connection with the offering, our shares and warrants were listed on the Alternative Investment Market ("AIM") of the London Stock Exchange plc under the ticker symbols "VAC" and "VACW", respectively.
The net proceeds of the offering in the amount of $172,500,000 were deposited into a trust fund maintained by Continental Stock Transfer & Trust Company, as trustee. The trust fund was to be released by the trustee for, among other things, a business combination approved by the holders of our common stock. Moreover, the trust fund was to be released in its entirety upon the completion of a business combination which, either on its own or when combined with all previous business combinations, had an aggregate transaction value of at least 50% of the initial trust amount (which initial trust amount excluded certain deferred placing fees) (a "qualified business combination").
On July 21, 2006, we entered into an acquisition agreement with Eastman Chemical Company to purchase all of the issued and outstanding stock of its subsidiary, Eastman SE, Inc., subject to approval by our shareholders. If approved by our shareholders, the acquisition would constitute both a business combination and a qualified business combination.
On July 24, 2006 and following the public announcement of the execution of the acquisition agreement with Eastman Chemical Company, trading in our shares and warrants was suspended by AIM.
On October 6, 2006, we mailed to our shareholders an admission document containing a proxy statement and other material required by AIM, notifying our shareholders of a special meeting to be held on October 27, 2006 to approve, among other things, the acquisition of Eastman SE, Inc. and the acquisition agreement with Eastman Chemical Company. On October 9, 2006 and following the mailing of the admission document to our shareholders, trading in our shares and warrants on AIM recommenced.
Our shareholders approved the acquisition of Eastman SE, Inc. on October 27, 2006. On October 31, 2006: (i) the trust amount was distributed to us; (ii) the acquisition of Eastman SE, Inc. was consummated (effective after the close of business on that day); and (iii) Eastman SE, Inc. became our wholly-owned subsidiary. In connection with such closing, we changed our name to FutureFuel Corp. and Eastman SE, Inc. changed its name to FutureFuel Chemical Company.
Consummation of the acquisition of Eastman SE, Inc. constituted a reverse takeover of us within the rules of AIM as promulgated by the London Stock Exchange plc. Where a transaction constitutes a reverse takeover, trading on AIM in the company's shares and warrants is cancelled and readmission to AIM is required to be sought in the same manner as any other applicant applying for admission of its securities for the first time. On October 31, 2006, we applied for readmission to AIM. Our shares of common stock and warrants were readmitted to AIM on that date under the ticker symbols "FFU" and "FFUW", respectively.
FutureFuel Chemical Company
FutureFuel Chemical Company is a Delaware corporation incorporated on September 1, 2005 under the name Eastman SE, Inc. as a wholly-owned subsidiary of Eastman Chemical Company. It owns approximately 2,200 acres of land six miles southeast of Batesville in north central Arkansas fronting the White River. Approximately
500 acres of the site are occupied with batch and continuous manufacturing facilities, laboratories and infrastructure, including on-site liquid waste treatment. The plant is staffed by approximately 430 non-union employees.
The Batesville facility was constructed by Eastman Kodak Company on an undeveloped "green field" site in 1977, initially to produce proprietary photographic chemicals. In 1982, the plant's business scope was broadened to include other specialty chemicals, with the construction of facilities to support Eastman Chemical Company's hydroquinone and antioxidant business. Other facility enhancements occurred in subsequent years to expand the specialty chemicals and custom manufacturing business at the site. In 1994, Eastman Chemical Company split from Eastman Kodak Company. Following that split, the facility continued to transition from manufacturing photographic imaging chemicals and, in recent years, has been engaged almost exclusively in the custom synthesis of fine chemicals and organic chemical intermediates used in a variety of end markets, including paints and coatings, plastics and polymers, pharmaceuticals, food supplements, household detergents and agricultural products.
In the late 1990's, Eastman Chemical Company attempted to focus the plant's custom manufacturing on the pharmaceuticals market, but this was abandoned in 2001 due to capital and business constraints. The specialty chemicals custom manufacturing business in North America became increasingly competitive due to off-shoring to India and China, among other countries. This factor, coupled with Eastman Chemical Company's changing business focus, resulted in a maturing product portfolio at the site and declining net cash flows. Employment declined from a peak of about 750 in the late 1990's to about 400 in early 2005 through a series of reductions-in-force.
Faced with declining net cash flows from a mature product portfolio and substantial competitive pressure in existing businesses, plant management began to actively pursue new businesses in which to focus their manufacturing capabilities. This management team became convinced that the plant was suited relative to geography and capabilities to manufacture products for the emerging alternative fuels markets. With nominal corporate direction and support, a local biobased products platform was launched in early 2005, comprising biofuels (biodiesel, bioethanol and lignin/biomass solid fuels) and biobased specialty chemical products (biobased solvents, chemicals and intermediates). With minimal capital expenditures, and using local technical resources, the management team was able to initiate biodiesel batch production in October 2005 at a capacity of 3 million gallons per year, subsequently expanded to 24 million gallons per year from a combination of batch and continuous processing. Entry into the biofuels business was accomplished with excess plant capacity and without any reduction in production of specialty chemicals.
In mid 2005, Eastman Chemical Company decided that specialty chemicals would no longer be a core business and that it would seek to divest the Batesville plant. In anticipation of such divestiture, Eastman Chemical Company incorporated FutureFuel Chemical Company (under the then name of Eastman SE, Inc.). Effective January 1, 2006, Eastman Chemical Company began to transfer the facility and certain of its related assets to FutureFuel Chemical Company. FutureFuel Chemical Company's management team continued its development of the biobased products business throughout this divestiture process.
Background of the Acquisition
In March 2006, our executive chairman had initial discussions with Eastman Chemical Company about acquiring Eastman Chemical Company's manufacturing plant in Batesville, Arkansas. Those discussions did not result in any meaningful dialogue. In June 2006, our executive chairman again expressed interest to Eastman Chemical Company about acquiring the Batesville plant. At that time, Eastman Chemical Company agreed to engage in discussions with us about the sale of the Batesville facility. On June 22, 2006, initial discussions were held and we commenced a due diligence investigation into Eastman SE, Inc. Those discussions and the due diligence investigation ultimately resulted in the execution by us of an acquisition agreement with Eastman Chemical Company on July 21, 2006.
Purpose for the Acquisition
We were organized to pursue business combinations with target businesses engaged in the oil and gas industry. In 2005, FutureFuel Chemical Company began the implementation of a biobased products platform, including biofuels (biodiesel, bioethanol and lignin/biomass solid fuels) and biobased specialty products (biobased lubricants, solvents and intermediates). At the time we began discussions with Eastman Chemical Company in June
2006, the Batesville plant had commercialized biodiesel and was capable of producing approximately 9 million gallons of biodiesel per year by batch processing. Production capacity was subsequently scheduled to increase to 24 million gallons per year through a continuous processing line. The purpose of the acquisition was to acquire FutureFuel Chemical Company, a target business in the oil and gas industry that we believed could be a meaningful participant in the alternative fuels markets.
Plan of Operation for the Consolidated Company
Our strategy in relation to the acquired operations is to build upon and expand FutureFuel Chemical Company's biobased products platform and to continue FutureFuel Chemical Company's chemical manufacturing activities.
We initially planned to increase the plant's biodiesel capacity to 40 million gallons per year by May 2007 and to 160 million gallons per year by November 2007, with substantial complementary expenditures on infrastructure to support this increased capacity. After closing on our acquisition of FutureFuel Chemical Company on October 31, 2006, we and, to our knowledge, the industry as a whole witnessed a rapid erosion in margins for producing biodiesel. As a result of these decreased margins, we determined that it was not in our shareholders best interest to proceed on an accelerated basis to increase capacity. However, we intend to continue with certain core infrastructure projects as described below. We believe these projects will bring efficiency, operational flexibility and cost savings to FutureFuel Chemical Company's existing biodiesel and chemical business lines. Any future expansions of biodiesel production capacity at the Batesville plant will be dictated by changing market conditions.
The core infrastructure projects include:
o adding methanol recovery and biodiesel feedstock pretreatment capabilities to the plant - scheduled for completion in the third quarter of 2007;
o constructing additional storage at the plant to support increased movements of feedstocks, methanol, glycerin and biodiesel on and off the site and to facilitate on-site blending of B5, B10 and B20 grade fuel - scheduled for completion in the third quarter of 2007;
o expanding on-site rail siding and railcar loading and unloading facilities to accommodate the increased number of rail cars expected at the plant - scheduled for completion in the third quarter of 2007;
o obtaining storage/thruput in Little Rock, Arkansas on the Arkansas River and in Memphis, Tennessee and Port Allen, Louisiana on the Mississippi River so that biodiesel can be shipped by barge to larger markets and feedstocks can be brought in to the plant by barge and truck;
o acquiring a fleet of tanker trucks to transport the biofuels and feedstocks between the plant and these storage facilities on such rivers; and
o procuring railcars to transport raw goods to the plant and deliver biodiesel from the plant to customers.
Construction is in progress for the site infrastructure described above. We believe that FutureFuel Chemical Company will be able to timely obtain the materials to complete these projects as scheduled, although no assurances can be given that the scheduled timetables will be achieved or that they will not be revised based upon market conditions.
In December 2006, FutureFuel Chemical Company commenced storage of its biodiesel at a liquid bulk storage facility in Little Rock, Arkansas. Additional locations will be assessed as market conditions dictate. FutureFuel Chemical Company has already acquired several tanker trucks and has leased methanol and biodiesel railcars. The need for additional tanker trucks and/or railcars will be assessed as market conditions dictate. We believe that implementation of the above strategy will help FutureFuel Chemical Company remain a substantial participant in the biofuels market.
Based upon our budget, the remaining cash from our July 2006 offering and the proceeds from the $50 million credit facility described below, we do not believe that it will be necessary for us to raise additional funds to meet the expenditures required for operating the business as set forth above.
Financial Information about Segments
Historically, the business and assets included in FutureFuel Chemical Company were accounted for by Eastman Chemical Company in various segments of Eastman Chemical Company's overall business. Although FutureFuel Chemical Company was incorporated on September 1, 2005, Eastman Chemical Company did not begin transferring assets into FutureFuel Chemical Company until January 1, 2006 and completed the transfer in subsequent periods prior to the closing of our acquisition of FutureFuel Chemical Company. Notwithstanding that FutureFuel Chemical Company was a separately incorporated entity, Eastman Chemical Company did not prepare separate financial statements for FutureFuel Chemical Company nor was Eastman Chemical Company required to do so under local law or accounting rules. Rather, the operations of the Batesville plant were reported within Eastman Chemical Company based upon the underlying products and the revenues and expenses of the plant were effectively spread throughout Eastman Chemical Company's financial statements. In addition, allocations to the plant of Eastman Chemical Company overhead (such as insurance, employee benefits, legal expenses and the like) were based upon assumptions made by Eastman Chemical Company and such assumptions historically did not reflect expenses which FutureFuel Chemical Company would have incurred had it been a stand-alone entity. Since we did not acquire or succeed to all of the assets and liabilities of Eastman Chemical Company, "carve-out" financial statements have been prepared for the acquired component business, excluding the continuing operations retained by Eastman Chemical Company. As the acquisition is deemed to be a reverse acquisition with FutureFuel Chemical Company being the accounting acquiror, the selected financial data presents the operations of the Batesville plant for the twelve-month periods ended December 31, 2006, 2005 and 2004, and includes our operations for the period beginning with the date of acquisition (beginning of business on November 1, 2006) and ending December 31, 2006.
The following table sets forth the Batesville plant's: (i) revenues from
external customers for the years ended December 31, 2006, 2005 and 2004; (ii)
net income (loss) for the years ended December 31, 2006, 2005 and 2004; and
(iii) total assets at December 31, 2006, 2005 and 2004.
(Dollars in thousands)
Revenues
from
External Net Income Total
Period Customers (Loss) Assets
------------------------------------- ----------- ----------- -----------
December 31, 2006 ................... $ 134,168 $ 2,137 $ 207,024
December 31, 2005 ................... $ 104,364 $ 381 $ 114,500
December 31, 2004 ................... $ 127,945 $ (14,867) $ 118,164
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For the years ended December 31, 2004 and 2005 and the ten months ended October 31, 2006, revenues from external customers excludes all revenues from Eastman Chemical Company. Beginning November 1, 2006, revenues from external customers equals total revenues. See note 14 to our audited financial statements included elsewhere herein for revenues from Eastman Chemical Company for the years ended December 31, 2004 and 2005 and the ten months ended October 31, 2006.
Prior to the initiation of its biofuels program in 2005, the Batesville plant did not have business reporting "segments" as defined by U.S. generally accepted accounting principles. After the initiation of the biobased products program in 2005, it had two segments: chemicals and biofuels. FutureFuel Chemical Company is not able to allocate net income (loss) and total assets between its two business segments. However, revenues from external customers can be allocated between the two business segments as set forth in the following chart.
(Dollars in thousands)
Total
Revenues Revenues Revenues
from from from
Chemical Biofuels External
Period Segment Segment Customers
------------------------------------- ----------- ----------- -----------
December 31, 2006 ................... $ 120,828 $ 13,340 $ 134,168
December 31, 2005 ................... $ 104,364 $ -- $ 104,364
December 31, 2004 ................... $ 127,945 $ -- $ 127,945
Narrative Description of the Business
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Principal Executive Offices
Our principal executive offices are located at 8235 Forsyth Blvd., 4th Floor, Clayton, Missouri 63105. Our telephone number is (805) 565-9800. FutureFuel Chemical Company's principal executive offices are located at 2800 Gap Road, Highway 394 South, Batesville, Arkansas 72501-9680. Its telephone number at such office is (870) 698-1811.
The Company
We completed the offering described above on July 12, 2006 and acquired FutureFuel Chemical Company at the close of business on October 31, 2006. We have not conducted any other material business operations.
FutureFuel Chemical Company
FutureFuel Chemical Company owns approximately 2,200 acres of land six miles southeast of Batesville in north central Arkansas fronting the White River. Approximately 500 acres of the site are occupied with batch and continuous manufacturing facilities, laboratories and infrastructure, including on-site liquid waste treatment. The plant is staffed by approximately 430 non-union employees. Land and support infrastructure are available to support expansion and business growth.
The Batesville facility was constructed by Eastman Kodak Company as a green field site in 1977, initially to produce proprietary photographic chemicals. In 1982, the plant's business scope was broadened to include other specialty chemicals, including facilities to support Eastman Chemical Company's hydroquinone and antioxidant business. Other facility enhancements occurred in subsequent years to expand the specialty chemicals and custom manufacturing business at the site. In 1994, Eastman Chemical Company split from Eastman Kodak Company. Following that split, the facility continued to transition from manufacturing photographic imaging chemicals and, in recent years, has been engaged almost exclusively in the custom synthesis of fine chemicals and organic chemical intermediates used in a variety of end markets, including paints and coatings, plastics and polymers, pharmaceuticals, food supplements, household detergents and agricultural products.
In the late 1990's, Eastman Chemical Company attempted to focus the plant's custom manufacturing on the pharmaceuticals market, but this was abandoned in 2001 due to capital and business constraints. Since that time, the specialty chemicals custom manufacturing business in North America has become increasingly competitive due to off-shoring to India and China, among other countries. This factor, coupled with Eastman Chemical Company's changing business focus, resulted in a maturing product portfolio at the site and declining net cash flows as revenues from new business did not offset declining revenues from existing products. Employment declined from a peak of about 750 in the late 1990's to about 400 in early 2005 through a series of reductions-in-force.
Faced with declining net cash flows from a mature product portfolio and substantial competitive pressure in existing businesses, plant management began to actively pursue new businesses in which to focus the Batesville plant's manufacturing capabilities. This management team became convinced that the plant was ideally suited relative to geography and capabilities to manufacture products for the emerging alternative fuels markets. With nominal corporate direction and support, a local biobased products platform was launched in early 2005, comprising biofuels (biodiesel, bioethanol and lignin/biomass solid fuels) and biobased specialty chemical products (biobased
solvents, chemicals and intermediates). With minimal capital expenditures, and using local technical resources, the management team was able to initiate biodiesel batch production in October 2005 at a capacity of 3 million gallons per year (subsequently expanded to 9 million gallons per year), while pursuing expansion via continuous processing to an aggregate plant capacity of 24 million gallons per year. The 24 million gallon per year capacity threshold was reached in October 2006. Entry into the biofuels business was accomplished with excess plant capacity and without any reduction in production of specialty chemicals.
In mid 2005, Eastman Chemical Company decided that specialty chemicals would no longer be a core business and that it would seek to divest the Batesville plant. Eastman Chemical Company executed an acquisition agreement with us on July 21, 2006 pursuant to which we agreed to purchase all of the issued and outstanding stock of FutureFuel Chemical Company (then known as Eastman SE, Inc.). The acquisition closed on October 31, 2006. FutureFuel Chemical Company's management team continued its development of the bio-based products business throughout this divestiture process.
For the year ended December 31, 2006, approximately 85% of site revenue was derived from manufacturing specialty chemicals for specific customers ("custom manufacturing") with 6% of revenues being derived from multi-customer specialty chemicals ("performance chemicals") and 9% from biodiesel. Custom manufacturing involves producing unique products for individual customers, generally under long-term contracts. The plant's custom manufacturing product portfolio includes a bleach activator for a major detergent manufacturer, a proprietary herbicide for a major life sciences company and chlorinated polyolefin adhesion promoters and antioxidant precursors for Eastman Chemical Company. The performance chemicals product portfolio includes polymer (nylon) modifiers and several small-volume specialty chemicals for diverse applications.
We will continue the specialty chemical business of FutureFuel Chemical Company. However, we expect that FutureFuel Chemical Company's biofuels platform will become the core segment of the business. We intend to increase production capacity of biodiesel within FutureFuel Chemical Company when market conditions support such an increase, and to pursue commercialization of other biofuel products, including lignocellulosic fuel pellets and cellulosic-derived ethanol. In pursuing this strategy, FutureFuel Chemical Company will continue to establish a name identity in the biofuels business, leverage its BQ-9000 quality certification, secure local and regional markets and expand marketing efforts to fleets and regional/national customers. Concurrent efforts will also seek to enhance margins via: (i) volume increases; (ii) conversion cost reductions by transition to continuous processing; (iii) expansion of feedstock options; (iv) legislative incentives; and (v) value-enhancing applications for glycerin co-product (from the biodiesel manufacturing process).
Biofuels Business Segment
Overview of the Segment
FutureFuel Chemical Company's biofuels segment was established in early 2005 as an initiative of the site management team to leverage site technical and operational expertise as well as available manufacturing capacity to pursue business growth opportunities in addition to the legacy specialty chemicals business. Management targeted this segment in recognition of three factors: (i) the abundance and diversity of biomass raw materials in the immediate area of the plant site; (ii) the ability to rapidly convert under-utilized facilities to biofuels production at substantially advantaged capital cost relative to new construction; and (iii) the existence of technical and operational expertise to position the business as a high quality, low-cost industry leader. The biofuels segment had no revenues for the year ended December 31, 2004, inconsequential revenue for the year ended December 31, 2005 and revenue of $13,340,000 for the year ended December 31, 2006.
Biofuel Products
FutureFuel Chemical Company's biofuels business segment currently targets three products: biodiesel, lignocellulose solid fuel pellets and bioethanol.
Biodiesel
Biodiesel is a sustainable, renewable transportation fuel with a growing market in the United States and internationally. Under current and projected market conditions, there are significant amounts of unsatisfied demand
for biodiesel. As an alternative to petrodiesel and other petroleum-based fuels, biodiesel has several advantages, including:
o extending domestic diesel fuel supplies;
o reducing dependence on foreign crude oil supplies;
o expanding markets for domestic and international agricultural products;
o reducing emissions of greenhouse gases and other gases that are regulated by the United States Environmental Protection Agency; and
o being usable by existing diesel engines while extending their useful lives.
As a result of the benefits that are expected from the widespread use of biodiesel, federal and state laws, including tax laws, and governmental policy favor and in some jurisdictions require the increasing use of biodiesel instead of petrodiesel.
Biodiesel commercialization was achieved by FutureFuel Chemical Company in October 2005, five months following initiation of that project. Technical and operational competency developed as a supplier of specialty chemicals enabled the development of a flexible manufacturing process which can utilize the broadest possible range of feedstock oils, including soy oil, cottonseed oil, palm oil, pork lard, poultry fat and beef tallow. The Batesville plant produces B100 (100% biodiesel) and B99.9 (99.9% biodiesel; .1% petrodiesel blend), the latter product priced net of the federal excise tax credit for those customers who do not wish to establish themselves as tax-qualified blenders. B20 (20% biodiesel; 80% petrodiesel) is currently used in the facility's diesel fleet and became available for retail sale at the site in March 2007. Beginning in the second quarter of 2007, FutureFuel Chemical Company intends to begin blending biodiesel with petrodiesel at a liquid bulk storage facility in Little Rock, Arkansas and selling B2, B5, B10 and B20 grades.
Lignocellulose Solid Fuel
Lignocellulose solid fuel was commercialized in March 2007 utilizing locally available hardwood products and residues. This product is sold as a low-ash, high BTU premium fuel pellet for use in residential and light commercial heating applications. A small specialty market uses these pellets in specially-designed outdoor barbeque grills. Market analysis conducted by FutureFuel Chemical Company indicates a growing demand for premium fuel pellets in residential heating applications. In addition, FutureFuel Chemical Company recognized the opportunity to develop a regional market for bulk product sales to light commercial applications, such as poultry houses and greenhouses, where renewable fuel pellets could be competitive on a BTU cost basis with propane and natural gas. The final reason for entry into hardwood fuel pellet manufacturing was as a component technology for the envisioned cellulosic ethanol plant described below. Such a facility, utilizing the planned biochemical technology route described below, would generate substantial volumes of a lignocellulosic co-product stream, which is well-suited for fuel purposes. We expect that production of premium fuel pellets from this cellulosic ethanol co-product stream will create more value for FutureFuel Chemical Company than the alternative outlet for the co-product (which is boiler fuel) and we see this to be important to the overall process economics for the planned cellulosic ethanol project. However, we can give no assurances that the planned cellulosic ethanol project will come to fruition for the reasons set forth below.
Bioethanol
Bioethanol is a fuel for internal-combustion engines that is made from
ethyl alcohol obtained from biological material and typically sold as a retail
blend with conventional gasoline. FutureFuel Chemical Company is pursuing
production of bioethanol from cellulosic biomass raw materials.
Cellulosic-derived ethanol can be produced from a great diversity of biomass
including waste from urban, agricultural and forestry sources. Unlike corn-based
ethanol, whose raw material competes with food chain products, cellulosic
ethanol derives from abundant and diverse sources of plant and wood products.
FutureFuel Chemical Company is pursuing the "biochemical" technology platform to
produce cellulosic-derived bioethanol, which incorporates four distinct
processing steps: (i) pretreatment; (ii) hydrolysis; (iii) fermentation; and
(iv) distillation. The technology is
developmental and exists in pilot configurations where testing is ongoing. As of the date of this Registration Statement, FutureFuel Chemical Company has only evaluated cellulosic based ethanol technologies at laboratory scale and has not commenced commercial production using these technologies.
Cellulose is composed of long chains of glucose molecules. In the
hydrolysis process, these chains are broken down to "free" the sugar to make it
available for fermentation to alcohol. There are two major hydrolysis processes:
a chemical reaction using acids and an enzymatic reaction. Chemical hydrolysis
is performed by attacking the cellulose with an acid. Dilute acid may be used
under high heat and high pressure, or more concentrated acid can be used at
lower temperatures and atmospheric pressure. A de-crystalized cellulosic mixture
of acid and sugars reacts in the presence of water to complete hydrolysis to
individual sugar molecules. The product from this hydrolysis is then neutralized
and yeast fermentation is used to produce ethanol. A significant obstacle to the
dilute acid process is that the hydrolysis is so harsh that toxic degradation
products are produced which can inhibit fermentation. Concentrated acid must be
separated from the sugar stream for recycling to be commercially attractive. In
addition, the aggressive acid conditions require more expensive materials of
construction for process equipment.
Cellulose chains can also be deconstructed into glucose molecules by cellulase enzymes (enzymatic hydrolysis). This is the sort of reaction that occurs at body temperature in the stomach of ruminants such as cows and sheep where the enzymes are produced by bacteria. If the enzymatic hydrolysis process is accomplished with previously isolated enzymes, a supply of the cellulase enzymes is needed. Several major and start-up enzyme manufacturers are pursuing development and commercialization of enzymes specifically for cellulosic ethanol production. These companies seek to produce large volumes of cellulase, xylanase and hemicellulase enzymes which can be utilized to convert agricultural residues such as corn stover, distiller grains, wheat straw and sugar cane bagasse, wood products and wastes, and energy crops such as switch grass into fermentable sugars which may be used to produce cellulosic ethanol.
This is the biochemical technology platform which FutureFuel Chemical Company is pursuing. There are four stages to the overall process:
o a "pre-treatment" phase to make the raw material such as wood or straw amenable to hydrolysis;
o enzymatic hydrolysis to break down the cellulose and hemicellulose into oligomers and sugars;
o yeast fermentation of the sugar solution; and
o distillation and drying to produce ethyl alcohol meeting fuel-grade ASTM standards.
An alternative to the biochemical technology platform is the thermo-chemical route. Also called the "gasification" process, it does not rely on chemical decomposition of the cellulose chain. Instead of breaking the cellulose into sugar molecules for fermentation, the carbon in the cellulosic raw material is converted into synthesis gas. The resulting carbon monoxide, carbon dioxide and hydrogen may then be fed into a specially designed fermentor. Instead of yeast, which operates on sugar, this process uses a microorganism to convert the synthesis gas products to ethanol. The thermo-chemical process can be broken into three steps:
o gasification -- complex carbon based molecules are broken apart to access the carbon as carbon monoxide, carbon dioxide and hydrogen are produced.
o fermentation -- the carbon monoxide, carbon dioxide and hydrogen are converted into ethanol using developed organisms such as the Clostridium ljungdahlii organism.
o distillation -- ethanol is separated from water and other co-products and dried to meet fuel-grade ASTM standards.
Ethanol today is produced in the United States mostly from sugars or starches obtained from fruits and grains, corn being the predominant raw material. In contrast, cellulosic ethanol is obtained from cellulose, the main component of wood, straw and plants. Since cellulose cannot be digested by humans, the production of cellulose does not compete with the production of food. The price per ton of the raw material is thus much cheaper than
grains or fruits. Moreover, since cellulose is the main components of wood and plants, the potential volume of available raw material is much greater than for agricultural food crops.
The production of cellulosic ethanol by FutureFuel Chemical Company through the biochemical route is in the research and development stage. FutureFuel Chemical Company has entered into discussions with various parties to develop some of the necessary technology for the commercial production of cellulosic ethanol. We can give no assurances, however, that FutureFuel Chemical Company will be able to bring cellulosic ethanol to commercial realization.
Emerging Biodiesel Industry
Diesel fuel is the motor fuel that is used in a compression-ignition engine which causes fuel to combust not by igniting the fuel with a spark but by injecting the fuel into a highly pressurized combustion chamber. There are two principal types of diesel fuel: petrodiesel and biodiesel. Petrodiesel is made from petroleum feedstock and comprises substantially all of the diesel fuel sold in the United States and elsewhere. Diesel fuel made from renewable vegetable oil or animal fat feedstock is called biodiesel. To be sold and distributed as biodiesel, the fuel must meet governmental standards, such as ASTM D6751 in the United States and EN14214:2003 in the European Union. The ASTM biodiesel specification defines biodiesel fuel as a fuel comprised of mono-alkyl esters of long-chain fatty acids derived from vegetable oils or animal fats. In Europe, the biodiesel specification is defined as fatty acid methyl esters. Biodiesel can be used in its pure form, known as B100, or blended in any ratio with conventional petrodiesel. Typical biodiesel blends are 2% (B2), 5% (B5) and 20% (B20).
Petrodiesel currently comprises more than 99% of the diesel transportation fuel market. According to the Energy Information Association of the U.S. Department of Energy, on-highway petrodiesel consumption in 2005 was approximately 39 billion gallons in the United States, or 22% of all ground transportation fuel consumed that year, and 228 billion gallons globally. We believe that use of diesel fuel will increase as a percentage of total on-highway ground transportation in the United States for several reasons, including:
o after compliance with the new low-sulfur requirements, diesel fuel will become less toxic;
o diesel fuel is more fuel efficient than gasoline;
o diesel engines are being installed in a larger number of commercially successful automobiles; and
o clean diesel light vehicles provide government-owned fleets with an option for increasing vehicle efficiency.
According to the 2005 Ricardo diesel report, sales of clean diesel vehicles are projected to increase from 43,000 units in 2004 to over 1.5 million in 2015, driving increased diesel fuel sales for those vehicles.
Despite these trends that indicate increased demand for diesel fuel, the price of petrodiesel closely tracks the cost of petroleum crude oil. Significantly since 2002, worldwide demand for petroleum-based products has been growing faster than supply.
Beginning on June 1, 2006, new federal laws went into effect that are likely to significantly affect the market for petrodiesel. These laws limit the amount of sulfur content allowed in diesel fuel, reducing the portion of sulfur allowed in diesel fuel for on-highway use by more than 95%. Consequently, ultra low sulfur diesel may result in price increases to users of the fuel.
The biodiesel industry has emerged as an alternative to petrodiesel based principally on the advantages of biodiesel over petrodiesel. Those advantages include:
o Biodiesel is made from renewable sources.
o When burned, biodiesel results in a substantial reduction of unburned hydrocarbons, carbon monoxide and particulate matter as compared to petrodiesel.
o Biodiesel is biodegradable and nontoxic and is not considered a hazardous material when spilled.
o Biodiesel is essentially free of sulfur and aromatics.
o The overall ozone forming potential of the hydrocarbon exhaust emissions from biodiesel is nearly 50% less that that for petrodiesel.
o Biodiesel is registered as a fuel and fuel additive with the U.S. Environmental Protection Agency and B100 biodiesel has been designated as an alternative fuel by the U.S. Departments of Energy and Transportation.
o Biodiesel can use domestic feedstock, reducing the amount of crude oil imported into the U.S.
o Public policy, both as enacted into law and as enunciated by governmental agencies in the United States, favors the production and use of biodiesel.
o Biodiesel can be blended with petrodiesel in any ratio.
Based on these advantages, we believe that demand for biodiesel will continue to grow at accelerated rates both in the United States and internationally over the next several years. The rising demand for biodiesel may also reflect or track the increasing amounts of biodiesel that are forecasted to be produced in the U.S. Although the existence of production capacity does not necessarily result in increased demand, we believe that increased availability of biodiesel as an alternative fuel to petrodiesel will result in wider voluntary consumer adoption and increased production of both diesel vehicles capable of burning blends of biodiesel and petrodiesel as well as vehicles that will burn mixes in which biodiesel predominates.
Although biodiesel use is still in its infancy, biodiesel production has grown substantially since 1999. The National Biodiesel Board's estimate of biodiesel production in the United States for the period 1999 through 2005 inclusive is set forth in the following chart.
Estimated Gallons of Biodiesel Produced in the United States
[THE FOLLOWING TABLE WAS REPRESENTED BY A BAR CHART IN THE SOURCE DOCUMENT]
0.5 2.0 5.0 15.0 20.0 25.0 75.0 1999 2000 2001 2002 2003 2004 2005
The United States Department of Agriculture estimates that biodiesel production reached 245 million gallons in 2006.
As of January 31, 2007, the National Biodiesel Board listed 105 operating biodiesel facilities in the United States, including FutureFuel Chemical Company, with a combined estimated capacity of 864 million gallons per year. Furthermore, the Board projected that 77 new facilities were under construction and 8 existing plant expansions were underway for a total of approximately 1.7 billion gallons per year of new capacity by mid-2008. According to the National Biodiesel Board, biodiesel is available nationwide. As of November 1, 2006, it could be purchased in the U.S. directly from biodiesel producers and marketers, more than 1,259 biodiesel distributors or at 1,016 retail pumping stations.
For the above-cited reasons, we believe that a substantial market for biodiesel is emerging in the United States. However, the industry faces several challenges to wide biodiesel acceptance, including cold temperature limitations, storage stability, fuel quality standards and exhaust emissions. FutureFuel Chemical Company is actively engaged in addressing these challenges.
Biodiesel from nearly all feedstocks has cold temperature limitations in that it freezes at higher temperatures than conventional petrodiesel. Although not free from doubt, it appears that, at low temperatures, the long chain molecules of methyl ester align alongside each other and set into a crystalline structure which may continue to attract other molecules until the crystal reaches a massive size and can be seen in the fluid as a haze and then, after a certain time, wax. Conventional petrodiesel also exhibits cold temperature flow problems; however, the petrochemical industry developed both additives and a high temperature catalytic process which isomerizes the long chain molecules, thereby improving cold flow. The challenge for biodiesel is to achieve effective cold flow properties. FutureFuel Chemical Company is acquiring fundamental knowledge on this characteristic through its internal research program. Cold-solvent extraction, solubilization, additives and other approaches are being investigated for their potential to mitigate these cold temperature limitations.
The relatively poor oxidative and hydrolytic stabilities of biodiesel are a concern with respect to fuel quality during storage. We believe that FutureFuel Chemical Company may be one of the first biodiesel producers to store biodiesel in large off-site storage tanks. Experience gathered in the use of such tankage, including cleaning and handling methods, stabilization additives and the use of water draws, will assist FutureFuel Chemical Company in ensuring fuel quality during storage and distribution.
A challenge facing the biodiesel industry relates to compliance of product to established fuel quality standards reflected in ASTM D6751. A national fuel quality testing project co-funded by the National Biodiesel Board and the National Renewable Energy Laboratory found that one-third of biodiesel samples tested between November 2005 and July 2006 did not comply with these specifications. FutureFuel Chemical Company strives to ensure that all biodiesel produced by it meets ASTM D6751 through process control and product testing protocols that have been certified to the industry BQ-9000 quality standard. In addition, FutureFuel Chemical Company is actively participating in industry and ASTM-led programs to further improve biodiesel testing methodology and specifications in an effort to enhance biodiesel fitness-for-use under the broadest possible range of temperature and handling conditions.
We believe that the industry, with support from producers such as FutureFuel Chemical Company, can resolve in a commercially reasonable manner the quality and fitness-for-use issues facing the emerging biodiesel market, although no assurances can be given that the industry will ultimately be successful with respect to all of these challenges or that biodiesel will, in fact, achieve wide-spread acceptance.
Volatile Margins
The profit margin generated in the production of biodiesel, on a per gallon basis, is calculated as sales price less feedstock and production costs. Sales price is generally based on the spot price of petrodiesel, plus federal credits, plus or minus small regional and/or market-specific variances. Feedstock costs include the cost of vegetable oil, animal fat or waste grease. Production costs include the cost of methanol, a catalyst, direct labor and variable and fixed costs associated with the operation of a biodiesel plant.
Looking first at sales price, we are not aware of any public postings of daily biodiesel prices for the entire year of 2006.(a) However, such prices tend to follow the price of petrodiesel plus the $1.00 per gallon federal blending credit. Biodiesel producers may also need to account for regional and/or market-specific factors in setting their sales price for biodiesel. These factors may include the size of the local market, the distance that product must
be shipped to reach local or other markets, the availability of storage and distribution infrastructure, the premium that local markets may place on alternative fuels and the feedstock source used in producing biodiesel. Of the three price components, the price of petrodiesel is the most significant and also the most volatile. The spot prices of one gallon of low sulfur No. 2 petrodiesel in the U.S. Gulf Coast during 2006 are set forth in the following chart.
(a) This is changing for 2007 in that both OPIS and Platts are now publishing posted prices for biodiesel at various locations throughout the United States.
[Set forth here is a chart that sets forth the spot prices of one gallon of low sulfur No. 2 petrodiesel in the U.S. Gulf Coast during each trading day of 2006. The following table contains the plot points, at approximate 14- or 15-day intervals, for the chart.]
------------------------------------------------------
PRICE IN
------------------------------------------------------
DATE DOLLARS
------------------------------------------------------
Jan 03, 2006 1.7774
------------------------------------------------------
Jan 18, 2006 1.7255
------------------------------------------------------
Feb 03, 2006 1.8075
------------------------------------------------------
Feb 17, 2006 1.768
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Mar 03, 2006 1.9165
------------------------------------------------------
Mar 17, 2006 1.868
------------------------------------------------------
Apr 03, 2006 1.9395
------------------------------------------------------
Apr 18, 2006 2.1925
------------------------------------------------------
May 03, 2006 2.1125
------------------------------------------------------
May 18, 2006 2.059
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Jun 02, 2006 2.212
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Jun 19, 2006 2.018
------------------------------------------------------
Jul 05, 2006 2.2137
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Jul 18, 2006 2.27
------------------------------------------------------
Aug 03, 2006 2.3613
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Aug 18, 2006 2.2015
------------------------------------------------------
Sep 05, 2006 1.9785
------------------------------------------------------
Sep 18, 2006 1.712
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Oct 03, 2006 1.6785
------------------------------------------------------
Oct 18, 2006 1.7075
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Nov 03, 2006 1.7146
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Nov 17, 2006 1.73
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Dec 04, 2006 1.8515
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Dec 18, 2006 1.785
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Dec 29, 2006 1.743
------------------------------------------------------
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Source: Department of Energy-http//www.eia.doe.gov/oil_gas/petroleum/info_glance /distillate.html (Diesel Spot Prices - History XLS file)
While the net change in the spot price of petrodiesel was modest for 2006 as a whole, intra year price movements where characterized by relatively high volatility. As an example, the price of petrodiesel declined by $0.76 per gallon between August 30, 2006 and September 14, 2006, a 32% decrease in 15 days.
The three primary feedstocks for biodiesel include vegetable oil, animal fat and waste grease. The markets for animal fats and waste greases in the United States and worldwide are smaller and less liquid than those for vegetable oils. In addition, vegetable oils are generally a preferred feedstock as they contain lower free fatty acids and are easier to process into a fuel that meets industry specifications. In the United States, soybean oil comprises the largest percentage of the overall vegetable market, and is also the primary feedstock oil for producing biodiesel. According to the United States Department of Agriculture, soybean oil constitutes more than 90% of the feedstock for biodiesel. The following chart sets forth the closing spot price of soybean oil during the year 2006.
[Set forth here is a chart that sets forth the closing spot price of soybean oil during each trading day of 2006. The following table contains the plot points, at approximate 14- or 15-day intervals, for the chart.]
----------------------------------------------------
PRICE PER
----------------------------------------------------
POUND
----------------------------------------------------
DATE DOLLARS
----------------------------------------------------
Jan 03, 2006 0.2271
----------------------------------------------------
Jan 18, 2006 0.2078
----------------------------------------------------
Feb 03, 2006 0.2228
----------------------------------------------------
Feb 17, 2006 0.2295
----------------------------------------------------
Mar 03, 2006 0.2466
----------------------------------------------------
Mar 17, 2006 0.2286
----------------------------------------------------
Apr 03, 2006 0.2226
----------------------------------------------------
Apr 18, 2006 0.227
----------------------------------------------------
May 03, 2006 0.2517
----------------------------------------------------
May 18, 2006 0.2482
----------------------------------------------------
Jun 02, 2006 0.2468
----------------------------------------------------
Jun 19, 2006 0.2345
----------------------------------------------------
Jul 05, 2006 0.2557
----------------------------------------------------
Jul 18, 2006 0.256
----------------------------------------------------
Aug 03, 2006 0.2597
----------------------------------------------------
Aug 18, 2006 0.2417
----------------------------------------------------
Sep 05, 2006 0.2372
----------------------------------------------------
Sep 18, 2006 0.2379
----------------------------------------------------
Oct 03, 2006 0.2266
----------------------------------------------------
Oct 18, 2006 0.2532
----------------------------------------------------
Nov 03, 2006 0.2706
----------------------------------------------------
Nov 17, 2006 0.2766
----------------------------------------------------
Dec 04, 2006 0.2797
----------------------------------------------------
Dec 18, 2006 0.2671
----------------------------------------------------
Dec 29, 2006 0.2826
----------------------------------------------------
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Bloomberg
The net increase in the spot price of soybean oil during 2006 as a whole was 24%. Similar to petrodiesel prices, intra year price movements were characterized by relatively high volatility. As an example, between October 3, 2006 and December 1, 2006, soybean oil prices increased approximately 5.94(cent) per pound, a 26% increase in 59 days. One gallon of biodiesel requires approximately 7.4 pounds of soybean oil, depending on the yield a biodiesel producer generates from the conversion of soybean oil into biodiesel, which in turn depends on that producer's technology and production techniques. The 5.94(cent) per pound increase in soybean oil between October 3, 2006 and December 1, 2006 resulted in an increased feedstock cost for biodiesel producers of approximately $0.44 per gallon. Biodiesel producers can reduce feedstock costs by expanding or converting their processing methods to include animal fats and waste greases, which historically and at present can be acquired at substantial discounts to soybean oil. FutureFuel Chemical Company is capable of processing several types of animal fat into biodiesel and is procuring and processing these feedstocks at present. However, soybean oil remains an important feedstock for FutureFuel Chemical Company and the primary feedstock for the industry as a whole and is the most relevant feedstock cost to consider when analyzing margins.
Production costs include the cost of methanol, a catalyst, direct labor and fixed and variable costs associated with operating a biodiesel plant. Fixed costs include such items as labor, energy, supplies, insurance, taxes and maintenance, among others. Although production costs can vary depending upon the processing method employed (batch processing versus continuous process, methanol recovery and the like), and other factors, they are considered somewhat stable. According to the United States Department of Agriculture, production costs for biodiesel average $0.50 per gallon industry wide.
Assuming the sales price of biodiesel approximated the price of petrodiesel plus the $1.00 per gallon federal blending credit, that feedstock costs equaled the price of soybean oil and that production costs equaled $0.50 per gallon, biodiesel margins for 2006 would be as set forth in the following chart.
[Set forth here is a chart that sets forth biodiesel margins for each trading day of 2006. The following table contains the plot points, at approximate 14- or 15-day intervals, for the chart.]
----------------------------------------------
DATE MARGIN
----------------------------------------------
1/3/2006 0.5969
----------------------------------------------
1/18/2006 0.6878
----------------------------------------------
2/3/2006 0.6588
----------------------------------------------
2/17/2006 0.5697
----------------------------------------------
3/3/2006 0.5917
----------------------------------------------
3/17/2006 0.6764
----------------------------------------------
4/3/2006 0.7923
----------------------------------------------
4/18/2006 1.0127
----------------------------------------------
5/3/2006 0.7499
----------------------------------------------
5/18/2006 0.7223
----------------------------------------------
6/2/2006 0.8857
----------------------------------------------
6/19/2006 0.7827
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7/5/2006 0.8215
----------------------------------------------
7/18/2006 0.8756
----------------------------------------------
8/3/2006 0.9395
----------------------------------------------
8/18/2006 0.9129
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9/5/2006 0.7232
----------------------------------------------
9/18/2006 0.4515
----------------------------------------------
10/3/2006 0.5017
----------------------------------------------
10/18/2006 0.3338
----------------------------------------------
11/3/2006 0.2122
----------------------------------------------
11/17/2006 0.1832
----------------------------------------------
12/4/2006 0.2817
----------------------------------------------
12/18/2006 0.3085
----------------------------------------------
12/29/2006 0.1518
----------------------------------------------
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Note: The margins set forth in the chart above do not include regional and/or market-specific factors, which may increase or decrease the sales price of biodiesel by as much as 10% or more. In addition, margins depicted above exclude transportation costs associated with moving soybean oil to a biodiesel plant or delivering biodiesel to end markets. These costs vary widely depending on a plant's proximity to soybean crushing facilities and end markets and cannot be estimated for the industry as a whole with any degree of accuracy.
Between October 3, 2006, the date that we sent our shareholders notice of the special meeting to approve the acquisition of FutureFuel Chemical Company, and December 31, 2006, the hypothetical margin on the production of biodiesel decreased from $0.50 per gallon to $0.15 per gallon, a 70% decrease. Although FutureFuel Chemical Company's actual sales price, feedstock cost and production costs varied from these hypothetical numbers (and no assurances can be given that FutureFuel Chemical Company's actual sales price, feedstock costs and/or production costs will approximate those hypothetical numbers in the future), its margins did decrease substantially during this same period.
We expect FutureFuel Chemical Company's margins to remain volatile in future years and no assurances can be given that such margins will be positive. We intend to address volatile margins through: (i) our current ability to process lower cost animal fat feedstocks; (ii) our research and development efforts aimed at developing methods of processing additional lower cost crude vegetable oils, animal fats and waste greases; (iii) cost efficiencies and economies of scale gained as we refine our processing methods, improve our methanol recovery capabilities and increase our biodiesel production capacity; and (iv) construction of storage capacity on-site and leases of storage capacity off-site to enable us to acquire large quantities of feedstock oils when market conditions are favorable or to store biodiesel when market conditions are not favorable.
As a final consideration, the two primary variables described above that affect biodiesel margins (and the volatility of those margins) are petrodiesel and soybean oil, both of which are actively traded on commodity exchanges. Through the purchase and sale of futures contracts or options on futures contracts, biodiesel producers can effectively hedge their sales price and feedstock cost when market conditions permit. FutureFuel Chemical Company has already pursued certain hedging strategies and intends to continue doing so in the future, as further described herein. However, no assurance can be given that such hedging strategies will be successful to protect us from all commodity price risks.
The Biodiesel Production Process
Biodiesel can be made from renewable sources such as:
o refined virgin vegetable oils;
o refined animal fats; and
o used cooking oils and trap grease.
The choice of feedstock is determined primarily by the price and availability of each feedstock variety and the capabilities of the producer's biodiesel production facility. In the United States, the majority of biodiesel historically has been made from domestically produced soybean oil. However, palm oil imported from Malaysia and Indonesia is being considered as a viable alternative due to price, availability and expected supply elasticity. FutureFuel Chemical Company's plant has been designed to process a wide variety of feedstocks to take advantage of fluctuating prices and availability of the various feedstocks.
The biodiesel manufacturing process has three distinct steps: the chemical reaction step, the separation step and the polishing step.
[The printed version contains a chart that illustrates the biodiesel manufacturing process, from the feedstock (which may be low or high in free fatty acids) and including the chemical reaction step (with the transesterification and esterification processes), the separation step (resulting in glycerin and biodiesel) and the polishing step (resulting in biodiesel and waste to be disposed of).]
Chemical Reaction. In the chemical reaction step, a mix of biodiesel glycerin and soap is created from the selected feedstock, methanol and a catalyst. The collection of equipment that performs this chemical reaction step in producing biodiesel is referred to as the "reactors." Depending upon the type of reactor used, the mix of biodiesel glycerin and soap produced requires differing degrees of further processing to separate the methyl esters comprising the biodiesel from the glycerin and soap, to clean or "polish" both the biodiesel and glycerin and to recover excess methanol from both the biodiesel and glycerin. Generally, the more efficient the reactor, the less downstream processing that is required. If the feedstock used is high in free fatty acids, an esterification step may be required. Esterification is a chemical reaction in which two chemicals (typically an alcohol and an acid) form an ester. Transesterification is the process of exchanging the alkoxy group of an ester compound by another alcohol.
Separation. The methyl esters are separated from the glycerin and soap produced during the chemical reaction step.
Polishing. The methyl esters are purified to remove residual catalysts and other impurities. Any excess water and methanol is also removed and may be recycled into earlier steps in the production process train.
Legislative Incentives
Agencies of the United States government, including the Department of Energy, the Environmental Protection Agency, the Internal Revenue Service and the Department of Agriculture, and many states offer biodiesel incentives or have mandates for the use of biodiesel, or both. There are other governmental incentives that do not directly reduce the net cost of producing or blending biodiesel but that drive the demand for biodiesel. For example, tax credits are available under the Internal Revenue Code for investment in qualifying refueling property, the Environmental Protection Agency will pay 50-100% of the cost for schools to upgrade and/or replace their buses, and programs administered by the Department of Energy indirectly require government fleet operators to purchase substantial amounts of biodiesel. The principal federal incentives that we believe will have the greatest positive effect on FutureFuel Chemical Company's business are discussed below.
The Energy Policy Act of 1992 requires government fleet operators to use a certain percentage of alternatively fueled vehicles. The Act established a goal of replacing 10% of motor fuels with non-petroleum alternatives by 2000, increasing to 30% by the year 2010. Currently, 75% of all new light-duty federal vehicles purchased are required to have alternative fuel capability to set an example for the private automotive and fuel industries.
Under the Energy Conservation Reauthorization Act of 1998, vehicle fleets that are required to purchase alternatively fueled vehicles can generate credit toward this requirement by purchasing and using biodiesel in a conventional vehicle. Since there are few cost-effective options for purchasing heavy-duty alternatively fueled vehicles, federal and state fleet providers can meet up to 50% of their heavy-duty alternatively fueled vehicle purchase requirements with biodiesel. The biodiesel fuel credit allows fleets to purchase and use 450 gallons of biodiesel in vehicles in excess of 8,500 pounds gross vehicle weight instead of alternatively fueled vehicles. Fleets must purchase and use the equivalent of 450 gallons of pure biodiesel in a minimum of a 20% blend to earn one credit. Covered fleets earn one vehicle credit for every light-duty alternatively fueled vehicle they acquire annually beyond their base vehicle acquisition requirements. Credits can be banked or sold.
In October 2004, Congress passed a biodiesel tax incentive, structured as a federal excise tax credit, as part of the American Jobs Creation Act of 2004. The credit amounts to a penny for each percentage point of vegetable oil or animal fat biodiesel that is blended with petrodiesel (and one-half penny for each percentage point of recycled oils and other non-agricultural biodiesel). For example, blenders that blend B20 made from soy, canola and other vegetable oils and animal fats receive a 20(cent) per gallon excise tax credit, while biodiesel made from recycled restaurant oils (yellow grease) receive half of this credit. The tax incentive generally is taken by petroleum distributors and substantially passed on to the consumer. It is designed to lower the cost of biodiesel to consumers in both taxable and tax-exempt markets. The tax credit was scheduled to expire at the end of 2006, but was extended in the Energy Policy Act of 2005 to the end of 2008. There are proposals pending in Congress to extend the tax credit to the end of the decade and beyond.
Congress enacted the Energy Policy Act of 2005 in August 2005 and included a number of provisions intended to spur the production and use of biodiesel. In particular, the Act's provisions include biodiesel as part of the minimum volume of renewable fuels (the renewable fuels standard or "RFS"), in the nationwide gasoline and diesel pool, with the Environmental Protection Agency being directed to determine the share to be allocated to biodiesel and other details through its rulemaking process. The Act also extended the biodiesel tax credit to 2008 and included a new tax credit for renewable diesel. More specifically, the RFS requires a specific amount of renewable fuel to be used each year in the nationwide gasoline and diesel pool. The volume increases each year, from 4 billion gallons per year in 2006 to 7.5 billion gallons per year in 2012. The Act requires the Environmental Protection Agency, beginning in 2006, to publish by November 30th of each year, "renewable fuel obligations" that will be applicable to refineries, blenders and importers in the contiguous 48 states. There must be no geographic restrictions on where renewable fuel may be used or per-gallon obligations for the use of renewable fuel. The renewable fuel obligations are required to be expressed in terms of a volume percentage of gasoline sold or introduced into commerce and consist of a single applicable percentage that will apply to all categories of refineries, blenders and importers. The renewable fuel obligations are to be based on estimates that the Energy Information Association provides to the Environmental Protection Agency on the volumes of gasoline it expects will be sold or introduced into commerce. In terms of implementing the RFS for the year 2006, the Environmental Protection Agency released a rule determining that the RFS target for 2006, 4 billion gallons of renewable fuel in the gasoline and diesel pool, will be considered to be met, given the then-current expectations of production of both ethanol and
biodiesel for that year. If the Environmental Protection Agency had determined the 2006 target was not being met, refiners, blenders and importers would be obligated to make up the shortfall in the year 2007. The Environmental Protection Agency released the final rules to implement the RFS on April 10, 2007. Under those rules, the RFS compliance period does not begin until September 1, 2007.
The Energy Policy Act of 2005 also created a new tax credit for small agri-biodiesel producers with production capacity not in excess of 60 million gallons, of 10(cent) per gallon for the first 15 million gallons of agri-biodiesel produced. We believe that FutureFuel Chemical Company's 2007 biodiesel production capacity will not exceed 60 million gallons and thus will qualify for this credit.
The federal government offers other programs as summarized in the table below.
Federal Agency
that
Administers/ Type of Who Receives Commonly
Oversees Incentive Incentive Known As Summary
IRS income tax Infrastructure Alternative Provides a tax credit in an amount
credit providers Fuel equal to 30% of the cost of any
Infrastructure qualified non-residential alternatively
Credit fueled vehicle refueling property
placed into service in the United
States up to $30,000, subject to
certain limits.
EPA grant program school districts Clean School Reduces operating costs and children's
Bus Program exposure to harmful diesel exhaust by
limiting bus idling, implementing
pollution reduction technology,
improving route logistics and switching
to biodiesel. The Energy Bill of 2005
utilizes this program to grant up to a
50% cost share (depending on the age
and emissions of the original bus) to
replace school buses with buses that
operate on alternative fuel or
low-sulfur diesel, or up to 100% for
retrofit projects.
USDA grant program agricultural Renewable In 2005, the U.S. Department of
producers and Energy Agriculture's Office of Rural
small Systems and Development made available
businesses Energy $22.8 million in competitive grant
Efficiency funds and guaranteed loans for the
Improvements purchase of renewable energy systems
Grant and energy improvements for
agricultural producers and small rural
businesses. Eligible projects include
biofuels, hydrogen and energy
efficiency improvements, as well as
solar, geothermal and wind.
|
Federal Agency
that
Administers/ Type of Who Receives Commonly
Oversees Incentive Incentive Known As Summary
USDA/DOE grant program biobased fuels Biomass Funds research, development and
researchers Research and demonstration biomass projects with
Development respect to renewable energy resources
Act of 2000 from the agricultural and agro-forestry
sectors. Biomass is defined as organic
matter that is available on a renewable
or recurring basis.
|
Many states are following the federal government's lead and are offering similar programs and incentives to spur biodiesel production and use. For example, Arkansas provides an income tax credit of 5% of the cost of the facilities and equipment used directly in the wholesale or retail distribution of biodiesel where the equipment has not been claimed in a previous tax year. In addition, Arkansas offers a tax refund of $0.50 for each gallon of biodiesel used by a supplier to produce a biodiesel/petrodiesel mixture of not more than 2% biodiesel. In April 2007, Arkansas passed legislation that provides for a $0.20 per gallon biodiesel producer credit (capped at $2 million) and up to $50,000 in grants per site for biodiesel producers and distributors to install distribution infrastructure.
Illinois and Minnesota have mandated the use of B2 in all diesel fuel sold in their respective states subject to certain conditions that include sufficient annual production capacity (defined as at least 8 million gallons). The mandate took effect in Minnesota in September 2005 and in Illinois in July 2006. Approximately 31 states provide either user or producer incentives for biodiesel. Several states provide both types of incentives. Approximately 15 states provide incentives to biodiesel producers to build facilities in their states, typically offering tax credits, grants and other financial incentives. As FutureFuel Chemical Company expands its business outside of Arkansas, it will evaluate these additional state incentives to determine if it qualifies for them.
FutureFuel Chemical Company will continue to identify and pursue other incentives to support its business. However, no assurances can be given that FutureFuel Chemical Company will qualify for any such incentives or, if it does qualify, what the amount of such incentives will be.
BQ-9000 Status
The BQ-9000 program was launched in late 2005 by the National Biodiesel Board. The program requires certified and accredited companies to possess a quality manual and quality control system and employ best practices in biodiesel sampling, testing, blending, shipping, storage and distribution. The goal of the program is to help assure quality of biodiesel from plant gate to consumer tank.
FutureFuel Chemical Company recognized the potential to establish itself as an industry quality leader through extension of its existing chemical ISO 9001 quality systems to biodiesel production. Management further recognized the need within this developing industry to provide a consistent ASTM standard product as an essential requirement for market expansion into fleet, government and on-the-road applications. In February 2006, shortly after the biodiesel industry established its comprehensive quality standard, BQ-9000, FutureFuel Chemical Company achieved the fourth such certification in the nation (as of December 31, 2006, only 17 biodiesel producers had achieved this quality standard). Consistent with BQ-9000, all manufactured product is tested in on-site quality control laboratories and confirmed to meet the ASTM D6751 standard.
Future Strategy of the Enlarged Group
We intend to expand FutureFuel Chemical Company's biodiesel capacity utilizing available facilities as market conditions dictate. All future capacity will be operated in continuous processing mode to realize operating economies and optimum throughput. Existing and future processes will accommodate a wide range of feedstock oils, allowing optimization relative to supply and pricing.
FutureFuel Chemical Company is pursuing the commercialization of cellulosic-based ethanol, initially to be produced from local hardwood biomass. FutureFuel Chemical Company's research and development program with respect to cellulosic-based ethanol includes collaboration with the National Renewable Energy Laboratory and other private-sector technology providers. As with biodiesel, FutureFuel Chemical Company intends to leverage technical expertise and existing idle manufacturing assets to move this emerging technology from the development stage to commercial reality. The biochemical platform approach being pursued seeks to assemble demonstrated component technologies in a process design that leverages current facility infrastructure and capabilities. Federal and state support incentives are anticipated to be available for cellulosic ethanol commercial development. We intend to take full advantage of incentives as they are promulgated into regulation and practice. In October 2006, a $2 million U.S. Department of Agriculture grant was awarded to Virent Energy Systems LLC to demonstrate the conversion of glycerin to propylene glycol at pilot plant scale. FutureFuel Chemical Company is Virent's research partner on the grant project. We believe this technology, if successfully demonstrated, may be adapted as a key component technology for the envisioned cellulosic ethanol process. In addition, the lignocellulose fuel pellet plant, which began operation in 2007, is envisioned as a potential outlet to utilize, and add value to, the substantial lignin residue stream resulting from a future cellulosic ethanol facility. However, no assurances can be given that FutureFuel Chemical Company will develop a commercially viable cellulosic-based ethanol manufacturing process.
Customers and Markets
FutureFuel Chemical Company currently markets its biodiesel products by truck and rail directly to customers in twelve midwest, southwest and western states. Through the utilization of liquid bulk storage facilities and barge loading capabilities, FutureFuel Chemical Company is positioned to market biodiesel throughout the United States for transportation and home heating fuel usage. In addition, FutureFuel Chemical Company has entered into a tolling agreement whereby, for a fee, it produces biodiesel for a third party. For the twelve months ended December 31, 2006, two of FutureFuel Chemical Company's customers represented 50% of biodiesel revenues (5% of total revenues), five customers represented 65% of biodiesel revenues (6% of total revenues) and the tolling agreement represented 9% of biodiesel revenues (1% of total revenues). Although the regional market is still being developed, we estimate that the regional direct market available to FutureFuel Chemical Company at maturity will be at least 30 million gallons per year.
Competition
FutureFuel Chemical Company competes with other producers of biodiesel, both locally, regionally and nationally. There is one other operational biodiesel plant in the state of Arkansas (in Stuttgart, southeast of Little Rock), with capacity stated at 3 million gallon per year. There are several operating facilities in surrounding states and announced biodiesel production facilities in Arkansas and surrounding states. We estimate that regional competitive producers may have approximately 150 million gallons of capacity by late 2007 or early 2008. National producers of biodiesel are described above.
In addition to biodiesel producers, FutureFuel Chemical Company competes with new technologies that are being developed as alternatives to biodiesel. For example, in December 2006, ConocoPhillips announced that commercial production of renewable diesel fuel had begun at its Whitegate refinery in Cork Island, Ireland. The production process, developed by ConocoPhillips, uses soybean and other vegetable oils to produce fuel that meets European diesel fuel standards. The fuel is produced using existing equipment at the refinery and is blended and transported with petroleum-based diesel. ConocoPhillips claims that renewable diesel is chemically similar to conventional petrodiesel and can be shipped through common carrier pipelines. ConocoPhillips is evaluating this technology for use in the United States. UOP, a major supplier to the petrochemical refining industry, has also reported the development of technology for the production of fungible fuels (diesel and gasoline) by hydro-processing of vegetable oils and cellulose. We cannot give any assurances that renewable diesel fuel (or some other product) produced by these competing technologies will not supplant biodiesel as an alternative to conventional petrodiesel.
Supply and Distribution
As a result of its feedstock-neutral process, FutureFuel Chemical Company is able to source oils from a broad supplier base which includes pork, chicken and beef rendering facilities from both national and regional suppliers. Soy oil is also sourced from several national and regional producers. Cottonseed oil has been sourced
from a regional cooperative. All feedstocks are currently supplied by either rail or truck. FutureFuel Chemical Company is currently exploring the possibility of importing palm oil feedstocks. We believe that an adequate supply of feedstocks can be sourced to support anticipated production.
We intend that biodiesel and other biofuels will be sold at the plant site as well as shipped to liquid bulk storage facilities for further distribution. Plant site sales are made by railcar and tank truck. Biodiesel is being delivered to liquid bulk storage facilities by company-owned tank trucks and common carriers for distribution there and for further transportation by barge.
Chemicals Business Segment
Overview of the Segment
FutureFuel Chemical Company's chemicals segment manufactures diversified chemical products that are sold externally to third party customers and to Eastman Chemical Company. This segment comprises two components: "custom manufacturing" (manufacturing chemicals for specific customers); and "performance chemicals" (multi-customer specialty chemicals). The chemicals segment had revenue of $137,430,000, $119,539,000 and $144,157,000 for the years ended December 31, 2006, 2005 and 2004, respectively.
Chemical Products
Custom manufacturing involves producing unique products for individual customers, generally under long-term contracts. Many of these products are produced under confidentiality agreements in order to protect intellectual property. This is a service-based business where customers value technical capabilities, responsiveness and process improvement to continually improve costs and reliability. In recent years, a trend toward off-shoring (to China and India in particular) has placed significant downward pressure on margins. The plant's custom manufacturing product portfolio includes four large products or product families which are generally produced throughout the year: (i) nonanoyloxybenzenesulfonate ("NOBS"), a bleach activator for The Procter & Gamble Company, a major detergent and consumer products manufacturer; (ii) a proprietary herbicide for Arysta LifeScience North America Corporation, a major life sciences company; (iii) chlorinated polyolefin adhesion promoters ("CPOs") for Eastman Chemical Company; and (iv) antioxidant precursors ("DIPBs") for Eastman Chemical Company. The portfolio also contains a number of smaller products which are produced intermittently in a "batch campaign" mode, for diverse customers and end markets.
Performance chemicals comprises multi-customer products which are sold based upon specification and/or performance in the end-use application. This portfolio includes a family of polymer (nylon) modifiers and several small-volume specialty chemicals for diverse applications.
FutureFuel Chemical Company has historically manufactured CPOs and DIPBs at cost for Eastman Chemical Company. CPOs are chemical intermediates that promote adhesion for plastic coatings and DIPBs are intermediates for production of Eastman Chemical Company products used as general purpose inhibitors, intermediates or antioxidants. Historically, revenues related to CPOs and DIPBs were exactly offset by cost of goods sold; hence there was no effect on gross profit for the years ended December 31, 2004 and 2005 or the ten-months ended October 31, 2006. As part of our acquisition of FutureFuel Chemical Company, FutureFuel Chemical Company entered into conversion agreements with Eastman Chemical Company whereby FutureFuel Chemical Company agreed to produce these products on Eastman Chemical Company's behalf. The conversion agreements effectively provide a conversion fee to FutureFuel Chemical Company based on volume manufactured, with a minimum annual fee. In addition, the conversion agreements provide for revenue adjustments for actual usage of raw materials versus a standard and stipulate that Eastman Chemical Company will pay for substantially all raw material expenses and allow for an annual inflation adjustment factor.
Future Strategy
To build on and maintain FutureFuel Chemical Company's reputation as a technology-driven competitive chemical producer, we believe that FutureFuel Chemical Company must continuously focus on cost control, operational efficiency and capacity utilization to maximize earnings. The ability to utilize large scale batch and continuous production processes and a continuous focus on process improvements allow FutureFuel Chemical
Company to compete effectively in the custom manufacturing market and to remain cost competitive with, and for some products cost-advantaged over, its competitors. We intend to improve margins in this area of the FutureFuel Chemical Company business by careful management of product mix with regard to size of opportunity, timing to market, capital efficiency and matching of opportunities to assets and capabilities.
We expect to derive significant growth in the performance chemicals component primarily as a result of new biobased co-products derived from biofuels manufacturing, such as glycerin and derivatives. We believe that these products and applications will be competitive in the marketplace due to advantaged raw material costs derived from their co-product status. For example, for every gallon of biodiesel produced, approximately one pound of co-product glycerin is generated. The production of glycerin from biodiesel represented 25% of U.S. domestic production of glycerin in 2005 and we estimate that it represented over 60% of the available U.S. domestic glycerin production in 2006. Production of glycerin from biofuels has significantly reduced the value of glycerin in the global marketplace and prices for refined glycerin have fallen by over 50% since late 2004. The crude form of glycerin derived directly from biodiesel processing has little or no value unless purified to an industrial grade quality. Many small biodiesel producers lack this purification capability and we believe that crude glycerin has become a disposal issue for many of these producers. Leveraging its specialty chemicals expertise and infrastructure, FutureFuel Chemical Company is capable of refining glycerin to sufficient purity to derive commercial value as a co-product and/or converting glycerin through chemical processing to higher-value derivative products. Commercial development samples of refined glycerin (bulk quantities) are currently available for customer evaluations. Routine production of refined glycerin is expected to be established at such time as we identify commercially viable opportunities.
Customers and Markets
FutureFuel Chemical Company's chemical products are used in a variety of market and end uses, including detergent, agrochemical, automotive, photographic imaging, coatings, nutrition and polymer additives. These products are generally non-cyclical; however, the customers are often the "brand owners" and therefore control factors related to demand, such as market development strategy. In many cases, FutureFuel Chemical Company may be unable to increase or maintain its level of sales revenue for these products.
All sales of NOBS are made to The Procter & Gamble Company pursuant to a supply contract that is set to expire in June 2008. No assurances can be given that such contract will be extended past June 2008 or, if extended, upon what terms. Sales of NOBS totaled $84,691,000, $66,959,000 and $73,607,000 for the years ended December 31, 2006, 2005 and 2004, respectively. Additionally, all sales of a proprietary herbicide and certain other intermediates used in the production of this herbicide are made to Arysta LifeScience North America Corporation pursuant to contracts which continue year-to-year unless terminated by notice given no later than 270 days prior to the end of the current term for the herbicide and not later than 18 months prior to the current term for the intermediates. No assurances can be given that these contracts will not be terminated. Sales of this herbicide and its intermediates totaled $23,685,000, $25,063,000 and $27,946,000 for the years ended December 31, 2006, 2005 and 2004, respectively. These two customers represented approximately 72%, 77% and 70% of revenues in 2006, 2005 and 2004, respectively.
Competition
Historically, there have been significant barriers to entry for competitors with respect to chemicals primarily due to the fact that the relevant technology and manufacturing capability has been held by a small number of companies. As technology and investment have increasingly moved outside of North America, competition from multinational chemical manufacturers has intensified, primarily from India and China. FutureFuel Chemical Company competes with these and other producers primarily based on price and, to a lesser extent, based on customer service, technology, quality and reliability. FutureFuel Chemical Company's major competitors in this segment include large multinational companies with specialty chemical business units, and smaller independent producers. The multinational competitors are often disadvantaged by poor responsiveness and customer service, while the small producers often have limited technology and financial resources. We believe that FutureFuel Chemical Company should be well-positioned for growth due to the combination of its scale of operations and technical capabilities.
Supply and Distribution
Specialty chemicals are generally high unit value products sold in packaged, or low-volume bulk form, for which distribution is a relatively minor component of cost. Most products are sold FOB the Batesville site for distribution globally. Similarly, raw materials for these products are comparatively higher-value components that are sourced globally. An exception will be the biofuels co-products, which will be recovered from local processing and purified or further functionalized into other products at the site.
Backlog
FutureFuel Chemical Company manages its inventory levels to control the backlog of products depending on customers' needs. In areas where FutureFuel Chemical Company is the single source of supply, or competitive forces or customers' needs dictate, FutureFuel Chemical Company may carry additional inventory to meet customer requirements.
Management Team and Workforce
FutureFuel Chemical Company's executive management team consists of four individuals with a combined 80 plus years of experience in the chemicals industry, comprising technical, operational and business responsibilities. Three of the four members of the executive team have international experience, including assignments in Europe and Asia. The fourth member, the chief financial officer, began employment concurrently with the closing of our acquisition of FutureFuel Chemical Company. The operational and commercial management group at the Batesville site includes eight additional degreed professionals with an average experience of over 20 years in the chemical industry.
The Batesville workforce comprises approximately 424 additional employees, with a total of 60 degreed professionals, including 15 chemists (10 PhDs) and 36 engineers (including 10 licensed professional engineers and 17 chemical engineers). The site is non-unionized. Operations personnel are highly skilled as all site manufacturing and infrastructure is fully automated and computer-controlled. The workforce is substantially self-sufficient in the range of required operational skills and experience due to the lack of locally-available process industry infrastructure. Voluntary attrition at the site has averaged less than 2% annually since 2001.
Cyclicality and Seasonality
FutureFuel Chemical Company's chemical products typically are not cyclical but they are sensitive to global economic conditions. Supply and demand dynamics determine profitability at different stages of cycles and global economic conditions affect the length of each cycle. Despite some sensitivity to global economic conditions, many of the products in the chemical segment provide a stable foundation of earnings.
Until such time as non-seasonal business (primarily on-road transportation) expands regionally, FutureFuel Chemical Company's biodiesel sales at grades greater than B5 are expected to be lower in winter months due to the end of farming activity, which is a major user of biodiesel. Also, cold weather usage and storage properties which reduce biodiesel demand during winter months require resolution in order to fully exploit year-round demand opportunities.
Intellectual Property
We consider FutureFuel Chemical Company's intellectual property portfolio to be a valuable corporate asset which we intend to expand and protect globally through a combination of trade secrets, confidentiality and non-disclosure agreements, patents and copyrights. As a producer of a broad and diverse portfolio of chemicals, FutureFuel Chemical Company's intellectual property relates to a wide variety of products and processes acquired through the development and manufacture of over 300 specialty chemicals during the history of the site. Our primary strategy regarding FutureFuel Chemical Company's intellectual property portfolio will be to appropriately protect all innovations and know-how in order to provide FutureFuel Chemical Company's business segments with a technology-based competitive advantage, wherever possible. In the chemicals business segment, custom manufacturing projects are primarily conducted within the framework of confidentiality agreements with each customer to ensure that intellectual property rights are defined and protected. In the biofuels business segment,
innovations and process know-how will be vigorously protected as appropriate. As may be necessary, we will seek to license technology from third parties that complements FutureFuel Chemical Company's strategic business objectives. Neither FutureFuel Chemical Company's business as a whole nor any particular segment is materially dependent upon any one particular patent, copyright or trade secret. As the laws of many foreign countries do not protect intellectual property to the same extent as the laws of the United States, we cannot assure you that FutureFuel Chemical Company will be able to adequately protect all of its intellectual property assets.
Research and Development
FutureFuel Chemical Company devotes significant resources to its research and development programs which are primarily targeted towards two objectives:
o innovating, developing and improving biofuels processes, in particular biodiesel and bioethanol, including value-up technology and applications for co-products; and
o developing and improving processes for custom manufacturing products or performance chemicals.
FutureFuel Chemical Company's research and development capabilities comprise analytical chemistry competencies to assay and characterize raw materials and products, organic chemistry expertise applied across a breadth of reaction chemistries and materials and process engineering capabilities for batch and continuous processing of both solid and liquid materials. We believe that these core competencies, established in support of the legacy chemical business, are applicable to building a technology-based position in biofuels and associated biobased specialty products.
The research and development expenses incurred by FutureFuel Chemical
Company during the years ended December 31, 2006, 2005 and 2004 were $4,937,000,
$5,975,000 and $9,919,000, respectively. Substantially all of such research and
development expenses related to the development of new products, services and
processes or the improvement of existing products, services and processes.
Research and development expenses during this timeframe trended downwards due
to: (i) reduced allocation of research and development overhead from Eastman
Chemical Company in anticipation of the divestiture of Eastman SE, Inc.; and
(ii) a reduction in research and development staffing at the Batesville site
resulting from the general reduction-in-force which was effective May 2005. The
2006 research and development expense generally reflects the research and
development staffing and program costs incurred at the Batesville site on a
standalone basis.
Regulatory and Environmental Matters
Various aspects of FutureFuel Chemical Company's operations are subject to regulation by state and federal agencies. Oil and gas operations as well as chemical operations are subject to numerous, stringent and complex laws and regulations at the federal, state and local levels governing the discharge of materials into the environment or otherwise relating to environmental protection. These laws and regulations may:
o require acquisition of permits regarding discharges into the air and discharge of waste waters;
o place restrictions on the handling and disposal of hazardous and other wastes; and
o require capital expenditures to implement pollution control equipment.
Compliance with such laws and regulations can be costly and noncompliance can result in substantial civil and even criminal penalties. Some environmental laws impose strict liability for environmental contamination, rendering a person liable for environmental damages and cleanup costs without regard to negligence or fault. Moreover, public interest in the protection of the environment has increased substantially in recent years. FutureFuel Chemical Company's operations could be adversely affected to the extent laws are enacted or other governmental action is taken that imposes environmental protection requirements that result in increased costs to the oil and gas industry and/or the chemical manufacturing industry in general. The following provides a general discussion of some of the significant environmental laws and regulations that impact FutureFuel Chemical Company's activities.
The federal Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"), and analogous state laws, impose joint and several liabilities, without regard to fault or the legality of the original act, on certain classes of persons that contributed to the release of a hazardous substance into the environment. These persons include the owner and operator of the site where the release occurred, past owners and operators of the site, and companies that disposed or arranged for the disposal of hazardous substances found at the site. Responsible parties under CERCLA may be liable for the costs of cleaning up hazardous substances that have been released into the environment and for damages to natural resources. Additionally, it is not uncommon for third parties to assert claims for personal injury and property damage allegedly caused by the release of hazardous substances or other pollutants into the environment.
The federal Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery Act ("RCRA"), is the principal federal statute governing the management of wastes, including the treatment, storage and disposal of hazardous wastes. RCRA imposes stringent operating requirements, and liability for failure to meet such requirements, on a person who is either a generator or transporter of hazardous waste or an owner or operator of a hazardous waste treatment, storage or disposal facility. Many of the wastes generated in FutureFuel Chemical Company's manufacturing facility are governed by RCRA.
The federal Oil Pollution Act of 1990 ("OPA") and regulations thereunder impose liability on responsible parties for damages resulting from oil spills into or upon navigable waters, adjoining shorelines or in the exclusive economic zone of the United States. A responsible party includes the owner or operator of an onshore facility. OPA limits liability for onshore facilities to $350 million. These liability limits may not apply if a spill is caused by a party's gross negligence or willful misconduct, the spill resulted from violation of a federal safety, construction or operating regulation, or if a party fails to report a spill or to cooperate fully in a clean-up. Failure to comply with OPA's requirements may subject a responsible party to civil, criminal or administrative enforcement actions.
The federal Water Pollution Control Act ("Clean Water Act") imposes restrictions and controls on the discharge of pollutants into navigable waters. These controls have become more stringent over the years, and it is possible that additional restrictions may be imposed in the future. Permits must be obtained to discharge pollutants into state and federal waters. The Clean Water Act provides for civil, criminal and administrative penalties for discharges of oil and other pollutants, and imposes liability on parties responsible for those discharges for the costs of cleaning up any environmental damage caused by the release and for natural resource damages resulting from the release. Comparable state statutes impose liabilities and authorize penalties in the case of an unauthorized discharge of petroleum or its derivatives, or other pollutants, into state waters.
The federal Clean Air Act ("Clean Air Act"), and associated state laws and regulations, restrict the emission of air pollutants from many sources, including facilities involved in manufacturing chemicals and biofuels. New facilities are generally required to obtain permits before operations can commence, and new or existing facilities may be required to incur certain capital expenditures to install air pollution control equipment in connection with obtaining and maintaining operating permits and approvals. Federal and state regulatory agencies can impose administrative, civil and criminal penalties for non-compliance with permits or other requirements of the Clean Air Act and associated state laws and regulations.
The federal Endangered Species Act, the federal Marine Mammal Protection Act, and similar federal and state wildlife protection laws prohibit or restrict activities that could adversely impact protected plant and animal species or habitats. Manufacturing activities could be prohibited or delayed in areas where such protected species or habitats may be located, or expensive mitigation may be required to accommodate such activities.
FutureFuel Chemical Company's policy is to operate its plants and facilities in a manner that protects the environment and the health and safety of its employees and the public. FutureFuel Chemical Company intends to continue to make expenditures for environmental protection and improvements in a timely manner consistent with its policies and with the technology available. In some cases, applicable environmental regulations such as those adopted under the Clean Air Act and RCRA, and related actions of regulatory agencies, determine the timing and amount of environmental costs incurred by FutureFuel Chemical Company.
We establish reserves for closure/post-closure costs associated with the environmental and other assets we maintain. Environmental assets include waste management units such as incinerators, landfills, storage tanks and boilers. When these types of assets are constructed or installed, a reserve is established for the future costs
anticipated to be associated with the closure of the site based on an expected life of the environmental assets, the applicable regulatory closure requirements and our environmental policies and practices. These expenses are charged into earnings over the estimated useful life of the assets. Currently, we estimate the useful life of each individual asset up to 35 years.
In addition to our general environmental policies and policies for asset retirement obligations and environmental reserves, we accrue environmental costs when it is probable that we or one of our subsidiaries has incurred a liability and the amount can be reasonably estimated. In some instances, the amount cannot be reasonably estimated due to insufficient data, particularly in the nature and timing of the future performance. In these cases, the liability is monitored until such time that sufficient data exists. With respect to a contaminated site, the amount accrued reflects our assumptions about remedial requirements at the site, the nature of the remedy, the outcome of discussions with regulatory agencies and other potentially responsible parties at multi-party sites, and the number and financial viability of other potentially responsible parties. Changes in the estimates on which the accruals are based, unanticipated government enforcement action, or changes in health, safety, environmental, chemical control regulations, and testing requirements could result in higher or lower costs.
FutureFuel Chemical Company's cash expenditures related to environmental protection and improvement were approximately $13,300,000, $13,211,000 and $12,896,000 for the years ended December 31, 2006, 2005 and 2004, respectively. These amounts pertain primarily to operating costs associated with environmental protection equipment and facilities, but also include expenditures for construction and development. We do not expect future environmental capital expenditures arising from requirements of recently promulgated environmental laws and regulations to materially increase FutureFuel Chemical Company's planned level of annual capital expenditures for environmental control facilities.
We believe that FutureFuel Chemical Company has obtained in all material respects the necessary permits and licenses to carry on its operations as presently conducted. We have reviewed environmental investigations of the properties owned by FutureFuel Chemical Company and believe, on the basis of the results of the investigations carried out to date, that there are no material regulatory and/or environmental issues which adversely impact FutureFuel Chemical Company. In addition, under our acquisition agreement with Eastman Chemical Company, Eastman Chemical Company acquired environmental insurance with respect to environmental conditions at the Batesville plant existing as of the closing date and Eastman Chemical Company has agreed, subject to certain limitations, to indemnify FutureFuel Chemical Company with respect to such environmental conditions.
Objectives
Our business objectives for FutureFuel Chemical Company are to: (i) exploit growth opportunities in its two core business segments, biofuels and chemicals; and (ii) improve gross margins.
Exploit Growth Opportunities in Core Business Segments
We believe that FutureFuel Chemical Company can become a market leader in biofuels by leveraging its specialty chemicals technical expertise and by fully utilizing idle site assets and infrastructure headspace, with emphasis on:
o operational expertise to produce ASTM D6751 quality biodiesel from diverse feedstocks;
o leveraging BQ-9000 quality certification to supply demanding biodiesel applications;
o conversion of available capacity at below new-build costs;
o service to regional markets and enhanced distribution channels to national markets;
o process improvement to reduce costs of manufacturing; and
o adding value to co-products and by-products from biofuels production.
We believe that FutureFuel Chemical Company is one of the largest independent custom chemical manufacturers in North America and that it will continue to grow this business based upon:
o long term contracts for most custom manufacturing products;
o strong relationships with customers who are market leaders, leading to repeat business;
o technical capability to innovate processes, particularly the ability to apply both chemistry and engineering disciplines to solve complex technical problems;
o responsiveness and customer service from an entrepreneurial organization;
o ability to practice a range of manufacturing scale; and
o process improvement capability to achieve lowest-cost manufacturing position.
We intend to grow FutureFuel Chemical Company's multi-customer chemicals portfolio by producing marketable chemical co-products from biofuels production and biobased specialty products derived from biofuel products and/or raw materials. As an example, a significant co-product from biodiesel production is glycerin, which can be purified and sold and which may also be chemically converted into other chemical products and derivatives. We intend that FutureFuel Chemical Company will exploit the potential for development of a "chemicals from biomass" platform, based upon the raw material and co-product streams associated with biofuels production.
Improve Gross Margins
We intend that FutureFuel Chemical Company will continue to work to maximize the value of core businesses by improving gross margins through:
o enhancing pricing processes and strategies, and optimizing biofuels channels to market;
o continuing to pursue cost reduction opportunities, including improved operational efficiency through business simplification;
o achieving high utilization of manufacturing assets;
o improving capital efficiency through high value de-bottlenecking opportunities and incremental expansions of existing assets and infrastructure; and
o enhancing custom manufacturing project selection and portfolio mix.
However, no assurances can be given that these objectives will be met, in whole or in part.
Financial Information about Geographic Areas
We do not derive revenues from customers in foreign countries. Most of FutureFuel Chemical Company's sales are FOB the Batesville plant, although some FOB points are in other states or at foreign ports. While many of FutureFuel Chemical Company's chemicals are utilized to manufacture products that are shipped, further processed and/or consumed throughout the world, the chemical products, with limited exceptions, generally leave the United States only after ownership has transferred from FutureFuel Chemical Company to the customer. Rarely is FutureFuel Chemical Company the exporter of record, never is FutureFuel Chemical Company the importer of record into foreign countries and FutureFuel Chemical Company is not always aware of the exact quantities of its products that are moved into foreign markets by its customers. FutureFuel Chemical Company does track the addresses of its customers for invoicing purposes and uses this address to determine whether a particular sale is within or outside the United States. FutureFuel Chemical Company's revenues from external customers for the last three fiscal years attributable to the United States and foreign countries (based upon the billing addresses of its customers) were as follows:
(Dollars in thousands)
All Foreign
Fiscal Year United States Countries Total
--------------------------------------- ------------- ----------- ---------
December 31, 2006 ..................... $ 131,893 $ 18,877 $ 150,770
December 31, 2005 ..................... $ 105,719 $ 13,820 $ 119,539
December 31, 2004 ..................... $ 138,636 $ 5,521 $ 144,157
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For the year ended December 31, 2004, revenues from a single foreign country did not exceed 2% of total revenues. Beginning in 2005, FutureFuel Chemical Company began invoicing Procter & Gamble International Operations Mexico, D.F. directly, at which time revenues from Mexico became a more significant component of total revenues. For the years ended December 31, 2005 and 2006, revenues from Mexico accounted for 10% and 11%, respectively, of total revenues. Other than Mexico, revenues from a single foreign country during 2005 and 2006 did not exceed 1% of total revenues.
All of our and FutureFuel Chemical Company's long-lived assets are located in the United States.
We have no foreign operations. See "Item 1A. - Risk Factors" at page 29 for a discussion of risks attendant to FutureFuel Chemical Company's foreign operations.
Available Information
Neither we nor FutureFuel Chemical Company currently files reports with the Securities and Exchange Commission.
Commencing upon the effectiveness of this Registration Statement, we will
make available free of charge, through the "Investor Relations - SEC Filings"
section of our Internet website (http://www.FutureFuelCorporation.com), our
annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on
Form 8-K, and amendments to those reports, filed or furnished pursuant to
Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, as
soon as reasonably practicable after electronically filing such material with,
or furnishing it to, the Securities and Exchange Commission. Once filed with the
Securities and Exchange Commission, such documents may be read and/or copied at
the Securities and Exchange Commission's Public Reference Room at 100 F Street
N.E., Washington, D.C. 20549. Information on the operation of the Public
Reference Room may be obtained by calling the Securities and Exchange Commission
at 1-800-SEC-0330. In addition, the Securities and Exchange Commission maintains
an Internet site that contains reports, proxy and information statements, and
other information regarding issuers that electronically file with the Securities
and Exchange Commission at http://www.sec.gov.
Commencing upon the effectiveness of this Registration Statement, we will
make available free of charge, through the "Investor Relations - Corporate
Governance" section of our website (http://www.FutureFuelCorporation.com), the
corporate governance guidelines of our board of directors, the charters of each
of the committees of our board of directors, and codes of ethics and business
conduct for our directors, officers and employees. Such materials will be
available in print upon the written request of any shareholder to FutureFuel
Corp., 8235 Forsyth Blvd., 4th Floor, Clayton, Missouri 63105, Attention:
Investor Relations.
Reports to Security Holders
In the investor rights agreement that we executed on July 12, 2006 in connection with our offering, we agreed, following completion of the acquisition of FutureFuel Chemical Company and until this Registration Statement has become effective, to furnish to our shareholders annual, quarterly and current reports and to ensure that the proxy materials distributed to our shareholders in connection with a business combination are substantially similar to materials that would be required if such materials were subject to Securities and Exchange Commission requirements, but only to the extent that our board of directors in its business judgment determines that it would be reasonably practicable to provide such information, taking into account factors such as time, expense and other relevant considerations under the particular circumstances. Such annual reports will contain financial information that has been examined and reported on, with an opinion expressed by, an independent certified public accountant.
On August 22, 2006, AIM announced that non-European Economic Area companies whose shares are traded on AIM are not required to adopt International Financial Reporting Standards for financial reporting purposes but may use, among other things, U.S. generally accepted accounting principles without reconciliation to the International Financial Reporting Standards. We are a non-European Economic Area company and have determined that we will prepare our financial statements in accordance with U.S. generally accepted accounting principles. International Financial Reporting Standards differ in certain significant respects from U.S. generally accepted accounting principles and our financial statements prepared in accordance with U.S. generally accepted accounting principles will not be comparable to financial statements prepared in accordance with International Financial Reporting Standards.
Item 1A. - Risk Factors
An investment in us involves a high degree of risk and may result in the loss of all or part of your investment. You should consider carefully all of the information set out in this document and the risks attaching to an investment in us, including, in particular, the risks described below. The information below does not purport to be an exhaustive list and should be considered in conjunction with the contents of the rest of this document.
Risks associated with FutureFuel Chemical Company.
The industries in which FutureFuel Chemical Company competes are highly competitive.
The oil and gas industry, as well as the chemical business, are highly competitive. There is competition within these industries and also with other industries in supplying the energy, fuel and chemical needs of industry and individual consumers. FutureFuel Chemical Company will compete with other firms in the sale or purchase of various goods or services in many national and international markets. FutureFuel Chemical Company will compete with large national and multi-national companies that have longer operating histories, greater financial, technical and other resources and greater name recognition than FutureFuel Chemical Company does. In addition, FutureFuel Chemical Company will compete with several smaller companies capable of competing effectively on a regional or local basis, and the number of these smaller companies is increasing. FutureFuel Chemical Company's competitors may be able to respond more quickly to new or emerging technologies and services and changes in customer requirements. As a result of competition, FutureFuel Chemical Company may lose market share or be unable to maintain or increase prices for its products and/or services or to acquire additional business opportunities, which could have a material adverse effect on our business, financial condition, results of operations and cash flows. Although FutureFuel Chemical Company will employ all methods of competition which are lawful and appropriate for such purposes, no assurances can be made that they will be successful. A key component of FutureFuel Chemical Company's competitive position, particularly given the expected commodity-based nature of many of its products, will be its ability to manage expenses successfully, which requires continuous management focus on reducing unit costs and improving efficiency. No assurances can be given that FutureFuel Chemical Company will be able to successfully manage such expenses.
FutureFuel Chemical Company's competitive position in the markets in which it participates is, in part, subject to external factors in addition to those that FutureFuel Chemical Company can impact. Natural disasters, changes in laws or regulations, war or other outbreak of hostilities, or other political factors in any of the countries or regions in which FutureFuel Chemical Company operates or does business, or in countries or regions that are key suppliers of strategic raw materials, could negatively impact FutureFuel Chemical Company's competitive position and its ability to maintain market share.
Increases in the construction of biodiesel production plants may cause excess biodiesel production capacity in the market. Excess capacity may adversely affect the price at which FutureFuel Chemical Company is able to sell the biodiesel that it produces and may also adversely affect our anticipated results of operation and financial condition.
In 2005, approximately 75 million gallons of biodiesel were produced in the United States. Currently, there is a reported 864 million gallons per year of biodiesel production capacity in the United States, with another 1.7 billion gallons per year under construction. With such an increase in biodiesel production capacity in the United States, compared to historical production levels, there is risk that there will be a significant amount of excess biodiesel production capacity. Although this existing and pending capacity growth is very large compared to historical production levels, we believe that the market will purchase as much biodiesel as is available, so long as the prices for biodiesel (net of the impact of tax credits and other similar incentives) are competitive with those of petrodiesel.
Fluctuations in commodity prices may cause a reduction in the demand or profitability of the products or services FutureFuel Chemical Company produces.
Prices for alternative fuels tend to fluctuate widely based on a variety of political and economic factors. These price fluctuations heavily influence the oil and gas industry. Lower energy prices for existing products tend to limit the demand for alternative forms of energy services and related products and infrastructure. Historically, the
markets for alternative fuels have been volatile, and they are likely to continue to be volatile. Wide fluctuations in alternative fuel prices may result from relatively minor changes in the supply of and demand for oil and natural gas, market uncertainty and other factors that are beyond our control, including:
o worldwide and domestic supplies of oil and gas;
o the price and/or availability of biodiesel feedstocks;
o weather conditions;
o the level of consumer demand;
o the price and availability of alternative fuels;
o the availability of pipeline and refining capacity;
o the price and level of foreign imports;
o domestic and foreign governmental regulations and taxes;
o the ability of the members of the Organization of Petroleum Exporting Countries to agree to and maintain oil price and production controls;
o political instability or armed conflict in oil-producing regions; and
o the overall economic environment.
These factors and the volatility of the commodity markets make it extremely difficult to predict future alternative fuel price movements with any certainty. There may be a decrease in the demand for FutureFuel Chemical Company's products or services and our profitability could be adversely affected.
FutureFuel Chemical Company is reliant on certain strategic raw materials for its operations.
FutureFuel Chemical Company is reliant on certain strategic raw materials (such as acetic anhydride, pelargonic acid, soybean oil and methanol) for its operations. We are implementing certain risk management tools, such as multiple suppliers and hedging, as appropriate, to mitigate short-term market fluctuations in raw material supply and costs. There can be no assurance, however, that such measures will result in cost savings or that all market fluctuation exposure will be eliminated. In addition, natural disasters, changes in laws or regulations, war or other outbreak of hostilities, or other political factors in any of the countries or regions in which FutureFuel Chemical Company operates or does business, or in countries or regions that are key suppliers of strategic raw materials, could affect availability and costs of raw materials.
While temporary shortages of raw materials may occasionally occur, these items have historically been sufficiently available to cover current requirements. However, their continuous availability and price are impacted by natural disasters, plant interruptions occurring during periods of high demand, domestic and world market and political conditions, changes in government regulation, and war or other outbreak of hostilities. In addition, as FutureFuel Chemical Company increases its biodiesel capacity, it will require larger supplies of raw materials which have not yet been secured and may not be available for the foregoing reasons, or may be available only at prices higher than current levels. FutureFuel Chemical Company's operations or products may, at times, be adversely affected by these factors.
Changes in technology may render FutureFuel Chemical Company's products or services obsolete.
The alternative fuel and chemical industries may be substantially affected by rapid and significant changes in technology. Examples include competitive product technologies, such as green gasoline and biodiesel produced from catalytic hydroforming of renewable feedstock oils and competitive process technologies such as advanced biodiesel continuous reactor and washing designs that increase throughput. These changes may render obsolete
certain existing products, energy sources, services and technologies currently used by FutureFuel Chemical Company. We cannot assure you that the technologies used by or relied upon by FutureFuel Chemical Company will not be subject to such obsolescence. While we may attempt to adapt and apply the services provided by FutureFuel Chemical Company to newer technologies, we cannot assure you that we will have sufficient resources to fund these changes or that these changes will ultimately prove successful.
Failure to comply with governmental regulations could result in the imposition of penalties, fines or restrictions on operations and remedial liabilities.
The oil and gas and chemical industries are subject to extensive federal, state, local and foreign laws and regulations related to the general population's health and safety and those associated with compliance and permitting obligations (including those related to the use, storage, handling, discharge, emission and disposal of municipal solid waste and other waste, pollutants or hazardous substances or waste, or discharges and air and other emissions) as well as land use and development. Existing laws also impose obligations to clean up contaminated properties or to pay for the cost of such remediation, often upon parties that did not actually cause the contamination. Compliance with these laws, regulations and obligations could require substantial capital expenditures. Failure to comply could result in the imposition of penalties, fines or restrictions on operations and remedial liabilities. These costs and liabilities could adversely affect our operations.
Changes in environmental laws and regulations occur frequently, and any changes that result in more stringent or costly waste handling, storage, transport, disposal or cleanup requirements could require FutureFuel Chemical Company to make significant expenditures to attain and maintain compliance and may otherwise have a material adverse effect on its business segments in general and on our results of operations, competitive position or financial condition. We are unable to predict the effect of additional environmental laws and regulations which may be adopted in the future, including whether any such laws or regulations would materially adversely increase FutureFuel Chemical Company's cost of doing business or affect its operations in any area.
Under certain environmental laws and regulations, FutureFuel Chemical Company could be held strictly liable for the removal or remediation of previously released materials or property contamination regardless of whether FutureFuel Chemical Company was responsible for the release or contamination, or if current or prior operations were conducted consistent with accepted standards of practice. Such liabilities can be significant and, if imposed, could have a material adverse effect on our financial condition or results of operations.
FutureFuel Chemical Company's biofuels operations may be harmed if the government were to change current laws and regulations.
Alternative fuels businesses benefit from tax credits and government subsidies. If any of the state or federal laws and regulations relating to the tax credits and government subsidies change, the ability to recover capital expenditures from an alternative fuels business could be harmed. FutureFuel Chemical Company's biofuels platform is subject to federal, state, and local laws and regulations governing the application and use of alternative energy products, including those related specifically to biodiesel. For instance, biodiesel products benefit from being the only alternative fuel certified by the U.S. Environmental Protection Agency that fulfills the requirements of Section 211(B) of the Clean Air Act. If agency determinations, laws and regulations relating to the application and use of alternative energy are changed, the marketability and sales of biodiesel production could be materially adversely affected.
The value of FutureFuel Chemical Company may prove to be less than what we paid for FutureFuel Chemical Company because of uncertainties in evaluating future costs and/or potential liabilities.
Successful acquisitions require an assessment of a number of factors, including estimates of future biofuel prices, operating costs (including the costs of raw goods) and potential environmental and other liabilities. Such assessments are inexact and their accuracy is inherently uncertain. In connection with our due diligence assessment of FutureFuel Chemical Company, we performed a review of FutureFuel Chemical Company and its properties which we believe was generally consistent with industry practices. However, such a review will not reveal all existing or potential problems. In addition, our review may not have permitted us to become sufficiently familiar with FutureFuel Chemical Company's properties to fully assess their deficiencies and capabilities. As a result of
these factors, the value of FutureFuel Chemical Company may ultimately be less than what we agreed to pay for its stock.
Market conditions or transportation impediments may hinder access to raw goods and distribution markets.
Market conditions, the unavailability of satisfactory transportation or the location of FutureFuel Chemical Company's manufacturing complex from more lucrative markets may hinder FutureFuel Chemical Company's access to raw goods and/or distribution markets. The availability of a ready market for biodiesel depends on a number of factors, including the demand for and supply of biodiesel and the proximity of the plant to trucking and terminal facilities. The sale of large quantities of biodiesel necessitates that FutureFuel Chemical Company transport its biodiesel to other markets since the Batesville, Arkansas regional market is not expected to absorb all of FutureFuel Chemical Company's contemplated production. Currently, common carrier pipelines are not transporting biodiesel. This leaves trucks, barges and rail cars as the means of distribution of FutureFuel Chemical Company's product from the plant to these storage terminals for further distribution. However, the current availability of rail cars is limited and at times unavailable because of repairs or improvements, or as a result of priority transportation agreements with other shippers. Additionally, the current availability of barges is limited, particularly heated barges to transport biodiesel during winter months. If transportation is restricted or is unavailable, FutureFuel Chemical Company may not be able to sell into more lucrative markets and consequently its cash flow from sales of biodiesel could be restricted.
The biodiesel industry also faces several challenges to wide biodiesel acceptance, including cold temperature limitations, storage stability, fuel quality standards and exhaust emissions. If the industry does not satisfy consumers that these issues have been resolved or are being resolved, biodiesel may not gain widespread acceptance which may have an adverse impact on FutureFuel Chemical Company's cash flow from sales of biodiesel.
FutureFuel Chemical Company's insurance may not protect it against its business and operating risks.
We maintain insurance for some, but not all, of the potential risks and liabilities associated with FutureFuel Chemical Company's business. For some risks, we may not obtain insurance if we believe the cost of available insurance is excessive relative to the risks presented. As a result of market conditions, premiums and deductibles for certain insurance policies can increase substantially and, in some instances, certain insurance policies may become unavailable or available only for reduced amounts of coverage. As a result, we may not be able to renew our existing insurance policies or procure other desirable insurance on commercially reasonable terms, if at all. Although we will maintain insurance at levels we believe are appropriate for FutureFuel Chemical Company's business and consistent with industry practice, we will not be fully insured against all risks which cannot be sourced on economic terms. In addition, pollution and environmental risks generally are not fully insurable. Losses and liabilities from uninsured and underinsured events and delay in the payment of insurance proceeds could have a material adverse effect on our financial condition and results of operations.
If a significant accident or other event resulting in damage to FutureFuel Chemical Company's operations (including severe weather, terrorist acts, war, civil disturbances, pollution or environmental damage) occurs and is not fully covered by insurance or a recoverable indemnity from a customer, it could adversely affect our financial condition and results of operations.
FutureFuel Chemical Company depends on key personnel, the loss of any of whom could materially adversely affect our future operations.
Our success will depend to a significant extent upon the efforts and abilities of FutureFuel Chemical Company's executive officers. The loss of the services of one or more of these key employees could have a material adverse effect on us. FutureFuel Chemical Company's business will also be dependent upon its ability to attract and retain qualified personnel. Acquiring or retaining these personnel could prove more difficult to hire or cost substantially more than estimated. This could cause FutureFuel Chemical Company to incur greater costs, or prevent it from pursuing its expansion strategy as quickly as it would otherwise wish to do.
If FutureFuel Chemical Company is unable to effectively manage the commodity price risk of its raw materials or finished goods, FutureFuel Chemical Company may have unexpected losses.
We hedge FutureFuel Chemical Company's raw materials and/or finished products to some degree to manage the commodity price risk of such items. This requires the purchase or sale of commodity futures contracts and/or options on those contracts or similar financial instruments. We may be forced to make cash deposits available to counterparties as they mark to market these financial hedges. This funding requirement may limit the level of commodity price risk management that we are prudently able to complete. If we do not or are not capable of managing the commodity price risk of FutureFuel Chemical Company's raw materials and/or finished products, FutureFuel Chemical Company may incur losses as a result of price fluctuations with respect to these raw materials and/or finished products.
If FutureFuel Chemical Company is unable to acquire or renew permits and approvals required for its operations, it may be forced to suspend or cease operations altogether.
The operation of FutureFuel Chemical Company's manufacturing plant requires numerous permits and approvals from governmental agencies. FutureFuel Chemical Company may not be able to obtain all necessary permits (or modifications thereto) and approvals and, as a result, our operations may be adversely affected. In addition, obtaining all necessary renewal permits (or modifications to existing permits) and approvals for future expansions may necessitate substantial expenditures and may create a significant risk of expensive delays or loss of value if a project is unable to function as planned due to changing requirements.
The lack of business diversification may adversely affect our results of operations.
It is possible that we will not consummate more than one business combination with the proceeds from our July 2006 offering and FutureFuel Chemical Company may be the only target business that we acquire. Accordingly, the prospects for our success may be entirely dependent upon FutureFuel Chemical Company. Unlike other entities which may have the resources to complete several business combinations of entities operating in multiple industries or multiple areas of a single industry, it is possible that we will not have the resources to diversify effectively our operations or benefit from the possible spreading of risks or offsetting of losses.
FutureFuel Chemical Company's indebtedness may limit our ability to borrow additional funds or capitalize on acquisition or other business opportunities.
FutureFuel Chemical Company has entered into a $50 million revolving credit facility with Regions Bank and we have guaranteed FutureFuel Chemical Company's obligations thereunder. The restrictions governing this indebtedness (such as total debt to EBITDA limitations) may reduce our ability to incur additional indebtedness, engage in certain transactions or capitalize on acquisition or other business opportunities. If FutureFuel Chemical Company is unable to meet its future debt service obligations and other financial obligations, we could be forced to restructure or refinance such indebtedness and other financial transactions, seek additional equity or sell assets.
We expect to have capital expenditure requirements, and we may be unable to obtain needed financing on satisfactory terms.
We expect to make capital expenditures for the expansion of FutureFuel Chemical Company's biofuels production capacity and complementary infrastructure. We intend to finance these capital expenditures primarily through cash flow from FutureFuel Chemical Company's operations, borrowings under the credit facility with Regions Bank and the remaining proceeds of our July 2006 offering. However, if FutureFuel Chemical Company's capital requirements vary materially from those provided for in our current projections, we may require additional financing sooner than anticipated. A decrease in expected revenues or adverse change in market conditions could make obtaining this financing economically unattractive or impossible. As a result, we may lack the capital necessary to complete the projected expansions or capitalize on other business opportunities.
We may be unable to successfully integrate the FutureFuel Chemical Company acquisition or other future acquisitions with our operations or realize all of the anticipated benefits of these acquisitions.
Separation of FutureFuel Chemical Company from Eastman Chemical Company and integration of FutureFuel Chemical Company with us has been a complex, time-consuming and costly process. Failure to successfully integrate FutureFuel Chemical Company in a timely manner may have a material adverse effect on our business, financial condition, results of operations and cash flows. The difficulties of combining the acquired operations include, among other things:
o operating a significantly larger combined organization;
o consolidating corporate technological and administrative functions;
o integrating internal controls and other corporate governance matters; and
o diverting management's attention from other business concerns.
In addition, we may not realize all of the anticipated benefits from the acquisition of FutureFuel Chemical Company and other future acquisitions, such as increased earnings, cost savings and revenue enhancements, for various reasons, including difficulties integrating operations and personnel, higher and unexpected acquisition and operating costs, unknown liabilities and fluctuations in markets. If the FutureFuel Chemical Company acquisition benefits do not meet the expectations of financial or industry analysts, the market price of our shares of common stock may decline.
The scope of indemnity protection afforded to us under the acquisition agreement with Eastman Chemical Company is limited.
While we are confident that the due diligence process undertaken in relation to FutureFuel Chemical Company was sufficient and that material areas of potential exposure have been discovered, there can be no certainty that all significant exposures were uncovered by the due diligence process and it is unlikely that all existing or potential problems and/or liabilities have been revealed. The inspections that have been performed may not have revealed structural and environmental problems, such as groundwater contamination. We were not able to obtain contractual indemnities from Eastman Chemical Company for all liabilities that were created by Eastman Chemical Company or FutureFuel Chemical Company prior to the completion of the acquisition of FutureFuel Chemical Company and have only limited indemnity protection under the acquisition agreement with Eastman Chemical Company. As part of such acquisition agreement, we, through FutureFuel Chemical Company, assumed the risk of the physical condition of FutureFuel Chemical Company's properties in addition to the risk that the properties may not perform in accordance with expectations, as well as certain environmental and other unknown liabilities in excess of certain amounts.
If any such exposures materialize or the information provided as part of the due diligence exercise proves to be untrue or inaccurate, we will have to rely on the limited indemnity protection afforded to us under the acquisition agreement in order to seek compensation for any financial loss incurred as a result. By its nature, indemnity protection is limited in scope, being the product of a negotiation exercise between us and Eastman Chemical Company, and therefore we may not recover any or sufficient funds fully to cover any loss incurred.
In addition, even where potential areas of exposure are covered by the scope of indemnity protection provided under the acquisition agreement, there is no guarantee that Eastman Chemical Company will be in a financial position to support the level of indemnification for which it may be liable. Consequently, we may not recover any or sufficient funds fully to cover any loss incurred.
Risks associated with investing in AIM companies.
The market for our shares or warrants is relatively illiquid.
Our shares of common stock and warrants currently are traded on AIM and are not listed or traded on any established market in the United States. AIM is a market designed primarily for emerging or smaller companies.
The AIM rules are less demanding than those of the Official List of the UK Listing Authority and other stock exchanges and also than those under federal securities laws. Neither the London Stock Exchange nor the federal Securities and Exchange Commission has approved the contents of this document. The future success of AIM and liquidity in the market for our shares of common stock and warrants cannot be guaranteed. In particular, the market for our shares of common stock and warrants may be, or may become, relatively illiquid and therefore may be or may become difficult to sell.
Investment in shares traded on AIM is perceived to carry a higher risk than an investment in shares quoted on exchanges with more stringent listing requirements, such as the London Stock Exchange, the New York Stock Exchange or the NASDAQ Global Market. This is because AIM imposes less stringent corporate governance and ongoing reporting requirements. AIM is also a new and more flexible market, which requires only semi-annual, rather than quarterly, financial update reports. Investors should be aware that the value of our shares of common stock and warrants may be influenced by many factors, some of which may affect quoted companies generally, including the depth and liquidity of the market, our performance, a large or small volume of trading in our securities, legislative changes and general economic, political or regulatory conditions, and that the prices may be volatile and subject to extensive fluctuations. Therefore, the market price of our shares of common stock and warrants may not reflect the underlying value. The value of an investment in us may increase or decrease; therefore investors may realize less than, or lose all of, their investment.
We will not adopt the International Financial Reporting Standards but rather will continue to prepare our financial statements and financial reporting in accordance with U.S. generally accepted accounting principles.
On August 22, 2006, AIM announced that non-European Economic Area companies whose shares are traded on AIM are not required to adopt International Financial Reporting Standards for financial reporting purposes but may use, among other things, U.S. generally accepted accounting principles without reconciliation to International Financial Reporting Standards. We are a non-European Economic Area company and have determined that we will prepare our financial statements in accordance with U.S. generally accepted accounting principles. International Financial Reporting Standards differ in certain significant respects from U.S. generally accepted accounting principles and our financial statements prepared in accordance with U.S. generally accepted accounting principles will not be comparable to financial statements prepared in accordance with International Financial Reporting Standards.
Risks associated with owning our shares and warrants.
Our shares will be represented by definitive certificates which could reduce the liquidity of our shares and warrants.
Our shares of common stock are represented by definitive certificates which contain the following legend.
Prior to investing in the securities or conducting any transactions in the securities, investors are advised to consult professional advisers regarding the restrictions on transfer summarized below and any other restrictions.
This security (or its predecessor) was originally issued in a transaction exempt from registration under the United States Securities Act of 1933, as amended (the "Securities Act"), and is a restricted security (as defined in Rule 144 under the Securities Act). This security may not be offered, sold or otherwise transferred in the absence of registration or an applicable exemption therefrom. Hedging transactions involving this security may not be conducted directly or indirectly, unless in compliance with the Securities Act. Each purchaser of this security is hereby notified that the seller of this security may be relying on the exemption from the provisions of Section 5 of the Securities Act provided by Rule 144A or Regulation S thereunder.
The holder of this security agrees for the benefit of the Company that (a) this security may be offered, resold, pledged or otherwise transferred, only (i) in the United States to a person whom the seller reasonably believes is a qualified
institutional buyer (as defined in Rule 144A under the Securities Act) in a transaction meeting the requirements of Rule 144A, (ii) outside of the United States in an offshore transaction in accordance with Rule 903 or Rule 904 under the Securities Act, (iii) pursuant to an exemption from registration under the Securities Act provided by Rule 144 thereunder (if available) or (iv) pursuant to an effective registration statement under the Securities Act, in each of cases (i) through (iv) in accordance with any applicable securities laws of any state of the United States, and (b) the holder will, and each subsequent holder is required to, notify any purchaser of this security from it of the resale restrictions referred to in (a) above.
The securities represented by this certificate are subject to transfer restrictions which require that in addition to any certifications required from a transferor as set forth on the reverse of this certificate, prior to the expiration of a distribution compliance period of at least one year, the transferee certifies as to whether or not it is a US person within the meaning of Regulation S and provides certain other certifications and agreements. Prior to permitting any transfer, the Company may request an opinion of counsel reasonably satisfactory to the Company that such transfer is to be effected in a transaction meeting the requirements of Regulation S under the Securities Act or is otherwise exempt from registration under the Securities Act.
CREST Co., which is the Central Securities Depository for the U.K. markets (including AIM) and which operates the CREST system (CREST Co.'s real-time settlement system for UK and Irish shares and other corporate securities), does not allow electronic settlement on CREST until the legend has been removed and the certification requirements required under U.S. securities laws have expired. The filing and effectiveness of this Registration Statement will not result in the removal of this legend. As a result, our shares of common stock and warrants must be represented by definitive certificates. In order to transfer or sell our shares or warrants, holders must provide the definitive certificates to the transfer agent, who will require certain certifications as set forth in the legend, and on occasion legal opinions as set forth in the legend, prior to issuing new certificates to new security holders. The lack of a fully electronic settlement mechanism may have a material adverse effect on the liquidity and the price of our securities.
If our founding shareholders and Mr. Novelly or his designees exercise their registration rights, such exercise may have an adverse effect on the market price of our shares of common stock.
Those shareholders holding shares of our common stock prior to the July
2006 offering (the "founding shareholders"; see "Item 4. - Security Ownership of
Certain Beneficial Owners and Management--Founding Shares Owned by the Founding
Shareholders" at page 49 for a list of the founding shareholders) and Mr. Paul
A. Novelly, our executive chairman of the board, or his designees, are entitled
to demand that we register under the U.S. Securities Act of 1933, as amended
(the "Securities Act"), the resale of their shares of our common stock issued
prior to our July 2006 offering (the "founding shares") and their shares
included in the units purchased in such offering. The demand may be made at any
time after the date on which we have become a reporting company under the U.S.
Securities Exchange Act of 1934, as amended, and their founding shares have been
released from escrow. Except in limited circumstances, this date will not be
before July 12, 2009. If our founding shareholders exercise their registration
rights with respect to all of their shares of our common stock, there will be an
additional 11,250,000 shares and/or up to 5,000,000 shares issued on exercise of
their warrants eligible for trading in the public market. The presence of this
additional number of shares eligible for trading in the public market may have
an adverse effect on the market price of our shares.
Transfer of our shares and/or warrants, and the exercise of our warrants, are subject to stringent transfer and exercise requirements under the Securities Act.
Our shares of common stock and our warrants are subject to the conditions listed under section 903(b)(3) or Category 3 of Regulation S under the Securities Act. Under Category 3, offering restrictions (as defined under Regulation S) had to be in place in connection with our July 2006 offering and additional restrictions are imposed on resales of our securities as described elsewhere herein. All of our shares of common stock and our warrants are
subject to these restrictions, regardless of whether the purchaser acquired the securities in a transaction pursuant to Rule 144A under the Securities Act or in a transaction pursuant to Regulation S. Our shares and warrants are considered "restricted securities" under Rule 144 and will, until the expiration of the applicable holding period with respect to the securities set forth in Rule 144 and the expiration of the one-year compliance period, bear restrictive legends, unless we determine otherwise in compliance with applicable law.
The Rule 144 holding period for our shares received upon exercise of our warrants may recommence upon the exercise of such warrants.
The Rule 144 holding period for the shares of our common stock received upon exercise of our warrants will start upon the exercise of such warrants. Even though the Rule 144(k) two-year holding period for the shares and warrants may have expired, enabling certificates for those securities to have the legend removed, the Rule 144 holding period for the shares received upon exercise of the warrants will start upon such exercise. Accordingly, holders of our warrants that exercise their warrants for cash will receive shares of our common stock subject to trading restrictions which are greater than those imposed on the trading of previously issued shares. Such restrictions may mean the value of the shares received upon exercise of the warrants may be significantly lower, at least until the two-year holding period has expired, than the shares originally issued.
We may not list our common stock or our warrants on a stock exchange other than
AIM.
Under the investor rights agreement that we entered into on July 12, 2006 with CRT Capital Group LLC and KBC Peel Hunt Ltd, as promptly as practicable after this Registration Statement has been declared effective, we are obligated to use our commercially reasonable efforts to cause our shares of common stock to be authorized to be quoted and/or listed (to the extent applicable) on the American Stock Exchange, the New York Stock Exchange, the NASD Automated Quotation System or the NASDAQ National Market (or, in each case, a successor thereto) or a similarly recognized national trading platform, if our common stock so qualifies. However, no assurances can be given that our common stock will qualify to be quoted and/or listed on any such exchange or other similarly recognized national trading platform. Further, we have no such obligation with respect to our warrants and no assurances can be given that we will attempt to cause our warrants to be authorized to be quoted and/or listed on any such exchange or other similarly recognized national trading platform.
Internal Reporting Controls.
Our management has identified a material weakness in our internal control over financial reporting; failure to achieve and maintain effective internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act of 2002 ("Section 404") could have a material adverse effect on our business and stock price.
Our internal control over financial reporting does not currently meet all the standards contemplated by Section 404 that we will eventually be required to meet. As a public company, we are required to complete our initial assessment by the filing of our Form 10-K for the year ending December 31, 2007. If we are not able to implement the requirements of Section 404 in a timely manner or with adequate compliance, this result may cause us to be unable to report on a timely basis and thereby subject us to adverse regulatory consequences, including sanctions by the Securities and Exchange Commission or violations of applicable stock exchange listing rules. There could also be a negative reaction in the financial markets due to a loss of investor confidence in the reliability of our financial statements. We have and will incur incremental costs in order to improve our internal control over financial reporting and comply with Section 404, including increased auditing and legal fees and costs associated with hiring additional accounting and administrative staff. This could harm our operating results and lead to a decline in our stock price.
Our management has identified a material weakness in our internal control over financial reporting, as defined in the standards established by the Public Company Accounting Oversight Board. This weakness related to the lack, at December 31, 2006, of an effective cut-off process for accruing liabilities. We identified the existence of certain deficiencies around the end-of-period close process to permit the preparation of our financial statements in accordance with accounting principles generally accepted in the United States of America and the Securities and Exchange Commission regulations. The lack of such controls may cause our quarterly or annual financial statements and other regulatory reporting requirements to become materially misstated or not meet the applicable filing deadlines if they are not properly remedied. Our management has designed and begun to implement an appropriate control that it believes is effective to address the identified weakness. The steps we have taken or intend to take, however, may not remediate this material weakness. Additional material weaknesses in our internal control over financial reporting also may be identified in the future.
Item 2. - Financial Information
Selected Financial Data
FutureFuel Chemical Company
Historically, the business and assets included in FutureFuel Chemical Company were accounted for by Eastman Chemical Company in various segments of Eastman Chemical Company's overall business. Although FutureFuel Chemical Company was incorporated on September 1, 2005, Eastman Chemical Company did not begin transferring assets into FutureFuel Chemical Company until January 1, 2006 and completed the transfer in subsequent periods prior to the closing of our acquisition of FutureFuel Chemical Company. Notwithstanding that FutureFuel Chemical Company was a separately incorporated entity, Eastman Chemical Company did not prepare separate financial statements for FutureFuel Chemical Company nor was it required to do so under local law or accounting rules. Rather, the operations of the Batesville plant were reported within Eastman Chemical Company based upon the underlying products, and the revenues and expenses of the plant were presented in various segments within Eastman Chemical Company's financial statements. In addition, allocations to the plant of Eastman Chemical Company overhead (such as insurance, employee benefits, legal expenses and the like) were based upon assumptions made by Eastman Chemical Company and such assumptions historically did not reflect expenses which FutureFuel Chemical Company would have incurred had it been a stand-alone entity. Since we did not acquire or succeed to all of the assets and liabilities of Eastman Chemical Company, "carve-out" financial statements have been prepared for the acquired component business, excluding the continuing operations retained by Eastman Chemical Company and allocations for overhead components described above have been effected. As the acquisition is deemed to be a reverse acquisition with FutureFuel Chemical Company being the accounting acquirer, the selected financial data presents the operations of the Batesville plant for the twelve-month periods ended December 31, 2006, 2005 and 2004 and includes our operations for the period beginning with the date of the acquisition (beginning of business on November 1, 2006) and ending December 31, 2006.
The following tables set forth FutureFuel Chemical Company's summary historical financial and operating data for the periods indicated below. This summary historic financial and operating data has been derived from FutureFuel Chemical Company's "carve-out" financial statements as of and for the twelve-months ended December 31, 2006, 2005 and 2004 which are included elsewhere in this Registration Statement. The information presented in the table below should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the financial statements and notes thereto included elsewhere in this Registration Statement. The three years of selected financial data represent the complete financial information prepared and provided by Eastman Chemical Company in conjunction with the carve out and sale of the Batesville plant to us.
(Dollars in thousands, except per share amounts)
Item 2006 2005 2004
------------------------------------------------------ --------- --------- ---------
Operating revenues ................................... $ 150,770 $ 119,539 $ 144,157
Net income (loss) .................................... $ 2,137 $ 381 $ (14,867)
Earnings (loss) per common share
Basic ............................................ $ 0.08 $ 0.01 $ (0.56)
Diluted .......................................... $ 0.07 $ 0.01 $ (0.56)
Total assets ......................................... $ 207,024 $ 114,500 $ 118,164
Long-term obligations ................................ $ 24,429 $ 24,830 $ 25,105
Cash dividends per common share ...................... $ -- $ -- $ --
Net cash provided by (used in) operating activities .. $ (5,517) $ 7,556 $ 19,044
Net cash provided by (used in) investing activities .. $ (18,524) $ (6,594) $ (6,520)
Net cash provided by (used in) financing activities .. $ 87,170 $ (962) $ (12,524)
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Prior to the initiation of its biofuels program in 2005, the Batesville plant did not report financial results by business "segments" as defined by generally accepted accounting principles After the initiation of such program and upon divestiture, it defined two segments: chemicals and biofuels
In March 2007, FutureFuel Chemical Company entered into a $50 million credit facility with Regions Bank as described below As of March 31, 2007, FutureFuel Chemical Company had not borrowed under such credit facility
The Company
We were incorporated on August 12, 2005 to serve as a vehicle for the acquisition by way of an asset acquisition, merger, capital stock exchange, share purchase or similar transaction of one or more operating businesses in the oil and gas industry We completed an offering on July 12, 2006 and consummated the acquisition of FutureFuel Chemical Company at the close of business on October 31, 2006 We otherwise had no material business operations and had no subsidiaries until October 31, 2006 The following is selected financial data for us for the period that began on August 12, 2005 (date of incorporation) and ended on December 31, 2005 and for the ten-month period ended October 31, 2006 The selected financial data has been derived from our financial statements which are included elsewhere in this Registration Statement
(Dollars in thousands, except per share amounts)
Item 2006 2005
----------------------------------------------------------- ------- -------
Interest and other income ................................. $ 2,632 $ 1
Net income (loss) ......................................... $ 1,368 $ --
Earnings (loss) per common share
Basic ................................................. $ 0.24 --
Diluted ............................................... $ 0.24 --
Total assets .............................................. $ 1,368 $ 235
Total liabilities ......................................... $ 1,746 $ 210
Cash dividends declared per common share .................. $ -- $ --
Net cash provided by (used in) operating activities ....... $ 2,590 $ 10
Net cash provided by (used in) investing activities ....... $(1,045) $ --
Net cash provided by (used in) financing activities ....... $(1,368) $ 18
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FutureFuel Chemical Company and the Company Combined Results
To illustrate the effects of our July 2006 offering and our acquisition of FutureFuel Chemical Company as if the combined results of operations had been in place during 2006, the pro forma effect of such a combination would have resulted in total assets of $207,024,000, operating revenues of $150,770,000, net income of $3,505,000 and earnings per share of $0.13. This information is for illustrative purposes only. The consolidated company would likely have performed differently had they always been combined. The information should not be relied on as an indication of future results that the combined company will experience after the acquisition of FutureFuel Chemical Company because of a variety of factors, including access to additional information and changes in value. Also see "Item 1A. - Risk Factors" at page 29.
Management's Discussion and Analysis of Financial Condition and Results of Operations
The following Management's Discussion and Analysis of Financial Condition and Results of Operations should be read together with ours and FutureFuel Chemical Company's financial statements, including the notes thereto, in this Registration Statement. This discussion contains forward-looking statements that reflect our current views with respect to future events and financial performance. Actual results may differ materially from those anticipated in these forward-looking statements. See "Forward Looking Information" at page 103 for additional discussion regarding risks associated with forward-looking statements.
Results of Operations
In General
We were not incorporated until August 12, 2005, we did not complete our offering until July 12, 2006 and we did not complete the acquisition of FutureFuel Chemical Company until October 31, 2006. Other than the offering and the acquisition, we have not carried on any material business activities.
FutureFuel Chemical Company's historical revenues have been generated
through the sale of specialty chemicals. FutureFuel Chemical Company breaks its
chemicals business into two main product groups: custom manufacturing and
performance chemicals. Major products in the custom manufacturing group include:
(i) NOBS, a chemical additive manufactured exclusively for The Procter & Gamble
Company for use in a household detergent; (ii) a proprietary herbicide (and
intermediates) manufactured exclusively for Arysta LifeScience North America
Corporation; and (iii) two other product lines (CPOs and DIPBs) produced under
conversion contracts for Eastman Chemical Company. The major product line in the
performance chemicals group is SSIPA/LiSIPA, polymer modifiers that aid the
properties of nylon manufactured for a broad customer base. There are a number
of additional small volume custom and performance chemical products that
FutureFuel Chemical Company groups into "other products". In late 2005,
FutureFuel Chemical Company began producing biodiesel as a product. All 2005
biodiesel revenues were classified as miscellaneous sales and recorded as a
credit to cost of goods sold. Beginning in 2006, revenues and cost of goods sold
for biofuels were treated as a separate business segment.
Revenues generated from NOBS are based on a supply agreement with the customer. The supply agreement stipulates selling price per kilogram based on volume produced, with price moving up as volumes move down, and vice-versa. The supply agreement has historically been renewed every five years. The current contract expires in June 2008, and no assurances can be given that the contract will be extended past that date or, if extended, under what terms. FutureFuel Chemical Company pays for raw materials required to produce NOBS. The contract with the customer provides that the price to be received by FutureFuel Chemical Company for NOBS is indexed to changes in labor, energy, inflation and the key external raw materials, enabling FutureFuel Chemical Company to pass along most increases in production costs to the customer.
FutureFuel Chemical Company has been the exclusive manufacturer for Arysta LifeScience North America Corporation of a proprietary herbicide and certain intermediates. These products are beginning to face some generic competition, and no assurances can be given that FutureFuel Chemical Company will remain the exclusive manufacturer for this product line. The contracts automatically renew for successive one-year periods, subject to the right of either party to terminate the contract not later than 270 days prior to the end of the then current term for the herbicide and not later than 18 months prior to the current term for the intermediates. No assurances can be given that these contracts will not be terminated. Arysta LifeScience North America Corporation supplies most of the key raw materials for production of the proprietary herbicide. There is no pricing mechanism or specific protection against cost changes for raw materials that FutureFuel Chemical Company is responsible for purchasing, and we do not anticipate this to change going forward.
FutureFuel Chemical Company has historically manufactured CPOs and DIPBs at cost for Eastman Chemical Company. CPOs are chemical intermediates that promote adhesion for plastic coatings and DIPBs are intermediates for production of Eastman Chemical Company products used as general purpose inhibitors, intermediates or antioxidants. Historically, revenues related to CPOs and DIPBs were exactly offset by cost of goods sold; hence there was no effect on gross profits historically. As part of our acquisition of FutureFuel Chemical Company, FutureFuel Chemical Company entered into conversion agreements with Eastman Chemical Company that effectively provide a conversion fee to FutureFuel Chemical Company based on volume manufactured, with a minimum annual fee. In addition, the conversion agreements provide for revenue adjustments for actual usage of raw materials versus a standard and stipulate that Eastman Chemical Company will pay for substantially all raw material expenses, with an adjustment for annual inflation.
SSIPA/LiSIPA revenues are generated from a diverse customer base of nylon fiber manufacturers. Historically, more than 50% of SSIPA/LiSIPA revenues were generated under a supply contract with a single customer. This contract was terminated in late 2006 and accounted for 43% of total SSIPA/LiSIPA revenues for that year. During 2006, no other single customer accounted for more than 25% of total revenues from this product. There is no pricing mechanism or specific protection against raw material cost changes, and we do not anticipate this to change going forward.
Other products include agricultural intermediates and additives, imaging chemicals, fiber additives and various specialty pharmaceutical intermediates that FutureFuel Chemical Company has in full commercial production or in development. These products are currently sold in small quantities to a large customer base. Pricing for these products is negotiated directly with the customer (in the case of custom manufacturing) or is established based upon competitive market conditions (in the case of performance chemicals). In general, for these
products, there is no pricing mechanism or specific protection against raw material cost changes, and we do not anticipate this to change going forward.
The year ended December 31, 2006 was the first full year that FutureFuel Chemical Company sold biodiesel. In addition to selling for its own account, FutureFuel Chemical Company produces, for a fee, biodiesel for a third party under a tolling agreement. Under that tolling agreement, for every gallon of feedstock provided by that party to FutureFuel Chemical Company, FutureFuel Chemical Company is obligated to deliver one gallon of biodiesel, up to a maximum amount of 6 million gallons. Through March 31, 2007, 1.9 million gallons of biodiesel had been delivered under this tolling agreement. The tolling agreement terminates on September 30, 2007, and no assurances can be given that the agreement will be renewed (or, if renewed, under what terms) or that the third party will utilize the maximum capacity provided by the tolling agreement.
The majority of FutureFuel Chemical Company's expenses are cost of goods sold. Cost of goods sold reflect raw material costs as well as both fixed and variable conversion costs, conversion costs being those expenses that are directly or indirectly related to the operation of FutureFuel Chemical Company's plant. Significant conversion costs include labor, benefits, energy, supplies and maintenance and repair. In addition to raw material and conversion costs, cost of goods sold includes environmental reserves, asset impairment and restructuring charges, severance costs and costs related to idle capacity. Finally, cost of goods sold includes hedging gains and losses recognized by us. Cost of goods sold are allocated to the chemical and biofuels business segments based on usage and reactor time for most conversion costs and based on revenues for most other costs.
Operating costs include selling, general and administrative and research and development expenses. These expense categories include expenses that were directly incurred by FutureFuel Chemical Company and corporate expense allocations from Eastman Chemical Company. Allocations were made primarily based on a percentage of revenues, which we believe represents a reasonable allocation methodology. These allocations and estimates are not necessarily indicative of the costs and expenses that would have resulted if FutureFuel Chemical Company had been operating as a separate entity. Beginning November 1, 2006, all operating expenses were directly incurred by us and FutureFuel Chemical Company.
Fiscal Year Ended December 31, 2006 Compared to Fiscal Year Ended December 31, 2005
Revenues: Revenues for the year ended December 31, 2006 for FutureFuel Chemical Company were $150,770,000 as compared to revenues for the year ended December 31, 2005 of $119,539,000, an increase of 26%. The increase was primarily a result of selling biodiesel for the full year and increased sales of NOBS. Revenues from biodiesel accounted for 9% of total revenues in 2006. Revenues from NOBS increased 26% and accounted for 56% of total revenues in 2006, the same percent of revenues as in 2005. Revenues from the proprietary herbicide and intermediates decreased 5% and accounted for 16% of total revenues in 2006 as compared to 21% in 2005. Revenues from CPOs increased 5% in 2006 and accounted for 3% of total revenues in 2006 compared to 4% in 2005. Revenues from DIPBs decreased 3% and accounted for 5% of total revenues in 2006 as compared to 6% in 2005. Revenues from SSIPA/LiSIPA decreased 9% and accounted for 4% of total revenues in 2006 as compared to 6% in 2005. Revenues from other products increased 26% and accounted for 7% of total revenues in 2006 as compared to 7% in 2005.
During 2006, revenues for NOBS increased due to increased demand from the customer as a result of changing consumer demand for their product. Revenue from the proprietary herbicide and intermediates declined due to price concessions to the customer in order to maintain market share in the face of generic product competition. The future volume of and revenues from NOBS depends on both consumer demand for the product containing NOBS and the manufacturing, sales and marketing priorities of our NOBS customer. We are unable to predict with certainty the revenues we will receive from NOBS in the future. The prices for the proprietary herbicide and intermediates have been reduced by 10% from 2006 to 2007 due to continued competitive pressures as described above. Our customer has been able to maintain their volume in light of generic competition by being more price competitive, changing their North American distribution system and developing new applications. They are forecasting similar volumes in 2008 with a 2-5% volume growth potential in 2009.
Revenue from biodiesel increased in 2006 due to: (i) production during the entire 12 months as opposed to two months of production in 2005 which resulted in no revenues of consequence; and (ii) an increase in production capacity from 3 million gallons per year at the end of 2005 to 24 million gallons per year at the end of 2006.
Cost of Goods Sold and Distribution: Total cost of goods sold and distribution for the year ended December 31, 2006 were $137,467,000 as compared to total cost of goods sold and distribution for the year ended December 31, 2005 of $105,263,000, an increase of 31%.
Cost of goods sold and distribution for the year ended December 31, 2006 for FutureFuel Chemical Company's chemicals segment were $114,481,000 as compared to cost of goods sold and distribution for the year ended December 31, 2005 of $102,702,000, an increase of approximately 11%. The increase was entirely a result of increased sales; cost of goods sold and distribution for the chemicals segment as a percent of total chemical revenues decreased slightly from 86% in 2005 to 83% in 2006. The decrease was primarily a result of the addition of the biofuels segment in 2006. As previously discussed, FutureFuel Chemical Company allocates the vast majority of its costs to products as raw materials are processed into finished goods; with the addition of the biofuels segment in 2006, there was a larger revenue base across which to allocate costs. The greatest reduction in cost of goods sold and distribution as a percent of total revenues came from the proprietary herbicide and intermediates product line, where cost of goods sold and distribution decreased from 28% of chemical revenues in 2005 to 20% of chemical revenues in 2006. This large decrease is explained by the fact that FutureFuel Chemical Company utilizes the same assets used to produce the proprietary herbicide and intermediates product line to produce biodiesel, and hence the biodiesel segment absorbed more fixed costs.
Cost of goods sold and distribution for the year ended December 31, 2006 for FutureFuel Chemical Company's biofuels segment were $22,986,000. Cost of goods sold and distribution for the biofuels segment exceeded biofuels revenues in 2006. FutureFuel Chemical Company began production of biodiesel in small individual batches utilizing several of the reactors in its batch plant. Costs incurred in the batch plant are allocated to products based on reactor time, and hence the biodiesel segment incurred costs based on the number of reactors it utilized and the duration of time it utilized those reactors. For much of 2006 the biodiesel product remained in a development phase and the biofuels segment did not always utilize the full capacity of the reactors under its control. This low utilization, combined with lower efficiency during the development phase, prevented the biofuels segment from generating sufficient revenues to cover the costs that were allocated during the year. During the second half of 2006, the biofuels segment initiated production from a continuous reaction line. Production from the continuous line is more efficient and produces higher volumes per reactor than the batch process, and hence absorbs fewer overhead costs per gallon of biodiesel produced. The biofuels segment has continued to utilize the batch process to test new processing techniques, experiment with various alternative feedstocks and meet peak demand. Ultimately, however, the biofuels segment will transition to continuous production only, which is expected to result in a material decrease in cost of goods sold and distribution.
Total cost of goods sold and distribution for 2005 included $99,000 of corporate expense allocations from Eastman Chemical Company and $2,462,000 of severance charges, none of which were allocated to segments. There were no corporate expense allocations or restructuring and impairment charges in 2006.
Operating Expenses: Operating expenses decreased from $13,637,000 for the year ended December 31, 2005 to $11,184,000 for the year ended December 31, 2006, or approximately 18%. This decrease was primarily the result of lower corporate expense allocations from Eastman Chemical Company, as well at the lower overall operating expenses incurred by FutureFuel Chemical Company on a standalone basis.
Fiscal Year Ended December 31, 2005 Compared to Fiscal year Ended December 31, 2004
Revenues: Revenues for the year ended December 31, 2005 for FutureFuel Chemical Company were $119,539,000 as compared to revenues for the year ended December 31, 2004 of $144,157,000, a decrease of approximately 17%. The decrease was a result of lower revenues across all product lines, with the exception of DIPBs, where revenues increased 10%, and SSIPA/LiSIPA, where revenues were flat. Revenues from NOBS decreased 9% and accounted for 56% of total revenues in 2005 as compared to 51% in 2004. Revenues from the proprietary herbicide decreased 10% and accounted for 21% of total revenues in 2005 as compared to 19% in 2004. Revenues from CPOs decreased 36% and accounted for 4% of total revenues in 2005 versus 5% in 2004. Revenues from DIPBs increased 10% and accounted for 6% of total revenues in 2005 versus 5% in 2004. Revenues from SSIPA/LiSIPA increased less than 1% and accounted for 6% of total revenues in 2005 as compared to 5% in 2004. Revenues from other products decreased 62% and accounted for 7% of total revenues in 2005 as compared to 15% in 2004.
During 2005, revenues for NOBS declined due to reduced demand from the customer as a result of changing consumer demand for their product. Revenue from the proprietary herbicide declined due to price concessions to the customer in order to maintain market share in the face of generic product competition. In addition, a large customer contract was completed in 2004 and not carried into 2005.
Cost of Goods Sold and Distribution: Total cost of goods sold and distribution for the year ended December 31, 2005 were $105,263,000 as compared to total cost of goods sold and distribution for the year ended December 31, 2004 of $147,808,000, a decrease of 29%.
Cost of goods sold and distribution for the year ended December 31, 2005 for FutureFuel Chemical Company's chemicals segment were $102,702,000 as compared to cost of goods sold and distribution for the year ended December 31, 2004 of $127,049,000, a decline of approximately 19%. The decline in cost of goods sold and distribution was attributed to the decline in revenues as described above, as evidenced by cost of goods sold and distribution as a percent of revenues in the chemicals segment decreasing from 88% in 2004 to 86% in 2005. The reduction of cost of goods sold and distribution in line with revenue reductions was largely a result of an approximate 20% reduction-in-force at the Batesville facility, effective May 1, 2005, which reduced the total workforce by 89 employees and afforded an annual labor cost reduction of approximately $7,000,000.
Total cost of goods sold and distribution for 2005 included $99,000 of corporate expense allocations from Eastman Chemical Company and $2,462,000 of restructuring and impairment charges, none of which were allocated to specific products or segments. Total cost of goods sold and distribution for 2004 included $1,275,000 of corporate expense allocations from Eastman Chemical Company and $19,485,000 of restructuring and impairment charges, none of which were allocated to specific products or segments.
Operating Expenses: Operating expenses decreased from $20,773,000 for the year ended December 31, 2004 to $13,637,000 for the year ended December 31, 2005, or approximately 34%. This decrease was the result in decreased labor expenses following the reduction in force implemented by FutureFuel Chemical Company's management during 2005 as well as significantly lower corporate overhead allocations.
Liquidity and Capital Resources
FutureFuel Chemical Company's net cash provided by (used in) operating activities, investing activities and financing activities for the years ended December 31, 2006, 2005 and 2004 was:
(Dollars in thousands)
2006 2005 2004
--------- --------- ---------
Net cash provided by (used in) operating activities ... $ (5,517) $ 7,556 $ 19,044
Net cash provided by (used in) investing activities ... $ (18,524) $ (6,594) $ (6,520)
Net cash provided by (used in) financing activities ... $ 87,170 $ (962) $ (12,524)
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See our audited consolidated statements of cash flows for the years ended December 31, 2006, 2005 and 2004 contained elsewhere herein for a description of the sources and uses of such cash.
The Company's net cash provided by (used in) operating activities, investing activities and financing activities for the ten months ended October 31, 2006 and the period from August 12, 2005 (inception) through December 31, 2005 was:
(Dollars in thousands)
2006 2005
-------- --------
Net cash provided by (used in) operating activities .................... $ 2,590 $ 10
Net cash provided by (used in) investing activities .................... $ (1,045) $ --
Net cash provided by (used in) financing activities .................... $ (1,368) $ 18
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See our audited statements of cash flows for the ten months ended October 31, 2006 and for the period from August 12, 2005 through December 31, 2005 contained elsewhere herein for a description of the sources and uses of such cash.
The following are FutureFuel Chemical Company's material commitments for capital expenditures as of December 31, 2006.
(Dollars in thousands)
General Purpose of the Commitment Amount
------------------------------------------------------------------------------- -------
Construction of storage at the Batesville facility ............................ $ 3,796
Improvements to materials handling capabilities at the Batesville facility .... 177
Implementation of an enterprise resource planning system ...................... 650
-------
Total ......................................................................... $ 4,623
=======
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FutureFuel Chemical Company has historically financed capital requirements for its business with cash flows from operations and has not had the need to incur bank indebtedness to finance any of its chemical operations during the historical periods discussed herein.
FutureFuel Chemical Company entered into a $50 million credit agreement with Regions Bank in March 2007. The loan is a revolving facility the proceeds of which may be used for working capital, capital expenditures and general corporate purposes of FutureFuel Chemical Company. The facility terminates in March 2010. Advances are made pursuant to a borrowing base comprised of 85% of eligible accounts plus 60% of eligible direct inventory plus 50% of eligible indirect inventory. Advances are secured by a perfected first priority security interest in accounts receivable and inventory. The interest rate floats at the following margins over LIBOR or base rate based upon the leverage ratio from time to time.
Leverage Base Rate LIBOR
Ratio Margin Margin
-------------- ------------- ------------
> 3 -0.55% 1.70%
>= 2 < 3 -070% 1.55%
>= 1 < 2 -0.85% 1.40%
< 1 -1.00% 1.25%
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There is an unused commitment fee of 0.25% per annum. Beginning December 31, 2007, and on the last day of each fiscal quarter thereafter, the ratio of debt to EBITDA may not be less than 1.5:1. Beginning June 30, 2007, the ratio of total funded debt to EBITDA may not exceed 3.50:1, reduced to 3.25:1 at March 31, 2008, June 30, 2008 and September 30, 2008, and then 3:1 thereafter. We have guaranteed FutureFuel Chemical Company's obligations under this credit agreement.
The remaining proceeds of our July 2006 offering after consummation of our acquisition of FutureFuel Chemical Company and repurchase of shares from shareholders who exercised their repurchase rights described herein were approximately $85 million. Between November 1, 2006 and January 31, 2007, the Company utilized approximately $16.5 million of these proceeds to build FutureFuel Chemical Company's working capital and approximately $2.5 million to fund insurance and other general expenses. We intend to fund future capital requirements for FutureFuel Chemical Company's chemical and biofuels segments from cash flow generated by FutureFuel Chemical Company as well as from the remaining proceeds of our offering and borrowings under the credit facility with Regions Bank. We do not believe there will be a need to issue any securities to fund such capital requirements.
Off-Balance Sheet Arrangements
Our only off-balance sheet arrangements are: (i) the financial assurance trusts established for the benefit of the Arkansas Department of Environmental Quality; and (ii) hedging transactions. The financial assurance trusts aggregate $3,127,000 and were established to provide assurances to the Arkansas Department of Environmental Quality that, in the event the Batesville facility is closed permanently, any reclamation activities necessitated under applicable environmental laws will be completed. Such financial assurance trusts are not reasonably likely to have a
current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors. The amounts held in trust are included in restricted cash and cash equivalents on our balance sheet. The closure liabilities are included in other noncurrent liabilities, but only on a present value basis.
The Company and FutureFuel Chemical Company engage in two types of hedging transactions. First, the Company hedges its biodiesel sales through the purchase and sale of futures contracts and options on futures contracts of energy commodities. Such futures contracts and options on contracts of energy commodities are detailed in note 4 to our audited consolidated financial statements included elsewhere herein. This activity was captured on our balance sheet at December 31, 2006. Second, FutureFuel Chemical Company hedges its biodiesel feedstocks through the execution of purchase contracts and supply agreements with certain vendors. These hedging transactions are recognized in earnings and not recorded on our balance sheet at December 31, 2006 as they do not meet the definition of a derivative instrument as defined under accounting principles generally accepted in the U.S. The purchase of biodiesel feedstocks generally involves two components: basis and price. Basis covers any refining or processing required as well as transportation. Price covers the purchases of the actual agricultural commodity. Both basis and price fluctuate over time. A supply agreement with a vendor constitutes a hedge when FutureFuel Chemical Company has committed to a certain volume of feedstock in a future period and has fixed the basis for that volume.
Contractual Obligations
The following table sets forth as of December 31, 2006 the payments due by period for the following contractual obligations of us and FutureFuel Chemical Company.
(Dollars in thousands)
Less than 1-3 3-5 More than
Contractual Obligations Total 1 Year Years Years 5 Years
-------------------------------- -------- -------- -------- -------- ----------
Long-term debt obligations ..... $ -- $ -- $ -- $ -- $ --
Capital lease obligations ...... $ -- $ -- $ -- $ -- $ --
Operating lease obligations .... $ 840 $ 318 $ 395 $ 90 $ 37
Purchase obligations ........... $ 31,718 $ 31,551 $ 111 $ 56 $ --
Other long-term liabilities .... $ -- $ -- $ -- $ -- $ --
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Subsequent to December 31, 2006, FutureFuel Chemical Company entered into the $50 million credit agreement with Regions Bank described above. As of March 31, 2007, FutureFuel Chemical Company had not borrowed under such credit facility.
Quantitative and Qualitative Disclosures About Market Risk
In recent years, general economic inflation has not had a material adverse impact on FutureFuel Chemical Company's costs and, as described elsewhere herein, we have passed some price increases along to our customers. However, FutureFuel Chemical Company is subject to certain market risks as described below.
Market risk represents the potential loss arising from adverse changes in market rates and prices. Commodity price risk is inherent in the chemical and biofuels business both with respect to input (acetic anhydride, electricity, coal, natural gas, biofuel feedstocks, etc.) and output (manufactured chemicals and biofuels).
FutureFuel Chemical Company seeks to mitigate its market risks associated with the manufacturing and sale of chemicals by entering into term sale contracts that include contractual market price adjustment protections to allow changes in market prices of key raw materials to be passed on to the customer. Such price protections are not always obtained, however, so raw material price risk remains a significant risk.
In order to manage price risk caused by market fluctuations in biofuel prices, FutureFuel Chemical Company may enter into exchange traded commodity futures and options contracts. FutureFuel Chemical Company accounts for these derivative instruments in accordance with Statement of Financial Accounting Standards ("SFAS") No. 133 Accounting for Derivative Instruments and Hedging Activities, as amended by SFAS No. 149 Amendment of Statement 133 on Derivative Instruments and Hedging Activities. Under these standards, the accounting for
changes in the fair value of a derivative instrument depends upon whether it has been designated as an accounting hedging relationship and, further, on the type of hedging relationship. To qualify for designation as an accounting hedging relationship, specific criteria must be met and appropriate documentation maintained. FutureFuel Chemical Company had no derivative instruments that qualified under these rules as designated accounting hedges in 2006 or in any preceding year. Changes in the fair value of FutureFuel Chemical Company's derivative instruments are recognized at the end of each accounting period and recorded in the statement of operations as a component of cost of goods sold.
FutureFuel Chemical Company's immediate recognition of derivative instrument gains and losses can cause net income to be volatile from quarter to quarter due to the timing of the change in value of the derivative instruments relative to the sale of biofuel being sold. As of December 31, 2006, the fair value of FutureFuel Chemical Company's derivative instruments was a net liability in the amount of $447,000.
FutureFuel Chemical Company's gross profit will be impacted by the prices it pays for raw materials and conversion costs (costs incurred in the production of chemicals and biofuels) for which it does not possess contractual market price adjustment protection. These items are principally comprised of acetic anhydride, electricity, coal, natural gas, methanol, soybean oil and caustic soda. The availability and price of all of these items are subject to wide fluctuations due to unpredictable factors such as weather conditions, overall economic conditions, farmers' planting decisions, governmental policies and global supply and demand.
FutureFuel Chemical Company has prepared a sensitivity analysis of its exposure to market risk with respect to key raw materials and conversion costs for which it does not possess contractual market price adjustment protections, based on average prices in 2006. Assuming that the prices of the associated finished goods could not be increased and assuming no change in quantities sold, a hypothetical 10% change in the average price of the commodities listed below would result in the following change in annual gross profit:
(Volumes and dollars in thousands)
Hypothetical
Adverse Percentage
Volume(a) Change in Change in Change in
Item Requirements Units Price Gross Profit Gross Profit
------------------- ------------ ----- ------------ ------------ ------------
Acetic anhydride .. 7,256 KG 10.0% 459 3.5%
Electricity ....... 84 MWH 10.0% 437 3.3%
Coal .............. 40 MT 10.0% 407 3.1%
Natural gas ....... 200 KSCF 10.0% 275 2.1%
Methanol .......... 5,915 KG 10.0% 205 1.5%
Soybean oil ....... 2,784 KG 10.0% 163 1.2%
Caustic soda ...... 10 MT 10.0% 157 1.2%
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(a) Volume requirements and average price information are based upon volumes used and prices obtained for the twelve months ended December 31, 2006. Volume requirements may differ materially from these quantities in future years as the business of FutureFuel Chemical Company evolves.
As of December 31, 2006, FutureFuel Chemical Company had no borrowings and, as such, was not exposed to interest rate risk. Due to the relative insignificance of transactions denominated in a foreign currency, FutureFuel Chemical Company considers its foreign currency risk to be immaterial.
Item 3. - Properties
The Company
We are a holding company whose principal assets are all of the issued and outstanding shares of stock of FutureFuel Chemical Company and cash and cash equivalents.
FutureFuel Chemical Company
FutureFuel Chemical Company's principal asset is a manufacturing plant situated on approximately 2,200 acres of land six miles southeast of Batesville in north central Arkansas fronting the White River. Approximately 500 acres of the site are occupied with batch and continuous manufacturing facilities, laboratories and infrastructure, including on-site liquid waste treatment. FutureFuel Chemical Company is the fee owner of this plant and the land upon which it is situated, and manufactures both biofuels and chemicals at the plant. Utilization of these facilities may vary with product mix and economic, seasonal and other business conditions, but the plant is substantially utilized with the exception of facilities designated for capacity expansion of biodiesel and a facility targeted for the potential future production of cellulosic-based ethanol. The plant, including approved expansions, has sufficient capacity for existing needs and expected near-term growth. We believe that the plant is generally well maintained, in good operating condition and suitable and adequate for its uses.
Item 4. - Security Ownership of Certain Beneficial Owners and Management
Security Ownership of Certain Beneficial Owners
As of the date of this Registration Statement, 26,700,000 shares of our common stock are issued and outstanding and we have issued warrants to purchase 22,500,000 additional shares of our common stock. The shares of common stock are our only voting securities issued and outstanding. The following table sets forth the number and percentage of shares and warrants owned by all persons known by us to be the beneficial owners of more than 5% of our shares of common stock and warrants as of the most recent practicable date.
Common Stock Warrants Fully Diluted
----------------------- ----------------------- ------------------------
Percent of
Amount of Percent of Amount of Amount of Common
Beneficial Common Beneficial Percent of Beneficial Stock and
Name and Address of Beneficial Owner Ownership Stock Ownership Warrants Ownership Warrants(d)
------------------------------------ --------- ----- --------- -------- --------- -----------
Paul A. Novelly, 8235 Forsyth
Blvd., 4th Floor, Clayton, MO
63105(a) ......................... 7,406,250 27.7% 5,268,750 23.4% 12,675,000 25.8%
Lee E. Mikles, 1486 E. Valley
Road, Santa Barbara, CA 93108(b) . 2,100,000 7.9% 12,500 0.1% 2,112,500 4.3%
SOF Investments, L.P., 645 5th
Avenue, 21st Floor, New York,
NY 10022 ......................... 1,800,000 6.7% 1,800,000 8.0% 3,600,000 7.3%
Fir Tree entities, Admiral Financial
Center, 5th Floor, 90 Fort Street,
Box 32021 SMB, Grand Cayman,
Cayman Islands(c) ................ 1,600,000 6.0% 1,350,000 6.0% 2,950,000 6.0%
Morstan Nominees Limited, 25
Cabot Square, Canary Wharf,
London E14 4QA, UK ............... 1,352,241 5.1% 974,099 4.3% 2,326,340 4.7%
N.C.B. Trust Limited, Citigroup
Centre, Canada Square, Canary
Wharf, London E14 5LB, U.K ....... 1,292,200 4.8% 1,155,000 5.1% 2,447,200 5.0%
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(a) Includes 6,781,250 shares of common stock and 4,643,750 warrants held by St. Albans Global Management, Limited Partnership, LLLP and 625,000 shares of common stock and 625,000 warrants held by Apex Holding Co. Mr. Novelly is the chief executive officer of both of these entities and thereby has voting and investment power over such shares, but he disclaims beneficial ownership except to the extent of a minor pecuniary interest.
(b) Includes 2,000,000 shares of common stock held by Lee E. Mikles Revocable Trust dated March 26, 1996 and 100,000 shares of common stock held by Lee E. Mikles Gift Trust dated October 6, 1999. Also includes 12,500 warrants held by the Alison L. Mikles Irrevocable Trust. Miss Mikles is the minor child of Mr. Mikles and lives in Mr. Mikles household. However, Mr. Mikles is not the trustee of such trust and disclaims beneficial ownership.
(c) Includes shares of common stock held by Fir Tree Recovery Master Fund, L.P. and Fir Tree Value Master Fund, L.P., which are managed by a common investment manager.
(d) Assumes the exercise of all warrants issued and outstanding as of the date of this Registration Statement.
Security Ownership of Management
The following table sets forth information regarding the beneficial ownership of our common stock and warrants as of the date of this Registration Statement by each of our directors and executive officers. Unless otherwise indicated, we believe that all persons named in the table below have sole voting and investment power with respect to all shares of common stock beneficially owned by them and none of such shares or warrants have been pledged as security.
Common Stock Warrants Fully Diluted
----------------------- ----------------------- ------------------------
Percent of
Amount of Percent of Amount of Amount of Common
Beneficial Common Beneficial Percent of Beneficial Stock and
Name and Address of Beneficial Owner Ownership Stock Ownership Warrants Ownership Warrants(d)
--------------------------------------- --------- ----- --------- -------- --------- -----------
Paul A Novelly(a) .................... 7,406,250 27.7% 5,268,750 23.4% 12,675,000 25.8%
Lee E Mikles(b) ...................... 2,100,000 7.9% 12,500 0.1% 2,112,500 4.3%
Douglas D Hommert(c) ................. 250,000 0.9% -- -- 250,000 0.5%
Edwin A Levy ......................... 250,000 0.9% -- -- 250,000 0.5%
Thomas R Evans ....................... 30,000 0.1% 30,000 0.1% 60,000 0.1%
William J Dore ....................... 109,375 0.4% 109,375 0.5% 218,750 0.4%
Richard L Knowlton ................... -- -- -- -- -- --
Paul G Lorenzini ..................... -- -- -- -- -- --
All directors and executive officers .. 10,145,625 38.0% 5,420,625 24.1% 15,566,250 31.6%
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(a) Includes 6,781,250 shares of common stock and 4,643,750 warrants held by St. Albans Global Management, Limited Partnership, LLLP and 625,000 shares of common stock and 625,000 warrants held by Apex Holding Co. Mr. Novelly is the chief executive officer of both of these entities and thereby has voting and investment power over such shares, but he disclaims beneficial ownership except to the extent of a minor pecuniary interest.
(b) Includes 2,000,000 shares of common stock held by Lee E. Mikles Revocable Trust dated March 26, 1996 and 100,000 shares of common stock held by Lee E. Mikles Gift Trust dated October 6, 1999. Also includes 12,500 warrants held by the Alison L. Mikles Irrevocable Trust. Miss Mikles is the minor child of Mr. Mikles and lives in Mr. Mikles household. However, Mr. Mikles is not the trustee of such trust and disclaims beneficial ownership.
(c) Includes 250,000 shares of common stock held by the Douglas D. Hommert Revocable Trust, which is a trust established by Mr. Hommert for the benefit of his descendants, of which Mr. Hommert is the trustee.
(d) Assumes the exercise of all warrants issued and outstanding as of the date of this Registration Statement.
Founding Shares Owned by the Founding Shareholders
Prior to our July 2006 offering, there were 5,625,000 shares of our common stock issued as follows ("founding shares").
Founding Shareholder Shares Relationship to the Company -------------------------------------------- --------- -------------------------------------- St. Albans Global Management, Limited Partnership, LLLP ........................ 2,250,000 Shareholder (affiliate of Mr. Novelly) Lee E. Mikles Revocable Trust .............. 2,000,000 Shareholders (affiliate of Mr. Mikles) Douglas D. Hommert Revocable Trust ......... 250,000 Shareholder (affiliate of Mr. Hommert) Edwin A. Levy .............................. 250,000 Director and Shareholder Joe C. Leach ............................... 250,000 Shareholder Edwin Wahl ................................. 150,000 Shareholder Jeffery Call ............................... 150,000 Shareholder Mark R. Miller ............................. 100,000 Shareholder Lee E. Mikles Gift Trust ................... 100,000 Shareholder (affiliate of Mr. Mikles) Ken Fenton ................................. 75,000 Shareholder RAS, LLC ................................... 50,000 Shareholder |
Item 5. - Directors and Executive Officers
Identification of Directors
Our directors are as follows.
Director Term
Name Age Since Expires
------------------------------------------------------------ --- -------- -------
Paul A. Novelly, executive chairman of the board ........... 63 2005 2009
Lee E. Mikles, chief executive officer and president ....... 51 2005 2008
Douglas D. Hommert, executive vice president, secretary
and treasurer ........................................... 51 2005 2007
Edwin A. Levy .............................................. 70 2005 2008
Thomas R. Evans ............................................ 52 2006 2008
William J. Dore(a) ......................................... 64 2006 2007
Richard L. Knowlton ........................................ 74 2007 2009
Paul G. Lorenzini .......................................... 67 2007 2009
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There is no arrangement or understanding between any of the above directors and any other person pursuant to which such person was or is to be selected as a director.
Identification of Executive Officers
Our executive officers are as follows.
Officer
Name Position Age Since
------------------------ ------------------------------------------------- --- -------
Paul A. Novelly ........ Executive chairman of the board 63 2005
Lee E. Mikles .......... Chief executive officer and president 51 2005
Douglas D. Hommert ..... Executive vice president, secretary and treasurer 51 2005
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There is no arrangement or understanding between any of the above officers and any other person pursuant to which such person was or is to be selected as an officer.
Identification of Certain Significant Employees
The following individuals are executive officers of FutureFuel Chemical Company who are expected to make significant contributions to our business.
Officer
Name Position Age Since
------------------------ ------------------------------------------------- --- -------
Randall W. Powell ...... President and chief operating officer 55 2006
David Baker ............ Vice president - manufacturing operations 59 2006
Gary Hess .............. Vice president - commercial operations 56 2006
Benjamin Ladd .......... Chief financial officer and treasurer 30 2006
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Business Experience
Paul A. Novelly has been our chairman of the board since inception. For at least the past five years, Mr. Novelly has been chairman and chief executive officer of Apex Oil Company, Inc., a privately-held company based in St. Louis, Missouri engaged in the trading, storage, marketing and transportation of petroleum products, including liquid terminal facilities in the Midwest and Eastern United States, and towboat and barge operations on the inland waterway system. Mr. Novelly is president and a director of AIC Limited, a Bermuda-based oil trading company, chairman and a director of World Point Terminals Inc., a publicly-held Canadian company based in Calgary which owns and operates petroleum storage facilities in the Bahamas and United States, and chief executive officer of
St. Albans Global Management, Limited Partnership, LLLP, which provides corporate management services. He currently serves on boards of directors at The Bear Stearns Companies Inc., a broker-dealer and global securities and investment firm, and Boss Holdings, Inc., a distributor of work gloves, boots and rainwear and other consumer products, and within the past five years also served on the board of directors of Intrawest Corporation, a company that is a world leader in destination resorts and adventure travel.
Lee E. Mikles has been our chief executive officer and a member of our board since inception. Mr. Mikles was chairman of Mikles/Miller Management, Inc., a registered investment adviser and home to the Kodiak family of funds, between 1992 and 2005. He was also chairman of Mikles/Miller Securities, LLC, a registered broker-dealer, between 1999 and 2005. Additionally, Mr. Mikles has served on the board of directors of Official Payments Corporation, Coastcast Corporation, Nelnet, Inc., Imperial Bank and Imperial Bancorp. He currently serves on the board of directors of Boss Holdings, Inc. and Pacific Capital Bankcorp. and is the chair of the audit committee for Boss Holdings, Inc.
Douglas D. Hommert has been our executive vice president, secretary, treasurer and a member of our board since inception. Mr. Hommert has been executive vice president and general counsel of Apex Oil Company, Inc. since September 2002. Between October 1988 and September 2002, he was a partner in the St. Louis law firm of Lewis, Rice & Fingersh, L.C. With that firm, he practiced in the areas of business law, taxation, mergers and acquisitions, financing and partnerships. He was licensed as a Certified Public Accountant in 1982.
Edwin A. Levy has been a member of our board since November 2005. In 1979, Mr. Levy co-founded Levy, Harkins & Co., Inc., an investment advisory firm, where he now serves as chairman of the board and individual advisor. Mr. Levy has been a director of Traffix, Inc. since November 1995, and he currently serves as a member of its audit committee and stock options committee. He is also a director of Forward Industries, Inc., a publicly-held company in the business of designing, manufacturing and distributing custom carrying case solutions, and World Point Terminals Inc., a publicly-held Canadian company based in Calgary which owns and operates petroleum storage facilities in the Bahamas and United States.
Thomas R. Evans has been a member of our board since May 2006. Since June 2004, he has served as president and chief executive officer of Bankrate, Inc., an Internet based aggregator of financial rate information. Mr. Evans was elected to Bankrate, Inc.'s board of directors in May 2004. From 1999 to 2002, Mr. Evans was chairman and chief executive officer of Official Payments Corporation, an Internet processor of payment to government entities.
William J. Dore has been a member of our board since May 2006. Since 1973, Mr. Dore has served as chairman of the board and chief executive officer of Global Industries, Ltd., a worldwide organization of over 3,000 employees which operates one of the largest fleet of marine construction assets in the world. Mr. Dore was formerly president of the Association of Diving Contractors and the Offshore Pipeline Contractors Association, and a former director of the National Ocean Industries Association. Mr. Dore currently serves on the Louisiana Public Affairs Research Council board of directors, the Horatio Alger Association board of directors, the M. D. Anderson Center's board of visitors, and the LSU Health Sciences Center advisory board.
Richard L. Knowlton has been a member of our board since January 2007. Between 1956 and 1995, Mr. Knowlton worked for Hormel Foods Corporation, a multinational manufacturer and marketer of consumer-branded meat and food products. He started as a merchandising manager and became the president and chief operating officer in 1979. He became the chief executive officer and chairman of the board in 1981 and retired in 1995. Mr. Knowlton currently serves as a director on The Hormel Foundation and the Horatio Alger Association and is a member of the Business Advisory Council for the University of Colorado Leeds School of Business, the Mayo Laboratory Services Advisory Board and the Eisenhower Medical Center Board. Mr. Knowlton served as a director of NG America Insurance Holdings, Inc. between 2000 and 2005 and SUPERVALU INC. between 1994 and 2005.
Paul G. Lorenzini has been a member of our board since January 2007. In January 1970, Mr. Lorenzini co-founded Packaging Consultants, Inc., a distribution business supplying packaging materials to the food industry. In 1983, Bunzl PLC, a supplier of supermarket and food service packaging, acquired Packaging Consultants, Inc. Mr. Lorenzini continued to work for Bunzl PLC and in 1986 became president of Bunzl USA. He subsequently became the chief executive officer of Bunzl USA and retired in July 2004 with the title of chairman emeritus. Mr. Lorenzini served as a director of Bunzl PLC between 1999 and 2004.
Randall W. Powell has been the president and chief operating officer of FutureFuel Chemical Company since October 31, 2006. Prior to that time, he held the dual position under Eastman Chemical Company of vice president, fine chemicals manufacturing and technology and general manager, Arkansas operations. In this position, he had line responsibility for Eastman Chemical Company's Arkansas and Wales manufacturing sites and also coordination with Eastman Chemical Company's specialty manufacturing units. Dr. Powell received a PhD in organic chemistry in 1977 from the University of North Carolina. In 1977, Dr. Powell joined Eastman Chemical Company's organic chemicals division in Kingsport, Tennessee as a development chemist. In 2001, he was appointed vice president, European manufacturing and relocated to Eastman Chemical Company's regional headquarters in The Hague, Netherlands, with responsibility to integrate and optimize twelve newly-acquired resins and inks chemical manufacturing sites in eight European countries. Upon Eastman Chemical Company's divestiture of these businesses in 2004, Dr. Powell relocated to Batesville, Arkansas.
David Baker has been the vice president - manufacturing operations of FutureFuel Chemical Company since October 31, 2006. In 1967, he joined Eastman Chemical Company's filter products division in Kingsport, Tennessee as a development engineer. In 2001, Mr. Baker was named managing director of Eastman Chemical Company's Peboc division, relocating to the United Kingdom. The Peboc division manufactures specialty chemicals including active pharmaceutical ingredients. In August 2005, Mr. Baker relocated to Kingsport as a business development manager in performance chemicals exclusive manufacturing. Mr. Baker is a registered professional engineer and past president of the East Tennessee Society of Professional Engineers.
Gary Hess has been the vice president - commercial operations of FutureFuel Chemical Company since October 31, 2006. Mr. Hess was the vice president for commercial operations for Bayer Corporation, where he had responsibility for sales, marketing, customer service, purchasing, research and development and quality control, prior to joining Eastman Chemical Company in December 2002 as the market development executive for agrochemicals. In 2004, he was appointed to the position of global business leader for exclusive manufacturing with responsibility for sales, marketing and business development.
Benjamin Ladd became FutureFuel Chemical Company's chief financial officer on October 31, 2006. Between October 2003 and October 2006, inclusive, Mr. Ladd has been a fund manager and financial consultant for St. Albans Global Management, Limited Partnership, LLLP, which provides corporate management services. In this position, he assisted with the management of capital in the equity and derivative markets worldwide and was responsible for all financial analysis and reporting related to the firm's merchant banking and consulting activities. From 1999 to 2003, Mr. Ladd served in various capacities for Green Manning & Bunch, Ltd., a middle-market investment banking firm in Denver, Colorado.
Item 6. - Executive Compensation
General
Our board of directors has established a remuneration committee. The remuneration committee's responsibilities include, among other things, determining our policy on remuneration to our officers and directors and the executive officers and directors of FutureFuel Chemical Company, provided, however, that no director may be directly involved in any decisions as to his own remuneration. Given that we are a start-up company and only recently consummated our acquisition of FutureFuel Chemical Company, we have determined not to pay salaries, bonuses or other forms of compensation to any of our executive officers or directors or to the directors of our subsidiaries. This policy may change in the future. We do pay salaries, bonuses and other forms of compensation to the officers of FutureFuel Chemical Company as described below.
Compensation Discussion and Analysis
We have not yet established a comprehensive executive compensation philosophy, nor have we determined definitively the material elements of the compensation of our executive officers or of the executive officers of FutureFuel Chemical Company, except as described below. We do not currently provide any compensation (other than reimbursement of expenses) to any of our executive officers. For FutureFuel Chemical Company, the current elements of our compensation program include base salary and certain retirement, insurance and other benefits generally available to all employees.
We have formed a remuneration committee of our board, which will determine compensation arrangements for our executive officers and the executive officers of FutureFuel Chemical Company going forward. We expect our remuneration committee will seek to establish a compensation program for executive officers of the Company and of FutureFuel Chemical Company that will be designed to attract, as needed, individuals with the skills necessary for us to achieve our business plan, to motivate those individuals, to reward those individuals fairly over time and to retain those individuals who continue to perform at or above the levels that we expect. We also expect that our executive compensation program will be designed to afford our executive officers a sense of ownership in us, and to link rewards to measurable Company and individual performance. These arrangements are expected to include appropriate salaries, annual bonus opportunities and long-term incentives awards linked to equity and equity awards under an omnibus incentive plan expected to be adopted during 2007.
Cash Salaries and Bonuses
At this time, we have determined that we will not pay a salary to those executive officers listed in the Summary Compensation Table who are our executive officers (i.e., Messrs. Novelly, Mikles and Hommert), although such policy may change in the future. Each of those executive officers were granted founder shares as described elsewhere in this Registration Statement, and our board of directors determined that the payment of cash compensation to them was unnecessary at this time. Our executive chairman, Mr. Novelly, receives compensation from our affiliate, St. Albans Global Management, Limited Partnership, LLLP. Our chief executive officer, Mr. Mikles, receives compensation from existing business enterprises and investments, none of which are affiliated with us. Our executive vice president, secretary and treasurer, Mr. Hommert, receives compensation from our affiliate, Apex Oil Company, Inc. None of Messrs. Novelly, Mikles or Hommert received any increase in their salary, bonus or other income to compensate them for their services to us. As to the executive officers of FutureFuel Chemical Company who were employees of Eastman Chemical Company, we continued their base salaries paid by Eastman Chemical Company with a modest percentage increase. We expect that our remuneration committee will establish future salaries for our executive officers and for the executive officers of FutureFuel Chemical Company commensurate with those paid by companies comparable to us and to FutureFuel Chemical Company, as applicable.
We expect to establish an annual cash bonus program for fiscal years commencing in 2007. In determining actual bonus payouts, we expect that the remuneration committee will consider performance against Company performance goals to be established, as well as individual performance goals. We expect that this annual cash bonus program will apply to certain key executives of FutureFuel Chemical Company in addition to the executives whose compensation is described elsewhere in this Registration Statement.
Omnibus Incentive Plan
We intend to adopt an omnibus incentive plan, subject to approval of our shareholders. The purpose of the plan will be to:
o encourage ownership in us by key personnel whose long-term employment with or engagement by us or our subsidiaries (including FutureFuel Chemical Company) is considered essential to our continued progress and, thereby, encourage recipients to act in our shareholders' interests and share in our success;
o encourage such persons to remain in our employ or in the employ of our subsidiaries; and
o provide incentives to persons who are not our employees to promote our success.
We expect that the plan will contain the following provisions, among others, although the final omnibus incentive plan may contain provisions different from those set forth below.
We expect that the plan will authorize us to issue stock options (including incentive stock options and nonqualified stock options), stock awards and stock appreciation rights.
We expect that eligible participants will include: (i) members of our board of directors; (ii) regular, active employees of us or of any of our subsidiaries; and (iii) persons engaged by us or by any of our subsidiaries to render services to us or our subsidiaries as an advisor or consultant.
We expect that stock awards will be limited to our common stock, which may be shares reacquired by us, including shares purchased in the open market, or authorized but un-issued shares. We expect that stock awards will be limited to 10% of the issued and outstanding shares of our common stock in the aggregate.
We expect that the plan will be administered by: (i) our board; (ii) a committee of our board appointed for that purpose; or (iii) if no such committee is appointed, our board's compensation committee (the "Administrator"). The Administrator may appoint agents to assist it in administering the plan. The Administrator may delegate to one or more individuals the day-to-day administration of the plan and any of the functions assigned to the Administrator in the plan. Such delegation may be revoked at any time. All decisions, determinations and interpretations by the Administrator regarding the plan and the terms and conditions of any award granted thereunder will be final and binding on all participants.
The plan would become effective upon its approval by our shareholders and would continue in effect for a term of ten years thereafter unless amended and extended by us or unless earlier terminated.
The Administrator may grant a stock option or provide for the grant of a stock option either from time to time in the discretion of the Administrator or automatically upon the occurrence of events specified by the Administrator, including the achievement of performance goals or the satisfaction of an event or condition within the control of the participant or within the control of others. Each option agreement must contain provisions regarding: (i) the number of shares of common stock that may be issued upon exercise of the option; (ii) the type of option; (iii) the exercise price of the shares and the means of payment for the shares; (iv) the term of the option; (v) such terms and conditions on the vesting or exercisability of the option as may be determined from time to time by the Administrator; (vi) restrictions on the transfer of the option and forfeiture provisions; and (vii) such further terms and condition not inconsistent with the plan as may be determined from time to time by the Administrator. Unless otherwise specifically determined by the Administrator or otherwise set forth in the plan, the vesting of an option will occur only while the participant is employed or rendering services to us or one of our subsidiaries, and all vesting will cease upon a participant's termination of employment for any reason.
The Administrator may grant annual performance vested options. Performance will be tied to annual cash flow targets (our consolidated income plus depreciation plus amortization) in amounts to be determined. Annual performance vested options will vest 25% for each year that the annual cash flow target is achieved (with provisions for subsequent year catch-ups).
The Administrator may grant cumulative performance vested options. Performance will be tied to cumulative cash flow in amounts to be determined for periods to be determined.
The Administrator may issue other options based upon the following
performance criteria either individually, alternatively or in any combination,
applied to either the Company as a whole or to a business unit, subsidiary or
business segment, either individually, alternatively or in any combination, and
measured either annually or cumulatively over a period of years, on an absolute
basis or relative to a pre-established target, to previous years' results or to
a designated comparison group, in each case as specified by the Administrator:
(i) cash flow; (ii) earnings (including gross margin, earnings before interest
and taxes, earnings before taxes, and net earnings); (iii) earnings per share;
(iv) growth in earnings or earnings per share; (v) stock price; (vi) return on
equity or average shareholders' equity; (vii) total shareholder return; (viii)
return on capital; (ix) return on assets or net assets; (x) return on
investment; (xi) revenue; (xii) income or net income; (xiii) operating income or
net operating income; (xiv) operating profit or net operating profit; (xv)
operating margin; (xvi) return on operating revenue; (xvii) market share;
(xviii) overhead or other expense reduction; (xix) growth in shareholder value
relative to the moving average of the S&P 500 Index or a peer group index; (xx)
strategic plan development and implementation; and (xxi) any other similar
criteria.
Such options will vest and expire (including on a pro rata basis) on such terms as may be determined by the Administrator from time to time consistent with the terms of the final plan.
The Administrator may award our common stock to participants. The grant, issuance, retention or vesting of each stock award may be subject to such performance criteria and level of achievement versus these criteria as the Administrator determines, which criteria may be based on financial performance, personal performance evaluations or completion of service by the participant. Unless otherwise provided for by the Administrator, upon the participant's termination of employment other than due to death or retirement, the unvested portions of the stock award and the shares of our common stock subject thereto will generally be forfeited. Unless otherwise provided for by the Administrator, if a participant's termination of employment is due to death or retirement, all outstanding stock awards will continue to vest provided certain conditions to be determined are met. Unless otherwise provided for by the Administrator, if a participant's termination of employment is due to his death, a portion of each outstanding stock award granted to such participant will immediately vest and all forfeiture provisions and repurchase rights will lapse as to a prorated number of shares of common stock determined by dividing the number of whole months since the grant date by the number of whole months between the grant date and the date that the stock award would have fully vested.
The Administrator may grant stock appreciation rights either alone or in conjunction with other awards. The Administrator will determine the number of shares of common stock to be subject to each award of stock appreciation rights. The award of stock appreciation rights will not be exercisable for at least six months after the date of grant except as the Administrator may otherwise determine in the event of death, disability, retirement or voluntary termination of employment of the participant. Except as otherwise provided by the Administrator, the award of stock appreciation rights will not be exercisable unless the person exercising the award of stock appreciation rights has been at all times during the period beginning with the date of the grant thereof and ending on the date of such exercise, employed by or otherwise performing services for us or one of our subsidiaries.
In the event there is a change in control of the Company, as determined by our board, our board may, in its discretion: (i) provide for the assumption or substitution of, or adjustment to, each outstanding award; (ii) accelerate the vesting of awards and terminate any restrictions on cash awards or stock awards; and (iii) provide for the cancellation of awards for a cash payment to the participant.
Retirement Benefits
We have adopted a 401(k) plan for FutureFuel Chemical Company which is generally available to all of its employees.
Founder's Grant
Certain of our executive officers were granted founders shares as described herein. Please refer to the discussion under "Item 4. - Security Ownership of Certain Beneficial Owners and Management - Founding Shares
Owned by the Founding Shareholders" at page 49. Our board of directors considers the grants of the founders shares to such executive officers to be adequate to compensate them for their services to us in our start-up stage (that is, from our organization in August 2005 through the end of 2006).
Life Insurance and Other Employee Benefits
We do not provide life insurance or other employee benefits for our executive officers. The executive officers of FutureFuel Chemical Company participate in employee welfare plans (life insurance, medical insurance, disability insurance, vacation pay and the like) maintained by FutureFuel Chemical Company for all of its employees.
The Remuneration Committee
Our remuneration committee currently consists of Mr. Levy, Mr. Evans and
Mr. Dore. Each of these individuals is an "independent director" under the rules
of the New York Stock Exchange, a "Non-Employee Director" within the meaning of
Section 16 of the Securities Exchange Act of 1934, as amended, and an "outside
director" within the meaning of ss.162(m) of the Internal Revenue Code of 1986,
as amended.
Summary Compensation Table
To date, we have not paid any compensation (in any form) to any of our executive officers or directors. See the discussion above. FutureFuel Chemical Company's principal executive officer, principal financial officer and other executive officers were paid the following compensation during the twelve months ended December 31, 2006.
SUMMARY COMPENSATION TABLE
(b)All Other
Person Office Salary Bonus Compensation Total
------ ------ ------- -------- ------------ --------
Paul A. Novelly(c) Executive chairman $ 0 $ 0 $ 0 $ 0
Lee E. Mikles(c) Chief executive officer $ 0 $ 0 $ 0 $ 0
Douglas D. Hommert(c) Executive vice president, secretary and treasurer $ 0 $ 0 $ 0 $ 0
Randall W. Powell(a) President and chief operating officer $ 36,538 $ 0 $ 1,180 $ 37,718
Benjamin Ladd(a) Chief financial officer $ 23,750 $ 40,000 $ 0 $ 63,750
David Baker(a) Vice president - manufacturing operations $ 24,849 $ 0 $ 1,548 $ 26,397
Gary Hess(a) Vice president - commercial operations $ 24,846 $ 0 $ 1,548 $ 26,394
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(a) Executive officers of FutureFuel Chemical Company. Only includes salary paid since November 1, 2006, the date that we acquired FutureFuel Chemical Company. Prior to such date, Messrs. Powell, Baker and Hess were employed by Eastman Chemical Company. Compensation paid by Eastman Chemical Company to Messrs. Powell, Baker and Hess have not been included in this Summary Compensation Table. Prior to November 1, 2006, Mr. Ladd was employed by St. Albans Global Management, Limited Partnership, LLLP, an affiliate of Mr. Novelly. Compensation paid by St. Albans Global Management, Limited Partnership, LLLP has not been included in this Summary Compensation Table.
(b) Includes our contributions (including accrued contributions) to vested and unvested defined contribution plans and the dollar value of any insurance premiums paid by, or on behalf of, us during the covered fiscal year with respect to life and disability insurance for the benefit of the named person.
(c) Our executive officers. For the year 2006, we did not pay Messrs. Novelly, Mikles or Hommert any form of compensation. See the discussion above. However, we did reimburse them for certain ordinary and necessary business expenses that they incurred in connection with our business.
None of the above-named persons are party to an employment agreement or employment arrangement with us or with FutureFuel Chemical Company.
Compensation Committee Interlocks and Insider Participation
The members of our remuneration committee during 2006 were Mr. Levy, Mr. Evans and Mr. Dore, three of our non-executive directors, and the committee is chaired by Mr. Dore.
Mr. Novelly, our executive chairman of the board, and Mr. Mikles, our chief executive officer and one of our directors, are both directors of Boss Holdings, Inc. Mr. Novelly is a member of Boss Holdings, Inc.'s compensation committee and Mr. Mikles is a member of its audit committee. Mr. Novelly and Mr. Levy, one of our directors and a member of our remuneration committee, are both directors of World Point Terminal Inc.; World Point Terminal Inc. does not have a separate compensation committee.
Item 7. - Certain Relationships and Related Transactions, and Director Independence
Transactions with Management, Promoters and Others
Storage Agreement
On November 1, 2006, FutureFuel Chemical Company entered into a Storage and Thruput Agreement with Center Point Terminal Company, a wholly-owned subsidiary of World Point Terminals Inc. Mr. Novelly, a director and chairman of our board, is the chairman of World Point Terminals Inc. and he and his family beneficially own approximately 49% of World Point Terminals Inc. Mr. Levy, one of our directors, is also a director of World Point Terminal Inc. Mr. Hommert, one of our directors and our executive vice president, secretary and treasurer, is the executive vice president of Center Point Terminal Company. Under the Storage and Thruput Agreement, Center Point Terminal Company will provide to FutureFuel Chemical Company storage space and thruput services for FutureFuel Chemical Company's biodiesel and certain feedstocks at Center Point Terminal Company's bulk liquid storage facilities located in Little Rock, Arkansas, Memphis, Tennessee and Port Allen, Louisiana. The initial term of this agreement is two years and automatically renews itself for successive one year periods unless FutureFuel Chemical Company or Center Point Terminal Company notifies the other party in writing at least 90 days prior to expiration of the then current term of its intent to cancel the agreement, in which case the agreement terminates at the end of the then current term.
Under the Storage and Thruput Agreement, FutureFuel Chemical Company will pay the following fees and expenses to Center Point Terminal Company:
o $0.35 per barrel of shell capacity available for thruput of biodiesel and other liquid products at each terminal each month (such shell capacity to be mutually agreed from time to time);
o charges for heating; and
o other incidental costs.
As of the date of this Registration Statement, FutureFuel Chemical Company is only leasing a 45,000 barrel tank at Center Point Terminal Company's Little Rock, Arkansas facility for which FutureFuel Chemical Company is being charged $15,750 per month plus charges for heating and other incidental costs.
Center Point Terminal Company's facilities are operated by Petroleum Fuel & Terminal Company, a wholly-owned subsidiary of Apex Oil Company, Inc. Mr. Novelly and his family beneficially own approximately 90% of Apex Holding Co. which owns all of the issued and outstanding stock of Apex Oil Company, Inc. Mr. Hommert is the president of Apex Holding Co. and the executive vice president of both Apex Oil Company, Inc. and Petroleum Fuel & Terminal Company. Our independent directors obtained an opinion from Turner Mason and Company to the effect that the Storage and Thruput Agreement is fair to FutureFuel Chemical Company and to our shareholders. Turner, Mason & Company provides engineering and management consulting services, primarily for petroleum related industries. Its staff is comprised of licensed chemical engineers who have an average of over 25 years of experience, including with petroleum terminalling companies located in the United States. Turner, Mason & Company has performed numerous fair market assessments of oil terminals and refineries.
Reimbursement of Expenses
In connection with our July 2006 offering of our shares of common stock and warrants, two of the founding shareholders, Mr. Novelly and Mr. Mikles, agreed to fund due diligence expenses incurred in investigating target businesses in the oil and gas industry, up to a maximum of $1,500,000. Due diligence expenses incurred in investigating FutureFuel Chemical Company and its business totaled $164,825. These expenses were incurred by Apex Oil Company, Inc., Mr. Novelly and Mr. Mikles. Our shareholders approved the reimbursement of these due diligence expenses and those due diligence expenses were reimbursed on October 31, 2006 in connection with the completion of the acquisition of FutureFuel Chemical Company.
Repayment of Loans
Prior to the July 2006 offering of our shares and warrants, Mr. Mikles and St. Albans Global Management, Limited Partnership, LLLP, an affiliate of Mr. Novelly, loaned us $700,000 in the aggregate. Those loans were repayable, without interest, upon the consummation of a business combination. Consequently, those loans were repaid on October 31, 2006 in connection with the completion of the acquisition of FutureFuel Chemical Company.
Commodity Trading Advisor Agreement
On November 1, 2006, FutureFuel Chemical Company and Apex Oil Company,
Inc. entered into a Commodity Trading Advisor Agreement pursuant to which Apex
Oil Company, Inc. agreed to provide advice and services to FutureFuel Chemical
Company with respect to the purchase, sale, exchange, conversion and hedging of
commodities. The term "commodity" includes: (i) any and all feedstocks that
FutureFuel Chemical Company uses in the operation of its biofuels business,
including fats and oils (including lard, tallow, cottonseed oil, peanut oil,
soybean oil, palm oil and all other fats and oils), cottonseed meal, cottonseed,
soybeans, soybean meal, livestock and livestock products and methanol; (ii)
diesel fuel, heating oil, gasoline and ethanol; (iii) biofuels, including
biodiesel and bioethanol, and co-products from biofuels, including glycerin; and
(iv) pour-point depressants, color stabilizers and other petroleum additives.
Such advice will also include advice as to contracts of sale for commodities and
as to options for commodities. FutureFuel Chemical Company also granted Apex Oil
Company, Inc. a power of attorney, and appointed Apex Oil Company, Inc. as
FutureFuel Chemical Company's agent with full power and authority, to enter into
contracts of sale for the purchase or sale of commodities and options on
commodities. Any such contracts must be approved by our chairman, chief
executive officer or executive vice president or by an executive officer of
FutureFuel Chemical Company. In exchange for these services, FutureFuel Chemical
Company pays Apex Oil Company, Inc. a fee of $10,000 per month.
Sales of Products
From time to time, FutureFuel Chemical Company may sell to Apex Oil Company, Inc. and/or its affiliates biofuels (including biodiesel and bioethanol) produced by FutureFuel Chemical Company, and Apex Oil Company, Inc. and/or its affiliates may sell to FutureFuel Chemical Company diesel fuel, gasoline and other petroleum products for use in FutureFuel Chemical Company's biofuels business. Such sales will be at then posted prices for comparable products plus or minus applicable geographical differentials.
Service Agreement
On November 1, 2006, we entered into a Service Agreement with Pinnacle Consulting, Inc. pursuant to which Pinnacle Consulting, Inc. agreed to provide accounting services, data processing services, financial services and general administrative services to us and our affiliates as we may request from time to time. Pinnacle Consulting, Inc. will be paid on an hourly basis for services actually rendered. The agreement may be terminated by either party upon 30 days notice. Pinnacle Consulting, Inc. provides accounting and other financial services solely to entities controlled by Mr. Novelly.
Railcar Sublease
Effective November 1, 2006, Apex Oil Company, Inc. entered into a lease agreement with General Electric Railcar Services Corporation pursuant to which Apex Oil Company, Inc. leased certain biodiesel railcars from General Electric Railcar Services Corporation. On that same date, Apex Oil Company, Inc. entered into a sublease agreement with FutureFuel Chemical Company pursuant to which Apex Oil Company, Inc. subleased these railcars to FutureFuel Chemical Company on the same terms that Apex Oil Company, Inc. leased the cars from General Electric Railcar Services Corporation.
Time Sharing Agreement
Effective April 18, 2008, we entered into a Time Sharing Agreement with Apex Oil Company, Inc. pursuant to which Apex Oil Company, Inc. leases certain airplanes to us. Pursuant to this Time Sharing Agreement, we are charged for certain expenses incurred with respect to specific flights of the airplanes while they are being used for our business purposes. These expenses are authorized by the Federal Aviation Regulations Part 91.501(d).
Review, Approval or Ratification of Transactions with Related Persons
Any transaction in which we (or one of our subsidiaries) are a participant, the amount involved exceeds the lesser of $120,000 or 5% of our net income, total assets or total capital, and in which any party related to us has or will have a direct or indirect material interest must be approved by a majority of the disinterested members of our board of directors as fair to us and our shareholders. This policy was adopted by our board on January 8, 2007, is in writing and can be found through the "Investor Relations - Corporate Governance" section of our internet website (http://www.FutureFuelCorporation.com). All of the agreements described above in this Item 7 have been approved by a majority of the disinterested members of our board of directors.
In addition, we have adopted a Code of Ethics and Business Conduct which sets forth legal and ethical standards of conduct for our directors, officers and employees and the directors, officers and employees of our subsidiaries, including FutureFuel Chemical Company. This Code is designed to deter wrongdoing and to promote: (i) honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships; (ii) full, fair, accurate, timely and understandable disclosure in reports and documents that we file with, or submit to, the Securities and Exchange Commission and in other public communications made by us; (iii) compliance with applicable governmental laws, rules and regulations; (iv) the prompt internal reporting of violations of this Code to appropriate persons identified in this Code; and (v) accountability for adherence to this Code. This Code was adopted by our board on November 30, 2005, is in writing and can be found through the "Investor Relations - Corporate Governance" section of our internet website (http://www.FutureFuelCorporation.com).
Each of the transactions described above (under the caption "Transactions with Management, Promoters and Others") was undertaken in compliance with our Code of Ethics and Business Conduct and approved by a majority of the disinterested members of our board of directors.
Promoters
All of our founding shareholders are "promoters" within the definition of
Rule 12b-2 as promulgated by the Securities and Exchange Commission. See "Item
4. - Security Ownership of Certain Beneficial Owners and Management - Founding
Shares Owned by the Founding Shareholders" at page 49 for a listing of our
founding shareholders and the founders shares received by them. Also see "Item
7. - Certain Relationships and Related Transactions, and Director Independence -
Transactions with Management, Promoters and Others" at page 58 for a description
of transactions between us or FutureFuel Chemical Company with such promoters or
affiliates of such promoters.
Director Independence
We are a listed issuer whose securities are listed on AIM. AIM has requirements that a majority of our board of directors be independent. AIM's definition of "independent director" can be found through the "Investor Relations - Corporate Governance" section of our internet website (http://www.FutureFuelCorporation.com). The Securities and Exchange Commission has also promulgated Rule 10A-3, which sets forth the independence requirements for members of an audit committee. The following members of our board of directors are independent under both AIM's and the Securities and Exchange Commission's definitions of independence:
Edwin A. Levy
Thomas R. Evans
William J. Dore
Richard L. Knowlton
Paul G. Lorenzini
In addition, each member of our board of directors' remuneration, audit and nominating committees are comprised of directors who are independent under such definitions.
Item 8. - Legal Proceedings
Neither we nor any of our subsidiaries are a party to, nor is any of ours or their property subject to, any material pending legal proceedings, other than ordinary routine litigation incidental to their businesses. However, from time to time, FutureFuel Chemical Company and its operations may be parties to, or targets of, lawsuits, claims, investigations and proceedings, including product liability, personal injury, asbestos, patent and intellectual property, commercial, contract, environmental, antitrust, health and safety and employment matters, which we expect to be handled and defended in the ordinary course of business. While we are unable to predict the outcome of any matters currently pending, we do not believe that the ultimate resolution of any such pending matters will have a material adverse effect on our overall financial condition, results of operations or cash flows. However, adverse developments could negatively impact earnings or cash flows in future periods.
Item 9. - Market Price of and Dividends on Our Common Equity/Related Shareholder Matters
Market Information
There is no established public trading market in the United States for our shares of common stock or our warrants. However, our shares and warrants are listed on AIM under the ticker symbols "FFU" and "FFUW," respectively. Trading of our shares of common stock and warrants on AIM commenced July 12, 2006 and was suspended on July 24, 2006, the date that our acquisition of FutureFuel Chemical Company was announced. Trading resumed on October 9, 2006. The high and low bid on AIM for our shares of common stock and warrants for the periods during which they were traded are set forth in the following table.
Shares Warrants
--------------- ---------------
Period High Low High Low
---------------------------------------- ------ ------ ------ ------
July 12 -24, 2006 ...................... $ 7.45 $ 7.40 $ 1.40 $ 1.35
October 9, 2006 - December 31, 2006 .... $ 8.21 $ 7.30 $ 2.50 $ 1.25
January 1, 2007 - March 31, 2007 ....... $ 8.50 $ 6.00 $ 2.45 $ 0.75
April 1, 2007 - _________, 2007
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There are currently outstanding 26,700,000 shares of our common stock and 22,500,000 warrants to purchase 22,500,000 shares of our common stock at $6.00 per share. Such shares and warrants (and shares issued upon exercise of the warrants) can only be sold pursuant to Rule 144 and Rule 144A of the Securities Act upon satisfaction of the terms and conditions of those rules.
On July 12, 2006, we and our founding shareholders entered into a registration rights agreement pursuant to which the holders of the majority of founding shares and shares of common stock included in the units purchased in our July 2006 offering by Mr. Novelly or his designees are entitled to make up to two demands that we register with the Securities and Exchange Commission their founding shares and the shares included in the units purchased in our offering. The holders of the majority of such shares can elect to exercise these registration rights at any time after the date on which we have become a reporting company under the Securities Exchange Act of 1934, as amended, and such shares have been released from the escrow agreement and the lock-in deeds discussed below. In addition, those shareholders have certain "piggy-back" registration rights on registration statements filed subsequent to the date on which such shares are released from escrow (as provided in the insider letters described below) or other lock up arrangements. We have agreed to bear the expenses incurred in connection with the filing of any such registration statements. There are 11,250,000 shares of our common stock subject to this registration rights agreement.
On July 12, 2006, we entered into an investor rights agreement with each of KBC Peel Hunt Ltd and CRT Capital Group LLC for the benefit of the holders of our shares of common stock and warrants in which we agreed, at our cost, to provide "piggyback" registration rights as to any shares of our common stock that are not, at the time, freely saleable identical to the "piggyback" registration rights of the founding shareholders described above, plus the right to piggyback on any registration statement filed pursuant to the founding shareholders' demand registration rights described above, provided that in the event such piggyback rights are exercised in an underwritten offering, the number of shares of our common stock registered will be subject to a cutback, pro rata with the founding shareholders, if the underwriter so requires. There are 15,450,000 shares of our common stock subject to this investor rights agreement.
On July 12, 2006, each of our founding shareholders executed an insider letter with CRT Capital Group, LLC, KBC Peel Hunt Ltd and us pursuant to which each founding shareholder agreed that it will, among other things, place its founding shares in escrow pursuant to the escrow agreement described below for three years from July 12, 2006.
On July 12, 2006, we entered into an escrow agreement with Capita Trust Company (Jersey) Limited, as escrow agent, and with our founding shareholders pursuant to which all of their founding shares were placed in escrow with the escrow agent until July 12, 2009. During the time that such shares are held in escrow, the founding shareholders are not able to sell or transfer their founding shares except: (i) at a time at least one year after July 12, 2006 to their spouses and children or trusts established for their benefit; (ii) by virtue of the laws of descent and distribution upon the death of any founding shareholder; (iii) pursuant to a qualified domestic relations order; or
(iv) to any company fully-owned by that founding shareholder (provided, however, that such transfers are permitted pursuant to the terms of the insider letters described above and the lock-in deed described below executed, respectively, by each founding shareholder, and such transferees agree, in writing to be bound by the terms of each of the escrow agreement, the insider letter and the lock-in deed, and in the case of a company, to transfer the founding shares back to the founding shareholder in the event that he disposed of a majority interest in that company).
On July 12, 2006, each of our directors and our founding shareholders entered into a lock-in deed with us and KBC Peel Hunt Ltd whereby they covenanted that they will not dispose of, and their respective related parties will not dispose of, any interest in any shares of our common stock or our warrants (whenever such shares or warrants were acquired) for one year from July 12, 2006 other than as consented to in writing by both KBC Peel Hunt Ltd and us or pursuant to a takeover offer, a court order or a testamentary disposition. The lock-in deed also requires that, for a further year following the lock-in period, any disposal by any founding shareholder of any shares or warrants must be made through KBC Peel Hunt Ltd as broker (or our broker from time to time) in order to ensure an orderly market in our securities.
On July 12, 2006, we entered into a warrant solicitation fee letter with
CRT Capital Group, LLC, on a non-exclusive basis, as our agent for the
solicitation of the exercise of our warrants beginning July 12, 2007, pursuant
to which we agreed to pay CRT Capital Group, LLC, for services rendered in
connection with the solicitation of such warrants, a commission equal to two
percent of the exercise price for each warrant exercised for cash as a result of
CRT Capital Group, LLC's solicitation efforts. In addition to soliciting the
exercise of our warrants, CRT Capital Group, LLC's services may (subject to
compliance with applicable laws) also include disseminating information, orally
or in writing, to warrant holders about us or the market for our securities. CRT
Capital Group, LLC will be paid the solicitation fee only where: (i) it has been
requested by us to solicit the exercise of the warrants; (ii) it (or its
sub-agent) has solicited the exercise of the warrants; (iii) the arrangement to
pay the commission is disclosed to warrant holders at the time of exercise in a
prospectus, solicitation notice or any other written solicitation materials
provided to warrant holders in connection with the exercise of the warrants;
(iv) the warrant holder has confirmed in writing that CRT Capital Group, LLC or
its subagent has solicited the exercise of the warrants being exercised; (v) a
notice of the redemption of the warrants has been published by us; and (vi) the
solicitation of the exercise was not in violation of Regulation M, to the extent
applicable at the time of any solicitation (as such rules or any successor rules
may be in effect as of such time of exercise) promulgated under the Securities
Act or any provision of any other law or regulation then applicable. In
addition, no compensation will be paid to CRT Capital Group, LLC upon the
exercise of our warrants if the market price of the underlying shares of our
common stock is lower than 102% of the exercise price at the time of such
exercise or where the warrants are held in a discretionary account except where
prior written approval for the exercise of warrants in such account is received
from the relevant customer.
Holders
The shares of our common stock and our warrants were held by 97 and 96 holders of record, respectively, on March 31, 2007.
Dividends
The payment of cash dividends by us is dependent upon our future earnings, capital requirements and overall financial condition. There were no cash dividends declared on shares of our common stock in 2005, 2006 or 2007 (through the date of this Registration Statement).
Item 10. - Recent Sales of Unregistered Securities
Securities Sold and Consideration
The following is a description of all securities sold by us within the past three years, which securities were not registered under the Securities Act.
We were incorporated on August 12, 2005. We issued 5,000,000 shares of common stock on September 1, 2005 to certain founding shareholders for an aggregate consideration of $25,000. On May 24, 2006, we issued a common stock dividend of 0.25 shares for each outstanding share, effectively lowering the purchase price paid by each of the founding shareholders to $.004 per share. The total number of issued shares of our common stock following such stock dividend was 6,250,000. On June 27, 2006, we and certain of our founding shareholders cancelled an aggregate of 625,000 shares of our common stock, reducing the founding shares outstanding to 5,625,000 shares.
On July 12, 2006, we issued in an offering 22,500,000 units, each unit consisting of one share of our common stock and one warrant entitling the holder thereof to purchase one share of our common stock. The sales price was $8.00 per unit for an aggregate sales price of $180,000,000.
Underwriters and Other Purchasers
The underwriters in the offering were KBC Peel Hunt Ltd and CRT Capital Group, LLC, who sold 16,875,000 units to the public. The remaining units sold in the offering were sold to the following designees of Mr. Novelly.
Name Shares
---------------------------------------------------------------------- ---------
St. Albans Global Management, Limited Partnership, LLLP .............. 4,531,250
Apex Holding Co ...................................................... 625,000
Ed Wahl .............................................................. 31,250
Jeff Call ............................................................ 31,250
Graziadio Family Trust ............................................... 62,500
Bermuda Life Insurance Company/Separate Account C .................... 93,750
William Dore ......................................................... 109,375
Lori L. Mikles ....................................................... 46,875
J. B. Ladd Trust ..................................................... 32,500
Thomas Evans ......................................................... 30,000
Steve Wallace ........................................................ 31,250
---------
Total ................................................................ 5,625,000
=========
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Exemption from Registration Claimed
Shares of our common stock were issued to our founding shareholders on the basis of an exemption from registration under Section 4(2) of the Securities Act.
The units were sold: (i) to "qualified institutional buyers" (as defined in Rule 144A under the Securities Act) and a limited number of "accredited investors" (as defined in Rule 501 under the Securities Act); and (ii) in offshore transactions complying with Rule 903 of Regulation S under the Securities Act.
Terms of Warrant Conversion or Exercise
Each of our outstanding warrants entitles the registered holder to purchase one share of our common stock at an exercise price of $6.00 per share, subject to adjustment as discussed below, at any time commencing on October 31, 2006. The warrants will expire on July 12, 2010 at 5:00 p.m., New York City time.
We may call the warrants for redemption at any time after they become exercisable:
o in whole and not in part;
o at a price of $0.01 per warrant;
o upon a minimum of 30 days' prior written notice of redemption to each warrant holder;
o if, and only if, the last independent bid price on AIM of our shares of common stock equals or exceeds $11.50 per share for any 20 trading days within a 30 trading day period ending three business days before we send the notice of redemption; and
o the weekly trading volume of our shares has been at least 200,000 shares for each of the two calendar weeks prior to the day we send the notice of redemption.
If the foregoing conditions are satisfied and we call the warrants for redemption, each warrant holder is entitled to exercise its warrant prior to the date scheduled for redemption by payment of the exercise price in cash.
The warrants were issued in registered form under a warrant deed between Capita IRG (Offshore) Limited, as warrant agent, and us.
The exercise price and number of shares of our common stock issuable on exercise of the warrants may be adjusted in certain circumstances, including in the event of a share dividend or our recapitalization, reorganization, merger or consolidation. However, the warrants will not be adjusted for issuances of shares of our common stock at a price below the exercise price of the warrants.
The warrants may be exercised upon surrender of the warrant certificate on or prior to the expiration date at the offices of the warrant agent, with the exercise form on the reverse side of the warrant certificate completed and executed as indicated, accompanied by full payment of the exercise price by certified check payable to us for the number of warrants being exercised. The warrant holders do not have the rights or privileges of holders of shares of common stock or any voting rights until they exercise their warrants and receive shares.
No warrants will be exercisable by a U.S. warrant holder unless, at the time of exercise, the exercise of the warrants for shares has been registered under the Securities Act, or is exempt from registration. U.S. warrant holders will be required to provide appropriate representations, warranties and legal opinions to support any applicable exemption and, if received in an exempt transaction, the shares received upon exercise of the warrant would be restricted securities with the certificate bearing a restrictive legend and not saleable in the U.S. unless registered under the Securities Act, or exempt from registration.
No fractional shares will be issued upon exercise of the warrants. If, upon exercise of the warrants, a holder would be entitled to receive a fractional interest in a share of our common stock, we will, upon exercise, round up to the nearest whole number the number of shares to be issued to the warrant holder.
Use of Proceeds
The proceeds of our July 2006 offering aggregated $180 million, which
proceeds were used as follows.
(Dollars in thousands)
Item Amount
------------------------------------------------------------------- ---------
Offering proceeds ................................................. $ 180,000
Underwriters' fees ................................................ (6,750)
Working capital amount ............................................ (750)
---------
Amount transferred to the trust fund .............................. $ 172,500
=========
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The working capital amount was released to us to pay, among other things, the expenses of the offering (which aggregated $825,000(a)). In addition to the underwriters' fees of $6,750,000 paid in connection with the offering, the underwriters deferred $2,700,000 of their fees, which deferred fees were payable upon the consummation of a qualified business combination and which were in fact paid on October 31, 2006 in connection with the consummation of our acquisition of FutureFuel Chemical Company.
(a) The expenses of the offering in excess of $750,000 were paid from the proceeds of loans made by Mr. Mikles and St. Albans Global Management, Limited Partnership, LLLP to us in the aggregate amount of $700,000, which loans were repaid as set forth above.
The trust fund was released concurrently with the consummation of our acquisition of FutureFuel Chemical Company (which acquisition constituted a qualified business combination) and was disbursed as follows.
(Dollars in thousands)
Item Amount
------------------------------------------------------------------- ---------
Trust Amount(a) ................................................... $ 174,123
Acquisition purchase price(b) ..................................... (73,971)
Additional acquisition costs ...................................... (70)
Reimbursement of due diligence expenses ........................... (165)
Repayment of the loans from the founding shareholders ............. (700)
Deferred underwriters' fees ....................................... (2,700)
Deferred NOMAD fee ................................................ (250)
Exercise of repurchase rights ..................................... (10,987)
---------
Amount disbursed to us ............................................ $ 85,280
=========
----------
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(a) Includes $2,623 in interest income.
(b) Prior to purchase price adjustments. After purchase price adjustments, the amount was $71,159. See note 1 to our consolidated financial statements contained elsewhere herein.
In connection with the offering, shareholders other than founding shareholders ("new shareholders") were granted certain rights to have their shares of our common stock repurchased by us ("repurchase rights"). At the time we sought approval of any business combination, each new shareholder that voted against the business combination was entitled to simultaneously exercise his repurchase rights with respect to his shares (exclusive of founding shares); provided that our repurchase obligations were only effective if such business combination was approved by the new shareholders and completed.
Since our acquisition of FutureFuel Chemical Company constituted a business combination, a new shareholder was entitled to have his shares repurchased by us at the repurchase price described below following consummation of the acquisition if the new shareholder voted against the acquisition and exercised his repurchase rights. Our board of directors imposed as a condition to us consummating the acquisition of FutureFuel Chemical Company the requirement that those new shareholders voting against the acquisition and exercising their repurchase rights must own in the aggregate not more than 15% of the issued and outstanding shares of our common stock. At our shareholder meeting to approve the acquisition of FutureFuel Chemical Company, 28,125,000 shares were issued and outstanding. Consequently, if new shareholders holding more than 4,218,750 shares voted against the acquisition and exercised their repurchase rights, the acquisition would not be approved. At the shareholder meeting, new shareholders holding an aggregate of 1,425,000 shares voted against the acquisition and exercised their repurchase rights, and shareholders holding 25,205,477 shares voted to approve the acquisition. Consequently, since the 15% threshold was not exceeded, the acquisition of FutureFuel Chemical Company by us was approved.
The repurchase price was $7.667 per eligible share plus any interest earned by the trust fund, net of expenses and income taxes payable on such interest. The interest earned by the trust fund, net of expenses and income taxes payable on such interest, was $973,594 as of the consummation of the acquisition, for a repurchase price of $7.71 per eligible share and an aggregate repurchase price of $10,986,750. Such payments to new shareholders exercising their repurchase rights were made and the 1,425,000 shares have been canceled.
Following consummation of our acquisition of FutureFuel Chemical Company, new shareholders who did not exercise their repurchase rights ceased to have such repurchase rights.
Item 11. - Description of Securities to be Registered
The total number of shares of all classes of stock which we have the authority to issue is 80,000,000 shares consisting of: (i) 5,000,000 shares of a class designated as preferred stock, par value $0.0001 per share; and (ii) 75,000,000 shares of a class designated as common stock, par value $0.0001 per share. Of the 22,500,000 shares of common stock previously issued in our July 2006 offering, 1,425,000 were the subject of repurchase rights and have been canceled as discussed above. The designations, preferences, rights, qualifications, limitations and restrictions of our preferred stock and common stock are as follows.
Preferred Stock
Our preferred stock may be issued from time to time in one or more classes or series. The shares of each class or series are to have such designations and powers, preferences, rights, qualifications, limitations and restrictions as are stated and expressed herein and in the resolution or resolutions providing for the issuance of such class or series adopted by our board of directors. Authority is vested in our board to authorize the issuance of the preferred stock from time to time in one or more classes or series, and with respect to each class or series of the preferred stock, to fix and state by the resolution or resolutions of our board from time to time adopted providing for the issuance thereof the following:
o whether the class or series is to have voting rights, full, special or limited, and whether such class or series is to be entitled to vote as a separate class either alone or together with the holders of one or more other classes or series of our stock;
o the number of shares to constitute the class or series and the designations thereof;
o the preferences and relative, participating, optional or other special rights, if any, and the qualifications, limitations or restrictions thereof, if any, with respect to any class or series;
o whether the shares of any class or series are redeemable at our option or the holders thereof or upon the happening of any specified event and, if redeemable, the redemption price or prices (which may be payable in the form of cash, notes, securities or other property), and the time or times at which, and the terms and conditions upon which, such shares are redeemable and the manner of redemption;
o whether the shares of a class or series are subject to the operation of retirement or sinking funds to be applied to the purchase or redemption of such shares for retirement and, if such retirement or sinking fund or funds are to be established, the annual amount thereof and the terms and provisions relative to the operation thereof;
o the dividend rate, whether dividends are payable in cash, our stock or other property, the conditions upon which and the times when such dividends are payable, the preference to or the relation to the payment of dividends payable on any other class or classes or series of our stock, whether or not such dividends are cumulative or noncumulative and, if cumulative, the date or dates from which such dividends accumulate;
o the preferences, if any, and the amounts thereof which the holders of any class or series thereof will be entitled to receive upon our voluntary or involuntary dissolution or liquidation, or upon any distribution of our assets;
o whether the shares of any class or series, at our option or the holders thereof or upon the happening of any specified event, are convertible into or exchangeable for the shares of any other class or classes or of any other series of the same or any other class or classes of stock, securities or other property and the conversion price or prices or ratio or the rate or rates at which such exchange may be made, with such adjustments, if any, as may be stated and expressed or provided for in such resolution or resolutions; and
o such other special rights and protective provisions with respect to any class or series as our board of directors may deem advisable.
The shares of each class or series of our preferred stock may vary from the shares of any other class or series thereof in any or all of the foregoing respects. Our board may increase the number of shares of the preferred stock designated for any existing class or series by a resolution adding to such class or series authorized and un-issued shares of the preferred stock not designated for any other class or series. Our board may decrease the number of shares of the preferred stock designated for any existing class or series (but not below the number of shares thereof then outstanding) by a resolution subtracting from such class or series, and the shares so subtracted will become authorized, un-issued and undesignated shares of the preferred stock.
As of the date of this Registration Statement, no shares of our preferred stock have been issued.
Common Stock
All shares of common stock have identical rights and privileges in every respect. Except as specifically provided by our board in a resolution providing for any preferred stock, or series thereof, in no event will shares of common stock have preferences over shares of our preferred stock with respect to payment of dividends or distribution of assets upon our liquidation and dissolution.
Our common stock is fully voting stock entitled to one vote per share with respect to all matters to be voted on by our shareholders. Except as expressly required under the Delaware General Corporation Law, our common stock will vote as a single class with respect to all matters to be voted on by our shareholders. Except as otherwise required by law or as otherwise provided by our board with respect to any preferred stock, the holders of our common stock exclusively possess all voting power with respect to us.
A holder of shares of our common stock will share ratably with the other holders of our common stock on a share-for-share basis in all distributions of assets pursuant to any voluntary or involuntary liquidation, dissolution or winding up of us.
Preemptive Rights
Our shareholders have no preemptive rights to acquire our un-issued shares or securities convertible into or carrying a right to subscribe to or acquire shares of our stock.
Board of Directors
The number of directors initially to constitute our board was three.
Thereafter, the number of directors may be changed: (i) by amendment to our
certificate of incorporation; or (ii) as set forth in our bylaws. The size of
our board was increased to four directors on October 26, 2005, to six directors
on May 24, 2006 and to eight directors on January 8, 2007. The number of
directors may be decreased at any time and from time to time either by our
shareholders or by a majority of our directors then in office, but only to
eliminate vacancies existing by reason of the death, resignation, removal or
expiration of the term of one or more directors. At each meeting of our
shareholders for the election of directors at which a quorum is present, the
persons receiving a plurality of the votes cast will be elected directors.
Nominations for the election of directors may be made by our board or a
committee appointed by the board, or by any shareholder entitled to vote
generally in the election of directors who complies with the shareholder
proposal procedures described below. All nominations by shareholders must be
made pursuant to timely notice in proper written form to our corporate secretary
as described below. To be in proper written form, such shareholder's notice must
set forth in writing: (i) as to each person whom the shareholder proposes to
nominate for election or reelection as a director, all information relating to
such person that is required to be disclosed in solicitations of proxies for
election of directors, or is otherwise required, in each case pursuant to
Regulation 14A under the Securities Exchange Act of 1934, as amended, including
such person's written consent to being a nominee and to serving as a director if
elected (irrespective of whether the Securities Exchange Act of 1934, as
amended, is applicable to us); and (ii) as to the shareholder giving the notice,
(a) the name and address, as they appear on our books, of such shareholder and
(b) the class and number of shares of our stock which are beneficially owned by
such shareholder.
Our board is divided into three classes: Class A, Class B and Class C. The number of directors in each class are to be nearly as equal as possible. At the first election of directors by the incorporator, the incorporator elected a Class C director for a term expiring at our third annual meeting of shareholders, which Class C director was Mr. Novelly. The Class C director then appointed additional Class A and Class B directors. The directors in Class A were elected for a term expiring at our first annual meeting of shareholders, the directors in Class B were elected for a term expiring at the second annual meeting and the director in Class C was elected for a term expiring at the third annual meeting. The Class A, Class B and Class C directors are as follows.
Term
Name Class Expires
-------------------------------------------------------------- ----- -------
Paul A. Novelly .............................................. C 2009
Lee E. Mikles ............................................... B 2008
Douglas D. Hommert ........................................... A 2007
Edwin A. Levy ................................................ B 2008
Thomas R. Evans .............................................. B 2008
William J. Dore .............................................. A 2007
Richard L. Knowlton .......................................... C 2009
Paul G. Lorenzini ............................................ C 2009
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Commencing at the first annual meeting of our shareholders, and at each annual meeting thereafter, directors elected to succeed those directors whose terms expire are elected for a term of office to expire at the third succeeding annual meeting after their election. Except as the Delaware General Corporation Law may otherwise require, in the interim between annual meetings or special meetings of our shareholders called for the election of directors and/or the removal of one or more directors and the filling of any vacancy in that connection, newly created directorships and any vacancies in our board, including unfilled vacancies resulting from the removal of directors for cause, may be filled by the vote of a majority of the remaining directors then in office, although less than a quorum (as defined in our bylaws), or by the sole remaining director. All directors hold office until the expiration of their respective terms of office and until their successors have been elected and qualified. A director elected to fill a vacancy resulting from the death, resignation or removal of a director serves for the remainder of the full term of the director whose death, resignation or removal has created such vacancy and until his successor has been elected and qualified.
Our board has the power, without the assent or vote of our shareholders, to make, alter, amend, change, add to or repeal our bylaws.
A majority of the total number of the whole board constitutes a quorum at all meetings of our board. In the event one or more of our directors is disqualified to vote at any meeting, then the required quorum will be reduced by one for each such director so disqualified; provided, however, that in no case will less than one third of the total number of the whole board constitute a quorum.
Subject to the rights of holders of our preferred stock to elect directors under circumstances specified in a resolution of our board adopted pursuant to the provisions of our certificate of incorporation and bylaws establishing such series, a director may be removed from office, but only for cause, by the affirmative vote of the holders of more than fifty percent of the voting power of our voting stock, voting together as a single class. "Voting stock" means our common stock and any preferred stock entitled to vote generally in the election of our directors.
Our board may provide for the payment to any of our directors of a specified amount for services as director or member of a committee of our board, or of a specified amount for attendance at each regular or special board meeting or committee meeting, or of both. All directors will be reimbursed for ordinary and necessary expenses of attendance at any such meeting.
Notification by Interested Shareholders
Pursuant to our certificate of incorporation, any holder of shares of our common stock or our warrants must notify us without delay, and including particulars of the price, amount and nature of the relevant transaction, if the aggregate amount of such shares or warrants in which he has an interest: (i) exceeds three percent by nominal value of the entire issued class of our common stock or warrants respectively; or (ii) changes from an aggregate amount
which exceeded three percent by nominal value of the then issued class of our common stock or warrants. "Interest" includes an interest of any kind (whether conditional or absolute) whatsoever in the shares of our common stock or warrants (and accordingly there are to be disregarded any restraints or restrictions to which the exercise of any right attached to the interest is or may be subject), including: (a) a joint interest; (b) a beneficial interest; (c) a contractual right to purchase; (d) the right to exercise any right conferred by or the right to control the exercise of such right in shares of our common stock or warrants; or (e) the right to call for delivery of, the right to acquire or the obligation to take an interest in shares of our common stock or warrants.
Alteration of the Certificate of Incorporation
Our certificate of incorporation may be amended only if approved by a
majority of our directors then in office and eligible to vote on such
resolution, presented to our shareholders for consideration pursuant to Section
242 of the Delaware General Corporation Law and approved by our shareholders:
(i) at a general or special meeting at which a quorum is present by a majority
of votes cast; or (ii) by written consent in accordance with Section 228 of the
Delaware General Corporation Law. Where our board has, by a resolution passed by
a majority of our directors then in office and eligible to vote on such
resolution, approved an amendment to the article of our certificate of
incorporation dealing with the number of directors and classes of directors, the
amendment will not be effective unless approved by a vote of shareholders
holding no less than 80% of our issued stock carrying the right to vote at
general or special meetings at the relevant time (or by written consent in
accordance with Section 228 of the Delaware General Corporation Law).
Meeting of Shareholders
An annual meeting of our shareholders for the election of directors and for the transaction of such other business as may properly be brought before the meeting will be held at such place, on such date and at such time as our board or our chief executive officer each year fixes, which date will be within thirteen months of the last annual meeting of our shareholders. If no annual meeting is held in accordance with the foregoing provisions, a special meeting may be held in lieu of the annual meeting, and any action taken at that special meeting will have the same effect as if it had been taken at the annual meeting, and in such case all references in our bylaws to the annual meeting of shareholders will be deemed to refer to such special meeting. Except as required by law and subject to the rights of holders of any series of our preferred stock, special meetings of our shareholders may be called at any time but only by our chief executive officer, the chairman of our board or by our board pursuant to a resolution approved by a majority of the then directors. Business transacted at any special meeting of our shareholders will be limited to matters relating to the purpose or purposes stated in the notice of the meeting unless this requirement is waived in accordance with our bylaws or with applicable law.
Except as otherwise may be required by law, notice of each meeting of our shareholders, whether an annual meeting or a special meeting: (i) must be in writing; (ii) must be delivered or sent by mail not less than ten nor more than sixty days before the date of such meeting to each shareholder entitled to vote at such meeting; and (iii) must state the place, date and hour of the meeting. The notice of a special meeting must also state the purpose or purposes for which the meeting is called and must indicate that such notice is being issued by or at the direction of the persons calling the meeting. Except as otherwise provided by law, our certificate of incorporation or our bylaws, at each meeting of our shareholders, the holders of shares of stock possessing a majority of the voting power of our capital stock issued and outstanding and entitled to vote at such meeting, present in person or represented by proxy at such meeting, constitute a quorum for the transaction of any business of the Company.
Except as otherwise provided with respect to our preferred stock, at each meeting of our shareholders, each holder of shares of our common stock will be entitled to one vote for each share of common stock standing in such holder's name on our stock records at the record date for the determination of shareholders entitled to vote at such meeting or, if no such record date has been fixed, then at the close of business on the day next preceding the day on which notice thereof is given. All voting, including on the election of directors but excepting where otherwise required by law, may be by a voice vote; provided, however, that upon demand therefor by a shareholder entitled to vote or by such shareholder's proxy, a stock vote will be taken by ballots (which may be submitted by electronic transmission), each of which will state the name of the shareholder or proxy voting and such other information as may be required under the procedure established for the meeting.
At each meeting of our shareholders where a quorum is present, the holders of a majority of our capital stock present or represented by proxy and entitled to vote thereon will decide any matter to be voted upon by our shareholders at such meeting, except when a different vote is required by express provision of law, our certificate of incorporation or our bylaws. At any annual meeting of our shareholders, only such business may be conducted as may be brought before the annual meeting: (i) by or at the direction of our board; or (ii) by any shareholder who complies with the procedures set forth in our bylaws. For business properly to be brought before an annual meeting by a shareholder, the shareholder must have given timely notice thereof in proper written form to our corporate secretary. To be timely, a shareholder's notice must be delivered to or mailed and received at our executive office not less than 30 days nor more than 60 days prior to the annual meeting; provided, however, that in the event that less than 40 days' notice or prior public disclosure of the date of the annual meeting is given or made to our shareholders, notice by the shareholder to be timely must be received not later than the close of business on the tenth day following the day on which such notice of the date of the annual meeting was mailed or such public disclosure was made. To be in proper written form, a shareholder's notice to our corporate secretary must set forth in writing as to each matter the shareholder proposes to bring before the annual meeting: (a) a brief description of the business desired to be brought before the annual meeting and the reason for conducting such business at the annual meeting; (b) the name and address, as they appear on our books, of the shareholder proposing such business; (c) the class and number of shares of our stock which are beneficially owned by the shareholder; and (d) any material interest of the shareholder in such business.
Item 12. - Indemnification of Directors and Officers
Under Article Eleven of our certificate of incorporation, we will indemnify, to the fullest extent permitted under the Delaware General Corporation Law, any individual who was, is or is threatened to be made a party to a proceeding by reason of the fact that he or she: (i) is or was a director or officer of the Company; or (ii) while a director or officer of the Company is or was serving at our request as a director, officer, partner, venturer, proprietor, trustee, employee, agent or similar functionary of another foreign or domestic person. Such right is a contract right and, as such, runs to the benefit of any director or officer who is elected and accepts the position of director or officer of the Company or elects to continue to serve as a director or officer of the Company while Article Eleven is in effect. Any repeal or amendment of Article Eleven may be prospective only and will not limit the rights of any such director or officer or our obligations with respect to any claim arising from or related to the services of such director or officer in any of the foregoing capacities prior to any such repeal or amendment to Article Eleven.
Such right includes the right to be paid by us for expenses incurred in defending any such proceeding in advance of its final disposition to the maximum extent permitted under the Delaware General Corporation Law. If a claim for indemnification or advancement of expenses is not paid in full by us within 60 days after a written claim has been received by us, the claimant may at any time thereafter bring suit against us to recover the unpaid amount of the claim and, if successful in whole or in part, the claimant will also be entitled to be paid the expenses of prosecuting such claim. It is a defense to any such action that such indemnification or advancement of costs of defense are not permitted under the Delaware General Corporation Law, but the burden of proving such defense is on us. Neither our failure (including our board, any committee thereof, independent legal counsel or shareholders) to have made our determination prior to commencement of such action that indemnification of, or advancement of costs of defense to, the claimant is permissible in the circumstances, nor an actual determination by us (including our board, any committee thereof, independent legal counsel or shareholders) that such indemnification or advancement is not permissible, may be a defense to the action or create a presumption that such indemnification or advancement is not permissible. In the event of the death of any individual having a right of indemnification under Article Eleven, such right inures to the benefit of his or her heirs, executors, administrators and personal representatives. The rights so conferred are not exclusive of any other right which any person may have or hereafter acquire under any statute, bylaw, resolution of shareholders or directors, agreement or otherwise.
A director is not personally liable to us or our shareholders for monetary damages for breach of fiduciary duty as a director, except for liability: (i) for any breach of the director's duty of loyalty to us or our shareholders; (ii) for acts or omissions not in good faith or which involve intentional misconduct or knowing violation of law; (iii) for any transaction from which the director derived an improper personal benefit; or (iv) under ss.174 of the Delaware General Corporation Law.
Item 13. - Financial Statements and Supplementary Data
Annual Financial Statements
FutureFuel Chemical Company
The following sets forth FutureFuel Chemical Company's consolidated balance sheets as of December 31, 2006 and December 31, 2005 and the consolidated statements of operations, statements of cash flows and statements of changes in stockholders' equity for each of the years in the three-year period ended December 31, 2006, together with KPMG LLP's report thereon.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of Directors and Stockholders
FutureFuel Corp.:
We have audited the accompanying consolidated balance sheets of FutureFuel Corp. and subsidiary as of December 31, 2006 and 2005, and the related consolidated statements of operations, stockholders' equity, and cash flows for each of the years in the three-year period ending December 31, 2006. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of FutureFuel Corp. and subsidiary as of December 31, 2006 and 2005, and the results of their operations and their cash flows for each of the years in the three-year period ending December 31, 2006, in conformity with U.S. generally accepted accounting principles.
/s/ KPMG LLP St. Louis, Missouri April 23, 2007 |
FutureFuel Corp.
Consolidated Balance Sheets
As of December 31, 2006 and 2005
(Dollars in thousands, except per share amounts)
2006 2005
-------- --------
Assets
Cash and cash equivalents ...................................... $ 63,129 $ --
Accounts receivable ............................................ 23,824 10,881
Inventory ...................................................... 11,591 4,830
Current deferred income tax asset .............................. 68 552
Prepaid expenses ............................................... 1,248 --
Other current assets ........................................... 3,131 --
-------- --------
Total current assets ....................................... 102,991 16,263
Property, plant and equipment, net ............................. 97,761 95,115
Noncurrent deferred income tax asset ........................... 381 516
Restricted cash and cash equivalents ........................... 3,127 --
Other assets ................................................... 2,764 2,606
-------- --------
Total noncurrent assets .................................... 104,033 98,237
-------- --------
Total Assets ....................................................... $207,024 $114,500
======== ========
Liabilities and Stockholders' Equity
Accounts payable ............................................... $ 13,057 $ 7,940
Income taxes payable ........................................... 2,264 --
Accrued expenses and other current liabilities ................. 1,757 5,657
-------- --------
Total current liabilities .................................. 17,078 13,597
Other noncurrent liabilities ................................... 545 843
Noncurrent deferred income taxes ............................... 23,884 23,987
-------- --------
Total noncurrent liabilities ............................... 24,429 24,830
-------- --------
Total Liabilities .................................................. 41,507 38,427
Preferred stock, $0.0001 par value, 5,000,000 shares authorized,
none issued and outstanding ................................ -- --
Common stock, $0.0001 par value, 75,000,000 shares authorized,
26,700,000 issued and outstanding .......................... 3 --
Additional paid in capital ..................................... 162,995 --
Retained earnings .............................................. 2,519 --
Net investment of parent ....................................... -- 76,073
-------- --------
Total stockholders' equity ................................. 165,517 76,073
-------- --------
Total Liabilities and Stockholders' Equity ......................... $207,024 $114,500
======== ========
|
The accompanying notes are an integral part of these financial statements.
FutureFuel Corp.
Consolidated Statements of Operations
For the Years Ended December 31, 2006, 2005 and 2004
(Dollars in thousands, except per share amounts)
2006 2005 2004
------------ ------------ ------------
Revenues ................................... $ 150,770 $ 119,539 $ 144,157
Cost of goods sold ......................... 136,176 103,659 146,309
Distribution ............................... 1,291 1,604 1,499
------------ ------------ ------------
Gross profit (loss) ................... 13,303 14,276 (3,651)
Selling, general and administrative expenses 6,247 7,662 10,854
Research and development expenses .......... 4,937 5,975 9,919
------------ ------------ ------------
11,184 13,637 20,773
------------ ------------ ------------
Income (loss) from operations .............. 2,119 639 (24,424)
Interest income ............................ 733 -- --
Interest expense ........................... (37) (31) (37)
------------ ------------ ------------
696 (31) (37)
------------ ------------ ------------
Income (loss) before income taxes .......... 2,815 608 (24,461)
Provision (benefit) for income taxes ....... 678 227 (9,594)
------------ ------------ ------------
Net income (loss) .......................... $ 2,137 $ 381 $ (14,867)
============ ============ ============
Earnings (loss) per common share
Basic ................................. $ 0.08 $ 0.01 $ (0.56)
Diluted ............................... $ 0.07 $ 0.01 $ (0.56)
Weighted average shares outstanding
Basic ................................. 26,700,000 26,700,000 26,700,000
Diluted ............................... 31,818,772 31,818,772 26,700,000
|
The accompanying notes are an integral part of these financial statements.
FutureFuel Corp.
Consolidated Statements of Cash Flows
For the Years Ended December 31, 2006, 2005 and 2004
(Dollars in thousands)
2006 2005 2004
--------- --------- ---------
Cash flows provide by (used in) operating activities
Net income (loss) ............................................... $ 2,137 $ 381 $ (14,867)
Adjustments to reconcile net income to net cash provided by
(used in) operating activities:
Asset impairment charges .................................... -- -- 18,305
Depreciation ................................................ 9,067 8,940 10,218
Provision (benefit) for deferred income taxes ............... 516 (148) (6,017)
Change in fair value of derivative instruments .............. 447 -- --
Noncash environmental charges (credits) from parent ......... 148 (2,682) (1,266)
Losses on disposals of fixed assets ......................... 95 67 402
Noncash interest expense .................................... 37 31 37
Changes in operating assets and liabilities:
Accounts receivable ......................................... (12,943) (533) 896
Inventory ................................................... (6,761) 2,121 10,586
Prepaid expenses ............................................ (1,248) -- --
Other assets ................................................ (158) (382) (233)
Accounts payable ............................................ 5,117 (57) 1,102
Income taxes payable ........................................ 2,264 -- --
Accrued expenses and other current liabilities .............. (3,900) (129) 7
Other noncurrent liabilities ................................ (335) (53) (126)
--------- --------- ---------
Net cash provided by (used in) operating activities .... (5,517) 7,556 19,044
--------- --------- ---------
Cash flows provided by (used in) investing activities
Restricted cash ................................................. (3,127) -- --
Collateralization of derivative instruments ..................... (3,578) -- --
Proceeds from the sale of fixed assets .......................... -- 60 --
Capital expenditures ............................................ (11,819) (6,654) (6,520)
--------- --------- ---------
Net cash provided by (used in) investing activities ......... (18,524) (6,594) (6,520)
--------- --------- ---------
Cash flows provided by (used in) financing activities
Net proceeds from reverse acquisition ........................... 87,094 -- --
Transfers to parent, net ........................................ 76 (962) (12,524)
--------- --------- ---------
Net cash provided by (used in) financing activities ......... 87,170 (962) (12,524)
--------- --------- ---------
Net change in cash and cash equivalents .............................. 63,129 -- --
Cash and cash equivalents at beginning of period ..................... -- -- --
--------- --------- ---------
Cash and cash equivalents at end of period ........................... $ 63,129 $ -- $ --
========= ========= =========
|
The accompanying notes are an integral part of these financial statements.
FutureFuel Corp.
Consolidated Statements of Changes in Stockholders' Equity
For the Years Ended December 31, 2006, 2005 and 2004
(Dollars in thousands)
Common stock Additional Net Total
------------------- paid-in Retained investment stockholders'
Shares Amount capital earnings of parent equity
---------- ------ ---------- -------- --------- --------------
Balance - December 31, 2003 ..... -- $ -- $ -- $ -- $ 107,933 $ 107,933
Net income (loss) ............ -- -- -- -- (14,867) (14,867)
Net transfers to parent ...... -- -- -- -- (13,790) (13,790)
---------- ------ -------- -------- --------- ---------
Balance - December 31, 2004 ..... -- -- -- -- 79,276 79,276
Net income ................... -- -- -- 381 381
Net transfers to parent ...... -- -- -- -- (3,584) (3,584)
---------- ------ -------- -------- --------- ---------
Balance - December 31, 2005 ..... -- -- -- -- 76,073 76,073
Net income (loss) prior
to reverse acquisition ..... -- -- -- -- (382) (382)
Net transfers to parent ...... -- -- -- -- 213 213
Reverse acquisition .......... 26,700,000 3 87,091 -- -- 87,094
Recapitalization ............. -- -- 75,904 -- (75,904) --
Net income after
giving effect to
recapitalization ........... -- -- -- 2,519 -- 2,519
---------- ------ -------- -------- --------- ---------
Balance - December 31, 2006 ..... 26,700,000 $ 3 $162,995 $ 2,519 $ -- $ 165,517
========== ====== ======== ======== ========= =========
|
The accompanying notes are an integral part of these financial statements.
Notes to the Consolidated Financial Statements of FutureFuel Corp.
(Dollars in thousands, except per share or unit amounts, and as noted)
1) Nature of operations and basis of presentation
Eastman SE, Inc.
Eastman SE, Inc. ("Eastman SE") was incorporated under the laws of the state of Delaware on September 1, 2005 and subsequent thereto operated as a wholly-owned subsidiary of Eastman Chemical Company ("Eastman Chemical") through October 31, 2006. Eastman SE was incorporated for purposes of effecting a sale of Eastman Chemical's manufacturing facility in Batesville, Arkansas (the "Batesville Plant"). Commencing January 1, 2006, Eastman Chemical began transferring the assets associated with the business of the Batesville Plant to Eastman SE.
The Batesville Plant was constructed to produce proprietary photographic chemicals for Eastman Kodak Company ("Eastman Kodak"). Over the years, Eastman Kodak shifted the plant's focus away from the photographic imaging business to the custom synthesis of fine chemicals and organic chemical intermediates used in a variety of end markets, including paints and coatings, plastics and polymers, pharmaceuticals, food supplements, household detergents and agricultural products.
In 2005, the Batesville Plant began the implementation of a biobased products platform. This includes the production of biofuels (biodiesel, bioethanol and lignin/biomass solid fuels) and biobased specialty chemical products (biobased solvents, chemicals and intermediates). In addition to biobased products, the Batesville Plant continues to manufacture fine chemicals and other organic chemicals.
Viceroy Acquisition Corporation
Viceroy Acquisition Corporation ("Viceroy") was incorporated under the laws of the state of Delaware on August 12, 2005 to serve as a vehicle for the acquisition by way of asset acquisition, merger, capital stock exchange, share purchase or similar transaction ("Business Combination") of one or more operating businesses in the oil and gas industry. On July 12, 2006 Viceroy completed an equity offering (see Note 10).
On July 21, 2006, Viceroy entered into an acquisition agreement with Eastman Chemical to purchase all of the issued and outstanding stock of Eastman SE. On October 27, 2006, a special meeting of the shareholders of Viceroy was held and the acquisition of Eastman SE was approved by the shareholders. On October 31, 2006, Viceroy acquired all of the issued and outstanding shares of Eastman SE from Eastman Chemical. After purchase price adjustments to date, a price of $71,159 was paid for the stock of Eastman SE. Any future purchase price adjustments will be treated as an adjustment to equity in the period realized. Immediately subsequent to the acquisition, Viceroy changed its name to FutureFuel Corp. ("FutureFuel") and Eastman SE changed its name to FutureFuel Chemical Company ("FutureFuel Chemical").
Acquisition Accounting
For accounting purposes, the transaction is deemed to be a reverse acquisition and FutureFuel Chemical has been treated as the accounting acquirer and continuing reporting entity that acquired FutureFuel. Accordingly, the October 31, 2006 acquisition has been accounted for as a capital transaction or, more specifically, the issuance of stock by FutureFuel Chemical for the net monetary assets of FutureFuel accompanied by a recapitalization and reorganization with FutureFuel assuming the role of the reporting entity and FutureFuel Chemical assuming the role of FutureFuel's operating subsidiary.
Through October 31, 2006, the operations of the Batesville Plant were included in the consolidated financial statements of Eastman Chemical. Accordingly, the accompanying balance sheets, statements of operations and related statements of cash flows have been prepared from Eastman Chemical's historical accounting records and are presented on a carve-out basis to include the historical financial position, results of operations and cash flows applicable to Eastman SE through October 31, 2006. As a result of the lack of capital structure of Eastman SE prior to October 31, 2006, the net investment of the parent has been presented in lieu of stockholder's equity.
Notes to the Consolidated Financial Statements of FutureFuel Corp.
(Dollars in thousands, except per share or unit amounts, and as noted)
Subsequent to October 31, 2006, the consolidated financial statements present the combined operations of FutureFuel and FutureFuel Chemical.
Corporate Allocations
The financial statements prior to October 31, 2006 include allocations of certain corporate services provided by Eastman Chemical's management, including finance, legal, information systems, human resources and distribution. Eastman Chemical has utilized its experience with the business of the Batesville Plant and its judgment in allocating such corporate services and other support to the periods prior to October 31, 2006. Costs allocated for such services were:
Ten months
ended Twelve months ended
October 31: December 31:
---------- -------------------
2006 2005 2004
---------- -------- --------
Cost of goods sold ................ $ -- $ 99 $ 1,275
Distribution ...................... 438 874 818
Selling, general and administrative 4,398 5,327 7,776
Research and development .......... 652 2,388 6,094
---------- -------- --------
Total cost and expenses allocated . $ 5,488 $ 8,688 $ 15,963
========== ======== ========
|
Allocations were made primarily based on a percentage of revenues, which management believes represents a reasonable allocation methodology. These allocations and estimates are not necessarily indicative of the costs and expenses that would have resulted if Eastman SE had been operating as a separate entity.
Eastman Chemical uses a centralized approach to cash management, hedging and the financing of its operations. As a result, debt and related interest income and expense, and certain cash and cash equivalents, were maintained at the corporate office and are not included in the accompanying consolidated financial statements.
2) Significant accounting policies
Consolidation
The accompanying consolidated financial statements include the accounts of FutureFuel and its wholly-owned subsidiary, FutureFuel Chemical. All significant intercompany transactions have been eliminated.
Cash and cash equivalents
Cash equivalents consist of highly liquid investments with maturities of three months or less when purchased and are carried at cost, which approximates market.
Accounts receivable, allowance for doubtful accounts and credit risk
Accounts receivable are recorded at the invoiced amount and do not bear interest. FutureFuel has established procedures to monitor credit risk and has not experienced significant credit losses in prior years. Accounts receivable have been reduced by an allowance for amounts that may be uncollectible in the future. This estimated allowance is based upon management's evaluation of the collectibility of individual invoices and is based upon management's evaluation of the financial condition of its customers and historical bad debt experience. Write-offs are recorded at the time a customer receivable is deemed uncollectible.
Prior to October 31, 2006, Eastman SE participated in an agreement that allowed Eastman Chemical to sell certain domestic accounts receivable under a planned continuous sale program to a third party. The agreement permitted the sale of undivided interests in domestic trade accounts receivable, which Eastman
Notes to the Consolidated Financial Statements of FutureFuel Corp.
(Dollars in thousands, except per share or unit amounts, and as noted)
Chemical continued to service until collection. As the sale program was part of Eastman Chemical's centralized approach to cash management, Eastman SE's $7,888 participation at December 31, 2005 is classified as accounts receivable in the accompanying consolidated balance sheet with the corresponding liability included in the net investment of parent.
Customer concentrations
Significant portions of FutureFuel's sales are made to a relatively small number of customers. All sales of nonanoyloxybenzenesulfonate ("NOBS"), a bleach activator, are made to a leading North American consumer products company pursuant to a supply contract that is set to expire in June 2008. Sales of NOBS totaled $84,691, $66,959 and $73,607 for the years ended December 31, 2006, 2005 and 2004, respectively. Additionally, all sales of a herbicide and certain other intermediates used in the production of this herbicide are made to one customer. Sales of this herbicide and its intermediates totaled $23,685, $25,063 and $27,946 for the years ended December 31, 2006, 2005 and 2004, respectively. These two customers represented approximately 64% and 88% of FutureFuel's accounts receivable balance at December 31, 2006 and 2005, respectively.
Inventory
FutureFuel determines the cost of substantially all raw materials and finished goods inventories by the last-in, first-out ("LIFO") method. FutureFuel writes down its inventories for estimated obsolescence or unmarketable inventory equal to the difference between the carrying value of inventory and the estimated market value based upon current demand and market conditions.
Financial and derivative instruments
The carrying values of cash and cash equivalents, accounts receivable, accounts payable and accrued expenses and other current liabilities approximate their fair values due to the short-term maturities of these instruments.
FutureFuel maintains inventories of biodiesel and utilizes various derivative instruments such as regulated futures and regulated options as an economic hedge to reduce the effects of fluctuations in the prices of biodiesel. These derivative instruments do not qualify for hedge accounting under the specific guidelines of Statement of Financial Accounting Standards ("SFAS") No. 133 Accounting for Derivative Instruments and Hedging Activities, as amended by SFAS No. 149 Amendment of Statement 133 on Derivative Instruments and Hedging Activities. While management believes each of these instruments are entered into in order to effectively manage various market risks, none of the derivative instruments are designated and accounted for as hedges primarily as a result of the extensive record-keeping requirements.
FutureFuel records all derivative instruments at fair value. Fair value is determined by using the closing prices of the derivative instruments on the New York Mercantile Exchange at the end of an accounting period. Changes in fair value of the derivative instruments are recorded in the statements of operations as a component of cost of goods sold. FutureFuel maintains a margin account with a broker to collateralize these derivative instruments.
Property, plant and equipment
Property, plant and equipment is carried at cost. Maintenance and repairs are charged to earnings; replacements and betterments are capitalized. When FutureFuel retires or otherwise disposes of assets, it removes the cost of such asset and related accumulated depreciation from the accounts. FutureFuel records any profit and loss on retirement or other disposition in earnings. Asset impairments are reflected as increases in accumulated depreciation. Depreciation is provided using the straight-line method over the following estimated useful lives:
Notes to the Consolidated Financial Statements of FutureFuel Corp.
(Dollars in thousands, except per share or unit amounts, and as noted)
Buildings and building equipment ...................... 20 - 50 years Machinery and equipment ............................... 3 - 33 years Transportation equipment .............................. 5 - 33 years Other ................................................. 5 - 33 years |
Restricted cash and cash equivalents
Restricted cash and cash equivalents include cash and cash equivalents reserved for purposes of meeting certain Arkansas Department of Environmental Quality requirements that become applicable in the event of a closure of the Batesville Plant. The amount of cash reserved for this purpose is based on a formula derived by the state of Arkansas and totaled $3,127 at December 31, 2006. No cash was restricted in periods prior to December 31, 2006.
Impairment of assets
FutureFuel evaluates the carrying value of long-lived assets when events or changes in circumstances indicate that the carrying value may not be recoverable. Such events and circumstances include, but are not limited to, significant decreases in the market value of the asset, adverse changes in the extent or manner in which the asset is being used, significant changes in business climate, or current or projected cash flow losses associated with the use of the assets. The carrying value of a long-lived asset is considered impaired when the total projected undiscounted cash flows from such assets are separately identifiable and are less than its carrying value. In that event, a loss is recognized based on the amount by which the carrying value exceeds the fair value of the long-lived asset. For long-lived assets to be held for use in future operations and for fixed (tangible) assets, fair value is determined primarily using either the projected cash flows discounted at a rate commensurate with the risk involved or appraisal. For long-lived assets to be disposed of by sale or other than sale, fair value is determined in a similar manner, except that fair values are reduced for disposal costs.
Asset retirement obligations
FutureFuel establishes reserves for closure/post-closure costs associated with the environmental and other assets it maintains. Environmental assets include but are not limited to waste management units such as incinerators, landfills, storage tanks and boilers. When these types of assets are constructed or installed, a reserve is established for the future costs anticipated to be associated with the closure of the site based on an expected life of the environmental assets, the applicable regulatory closure requirements and FutureFuel's environmental policies and practices. These expenses are charged into earnings over the estimated useful life of the assets. Currently, FutureFuel estimates the useful life of each individual asset up to 35 years. Changes made in estimates of the asset retirement obligation costs or the estimate of the useful lives of these assets are reflected in earnings as an increase or decrease in the period such changes are made.
Environmental costs are capitalized if they extend the life of the related property, increase its capacity and/or mitigate or prevent future contamination. The cost of operating and maintaining environmental control facilities is charged to expense.
Deferred income taxes
Prior to October 31, 2006, Eastman SE was included in the consolidated federal tax return of Eastman Chemical. For purposes of the financial results presented up to that date, the provision for income taxes has been prepared using the separate return method. As Eastman SE did not file a separate federal tax return prior to October 31, 2006 and no tax sharing agreement was in place, any amounts payable or receivable were actually due to or receivable from Eastman Chemical and are included in the net investment of parent and transfers to parent.
Notes to the Consolidated Financial Statements of FutureFuel Corp.
(Dollars in thousands, except per share or unit amounts, and as noted)
Income taxes are accounted for using the asset and liability method. Under this method, income tax assets and liabilities are recognized for temporary differences between financial statement carrying amounts of assets and liabilities and their respective income tax basis. A future income tax asset or liability is estimated for each temporary difference using enacted and substantively enacted income tax rates and laws expected to be in effect when the asset is realized or the liability settled. A valuation allowance is established, if necessary, to reduce any future income tax asset to an amount that is more likely than not to be realized.
Revenue recognition
Revenue from product sales are recognized when persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the price to the customer is fixed or determinable and collectibility is reasonably assured.
Prior to October 31, 2006, certain sales from Eastman SE to then affiliated companies, such as Eastman Chemical, were recorded with no margin based on the interdivision arrangements. Since October 31, 2006, these sales have been recorded based upon the pricing provisions stipulated within negotiated sales contracts.
Shipping and handling fees
Shipping and handling fees related to sales transactions are billed to customers and recorded as sales revenues.
Cost of goods sold and selling, general and administration expense
Cost of goods sold includes the costs of inventory sold, related purchasing, distribution and warehousing costs, costs incurred for shipping and handling, and environmental remediation costs.
Selling, general and administration expense includes personnel costs associated with sales, marketing and administration, legal and legal-related costs, consulting and professional services fees, advertising expenses, and other similar costs.
Research and development
All costs identified as research and development costs are charged to expense when incurred.
Planned major maintenance activities
Expenditures for planned major maintenance activities are recognized as expense as incurred.
Earnings per share
Basic earnings per share is computed by dividing net income (the numerator) by the weighted average number of outstanding shares (the denominator) for the period. Diluted earnings per share are calculated in accordance with the treasury stock method to determine the dilutive effect of warrants and options. The computation of diluted earnings per share includes the same numerator, but the denominator is increased to include the number of additional common shares from the exercise of warrants and options that would have been outstanding if potentially dilutive common shares had been issued.
The weighted average basic and diluted shares outstanding for the years ended December 31, 2006, 2005 and 2004 have been calculated assuming that all shares outstanding at December 31, 2006, net of those shares whose holders exercised their repurchase rights as described in Note 10, were outstanding for all periods presented. The dilutive impact of the warrants, as described in Note 10, was calculated based upon the trading activity of FutureFuel's common stock from July 13, 2006 to December 31, 2006.
Notes to the Consolidated Financial Statements of FutureFuel Corp.
(Dollars in thousands, except per share or unit amounts, and as noted)
Comprehensive income (loss)
As it has not historically recognized any other comprehensive income
(loss), the comprehensive income (loss) of FutureFuel is comprised
entirely of its net income (loss). As FutureFuel recognizes revenues,
expenses, gains or losses that, under accounting principles generally
accepted in the U.S., are included in comprehensive income but excluded
from net income, these items will be recognized as a component of other
comprehensive income in its financial statements.
Commitments and contingent liabilities
In the ordinary course of its business, FutureFuel enters into supply and sales contracts as deemed commercially desirable. Supply contracts are utilized to ensure the availability of raw materials used in the production process. Sales contracts are utilized to ensure the future sale of produced product.
FutureFuel and its operations from time to time may be parties to or targets of lawsuits, claims, investigations and proceedings including product liability, personal injury, patent and intellectual property, commercial, contract, environmental, health and safety and environmental matters, which are handled and defended in the ordinary course of business. FutureFuel accrues a liability for such matters when it is probable that a liability has been incurred and the amount can be reasonably estimated. When a single amount cannot be reasonably estimated but the cost can be estimated within a range, FutureFuel accrues the minimum amount.
Use of estimates
The preparation of financial statements in conformity with accounting principals generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during a reporting period. Estimates are used when accounting for allowance for doubtful accounts, depreciation, amortization, asset retirement obligations and income taxes as well as the evaluation of potential losses due to impairments or future liabilities. Actual results could differ materially from those estimates.
3) Inventories
The carrying values of inventory were as follows as of December 31:
2006 2005
-------- --------
At first-in, first-out or average cost (approximates current cost)
Finished goods .............................................. $ 11,832 $ 7,405
Raw materials and supplies .................................. 12,631 9,842
-------- --------
24,463 17,247
LIFO reserve ................................................ (12,872) (12,417)
-------- --------
Total inventories ........................................... $ 11,591 $ 4,830
======== ========
|
Notes to the Consolidated Financial Statements of FutureFuel Corp.
(Dollars in thousands, except per share or unit amounts, and as noted)
4) Derivative instruments
The volumes and carrying values of FutureFuel's derivative instruments were as follows at December 31:
Asset/(Liability)
-----------------------------------------------
2006 2005
---------------------- ---------------------
Quantity Fair Quantity Fair
(000 bbls) Market (000 bbls) Market
Long/(Short) Value Long/(Short) Value
------------ ------ ------------ ------
Regulated fixed price future
commitments, included in prepaid
expenses and other current assets ....... (250) $ (28) -- $ --
Regulated options, included in prepaid
expenses and other current assets ....... (100) $ (419) -- $ --
|
The margin account maintained with a broker to collateralize these derivative instruments carried an account balance of $3,578 at December 31, 2006, and is classified as other current assets in the consolidated balance sheet. This margin account carried no balance at December 31, 2005. The carrying values of the margin account and of the derivative instruments are included in other current assets and comprise the entire account balance.
5) Property, plant and equipment
Property, plant and equipment consisted of the following at December 31:
2006 2005
--------- ---------
Land ............................................................. $ 1,345 $ 1,345
Buildings and building equipment ................................. 47,895 47,301
Machinery and equipment .......................................... 409,676 403,051
Construction in progress ......................................... 6,335 2,538
Accumulated depreciation ......................................... (367,490) (359,120)
--------- ---------
$ 97,761 $ 95,115
========= =========
|
Depreciation expense totaled $9,067, $8,940 and $10,218 for the years ended December 31, 2006, 2005 and 2004, respectively.
6) Other assets
Other assets is comprised of spare equipment and parts that have not been placed into service as of the balance sheet date and are not expected to be placed into service for the twelve-month period subsequent to the balance sheet date. The balance related to these items totaled $2,764 and $2,606 at December 31, 2006 and 2005, respectively.
7) Accrued expenses and other current liabilities
Accrued expenses and other current liabilities consisted of the following at December 31:
2006 2005
-------- --------
Accrued employee liabilities ..................................... $ 773 $ 4,238
Accrued property, use and franchise taxes ........................ 373 1,419
Accrued professional fees ........................................ 340 --
Amounts collected on behalf of Eastman Chemical .................. 178 --
Other ............................................................ 93 --
-------- --------
$ 1,757 $ 5,657
======== ========
|
Notes to the Consolidated Financial Statements of FutureFuel Corp.
(Dollars in thousands, except per share or unit amounts, and as noted)
8) Asset retirement obligations and environmental reserves
The Batesville Plant generates hazardous and non-hazardous wastes, the treatment, storage, transportation and disposal of which are regulated by various governmental agencies. In addition, the Batesville Plant may be required to incur costs for environmental and closure and post closure costs under the Resource Conservation and Recovery Act ("RCRA"). FutureFuel's reserve for asset retirement obligations and environmental contingencies was $545 and $513 as of December 31, 2006 and 2005, respectively.
The following table summarizes the activity of accrued obligations for asset retirement obligations for the years ended December 31:
2006 2005 2004
--------- --------- ---------
Beginning balance at January 1 ............. $ 513 $ 474 $ 612
Accretion expense .......................... 37 31 37
Revisions in estimates ..................... (5) 8 (175)
--------- --------- ---------
Balance at December 31 ..................... $ 545 $ 513 $ 474
========= ========= =========
|
In addition, certain closure and post-closure liabilities were not transferred to the Batesville Plant and were retained by Eastman Chemical. As these liabilities related to the operations of the Batesville Plant, charges (credits) of $148, $(2,682) and $(1,266) for the years ended December 31, 2006, 2005 and 2004, respectively, were included in cost of goods sold within the accompanying consolidated statements of operations in deriving the results of operations.
9) Deferred taxes
The following table summarizes the provision for income taxes for the years ended December 31:
2006 2005 2004
--------- --------- ---------
Income (loss) before taxes - U.S. .......... $ 2,815 $ 608 $ (24,461)
========= ========= =========
Provision/(benefit) for income taxes:
Current ............................... $ 10 $ 313 $ (2,983)
Deferred .............................. 479 (132) (5,370)
State and other
Current ............................... 107 62 (593)
Deferred .............................. 82 (16) (648)
--------- --------- ---------
Total ............................. $ 678 $ 227 $ (9,594)
========= ========= =========
|
Differences between the provision for income taxes computed using the U.S. federal statutory income tax rate were as follows as of December 31:
2006 2005 2004
--------- --------- ---------
Amount computed using the statutory rate ... $ 985 $ 213 $ (8,561)
Section 199 manufacturing deduction ........ (40) (10) --
Agri-biodiesel production credit ........... (401) -- --
State income taxes, net .................... 134 24 (1,033)
--------- --------- ---------
Provision for income taxes ............ $ 678 $ 227 $ (9,594)
========= ========= =========
|
Notes to the Consolidated Financial Statements of FutureFuel Corp.
(Dollars in thousands, except per share or unit amounts, and as noted)
The significant components of deferred tax assets and liabilities were as follows as of December 31:
2006 2005 2004
--------- --------- ---------
Deferred tax assets
Vacation pay ........................... $ 52 $ 258 $ 317
Allowance for doubtful accounts ........ 16 -- --
Inventory reserves ..................... 175 279 338
Separation and retirement allowances ... -- 191 169
Deferred compensation .................. -- 129 153
Asset retirement obligation ............ 206 211 196
--------- --------- ---------
Total deferred tax assets ................... 449 1,068 1,173
--------- --------- ---------
Deferred tax liabilities
Derivative instruments ................. (45) -- --
Depreciation ........................... (23,884) (23,987) (24,240)
--------- --------- ---------
Total deferred tax liabilities .............. (23,929) (23,987) (24,240)
--------- --------- ---------
Net deferred tax liabilities ................ $ (23,480) $ (22,919) $ (23,067)
========= ========= =========
As recorded in the consolidated balance sheet
Current deferred income tax asset ...... $ 68 $ 552 $ 601
Noncurrent deferred income tax asset .. 381 516 572
Accrued expenses and other current
liabilities .......................... (45) -- --
Noncurrent deferred income tax liability (23,884) (23,987) (24,240)
--------- --------- ---------
Net deferred income tax liabilities ......... $ (23,480) $ (22,919) $ (23,067)
========= ========= =========
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10) Stockholders' equity
On July 12, 2006, Viceroy completed an offering of 22,500,000 units. Each unit consisted of one share of Viceroy's common stock and one warrant to acquire one share. The units were issued at $8.00 per unit. In connection with this offering, the shares and warrants issued were listed on the Alternative Investment Market ("AIM") maintained by the London Stock Exchange plc. The net proceeds of this offering totaled $172,500 and were placed into a trust fund. All or a portion of the trust fund was to be released for, among other things, a Business Combination approved by the holders of Viceroy's common stock. Moreover, the trust fund was to be released in its entirety upon the completion of a Business Combination which, either on its own or when combined with all previous Business Combinations, had an aggregate transaction value of at least 50% of the initial trust amount (which initial trust amount excluded certain deferred placing fees).
Certain of the Viceroy shareholders who purchased units in the July 12, 2006 offering were granted repurchase rights whereby at the time Viceroy sought approval for a Business Combination these shareholders could vote against the Business Combination and require Viceroy to repurchase their common shares for $7.667 per common share plus accrued interest earned on the offering proceeds held in trust net of expenses and income taxes payable on the interest earned. Shareholders who exercised their repurchase rights retained all rights to any warrants that they may have held.
At the October 27, 2006 special meeting of the shareholders of Viceroy, the acquisition of Eastman SE by Viceroy was approved by the shareholders of Viceroy. Shareholders owning 1,425,000 common shares of Viceroy voted against the acquisition and exercised their repurchase rights. Accordingly, such shares are deemed to be held for redemption, are not deemed to be outstanding, and are not included in equity in the post-acquisition period. The repurchase price totaled $7.71 per share, calculated as $7.667 plus $0.043 of accrued interest earned on the offering proceeds held in trust net of expenses and income taxes payable on
Notes to the Consolidated Financial Statements of FutureFuel Corp.
(Dollars in thousands, except per share or unit amounts, and as noted)
the interest earned per share. Pursuant to the terms of the July 12, 2006 offering, the repurchase price was payable by Viceroy only when those shareholders who exercised their repurchase rights surrendered to Viceroy their common share certificates. Through December 31, 2006, shareholders owing 1,175,000 common shares of FutureFuel had surrendered their shares to FutureFuel and FutureFuel had paid an aggregate $9,059 to repurchase these shares. At December 31, 2006, FutureFuel remained obligated to repurchase 250,000 common shares at the $7.71 per share repurchase price. The $1,928 payable to these shareholders remains in trust and is subject to distribution to the shareholders upon proper presentation of the related stock certificates.
As discussed in Note 1, immediately subsequent to the acquisition Viceroy changed its name to FutureFuel Corp. and Eastman SE changed its name to FutureFuel Chemical Company. As also discussed in Note 1, for accounting purposes, the transaction is deemed to be a reverse acquisition and FutureFuel Chemical has been treated as the accounting acquirer and continuing reporting entity that acquired FutureFuel. Accordingly, the October 31, 2006 acquisition has been accounted for as a capital transaction or, more specifically, the issuance of stock by FutureFuel Chemical for the net monetary assets of FutureFuel accompanied by a recapitalization and reorganization with FutureFuel assuming the role of the reporting entity and FutureFuel Chemical assuming the role of FutureFuel's operating subsidiary.
At December 31, 2006, 5,000,000 shares of $0.0001 par value preferred stock and 75,000,000 shares of $0.0001 a par value common stock were authorized. At December 31, 2006, no preferred shares were outstanding and 26,700,000 common shares were issued and outstanding.
At December 31, 2006, 22,500,000 warrants to purchase common shares of FutureFuel were issued and outstanding. Each warrant is exercisable for one common share of FutureFuel at an exercise price of $6.00 per warrant. These warrants are only settleable through physical delivery of the common share certificate and expire July 12, 2010.
11) Earnings per share
The computation of basic and diluted earnings per common share was as follows for the years ended December 31:
2006 2005 2004
----------- ----------- ------------
Net income (loss) available to common
stockholders .............................. $ 2,137 $ 381 $ (14,867)
Weighted average number of common shares
outstanding ............................... 26,700,000 26,700,000 26,700,000
Effect of warrants .......................... 5,118,772 5,118,772 --
Weighted average diluted number of common
shares outstanding ........................ 31,818,772 31,818,772 26,700,000
Basic earnings per share .................... $ 0.08 $ 0.01 $ (0.56)
Diluted earnings per share .................. $ 0.07 $ 0.01 $ (0.56)
|
Warrants to purchase 22,500,000 common shares of FutureFuel were not included in the computation of diluted earnings per share in 2004 as FutureFuel reported a net loss for the period and the inclusion of those securities in the computation would have been antidilutive.
12) Impairments and severance charges
Impairments and severance charges totaled approximately $2,462 and $19,485 in the years ended December 31, 2005 and 2004, respectively. These charges consisted of severance charges of $2,462 in the year ended December 31, 2005 and non-cash asset impairment charges and severance charges of $18,305 and $1,180, respectively, in the year ended December 31, 2004.
Notes to the Consolidated Financial Statements of FutureFuel Corp.
(Dollars in thousands, except per share or unit amounts, and as noted)
Eastman SE recognized $2,462 and $1,180 in severance charges in the years ended December 31, 2005 and 2004, respectively, from ongoing cost reduction efforts related to employee separation programs announced in April 2004.
In 2004, Eastman SE recognized asset impairments of approximately $18,305 related to assets at the Batesville Plant. This impairment primarily relates to the closure of specific fixed assets used to manufacture certain performance chemicals product lines that were divested by Eastman Chemical. The related assets were deemed to be impaired, were determined to have no disposal value and remained at the Batesville Plant.
No impairment charges or severance costs were incurred in the year ended December 31, 2006.
13) Employee benefit plans
Eastman Chemical maintains certain deferred benefit plans that provide eligible employees, including those who have been a part of the operations of Eastman SE, with retirement benefits. All such benefit plans and associated benefit obligations were retained by Eastman Chemical. For the purposes of the presentation with the financial statements of FutureFuel Corp., costs recognized for these benefits are allocated based on the employee participants and are summarized based on the following component plans.
Defined benefit pension plans
Eastman Chemical maintains defined benefit plans that provide eligible employees, which included those of the Batesville Plant while they were employed by Eastman Chemical, with retirement benefits. Costs recognized for these benefits are recorded using estimated amounts, which may change as actual costs derived for the year are determined.
Defined contribution plans
Eastman Chemical sponsors a defined contribution employee stock ownership plan (the "ESOP") in which the employees of the Batesville Plant participated while they were employed by Eastman Chemical. The ESOP is a qualified plan under Section 401(a) of the Internal Revenue Code, which is a component of the Eastman Investment Plan and Employee Stock Ownership Plan ("EIP/ESOP").
Postretirement welfare plans
Eastman Chemical provides life insurance and health care benefits for eligible retirees, and health care benefits for retirees' eligible survivors in the United States.
Eastman SE was allocated $3,005 of expense related to these employee benefit plans for the ten months ended October 31, 2006 and $4,386 and $4,435 for the years ended December 31, 2005 and 2004, respectively.
No liabilities or assets affiliated with any Eastman Chemical employee benefit plan, including the defined benefit pension plans, the defined contribution plan and postretirement welfare plans, were assumed or acquired in the reverse acquisition as described in Note 1.
Defined contribution savings plan
FutureFuel currently offers its employees a defined contribution savings plan, which covers substantially all employees. Under this plan, FutureFuel matches the amount of employee contributions, subject to specified limits. Plan related expenses totaled $120 for the year ended December 31, 2006. No expense related to this plan was incurred in the years ended December 31, 2005 and 2004.
Notes to the Consolidated Financial Statements of FutureFuel Corp.
(Dollars in thousands, except per share or unit amounts, and as noted)
14) Related party transactions
In addition to receiving support services such as research and development, legal, finance, treasury, income tax, public relations, executive management functions, and certain other administrative services from Eastman Chemical or Eastman Chemical affiliates prior to the October 31, 2006 reverse acquisition, Eastman SE purchased a significant portion of its raw materials and sold a significant portion of its product produced to Eastman Chemical or affiliates of Eastman Chemical. Purchases of raw materials from affiliates of Eastman Chemical totaled $5,789 for the ten months ended October 31, 2006 and $5,014 and $4,115 for the years ended December 31, 2005 and 2004, respectively. Sales of Eastman SE products to Eastman Chemical or affiliates of Eastman Chemical totaled $5,952 for the ten months ended October 31, 2006 and $2,493 and $1,396 for the years ended December 31, 2005 and 2004, respectively.
Historically, Eastman SE processed certain products for Eastman Chemical or Eastman Chemical affiliates for which the ownership of the product had not been transferred to Eastman SE. Eastman SE historically processed such products on a cost basis without recognizing a selling margin. As the risks and rewards of ownership were not transferred to Eastman SE, the related inventories, revenues and costs have not been reflected in the accompanying financial statements. The financial statements include the cost of processing and the corresponding revenue received for processing such products. The costs of product processed on behalf of Eastman Chemical or Eastman Chemical affiliates totaled $10,650 for the ten months ended October 31, 2006 and $12,682 and $14,816 for the years ended December 31, 2005 and 2004, respectively.
Inventories of $4,103 were held by FutureFuel on behalf of Eastman Chemical or Eastman Chemical affiliates as of December 31, 2005.
Prior to October 31, 2006, all receivables and payables due to or from Eastman Chemical or Eastman Chemical affiliates were included in the net investment of parent.
Since October 31, 2006 all sales and purchases between FutureFuel and Eastman Chemical or any Eastman Chemical affiliates have been made pursuant to negotiated contracts. All receivables and payables stemming from transactions with Eastman Chemical or Eastman Chemical affiliates are included in accounts receivable and accounts payable.
FutureFuel enters into transactions with companies affiliated with or controlled by a director and significant shareholder.
FutureFuel leases oil storage capacity from an affiliate under a storage and thruput agreement. This agreement provides for the storage of biodiesel, biodiesel/petrodiesel blends, palm oil, methanol and other biodiesel feedstocks in above-ground storage tankage at designated facilities of the affiliate. Lease expense related to this agreement totaled $9 for the year ended December 31, 2006. No expense was incurred for the years ended December 31, 2005 and 2004, respectively.
FutureFuel entered into a commodity trading advisor agreement with an affiliate. Pursuant to the terms of this agreement the affiliate provides advice to FutureFuel concerning the purchase, sale, exchange, conversion and/or hedging of commodities as FutureFuel may request from time to time. Expenditures related to this agreement totaled $20 in the year ended December 31, 2006. No expenses were incurred for this contract in the years ended December 31, 2005 and 2004.
FutureFuel entered into a railcar sublease agreement with an affiliate. Pursuant to the terms of this sublease, FutureFuel leases from the affiliate railcars upon the same terms, conditions and price the affiliate leases the railcars. Lease terms for individual railcars begin upon delivery of the railcars. No railcars had been received through December 31, 2006 under this agreement. As such, no expenditures were incurred.
FutureFuel reimburses an affiliate for travel and other administrative services incurred on its behalf. Such reimbursement is performed at cost with the affiliate realizing no profit on the transaction. These reimbursements totaled $123 in 2006.
Notes to the Consolidated Financial Statements of FutureFuel Corp.
(Dollars in thousands, except per share or unit amounts, and as noted)
Accounts payable included $112 and accrued expenses and other current liabilities included $40 due to related parties at December 31, 2006. All amounts due to or from related parties as of December 31, 2005 and 2004 were included in net investment of parent.
15) Segment information
FutureFuel has determined that is has two reportable segments organized along product lines - chemicals and biofuels. The accounting policies of the segments are the same as those described in the summary of significant accounting policies in Note 2.
Chemicals
FutureFuel's chemicals segment manufactures diversified chemical products that are sold externally to third party customers and to Eastman Chemical. This segment comprises two components: "custom manufacturing" (manufacturing chemicals for specific customers); and "performance chemicals" (multi-customer specialty chemicals).
Biofuels
FutureFuel's biofuels business segment manufactures and markets biodiesel. Biodiesel commercialization was achieved in October 2005. Biodiesel revenues are generally derived in one of two ways. Revenues are generated under tolling agreements whereby customers supply key biodiesel feed stocks which FutureFuel then converts into biodiesel at the Batesville Plant in exchange for a fixed price processing charge per gallon of biodiesel produced. Revenues are also generated through the sale of biodiesel to customers through FutureFuel's distribution network at the Batesville Plant and through distribution facilities available at a leased oil storage facility near Little Rock, Arkansas at negotiated prices.
Summary of long-lived assets and revenues by geographic area
All of FutureFuel's long-lived assets are located in the U.S.
Most of FutureFuel's sales are transacted with title passing at the time of shipment from the Batesville Plant, although some sales are transacted based on title passing at the delivery point. While many of FutureFuel's chemicals are utilized to manufacture products that are shipped, further processed and/or consumed throughout the world, the chemical products, with limited exceptions, generally leave the United States only after ownership has transferred from FutureFuel to the customer. Rarely is FutureFuel the exporter of record, never is FutureFuel the importer of record into foreign countries and FutureFuel is not always aware of the exact quantities of its products that are moved into foreign markets by its customers. FutureFuel does track the addresses of its customers for invoicing purposes and uses this address to determine whether a particular sale is within or without the United States. FutureFuel's revenues for the last three years ended December 31 attributable to the United States and foreign countries (based upon the billing addresses of its customers) were as follows:
All Foreign
Fiscal Year United States Countries Total
--------------------------------------------- ------------- ----------- ---------
December 31, 2006 ........................... $ 131,893 $ 18,877 $ 150,770
December 31, 2005 ........................... $ 105,719 $ 13,820 $ 119,539
December 31, 2004 ........................... $ 138,636 $ 5,521 $ 144,157
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For the year ended December 31, 2004, revenues from a single foreign country did not exceed 2% of total revenues. Beginning in 2005, FutureFuel Chemical Company began invoicing Procter & Gamble International Operations Mexico, D.F. directly, at which time revenues from Mexico became a material component of total revenues. For the years ended December 31, 2005 and 2006, revenues from Mexico accounted for 10% and 11%, respectively, of total revenues. Other than Mexico, revenues from a single foreign country during 2005 and 2006 did not exceed 1% of total revenues.
Notes to the Consolidated Financial Statements of FutureFuel Corp.
(Dollars in thousands, except per share or unit amounts, and as noted)
Summary of business by segment
2006 2005 2004
--------- --------- ---------
Revenues
Chemicals .............................. $ 137,430 $ 119,539 $ 144,157
Biofuels ............................... 13,340 -- --
--------- --------- ---------
Revenues .................................... $ 150,770 $ 119,539 $ 144,157
========= ========= =========
Segment gross margins
Chemicals .............................. $ 22,949 $ 16,837 $ 17,108
Biofuels ............................... (9,646) -- --
--------- --------- ---------
Segment gross margins ....................... 13,303 16,837 17,108
Corporate expenses .......................... (11,184) (16,198) (41,532)
--------- --------- ---------
Income (loss) before interest and taxes ..... 2,119 639 (24,424)
Interest income ............................. 733 -- --
Interest expense ............................ (37) (31) (37)
Provision for income taxes .................. (678) (227) 9,594
--------- --------- ---------
Net income (loss) ........................... $ 2,137 $ 381 $ (14,867)
========= ========= =========
|
No biofuels were sold by FutureFuel in 2004. FutureFuel's 2005 biofuel revenues and related gross margin were inconsequential. Due to the inconsequential nature of the amounts, 2005 biofuel gross margin has been included in the chemicals gross margin for that year.
Depreciation is allocated to segment costs of goods sold based on plant usage. The total assets and capital expenditures of FutureFuel have not been allocated to individual segments as large portions of these assets are shared to varying degrees by each segment, causing such an allocation to be of little value.
16) Commitments
Lease agreements
FutureFuel has entered into lease agreements for oil storage capacity and railcars. Minimum rental commitments under existing noncancellable operating leases as of December 31, 2006 were as follows:
2007 .................................................................. $ 318
2008 .................................................................. 287
2009 .................................................................. 108
2010 .................................................................. 45
2011 .................................................................. 45
Thereafter ............................................................ 37
---------
$ 840
=========
|
Lease expenses totaled $115, $182 and $181 for the years ended December 31, 2006, 2005 and 2004, respectively.
Purchase obligations
FutureFuel has entered into contracts for the purchase of goods and services including contracts for the expansion of FutureFuel's biodiesel related infrastructure, the development, implementation and maintenance of an enterprise resource planning computer software package, the purchase of biodiesel related feedstocks and the licensing of a chemical modeling software product.
Notes to the Consolidated Financial Statements of FutureFuel Corp.
(Dollars in thousands, except per share or unit amounts, and as noted)
Deferred payments Eastman Chemical
In connection with the purchase of shares of Eastman SE, FutureFuel agreed to pay Eastman Chemical $0.02 per gallon of biodiesel sold by FutureFuel during the three-year period commencing on October 31, 2006 and ending on October 31, 2009. Payments to Eastman Chemical in 2006 for this agreement totaled $11.
17) Recently issued accounting standards
In February 2006, the Financial Accounting Standards Board ("FASB") issued SFAS No. 155, Accounting for Certain Hybrid Financial Instruments, an amendment of SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities and SFAS No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishment of Liabilities. SFAS No. 155 simplifies accounting for certain hybrid instruments under SFAS No. 133 by permitting fair value remeasurement for financial instruments containing an embedded derivative that otherwise would require bifurcation. SFAS No. 155 eliminates both the previous restriction under SFAS No. 140 on passive derivative instruments that a qualifying special-purpose entity may hold and SFAS No. 133 Implementation Issue No. D1, Application of Statement 133 to Beneficial Interests in Securitized Financial Assets, which provides that beneficial interests are not subject to the provisions of SFAS No. 133. SFAS No. 155 also establishes a requirement to evaluate interests in securitized financial assets to identify interests that are freestanding derivatives or that are hybrid financial instruments that contain an embedded derivative requiring bifurcation, and clarifies that concentrations of credit risk in the form of subordination are not imbedded derivatives. SFAS No. 155 is effective for all financial instruments acquired, issued, or subject to a remeasurement event occurring after the beginning of an entity's fiscal year that begins after September 15, 2006. FutureFuel is currently evaluating the effect SFAS No. 157 will have on its consolidated financial position, liquidity, and results of operations.
In March 2006, the FASB issued SFAS No. 156, Accounting for Servicing of Financial Assets, an amendment of SFAS No. 140. SFAS No. 156 permits entities to choose to either subsequently measure servicing rights at fair value and report changes in fair value in earnings or amortize servicing rights in proportion to and over the estimated net servicing income or loss and assess to rights for impairment or the need for an increased obligation. SFAS No. 156 also clarifies when a servicer should separately recognize servicing assets and liabilities; requires all separately recognized assets and liabilities to be initially measured at fair value, if practicable; and permits a one-time reclassification of available-for-sales securities to trading securities by an entity with recognized servicing rights and requires additional disclosures for all separately recognized servicing assets and liabilities. SFAS No. 156 is effective as of the beginning of an entity's fiscal year that begins after September 15, 2006. FutureFuel is currently evaluating the effect SFAS No. 157 will have on its consolidated financial position, liquidity, and results of operations.
In July 2006, the FASB issued Interpretation No. 48 ("FIN 48"), Accounting for Uncertainty in Income Taxes--an Interpretation of SFAS 109 Accounting for Income Taxes. FIN 48 prescribes a comprehensive model for how a company should recognize, measure, present, and disclose in its financial statements uncertain tax positions that a company has taken or expects to take on a tax return. Under FIN 48, the financial statements will reflect expected future tax consequences of such positions presuming the taxing authorities' full knowledge of the position and all relevant facts, but without considering time values. FIN 48 also revises disclosure requirements and introduces a prescriptive, annual, tabular roll-forward of the unrecognized tax benefits. FIN 48 is effective for fiscal years beginning after December 15, 2006. FutureFuel does not expect the adoption of FIN 48 to have a material effect on its consolidated financial position, liquidity, or results of operations.
In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements, which addresses the measurement of fair value by companies when they are required to use a fair value measure for recognition or disclosure purposes under GAAP. SFAS No. 157 provides a common definition of fair value to be used throughout GAAP which is intended to make the measurement of fair value more consistent and
Notes to the Consolidated Financial Statements of FutureFuel Corp.
(Dollars in thousands, except per share or unit amounts, and as noted)
comparable and improve disclosures about those measures. SFAS No. 157 will be effective for an entity's financial statements issued for fiscal years beginning after November 15, 2007. FutureFuel is currently evaluating the effect SFAS No. 157 will have on its consolidated financial position, liquidity, and results of operations.
In September 2006, the FASB issued Staff Position No. AUG AIR-1 ("FSP No. AUG AIR-1"), which addresses the accounting for planned major maintenance activities. FSP No. AUG AIR-1 amends certain provisions in the American Institute of Certified Public Accountants ("AICPA") Industry Audit Guide and APB Opinion No. 28, Interim Financial Reporting. Four alternative methods of accounting for planned major maintenance activities were permitted: direct expense, built-in overhaul, deferral, and accrual ("accrue-in-advance"). This FSP prohibits the use of the accrue-in-advance method of accounting for planned major maintenance activities because it results in the recognition of a liability in a period prior to the occurrence of the transaction or event obligating the entity. FSP No. AUG AIR-1 is effective for an entity's financial statements issued for fiscal years beginning after December 15, 2006. FutureFuel does not utilize the accrue-in-advance method of accounting and therefore expects this FSP to have no impact on its consolidated financial position, liquidity, or results of operations.
In February, 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities--Including an amendment of FASB Statement No. 115. SFAS No. 159 permits companies to choose to measure many financial instruments and certain other items at fair value at specified election dates. Upon adoption, an entity shall report unrealized gains and losses on items for which the fair value option has been elected in earnings at each subsequent reporting date. Most of the provisions apply only to entities that elect the fair value option. However, the amendment to SFAS No. 115, Accounting for Certain Investments in Debt and Equity Securities, applies to all entities with available for sale and trading securities. SFAS No. 159 will be effective as of the beginning of an entity's first fiscal year that begins after November 15, 2007. FutureFuel is currently evaluating the effect SFAS No. 159 will have on its consolidated financial position, liquidity, and results of operations.
18) Subsequent events
Share redemption
In January 2007 the last remaining shareholders who exercised their repurchase rights relinquished their stock certificates to FutureFuel and FutureFuel subsequently paid the $1,928 repurchase price to these shareholders from the trust.
Credit agreement
On March 14, 2007, FutureFuel Chemical entered into a revolving credit agreement with a commercial bank. This credit agreement makes up to $50,000 available to FutureFuel Chemical for working capital requirements, capital expenditures and other general corporate purposes. This credit agreement is secured by specific collateral, including FutureFuel Chemical's accounts receivable and inventory. The maximum availability under this credit agreement at any point in time is determined based upon a borrowing base calculation, which is in turn based upon the eligible accounts receivable and inventory balances of FutureFuel Chemical. The credit agreement contains financial and non-financial restrictive covenants, which, among other things, require FutureFuel Chemical to maintain a certain ratio of debt to earnings before interest, taxes, depreciation and amortization.
Advances under the credit facility bear interest, payable monthly, at rates based upon the then current prime rate or based upon the then current London interbank offered rate plus margins ranging from (1.00%) to 1.70%. Additionally, FutureFuel Chemical will pay a commitment fee of 0.25% on any unused availability. This credit agreement matures on March 14, 2010.
FutureFuel unconditionally guaranteed any and all indebtedness and obligations of FutureFuel Chemical to the commercial bank under this credit agreement.
Notes to the Consolidated Financial Statements of FutureFuel Corp.
(Dollars in thousands, except per share or unit amounts, and as noted)
No borrowings have yet been made under this credit agreement.
Purchase price settlement
On March 30, 2007, FutureFuel received $2,812 (plus interest thereon) from Eastman Chemical as satisfaction of certain agreed-to purchase price adjustments stemming from the October 31, 2006 acquisition of Eastman SE. A receivable from Eastman Chemical was included in the consolidated balance sheet of FutureFuel at December 31, 2006 in anticipation of this payment from Eastman Chemical. FutureFuel and Eastman Chemical continue to discuss remaining potential purchase price adjustments (which may be recognized in future periods if and when they are realized by FutureFuel).
Customer dispute
A customer of FutureFuel Chemical has indicated it has been billed on certain products for amounts aggregating up to $1,400 in excess of their management's interpretation of the appropriate billings under their contract with FutureFuel Chemical since the second quarter of 2004. FutureFuel has evaluated the position asserted by the customer and the arrangements under the contract and has determined that they do not believe there have been any excess billings or overpayments under this contract. As a result, management intends to vigorously defend against any such claim if made by the customer. In addition, to the extent such a liability exists, FutureFuel believes it has a right under the Acquisition Agreement between itself and Eastman Chemical to assert a claim with respect to amounts related to periods prior to October 31, 2006.
The Company
The following sets forth our balance sheets as at December 31, 2005 and October 31, 2006 and the statements of operations, statements of changes in stockholders' equity (deficit) and statements of cash flows for the period from inception through December 31, 2005 and for the ten-month period ended October 31, 2006, together with KPMG LLP's report thereon.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of Directors and Stockholders
Viceroy Acquisition Corp.:
We have audited the accompanying balance sheets of Viceroy Acquisition Corp. as of October 31, 2006 and December 31, 2005, and the related consolidated statements of operations, stockholders' equity (deficit), and cash flows for the ten months ended October 31, 2006 and for the period from August 12, 2005 (Inception) through December 31, 2005. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Viceroy Acquisition Corp. as of October 31, 2006 and December 31, 2005, and the results of its operations and its cash flows for the ten months ended October 31, 2006 and for the period from August 12, 2005 (Inception) through December 31, 2005, in conformity with U.S. generally accepted accounting principles.
/s/ KPMG LLP St. Louis, Missouri April 23, 2007 |
Viceroy Acquisition Corporation Balance Sheets As At October 31, 2006 and December 31 2005
(Dollars in thousands)
October 31, December 31,
2006 2005
----------- ------------
Assets
Cash and cash equivalents ....................................... $ 205 $ 28
Prepaid expenses ................................................ 118 --
---------- ---------
Total current assets ........................................ 323 28
Deferred costs .................................................. 1,045 207
---------- ---------
Total Assets ........................................................ $ 1,368 $ 235
========== =========
Liabilities and Stockholders' Equity (Deficit)
Accounts payable ................................................ $ 212 $ 10
Income taxes payable ............................................ 834 --
---------- ---------
Total current liabilities ................................... 1,046 10
Notes payable to related parties ................................ 700 200
---------- ---------
Total noncurrent liabilities ................................ 700 200
---------- ---------
Total Liabilities ................................................... 1,746 210
Preferred stock, $0.0001 par value, 5,000,000 shares authorized,
none issued and outstanding ................................. -- --
Common stock, $0.0001 par value, 75,000,000 shares authorized,
5,625,000 issued and outstanding and, additionally,
22,500,000 issued and outstanding and subject to repurchase
at October 31, 2006; 5,000,000 issued and outstanding at
December 31, 2005 ........................................... 3 1
Called-up share capital held in trust ........................... (174,123) --
Additional paid in capital ...................................... 172,374 24
Retained earnings ............................................... 1,368 --
---------- ---------
Total stockholders' equity (deficit) ........................ (378) 25
---------- ---------
Total Liabilities and Stockholders' Equity (Deficit) ................ $ 1,368 $ 235
========== =========
|
The accompanying notes are an integral part of these financial statements.
Viceroy Acquisition Corporation Statements of Operations For the ten months ended October 31, 2006 and for the period from August 12, 2005 (Inception) through December 31, 2005
(Dollars in thousands, except per share amounts)
August 12,
10 months 2005
ended (inception) to
October 31, December 31,
2006 2005
----------- -----------
Interest and other income ........................ $ 2,632 $ 1
Formation and operating costs .................... (126) (1)
Cancelled offering costs ......................... (304) --
Provision for income taxes ....................... (834) --
----------- -----------
Net income (loss) ................................ $ 1,368 $ --
=========== ===========
Weighted Average Shares Outstanding
Basic ....................................... 5,625,000 5,625,000
Diluted ..................................... 5,625,000 5,625,000
Net Income (Loss) Per Share
Basic ....................................... $ 0.24 $ 0.00
Diluted ..................................... $ 0.24 $ 0.00
|
The accompanying notes are an integral part of these financial statements.
Viceroy Acquisition Corporation Statements of Changes in Stockholders' Equity (Deficit) For the period from August 12, 2005 (Inception) to October 31, 2006
(Dollars in thousands)
Total
Common stock Additional Called-up stockholders'
----------------------- paid-in share capital Retained equity
Shares Amount capital held in trust earnings (deficit)
----------- -------- ---------- ------------- ---------- -----------
December 31, 2004 ....... -- $ -- $ -- $ -- $ -- $ --
Common shares issued .... 5,000,000 1 24 -- -- 25
Net loss ................ -- -- -- -- -- --
----------- -------- ---------- ---------- -------- --------
December 31, 2005 ....... 5,000,000 1 24 -- -- 25
Common share dividend ... 1,250,000 -- -- -- -- --
Common share
cancellation .......... (625,000) -- -- -- -- --
Equity offering (shares
subject to repurchase) 22,500,000 2 172,350 (172,500) -- (148)
Interest earned on trust
fund .................. -- -- -- (2,623) -- (2,623)
Transfer from trust ..... -- -- -- 1,000 -- 1,000
Net income .............. -- -- -- -- 1,368 1,368
----------- -------- ---------- ---------- -------- --------
October 31, 2006 ........ 28,125,000 $ 3 $ 172,374 $ (174,123) $ 1,368 $ (378)
=========== ======== ========== ========== ======== ========
|
The accompanying notes are an integral part of these financial statements.
Viceroy Acquisition Corporation Statements of Cash Flows For the ten months ended October 31, 2006 and for the period from August 12, 2005 (Inception) through December 31, 2005
(Dollars in thousands)
August 12,
10 months 2005
ended (inception) to
October 31, December 31,
2006 2005
------------ ------------
Cash flows provided by operating activities
Net income ........................................................ $ 1,368 $ --
Adjustments to reconcile net income to net cash provided by operating
activities:
Cancelled offering costs .......................................... 304 --
Changes in operating assets and liabilities:
Prepaid expenses .................................................. (118) --
Accounts payable .................................................. 202 10
Income taxes payable .............................................. 834 --
---------- ----------
Net cash provided by operating activities ..................... 2,590 10
---------- ----------
Cash flows provided by (used in) investing activities
Capitalized acquisition costs ..................................... (1,045) --
---------- ----------
Net cash provided by (used in) investing activities ........... (1,045) --
---------- ----------
Cash flows provided by (used in) financing activities
Equity offering expenditures ...................................... (97) (207)
Proceeds from long term debt ...................................... 500 200
Net proceeds from stock issuance .................................. 172,352 25
Net cash placed into trust ........................................ (172,500) --
Interest earned on cash held in trust ............................. (2,623) --
Transfers of cash held in trust to cash ........................... 1,000 --
---------- ----------
Net cash provided by (used in) financing activities ........... (1,368) 18
---------- ----------
Net change in cash and cash equivalents .............................. 177 28
Cash and cash equivalents at beginning of period ..................... 28 --
---------- ----------
Cash and cash equivalents at end of period ........................... $ 205 $ 28
========== ==========
|
The accompanying notes are an integral part of these financial statements.
Notes to Financial Statements of Viceroy Acquisition Corporation
(Dollars in thousands, except per share amounts)
1) Organization, business and operations and summary of significant accounting policies
Viceroy Acquisition Corporation
Viceroy Acquisition Corporation (the "Company") was incorporated in Delaware on August 12, 2005 to serve as a vehicle for the acquisition by way of asset acquisition, merger, capital stock exchange, share purchase or similar transaction, of one or more operating businesses in the oil and gas industry (a "Business Combination"). Through October 31, 2006, the Company had not commenced any operations.
Offering
On July 12, 2006, the Company completed an offering (the "Offering") of 22,500,000 units ("Units"), each Unit consisting of one common share of the Company ("Share") and one warrant to purchase one Share ("Warrant"). In connection with the Offering, the Shares and Warrants were listed on the Alternative Investment Market ("AIM") maintained by the London Stock Exchange plc.
The net proceeds of the Offering of $172,500 (the "Trust Amount") were deposited into a trust fund (the "Trust Fund") maintained by a corporate trustee (the "Trustee"). The Trust Fund was to be released by the Trustee for, among other things, a Business Combination approved by the shareholders of the Company. Moreover, the Trust Fund was to be released in its entirety upon the completion of a Business Combination which, either on its own or combined with all previous Business Combinations, had an aggregate transaction value of at least 50% of the initial Trust Amount (which initial Trust Amount excluded certain deferred placing fees) (a "Qualified Business Combination").
Acquisition agreement
On July 21, 2006, the Company entered into an acquisition agreement with Eastman Chemical Company ("Eastman Chemical") to purchase all of the issued and outstanding stock of its subsidiary, Eastman SE, Inc., subject to approval by the Company's shareholders. If approved by the Company's shareholders, the acquisition would constitute both a Business Combination and a Qualified Business Combination.
On October 27, 2006, a special meeting of the shareholders of the Company was held. At this meeting the acquisition of Eastman SE, Inc. by the Company was approved by the shareholders of the Company.
Eastman SE, Inc.
Eastman SE, Inc. ("Eastman SE") was incorporated under the laws of the state of Delaware on September 1, 2005 and subsequent thereto operated as a wholly-owned subsidiary of Eastman Chemical through October 31, 2006. Eastman SE was incorporated for purposes of effecting a sale of Eastman Chemical's manufacturing facility in Batesville, Arkansas (the "Batesville Plant"). Commencing January 1, 2006, Eastman Chemical began transferring the assets associated with the business of the Batesville Plant to Eastman SE.
The Batesville Plant was constructed in 1977 to produce proprietary photographic chemicals for Eastman Kodak Company ("Eastman Kodak"). Over the years, Eastman Kodak shifted the plant's focus away from the photographic imaging business to the custom synthesis of fine chemicals and organic chemical intermediates used in a variety of end markets, including paints and coatings, plastics and polymers, pharmaceuticals, food supplements, household detergents and agricultural products.
In 2005, the Batesville Plant began the implementation of a biobased products platform. This includes the production of biofuels (biodiesel, bioethanol and lignin/biomass solid fuels) and biobased specialty chemical products (biobased solvents, chemicals and intermediates). In addition to biobased products, the Batesville Plant continues to manufacture fine chemicals and other organic chemicals.
The accompanying financial statements present the financial position, the results of operations and the cash flows of the Company from its inception through the closing of the Company's acquisition of Eastman SE.
Notes to Financial Statements of Viceroy Acquisition Corporation
(Dollars in thousands, except per share amounts)
Summary of significant accounting policies
Cash and cash equivalents
The Company includes demand deposits with banks and all highly liquid investments with original maturities of three months or less in cash and cash equivalents.
Income taxes
Income taxes are accounted for using the asset and liability method. Under this method, future income tax assets and liabilities are recognized for temporary differences between financial statement carrying amounts of assets and liabilities and their respective income tax basis. A future income tax asset or liability is estimated for each temporary difference using enacted and substantively enacted income tax rates and laws expected to be in effect when the asset is realized or the liability settled. A valuation allowance is established, if necessary, to reduce any future income tax asset to an amount that is more likely than not to be realized.
Earnings per share
Basic earnings per share is computed by dividing net income (the numerator) by the weighted average number of outstanding shares (the denominator) for the period. Diluted earnings per share are calculated in accordance with the treasury stock method to determine the dilutive effect of warrants and options. The computation of diluted earnings per share includes the same numerator, but the denominator is increased to include the number of additional common shares from the exercise of warrants and options that would have been outstanding if potentially dilutive common shares had been issued.
The weighted average basic and diluted shares outstanding as at October 31, 2006 and December 31, 2005 have been calculated excluding the effects of all Shares and Warrants issued in the Offering as a result of the repurchase rights associated with the Shares in effect through the time of the Company's acquisition of Eastman SE.
Use of estimates
The preparation of financial statements in conformity with accounting principals generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during a reporting period. Actual results could differ materially from those estimates.
2) Notes payable to related parties
The Company had unsecured promissory notes payable to shareholders (one of these shareholders was an officer and director of the Company and the other was affiliated with one) of $700 and $200 in aggregate as of October 31, 2006 and as of December 31, 2005, respectively. The loans were non-interest bearing and were payable upon the consummation of a Business Combination. Due to the short-term nature of the notes, the fair value of the notes approximated their carrying value.
3) Common stock
On July 12, 2006, the Company completed the Offering. The net proceeds of the Offering totaled $172,500 and were placed into the Trust Fund. All or a portion of the Trust Fund was to be released for, among other things, a Business Combination.
Certain of the Company's shareholders who purchased Units in the July 12, 2006 offering were granted repurchase rights whereby at the time the Company sought approval for a Business Combination these shareholders could vote against the Business Combination and require the Company to repurchase their
Notes to Financial Statements of Viceroy Acquisition Corporation
(Dollars in thousands, except per share amounts)
Shares for $7.667 per Share plus accrued interest earned on the Offering proceeds held in the Trust Fund net of expenses and income taxes payable on the interest earned. Shareholders who exercised their repurchase rights retained all rights to any Warrants that they may have held.
At the October 27, 2006 special meeting of the shareholders of the Company, the acquisition of Eastman SE by the Company was approved by the shareholders of the Company. Shareholders owning 1,425,000 Shares of the Company voted against the acquisition and exercised their repurchase rights. The repurchase price totaled $7.71 per Share, calculated as $7.667 plus $0.043 of accrued interest earned on the offering proceeds held in trust net of expenses and income taxes payable on the interest earned per Share. Pursuant to the terms of the July 12, 2006 offering, the repurchase price was payable by the Company only when those shareholders who exercised their repurchase rights surrendered to the Company their Share certificates. As of October 31, 2006, no shareholders had surrendered their Share certificates to the Company. Subsequent to October 31, 2006, all such Share certificates were presented to the Company and 1,425,000 Shares were repurchased for an aggregate $10,987.
4) Preferred stock
The Company is authorized to issue 5,000,000 shares of preferred stock with such designations, voting and other rights and preferences as may be determined from time to time by the Company's board of directors. As of October 31, 2006, no shares of preferred stock were issued or outstanding.
5) Contingent liabilities
The Company agreed to pay its placing agents deferred placing fees totaling $2,700 payable upon the consummation of a Business Combination meeting certain defined parameters.
6) Subsequent events
On October 31, 2006, the Company acquired all of the issued and outstanding shares of Eastman SE from Eastman Chemical. Immediately subsequent to the acquisition the Company changed its name to FutureFuel Corp. ("FutureFuel") and Eastman SE changed its name to FutureFuel Chemical Company ("FutureFuel Chemical").
For accounting purposes, the transaction is deemed to be a reverse acquisition and FutureFuel Chemical has been treated as the accounting acquirer and continuing reporting entity that acquired FutureFuel. Accordingly, the October 31, 2006 acquisition will be accounted for as a capital transaction or, more specifically, the issuance of stock by FutureFuel Chemical for the net monetary assets of FutureFuel accompanied by a recapitalization and reorganization with FutureFuel assuming the role of the reporting entity and FutureFuel Chemical assuming the role of FutureFuel's operating subsidiary.
Forward Looking Information
This Registration Statement contains or incorporates by reference "forward-looking statements". When used in this document, the words "anticipate," "believe," "estimate," "expect," "plan," and "intend" and similar expressions, as they relate to us, FutureFuel Chemical Company or our respective management, are intended to identify forward-looking statements. These forward-looking statements are based on current management assumptions and are subject to uncertainties and inherent risks that could cause actual results to differ materially from those contained in any forward-looking statement. We caution you therefore that you should not rely on any of these forward-looking statements as statements of historical fact or as guarantees or assurances of future performance. Important factors that could cause actual results to differ materially from those in the forward-looking statements include regional, national or global political, economic, business, competitive, market and regulatory conditions as well as, but not limited to, the following:
o our board's selection of FutureFuel Chemical Company as a prospective target business;
o conflicts of interest of our officers and directors;
o potential future affiliations of our officers and directors with competing businesses;
o the control by our founding shareholders of a substantial interest in us;
o the highly competitive nature of the chemical and alternative fuel industries;
o fluctuations in energy prices may cause a reduction in the demand or profitability of the products or services we may ultimately produce or offer or which form a portion of our business;
o changes in technology may render our products or services obsolete;
o failure to comply with governmental regulations could result in the imposition of penalties, fines or restrictions on operations and remedial liabilities;
o the operations of FutureFuel Chemical Company's biofuels business may be harmed if the applicable government were to change current laws and/or regulations;
o our board may have incorrectly evaluated FutureFuel Chemical Company's potential liabilities;
o our board may have FutureFuel Chemical Company engage in hedging transactions in an attempt to mitigate exposure to price fluctuations in petroleum product transactions and other portfolio positions which may not ultimately be successful; and
o we may not continue to have access to capital markets and commercial bank financing on favorable terms and FutureFuel Chemical Company may lose its ability to buy on open credit terms.
Although we believe that the expectations reflected by such forward-looking statements are reasonable based on information currently available to us, no assurances can be given that such expectations will prove to have been correct. All forward-looking statements included in this Registration Statement and all subsequent oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by these cautionary statements. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. Readers are cautioned not to place undue reliance on any forward-looking statements, which speak only as to their particular dates.
Item 14. - Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
On August 16, 2005, we engaged Rothstein, Kass & Company, P.C. to audit our balance sheet and the related statements of operations, stockholders' equity and cash flow. On August 30, 2005, Rothstein, Kass & Company, P.C. issued its audit report on our balance sheet as of August 29, 2005 and the related statement of operations, stockholders' equity and cash flows for the period from August 12, 2005 (the date of our incorporation) to August 29, 2005. This audit report was used in connection with our Registration Statement on Form S-1, which we filed on September 2, 2005 and withdrew on February 14, 2006. When we decided to list with AIM, Rothstein, Kass & Company, P.C. declined to continue as our auditors because they were unfamiliar with AIM rules and regulations. As a result, on June 6, 2006 we engaged KPMG LLP to act as our independent accountants due to their expertise in auditing AIM listed companies. This change of accountants was approved by our board.
Rothstein, Kass & Company, P.C.'s report on our financial statements did not contain an adverse opinion or a disclaimer of opinion, nor was it qualified or modified as to uncertainty, audit scope or accounting principles. Further, during such time as Rothstein, Kass & Company, P.C. served as our principal independent accountant, there were not any disagreements between us and Rothstein, Kass & Company, P.C. on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure.
Item 15. - Financial Statements and Exhibits
(a) List separately all financial statements filed as part of the registration statement.
1. FutureFuel Chemical Company's audited Balance Sheets as of December 31, 2005 and December 31, 2006 and Statements of Operations, Statements of Changes in Stockholders' Equity and Statements of Cash Flows for the twelve-month periods ended December 31, 2004, December 31, 2005 and December 31, 2006
2. FutureFuel Corp.'s audited Balance Sheets as of December 31, 2005 and October 31, 2006 and Statements of Operations, Statements of Changes in Stockholders' Equity (Deficit) and Statements of Cash Flows for the period from August 12, 2005 (Inception) through October 31, 2006
(b) Exhibits required by Item 601 of Regulation S-K.
2. Acquisition Agreement dated July 21, 2006 between FutureFuel Corp.
and Eastman Chemical Company
3.1. FutureFuel Corp.'s Certificate of Incorporation
a. Original Certificate of Incorporation filed on August 12, 2005
b. Amended and Restated Certificate of Incorporation filed on August 26, 2005
c. Second Amended and Restated Certificate of Incorporation filed on June 5, 2006
d. Third Amended and Restated Certificate of Incorporation filed on July 5, 2006
e. Amendment to Certificate of Incorporation filed on October 31, 2006
3.2. FutureFuel Corp.'s Bylaws
a. Original Bylaws
b. Amendment to Bylaws
4.1. Stock Escrow Agreement dated July 12, 2006 among FutureFuel Corp., Capita IRG (Offshore) Limited, St. Albans Global Management, Limited Partnership, LLLP, Lee E. Mikles as Trustee of the Lee E. Mikles Gift Trust dated October 6, 1999, Lee E. Mikles as Trustee of the Lee E. Mikles Revocable Trust dated March 26, 1996, Douglas D. Hommert as Trustee of the Douglas D. Hommert Revocable Trust, Edwin A. Levy, Joe C. Leach, Mark R. Miller, RAS LLC, Edwin L.
Wahl, Jeffery H. Call and Ken Fenton
4.2. Warrant Deed dated July 12, 2006 between FutureFuel Corp. and Capita IRG (Offshore) Limited
4.3 Insider Letters dated July 12, 2006 to FutureFuel Corp., CRT Capital Group LLC and KBC Peel Hunt Ltd from the following persons:
4.3a Paul Anthony Novelly
4.3b St. Albans Global Management, Limited Partnership, LLLP
4.3c Lee E. Mikles
4.3d Lee E. Mikles as Trustee of the Lee E. Mikles Gift Trust dated October 6, 1999
4.3e Lee E. Mikles as Trustee of the Lee E. Mikles Revocable Trust dated March 26, 1996
4.3f Douglas D. Hommert
4.3g Douglas D. Hommert as Trustee of the Douglas D. Hommert Revocable Trust
4.3h Edwin A. Levy
4.3i Joe C. Leach
4.3j Mark R. Miller
4.3k RAS LLC
4.3l William J. Dore
4.3m Thomas R. Evans
4.3n Edwin L. Wahl
4.3o Jeffery H. Call
4.3p Ken Fenton
4.4. Investor Rights Agreement dated July 12, 2006 among FutureFuel Corp., CRT Capital Group LLC and KBC Peel Hunt Ltd
4.5. Registration Rights Agreement dated July 12, 2006 among FutureFuel Corp., St. Albans Global Management, Limited Partnership, LLLP, Lee E. Mikles as Trustee of the Lee E. Mikles Gift Trust dated October 6, 1999, Lee E. Mikles as Trustee of the Lee E. Mikles Revocable Trust dated March 26, 1996, Douglas D. Hommert as Trustee of the Douglas D. Hommert Revocable Trust, Edwin A. Levy, Joe C. Leach, Mark R. Miller, RAS LLC, Edwin L. Wahl, Jeffery H. Call and Ken Fenton
4.6. Lock-in Deed dated July 12, 2006 among FutureFuel Corp., KBC Peel Hunt Ltd, St. Albans Global Management, Limited Partnership, LLLP, Lee E. Mikles as Trustee of the Lee E. Mikles Gift Trust dated October 6, 1999, Lee E. Mikles as Trustee of the Lee E. Mikles Revocable Trust dated March 26, 1996, Douglas D. Hommert as Trustee of the Douglas D. Hommert Revocable Trust, Edwin A. Levy, Paul Anthony Novelly, Lee E. Mikles, Douglas D. Hommert, Thomas R.
Evans and William J. Dore
10.1. Placing Agreement dated July 12, 2006 among CRT Capital Group LLC, KBC Peel Hunt Ltd, FutureFuel Corp. and FutureFuel Corp.'s Directors
10.2. Offshore Registrar Agreement dated July 12, 2006 between FutureFuel Corp. and Capita IRG (Offshore) Limited
10.3. Warrant Solicitation Fee Letter dated July 12, 2006 between FutureFuel Corp. and CRT Capital Group LLC
10.4. Storage and Thruput Agreement dated November 1, 2006 between FutureFuel Chemical Company and Center Point Terminal Company
10.5 Commodity Trading Advisor Agreement dated November 1, 2006 between FutureFuel Chemical Company and Apex Oil Company, Inc.
10.6 Service Agreement dated November 1, 2006 between FutureFuel Corp.
and Pinnacle Consulting, Inc.
10.7 NOBS Supply Agreement dated January 1, 1999 between Eastman Chemical Company and The Procter & Gamble Manufacturing Company, as amended October 6, 1999, October 1, 2001,
July 10, 2002, April 22, 2003 and June 18, 2003 (portions of the exhibit have been omitted pursuant to a request for confidential treatment)
10.8 Custom Manufacturing Agreement dated September 1, 1992 between Tomen Corporation and Eastman Kodak Company, as amended October 2, 1992, February 1, 1993, March 19, 1993, September 28, 1995, October 30, 1998, May 24, 1999, November 10, 1999, December 12, 2000 and July 25, 2006 (portions of the exhibit have been omitted pursuant to a request for confidential treatment)
10.9 Conversion Agreement dated October 1, 1993 between Tomen Corporation and Eastman Chemical Company, as amended March 7, 1994, May 13, 1994, May 17, 1994, June 14, 1994, July 19, 1994, August 17, 1994, February 10, 1995, May 25, 1995, October 15, 1997, March 27, 1998, June 23, 1998, September 29, 1998, October 30, 1998, November 10, 1999 and July 25, 2006 (portions of the exhibit have been omitted pursuant to a request for confidential treatment)
10.10 Credit Agreement dated March 14, 2007 between FutureFuel Chemical Company and Regions Bank (portions of the exhibit have been omitted pursuant to a request for confidential treatment)
10.11 Revolving Credit Promissory Note dated March 14, 2007 executed by FutureFuel Chemical Company and payable to the order of Regions Bank
10.12 Security Agreement -Accounts and Inventory dated March 14, 2007 executed by FutureFuel Chemical Company in favor of Regions Bank
10.13 Continuing Unlimited Guaranty Agreement dated March 14, 2007 executed by FutureFuel Corp. in favor of Regions Bank
10.14 Car Subleasing Agreement dated November 1, 2006 between Apex Oil Company, Inc. and FutureFuel Chemical Company
10.15 Time Sharing Agreement dated April 18, 2007 between Apex Oil Company, Inc. and FutureFuel Corp.
11. Statement re Computation of per Share Earnings
21. Subsidiaries of FutureFuel Corp.
24. Power of Attorney
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized.
FUTUREFUEL CORP.
Date: April 23, 2007 By: /s/ Douglas D. Hommert
------------------------------------
Douglas D. Hommert, Executive
Vice President
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APPENDIX
Pages 12, 13 and 14 of this Registration Statement contain a Performance Graph. The information contained within the graph is presented in a tabular format immediately following the graph.
Exhibit 2
EXECUTION COPY
ACQUISITION AGREEMENT
BY AND BETWEEN
EASTMAN CHEMICAL COMPANY
AND
VICEROY ACQUISITION CORPORATION
Dated as of July 21, 2006
ARTICLE I DEFINITIONS AND USE OF TERMS..............................................1
Section 1.1. Definitions........................................................1
Section 1.2. Rules of Construction.............................................10
ARTICLE II THE PURCHASE AND SALE....................................................10
Section 2.1. Purchase and Sale of Purchased Shares.............................10
Section 2.2. Nonassignable Business Contracts..................................10
ARTICLE III CONSIDERATION............................................................11
Section 3.1. Amount and Form of Consideration..................................11
Section 3.2. Reference Working Capital Adjustment..............................11
Section 3.3. Pre-Closing Purchase Price Adjustment.............................13
Section 3.4. Post-Closing Purchase Price Adjustment............................13
ARTICLE IV THE CLOSING..............................................................15
Section 4.1. Closing Date......................................................15
Section 4.2. Deliveries by Seller to Purchaser.................................15
Section 4.3. Deliveries by Purchaser to Seller.................................16
Section 4.4. Proceedings at Closing............................................16
ARTICLE V WARRANTIES OF SELLER.....................................................16
Section 5.1. Organization and Good Standing....................................16
Section 5.2. Authorization of Agreement........................................17
Section 5.3. Conflicts; Consents of Third Parties..............................17
Section 5.4. Capitalization; Equity Interests; Directors and Officers..........18
Section 5.5. Financial Statements..............................................18
Section 5.6. No Undisclosed Liabilities........................................19
Section 5.7. Absence of Certain Developments...................................19
Section 5.8. Taxes.............................................................19
Section 5.9. Real Property.....................................................20
Section 5.10. Tangible Personal Property and Other Assets.......................21
Section 5.11. Intellectual Property.............................................21
Section 5.12. Contracts.........................................................22
Section 5.13. Employee Benefits.................................................23
Section 5.14. Labor.............................................................24
Section 5.15. Litigation........................................................24
Section 5.16. Compliance with Other Laws; Permits...............................25
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Section 5.17. Environmental Matters.............................................25
Section 5.18. Ownership of Necessary Assets and Rights..........................26
Section 5.19. Customers and Suppliers...........................................27
Section 5.20. Brokers...........................................................27
Section 5.21. Product Liability.................................................27
Section 5.22. Condemnation......................................................27
Section 5.23. No Additional Representations.....................................27
ARTICLE VI WARRANTIES OF PURCHASER..................................................28
Section 6.1. Organization and Good Standing....................................28
Section 6.2. Authorization of Agreement........................................28
Section 6.3. Conflicts; Consents of Third Parties..............................28
Section 6.4. Litigation........................................................29
Section 6.5. Financing.........................................................29
Section 6.6. Brokers...........................................................29
Section 6.7. WARN Act..........................................................29
Section 6.8. No Reliance.......................................................29
ARTICLE VII COVENANTS OF SELLER......................................................29
Section 7.1. Access to Documents...............................................29
Section 7.2. Conduct of Business...............................................30
Section 7.3. Consents and Conditions...........................................31
Section 7.4. Public Statements.................................................32
Section 7.5. Further Actions...................................................33
Section 7.6. Confidential Information..........................................33
Section 7.7. No Solicitation...................................................33
Section 7.8. Inspection........................................................33
Section 7.9. Absence of Affiliation............................................34
Section 7.10. Casualty..........................................................34
Section 7.11. Resignation of Officers and Directors; Releases...................34
ARTICLE VIII COVENANTS OF PURCHASER...................................................35
Section 8.1. Confidentiality...................................................35
Section 8.2. Public Statements.................................................35
Section 8.3. Consents and Conditions...........................................36
Section 8.4. Seller's Access to Documents......................................37
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Section 8.5. Use of Seller's Names and Marks...................................37
Section 8.6. Solicitation of Customers by Purchaser Prior to Closing...........37
Section 8.7. Further Actions...................................................37
ARTICLE IX CONDITIONS PRECEDENT TO PURCHASER'S OBLIGATIONS..........................38
Section 9.1. Accuracy of Warranties............................................38
Section 9.2. Performance of Covenants..........................................38
Section 9.3. Antitrust Laws....................................................38
Section 9.4. No Injunctions....................................................38
Section 9.5. Shareholder Approval..............................................38
Section 9.6. Consents..........................................................38
Section 9.7. Officer's Certificate.............................................38
Section 9.8. Delivery of Documents.............................................39
Section 9.9. Material Adverse Effect...........................................39
Section 9.10. Security Interest Releases........................................39
ARTICLE X CONDITIONS PRECEDENT TO SELLER'S OBLIGATIONS.............................39
Section 10.1. Accuracy of Warranties............................................39
Section 10.2. Performance of Covenants..........................................39
Section 10.3. No Injunctions....................................................39
Section 10.4. Antitrust Laws....................................................39
Section 10.5. Officer's Certificate.............................................39
Section 10.6. Delivery of Documents.............................................40
Section 10.7. Environmental Insurance...........................................40
ARTICLE XI ADDITIONAL POST-CLOSING COVENANTS........................................40
Section 11.1. Employment and Benefits Matters...................................40
Section 11.2. Ancillary Agreements..............................................42
Section 11.3. Tax Matters.......................................................42
Section 11.4. Cooperation in Litigation.........................................43
Section 11.5. Environmental Matters.............................................44
Section 11.6. Section 338(h)(10) Election.......................................44
Section 11.7. Receipt of Assets.................................................44
ARTICLE XII SURVIVAL, INDEMNIFICATION AND RELATED MATTERS............................44
Section 12.1. Survival..........................................................44
Section 12.2. Indemnification...................................................45
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Section 12.3. Allocation of Environmental Liabilities; Indemnification and
Covenants Not to Sue..............................................46
Section 12.4. Procedures for Indemnification....................................51
ARTICLE XIII NONCOMPETITION; NONSOLICITATION..........................................52
Section 13.1. Noncompetition....................................................52
Section 13.2. Nonsolicitation of Transferred Employees..........................54
Section 13.3. Nonsolicitation of Seller's Employees.............................54
ARTICLE XIV TERMINATION..............................................................54
Section 14.1. Termination.......................................................54
Section 14.2. Procedure and Effect of Termination...............................55
Section 14.3. Remedies..........................................................55
ARTICLE XV MISCELLANEOUS............................................................55
Section 15.1. Entire Agreement..................................................55
Section 15.2. Governing Law.....................................................55
Section 15.3. Submission to Jurisdiction........................................56
Section 15.4. Waiver of Jury Trial..............................................56
Section 15.5. Expenses..........................................................56
Section 15.6. Table of Contents and Headings....................................56
Section 15.7. Notices...........................................................56
Section 15.8. Severability......................................................57
Section 15.9. Binding Effect; No Assignment.....................................57
Section 15.10. Payment under Certain Conditions..................................58
Section 15.11. Construction......................................................58
Section 15.12. Amendments........................................................58
Section 15.13. Enforcement.......................................................58
Section 15.14. Counterparts......................................................59
Section 15.15. Business Day......................................................59
Section 15.16. Counterpart Facsimile Execution...................................59
Section 15.17. Exhibits and Schedules............................................59
Section 15.18. Failure or Delay..................................................59
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Exhibits
Exhibit A - The Business
Exhibit B - Form of Conversion Agreement by Eastman SE
Exhibit C - Form of Sales Agreements
Exhibit D - Form of Technology Transfer Agreement
Exhibit E - Form of Transition Services Agreement
Exhibit F - Form of Software License Agreement
Exhibit G - Competitive Business
Exhibit H - Form of Escrow Agreement
Exhibit I - Terms of BioExtend Agreement
Seller Disclosure Schedule
This ACQUISITION AGREEMENT, dated as of July 21, 2006 (together with the Schedules and Exhibits hereto, this "AGREEMENT"), is entered into by and between VICEROY ACQUISITION CORPORATION ("PURCHASER"), a corporation incorporated under the laws of the State of Delaware, and EASTMAN CHEMICAL COMPANY ("SELLER"), a corporation incorporated under the laws of the State of Delaware.
Purchaser and Seller are sometimes referred to herein individually as a "party" and together as the "parties." Unless otherwise indicated, capitalized terms used herein have the respective meanings set forth in Section 1.1.
RECITALS
WHEREAS, upon the terms and subject to the conditions hereinafter set forth, the parties desire that Seller sell, assign and transfer to Purchaser, and that Purchaser purchase and acquire from Seller all of the issued and outstanding capital stock of Eastman SE (the "Purchased Shares").
NOW, THEREFORE, in consideration of the premises and the mutual warranties, covenants and agreements hereinafter set forth and other good and valuable consideration, being hereinafter referred to, acknowledged, and intending to be legally bound hereby, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS AND USE OF TERMS
"ACQUISITION PROPOSAL" means a proposal or offer for (other than pursuant to this Agreement), or any indication of interest in, a merger, consolidation, purchase, acquisition, recapitalization, business combination or similar transaction involving any proposal to acquire, in any manner, an equity interest in Eastman SE, or any of the material assets of the Business, other than sales of inventory in the Ordinary Course of Business.
"ADJUSTMENT AMOUNT" has the meaning set forth in Section 3.3.
"AFFILIATE" means, as to any Person, any other Person that, directly or indirectly, controls, is controlled by, or is under common control with, such Person. For the purposes of this definition, "control" means the possession of the power to direct or cause the direction of management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise and either alone or in conjunction with others.
"AGREEMENT" has the meaning set forth in the preamble.
"APEX" has the meaning set forth in Section 15.9.
"BUSINESS" has the meaning set forth in the Recitals.
"BUSINESS CONTRACTS" means all Contracts (a) to which Eastman SE is a party or (b) to which Seller is a party and which exclusively relate to the Business.
"BUSINESS DAY" means any day other than a Saturday, a Sunday or a day on which banks in New York, New York are authorized or obligated by Law to close.
"BUSINESS EMPLOYEE" means all employees of Eastman SE.
"CASUALTY" has the meaning set forth in Section 7.10.
"CERCLA" means the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended.
"CLOSING" has the meaning set forth in Section 4.1.
"CLOSING DATE" has the meaning set forth in Section 4.1.
"CLOSING DATE WORKING CAPITAL SCHEDULE" has the meaning
set forth in Section 3.4(a).
"CLOSING WORKING CAPITAL" has the meaning set forth in
Section 3.4(a).
"COBRA" has the meaning set forth in Section 11.1(h).
"CODE" means the United States Internal Revenue Code of 1986, as amended.
"COMMERCIALLY REASONABLE EFFORTS" means efforts which are
commercially reasonable under the circumstances taking into account all
relevant facts, but such term does not include the provision of any material
consideration to any third Person or the suffering of any material economic
detriment to a party's ongoing operations for the taking of any action
(including the procurement of any consent, authorization or approval)
required under this Agreement except for: (i) the costs of gathering or
supplying any data or other information or making any filings; (ii) fees and
expenses of counsel and consultants; and (iii) customary fees and charges of
Governmental Bodies or third Persons.
"COMPARABLE EMPLOYMENT" has the meaning set forth in
Section 11.1(b).
"COMPETITIVE BUSINESS" has the meaning set forth in
Section 13.1(a).
"CONFIDENTIALITY AGREEMENT" means that certain confidentiality agreement executed by and between Seller and Apex Oil Company, Inc. dated June 16, 2006.
"CONTRACT" means any written contract, agreement, indenture, note, bond, loan, instrument, lease, conditional sale contract, purchase or sales orders, mortgage, license, franchise, insurance policy, undertaking, commitment or other enforceable arrangement or agreement.
"COVENANT TERM" has the meaning set forth in Section 13.1(a).
"CURRENT ASSETS" means, as of any date, the current asset line items set forth on Schedule 3.4(a).
"CURRENT LIABILITIES" means, as of any date, the current liability line items set forth on Schedule 3.4(a).
"DATA RESOLUTION PERIOD" has the meaning set forth in
Section 3.2(b).
"DEBT" of a Person means: (i) all obligations of such Person for borrowed money; (ii) all obligations of such Person evidenced by bonds, debentures, notes or other financial instruments; and (iii) all obligations or liabilities of others secured by a Lien on any asset owned by such Person, whether or not such obligation or liability is assumed by such Person.
"EARNEST DEPOSIT" means $7,500,000.
"EARN-OUT CONSIDERATION" means the consideration set forth on Schedule 1.1(c), to be paid in accordance with the procedures set forth thereon.
"EASTMAN SE OWNED REAL PROPERTY" means the real properties indicated in Section 5.9 of the Seller Disclosure Schedule as owned by Eastman SE.
"EASTMAN SE" has the meaning set forth in the recitals.
"EMPLOYEE BENEFIT PLANS" has the meaning set forth in
Section 5.13(a).
"ENVIRONMENT" means soil, surface water, groundwater, land, sediment, surface or subsurface strata or ambient air.
"ENVIRONMENTAL AUTHORITY" means any department, agency, or other body or component of any Governmental Body that lawfully exercises jurisdiction under any Environmental Law.
"ENVIRONMENTAL AUTHORIZATION" means any license, permit, order, approval, consent, notice, registration, filing or other form of permission or action required under any Environmental Law.
"ENVIRONMENTAL CONDITION" means any contamination of the Environment that results from a Release of Hazardous Substance or Regulated Substance to the Environment, whether or not yet discovered, which could or does result in a requirement under Environmental Law that Seller, Eastman SE or Purchaser investigate or cleanup such contamination.
"ENVIRONMENTAL INDEMNITY CAP" has the meaning set forth in
Section 12.3(a).
"ENVIRONMENTAL INSURANCE" has the meaning set forth in
Section 12.3(c).
"ENVIRONMENTAL LAW" means any Law relating to the protection of the Environment or occupational and worker health and safety.
"ENVIRONMENTAL LIABILITY" means any Liability or obligation arising under Environmental Law.
"ERISA" means the Employee Retirement Income Security Act of 1974.
"ERISA AFFILIATE" means any trade or business
(irrespective of whether incorporated) which is a member of a group of which
Eastman SE is a member and thereafter treated as a single employer under
Section 414(b), (c), (m) or (o) of the Code or applicable Treasury
Regulations.
"ESCROW AGENT" means Regions Bank, 8182 Maryland Avenue, Clayton, Missouri 63105.
"ESTIMATED CLOSING WORKING CAPITAL" has the meaning set forth in Section 3.3.
"EXCESS LOSS ACCOUNT" has the meaning set forth in Treasury Regulation Section 1.1502-19.
"FINAL ADJUSTMENT AMOUNT" has the meaning set forth in
Section 3.4(e).
"FINAL CLOSING WORKING CAPITAL" has the meaning set forth in Section 3.4(d).
"FULL YEAR FINANCIAL STATEMENTS" has the meaning set forth in Section 5.5.
"GAAP" means generally accepted accounting principles in the United States of America as implemented according to GAAP by Seller, consistently applied.
"GOVERNMENTAL BODY" means any government or governmental or regulatory body thereof, or political subdivision thereof, of any country or subdivision thereof, whether
international, of the European Union, national, federal, state or local, or any agency or instrumentality thereof, or any court or arbitrator (public or private) that, in each case, has asserted jurisdiction over the matter in question.
"HAZARDOUS SUBSTANCE" has the meaning set forth in CERCLA.
"HAZARDOUS WASTE SITE" means any site or location, wherever located (including any well, pit, pond, lagoon, tailings pile, spoil pile, impoundment, ditch, trench, drain, landfill, warehouse or waste storage container) where Hazardous Substance has been deposited, stored, treated, reclaimed, disposed of, placed or otherwise come to be located.
"HSR ACT" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and the rules and regulations promulgated thereunder.
"INDEMNIFIED PARTY" has the meaning set forth in Section 12.4.
"INDEMNIFYING PARTY" has the meaning set forth in Section 12.4.
"INTELLECTUAL PROPERTY" has the meaning set forth in the Technology Transfer Agreement.
"JUNE 30 WORKING CAPITAL" means the Working Capital on June 30, 2006 as finally determined pursuant to Section 3.4(a).
"KNOWLEDGE" means with respect to Seller or Purchaser, as the case may be, the actual knowledge, as of the date hereof, of the individuals set forth on Schedule 1.1(a) and identified as Seller employees or Purchaser employees, respectively.
"LAW" means any national, federal, state or local law, statute, code, ordinance, rule or regulation existing at the date hereof.
"LIABILITY" as to any Person means: (i) any Debt of such Person; and (ii) any other liability of such Person, whether absolute or contingent, accrued or unaccrued, liquidated or unliquidated or due or to become due.
"LIEN" means any lien (statutory or otherwise), pledge, mortgage, deed of trust, security agreement, security interest, financing statement, hypothecation, assignment, charge, option, right of first refusal, transfer restriction or encumbrance.
"LOSSES" has the meaning set forth in Section 12.2(a).
"MATERIAL ADVERSE EFFECT" means (i) when used with respect to the Business, any material adverse change in the business, properties, results of operations or financial condition of the Business, taken as a whole, but excluding any change to the extent relating to or arising from any (a) changes in Laws or changes in the enforcement thereof, (b) changes resulting from the announcement of the execution of this Agreement and the transactions contemplated hereby, (c) changes resulting from any action taken by Purchaser or Seller or any of their respective representatives or Affiliates in accordance with the terms hereof or in order to consummate the
transactions contemplated hereby, (d) changes in general economic conditions or (e) changes generally affecting the industry in which the Business competes, including changes in the price of energy, supplies and raw materials, and (ii) when used with respect to Seller or Purchaser, any effect that materially impairs the ability of Seller or Purchaser, respectively, to complete the transactions contemplated hereby or to fulfill its respective obligations hereunder.
"MATERIAL BUSINESS CONTRACTS" has the meaning set forth in
Section 5.12.
"MATERIAL INTELLECTUAL PROPERTY" means Purchased Intellectual Property that is material to the operation of the Business as of the date hereof.
"MATERIAL PERMIT" has the meaning set forth in Section 5.16(b).
"MIC TAX CREDIT" means the MIC Tax Credit transferred from Seller to Eastman SE and approved by the State of Arkansas Department of Finance and Administration pursuant to a letter from the Revenue Legal Counsel dated as of February 6, 2006.
"NEUTRAL AUDITORS" has the meaning set forth in Section 3.2(c).
"NONTRANSFERRED EMPLOYEES" has the meaning set forth in
Section 11.1(b).
"OPTIONS" means options, warrants, rights of first refusal, purchase rights, sale rights, subscription rights, puts, calls, conversion rights, exchange rights or similar Contracts.
"ORDER" means any order, injunction, judgment, decree, ruling, writ, assessment or arbitration award of any Governmental Body.
"ORDINARY COURSE OF BUSINESS" means the ordinary course of business consistent in all material respects with past custom and practice, including with respect to quantity and frequency.
"ORGANIZATIONAL DOCUMENTS" means as to any Person, the articles of incorporation, certificate of incorporation or articles of association, and bylaws, or other applicable organizational documents, of such Person.
"PATENTS" has the meaning set forth in the Technology Transfer Agreement.
"PERMIT" means any approval, authorization, order, franchise, license, certificate, permit, registration, variance or similar right obtained from or issued by any Governmental Body.
"PERMITTED BUSINESS COMBINATION" has the meaning set forth in Section 13.1(b)(iv).
"PERMITTED EXCEPTIONS" means: (a) liens for current Taxes, assessments or other claims by a Governmental Body not yet delinquent or the amount or validity of which is being contested in good faith by appropriate proceedings as disclosed in writing to Purchaser; (b) mechanics', carriers', workers', repairers', warehousemans', landlords' and similar Liens
arising or incurred in the Ordinary Course of Business which secure payment of obligations which are not past due; (c) zoning, entitlement and other land use and environmental regulations and restrictions by Governmental Bodies; (d) easements, restrictions and encumbrances of record listed as exceptions in the Title Commitment, and such other imperfections in title, charges, easements, restrictions and encumbrances (other than monetary Liens), in each case that do not materially detract from or materially diminish the value of or materially interfere with the present use of such property (real or personal) or asset in the Business; (e) express conditions, restrictions or limitations set forth in Permits or Business Contracts provided to Purchaser; and (f) such other matters as are disclosed on Schedule 1.1(b) attached hereto.
"PERSON" means any individual, corporation, partnership, limited liability company, firm, joint venture, association, joint-stock company, trust, unincorporated organization, Governmental Body or other similar entity.
"PERSONAL PROPERTY LEASES" means those Contracts providing for the lease of personal property by Eastman SE.
"PRE-CLOSING TAXES" means all Taxes of Eastman SE (a) for periods that end before the Closing Date, and (b) with respect to a Straddle Period (i) in the case of any Tax based upon or related to income or receipts, the pre-Closing portion of such Tax shall be deemed equal to the amount that would be payable if the relevant period ended the day immediately preceding the Closing, and (ii) in the case of any real or personal property Tax or any other Tax not described in the next sentence or clause (i), the pre-Closing portion of such Tax shall be deemed equal to the amount of such Tax for the entire taxable period multiplied by a fraction, the numerator of which is the number of days in the taxable period ending on the day immediately preceding (and not including) the Closing Date, and the denominator of which is the number of days in the entire taxable period. Sales and use Taxes shall be deemed to accrue as property is purchased, sold, used or transferred, as reflected in the books and records of the Business.
"PRIME RATE" means, with respect to any date on which interest at such rate begins to accrue, the highest rate published on such date as the "Prime Rate" in The Wall Street Journal.
"PROCEEDING" means any judicial or arbitral action, suit, or proceeding.
"PURCHASED INTELLECTUAL PROPERTY" means the Intellectual Property that is either (a) owned by Seller for use in the Business and conveyed to Purchaser by the Technology Transfer Agreement or (b) owned by Eastman SE.
"PURCHASED SHARES" has the meaning set forth in the recitals.
"PURCHASE PRICE" has the meaning set forth in Section 3.1.
"PURCHASER" has the meaning set forth in the preamble.
"PURCHASER DOCUMENTS" has the meaning set forth in Section 6.2.
"PURCHASER INDEMNIFIED GROUP" means Purchaser and its Affiliates (which after the Closing includes Eastman SE), together with their successors and assigns, and their respective officers, directors, employees and agents.
"RCRA" means the Resource Conservation and Recovery Act.
"REFERENCE BALANCE SHEET" has the meaning given in Section 5.5.
"REFERENCE DATE" means December 31, 2005, the date of the Reference Balance Sheet.
"REFERENCE FINANCIAL STATEMENTS" has the meaning given in
Section 5.5.
"REFERENCE WORKING CAPITAL" means the average of the Working Capital on January 31, 2006, February 28, 2006, March 31, 2006, April 30, 2006, May 31, 2006 and June 30, 2006, as calculated pursuant to Schedule 3.4(a), subject to adjustment as provided in Section 3.2.
"REGULATED SUBSTANCE" means any material, substance, compound or waste regulated by any Environmental Law or for which Liability can be imposed pursuant to any Environmental Law.
"RELEASE" has the meaning set forth in CERCLA.
"RESOLUTION PERIOD" has the meaning set forth in Section 3.4(c).
"RESPONSE" has the meaning set forth in CERCLA.
"SELLER" has the meaning set forth in the preamble.
"SELLER DISCLOSURE SCHEDULE" has the meaning set forth in the introduction to ARTICLE V.
"SELLER DOCUMENTS" has the meaning set forth in Section 5.2.
"SELLER INDEMNIFIED GROUP" means Seller and its Affiliates, together with their successors and assigns, and their respective officers, directors, employees and agents.
"SELLER PROPRIETARY INFORMATION" has the meaning set forth in Section 8.1.
"SELLER'S 401(k) PLAN" means any qualified cash or deferred arrangement (within the meaning of Section 401(k) of the Code) maintained by Seller.
"STOCK" means shares of capital stock (including common and preferred stock) or other equity interests (regardless of how designated) of or in a corporation or comparable entity (including a partnership, joint venture or limited liability company), whether voting or nonvoting, or general or limited.
"STOCK EQUIVALENTS" means all securities convertible into or exchangeable for Stock and all Options to purchase or subscribe for any Stock, whether or not presently convertible, exchangeable or exercisable.
"STRADDLE PERIOD" means taxable periods which begin before the Closing Date and end after the Closing Date.
"STRADDLE PERIOD RETURNS" has the meaning set forth in
Section 11.3(b).
"SUBSIDIARY" means, with respect to any Person, any other Person of which such Person (either alone or through or together with any other Subsidiary) owns, directly or indirectly, a majority of the outstanding equity securities or securities carrying a majority of the voting power in the election of the board of directors or other governing body of such Person.
"TAX" or "TAXES" means all taxes, however denominated, including any interest or penalties that may become payable in respect thereof, imposed by any federal, state, local or non-U.S. government or any agency or political subdivision of any such government, which taxes include all income, excise, franchise, gains, capital, real property, goods and services, transfer, value added, gross receipts, personal property, sales, use, license, stamp, documentary stamp, mortgage recording, employment, payroll, unemployment, social security, environmental, estimated or withholding taxes, and all customs and import duties.
"TAX RETURN" means a report, return or other information (including any amendments) required to be supplied to a Governmental Body with respect to Taxes including, where permitted or required, combined or consolidated returns for any group of entities that includes Seller or any Subsidiary of Seller.
"TITLE COMMITMENT" means the title insurance commitment attached as Schedule 1.1(d) hereto.
"TITLE INSURANCE POLICY" means an ALTA owner's title insurance policy for the Eastman SE Owned Real Property to be issued pursuant to the Title Commitment.
"TRANSFERRED EMPLOYEE" has the meaning set forth in
Section 11.1(b).
"TREASURY REGULATION" means those regulations promulgated by the United States Department of the Treasury pursuant to the authority of the Code or any other revenue law of the United States of America.
"UST" has the meaning set forth in 40 CFR Section 280.12.
"VOLUNTARY OR DISCRETIONARY ASSESSMENT" means an investigation or assessment of Hazardous Substances or Regulated Substances in the Environment, other than one that is required by Law or an Order from an Environmental Authority.
"WORK-AROUND" has the meaning set forth in Section 2.2.
"WORKING CAPITAL" means, as of any date, total Current Assets minus total Current Liabilities of the Business, as of such date, in accordance with the accounting principles, procedures, policies, estimates, assumptions and methods set forth on Schedule 3.4(a).
"YEAR END BALANCE SHEET" has the meaning set forth in
Section 5.5.
ARTICLE II
THE PURCHASE AND SALE
Efforts to obtain, or cause to be obtained, on or prior to the Closing, any approvals or consents necessary to convey to Eastman SE the benefit thereof. Purchaser shall cooperate with Seller in such manner as may be reasonably requested in connection therewith. In the event any consent or approval to an assignment contemplated hereby is not obtained on or prior to the Closing Date, Seller shall continue to use Commercially Reasonable Efforts to obtain any such consent or approval after the Closing Date for a period of 6 months from the Closing Date or until such time as such Required Consent has been obtained or it shall become reasonably apparent that such consent or approval is not forthcoming, whichever is shorter. In the event a consent or approval is not so obtained, Seller shall cooperate with Purchaser in any appropriate and economically feasible arrangement (a "WORK-AROUND") to provide that Eastman SE shall receive all of the benefits under any such Business Contract to which it would have been entitled had such consent or approval been obtained, provided that Purchaser shall cause Eastman SE to undertake to pay or satisfy the corresponding Liabilities for the enjoyment of such benefit to the extent Eastman SE would have been responsible therefor if such consent or approval had been obtained. Notwithstanding the preceding, in the event that a consent or approval with respect to a Material Business Contract is not obtained, then Section 9.5 applies.
ARTICLE III
CONSIDERATION
(b) Purchaser shall have 10 calendar days after the date hereof to review such calculations of Working Capital. Purchaser and its representatives shall have reasonable access to all books and records of Seller which are relevant to the Business, to the extent reasonably required to complete their review of such Working Capital. Purchaser may dispute those individual items reflected in the Working Capital which are disputed on the basis that such amounts (i) were not determined in conformity with the same accounting
principles, procedures, policies, estimates, assumptions and methods set forth on Schedule 3.4(a), or (y) contain arithmetic error. Except to the extent Purchaser delivers written notice to Seller on or prior to the 10th calendar day after Purchaser's receipt of the Working Capital, which notice specifies in reasonable detail the amount, nature and basis of all disputed items, Purchaser shall be deemed to have accepted and agreed to the calculations of Working Capital. If Purchaser so notifies Seller of its objection to the Working Capital for the above-referenced periods, Purchaser and Seller shall, within 5 calendar days following such notice (the "DATA RESOLUTION PERIOD"), attempt to resolve their differences and any resolution by them as to any disputed amounts shall be set forth in writing and shall be final, binding and conclusive.
(c) At the conclusion of the Data Resolution Period, all amounts remaining in dispute shall be submitted to Ernst & Young LLP, or such other nationally recognized accounting firm that is not then the independent auditor for either party and is selected by mutual agreement of Seller and Purchaser (the "NEUTRAL AUDITORS"), within 10 calendar days after the expiration of the Data Resolution Period. Each party agrees to execute, if requested by the Neutral Auditors, a reasonable engagement letter, including customary indemnities. The fees and disbursements of the Neutral Auditors shall be shared equally between Seller and Purchaser. The Neutral Auditors shall act as an arbitrator to determine, based solely on the provisions of this Section 3.2 and the presentations by Seller and Purchaser, and not by independent review, only those issues still in dispute and only as to whether such amounts (i) were arrived at in conformity with the same accounting principles, procedures, policies, estimates, assumptions and methods as set forth on Schedule 3.4(a) or (ii) contain an arithmetic error. The Neutral Auditors' determination shall be made within 15 calendar days of their selection, shall be set forth in a written statement delivered to Seller and Purchaser and shall be final, binding and conclusive. Following the determination of Working Capital pursuant hereto, the term "REFERENCE WORKING CAPITAL" shall be deemed to mean the Reference Working Capital as calculated using such final determination as to the Working Capital as of January 31, 2006, February 28, 2006, March 31, 2006, April 30, 2006, May 31, 2006 and June 30, 2006.
(a) Within 90 calendar days following the Closing Date,
Seller shall prepare, or cause to be prepared, and deliver to
Purchaser an unaudited schedule of Working Capital for the Business
as of the close of business on the Closing Date (the "CLOSING DATE
WORKING CAPITAL SCHEDULE"). Seller will certify to Purchaser that
the calculation of the Working Capital of the Business as of the
Closing Date has been prepared in accordance with the same
accounting principles, procedures, policies, estimates, assumptions
and methods that were employed in preparing the Reference Working
Capital as set forth on Schedule 3.4(a) (the "CLOSING WORKING
CAPITAL").
(b) During the preparation of the Closing Date Working
Capital Schedule and the calculation of Closing Working Capital,
and the period of any dispute within the contemplation of this
Section 3.4, Purchaser shall: (i) provide Seller and its
accountants, counsel, consultants, employees and other
representatives reasonable access to all relevant books, records,
facilities and employees of the Business and (ii) cooperate fully
with Seller and Seller's representatives, including by providing on
a timely basis information, in each case to the extent reasonably
required to prepare the Closing Date Working Capital Schedule and
the calculation of Closing Working Capital.
(c) After receipt of the Closing Date Working Capital Schedule and the calculation of Closing Working Capital, Purchaser shall have 30 calendar days to review the calculation of Closing Working Capital. Purchaser and its representatives shall have reasonable access to all books and records of Seller which are relevant to the Business, to the extent reasonably required to complete their review of the Closing Date Working Capital Schedule and the calculation of Closing Working Capital. Purchaser may dispute those individual items reflected in the Closing Date Working Capital Schedule and the calculation of Closing Working Capital which are disputed on the basis that such amounts (i) were not determined in conformity with the same accounting principles, procedures, policies, estimates, assumptions and methods set forth on Schedule 3.4(a), or (ii) contain arithmetic error. Except to the extent Purchaser delivers written notice to Seller on or prior to the 30th calendar day after Purchaser's receipt of the Closing Date Working Capital Schedule and the calculation of Closing Working Capital, which notice specifies in reasonable detail the amount, nature and basis of all disputed items,
Purchaser shall be deemed to have accepted and agreed to the calculation of Closing Working Capital. If Purchaser so notifies Seller of its objection to the calculation of Closing Working Capital, Purchaser and Seller shall, within 30 calendar days following such notice (the "RESOLUTION PERIOD"), attempt to resolve their differences and any resolution by them as to any disputed amounts shall be set forth in writing and shall be final, binding and conclusive.
(d) At the conclusion of the Resolution Period, all amounts remaining in dispute shall be submitted to the Neutral Auditors, within 10 calendar days after the expiration of the Resolution Period. Each party agrees to execute, if requested by the Neutral Auditors, a reasonable engagement letter, including customary indemnities. The fees and disbursements of the Neutral Auditors shall be shared equally between Seller and Purchaser. The Neutral Auditors shall act as an arbitrator to determine, based solely on the provisions of this Section 3.4 and the presentations by Seller and Purchaser, and not by independent review, only those issues still in dispute and only as to whether such amounts (i) were arrived at in conformity with the same accounting principles, procedures, policies, estimates, assumptions and methods as set forth on Schedule 3.4(a) or (ii) contain an arithmetic error. The Neutral Auditors' determination shall be made within 30 calendar days of their selection, shall be set forth in a written statement delivered to Seller and Purchaser and shall be final, binding and conclusive. To the extent that the Neutral Auditors determine there is an adjustment to be made to the Closing Date Working Capital Schedule or the calculation of Closing Working Capital, similar adjustments shall be made to the Reference Working Capital to the extent necessary for the items included therein also to be in accordance with any required modifications to the Closing Working Capital. The term "FINAL CLOSING WORKING CAPITAL" shall mean the definitive Closing Working Capital, in each case, as agreed to (or deemed to be agreed to) by Purchaser and Seller in accordance with the terms of Section 3.4(c) or resulting from the determinations made by the Neutral Auditors in accordance with this Section 3.4(d) (in addition to those items theretofore agreed to by Seller and Purchaser).
(e) Upon the final determination of Final Closing Working
Capital, the parties shall subtract Final Closing Working Capital
from Reference Working Capital (the "FINAL ADJUSTMENT AMOUNT"). If
there is a difference between the Final Adjustment Amount and the
Adjusted Amount, Seller and Purchaser agree to make payment, as
appropriate, to the respective party in respect of such difference,
provided that in no event shall any amount payable by Purchaser to
Seller as a result of this Section 3.4(e) exceed the Adjustment
Amount. Any adjustments to the Purchase Price made pursuant to this
Section 3.4(e) shall bear interest from the Closing Date through
the date of payment at the Prime Rate. Any adjustments to the
Purchase Price made pursuant to this Section 3.4(e) shall be paid
by wire transfer of immediately available funds to the account
specified by Purchaser or Seller, as applicable, within 5 Business
Days after the Final Closing Working Capital is agreed to by
Purchaser and Seller or any remaining disputed items are ultimately
determined by the Neutral Auditors.
ARTICLE IV
THE CLOSING
(a) stock certificates representing the Purchased Shares, together with stock powers duly endorsed in blank;
(b) the certificates referred to in Section 9.6 signed on behalf of Seller by an officer of Seller;
(c) the Transition Services Agreement, duly executed on behalf of Seller;
(d) the Technology Transfer Agreement, duly executed on behalf of Seller;
(e) the Software License Agreement, duly executed on behalf of Seller;
(f) the Conversion Agreement by Eastman SE, duly executed on behalf of Seller;
(g) the Sales Agreements, duly executed on behalf of Seller;
(h) the Escrow Agreement, duly executed on behalf of Seller;
(i) the BioExtend Agreement, duly executed on behalf of Seller;
(j) a Certificate of Good Standing for Eastman SE issued by the Secretary of State (or comparable official) for the States of Arkansas and Delaware;
(k) a certification of the authority of Seller to execute the documents and complete the transactions contemplated hereunder;
(l) an affidavit and such other information reasonably requested by the title insurance company to issue the Title Insurance Policy;
(m) such other documents and instruments as Purchaser may reasonably request that do not alter the parties' respective obligations hereunder;
(n) the resignations and releases described in Section 7.11; and
(o) the assignment agreement described in Section 2.2.
(a) the Purchase Price in the amount and manner provided in Section 3.1;
(b) the certificate referred to in Section 10.5 signed on behalf of Purchaser by an officer of Purchaser;
(c) the Transition Services Agreement, duly executed by Eastman SE;
(d) the Technology Transfer Agreement, duly executed by Eastman SE;
(e) the Software License Agreement, duly executed on behalf of Eastman SE;
(f) the Conversion Agreement by Eastman SE, duly executed by Eastman SE;
(g) the Sales Agreements, duly executed by Eastman SE;
(h) the Escrow Agreement, duly executed on behalf of Purchaser;
(i) the BioExtend Agreement, duly executed by Eastman SE; and
(j) such other documents and instruments as Seller may reasonably request that do not alter the parties' respective obligations hereunder.
ARTICLE V
WARRANTIES OF SELLER
Seller hereby represents and warrants to Purchaser that, except as set forth in the disclosure schedule dated as of the date hereof and delivered by Seller to Purchaser (the "SELLER DISCLOSURE SCHEDULE"):
its properties and assets and to carry on, in all material respects, the Business. Seller and Eastman SE are each duly qualified, authorized or licensed to conduct business under the Laws of each jurisdiction in which the conduct of the Business or the ownership or lease of the assets owned or leased by it in respect of the Business requires such qualification, authorization or license, except where the failure to be so qualified, authorized or licensed is not reasonably likely to have a Material Adverse Effect.
upon any of the assets of Eastman SE. No consent, waiver, approval, Permit or authorization of, or declaration or filing with, or notification to, any Person or Governmental Body is required on the part of Seller or Eastman SE in connection with the execution and delivery of this Agreement or the Seller Documents, the consummation of the transactions contemplated hereby and thereby or the compliance by Seller and Eastman SE with any of the provisions hereof or thereof, except (i) for such other consents, waivers, approvals, Permits or filings with, or notifications to, any Person or Governmental Body, the failure to receive or make is not reasonably likely to have a Material Adverse Effect on the Business, and (ii) for compliance with the applicable requirements of the HSR Act.
(a) The Business has been conducted in all material respects in the Ordinary Course of Business;
(b) There has not occurred any Material Adverse Effect on the Business;
(c) Seller has not made any change in the accounting practices or policies applied in the preparation of financial statements of the Business, except to incorporate portions of the Business as a wholly-owned Subsidiary of Seller and as required by GAAP;
(d) Neither Seller nor Eastman SE has made any material change in any method or practice of management or operation with respect to the Business; and
(e) Neither Eastman SE or Seller (with respect to the Business) has entered into any other material transaction other than in the Ordinary Course of Business.
(a) All material Tax Returns required to be filed by Eastman SE or by Seller with respect to the Business for any period ending on or before the Closing Date have been or will be timely filed (taking into account any extensions validly obtained) and all such Tax Returns are or will be, as applicable, complete and accurate in all material respects. All Tax Liabilities related to such Tax Returns have been properly accrued on a basis consistent with such Tax Returns.
(b) All Taxes shown to be due on such Tax Returns (or payable pursuant to any assessments with respect to such Tax Returns) have been or will be timely paid by Seller.
(c) To the Knowledge of Seller, there is no material action, suit, claim, or assessment, nor any investigation or audit pending against Eastman SE, or against Seller with respect to Taxes in respect of the Business.
(d) All Taxes due and payable by Eastman SE or for which Eastman SE may be liable in respect of periods prior to the Closing Date, other than Taxes for current periods not yet due and payable prior to the Closing Date, have been (or will be, prior to the Closing Date) paid in full, all Tax Returns required to be filed in connection therewith have been accurately prepared and filed, and all deposits required by Law to be made by Eastman SE with respect to employees' and other withholding Taxes have been duly made. No deficiency for any Tax or claim for additional Taxes has been asserted, assessed or, to the Knowledge of the Seller, proposed against Eastman SE, and Eastman SE has not granted any waiver of any statute of limitations in respect of Taxes or agreed to any extension of time with respect to a Tax assessment or deficiency. Eastman SE is not a party to any tax allocation or sharing agreement.
(e) Eastman SE's basis in its assets subject to depreciation or cost recovery for federal income Tax purposes as of the Effective Date was not less than $35,000,000. Neither Seller nor Eastman SE has agreed or been requested to make any adjustment under Section 481(a) of the Code by reason of a change in accounting method or otherwise that will affect Eastman SE or the Business for any period after the Effective Date. None of Eastman SE's or the Business' Liabilities is an obligation to make a payment that will not be deductible under Code Section 280G. Eastman SE and Seller with respect to the Business has disclosed on its federal income Tax Returns all positions taken therein that could give rise to a substantial understatement of federal income Tax within the meaning of Code Section 6662. Eastman SE is not and has not been a member of an affiliated group filing a consolidated federal income Tax Return other than an affiliated group the common parent of which is Seller. Seller has no Excess Loss Account with respect to Eastman SE. Eastman SE has no net operating loss, net capital loss, unused investment, foreign tax or other credit or excess charitable contribution carryover allocable to it or the Business. There is no deferred gain or loss allocable to Eastman SE or the Business arising out of any deferred intercompany transaction.
(a) Eastman SE has good, marketable and insurable fee simple title to the Eastman SE Owned Real Property (and has no leasehold interests), free and clear of all Liens except Permitted Exceptions.
(b) None of the Eastman SE Owned Real Property is subject to any lease, sublease, license, asset or other agreement granting to any other Person any right to the use, occupancy or enjoyment of such property or any part thereof.
(c) Eastman SE neither owns nor has an interest in (including as a tenant) any real property other than the Eastman SE Owned Real Property. Seller neither owns nor has an interest in any real property in Independence County, Arkansas or any other real property used in the operation of the Business. The Eastman SE Owned Real Property is
in compliance with all building, fire, zoning and other ordinances and regulations applicable thereto, except such noncompliance which has not had or will not have a Material Adverse Effect. The Eastman SE Owned Real Property and the present use and condition thereof do not violate any applicable deed restrictions or other covenants, restrictions or agreements, site plan approvals, zoning or subdivision regulations or urban redevelopment plans applicable thereto, as modified by any duly issued variances, except violations which have not had or will not have a Material Adverse Effect. No building or other improvement which is part of any of the Eastman SE Owned Real Property encroaches, in any respect, upon any property owned by any adjacent landowner or upon any real property interest held by any other Person with respect to any of the Eastman SE Owned Real Property (including easements on the Eastman SE Owned Real Property) or upon any setback lines or similar encumbrances and no asset of any other Person encroaches upon the Eastman SE Owned Real Property, except such encroachments, if any, none of which, individually or in the aggregate, materially detracts from the value, or impairs in any significant way the current use of, the property subject thereto.
(a) The Technology Transfer Agreement contains a true and correct list, as of the date hereof, of the following categories of Purchased Intellectual Property: (i) Patents; and (ii) patent applications.
(b) (i) Seller or Eastman SE is the owner of the Purchased Intellectual Property and has all right, title and interest in and to such Purchased Intellectual Property free and clear of any Liens other than Permitted Exceptions; and (ii) to the Knowledge of Seller, the consummation of the transactions contemplated hereby and by the Seller Documents will not result in the loss or impairment of any of the rights of any of the Business or Eastman SE in any Purchased Intellectual Property, assuming the receipt of any consents or approvals under any Contracts required in connection with the transactions contemplated hereby.
(c) None of the Purchased Intellectual Property is the subject of any pending or, to the Knowledge of Seller, threatened opposition, interference or cancellation Proceeding before any registration authority in any jurisdiction in which the operations of the Business or Eastman SE are conducted, and all registrations and applications for all such Purchased Intellectual Property listed in the Technology Transfer Agreement are, as of the date hereof, in full force and effect and have not been abandoned or withdrawn.
(d) Other than as provided in Section 5.11 of the Seller Disclosure Schedule: (i) neither Seller nor Eastman SE has given any notice of infringement to any third party with respect to any Material Intellectual Property within the last 36 months, and no claim or controversy with respect to any such alleged infringement currently exists as of the date hereof; (ii) to the Knowledge of Seller, use of Material Intellectual Property and the manufacture, use or sale of Seller's or Eastman SE's products by each of Seller or Eastman SE do not infringe any valid Patent rights of any Person; and (iii) no claims of infringement of Patent rights of any Person have been asserted within the past 36 months by any Person against Seller or Eastman SE with respect to their use of Material Intellectual Property.
(e) Either Seller or Eastman SE has used Commercially Reasonable Efforts to maintain and protect each item of Material Intellectual Property that it owns or uses. Since the Reference Date, neither Seller nor Eastman SE, to their Knowledge, has granted, disposed of or permitted to lapse any rights or licenses or sublicenses to use any of the Material Intellectual Property.
(a) Section 5.12(a) of the Seller Disclosure Schedule sets forth, as of the date hereof, a true and correct list of each of the following Contracts to which Eastman SE is a party, or to which Seller is a party and that are used in the Business, and that are Material Business Contracts. "MATERIAL BUSINESS CONTRACTS," as such term is used in this Agreement, means: (i) Contracts relating to the acquisition or disposition of any material assets not made in the Ordinary Course of Business, and any Contracts providing for any merger, acquisition or other business combination, to the extent that such Contract provides for continuing obligations by the parties thereto; (ii) Contracts providing for the purchase of, or payment for, supplies (excluding raw materials and energy), services, merchandise or equipment that are not capable of being fully performed or are not terminable without penalty within a period of 60 calendar days and involving annual payments in excess of $250,000; (iii) Contracts providing for the sale of products and involving annual payments in excess of $1,000,000; (iv) Personal Property Leases that are not terminable without penalty within a period of 60 calendar days and involving annual payments in excess of $250,000; (v) Contracts for research and development collaboration; (vi) non-competition or exclusive dealing agreements, or any other agreement or obligation which purports to limit or restrict in any respect (A) the ability of Eastman SE to solicit customers for the Business, or (B) the localities in which all or any portion of the Business is conducted; (vii) joint venture or partnership agreements or similar Contracts; (viii) Contracts providing for the disposal of Hazardous Substances; (ix) Contracts providing for the transportation of products of the Business that are not capable of being fully performed or are not terminable without penalty within a period of 60 calendar days and involving annual payments in excess of $250,000; (x) Contracts relating to the leasing of railroad cars or rolling stock; (xi) Contracts for the purchase of raw materials involving annual payments in excess of $250,000; and (xii) Contracts for the purchase of electricity, coal and other forms of energy involving annual payments in excess of $250,000. Each of Seller and Eastman SE has performed in all material respects all of the obligations required to be performed by it to date, and is not in material
default under, any of the Material Business Contracts, and, to the Knowledge of Seller as of the date hereof, no other party to any of the Material Business Contracts is in material default thereunder. Each Material Business Contract is in full force and effect. Seller has delivered or caused to be delivered to Purchaser complete copies (including copies or summaries of all material amendments, oral or written) of each Material Business Contract.
(b) Section 5.12(b) of the Seller Disclosure Schedule sets forth a true and complete list of all Material Business Contracts shared between Eastman SE, on the one hand, and Seller and its Affiliates, on the other hand.
(a) Section 5.13(a) of the Seller Disclosure Schedule sets forth a true and correct list, as of the date hereof, of all material employee benefit and compensation plans, programs or policies maintained or sponsored by Seller, Eastman SE or any other ERISA Affiliate for the benefit of the current or former Business Employees or their dependents, or in which any current or former Business Employee or their respective dependents participate, whether maintained pursuant to a written contract or pursuant to custom or informal understanding (collectively, the "EMPLOYEE BENEFIT PLANS").
(b) Seller has made available to Purchaser true and correct copies of the most recent plan summaries distributed to the Business Employees, if any, with respect to each of the Employee Benefit Plans.
(c) None of the Business Employees participates in any "multiemployer plan" (as defined in Section 3(37) of ERISA).
(d) There are neither presently pending nor, to the Knowledge of the Seller, threatened against Eastman SE or any ERISA Affiliate, any claims or charges by any Governmental Body, labor organization, Business Employee or former Business Employee or participant or beneficiary of any Employee Benefit Plan alleging that Eastman SE or any ERISA Affiliate or such Employee Benefit Plan has violated any Law in any material respect respecting employee benefits or employment claims or charges relating to holiday pay, workers' compensation, disability, unemployment insurance or similar claims, in each case as they relate to the Business.
(e) None of such Employee Benefit Plans has incurred any "accumulated funding deficiency" as defined in Section 412 of the Code.
(f) None of such Employee Benefit Plans is an employee pension benefit plan within the meaning of ERISA Section 3(2).
(g) Neither Eastman SE nor any ERISA Affiliate with respect to the Business maintains or has ever maintained or contributes, ever has contributed or ever has been required to contribute to any employee welfare benefit plan (within the meaning of ERISA Section 3(1)) providing medical, health or life insurance or other welfare-type benefits
for current or future retired or terminated employees, their spouses or their dependents other than in accordance with Section 4980B of the Code.
(h) Eastman SE will not be subject to any withdrawal liability in respect of any Employee Benefit Plans.
(a) There are no collective bargaining agreements in effect that pertain to any of the Business Employees.
(b) As of the date hereof: no labor organization representing any Business Employees or group of Business Employees has made a pending demand against Seller or Eastman SE for recognition; and there are no representation proceedings or petitions seeking a representation proceeding presently pending involving any Business Employees or, to the Knowledge of Seller, threatened to be brought or filed with the U.S. National Labor Relations Board or with any non-U.S. Governmental Body having jurisdiction over such matters.
(c) As of the date hereof, there are no (i) strikes, work stoppages or lockouts pending, or to the Knowledge of Seller, threatened, involving Business Employees; (ii) unfair labor practice charges, arbitrations or complaints pending or, to the Knowledge of Seller, threatened by or on behalf of any Business Employees; or (iii) claims or charges pending or to the Knowledge of Seller threatened before the Equal Employment Opportunity Commission or similar state agency.
(d) Since the Reference Date, there has been no general increase in the wage rates of Business Employees or in the compensation of management thereof, other than increases in the Ordinary Course of Business.
(e) The consummation of the transactions contemplated by this Agreement will not subject Purchaser or Eastman SE to any Liability, directly or indirectly, with respect to any Person for a golden parachute payment or any similar payment arising out of such Person's employment by Seller, by Eastman SE or by any Affiliate of Seller.
(a) To the Knowledge of Seller, Seller and Eastman SE are conducting the Business in all material respects in compliance with all Laws and Orders (considered without regard to Environmental Laws, which are addressed in Section 5.17).
(b) Eastman SE holds all Permits of all Governmental
Bodies that by the nature of the operations of the Business
conducted by it or the ownership of the assets owned by it are
Permits required to conduct the operation and ownership thereof in
the manner currently conducted or to use such assets in the manner
currently utilized in the Business, except for such Permits, if
any, as to which the failure to hold are not reasonably likely to
have a Material Adverse Effect on the Business (considered without
regard to Environmental Authorizations, which are addressed in
Section 5.17) ("MATERIAL PERMITS"). All Material Permits are in
full force and effect and none of them have expired, and none of
Seller or Eastman SE has received written notice of any suspension,
modification, revocation, cancellation or non-renewal, in whole or
in part, of any Material Permits. No Material Permit will terminate
as of, or require renewal or reapplication or notice of a change in
ownership or control prior to, the Closing Date as a result of the
consummation of the transactions contemplated hereby.
(c) Neither Seller nor Eastman SE has received any notice alleging (or any notice of any investigation related to) any material violation by Eastman SE or the Business of any Law (considered without regard to Environmental Laws which are addressed in Section 5.17), which allegation has not been resolved as of the date of this Agreement.
(a) To the Knowledge of Seller:
(i) Except as disclosed in Section 5.17(a)(i) of the
Seller Disclosure Schedule, Eastman SE has obtained or is in the
process of obtaining all material Environmental Authorizations
required for operation of the Business. These Environmental
Authorizations are in full force and effect and there is no
Proceeding pending or threatened which might directly and adversely
affect the validity of any of these effective or proposed
Environmental Authorizations, except in each case as described in
Section 5.17(a)(i) of the Seller Disclosure Schedule;
(ii) No Eastman SE Owned Real Property is subject to any Lien imposed by or arising under any Environmental Law, and there is no Proceeding pending or threatened for imposition of any such Lien;
(iii) Except as disclosed in Section 5.17(a)(iii) of the Seller Disclosure Schedule, neither Seller nor Eastman SE has received any written communication from any Environmental Authority during the 5 years prior to the date hereof alleging that the Business is in violation of any Environmental Law or Environmental Authorization;
(iv) Except as disclosed in Section 5.17(a)(iv) of the Seller Disclosure Schedule, neither Seller nor Eastman SE has been named, identified or alleged during the 5 years prior to the date hereof to be a responsible party or a potentially responsible party under CERCLA or RCRA or any state Law based on CERCLA or RCRA as the result of the operation of the Business;
(v) Except as disclosed in Section 5.17(a)(v) of the Seller Disclosure Schedule, there is no Proceeding pending against Seller, Eastman SE or the Business, nor is any such Proceeding threatened, in which any violation of Environmental Law by Seller or Eastman SE or the Business is alleged or any Environmental Liability is asserted;
(vi) Except as disclosed in Section 5.17(a)(vi) of the Seller Disclosure Schedule, Eastman SE has not, and no predecessor in interest with respect to the Business, has during the 5 years prior to the date hereof, Released, stored, manufactured, disposed of or used any Hazardous Substance on or at any of the Eastman SE Real Property or any Hazardous Waste Site in material violation of any Environmental Law;
(vii) No part of any of the Eastman SE Owned Real Property has been listed or proposed for listing on the National Priorities List of the United States Environmental Protection Agency or any similar state or local list;
(viii) Except as disclosed in the documents identified in Section 5.17(a)(viii) of the Seller Disclosure Schedule, in the 5 years prior to the date hereof Seller and Eastman SE have timely filed or caused to be filed all reports required to be filed with respect to all of the Eastman SE Owned Real Property and the facilities thereon and has generated and maintained all required data, documentation and records under all Environmental Laws with respect thereto (except such reports, data, documentation and records the failure to file, generate or maintain has not had or will not have a Material Adverse Effect), and has heretofore made complete copies of all such reports, data, documentation and records available to Purchaser;
(ix) Except as disclosed in Section 5.17(a)(ix) of the Seller Disclosure Schedule, there are no USTs at the Eastman SE Owned Real Property; and
(x) All material environmental written audits, assessments, reviews and reports in Seller's or Eastman SE's possession relating to compliance with Environmental Laws by the Business at the Eastman SE Owned Real Property in the five years prior to the date hereof, that have not otherwise been disposed of in accordance with Seller's records retention policy, have been made available for Purchaser's review.
(b) The representations and warranties of the Seller in
Section 5.17(a) shall be the sole and exclusive representations and
warranties of the Seller in this Agreement with respect to the
Environment, Environmental Authorities, Environmental
Authorizations, Environmental Conditions, Environmental Law and
Environmental Liabilities.
the Technology Transfer Agreement, the Conversion Agreement by Eastman SE,
the Software License Agreement, and the Sales Agreements, (ii) Business
Contracts as to which a Work-around is implemented, (iii) Permits listed on
Section 5.18(a) of the Seller Disclosure Schedule that cannot be transferred
to Eastman SE or for which consent for a change of control, as applicable,
cannot be obtained, as applicable, (iv) Business Employees who do not become
Transferred Employees, and (v) as otherwise described in Section 5.18(b) of
the Seller Disclosure Schedule, the assets, properties and rights of Eastman
SE acquired by virtue of the acquisition of the Purchased Shares will
compose all of the assets, properties and rights necessary to the continued
operation of the Business substantially as conducted since the Reference
Date. Except as set forth in Section 5.18(c) of the Seller Disclosure
Schedule, Eastman SE will have no on-going contractual obligations to or
relationship with Seller or its Affiliates after Closing, except pursuant to
the Seller Documents, Purchaser Documents or this Agreement.
representations or warranties with respect to any projections, forecasts or forward-looking information provided to Purchaser.
ARTICLE VI
WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to Seller that, as of the date hereof:
to, any Person or Governmental Body is required on the part of Purchaser in connection with the execution and delivery of this Agreement or the Purchaser Documents, the consummation of the transactions contemplated hereby and thereby or the compliance by Purchaser with any of the provisions hereof or thereof, except (i) for such consents, waivers, approvals, Permits or filings with, or notifications to, any Person or Governmental Body, the failure to receive or make is not reasonably likely to have a Material Adverse Effect on Purchaser; and (ii) for compliance with the applicable requirements of the HSR Act.
ARTICLE VII
COVENANTS OF SELLER
From and after the date hereof and until the Closing (except with respect to Section 7.1, Section 7.4, Section 7.6 and Section 7.9, which survive the Closing in accordance with its terms), Seller hereby covenants and agrees that:
may necessary to enable Purchaser to comply with provisions of applicable Law) following the Closing Date in connection with financial statements and U.S. Securities and Exchange Commission and London Stock Exchange plc reporting obligations and other reasonable business purposes, provided that nothing herein shall limit Purchaser's rights of discovery. Seller agrees to hold all of the books and records of the Business existing on the Closing Date in accordance with Seller's standard record retention policies provided that Seller shall not destroy, alter or dispose of any of such books and records for a period of ten years from the Closing Date or such longer time as may be required by Law without first offering in writing at least 60 calendar days prior to such destruction or disposition to surrender them to Purchaser.
(i) operate in the Ordinary Course of Business, provided that Purchaser acknowledges and agrees that Seller may take reasonable actions, upon reasonable advance notice to Purchaser of Seller's intended actions, to maintain Final Closing Working Capital at levels no higher than those in Reference Working Capital (which actions shall not adversely affect the Business after Closing, including without limitation reducing inventory below levels reasonably required to operate the Business), and any and all such actions shall be considered to be taken in the Ordinary Course of Business;
(ii) (A) preserve its present material business operations, organization and goodwill, (B) keep available the services of its present officers and key employees and (C) preserve its present relationships with Persons having business dealings with it;
(iii) maintain its books, accounts and records in the Ordinary Course of Business;
(iv) except in the Ordinary Course of Business or as required by Law, or as required by any contractual obligation or other understanding or arrangement disclosed on Schedule 7.2(iv), not increase the rate of compensation payable or to become payable to any Business Employees or enter into or amend any employment or similar or related agreement with any Business Employee;
(v) except in the Ordinary Course of Business, or as otherwise provided for herein or contemplated hereby, not enter into any new, or modify any material terms of any existing, Material Business Contract;
(vi) maintain its assets that are operable and utilized in the Business as of the date hereof (including the expenditure of adequate amounts for maintenance) consistent with the pattern and practice of maintenance of Seller as of the date hereof and, as a whole, in generally as favorable a condition as the same are in on the date hereof, except for normal wear and tear and Casualty events;
(vii) maintain insurance covering its assets comparable to that in effect on the date hereof;
(viii) reapply for necessary material Permits in the Ordinary Course of Business;
(ix) provide notice of any capital expenditure or commitment to make a capital expenditure, in each case in excess of $250,000; and
(x) replace in accordance with past practice assets that are operable and utilized in the Business as of the date hereof but become inoperable, worn out or obsolete (other than as a result of Casualty) prior to the Closing Date.
Without limiting the generality of the foregoing (except with the prior written consent of Purchaser, which consent may not be unreasonably withheld, delayed or conditioned, or except as contemplated by this Agreement), Seller will not with respect to the Business and will not permit Eastman SE to:
(xi) adopt any change in its certificate of incorporation or bylaws;
(xii) adopt a plan or agreement of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other material reorganization;
(xiii) issue, sell, transfer, pledge, dispose of or encumber any shares of Stock, or Stock Equivalents convertible into or exchangeable for, or to acquire, any shares of Stock, in Eastman SE;
(xiv) declare, set aside or pay any distribution of property (other than cash or as otherwise permitted by Section 7.2(i) above, or as provided in Section 7.2(xvi) of the Seller Disclosure Schedule) with respect to Eastman SE's Stock;
(xv) redeem, purchase or otherwise acquire directly or indirectly any of Eastman SE's Stock or Stock Equivalents;
(xvi) except as provided in Section 7.2(xvi) of the Seller Disclosure Schedule, sell, exchange, hypothecate, pledge or otherwise dispose of the Business or any material portion of the assets of the Business;
(xvii) acquire or organize a Subsidiary; or
(xviii) agree or commit to do any of the foregoing.
(a) Seller shall use Commercially Reasonable Efforts to take, or cause to be taken, all actions, and to do, or cause to be done, and to assist and cooperate with Purchaser in doing, all things necessary, proper or advisable to consummate and make
effective the transactions contemplated hereby as promptly as practicable, including: (i) obtaining all necessary consents, approvals or waivers from, and giving any necessary notifications to, third parties; (ii) making all registrations and filings as promptly as practicable with, and obtaining all necessary actions or non-actions, waivers, consents and approvals from, all Governmental Bodies (including those in connection with the HSR Act and any other applicable foreign law) and using all Commercially Reasonable Efforts to obtain an approval or waiver from, or to avoid an action or proceeding by, a Governmental Body; (iii) responding to any information requests from Governmental Bodies as soon as reasonably practicable; and (iv) defending any Proceedings challenging this Agreement or the consummation of the transactions contemplated hereby, including seeking to have any stay or temporary restraining order or preliminary or permanent injunction entered by any Governmental Body vacated or reversed.
may apply for any Permits for which Purchaser is required to apply for by Law prior to Closing, provided that neither activity unreasonably interferes with the operation of the Business or involve any physically intrusive due diligence, such as sampling of soils, groundwater or other part of the Environment. Purchaser and its Affiliates shall, in performing such due diligence, comply with all Laws or Environmental Authorizations applicable to the Eastman SE Owned Property and the Business. Seller will, and will cause Eastman SE to, cooperate with Purchaser in carrying out the provisions of this Section and will provide Purchaser reasonably promptly with such documents and information pertaining to the Business and its assets as Purchaser may reasonably request. Purchaser agrees to indemnify, hold harmless and defend (with counsel reasonably acceptable to Seller) Seller against any Losses suffered by Seller or Eastman SE or any of the Eastman SE Owned Real Property and resulting from the acts or omissions of Purchaser or its employees, officers, directors, attorneys, agents, independent auditors and representatives in inspecting or investigating the Business and its assets pursuant to this Section 7.8. Notwithstanding the preceding sentence, Purchaser has no obligation to indemnify, hold harmless or defend Seller or Eastman SE with respect to any Losses arising out of Seller's or Eastman SE's own negligence or willful misconduct. Purchaser agrees to return all Eastman SE Owned Real Property to substantially the same condition as it existed prior to such investigation and inspection. The obligations of Purchaser under this Section 7.8 survive the termination of this Agreement.
against Eastman SE, including any right to indemnification under Eastman SE's certificate of incorporation or bylaws.
ARTICLE VIII
COVENANTS OF PURCHASER
From and after the date hereof and until the Closing (except with respect to Section 8.1, Section 8.4, Section 8.5 and Section 8.6, which shall survive the Closing in accordance with their terms), Purchaser hereby covenants and agrees that:
(a) Purchaser shall use Commercially Reasonable Efforts to take, or cause to be taken, all actions, and to do, or cause to be done, and to assist and cooperate with Seller in doing, all things necessary, proper or advisable to consummate and make effective the transactions contemplated hereby as promptly as practicable, including: (i) obtaining all necessary consents, approvals or waivers from, and giving any necessary notifications to, third parties; (ii) making all registrations and filings as promptly as practicable with, and obtaining all necessary actions or non-actions, waivers, consents and approvals from, all Governmental Bodies (including those in connection with the HSR Act and any other applicable foreign Law) and using all Commercially Reasonable Efforts to obtain an approval or waiver from, or to avoid an action or proceeding by, a Governmental Body; (iii) responding to any information requests from Governmental Bodies as soon as reasonably practicable; and (iv) defending any Proceedings challenging this Agreement or the consummation of the transactions contemplated hereby, including seeking to have any stay or temporary restraining order or preliminary or permanent injunction entered by any Governmental Body vacated or reversed.
the conditions precedent to Closing. Seller and Purchaser will provide to such title insurer such affidavits and other documents listed on Section 8.7 of the Seller Disclosure Schedule.
ARTICLE IX
CONDITIONS PRECEDENT TO PURCHASER'S OBLIGATIONS
The obligation of Purchaser to consummate the transactions contemplated hereby on the Closing Date is subject to the satisfaction (or, if permitted by applicable Law, waiver by Purchaser in its sole discretion) of each of the following conditions:
ARTICLE X
CONDITIONS PRECEDENT TO SELLER'S OBLIGATIONS
The obligation of Seller to consummate the transactions contemplated hereby on the Closing Date is subject to the satisfaction (or, if permitted by applicable Law, waiver by Seller in its sole discretion) of each of the following conditions:
ARTICLE XI
ADDITIONAL POST-CLOSING COVENANTS
other applicable Law with respect to the Business Employees and their beneficiaries who experience a "Qualifying Event" (as defined in COBRA) on or prior to the Closing Date.
(a) Seller shall prepare and timely file all Tax Returns in respect of Eastman SE that are required to be filed before the Closing Date. Seller shall also prepare and timely file all Tax Returns in respect of Eastman SE required to be filed on or after the Closing Date with respect to taxable periods ending before the Closing Date. Seller will pay all Pre-Closing Taxes required to be paid with respect to such Tax Returns.
(b) Purchaser shall prepare and timely file all Tax
Returns in respect of Eastman SE required to be filed on or after
the Closing Date with respect to taxable periods that begin before
and end on or after the Closing Date ("STRADDLE PERIOD RETURNS").
The portions of the Straddle Period Returns relating to taxable
periods ending on or before the Closing Date shall reflect the
practices of Seller in respect of the Tax Returns described in
Section 11.3 (a) above but only to the extent Seller has apprised
Purchaser of such practices on or before the Closing Date. As early
as practicable prior to the due date of any Straddle Period Return,
Purchaser shall provide Seller with a draft of such Straddle Period
Return, provided that Purchaser may file such Straddle Period
Return without review or comment by Seller. Seller shall have a
period of 90 days after the filing of such Straddle Period Return
to review the contents thereof and, in the event of a disagreement
between Seller and Purchaser as to any matter reflected in the
Straddle Period Return, Seller and Purchaser shall endeavor in good
faith to expeditiously resolve
any such disagreement. In the event Seller and Purchaser are unable to resolve such disagreement within 20 days after receipt by Purchaser of Seller's disagreement, the disagreement shall be referred to the Neutral Auditors for resolution in accordance with the same procedures provided for in Section 3.4(d) hereof. Seller will reimburse Purchaser for all Pre-Closing Taxes required to be paid with respect to such Tax Returns, taking into account the resolution of any disputes as provided above.
(c) Any Tax refunds that are received by Eastman SE, and any amounts credited against any Tax to which Eastman SE becomes entitled, that relate to any taxable period (or portion thereof) ending prior to the Closing Date shall be for the account of Seller and shall be paid over to Seller within 10 days after receipt thereof or entitlement thereto. Any Tax refunds that are received by Seller, and any amounts credited against any Tax to which Eastman SE becomes entitled, that relate to any taxable period (or portion thereof) ending on or after the Closing Date shall be for the account of Eastman SE and shall be paid over to Eastman SE within 10 days after receipt thereof or entitlement thereto.
(d) After the Closing Date, neither Purchaser nor Eastman SE, without the written consent of Seller, shall file any amended Tax Returns for any taxable period (or portion thereof) ending on or before the Closing Date. After the Closing Date, without the written consent of Purchaser, Seller shall not file any amended Tax Returns for any taxable period (or portion thereof) ending on or before the Closing Date if such amendment results in an increase to Eastman SE's Tax Liability for periods on or after the Closing Date.
(e) Seller and Eastman SE shall be permitted to utilize any remaining amounts of the MIC Tax Credit to offset any sales and use Taxes owed in respect of any periods up to and including the Closing Date. To the extent that any portion of the MIC Tax Credit remains unused by Seller and Eastman SE in respect of periods up to and including the Closing Date, Purchaser shall reimburse Seller, as, when and if such MIC Tax Credit is actually used by Eastman SE to offset sales and use Taxes attributable to sales, use or ownership occurring after the Closing, within 20 days of such use. In no event shall Purchaser be required to make or increase any payment to any Person under any provision of this Agreement for any Tax effects of the payments provided for in this Section 11.3(e).
or documents received by it heretofore or hereafter from the other party's attorneys in connection with the defense or prosecution of any litigation or proceedings. The other party shall pay the out-of-pocket expenses of the cooperating party and its employees and those fees and expenses of the cooperating party's agents (including attorneys) reasonably incurred in connection with providing such cooperation but shall not be responsible for reimbursing the cooperating party for the salaries or costs of fringe benefits or other similar expenses of the cooperating party's employees in connection with time spent providing such cooperation to the other party. The obligations set forth in this Section 11.5 shall survive termination of this Agreement, but in no event longer than 3 years after such termination or the length of any relevant indemnity obligation (whichever period is longer).
(a) To the extent not completed prior to Closing, Seller and Purchaser shall cooperate in effecting the transfer of, or consent to a change of control of Eastman SE with respect to, all Environmental Authorizations required for Purchaser's operation of the Business. Nothing in this section affects Section 9.6.
(b) Within 10 calendar days after Closing, Purchaser shall obtain and submit to the applicable Environmental Authorities (with a copy to Seller) those certain financial assurance instruments required for operation of the Business in compliance with Environmental Law described on Schedule 11.5 hereto.
ARTICLE XII
SURVIVAL, INDEMNIFICATION AND RELATED MATTERS
(a) All representations and warranties contained in this
Agreement shall terminate 18 months after the Closing Date, except
that (i) the representations and warranties contained in Section
5.8 (Taxes) shall survive until the end of the period of the
applicable statute of limitations (without regard to any extensions
thereof), (ii) the representations and warranties contained in
Section 5.17 (Environmental Matters) shall survive until five years
after the Closing Date, and (iii) the representations and
warranties contained in Section 5.1 (Organization and Good
Standing), Section 5.2 (Authorization of Agreement), Section 5.4
(Capitalization; Equity Interests; Directors and Officers),
Section 5.9(a) (Real Property), Section 6.1 (Organization and Good Standing), and Section 6.2 (Authorization of Agreement) shall survive without limitation as to time. The covenants and agreements of the parties contained herein that by their terms are to be performed following the Closing Date shall survive the Closing and continue in effect in accordance with their terms and all other covenants and agreements shall terminate and merge with the Closing.
(b) After the Closing, and except in the case of fraud, the indemnification provided for in this ARTICLE XII shall be the sole and exclusive remedy for monetary damages for any breach of this Agreement or the representations, warranties, covenants or agreements herein by either party hereto. No Person shall be entitled to indemnification hereunder if, on the Closing Date, such Person had Knowledge of the breach of the representation, warranty, covenant or agreement with respect to which such Person is seeking indemnification hereunder.
(c) In calculating any amount of Losses recoverable pursuant to Section 12.2 or Section 12.3, the amount of such Losses shall be (i) reduced by (A) any insurance proceeds actually received by the Indemnified Party relating to such Loss, net of any related deductible and any expenses (including legal fees and expenses) incurred by the Indemnified Party in obtaining such proceeds, (B) any recoveries by the Indemnified Party from third parties pursuant to indemnification (or otherwise) with respect thereto, net of any expenses (including legal fees and expenses) incurred by the Indemnified Party in obtaining such third party payment, and (C) the amount of any net Tax benefit to the Indemnified Party resulting from the incurrence or payment of such Losses, and (ii) increased by the amount of any net Tax cost incurred by the Indemnified Party as a result of the receipt of such indemnity payments (grossed up for such increase). The parties agree to treat any indemnification payment pursuant to this ARTICLE XII as an adjustment to the Purchase Price for all Tax purposes unless otherwise required by applicable Law.
(d) Notwithstanding anything herein to the contrary, no party shall be liable to any Indemnified Party for special, incidental, indirect, consequential, punitive or exemplary Losses. The Indemnified Party shall take all reasonable steps to mitigate damages in respect of any claim for which it is seeking indemnification and shall use reasonable efforts to avoid any costs or expenses associated with such claim and, if such costs and expenses cannot be avoided, to minimize the amount thereof.
(a) Except with respect to those matters addressed in
Section 12.3 (which shall be exclusively governed thereby), Seller
hereby agrees to indemnify, defend, and hold the Purchaser
Indemnified Group harmless from and against any and all claims,
demands, judgments, causes of action, liabilities, obligations,
damages, losses, deficiencies, costs, penalties, interest and
expenses (including the reasonable fees and expenses of counsel)
(collectively, "LOSSES") actually incurred by any of them to the
extent arising out of or resulting from:
(i) any breach as of the Closing Date of a representation or warranty made by Seller herein (other than breaches of Section 5.17, which are addressed in Section 12.3);
(ii) any breach of any covenant or agreement of Seller herein;
(iii) any Pre-Closing Taxes not reflected in Final Closing Working Capital; and
(iv) any Liability of Eastman SE to third party customers relating to products sold prior to Closing that was not disclosed to Purchaser in a schedule to this Agreement or is not reflected in the Final Closing Working Capital or the Full Year Financial Statements.
Notwithstanding anything contained herein to the contrary, Seller shall not be liable for any Losses with respect to the matters set forth in Section 12.2(a)(i) and (iv) unless (x) a claim is asserted prior to the relevant survival period specified in Section 12.1(a) for any representation or warranty, and the aggregate of all Losses under Section 12.2(a)(i) and (iv) exceeds, on a cumulative basis, $750,000 (and then only to the extent of such excess). In addition, notwithstanding anything contained in this Agreement to the contrary, Seller shall not be required to pay an aggregate amount in excess of $7,500,000 in respect of all Losses for the matters set forth in Sections 12.2(a)(i) and (iv). The limitations set forth in this paragraph do not apply to Losses described in Section 12.2(a)(ii) and (iii).
(b) Except with respect to those matters addressed in
Section 12.3 (which shall be exclusively governed thereby),
Purchaser hereby agrees to indemnify and hold the Seller
Indemnified Group harmless from and against any and all Losses
actually incurred by any of them to the extent arising out of or
resulting from:
(i) any breach as of the Closing Date of a representation or warranty made by Purchaser herein; and
(ii) any breach of any covenant or agreement of Purchaser herein.
a third party for Losses Seller pays associated with claims under
Section 12.3(a)), to the extent arising out of or resulting from:
(i) Any breach of any representation or warranty of Seller contained in Section 5.17(a) of this Agreement.
(ii) Any Liability under CERCLA or RCRA or any state Law based on CERCLA or RCRA, or under any other Environmental Law, for costs of Response or the costs of complying with an injunction or other Order under RCRA or under any other Environmental Law, at a Hazardous Waste Site (other than at the Eastman SE Owned Real Property) and that Purchaser demonstrates is attributable to the activities of Seller, its Affiliates (including Eastman SE) or the operation of the Business prior to Closing.
(iii) An Environmental Condition at any of the Eastman SE Owned Real Property that Purchaser demonstrates existed at Closing. Notwithstanding the foregoing, Seller shall not be liable for an Environmental Condition:
(1) unless an investigation or remediation of the Environmental Condition is required by Law or by an Order issued to Purchaser or Eastman SE by an Environmental Authority;
(2) if the Environmental Condition is discovered by Purchaser during a Voluntary or Discretionary Assessment; or
(3) to the extent the Environmental Condition is attributable to the activities of Eastman SE, Purchaser or the operation of the Business after Closing.
(iv) Any violation of, or non-compliance with, any Environmental Law by the Business to the extent that Purchaser demonstrates that such violation or non-compliance existed at Closing.
(1) Within 30 days after becoming aware of an alleged breach, Environmental Condition or alleged violation of or non-compliance with Environmental Law, Purchaser shall commit to Seller in writing that it will accept responsibility for managing the Response to the alleged breach, Environmental Condition or alleged violation of or non-compliance with Environmental Law and working with the applicable Environmental Authority or third party claimant.
(2) After such commitment, Purchaser shall have primary responsibility for responding to the alleged breach, Environmental Condition or alleged violation of or non-compliance with Environmental Law. In its response to the alleged breach, Environmental Condition or alleged violation of or non-compliance with Environmental Law, Purchaser shall use reasonable efforts to utilize and implement the lowest cost investigatory, remedial or corrective measures allowable under Environmental Law and acceptable to the relevant Environmental Authorities, provided that no settlement or other investigatory, remedial, corrective Response or cost-reimbursement activity shall be undertaken by Purchaser without the prior written approval of Seller, such approval not to be unreasonably withheld, delayed or conditioned.
(3) Purchaser shall (A) regularly consult with Seller and keep Seller reasonably informed as to the status of the alleged breach, Environmental Condition or alleged violation of or non-compliance with Environmental Law and shall provide Seller with copies of all material proposals, plans, work plans, reports, analytical data, correspondence and other documents related to the alleged breach, Environmental Condition or alleged violation of or non-compliance with Environmental Law; (B) provide Seller with a reasonable opportunity to comment on drafts of such documents, and Purchaser shall reasonably address and incorporate Seller's comments; (C) provide Seller with notice of material meetings, phone calls and conference calls, related to the Environmental Condition, including all meetings and calls with Environmental Authorities, and Seller shall have the right to attend and participate in such meetings and calls at Seller's expense; and (D) fulfill its obligations identified in Section 12.3(d). Purchaser and Seller shall cooperate in good faith in fulfilling their obligations under this Section 12.3(b).
(i) The one-time premium (including broker commissions) for, and surplus lines or other tax on, the Environmental Insurance as described in Section 12.3(c)(ii)(1) through (4) will be split equally by Purchaser and Seller.
(ii) The Environmental Insurance will contain the following minimum coverages, limitations, terms and conditions:
(1) policy limit of $10,000,000 with a per claim deductible of $150,000 and a term of ten years following the Closing;
(2) coverage for any unknown Environmental Conditions
that existed at Closing at, on, within, under or
emanating from any of the Eastman SE Owned Real
Property, including the equipment, units, conditions,
or areas identified as a solid waste management unit
in the Business' RCRA Facility Investigation report;
third party claims relating to any Environmental
Conditions that existed at Closing; and for CERCLA
Liability associated with Seller's, Eastman SE's or
the Business' use of the disposal sites identified in
Section 12.3(c)(ii) of the Seller Disclosure Schedule
for the period between 1975 and Closing;
(3) names both Purchaser and Seller as insured parties, with this status as an insured fully assignable by either party; and
(4) does not require invasive due diligence, such as any sampling or analysis of the Environment at any Eastman SE Owned Real Property.
(iii) Purchaser and Seller will cooperate in all negotiation of the policy terms and conditions with all insurance carriers.
(i) During the period from Closing through the fifth
anniversary of the Closing Date, Seller and Purchaser shall split
the $150,000 Environmental Insurance per claim deductible with
Purchaser paying the first $75,000 and Seller paying any deductible
amounts spent over this first $75,000. Except as provided in
Section 12.3(d)(iii), Seller shall be responsible for paying any
amounts above the $150,000 Environmental Insurance per claim
deductible and pursuing recovery for such claims from Environmental
Insurance and shall be entitled to retain all funds recovered from
Environmental Insurance for such claims so paid by Seller.
Notwithstanding the foregoing, Seller shall not be obligated to pay
any amount for claims under Section 12.3 in excess of the
Environmental Indemnity Cap. If Seller fails to pursue coverage
under the Environmental Insurance or fails to comply with any terms
or conditions precedent to recovery under the Environmental
Insurance, and that failure is the basis for the Environmental
Insurance carrier's denial of coverage for the claim, Seller will
be deemed to have waived its right to recover and will be barred
from recovering the Losses associated with the denied claim from
Purchaser.
(ii) To the extent that Seller reasonably determines that Purchaser's Losses are not covered by the indemnities provided in Section 12.3(a), Purchaser shall be responsible for pursuing coverage under the Environmental Insurance. If Purchaser fails to do so or fails to comply with any terms or conditions precedent to recovery under the Environmental Insurance, that is the basis for the Environmental Insurance carrier's denial of coverage for the claim, and such claim is subsequently determined to have qualified for indemnification under Section 12.3(a), Purchaser will be deemed to have
waived its right to recover and will be barred from recovering the Losses associated with the denied claim from Seller.
(iii) In the event Purchaser identifies a matter for which there is coverage under the Environmental Insurance during the period commencing the day after the fifth anniversary of the Closing Date until the expiration of the Environmental Insurance policy's term, Purchaser shall be responsible for paying the entire $150,000 per claim Environmental Insurance deductible associated with any such claim and for pursing recovery for such claims under the Environmental Insurance. Purchaser shall be entitled to retain all funds recovered from Environmental Insurance for such claims.
(iv) Seller and Purchaser agree that they will use all reasonable means to cooperate with the other in the filing of claims under Environmental Insurance.
(i) any liability under CERCLA or RCRA or any state law based on CERCLA or RCRA, or under any other Environmental Law, for costs of Response or the costs of complying with an injunction or other Order under RCRA or under any other Environmental Law, at a Hazardous Waste Site (other than at the Eastman SE Owned Real Property) that Seller demonstrates are attributable to the activities of Purchaser, its Affiliates (including Eastman SE) or the operation of the Business after Closing;
(ii) any Environmental Condition at or associated with any of the Eastman SE Owned Real Property Seller demonstrates arose after Closing;
(iii) Any violation of, or non-compliance with, any Environmental Law by Purchaser, its Affiliates or the Business that Seller demonstrates did not exist at the time of Closing; and
(iv) Purchaser's utilization of the following: (i)
Corporate Guarantee for Closure or Post-Closure Care dated
September 20, 2005 and made by Seller on behalf of Eastman SE; and
(ii) Guarantee for Liability Coverage dated September 20, 2005 and
made by Seller on behalf of Eastman SE. A successful claim made
against Seller under the Guarantee for Liability Coverage described
in clause (ii) by a third party who has sustained bodily injury or
property damage caused by sudden accidental occurrences arising
from operation of the Business prior to the Closing will not be
deemed Purchaser's utilization of such guarantee.
successors or assigns with respect to any Losses arising under, related to or associated with the Environment, Environmental Authorities, Environmental Authorizations, Environmental Conditions, Environmental Law, and Environmental Liabilities. Except as otherwise provided in this Article, Seller agrees that, in connection with the Business or the Eastman SE Owned Real Property, it shall hereafter assert no claim against Purchaser or Seller SE and that each of Purchaser and Eastman SE is hereby released from and shall have no Liability or obligation whatsoever to Seller or its successors or assigns with respect to any Losses arising under, related to or associated with the Environment, Environmental Authorities, Environmental Authorizations, Environmental Conditions, Environmental Law, and Environmental Liabilities.
Indemnifying Party has not assumed the defense thereof. The Indemnified Party shall have the option of joining the defense of such claim or Proceeding (which shall be at the sole cost and expense of the Indemnified Party) with counsel not reasonably objected to by the Indemnifying Party and counsel for each party shall, to the extent consistent with such counsel's professional responsibilities, cooperate with the other party and any counsel designated by that party.
ARTICLE XIII
NONCOMPETITION; NONSOLICITATION
(ii) Seller may directly or indirectly hold interests in or securities of any Person to the extent that such investment does not directly or indirectly confer on Seller more than 2% of the voting power of such Person;
(iii) Seller may maintain and continue the operations of Seller and its Affiliates that are not being transferred to Purchaser hereunder; and it is expressly understood that Seller may continue to make, have made, use, sell, offer for sale and import any product not being transferred to Purchaser hereunder for any purpose, use or application;
business is to be divested, and provided Seller is able to control such divestiture and there are no other material legal impediments, Seller agrees that it will first make a good faith effort to sell such biodiesel business to Purchaser, and provide Purchaser with a reasonable period to negotiate such purchase, including a reasonable time for due diligence, before offering such biodiesel business to a third party;
(v) Seller may produce, acquire or use any product for internal uses or to conduct Seller's or its Affiliates' other businesses that consume, use, contain, depend upon or otherwise incorporate any such product; and
(vi) Seller may perform any act or conduct any business contemplated by the Transition Services Agreement.
(c) The parties hereto acknowledge and agree that nothing herein shall be deemed to require Seller to give notice to or obtain the consent of Purchaser in order to engage in any transaction of the types described in Section 13.1(b) or otherwise.
ARTICLE XIV
TERMINATION
(a) upon the written agreement of Purchaser and Seller;
(b) by Purchaser or Seller if the other party shall have breached any representation, warranty, covenant or agreement contained herein that would result in the failure of the closing conditions set forth in Section 9.1 or Section 9.2, or Section 10.1 or Section 10.2, respectively, and such breach cannot be or has not been cured within 30 calendar days after the giving of a written notice by the terminating party to the other party of such breach;
(d) by Purchaser as provided in Section 7.10 hereof.
ARTICLE XV
MISCELLANEOUS
WILL GOVERN ALL QUESTIONS CONCERNING THE CONSTRUCTION, VALIDITY AND INTERPRETATION OF THIS AGREEMENT AND THE PERFORMANCE OF THE OBLIGATIONS IMPOSED BY THIS AGREEMENT.
by overnight mail or to the extent receipt is confirmed, facsimile or other electronic transmission service, or 5 calendar days after being mailed by registered mail, return receipt requested, to a party at the following address (or to such other address as such party may have specified by notice given to the other parties pursuant to this Section 15.7):
If to Seller, to:
Eastman Chemical Company
P.O. Box 511
Kingsport, TN 37662-5075
Attn: Senior Vice President and Chief Legal Officer Fax: (423) 229-2097
If to Purchaser, to:
Viceroy Acquisition Corporation
8235 Forsyth Blvd., 4th Floor
Clayton, Missouri 63105
Attn: General Counsel
Fax: (314) 889-9603
Eastman SE to allow, Purchaser (which, for purposes of this and the next succeeding sentence only, shall not be deemed to include Apex) to hold in the administrative building at the Eastman SE Owned Real Property, on such date as Purchaser may reasonably request, a meeting of Purchaser's shareholders called to approve the transactions contemplated hereby. In connection with such shareholder meeting, Seller will cause Eastman SE to provide such shareholders of Purchaser with such tours of the facilities as Purchaser may reasonably request and assist Purchaser in procuring refreshments and meals as Purchaser may reasonably request, at Purchaser's expense.
remedy at law which might be asserted as a bar to such remedy of specific performance or injunctive relief.
[SIGNATURES TO THE ACQUISITION AGREEMENT APPEAR ON THE NEXT PAGE]
[SIGNATURES TO THE ACQUISITION AGREEMENT]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date and year first above written.
VICEROY ACQUISITION CORPORATION
By: /s/ Douglas D. Hommert
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Douglas D. Hommert
Executive Vice President
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EASTMAN CHEMICAL COMPANY
By: /s/ Prentice O. McKibben
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Name: Prentice O. McKibben
Title: Vice President, Corporate Development
and Strategic Planning
|
For the purposes of Section 15.9 only:
APEX OIL COMPANY, INC.
By: /s/ Douglas D. Hommert
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Douglas D. Hommert
Executive Vice President
|
Exhibit 3.1.a.
CERTIFICATE OF INCORPORATION
OF
VICEROY ACQUISITION CORPORATION
I, the undersigned, in order to form a corporation for the purposes hereinafter stated, under and pursuant to the provisions of the General Corporation Law of Delaware (as amended or hereinafter enacted, the "ACT"), do hereby certify as follows.
ARTICLE ONE - NAME OF THE CORPORATION
The name of the corporation is Viceroy Acquisition Corporation (the
"CORPORATION").
ARTICLE TWO - REGISTERED AGENT
The name and address of the Corporation's initial registered agent in Delaware is:
The Corporation Trust Company 1209 Orange Street Corporation Trust Center Wilmington, Delaware 19801
ARTICLE THREE - PURPOSE OF THE CORPORATION
The purpose for which the Corporation is organized is to engage in any lawful act or activity for which corporations may be organized under the Act.
ARTICLE FOUR - AUTHORIZED CAPITAL STOCK
The total number of shares of all classes of stock which the
Corporation has the authority to issue is 55,000,000 shares consisting of:
(i) 5,000,000 shares of a class designated as preferred stock, par value
$0.0001 per share ("PREFERRED STOCK"); and (ii) 50,000,000 shares of a class
designated as common stock, par value $0.0001 per share ("COMMON STOCK").
The designations, preferences, rights, qualifications, limitations and
restrictions of the Preferred Stock and the Common Stock are as follows.
A. PROVISIONS RELATING TO THE PREFERRED STOCK.
(a) whether the class or series is to have voting rights, full, special or limited, and whether such class or series is to be entitled to vote as a separate class either alone or together with the holders of one or more other classes or series of stock of the Corporation;
(b) the number of shares to constitute the class or series and the designations thereof;
(c) the preferences and relative, participating, optional or other special rights, if any, and the qualifications, limitations or restrictions thereof, if any, with respect to any class or series;
(d) whether the shares of any class or series are redeemable at the option of the Corporation or the holders thereof or upon the happening of any specified event and, if redeemable, the redemption price or prices (which may be payable in the form of cash, notes, securities or other property), and the time or times at which, and the terms and conditions upon which, such shares are redeemable and the manner of redemption;
(e) whether the shares of a class or series are subject to the operation of retirement or sinking funds to be applied to the purchase or redemption of such shares for retirement and, if such retirement or sinking fund or funds are to be established, the annual amount thereof and the terms and provisions relative to the operation thereof;
(f) the dividend rate, whether dividends are payable in cash, stock of the Corporation or other property, the conditions upon which and the times when such dividends are payable, the preference to or the relation to the payment of dividends payable on any other class or classes or series of stock of the Corporation, whether or not such dividends are cumulative or noncumulative and, if cumulative, the date or dates from which such dividends accumulate;
(g) the preferences, if any, and the amounts thereof which the holders of any class or series thereof will be entitled to receive upon the voluntary or involuntary dissolution of, or upon any distribution of the assets of, the Corporation;
(h) whether the shares of any class or series, at the option of the Corporation or the holders thereof or upon the happening of any specified event, are convertible into or exchangeable for the shares of any other class or classes or of any other series of the same or any other class or classes of stock, securities or other property of the Corporation and the conversion price or prices or ratio or the rate or rates at which such exchange may be made, with such adjustments, if any, as may be stated and expressed or provided for in such resolution or resolutions; and
(i) such other special rights and protective provisions with respect to any class or series as may to the Board of Directors seem advisable.
B. PROVISIONS RELATING TO THE COMMON STOCK.
series thereof, in no event will shares of Common Stock have preferences over shares of Preferred Stock with respect to payment of dividends or distribution of assets upon liquidation of the Corporation.
C. GENERAL.
ARTICLE FIVE - BUSINESS COMBINATIONS
The following paragraphs (A) through (D) apply during the period commencing upon the filing of this Certificate of Incorporation and terminating upon the consummation of any Business Combination (as defined below) and may not be amended during the Target Business Acquisition Period (as defined below). "BUSINESS COMBINATION" means the acquisition by the Corporation, whether by merger, capital stock exchange, asset or stock acquisition or other similar type of transaction, of an operating business in the petroleum or oil and gas industries ("TARGET BUSINESS"), and specifically includes the exploration, development, extraction, production, refining, storage, transportation and/or marketing of petroleum, petroleum products and natural gas. "TARGET BUSINESS ACQUISITION PERIOD" means the period from the effectiveness of the registration statement filed in connection with the Corporation's initial public offering ("IPO") up to and including the first to occur of: (i) a Business Combination; or (ii) the Termination Date (as defined below).
A. SHAREHOLDER APPROVAL.
Prior to the consummation of any Business Combination, the Corporation must submit such Business Combination to its stockholders for approval regardless of whether the Business Combination is of a type which normally would require such stockholder approval under the Act. In the event that a majority of the IPO Shares (as defined below) cast at the meeting to approve the Business Combination are voted for the approval of such Business Combination, the Corporation will be authorized to consummate the Business Combination; provided that the Corporation may not consummate any Business Combination if the holders of 20% or more of the IPO Shares exercise their conversion rights described in paragraph B below.
B. REDEMPTION RIGHTS.
In the event that a Business Combination is approved in accordance with paragraph A above and is consummated by the Corporation, any stockholder of the Corporation holding shares of Common Stock issued in the IPO ("IPO SHARES") who voted against the Business Combination may, contemporaneously with such vote, demand that the Corporation convert his IPO Shares into cash. If so demanded, the Corporation will, promptly after consummation of the Business Combination, convert such shares into cash at a per share conversion price equal to the quotient determined by dividing (i) the amount in the Trust Fund (as defined below), inclusive of any interest or other earnings thereon, calculated as of two business days prior to the consummation of the Business Combination, by (ii) the total number of IPO Shares. "TRUST FUND" means the trust account established by the Corporation at the consummation of its IPO and into which a certain amount of the net proceeds of the IPO is deposited.
C. FAILURE TO CONSUMMATE A BUSINESS COMBINATION.
In the event that the Corporation does not consummate a Business Combination by the later of (i) 18 months after the consummation of the IPO or (ii) 24 months after the consummation of the IPO in the event that either a letter of intent, an agreement in principle or a definitive agreement to complete a Business Combination was executed but was not consummated within such 18-month period (such later date being referred to as the "TERMINATION DATE"), the officers of the Corporation will take all action necessary to dissolve and liquidate the Corporation as soon as reasonably practicable. In the event that the Corporation is so dissolved and liquidated, only the holders of IPO Shares are entitled to receive liquidating distributions and the Corporation will pay no liquidating distributions with respect to any other shares of capital stock of the Corporation.
D. TRUST FUND.
A holder of IPO Shares will be entitled to receive distributions from the Trust Fund only in the event of a liquidation of the Corporation or in the event he demands conversion of his shares in accordance with paragraph B above. In no other circumstances will a holder of IPO Shares have any right or interest of any kind in or to the Trust Fund.
ARTICLE SIX - PREEMPTIVE RIGHTS
The shareholders of the Corporation have no preemptive rights to acquire unissued shares of the Corporation, or securities of the Corporation convertible into or carrying a right to subscribe to or acquire shares of stock of the Corporation.
ARTICLE SEVEN - INCORPORATOR
The name and mailing address of the incorporator of the Corporation are as follows:
Douglas D. Hommert 8235 Forsyth Avenue 4th Floor Clayton, Missouri 63105
ARTICLE EIGHT - BOARD OF DIRECTORS
The following provisions are inserted for the management of the business and for the conduct of the affairs of the Corporation, and for further definition, limitation and regulation of the powers of the Corporation and of its directors and stockholders.
A. NUMBER OF DIRECTORS.
The number of directors initially to constitute the Board of Directors is three. Thereafter, the number of directors of the Corporation may be changed: (i) by amendment to this Certificate of Incorporation; or (ii) as set forth in the Corporation's bylaws.
B. CLASSES OF DIRECTORS.
The Board of Directors are divided into three classes: Class A, Class B and Class C. The number of directors in each class are to be nearly equal as possible. At the first election of directors by the incorporator, the incorporator will elect a Class C director for a term expiring at the Corporation's third annual meeting of the Corporation's stockholders (the "ANNUAL MEETING OF STOCKHOLDERS"). The Class C director will then appoint additional Class A, Class B and Class C directors as necessary. The directors in Class A will be elected for a term expiring at the first Annual Meeting of Stockholders, the directors in Class B will be elected for a term expiring at the second Annual Meeting of Stockholders and the directors in Class C will be elected for a term expiring at the third Annual Meeting of Stockholders. Commencing at the first Annual Meeting of Stockholders, and at each Annual Meeting of Stockholders thereafter, directors elected to succeed those directors whose terms expire will be elected for a term of office to expire at the third succeeding Annual Meeting of Stockholders after their election. Except as the Act may otherwise require, in the interim between Annual Meetings of Stockholders or special meetings of the Corporation's stockholders called for the election of directors and/or the removal of one or more directors and the filling of any vacancy in that connection, newly created directorships and any vacancies in the Board of Directors, including unfilled vacancies resulting from the removal of directors for cause, may be filled by the vote of a majority of the remaining directors then in office, although less than a quorum (as defined in the Corporation's bylaws), or by the sole remaining director. All directors hold office until the expiration of their respective terms of office and until their successors have been elected and qualified. A director elected to fill a vacancy resulting from the death, resignation or removal of a director serves for the remainder of the full term of the director whose death, resignation or removal has created such vacancy and until his successor has been elected and qualified.
C. BALLOTS NOT REQUIRED.
Election of directors need not be by ballot unless the bylaws of the Corporation so provide.
D. BYLAWS OF THE CORPORATION.
The Board of Directors has the power, without the assent or vote of the Corporation's stockholders, to make, alter, amend, change, add to or repeal the bylaws of the Corporation as provided in the bylaws of the Corporation.
E. CONTRACTS.
The directors in their discretion may submit any contract or act for approval or ratification at any Annual Meeting of Stockholders or at any meeting of the Corporation's stockholders called for the purpose of considering any such act or contract, and any contract or act that is approved or ratified by the vote of the holders of a majority of the stock of the Corporation which is represented in person or by proxy at such meeting and entitled to vote thereat (provided that a lawful quorum of stockholders be there represented in person or by proxy) is valid and binding upon the Corporation and upon all the Corporation's stockholders as though it had been approved or ratified by every stockholder of the Corporation, whether or not the contract or act would otherwise be open to legal attack because of directors' interests or for any other reason.
F. ADDITIONAL POWERS.
In addition to the powers and authorities hereinbefore or by statute expressly conferred upon them, the directors are hereby empowered to exercise all such powers and do all such acts and things as may be exercised or done by the Corporation; subject, nevertheless, to the provisions of the statutes of Delaware, of this Certificate of Incorporation and to any bylaws from time to time made by the stockholders; provided, however, that no bylaw so made may invalidate any prior act of the directors which would have been valid if such bylaw had not been made.
ARTICLE NINE - DURATION OF THE CORPORATION
The duration of the Corporation is perpetual.
ARTICLE TEN - INTERESTED DIRECTORS, OFFICERS AND SHAREHOLDERS
No contract or transaction between the Corporation and one or more of
its directors, officers or shareholders or between the Corporation and any
person (as used herein, "PERSON" means any other natural person,
corporation, limited partnership, general partnership, joint venture,
association, company, trust, joint stock company, bank, trust company, land
trust, vehicle trust, business trust, real estate investment trust, estate,
limited liability company, limited liability partnership, limited liability
limited partnership, employee benefit plan or other organization
irrespective of whether it is a legal entity, and any governmental
authority) in which one or more of its directors, officers or shareholders
are directors, officers or shareholder, or have a financial interest, will
be void or voidable solely for this reason, or solely because the director
or officer is present at or participates in the meeting of the Board of
Directors (or committee thereof) which authorizes the contract or
transaction, or solely because his, her or their votes are counted for such
purpose, if: (i) the material facts as to his or her relationship or
interest and as to the contract or transaction are disclosed or are known to
the Board of Directors (or the committee thereof), and the Board of
Directors (or such committee) in good faith authorizes the contract or
transaction by the affirmative votes of a majority of the disinterested
directors, even though the disinterested directors are less than a quorum;
(ii) the material facts as to his or her relationship or interest and as to
the contract or transaction are disclosed or are known to the shareholders
of the Corporation entitled to vote thereon, and the contract or transaction
is specifically approved in good faith by vote of such shareholders; or
(iii) the contract or transaction is fair as to the Corporation as of the
time it is authorized, approved or ratified by the Board of Directors, a
committee of the Board of Directors or the
shareholders of the Corporation. Common or interested directors may be counted in determining the presence of a quorum at a meeting of the Board of Directors or of a committee thereof which authorizes the contract or transaction.
ARTICLE ELEVEN - INDEMNIFICATION
A. INDEMNIFICATION OF OFFICERS AND DIRECTORS.
The Corporation will indemnify, to the fullest extent permitted under the Act, any individual who was, is or is threatened to be made a party to a proceeding by reason of the fact that he or she: (i) is or was a director or officer of the Corporation; or (ii) while a director or officer of the Corporation is or was serving at the request of the Corporation as a director, officer, partner, venturer, proprietor, trustee, employee, agent or similar functionary of another foreign or domestic person. Such right is a contract right and, as such, runs to the benefit of any director or officer who is elected and accepts the position of director or officer of the Corporation or elects to continue to serve as a director or officer of the Corporation while this Article Eleven is in effect. Any repeal or amendment of this Article Eleven may be prospective only and will not limit the rights of any such director or officer or the obligations of the Corporation with respect to any claim arising from or related to the services of such director or officer in any of the foregoing capacities prior to any such repeal or amendment to this Article Eleven. Such right includes the right to be paid by the Corporation for expenses incurred in defending any such proceeding in advance of its final disposition to the maximum extent permitted under the Act. If a claim for indemnification or advancement of expenses hereunder is not paid in full by the Corporation within 60 days after a written claim has been received by the Corporation, the claimant may at any time thereafter bring suit against the Corporation to recover the unpaid amount of the claim and, if successful in whole or in part, the claimant will also be entitled to be paid the expenses of prosecuting such claim. It is a defense to any such action that such indemnification or advancement of costs of defense are not permitted under the Act, but the burden of proving such defense is on the Corporation. Neither the failure of the Corporation (including the Board of Directors, any committee thereof, independent legal counsel or shareholders) to have made its determination prior to commencement of such action that indemnification of, or advancement of costs of defense to, the claimant is permissible in the circumstances, nor an actual determination by the Corporation (including the Board of Directors, any committee thereof, independent legal counsel or shareholders) that such indemnification or advancement is not permissible, may be a defense to the action or create a presumption that such indemnification or advancement is not permissible. In the event of the death of any individual having a right of indemnification under the foregoing provisions, such right inures to the benefit of his or her heirs, executors, administrators and personal representatives. The rights conferred above are not exclusive of any other right which any person may have or hereafter acquire under any statute, bylaw, resolution of shareholders or directors, agreement or otherwise.
B. INDEMNIFICATION OF EMPLOYEES AND AGENTS.
The Corporation may additionally indemnify any employee or agent of the Corporation to the fullest extent permitted by applicable law.
C. DEFINITION OF PROCEEDING.
As used herein, the term "PROCEEDING" means any: (i) threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative, arbitrative or investigative; (ii) appeal in such action, suit or proceeding; and (iii) inquiry or investigation that could lead to such an action, suit or proceeding.
ARTICLE TWELVE - LIABILITY OF DIRECTORS
A director of the Corporation will not be personally liable to the Corporation or its shareholders for monetary damages for breach of fiduciary duty as a director, except for liability: (i) for any breach of the director's duty of loyalty to the Corporation or its shareholders; (ii) for acts or omissions not in good faith or which involve intentional misconduct or knowing violation of law; (iii) for any transaction from which the director derived an improper personal benefit; or (iv) under Section 174 of the Act. Any repeal or amendment of this Article Twelve by the shareholders of the Corporation will be prospective only and will not adversely affect any limitation on the personal liability of a director of the Corporation arising from an act or omission occurring prior to the time of such repeal or amendment. In addition to the circumstances in which a director of the Corporation is not personally liable as set forth in the foregoing provisions of this Article Twelve, a director will not be liable to the Corporation or its shareholders to such further extent as permitted by any law hereinafter enacted, including without limitation any subsequent amendment to the Act.
ARTICLE THIRTEEN - COMPROMISE OR ARRANGEMENT
Whenever a compromise or arrangement is proposed between the Corporation and its creditors or any class of them and/or between the Corporation and its stockholders or any class of them, any court of equitable jurisdiction within the State of Delaware may, on the application in a summary way of the Corporation or of any creditor or stockholder thereof or on the application of any receiver or receivers appointed for the Corporation under Section 291 of Title 8 of the Delaware Code or on the application of trustees in dissolution or of any receiver or receivers appointed for the Corporation under Section 279 of Title 8 of the Delaware Code, order a meeting of the creditors or class of creditors, and/or of the stockholders or class of stockholders of the Corporation, as the case may be, to be summoned in such manner as such court directs. If a majority in number representing three-fourths in value of the creditors or class of creditors, and/or of the stockholders or class of stockholders of the Corporation, as the case may be, agree to any compromise or arrangement and to any reorganization of the Corporation as a consequence of such compromise or arrangement, such compromise or arrangement and such reorganization will, if sanctioned by the court to which such application has been made, be binding on all the creditors or class of creditors, and/or on all the stockholders or class of stockholders, of the Corporation, as the case may be, and also on the Corporation.
I have signed this Certificate of Incorporation this 11th day of August, 2005.
/s/ Douglas D. Hommert
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Douglas D. Hommert, Incorporator
|
Exhibit 3.1.b.
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
VICEROY ACQUISITION CORPORATION
PURSUANT TO SECTION 102
OF THE DELAWARE GENERAL CORPORATION LAW
VICEROY ACQUISITION CORPORATION, a corporation existing under the laws of the State of Delaware (the "Corporation"), by its Executive Vice President and Secretary, hereby certifies as follows:
1. The name of the Corporation is "Viceroy Acquisition Corporation".
2. The Corporation's original Certificate of Incorporation was filed in the office of the Secretary of the State of Delaware on August 12th, 2005.
3. This Amended and Restated Certificate of Incorporation restates, integrates and amends the Certificate of Incorporation.
4. The Corporation has not received payment for any of its stock.
5. This Amended and Restated Certificate of Incorporation was duly adopted by unanimous written consent of the directors of the Corporation in accordance with the applicable provisions of Sections 241 and 245 of the Delaware General Corporation Law.
ARTICLE ONE - NAME OF THE CORPORATION
The name of the corporation is Viceroy Acquisition Corporation (the
"CORPORATION").
ARTICLE TWO - REGISTERED AGENT
The name and address of the Corporation's initial registered agent in
Delaware is:
The Corporation Trust Company
1209 Orange Street
Corporation Trust Center
Wilmington, Delaware 19801
ARTICLE THREE - PURPOSE OF THE CORPORATION
The purpose for which the Corporation is organized is to engage in any lawful act or activity for which corporations may be organized under the Act.
ARTICLE FOUR - AUTHORIZED CAPITAL STOCK
The total number of shares of all classes of stock which the
Corporation has the authority to issue is 65,000,000 shares consisting of:
(i) 5,000,000 shares of a class designated as preferred stock, par value
$0.0001 per share ("PREFERRED STOCK"); and (ii) 60,000,000 shares of a class
designated as common stock, par value $0.0001 per share ("COMMON STOCK").
The designations, preferences, rights, qualifications, limitations and
restrictions of the Preferred Stock and the Common Stock are as follows.
A. PROVISIONS RELATING TO THE PREFERRED STOCK.
(a) whether the class or series is to have voting rights, full, special or limited, and whether such class or series is to be entitled to vote as a separate class either alone or together with the holders of one or more other classes or series of stock of the Corporation;
(b) the number of shares to constitute the class or series and the designations thereof;
(c) the preferences and relative, participating, optional or other special rights, if any, and the qualifications, limitations or restrictions thereof, if any, with respect to any class or series;
(d) whether the shares of any class or series are redeemable at the option of the Corporation or the holders thereof or upon the happening of any specified event and, if redeemable, the redemption price or prices (which may be payable in the form of cash, notes, securities or other property), and the time or times at which, and the terms and conditions upon which, such shares are redeemable and the manner of redemption;
(e) whether the shares of a class or series are subject to the operation of retirement or sinking funds to be applied to the purchase or redemption of such shares for retirement and, if such retirement or sinking fund or funds are to be
established, the annual amount thereof and the terms and provisions relative to the operation thereof;
(f) the dividend rate, whether dividends are payable in cash, stock of the Corporation or other property, the conditions upon which and the times when such dividends are payable, the preference to or the relation to the payment of dividends payable on any other class or classes or series of stock of the Corporation, whether or not such dividends are cumulative or noncumulative and, if cumulative, the date or dates from which such dividends accumulate;
(g) the preferences, if any, and the amounts thereof which the holders of any class or series thereof will be entitled to receive upon the voluntary or involuntary dissolution of, or upon any distribution of the assets of, the Corporation;
(h) whether the shares of any class or series, at the option of the Corporation or the holders thereof or upon the happening of any specified event, are convertible into or exchangeable for the shares of any other class or classes or of any other series of the same or any other class or classes of stock, securities or other property of the Corporation and the conversion price or prices or ratio or the rate or rates at which such exchange may be made, with such adjustments, if any, as may be stated and expressed or provided for in such resolution or resolutions; and
(i) such other special rights and protective provisions with respect to any class or series as may to the Board of Directors seem advisable.
B. PROVISIONS RELATING TO THE COMMON STOCK.
and except as otherwise provided herein, the Common Stock will vote as a single class with respect to all matters to be voted on by the Corporation's shareholders. Except as otherwise required by law or as otherwise provided by the Board of Directors with respect to any Preferred Stock, the holders of the Common Stock exclusively possess all voting power with respect to the Corporation.
C. GENERAL.
ARTICLE FIVE - BUSINESS COMBINATIONS
The following paragraphs (A) through (D) apply during the period commencing upon the filing of this Certificate of Incorporation and terminating upon the consummation of any Business Combination (as defined below) and may not be amended during the Target Business Acquisition Period (as defined below). "BUSINESS COMBINATION" means the acquisition by the Corporation, whether by merger, capital stock exchange, asset or stock acquisition or other similar type of transaction, of an operating business in the petroleum or oil and gas industries ("TARGET BUSINESS"), and specifically includes the exploration, development, extraction, production, refining, storage, transportation and/or marketing of petroleum, petroleum products and natural gas. "TARGET BUSINESS ACQUISITION PERIOD" means the period from the effectiveness of the registration statement filed in connection with the Corporation's initial public offering ("IPO") up to and including the first to occur of: (i) a Business Combination; or (ii) the Termination Date (as defined below).
A. SHAREHOLDER APPROVAL.
Prior to the consummation of any Business Combination, the Corporation must submit such Business Combination to its stockholders for approval regardless of whether the Business Combination is of a type which normally would require such stockholder approval under the Act. In the event that a majority of the IPO Shares (as defined below) cast at the meeting to approve the Business Combination are voted for the approval of such Business Combination, the Corporation will be authorized to consummate the Business Combination; provided that the Corporation may not consummate any Business Combination if the holders of 20% or more of the IPO Shares exercise their conversion rights described in paragraph B below.
B. REDEMPTION RIGHTS.
In the event that a Business Combination is approved in accordance with paragraph A above and is consummated by the Corporation, any stockholder of the Corporation holding shares of Common Stock issued in the IPO ("IPO SHARES") who voted against the Business Combination may, contemporaneously with such vote, demand that the Corporation convert his IPO Shares into cash. If so demanded, the Corporation will, promptly after consummation of the Business Combination, convert such shares into cash at a per share conversion price equal to the quotient determined by dividing (i) the amount in the Trust Fund (as defined below), inclusive of any interest or other earnings thereon, calculated as of two business days prior to the consummation of the Business Combination, by (ii) the total number of IPO Shares. "TRUST FUND" means the trust account established by the Corporation at the consummation of its IPO and into which a certain amount of the net proceeds of the IPO is deposited.
C. FAILURE TO CONSUMMATE A BUSINESS COMBINATION.
In the event that the Corporation does not consummate a Business Combination by the later of (i) 18 months after the consummation of the IPO or (ii) 24 months after the consummation of the IPO in the event that either a letter of intent, an agreement in principle or a definitive agreement to complete a Business Combination was executed but was not consummated within such 18-month period (such later date being referred to as the "TERMINATION DATE"), the officers of the Corporation will take all action necessary to dissolve and liquidate the Corporation as soon as reasonably practicable. In the event that the Corporation is so dissolved and liquidated, only the holders of IPO Shares are entitled to receive liquidating distributions and the Corporation will pay no liquidating distributions with respect to any other shares of capital stock of the Corporation.
D. TRUST FUND.
A holder of IPO Shares will be entitled to receive distributions from the Trust Fund only in the event of a liquidation of the Corporation or in the event he demands conversion of his shares in accordance with paragraph B above. In no other circumstances will a holder of IPO Shares have any right or interest of any kind in or to the Trust Fund.
ARTICLE SIX - PREEMPTIVE RIGHTS
The shareholders of the Corporation have no preemptive rights to acquire unissued shares of the Corporation, or securities of the Corporation convertible into or carrying a right to subscribe to or acquire shares of stock of the Corporation.
ARTICLE SEVEN - INCORPORATOR
The name and mailing address of the incorporator of the Corporation are as follows:
Douglas D. Hommert
8235 Forsyth Avenue, 4th Floor
Clayton, Missouri 63105
ARTICLE EIGHT - BOARD OF DIRECTORS
The following provisions are inserted for the management of the business and for the conduct of the affairs of the Corporation, and for further definition, limitation and regulation of the powers of the Corporation and of its directors and stockholders.
A. NUMBER OF DIRECTORS.
The number of directors initially to constitute the Board of Directors is three. Thereafter, the number of directors of the Corporation may be changed: (i) by amendment to this Certificate of Incorporation; or (ii) as set forth in the Corporation's bylaws.
B. CLASSES OF DIRECTORS.
The Board of Directors are divided into three classes: Class A, Class B and Class C. The number of directors in each class are to be nearly equal as possible. At the first election of directors by the incorporator, the incorporator will elect a Class C director for a term expiring at the Corporation's third annual meeting of the Corporation's stockholders (the "ANNUAL MEETING OF STOCKHOLDERS"). The Class C director will then appoint additional Class A, Class B and Class C directors as necessary. The directors in Class A will be elected for a term expiring at the first Annual Meeting of Stockholders, the directors in Class B will be elected for a term expiring at the second Annual Meeting of Stockholders and the directors in Class C will be elected for a term expiring at the third Annual Meeting of Stockholders. Commencing at the first Annual Meeting of Stockholders, and at each Annual Meeting of Stockholders thereafter, directors elected to succeed those directors whose terms expire will be elected for a term of office to expire at the third succeeding Annual Meeting of Stockholders after their election. Except as the Act may otherwise require, in the interim between Annual Meetings of Stockholders or special meetings of the Corporation's stockholders called for the election of directors and/or the removal of one or more directors and the filling of any vacancy in that connection, newly created directorships and any vacancies in the Board of Directors, including unfilled vacancies resulting from the removal of directors for cause,
may be filled by the vote of a majority of the remaining directors then in office, although less than a quorum (as defined in the Corporation's bylaws), or by the sole remaining director. All directors hold office until the expiration of their respective terms of office and until their successors have been elected and qualified. A director elected to fill a vacancy resulting from the death, resignation or removal of a director serves for the remainder of the full term of the director whose death, resignation or removal has created such vacancy and until his successor has been elected and qualified.
C. BALLOTS NOT REQUIRED.
Election of directors need not be by ballot unless the bylaws of the Corporation so provide.
D. BYLAWS OF THE CORPORATION.
The Board of Directors has the power, without the assent or vote of the Corporation's stockholders, to make, alter, amend, change, add to or repeal the bylaws of the Corporation as provided in the bylaws of the Corporation.
E. CONTRACTS.
The directors in their discretion may submit any contract or act for approval or ratification at any Annual Meeting of Stockholders or at any meeting of the Corporation's stockholders called for the purpose of considering any such act or contract, and any contract or act that is approved or ratified by the vote of the holders of a majority of the stock of the Corporation which is represented in person or by proxy at such meeting and entitled to vote thereat (provided that a lawful quorum of stockholders be there represented in person or by proxy) is valid and binding upon the Corporation and upon all the Corporation's stockholders as though it had been approved or ratified by every stockholder of the Corporation, whether or not the contract or act would otherwise be open to legal attack because of directors' interests or for any other reason.
F. ADDITIONAL POWERS.
In addition to the powers and authorities hereinbefore or by statute expressly conferred upon them, the directors are hereby empowered to exercise all such powers and do all such acts and things as may be exercised or done by the Corporation; subject, nevertheless, to the provisions of the statutes of Delaware, of this Certificate of Incorporation and to any bylaws from time to time made by the stockholders; provided, however, that no bylaw so made may invalidate any prior act of the directors which would have been valid if such bylaw had not been made.
ARTICLE NINE - DURATION OF THE CORPORATION
The duration of the Corporation is perpetual.
ARTICLE TEN - INTERESTED DIRECTORS, OFFICERS AND SHAREHOLDERS
No contract or transaction between the Corporation and one or more of
its directors, officers or shareholders or between the Corporation and any
person (as used herein, "PERSON" means any other natural person,
corporation, limited partnership, general partnership, joint venture,
association, company, trust, joint stock company, bank, trust company, land
trust, vehicle trust, business trust, real estate investment trust, estate,
limited liability company, limited liability partnership, limited liability
limited partnership, employee benefit plan or other organization
irrespective of whether it is a legal entity, and any governmental
authority) in which one or more of its directors, officers or shareholders
are directors, officers or shareholder, or have a financial interest, will
be void or voidable solely for this reason, or solely because the director
or officer is present at or participates in the meeting of the Board of
Directors (or committee thereof) which authorizes the contract or
transaction, or solely because his, her or their votes are counted for such
purpose, if: (i) the material facts as to his or her relationship or
interest and as to the contract or transaction are disclosed or are known to
the Board of Directors (or the committee thereof), and the Board of
Directors (or such committee) in good faith authorizes the contract or
transaction by the affirmative votes of a majority of the disinterested
directors, even though the disinterested directors are less than a quorum;
(ii) the material facts as to his or her relationship or interest and as to
the contract or transaction are disclosed or are known to the shareholders
of the Corporation entitled to vote thereon, and the contract or transaction
is specifically approved in good faith by vote of such shareholders; or
(iii) the contract or transaction is fair as to the Corporation as of the
time it is authorized, approved or ratified by the Board of Directors, a
committee of the Board of Directors or the shareholders of the Corporation.
Common or interested directors may be counted in determining the presence of
a quorum at a meeting of the Board of Directors or of a committee thereof
which authorizes the contract or transaction.
ARTICLE ELEVEN - INDEMNIFICATION
A. INDEMNIFICATION OF OFFICERS AND DIRECTORS.
The Corporation will indemnify, to the fullest extent permitted under the Act, any individual who was, is or is threatened to be made a party to a proceeding by reason of the fact that he or she: (i) is or was a director or officer of the Corporation; or (ii) while a director or officer of the Corporation is or was serving at the request of the Corporation as a director, officer, partner, venturer, proprietor, trustee, employee, agent or similar functionary of another foreign or domestic person. Such right is a contract right and, as such, runs to the benefit of any director or officer who is elected and accepts the position of director or officer of the Corporation or elects to continue to serve as a director or officer of the Corporation while this Article Eleven is in effect. Any repeal or amendment of this Article Eleven may be prospective only and will not limit the rights of any such director or officer or the obligations of the Corporation with respect to any claim arising from or related to the services of such director or officer in any of the foregoing capacities prior to any such repeal or amendment to this Article Eleven. Such right includes the right to be paid by the Corporation for expenses incurred in defending
any such proceeding in advance of its final disposition to the maximum extent permitted under the Act. If a claim for indemnification or advancement of expenses hereunder is not paid in full by the Corporation within 60 days after a written claim has been received by the Corporation, the claimant may at any time thereafter bring suit against the Corporation to recover the unpaid amount of the claim and, if successful in whole or in part, the claimant will also be entitled to be paid the expenses of prosecuting such claim. It is a defense to any such action that such indemnification or advancement of costs of defense are not permitted under the Act, but the burden of proving such defense is on the Corporation. Neither the failure of the Corporation (including the Board of Directors, any committee thereof, independent legal counsel or shareholders) to have made its determination prior to commencement of such action that indemnification of, or advancement of costs of defense to, the claimant is permissible in the circumstances, nor an actual determination by the Corporation (including the Board of Directors, any committee thereof, independent legal counsel or shareholders) that such indemnification or advancement is not permissible, may be a defense to the action or create a presumption that such indemnification or advancement is not permissible. In the event of the death of any individual having a right of indemnification under the foregoing provisions, such right inures to the benefit of his or her heirs, executors, administrators and personal representatives. The rights conferred above are not exclusive of any other right which any person may have or hereafter acquire under any statute, bylaw, resolution of shareholders or directors, agreement or otherwise.
B. INDEMNIFICATION OF EMPLOYEES AND AGENTS.
The Corporation may additionally indemnify any employee or agent of the Corporation to the fullest extent permitted by applicable law.
C. DEFINITION OF PROCEEDING.
As used herein, the term "PROCEEDING" means any: (i) threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative, arbitrative or investigative; (ii) appeal in such action, suit or proceeding; and (iii) inquiry or investigation that could lead to such an action, suit or proceeding.
ARTICLE TWELVE - LIABILITY OF DIRECTORS
A director of the Corporation will not be personally liable to the Corporation or its shareholders for monetary damages for breach of fiduciary duty as a director, except for liability: (i) for any breach of the director's duty of loyalty to the Corporation or its shareholders; (ii) for acts or omissions not in good faith or which involve intentional misconduct or knowing violation of law; (iii) for any transaction from which the director derived an improper personal benefit; or (iv) under Section 174 of the Act. Any repeal or amendment of this Article Twelve by the shareholders of the Corporation will be prospective only and will not adversely affect any limitation on the personal liability of a director of the Corporation arising from an act or omission occurring prior to the time of such repeal or amendment. In addition to the circumstances in which a director of the Corporation is not personally liable as set forth in the foregoing provisions of this Article
Twelve, a director will not be liable to the Corporation or its shareholders to such further extent as permitted by any law hereinafter enacted, including without limitation any subsequent amendment to the Act.
ARTICLE THIRTEEN - COMPROMISE OR ARRANGEMENT
Whenever a compromise or arrangement is proposed between the Corporation and its creditors or any class of them and/or between the Corporation and its stockholders or any class of them, any court of equitable jurisdiction within the State of Delaware may, on the application in a summary way of the Corporation or of any creditor or stockholder thereof or on the application of any receiver or receivers appointed for the Corporation under Section 291 of Title 8 of the Delaware Code or on the application of trustees in dissolution or of any receiver or receivers appointed for the Corporation under Section 279 of Title 8 of the Delaware Code, order a meeting of the creditors or class of creditors, and/or of the stockholders or class of stockholders of the Corporation, as the case may be, to be summoned in such manner as such court directs. If a majority in number representing three-fourths in value of the creditors or class of creditors, and/or of the stockholders or class of stockholders of the Corporation, as the case may be, agree to any compromise or arrangement and to any reorganization of the Corporation as a consequence of such compromise or arrangement, such compromise or arrangement and such reorganization will, if sanctioned by the court to which such application has been made, be binding on all the creditors or class of creditors, and/or on all the stockholders or class of stockholders, of the Corporation, as the case may be, and also on the Corporation.
IN WITNESS WHEREOF, the Corporation has caused this Amended and Restated Certificate of Incorporation to be signed by Douglas D. Hommert, its Executive Vice President and Secretary on August 26, 2005.
/s/ Douglas D. Hommert ------------------------------------------ Douglas D. Hommert Executive Vice President and Secretary |
Exhibit 3.1.c.
SECOND AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
VICEROY ACQUISITION CORPORATION
PURSUANT TO SECTION 102
OF THE DELAWARE GENERAL CORPORATION LAW
VICEROY ACQUISITION CORPORATION, a corporation existing under the laws of the State of Delaware (the "Corporation"), by its Executive Vice President and Secretary, hereby certifies as follows:
1. The name of the Corporation is "Viceroy Acquisition Corporation".
2. The Corporation's original Certificate of Incorporation was filed in the office of the Secretary of the State of Delaware on August 12, 2005 (the "Original Certificate of Incorporation").
3. The Corporation's Amended and Restated Certificate of Incorporation was filed in the office of the Secretary of the State of Delaware on August 26, 2005 (together with the Original Certificate of Incorporation, the "Certificate of Incorporation").
4. This Second Amended and Restated Certificate of Incorporation restates, integrates and amends the Certificate of Incorporation.
5. This Second Amended and Restated Certificate of Incorporation was duly adopted in accordance with the applicable provisions of Sections 228, 242 and 245 of the Delaware General Corporation Law ("DGCL") by the directors and stockholders of the Corporation.
6. This Certificate shall be effective on the date of the filing with the Secretary of State of the State of Delaware.
7. The text of the Certificate of Incorporation of the Corporation is hereby amended and restated to read in full as follows:
ARTICLE ONE - NAME OF THE CORPORATION
The name of the corporation is Viceroy Acquisition Corporation (the
"CORPORATION").
ARTICLE TWO - REGISTERED AGENT
The name and address of the Corporation's initial registered agent in Delaware is:
The Corporation Trust Company 1209 Orange Street Corporation Trust Center Wilmington, Delaware 19801
ARTICLE THREE - PURPOSE OF THE CORPORATION
The purpose for which the Corporation is organized is to engage in any lawful act or activity for which corporations may be organized under the DGCL.
ARTICLE FOUR - AUTHORIZED CAPITAL STOCK
The total number of shares of all classes of stock which the
Corporation has the authority to issue is 80,000,000 shares consisting of:
(i) 5,000,000 shares of a class designated as preferred stock, par value
$0.0001 per share ("PREFERRED STOCK"); and (ii) 75,000,000 shares of a class
designated as common stock, par value $0.0001 per share ("COMMON STOCK").
The designations, preferences, rights, qualifications, limitations and
restrictions of the Preferred Stock and the Common Stock are as follows.
A. PROVISIONS RELATING TO THE PREFERRED STOCK.
(a) whether the class or series is to have voting rights, full, special or limited, and whether such class or series is to be entitled to vote as a separate class either alone or together with the holders of one or more other classes or series of stock of the Corporation;
(b) the number of shares to constitute the class or series and the designations thereof;
(c) the preferences and relative, participating, optional or other special rights, if any, and the qualifications, limitations or restrictions thereof, if any, with respect to any class or series;
(d) whether the shares of any class or series are redeemable at the option of the Corporation or the holders thereof or upon the happening of any specified event and, if redeemable, the redemption price or prices (which may be payable in the form of cash, notes, securities or other property), and the time or times at which, and the terms and conditions upon which, such shares are redeemable and the manner of redemption;
(e) whether the shares of a class or series are subject to the operation of retirement or sinking funds to be applied to the purchase or redemption of such shares for retirement and, if such retirement or sinking fund or funds are to be established, the annual amount thereof and the terms and provisions relative to the operation thereof;
(f) the dividend rate, whether dividends are payable in cash, stock of the Corporation or other property, the conditions upon which and the times when such dividends are payable, the preference to or the relation to the payment of dividends payable on any other class or classes or series of stock of the Corporation, whether or not such dividends are cumulative or non-cumulative and, if cumulative, the date or dates from which such dividends accumulate;
(g) the preferences, if any, and the amounts thereof which the holders of any class or series thereof will be entitled to receive upon the voluntary or involuntary dissolution or liquidation of, or upon any distribution of the assets of, the Corporation;
(h) whether the shares of any class or series, at the option of the Corporation or the holders thereof or upon the happening of any specified event, are convertible into or exchangeable for the shares of any other class or classes or of any other series of the same or any other class or classes of stock, securities or other property of the Corporation and the conversion price or prices or ratio or the rate or rates at which such exchange may be made, with such adjustments, if any, as may be stated and expressed or provided for in such resolution or resolutions; and
(i) such other special rights and protective provisions with respect to any class or series as may to the Board of Directors seem advisable.
B. PROVISIONS RELATING TO THE COMMON STOCK.
C. GENERAL.
ARTICLE FIVE - BUSINESS COMBINATIONS
The following provisions (A) through (G) shall apply during the period commencing upon the admission to trading (the "IPO") of the Corporation's securities on the Alternative Investment Market of the London Stock Exchange plc ("AIM") and terminating upon the consummation of any "Qualified Business Combination," and may only be amended by an affirmative vote of stockholders holding one hundred percent of the Common Stock issued by the Corporation. Any positive obligations contained in this Article FIVE which arise during such period (for example, without limitation, in connection with making payments in respect of validly exercised Repurchase Rights (as defined below)) will continue to bind the Corporation until such
obligations are satisfied, notwithstanding the end of such period. A "Business Combination" shall mean an acquisition or the acquisition of control of, through a merger, capital stock exchange, asset acquisition, stock purchase or other similar business combination transaction, of one or more operating businesses in the oil and gas industry by the Corporation ("A TARGET BUSINESS") which has a fair market value (calculated in accordance with Part F below) of at least $20,000,000. A "Qualified Business Combination" shall mean a Business Combination which, either on its own or which when combined with all of the Corporation's previous Business Combinations, has an aggregate fair market value (calculated in accordance with Part F below) of at least 50% of the initial amount placed in the Trust Fund (as defined below) in connection with the IPO, including such funds as are deposited in the Trust Fund immediately following the end of any price stabilization activities, but excluding any deferred placing fees and commissions payable to the placing agents in connection with the IPO being held in the Trust Fund.
A. Prior to the consummation of any Business Combination, the Corporation shall submit such proposed Business Combination to its stockholders for approval regardless of whether the Business Combination is of a type which normally would require such stockholder approval under the DGCL. In the event that (and only in the event that) a majority of the IPO Shares (as defined below) cast at the duly called meeting at which a quorum is present to approve the Business Combination are voted for the approval of such Business Combination, the Corporation shall be authorized to consummate the Business Combination; provided that the Corporation shall not consummate any Business Combination if, in the opinion of the Board of Directors, the Corporation does not have sufficient cash resources to pay both (i) the consideration required to complete the Business Combination and (ii) all sums due to any holders of IPO Shares who did not vote in favor of such Business Combination and simultaneously exercised their Repurchase Rights (as described below).
B. In the event that a Business Combination (including a Qualified Business Combination) is approved in accordance with Part A above and is consummated by the Corporation, any stockholder of the Corporation holding shares of Common Stock issued in the Corporation's IPO ("IPO SHARES") who voted against the Business Combination may, simultaneously with such vote, demand that the Corporation repurchase a certain number of such stockholder's IPO Shares for cash (a "REPURCHASE RIGHT"), where such number of shares is equal to the total number of IPO Shares held by such stockholder at the time of its election to exercise the Repurchase Rights multiplied by a fraction, the numerator of which is equal to the amount of funds held in the Trust Fund immediately before the Business Combination and of which the denominator is equal to the amount of funds placed in the Trust Fund as a result of the IPO (including as a result of any price stabilization procedures), less any funds previously used to repurchase IPO Shares for cash in connection with previous stockholder votes on approval of Business Combinations or the extension of the Termination Date (as contemplated in Part C below); provided, however, that such fraction shall be deemed never to exceed 1.0. For the purposes of the foregoing computation, deferred placing fees (as designated when the proceeds from the IPO are deposited into the Trust Fund) and commissions and net interest earned on the funds held in the Trust Fund shall be excluded from the numerator and denominator. If so demanded, the Corporation shall repurchase such shares at a repurchase price equal to $7.65 per share plus a pro rata portion of any interest earned on the Trust Fund, net of income taxes payable on such interest and trust expenses and net of up to $1,000,000 of the interest earned on the Trust Fund previously released to the Corporation. Such payment for the repurchased stock shall take place no later than the later of three business days after the occurrence of both the Business Combination and the delivery of the shares by the stockholder. "Trust Fund" shall mean the trust account established by the Corporation at the consummation of its IPO and into which a certain amount of the net proceeds of the IPO and deferred placing fees and commissions are deposited.
C. (a) In the event that the Corporation does not consummate any Business Combination by the later of (i) 12 months after the consummation of the IPO or the date which is 18 months after the consummation of the IPO (in the event that the Corporation has signed a current, binding (but conditional, among other things, on the consent of its stockholders being given in a special meeting) letter of intent, an agreement in principle or definitive agreement in respect of a proposed Qualified Business Combination) or (ii) an extended date approved by a majority of the holders of the IPO Shares, (such later date being referred to as the "TERMINATION DATE"), the officers of the Corporation shall be entitled by resolution to and shall take all such action necessary to liquidate the Trust Fund as soon as reasonably practicable. In the event that the Trust Fund is so liquidated, only the holders of IPO Shares (at such time) shall be entitled to receive liquidating distributions and the Corporation shall pay no liquidating distributions with respect to any other shares of capital stock of the Corporation. Such liquidating distribution payment shall take place no later than the later of three business days after the occurrence of both the Termination Date and the delivery of the applicable IPO Shares by the applicable stockholder. After the distribution of the Trust Fund, the sole purpose of the Corporation shall be to dissolve and liquidate the Corporation and, accordingly, (i) the Corporation shall not be authorized to issue any shares of capital stock and (ii) the officers of the Corporation shall take all such action as necessary to dissolve and liquidate the Corporation as soon as reasonably practicable. The Board of Directors shall have the power by resolution, and shall take all such action necessary, to cancel all other shares of capital stock of the Corporation.
(b) The Corporation may submit to the stockholders for approval a resolution to postpone the Termination Date. Notwithstanding the provisions of Part C(a), if the Corporation seeks the approval of stockholders to extend the Termination Date, and such extension is approved by a majority of stockholders as contemplated herein, each holder of IPO Shares that voted against such extension shall be entitled at its election to exercise, simultaneously with such vote, a Repurchase Right in accordance with Part B of this Section (based on the amount in the Trust Fund, inclusive of interest thereon, calculated as of two business days prior to such Termination Date prior to giving effect to the proposed extension). Each such holder of IPO shares shall have shares repurchased from the amounts held in the Trust Fund calculated as of two business days prior to the Termination Date in accordance with Part B.
D. (a) In the event that the Corporation consummates one or more Business Combinations by the Termination Date (as it may be extended by Part C(b)), but has not consummated a Qualified Business Combination by the Termination Date, the Corporation will send on the third business day following the Termination Date a notice of election (a "NOTICE OF ELECTION") to all holders of record of IPO Shares notifying them of their ability to exercise a Repurchase Right in respect of their IPO Shares (an "ELECTION", and such holders of IPO Shares electing to exercise such Repurchase Right, "ELECTING STOCKHOLDERS").
(b) Each Electing Stockholder shall have IPO Shares repurchased from the Trust Fund calculated in accordance with Part B above (based on the amount in the Trust Fund, inclusive of interest thereon, calculated as of two business days prior to such Termination Date). Such payment for the repurchased stock shall be made no later than 20 business days following such Electing Stockholder's Election.
(c) If at any time the number of shares of Common Stock as are then held by those persons holding shares of Common Stock prior to the IPO (the "Founding Shares") exceed twenty five percent of the total issued capital stock of the Corporation, the Corporation shall, to
the extent permitted by the rules and regulations of AIM (the "AIM RULES") and other applicable laws, repurchase from each holder of such stock sufficient Founding Shares to reduce the proportion of the total issued capital stock the Founding Shares represent to twenty five percent of the total issued capital stock of the Corporation. The number of Founding Shares repurchased from each stockholder shall be in such amounts as determined by a majority-in-interest of such stockholders holding Founding Shares. The Founding Shares repurchased shall be cancelled or held as treasury shares at the option of the Corporation, and the repurchase and cancellation or return to treasury of Founding Shares shall be deemed to occur concurrently with the repurchase of IPO Shares (if it is a repurchase of IPO Shares that has triggered a repurchase pursuant to this provision, regardless of whether the certificates in respect of such Founding Shares are delivered up).
(d) If the Corporation takes the actions referred to in clauses (a), (b) and (c) above, the Corporation will have met the requirements to avoid liquidation and therefore will not be required to dissolve; provided that if the Corporation is unable to undertake the actions described in clause (c) because of any prohibition under the AIM Rules or any other applicable law, the Corporation will be deemed to have met the requirements to avoid liquidation and dissolution and therefore will not be required to dissolve; provided further that the Corporation shall undertake such actions as soon as such actions are permitted by the AIM Rules and other applicable laws.
(e) Each holder of IPO Shares that does not exercise its Election and does not constitute an Electing Stockholder will retain its interest in the Corporation and shall be deemed to have given their consent to the release of all funds remaining in the Trust Fund to the Corporation, and, following payment to the Electing Stockholders as contemplated by Part D(b) above, the remaining funds in the Trust Fund shall be released to the Corporation.
E. A holder of IPO Shares shall be entitled to receive distributions from the Trust Fund only in the event of a liquidation and dissolution of the Corporation or in the event such holder demands repurchase of such holder's shares in accordance with Part B, C or D(a) above. In no other circumstances shall a holder of IPO Shares have any right or interest of any kind in or to the Trust Fund.
F. For purposes of this Article FIVE, "fair market value" shall
mean the sum of (i) any cash and fair market value of any property used as
consideration in connection with a Business Combination, (ii) any net debt,
capitalized lease obligations and obligations under a letter of credit or
similar, assumed and/or incurred in connection with such Business Combination,
(iii) in the case of a Business Combination, the value of any Common Stock or
Preferred Stock used as consideration in connection with such Business
Combination as determined by an unaffiliated independent investment banking
firm, and (iv) all transaction costs incurred to complete the Business
Combination.
G. Prior to the consummation of any Business Combination, the Corporation shall not pay any compensation to any director, but may pay for such director's out-of-pocket expenses related to the performance of his duties.
ARTICLE SIX - PREEMPTIVE RIGHTS
The shareholders of the Corporation have no preemptive rights to acquire unissued shares of the Corporation or securities of the Corporation convertible into or carrying a right to subscribe to or acquire shares of stock of the Corporation.
ARTICLE SEVEN - INCORPORATOR
The name and mailing address of the incorporator of the Corporation are:
Douglas D. Hommert
8235 Forsyth Avenue, 4th Floor
Clayton, Missouri 63105
ARTICLE EIGHT - BOARD OF DIRECTORS
The following provisions are inserted for the management of the business and for the conduct of the affairs of the Corporation, and for further definition, limitation and regulation of the powers of the Corporation and its directors and stockholders.
A. NUMBER OF DIRECTORS.
The number of directors initially to constitute the Board of
Directors is three. Thereafter, the number of directors of the Corporation
may be changed: (i) by amendment to this Certificate of Incorporation; or
(ii) as set forth in the Corporation's bylaws.
B. CLASSES OF DIRECTORS.
The Board of Directors are divided into three classes: Class A, Class B and Class C. The number of directors in each class are to be nearly as equal as possible. At the first election of directors by the incorporator, the incorporator will elect a Class C director for a term expiring at the Corporation's third annual meeting of the Corporation's stockholders (the "ANNUAL MEETING OF STOCKHOLDERS"). The Class C director will then appoint additional Class A, Class B and Class C directors as necessary. The directors in Class A will be elected for a term expiring at the first Annual Meeting of Stockholders, the directors in Class B will be elected for a term expiring at the second Annual Meeting of Stockholders and the directors in Class C will be elected for a term expiring at the third Annual Meeting of Stockholders. Commencing at the first Annual Meeting of Stockholders, and at each Annual Meeting of Stockholders thereafter, directors elected to succeed those directors whose terms expire will be elected for a term of office to expire at the third succeeding Annual Meeting of Stockholders after their election. Except as the DGCL may otherwise require, in the interim between Annual Meetings of Stockholders or special meetings of the Corporation's stockholders called for the election of directors and/or the removal of one or more directors and the filling of any vacancy in that connection, newly created directorships and any vacancies in the Board of Directors, including unfilled vacancies resulting from the removal of directors for cause, may be filled by the vote of a majority of the remaining directors then in office, although less than a quorum (as defined in the Corporation's bylaws), or by the sole remaining director. All directors hold office until the expiration of their respective terms of office and until their successors have been elected and qualified. A director elected to fill a vacancy resulting from the death, resignation or removal of a director serves for the remainder of the full term of the director whose death, resignation or removal has created such vacancy and until his successor has been elected and qualified.
C. BALLOTS NOT REQUIRED.
Election of directors need not be by ballot unless the bylaws of the Corporation so provide.
D. BYLAWS OF THE CORPORATION.
The Board of Directors has the power, without the assent or vote of the Corporation's stockholders, to make, alter, amend, change, add to or repeal the bylaws of the Corporation as provided in the bylaws of the Corporation.
F. ADDITIONAL POWERS.
In addition to the powers and authorities hereinbefore or by statute expressly conferred upon them, the directors are hereby empowered to exercise all such powers and do all such acts and things as may be exercised or done by the Corporation; subject, nevertheless, to the provisions of the DGCL, of this Certificate of Incorporation and to any bylaws from time to time made by the stockholders; provided, however, that no bylaw so made may invalidate any prior act of the directors which would have been valid if such bylaw had not been made.
ARTICLE NINE - DURATION OF THE CORPORATION
The duration of the Corporation is perpetual.
ARTICLE TEN - INTERESTED DIRECTORS, OFFICERS AND SHAREHOLDERS
No contract or transaction between the Corporation and one or more
of its directors, officers or shareholders or between the Corporation and
any person (as used herein, "PERSON" means any other natural person,
corporation, limited partnership, general partnership, joint venture,
association, company, trust, joint stock company, bank, trust company, land
trust, vehicle trust, business trust, real estate investment trust, estate,
limited liability company, limited liability partnership, limited liability
limited partnership, employee benefit plan or other organization
irrespective of whether it is a legal entity, and any governmental
authority) in which one or more of its directors, officers or shareholders
are directors, officers or shareholders, or have a financial interest, will
be void or voidable solely for this reason, or solely because the director
or officer is present at or participates in the meeting of the Board of
Directors (or committee thereof) which authorizes the contract or
transaction, or solely because his, her or their votes are counted for such
purpose, if: (i) the material facts as to his or her relationship or
interest and as to the contract or transaction are disclosed or are known to
the Board of Directors (or the committee thereof), and the Board of
Directors (or such committee) in good faith authorizes the contract or
transaction by the affirmative votes of a majority of the disinterested
directors, even though the disinterested directors are less than a quorum;
(ii) the material facts as to his or her relationship or interest and as to
the contract or transaction are disclosed or are known to the shareholders
of the Corporation entitled to vote thereon, and the contract or transaction
is specifically approved in good faith by vote of such shareholders; or
(iii) the contract or transaction is fair as to the Corporation as of the
time it is authorized, approved or ratified by the Board of Directors, a
committee of the Board of Directors or the shareholders of the Corporation.
Common or interested directors may be counted in determining the presence of
a quorum at a meeting of the Board of Directors or of a committee thereof
which authorizes the contract or transaction.
ARTICLE ELEVEN - INDEMNIFICATION
A. INDEMNIFICATION OF OFFICERS AND DIRECTORS.
The Corporation will indemnify, to the fullest extent permitted under the DGCL, any individual who was, is or is threatened to be made a party to a proceeding by reason of the fact
that he or she: (i) is or was a director or officer of the Corporation; or
(ii) while a director or officer of the Corporation is or was serving at the
request of the Corporation as a director, officer, partner, venturer,
proprietor, trustee, employee, agent or similar functionary of another
foreign or domestic person. Such right is a contract right and, as such,
runs to the benefit of any director or officer who is elected and accepts
the position of director or officer of the Corporation or elects to continue
to serve as a director or officer of the Corporation while this Article
Eleven is in effect. Any repeal or amendment of this Article Eleven may be
prospective only and will not limit the rights of any such director or
officer or the obligations of the Corporation with respect to any claim
arising from or related to the services of such director or officer in any
of the foregoing capacities prior to any such repeal or amendment to this
Article Eleven. Such right includes the right to be paid by the Corporation
for expenses incurred in defending any such proceeding in advance of its
final disposition to the maximum extent permitted under the DGCL. If a claim
for indemnification or advancement of expenses hereunder is not paid in full
by the Corporation within 60 days after a written claim has been received by
the Corporation, the claimant may at any time thereafter bring suit against
the Corporation to recover the unpaid amount of the claim and, if successful
in whole or in part, the claimant will also be entitled to be paid the
expenses of prosecuting such claim. It is a defense to any such action that
such indemnification or advancement of costs of defense are not permitted
under the DGCL, but the burden of proving such defense is on the
Corporation. Neither the failure of the Corporation (including the Board of
Directors, any committee thereof, independent legal counsel or shareholders)
to have made its determination prior to commencement of such action that
indemnification of, or advancement of costs of defense to, the claimant is
permissible in the circumstances, nor an actual determination by the
Corporation (including the Board of Directors, any committee thereof,
independent legal counsel or shareholders) that such indemnification or
advancement is not permissible, may be a defense to the action or create a
presumption that such indemnification or advancement is not permissible. In
the event of the death of any individual having a right of indemnification
under the foregoing provisions, such right inures to the benefit of his or
her heirs, executors, administrators and personal representatives. The
rights conferred above are not exclusive of any other right which any person
may have or hereafter acquire under any statute, bylaw, resolution of
shareholders or directors, agreement or otherwise.
B. INDEMNIFICATION OF EMPLOYEES AND AGENTS.
The Corporation may additionally indemnify any employee or agent of the Corporation to the fullest extent permitted by applicable law.
C. DEFINITION OF PROCEEDING.
As used herein, the term "PROCEEDING" means any: (i) threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative, arbitrative or investigative (other than an action by or in the right of the Corporation); (ii) appeal in such action, suit or proceeding; and (iii) inquiry or investigation that could lead to such an action, suit or proceeding.
ARTICLE TWELVE - LIABILITY OF DIRECTORS
A director of the Corporation will not be personally liable to the Corporation or its shareholders for monetary damages for breach of fiduciary duty as a director, except for liability: (i) for any breach of the director's duty of loyalty to the Corporation or its shareholders; (ii) for acts or omissions not in good faith or which involve intentional misconduct or knowing violation of law; (iii) for any transaction from which the director derived an improper personal benefit; or (iv) under Section 174 of the DGCL. Any repeal or amendment of this Article Twelve by the
shareholders of the Corporation will be prospective only and will not adversely affect any limitation on the personal liability of a director of the Corporation arising from an act or omission occurring prior to the time of such repeal or amendment. In addition to the circumstances in which a director of the Corporation is not personally liable as set forth in the foregoing provisions of this Article Twelve, a director will not be liable to the Corporation or its shareholders to such further extent as permitted by any law hereinafter enacted, including without limitation any subsequent amendment to the DGCL.
ARTICLE THIRTEEN - COMPROMISE OR ARRANGEMENT
Whenever a compromise or arrangement is proposed between the Corporation and its creditors or any class of them and/or between the Corporation and its stockholders or any class of them, any court of equitable jurisdiction within the State of Delaware may, on the application in a summary way of the Corporation or of any creditor or stockholder thereof or on the application of any receiver or receivers appointed for the Corporation under Section 291 of Title 8 of the Delaware Code or on the application of trustees in dissolution or of any receiver or receivers appointed for the Corporation under Section 279 of Title 8 of the Delaware Code, order a meeting of the creditors or class of creditors, and/or of the stockholders or class of stockholders of the Corporation, as the case may be, to be summoned in such manner as such court directs. If a majority in number representing three-fourths in value of the creditors or class of creditors, and/or of the stockholders or class of stockholders of the Corporation, as the case may be, agree to any compromise or arrangement and to any reorganization of the Corporation as a consequence of such compromise or arrangement, such compromise or arrangement and such reorganization will, if sanctioned by the court to which such application has been made, be binding on all the creditors or class of creditors, and/or on all the stockholders or class of stockholders, of the Corporation, as the case may be, and also on the Corporation.
ARTICLE FOURTEEN - NOTIFICATION BY INTERESTED SHAREHOLDERS
Any holder of shares of Common Stock or warrants to purchase Common Stock (the "WARRANTS") must notify the Corporation without delay, and including particulars of the price, amount and nature of the relevant transaction, if the aggregate amount of such Common Stock or Warrants in which he has an Interest (as defined below) (i) exceeds three percent by nominal value of the entire issued class of Common Stock or Warrants respectively, or (ii) changes from an aggregate amount which exceeded three percent by nominal value of the then issued class of Common Stock or Warrants.
A. On written request by the Corporation, a holder of shares of Common Stock or Warrants is obliged to notify the Corporation (within the period and including the particulars required by the Corporation) of any person who has an Interest in such Common Stock or Warrants.
B. Unless otherwise directed by the Board of Directors, for so long as any person is in default of his obligations under this section, he shall not be entitled to vote at any meeting of the Corporation nor receive dividends in respect of his or her shares of Common Stock, and shall not be entitled to exercise his Warrants.
C. In this section, "Interest" includes an interest of any kind (whether conditional or absolute) whatsoever in the shares of Common Stock or Warrants; (and accordingly there are to be disregarded any restraints or restrictions to which the exercise of any right attached to the interest is or may be subject), including: (i) a joint interest, (ii) a beneficial
interest, (iii) a contractual right to purchase; (iv) the right to exercise any right conferred by or the right to control the exercise of such right in shares of Common Stock or Warrants; or (v) the right to call for delivery of, the right to acquire or the obligation to take an interest in shares of Common Stock or Warrants.
D. For the purposes of C(iv) above, a person is entitled to exercise or control the exercise of any right conferred by the holding of shares of Common Stock or Warrants if he has a right (whether subject to conditions or not) the exercise of which would make him so entitled, or is under an obligation (whether so subject or not) the fulfillment of which would make him so entitled.
E. The provisions of this Article FOURTEEN shall terminate if the Common Stock and Warrants cease to be admitted for trading on AIM.
ARTICLE FIFTEEN - ALTERATION OF CERTIFICATE OF INCORPORATION
Subject to the provisions of Article FIVE and this Article FIFTEEN,
this Amended and Restated Certificate of Incorporation may be amended only
if approved by a majority of the directors then in office and eligible to
vote on such resolution, presented to the stockholders for consideration
pursuant to Section 242 of the DGCL and approved by the stockholders (i) at
a general or special meeting of the Corporation at which a quorum is present
by a majority of votes cast or (ii) by written consent in accordance with
Section 228 of the DGCL. Where the Board of Directors has, by a resolution
passed by a majority of the directors then in office and eligible to vote on
such resolution, approved an amendment of Article EIGHT or this Article
FIFTEEN, the amendment will not be effective unless approved by a vote of
stockholders holding no less than eighty percent of the issued stock of the
Corporation carrying the right to vote at general or special meetings at the
relevant time(or by written consent in accordance with Section 228 of the
DGCL).
IN WITNESS WHEREOF, the Corporation has caused this Amended and Restated Certificate of Incorporation to be signed by Douglas D. Hommert, its Executive Vice President and Secretary on June 5, 2006.
/s/ Douglas D. Hommert
--------------------------------------
Douglas D. Hommert, Executive Vice
President and Secretary
|
Exhibit 3.1.d.
THIRD AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
VICEROY ACQUISITION CORPORATION
PURSUANT TO SECTION 102
OF THE DELAWARE GENERAL CORPORATION LAW
VICEROY ACQUISITION CORPORATION, a corporation existing under the laws of the State of Delaware (the "Corporation"), by its Executive Vice President and Secretary, hereby certifies as follows:
1. The name of the Corporation is "Viceroy Acquisition Corporation".
2. The Corporation's original Certificate of Incorporation was filed in the office of the Secretary of the State of Delaware on August 12th, 2005 (the "Original Certificate of Incorporation").
3. The Corporation's Amended and Restated Certificate of Incorporation was filed in the office of the Secretary of the State of Delaware on August 26, 2005 and the Corporation's Second Amended and Restated Certificate of Incorporation was filed in the office of the Secretary of the State of Delaware on June 2, 2006 (together with the Original Certificate of Incorporation, the "Certificate of Incorporation").
4. This Third Amended and Restated Certificate of Incorporation restates, integrates and amends the Certificate of Incorporation.
5. This Third Amended and Restated Certificate of Incorporation was duly adopted in accordance with the applicable provisions of Sections 228, 242 and 245 of the Delaware General Corporation Law ("DGCL") by the directors and stockholders of the Corporation.
6. This Certificate shall be effective on the date of the filing with the Secretary of State of the State of Delaware.
7. The text of the Certificate of Incorporation of the Corporation is hereby amended and restated to read in full as follows:
ARTICLE ONE - NAME OF THE CORPORATION
The name of the corporation is Viceroy Acquisition Corporation (the
"CORPORATION").
ARTICLE TWO - REGISTERED AGENT
The name and address of the Corporation's initial registered agent in Delaware is:
The Corporation Trust Company 1209 Orange Street Corporation Trust Center Wilmington, Delaware 19801
ARTICLE THREE - PURPOSE OF THE CORPORATION
Subject to the immediately succeeding sentence, the purpose of the Corporation shall be to engage in any lawful act or activity for which corporations may be organized under the DGCL. In addition to the powers and privileges conferred upon the Corporation by law and those incidental thereto, the Corporation shall possess and may exercise all the powers and privileges which are necessary or convenient to the conduct, promotion or attainment of the business or purposes of the Corporation; provided, however, that in the event a Business Combination (as defined below) is not consummated prior to the Termination Date (as defined below), then, on or after the Termination Date, the purposes of the Corporation shall automatically, with no action required by the board of directors (the "BOARD OF DIRECTORS") or the stockholders, be limited to effecting and implementing the dissolution and liquidation of the Corporation and the taking of any other actions expressly required to be taken herein, and the Corporation's powers shall thereupon be limited to those set forth in Section 278 of the DGCL and as otherwise may be necessary to implement the limited purposes of the Corporation as provided herein.
ARTICLE FOUR - AUTHORIZED CAPITAL STOCK
The total number of shares of all classes of stock which the
Corporation has the authority to issue is 80,000,000 shares consisting of:
(i) 5,000,000 shares of a class designated as preferred stock, par value
$0.0001 per share ("PREFERRED STOCK"); and (ii) 75,000,000 shares of a class
designated as common stock, par value $0.0001 per share ("COMMON STOCK").
The designations, preferences, rights, qualifications, limitations and
restrictions of the Preferred Stock and the Common Stock are as follows.
A. PROVISIONS RELATING TO THE PREFERRED STOCK.
(a) whether the class or series is to have voting rights, full, special or limited, and whether such class or series is to be entitled to vote as a separate class either alone or together with the holders of one or more other classes or series of stock of the Corporation;
(b) the number of shares to constitute the class or series and the designations thereof;
(c) the preferences and relative, participating, optional or other special rights, if any, and the qualifications, limitations or restrictions thereof, if any, with respect to any class or series;
(d) whether the shares of any class or series are redeemable at the option of the Corporation or the holders thereof or upon the happening of any specified event and, if redeemable, the redemption price or prices (which may be payable in the form of cash, notes, securities or other
property), and the time or times at which, and the terms and conditions upon which, such shares are redeemable and the manner of redemption;
(e) whether the shares of a class or series are subject to the operation of retirement or sinking funds to be applied to the purchase or redemption of such shares for retirement and, if such retirement or sinking fund or funds are to be established, the annual amount thereof and the terms and provisions relative to the operation thereof;
(f) the dividend rate, whether dividends are payable in cash, stock of the Corporation or other property, the conditions upon which and the times when such dividends are payable, the preference to or the relation to the payment of dividends payable on any other class or classes or series of stock of the Corporation, whether or not such dividends are cumulative or noncumulative and, if cumulative, the date or dates from which such dividends accumulate;
(g) the preferences, if any, and the amounts thereof which the holders of any class or series thereof will be entitled to receive upon the voluntary or involuntary dissolution or liquidation of, or upon any distribution of the assets of, the Corporation;
(h) whether the shares of any class or series, at the option of the Corporation or the holders thereof or upon the happening of any specified event, are convertible into or exchangeable for the shares of any other class or classes or of any other series of the same or any other class or classes of stock, securities or other property of the Corporation and the conversion price or prices or ratio or the rate or rates at which such exchange may be made, with such adjustments, if any, as may be stated and expressed or provided for in such resolution or resolutions; and
(i) such other special rights and protective provisions with respect to any class or series as may to the Board of Directors seem advisable.
B. PROVISIONS RELATING TO THE COMMON STOCK.
shareholders. Except as otherwise required by law or as otherwise provided by the Board of Directors with respect to any Preferred Stock, the holders of the Common Stock exclusively possess all voting power with respect to the Corporation.
C. GENERAL.
ARTICLE FIVE - BUSINESS COMBINATIONS
The following provisions (A) through (G) shall apply during the period commencing upon the admission to trading (the "IPO") of the Corporation's securities on the Alternative Investment Market of the London Stock Exchange plc ("AIM") and terminating upon the earlier of the consummation of any "Qualified Business Combination" or the Termination Date, and may only be amended by an affirmative vote of stockholders holding one hundred percent of the Common Stock issued by the Corporation. Any positive obligations contained in this Article FIVE which arise during such period (for example, without
limitation, in connection with making payments in respect of validly exercised Repurchase Rights (as defined below)) will continue to bind the Corporation until such obligations are satisfied, notwithstanding the end of such period. A "Business Combination" shall mean an acquisition or the acquisition of control of, through a merger, capital stock exchange, asset acquisition, stock purchase or other similar business combination transaction, of one or more operating businesses in the oil and gas industry by the Corporation ("A TARGET BUSINESS") which has a transaction value (calculated in accordance with Part F below) of at least $20,000,000. A "Qualified Business Combination" shall mean a Business Combination which, either on its own or which when combined with all of the Corporation's previous Business Combinations, has an aggregate transaction value (calculated in accordance with Part F below) of at least 50% of the initial amount placed in the Trust Fund (as defined below) in connection with the IPO, including such funds as are deposited in the Trust Fund immediately following the end of any price stabilization activities, but excluding any deferred placing fees and commissions payable to the placing agents in connection with the IPO being held in the Trust Fund.
A. Prior to the consummation of any Business Combination, the Corporation shall submit such proposed Business Combination to its stockholders for approval regardless of whether the Business Combination is of a type which normally would require such stockholder approval under the DGCL. In the event that (and only in the event that) a majority of the New Shares (as defined below) cast at the duly called meeting at which a quorum is present to approve the Business Combination are voted for the approval of such Business Combination, the Corporation shall be authorized to consummate the Business Combination; provided that the Corporation shall not consummate any Business Combination if, in the opinion of the Board of Directors, the Corporation does not have sufficient cash resources to pay both (i) the consideration required to complete the Business Combination and (ii) all sums due to any holders of New Shares who did not vote in favor of such Business Combination and simultaneously exercised their Repurchase Rights (as described below).
B. In the event that a Business Combination (including a Qualified Business Combination) is approved in accordance with Part A above and is consummated by the Corporation, any stockholder of the Corporation holding shares of Common Stock issued in the Corporation's IPO ("NEW SHARES") who voted against the Business Combination may, simultaneously with such vote, demand that the Corporation repurchase a certain number of such stockholder's New Shares for cash (a "REPURCHASE RIGHT"), where such number of shares is equal to the product of the total number of New Shares held by such stockholder at the time of its election to exercise the Repurchase Rights multiplied by a fraction, the numerator of which is equal to the amount of funds held in the Trust Fund immediately before the Business Combination and of which the denominator is equal to the amount of funds placed in the Trust Fund as a result of the IPO (including as a result of any price stabilization procedures), less any funds previously used to repurchase New Shares for cash in connection with previous stockholder votes on approval of Business Combinations or the extension of the Termination Date (as contemplated in Part C below); provided, however, that such fraction shall be deemed never to exceed 1.0. For the purposes of the foregoing computation, deferred placing fees (as designated when the proceeds from the IPO are deposited into the Trust Fund) and commissions and net interest earned on the funds held in the Trust Fund shall be excluded from the numerator and denominator. If so demanded, the Corporation shall repurchase such shares at a repurchase price equal to $7.667 per share plus a pro rata portion of any interest earned on the Trust Fund, net of income taxes payable on such interest and trust expenses and net of up to $1,000,000 of the interest earned on the Trust Fund previously released to the Corporation. Such payment for the repurchased stock shall take place no later than the later of three business days after the occurrence of both the Business Combination and the delivery of the shares by the stockholder. "Trust Fund" shall mean the trust account established by the Corporation at the consummation of its IPO and into which a certain amount of the net proceeds of the IPO and deferred placing fees and commissions are deposited.
C. (a) In the event that the Corporation does not consummate any Business Combination by the later of (i) 12 months after the consummation of the IPO or the date which is 18 months after the consummation of the IPO (in the event that the Corporation has signed a current, binding (but conditional, among other things, on the consent of its stockholders being given in a special meeting) letter of intent, an agreement in principle or definitive agreement in respect of a proposed Qualified Business Combination) or (ii) an extended date approved by a majority of the holders of the New Shares, (such later date being referred to as the "TERMINATION DATE"), the officers of the Corporation shall be entitled by resolution to and shall take all such action necessary to liquidate the Trust Fund as soon as reasonably practicable. In the event that the Trust Fund is so liquidated, only the holders of New Shares (at such time) shall be entitled to receive liquidating distributions and the Corporation shall pay no liquidating distributions with respect to any other shares of capital stock of the Corporation. Such liquidating distribution payment shall take place no later than the later of three business days after the occurrence of both the Termination Date and the delivery of the applicable New Shares by the applicable stockholder. After the distribution of the Trust Fund, the sole purpose of the Corporation shall be to dissolve and liquidate the Corporation and, accordingly, (i) the Corporation shall not be authorized to issue any shares of capital stock and (ii) the officers of the Corporation shall take all such action as necessary to dissolve and liquidate the Corporation as soon as reasonably practicable. The Board of Directors shall have the power by resolution, and shall take all such action necessary, to cancel all other shares of capital stock of the Corporation.
(b) The Corporation may submit to the stockholders for approval a resolution to postpone the Termination Date. Notwithstanding the provisions of Part C(a), if the Corporation seeks the approval of stockholders to extend the Termination Date, and such extension is approved by a majority of stockholders as contemplated herein, each holder of New Shares that voted against such extension shall be entitled at its election to exercise, simultaneously with such vote, a Repurchase Right in accordance with Part B of this Section (based on the amount in the Trust Fund, inclusive of interest thereon, calculated as of two business days prior to such Termination Date prior to giving effect to the proposed extension). Each such holder of New Shares shall have shares repurchased from the amounts held in the Trust Fund calculated as of two business days prior to the Termination Date in accordance with Part B.
D. (a) In the event that the Corporation consummates one or more Business Combinations by the Termination Date (as it may be extended by Part C(b)), but has not consummated a Qualified Business Combination by the Termination Date, the Corporation will send on the third business day following the Termination Date a notice of election (a "NOTICE OF ELECTION") to all holders of record of New Shares notifying them of their ability to exercise a Repurchase Right in respect of their New Shares (an "ELECTION", and such holders of New Shares electing to exercise such Repurchase Right, "ELECTING STOCKHOLDERS").
(b) Each Electing Stockholder shall have New Shares repurchased from the Trust Fund calculated in accordance with Part B above (based on the amount in the Trust Fund, inclusive of interest thereon, calculated as of two business days prior to such Termination Date). Such payment for the repurchased stock shall be made no later than 20 business days following such Electing Stockholder's Election.
(c) If at any time the number of shares of Common Stock as are then held by those persons holding shares of Common Stock prior to the IPO (the "Founding Shares") exceed twenty five percent of the total issued capital stock of the Corporation, the Corporation shall, to the extent permitted by the rules and regulations of AIM (the "AIM RULES") and other applicable laws, repurchase from each holder of such stock sufficient Founding Shares to reduce the proportion of the total issued capital stock the Founding Shares represent to twenty five percent of the total issued capital stock of the Corporation.
The number of Founding Shares repurchased from each stockholder shall be in such amounts as determined by a majority-in-interest of such stockholders holding Founding Shares. The Founding Shares repurchased shall be cancelled or held as treasury shares at the option of the Corporation, and the repurchase and cancellation or return to treasury of Founding Shares shall be deemed to occur concurrently with the repurchase of New Shares (if it is a repurchase of New Shares that has triggered a repurchase pursuant to this provision, regardless of whether the certificates in respect of such Founding Shares are delivered up).
(d) If the Corporation takes the actions referred to in clauses (a), (b) and (c) above, the Corporation will have met the requirements to avoid liquidation and therefore will not be required to dissolve; provided that if the Corporation is unable to undertake the actions described in clause (c) because of any prohibition under the AIM Rules or any other applicable law, the Corporation will be deemed to have met the requirements to avoid liquidation and dissolution and therefore will not be required to dissolve; provided further that the Corporation shall undertake such actions as soon as such actions are permitted by the AIM Rules and other applicable laws.
(e) Each holder of New Shares that does not exercise its Election and does not constitute an Electing Stockholder will retain its interest in the Corporation and shall be deemed to have given their consent to the release of all funds remaining in the Trust Fund to the Corporation, and, following payment to the Electing Stockholders as contemplated by Part D(b) above, the remaining funds in the Trust Fund shall be released to the Corporation.
E. A holder of New Shares shall be entitled to receive distributions from the Trust Fund only in the event of a liquidation and dissolution of the Corporation or in the event such holder demands repurchase of such holder's shares in accordance with Part B, C or D(a) above. In no other circumstances shall a holder of New Shares have any right or interest of any kind in or to the Trust Fund.
F. For purposes of this Article FIVE, "transaction value" shall mean the sum of (i) any cash and fair market value of any property used as consideration in connection with a Business Combination, (ii) any net debt, capitalized lease obligations and obligations under a letter of credit or similar, assumed and/or incurred in connection with such Business Combination, (iii) in the case of a Business Combination, the value of any Common Stock or Preferred Stock used as consideration in connection with such Business Combination as determined by an unaffiliated independent investment banking firm, and (iv) all transaction costs incurred to complete the Business Combination.
G. Prior to the consummation of any Business Combination, the Corporation shall not pay any compensation to any director, but may pay for such director's out-of-pocket expenses related to the performance of his duties.
ARTICLE SIX - PREEMPTIVE RIGHTS
The shareholders of the Corporation have no preemptive rights to acquire unissued shares of the Corporation or securities of the Corporation convertible into or carrying a right to subscribe to or acquire shares of stock of the Corporation.
ARTICLE SEVEN - INCORPORATOR
The name and mailing address of the incorporator of the Corporation are:
Douglas D. Hommert
8235 Forsyth Avenue, 4th Floor
Clayton, Missouri 63105
ARTICLE EIGHT - BOARD OF DIRECTORS
The following provisions are inserted for the management of the business and for the conduct of the affairs of the Corporation, and for further definition, limitation and regulation of the powers of the Corporation and its directors and stockholders.
A. NUMBER OF DIRECTORS.
The number of directors initially to constitute the Board of
Directors is three. Thereafter, the number of directors of the Corporation
may be changed: (i) by amendment to this Certificate of Incorporation; or
(ii) as set forth in the Corporation's bylaws.
B. CLASSES OF DIRECTORS.
The Board of Directors are divided into three classes: Class A, Class B and Class C. The number of directors in each class are to be nearly as equal as possible. At the first election of directors by the incorporator, the incorporator will elect a Class C director for a term expiring at the Corporation's third annual meeting of the Corporation's stockholders (the "ANNUAL MEETING OF STOCKHOLDERS"). The Class C director will then appoint additional Class A, Class B and Class C directors as necessary. The directors in Class A will be elected for a term expiring at the first Annual Meeting of Stockholders, the directors in Class B will be elected for a term expiring at the second Annual Meeting of Stockholders and the directors in Class C will be elected for a term expiring at the third Annual Meeting of Stockholders. Commencing at the first Annual Meeting of Stockholders, and at each Annual Meeting of Stockholders thereafter, directors elected to succeed those directors whose terms expire will be elected for a term of office to expire at the third succeeding Annual Meeting of Stockholders after their election. Except as the DGCL may otherwise require, in the interim between Annual Meetings of Stockholders or special meetings of the Corporation's stockholders called for the election of directors and/or the removal of one or more directors and the filling of any vacancy in that connection, newly created directorships and any vacancies in the Board of Directors, including unfilled vacancies resulting from the removal of directors for cause, may be filled by the vote of a majority of the remaining directors then in office, although less than a quorum (as defined in the Corporation's bylaws), or by the sole remaining director. All directors hold office until the expiration of their respective terms of office and until their successors have been elected and qualified. A director elected to fill a vacancy resulting from the death, resignation or removal of a director serves for the remainder of the full term of the director whose death, resignation or removal has created such vacancy and until his successor has been elected and qualified.
C. BALLOTS NOT REQUIRED.
Election of directors need not be by ballot unless the bylaws of the Corporation so provide.
D. BYLAWS OF THE CORPORATION.
The Board of Directors has the power, without the assent or vote of the Corporation's stockholders, to make, alter, amend, change, add to or repeal the bylaws of the Corporation as provided in the bylaws of the Corporation.
F. ADDITIONAL POWERS.
In addition to the powers and authorities hereinbefore or by statute expressly conferred upon them, the directors are hereby empowered to exercise all such powers and do all such acts and things as may be exercised or done by the Corporation; subject, nevertheless, to the provisions of the DGCL, of this Certificate of Incorporation and to any bylaws from time to time made by the stockholders; provided, however, that no bylaw so made may invalidate any prior act of the directors which would have been valid if such bylaw had not been made.
ARTICLE NINE - DURATION OF THE CORPORATION
The duration of the Corporation is perpetual.
ARTICLE TEN - INTERESTED DIRECTORS, OFFICERS AND SHAREHOLDERS
No contract or transaction between the Corporation and one or more
of its directors, officers or shareholders or between the Corporation and
any person (as used herein, "PERSON" means any other natural person,
corporation, limited partnership, general partnership, joint venture,
association, company, trust, joint stock company, bank, trust company, land
trust, vehicle trust, business trust, real estate investment trust, estate,
limited liability company, limited liability partnership, limited liability
limited partnership, employee benefit plan or other organization
irrespective of whether it is a legal entity, and any governmental
authority) in which one or more of its directors, officers or shareholders
are directors, officers or shareholders, or have a financial interest, will
be void or voidable solely for this reason, or solely because the director
or officer is present at or participates in the meeting of the Board of
Directors (or committee thereof) which authorizes the contract or
transaction, or solely because his, her or their votes are counted for such
purpose, if: (i) the material facts as to his or her relationship or
interest and as to the contract or transaction are disclosed or are known to
the Board of Directors (or the committee thereof), and the Board of
Directors (or such committee) in good faith authorizes the contract or
transaction by the affirmative votes of a majority of the disinterested
directors, even though the disinterested directors are less than a quorum;
(ii) the material facts as to his or her relationship or interest and as to
the contract or transaction are disclosed or are known to the shareholders
of the Corporation entitled to vote thereon, and the contract or transaction
is specifically approved in good faith by vote of such shareholders; or
(iii) the contract or transaction is fair as to the Corporation as of the
time it is authorized, approved or ratified by the Board of Directors, a
committee of the Board of Directors or the shareholders of the Corporation.
Common or interested directors may be counted in determining the presence of
a quorum at a meeting of the Board of Directors or of a committee thereof
which authorizes the contract or transaction.
ARTICLE ELEVEN - INDEMNIFICATION
A. INDEMNIFICATION OF OFFICERS AND DIRECTORS.
The Corporation will indemnify, to the fullest extent permitted under the DGCL, any individual who was, is or is threatened to be made a party to a proceeding by reason of the fact that he or she: (i) is or was a director or officer of the Corporation; or (ii) while a director or officer of the Corporation is or
was serving at the request of the Corporation as a director, officer, partner, venturer, proprietor, trustee, employee, agent or similar functionary of another foreign or domestic person. Such right is a contract right and, as such, runs to the benefit of any director or officer who is elected and accepts the position of director or officer of the Corporation or elects to continue to serve as a director or officer of the Corporation while this Article Eleven is in effect. Any repeal or amendment of this Article Eleven may be prospective only and will not limit the rights of any such director or officer or the obligations of the Corporation with respect to any claim arising from or related to the services of such director or officer in any of the foregoing capacities prior to any such repeal or amendment to this Article Eleven. Such right includes the right to be paid by the Corporation for expenses incurred in defending any such proceeding in advance of its final disposition to the maximum extent permitted under the DGCL. If a claim for indemnification or advancement of expenses hereunder is not paid in full by the Corporation within 60 days after a written claim has been received by the Corporation, the claimant may at any time thereafter bring suit against the Corporation to recover the unpaid amount of the claim and, if successful in whole or in part, the claimant will also be entitled to be paid the expenses of prosecuting such claim. It is a defense to any such action that such indemnification or advancement of costs of defense are not permitted under the DGCL, but the burden of proving such defense is on the Corporation. Neither the failure of the Corporation (including the Board of Directors, any committee thereof, independent legal counsel or shareholders) to have made its determination prior to commencement of such action that indemnification of, or advancement of costs of defense to, the claimant is permissible in the circumstances, nor an actual determination by the Corporation (including the Board of Directors, any committee thereof, independent legal counsel or shareholders) that such indemnification or advancement is not permissible, may be a defense to the action or create a presumption that such indemnification or advancement is not permissible. In the event of the death of any individual having a right of indemnification under the foregoing provisions, such right inures to the benefit of his or her heirs, executors, administrators and personal representatives. The rights conferred above are not exclusive of any other right which any person may have or hereafter acquire under any statute, bylaw, resolution of shareholders or directors, agreement or otherwise.
B. INDEMNIFICATION OF EMPLOYEES AND AGENTS.
The Corporation may additionally indemnify any employee or agent of the Corporation to the fullest extent permitted by applicable law.
C. DEFINITION OF PROCEEDING.
As used herein, the term "PROCEEDING" means any: (i) threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative, arbitrative or investigative (other than an action by or in the right of the Corporation); (ii) appeal in such action, suit or proceeding; and (iii) inquiry or investigation that could lead to such an action, suit or proceeding.
ARTICLE TWELVE - LIABILITY OF DIRECTORS
A director of the Corporation will not be personally liable to the Corporation or its shareholders for monetary damages for breach of fiduciary duty as a director, except for liability: (i) for any breach of the director's duty of loyalty to the Corporation or its shareholders; (ii) for acts or omissions not in good faith or which involve intentional misconduct or knowing violation of law; (iii) for any transaction from which the director derived an improper personal benefit; or (iv) under Section 174 of the DGCL. Any repeal or amendment of this Article Twelve by the shareholders of the Corporation will be prospective only and will not adversely affect any limitation on the personal liability of a director of the Corporation arising from an act or omission occurring prior to the time of such repeal or amendment. In addition to the circumstances in which a director of the Corporation is not personally liable as set forth in the foregoing
provisions of this Article Twelve, a director will not be liable to the Corporation or its shareholders to such further extent as permitted by any law hereinafter enacted, including without limitation any subsequent amendment to the DGCL.
ARTICLE THIRTEEN - COMPROMISE OR ARRANGEMENT
Whenever a compromise or arrangement is proposed between the Corporation and its creditors or any class of them and/or between the Corporation and its stockholders or any class of them, any court of equitable jurisdiction within the State of Delaware may, on the application in a summary way of the Corporation or of any creditor or stockholder thereof or on the application of any receiver or receivers appointed for the Corporation under Section 291 of Title 8 of the Delaware Code or on the application of trustees in dissolution or of any receiver or receivers appointed for the Corporation under Section 279 of Title 8 of the Delaware Code, order a meeting of the creditors or class of creditors, and/or of the stockholders or class of stockholders of the Corporation, as the case may be, to be summoned in such manner as such court directs. If a majority in number representing three-fourths in value of the creditors or class of creditors, and/or of the stockholders or class of stockholders of the Corporation, as the case may be, agree to any compromise or arrangement and to any reorganization of the Corporation as a consequence of such compromise or arrangement, such compromise or arrangement and such reorganization will, if sanctioned by the court to which such application has been made, be binding on all the creditors or class of creditors, and/or on all the stockholders or class of stockholders, of the Corporation, as the case may be, and also on the Corporation.
ARTICLE FOURTEEN - NOTIFICATION BY INTERESTED SHAREHOLDERS
Any holder of shares of Common Stock or warrants to purchase Common Stock (the "WARRANTS") must notify the Corporation without delay, and including particulars of the price, amount and nature of the relevant transaction, if the aggregate amount of such Common Stock or Warrants in which he has an Interest (as defined below) (i) exceeds three percent by nominal value of the entire issued class of Common Stock or Warrants respectively, or (ii) changes from an aggregate amount which exceeded three percent by nominal value of the then issued class of Common Stock or Warrants.
A. On written request by the Corporation, a holder of shares of Common Stock or Warrants is obliged to notify the Corporation (within the period and including the particulars required by the Corporation) of any person who has an Interest in such Common Stock or Warrants.
B. Unless otherwise directed by the Board of Directors, for so long as any person is in default of his obligations under this section, he shall not be entitled to vote at any meeting of the Corporation nor receive dividends in respect of his or her shares of Common Stock, and shall not be entitled to exercise his Warrants.
C. In this section, "Interest" includes an interest of any kind (whether conditional or absolute) whatsoever in the shares of Common Stock or Warrants; (and accordingly there are to be disregarded any restraints or restrictions to which the exercise of any right attached to the interest is or may be subject), including: (i) a joint interest, (ii) a beneficial interest, (iii) a contractual right to purchase; (iv) the right to exercise any right conferred by or the right to control the exercise of such right in shares of Common Stock or Warrants; or (v) the right to call for delivery of, the right to acquire or the obligation to take an interest in shares of Common Stock or Warrants.
D. For the purposes of C(iv) above, a person is entitled to exercise or control the exercise of any right conferred by the holding of shares of Common Stock or Warrants if he has a right
(whether subject to conditions or not) the exercise of which would make him so entitled, or is under an obligation (whether so subject or not) the fulfillment of which would make him so entitled.
E. The provisions of this Article FOURTEEN shall terminate if the Common Stock and Warrants cease to be admitted for trading on AIM.
ARTICLE FIFTEEN - ALTERATION OF CERTIFICATE OF INCORPORATION
Subject to the provisions of Article FIVE and this Article FIFTEEN,
this Amended and Restated Certificate of Incorporation may be amended only
if approved by a majority of the directors then in office and eligible to
vote on such resolution, presented to the stockholders for consideration
pursuant to Section 242 of the DGCL and approved by the stockholders (i) at
a general or special meeting of the Corporation at which a quorum is present
by a majority of votes cast or (ii) by written consent in accordance with
Section 228 of the DGCL. Where the Board of Directors has, by a resolution
passed by a majority of the directors then in office and eligible to vote on
such resolution, approved an amendment of Article EIGHT or this Article
FIFTEEN, the amendment will not be effective unless approved by a vote of
stockholders holding no less than eighty percent of the issued stock of the
Corporation carrying the right to vote at general or special meetings at the
relevant time(or by written consent in accordance with Section 228 of the
DGCL).
IN WITNESS WHEREOF, the Corporation has caused this Amended and Restated Certificate of Incorporation to be signed by Douglas D. Hommert, its Executive Vice President and Secretary on June 30, 2006.
/s/ Douglas D. Hommert -------------------------------------------- Douglas D. Hommert Executive Vice President and Secretary |
Exhibit 3.1.e.
STATE OF DELAWARE
CERTIFICATE OF AMENDMENT
OF CERTIFICATE OF INCORPORATION
The corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware does hereby certify:
SECOND: That thereafter, pursuant to resolution of its Board of Directors, a special meeting of the stockholders of said corporation was duly called and held upon notice in accordance with Section 222 of the General Corporation Law of the State of Delaware at which meeting the necessary number of shares as required by statute were voted in favor of the amendment.
THIRD: That said amendment was duly adopted in accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, said corporation has caused this certificate to be signed
this 31st day of October, 2006.
---- ------- --
By: /s/ Douglas D. Hommert
-----------------------------------
Authorized Officer
Title: Executive Vice President
-----------------------------------
Name: Douglas D. Hommert
-----------------------------------
Print or Type
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Exhibit 3.2.a.
BYLAWS
OF
VICEROY ACQUISITION CORPORATION
TABLE OF CONTENTS
Page
----
ARTICLE 1 - Offices..........................................................................1
1.1. Delaware Office............................................................1
1.2. Other Offices..............................................................1
ARTICLE 2 - Meeting of Stockholders..........................................................1
2.1. Place of Meetings..........................................................1
2.2. Annual Meeting.............................................................1
2.3. Special Meetings...........................................................1
2.4. Notice of Meetings.........................................................1
2.5. Quorum.....................................................................2
2.6. Adjournments...............................................................2
2.7. Voting and Proxies.........................................................2
2.8. Action at Meeting..........................................................3
2.8.1. Requisite Vote....................................................3
2.8.2. Business to be Conducted..........................................3
2.8.3. Business to be Brought by Stockholders............................3
2.9. Inspectors.................................................................3
2.10. Action without Meeting.....................................................4
ARTICLE 3 - Directors........................................................................4
3.1. General Powers.............................................................4
3.2. Number; Election and Qualification.........................................5
3.3. Enlargement of the Board of Directors......................................5
3.4. Tenure.....................................................................5
3.5. Vacancies..................................................................5
3.6. Resignation................................................................6
3.7. Place of Meetings..........................................................6
3.8. Regular Meetings...........................................................6
3.9. Special Meetings...........................................................6
3.10. Notice of Special Meetings.................................................6
3.11. Meetings by Telephone Conference Calls.....................................6
3.12. Quorum.....................................................................6
3.13. Action at Meeting..........................................................6
3.14. Action by Consent..........................................................6
3.15. Removal....................................................................7
3.16. Compensation of Directors..................................................7
ARTICLE 4 - Committees of the Board of Directors.............................................7
4.1. Appointment and Powers of Executive Committee..............................7
4.2. Appointment and Powers of Audit Committee..................................7
4.3. Appointment and Powers of Nominating Committee.............................7
4.4. Compensation Committee; Other Committees...................................8
4.5. Powers of Such Committees..................................................8
4.6. Action by Consent; Participation by Telephone or Similar Equipment.........8
4.7. Resignations; Removals.....................................................8
ARTICLE 5 - Officers.........................................................................8
|
5.1. Enumeration................................................................8
5.2. Election...................................................................8
5.3. Qualification..............................................................9
5.4. Tenure.....................................................................9
5.5. Resignation and Removal....................................................9
5.6. Vacancies..................................................................9
5.7. Chairman of the Board and Vice-Chairman of the Board.......................9
5.8. Chief Executive Officer....................................................9
5.9. President..................................................................9
5.10. Vice Presidents...........................................................10
5.11. Secretary and Assistant Secretaries.......................................10
5.12. Treasurer and Assistant Treasurers........................................10
5.13. Salaries..................................................................10
5.14. Delegation of Authority...................................................10
5.15. Bonds of Officers.........................................................10
ARTICLE 6 - Capital Stock...................................................................11
6.1. Issuance of Stock.........................................................11
6.2. Certificates of Stock.....................................................11
6.3. Stock List................................................................11
6.4. Transfers.................................................................11
6.5. Lost, Stolen or Destroyed Certificates....................................11
6.6. Record Date...............................................................12
6.6.1. Fixing of Record Date............................................12
6.6.2. Stockholder Consents.............................................12
6.6.3. Adjourned Meetings...............................................12
6.7. Regulations...............................................................12
ARTICLE 7 - Contracts, Checks, Loans, Deposits, Etc. .......................................12
7.1. Contracts.................................................................12
7.2. Checks, Etc. .............................................................12
7.3. Loans.....................................................................13
7.4. Deposits..................................................................13
ARTICLE 8 - Notices.........................................................................13
8.1. Notices...................................................................13
8.2. Waiver of Notice..........................................................13
ARTICLE 9 - General Provisions..............................................................13
9.1. Fiscal Year...............................................................13
9.2. Corporate Seal............................................................13
9.3. Voting of Securities of Other Corporations................................14
9.4. Evidence of Authority.....................................................14
9.5. Certificate of Incorporation..............................................14
9.6. Transactions with Interested Parties......................................14
9.7. Severability..............................................................14
9.8. Construction..............................................................14
9.9. Facsimile Signatures......................................................15
9.10. Reliance Upon Books, Reports and Records..................................15
9.11. Time Periods..............................................................15
ARTICLE 10 - Amendments.....................................................................15
ii
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10.1. By the Board of Directors.................................................15
10.2. By the Stockholders.......................................................15
|
BYLAWS
OF
VICEROY ACQUISITION CORPORATION
ARTICLE 1 - OFFICES
1.1. DELAWARE OFFICE. The office of Viceroy Acquisition Corporation (the "CORPORATION") within the State of Delaware will be in the City of Wilmington.
1.2. OTHER OFFICES. The Corporation may also have an office or offices and keep the books and records of the Corporation, except as otherwise may be required by law, in such other place or places either within or without the State of Delaware as the board of directors of the Corporation (the "BOARD OF DIRECTORS") may from time to time determine or the business of the Corporation may require.
ARTICLE 2 - MEETING OF STOCKHOLDERS
2.1. PLACE OF MEETINGS. All meetings of holders of shares of capital stock of the Corporation ("STOCKHOLDERS") will be held at the executive office of the Corporation or at such other place, within or without the State of Delaware, as may from time to time be fixed by the Board of Directors or the chief executive officer of the Corporation (the "CHIEF EXECUTIVE OFFICER") or specified or fixed in the respective notices or waivers of notice thereof. If not so designated, a meeting of the Stockholders will be held at the executive office of the Corporation.
2.2. ANNUAL MEETING. An annual meeting of Stockholders for the election of directors and for the transaction of such other business as may properly be brought before the meeting ("ANNUAL MEETING") will be held at such place, on such date and at such time as the Board of Directors or the Chief Executive Officer each year fixes, which date will be within thirteen months of the last Annual Meeting. If no Annual Meeting is held in accordance with the foregoing provisions, a special meeting may be held in lieu of the Annual Meeting, and any action taken at that special meeting will have the same effect as if it had been taken at the Annual Meeting, and in such case all references in these Bylaws to the Annual Meeting will be deemed to refer to such special meeting.
2.3. SPECIAL MEETINGS. Except as required by law and subject to the rights of holders of any series of Preferred Stock (as defined below), special meetings of Stockholders may be called at any time but only by the Chief Executive Officer, the chairman of the Board of Directors (the "CHAIRMAN") or by the Board of Directors pursuant to a resolution approved by a majority of the then directors. Business transacted at any special meeting of Stockholders will be limited to matters relating to the purpose or purposes stated in the notice of the meeting unless this requirement is waived in accordance with these Bylaws or with applicable law.
2.4. NOTICE OF MEETINGS. Except as otherwise may be required by law, notice of each meeting of Stockholders, whether an Annual Meeting or a special meeting: (i) must be in writing; (ii) must be delivered or sent by mail not less than ten nor more than sixty days before the date of such meeting to each Stockholder entitled to vote at such meeting; and (iii) must state the place, date and hour of the meeting. The notice of a special meeting must also state the purpose or purposes for which the meeting is called and must indicate that such notice is being issued by or at the direction of the persons calling the meeting. If mailed, such notice must be directed to each Stockholder at such Stockholder's address as it appears on the stock records of the Corporation unless such Stockholder has filed with the secretary of the Corporation (the "SECRETARY") a written request that notices to such Stockholder be mailed to some other address in which case it will be directed to such Stockholder at such other address. If mailed, notice is
deemed given when deposited in the United States mail, postage prepaid and addressed as set forth in the immediately preceding sentence.
2.5. QUORUM. Except as otherwise provided by law, the Corporations' certificate of incorporation (the "CERTIFICATE OF INCORPORATION") or these Bylaws, at each meeting of the Stockholders, the holders of shares of stock possessing a majority of the voting power of the capital stock of the Corporation issued and outstanding and entitled to vote at such meeting, present in person or represented by proxy at such meeting, constitute a quorum for the transaction of any business of the Corporation. Where a separate vote by a class or classes is required, the holders of shares of stock possessing a majority of the voting power of such class or classes present in person or represented by proxy at such meeting constitute a quorum entitled to take action with respect to that vote on that matter.
2.6. ADJOURNMENTS. Any meeting of Stockholders may be adjourned to any other time and to any other place at which a meeting of Stockholders may be held under these Bylaws by the Chief Executive Officer or Chairman or, in their absence, by any other officer of the Corporation entitled to preside at or to act as secretary of such meeting, whether or not a quorum is present or represented by proxy at such meeting. In addition, in the absence of a quorum at any meeting of Stockholders, or at any adjournment or adjournments thereof, the holders of shares possessing a majority of the voting power of the capital stock present or represented by proxy at the meeting may adjourn the meeting from time to time until a quorum is present or represented by proxy. It is not necessary to notify any Stockholder of any adjournment of thirty days or less if the time and place to which the meeting is to be adjourned was announced at the meeting at which the adjournment was taken, unless after the adjournment a new record date is fixed by the Board of Directors for the adjourned meeting. Notice of the time and place will be duly given to all Stockholders of record and entitled to vote at the adjourned meeting of any adjournment of more than thirty days. At any such adjourned meeting at which a quorum is present or represented by proxy, the Corporation may transact any business which might have been transacted at the meeting as originally called if a quorum had been present or represented by proxy thereat.
2.7. VOTING AND PROXIES. Except as otherwise provided in a resolution of the Board of Directors adopted pursuant to the Certificate of Incorporation and these Bylaws establishing a series of preferred stock of the Corporation ("PREFERRED STOCK"), at each meeting of Stockholders, each holder of shares of the Corporation's common stock, par value $.0001 per share ("COMMON STOCK"), will be entitled to the respective number of votes as set forth in the Certificate of Incorporation, in each case determined with reference to the number of shares of Common Stock standing in such holder's name on the stock records of the Corporation maintained in accordance with Section 6.3: (i) at the time fixed pursuant to Section 6.6 as the record date for the determination of Stockholders entitled to vote at such meeting; or (ii) if no such record date has been fixed, then at the close of business on the day next preceding the day on which notice thereof will be given. At any meeting of the Stockholders, each Stockholder of record entitled to vote at the meeting of Stockholders, or to express consent or dissent to corporate action in writing without a meeting, may vote or express such consent or dissent in person or by proxy authorized by the Stockholder or his authorized officer, director, employee or agent by an instrument in writing or by a transmission permitted by law filed in accordance with the procedure established for the meeting. No such proxy may be voted or acted upon after three years from the date of its authorization unless the proxy expressly provides for a longer period. Any copy, facsimile telecommunication or other reliable reproduction of the writing or transmission created pursuant to this Section 2.7 may be substituted or used in lieu of the original writing or transmission for any and all purposes for which the original writing or transmission could be used, provided that such copy, facsimile telecommunication or other reproduction will be a complete reproduction of the entire original writing or transmission. All voting, including on the election of directors but excepting where otherwise required by law, may be by a voice vote; provided, however, that upon demand therefor by a Stockholder entitled to vote or by such Stockholder's proxy, a stock vote will be taken by ballots (which may be submitted by
electronic transmission), each of which will state the name of the Stockholder or proxy voting and such other information as may be required under the procedure established for the meeting.
2.8. ACTION AT MEETING.
2.8.1. REQUISITE VOTE. At each meeting of Stockholders where a quorum is present, the holders of a majority of the capital stock present or represented by proxy and entitled to vote thereon will decide any matter to be voted upon by the Stockholders at such meeting, except when a different vote is required by express provision of law, the Certificate of Incorporation or these Bylaws.
2.8.2. BUSINESS TO BE CONDUCTED. At any Annual Meeting, only
such business may be conducted as may be brought before the Annual Meeting:
(i) by or at the direction of the Board of Directors; or (ii) by any
Stockholder who complies with the procedures set forth in this Section 2.8.
2.8.3. BUSINESS TO BE BROUGHT BY STOCKHOLDERS. For business
properly to be brought before an Annual Meeting by a Stockholder, the
Stockholder must have given timely notice thereof in proper written form to
the Secretary. To be timely, a Stockholder's notice must be delivered to or
mailed and received at the executive office of the Corporation not less than
thirty days nor more than sixty days prior to the Annual Meeting; provided,
however, that in the event that less than forty days' notice or prior public
disclosure of the date of the Annual Meeting is given or made to
Stockholders, notice by the Stockholder to be timely must be received not
later than the close of business on the tenth day following the day on which
such notice of the date of the Annual Meeting was mailed or such public
disclosure was made. To be in proper written form, a Stockholder's notice to
the Secretary must set forth in writing as to each matter the Stockholder
proposes to bring before the Annual Meeting: (i) a brief description of the
business desired to be brought before the Annual Meeting and the reason for
conducting such business at the Annual Meeting; (ii) the name and address,
as they appear on the Corporation's books, of the Stockholder proposing such
business; (iii) the class and number of shares of stock of the Corporation
which are beneficially owned by the Stockholder; and (iv) any material
interest of the Stockholder in such business. Notwithstanding anything in
these Bylaws to the contrary, no business will be conducted at an Annual
Meeting except in accordance with the procedures set forth in this Section
2.8. The chairman of an Annual Meeting will, if the facts warrant, determine
and declare to the Annual Meeting that business was not properly brought
before the Annual Meeting in accordance with the provisions of this Section
2.8 and, if he should so determine, he will so declare to the Annual Meeting
and any such business not properly brought before the Annual Meeting will
not be transacted.
2.9. INSPECTORS. For each election of directors by the Stockholders and in any other case in which it is advisable, in the opinion of the Board of Directors, that the voting upon any matter will be conducted by inspectors of election, the Board of Directors will appoint an inspector or inspectors of election. If, for any such election of directors or the voting upon any such other matter, any inspector appointed by the Board of Directors is unwilling or unable to serve, or if the Board of Directors fails to appoint inspectors, the chairman of the meeting will appoint the necessary inspector or inspectors. The inspectors so appointed, before entering upon the discharge of their duties, will be sworn faithfully to execute the duties of inspectors with strict impartiality, and according to the best of their ability, and the oath so taken will be subscribed by them. Such inspectors will determine the number of shares of capital stock of the Corporation outstanding and the voting power of each of the shares represented at the meeting, the existence of a quorum and the validity and effect of proxies, and will receive votes, ballots or consents, hear and determine all challenges and questions arising in connection with the right to vote, count and tabulate all votes, ballots or consents, determine the result and do such acts as are proper to conduct the election or vote with fairness to all Stockholders. On request of the chairman of the meeting or any Stockholder entitled to vote thereat, the inspectors will make a report in writing of any challenge, question or matter determined by them and will execute a certificate of any fact found by them. No
director or candidate for the office of director will act as an inspector of election of directors. Inspectors need not be Stockholders.
2.10. ACTION WITHOUT MEETING. Any action required or permitted to be taken at any Annual Meeting or special meeting of Stockholders of the Corporation may be taken without a meeting, without prior notice and without a vote, if: (i) a consent or consents in writing, setting forth the action so taken, are signed by the holders of outstanding stock entitled to vote having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote on such action were present and voted; and (ii) such consents are delivered to the Corporation by delivery to its registered office in Delaware, its executive office or an officer or agent of the Corporation having custody of the book in which proceedings of meetings of Stockholders are recorded. Delivery made to the Corporation's registered office will be made by hand or by certified or registered mail, return receipt requested. Every written consent must bear the date of signature of each Stockholder who signs the consent. No written consent will be effective to take the corporate action referred to therein unless, within sixty days of the date the earliest dated consent is delivered to the Corporation as set forth above, a written consent or consents signed by a sufficient number of holders to take such action are delivered to the Corporation in the manner prescribed in this Section. Prompt notice of the corporate action taken without a meeting by less than unanimous written consent will be given to those Stockholders who have not consented in writing.
ARTICLE 3 - DIRECTORS
3.1. GENERAL POWERS. The business and affairs of the Corporation will be managed by or under the direction of the Board of Directors, which may, except as otherwise provided by law, the Certificate of Incorporation or these Bylaws, exercise all of the powers and do all such acts and things as may be exercised or done by the Corporation, including the unqualified power:
3.1.1. to declare dividends from time to time in accordance with law;
3.1.2. to purchase or otherwise acquire any property, rights or privileges on such terms as it determines;
3.1.3. to authorize the creation, making and issuance, in such form as it may determine, of written obligations of every kind, negotiable or non-negotiable, secured or unsecured, and to do all things necessary in connection therewith;
3.1.4. to remove any officer of the Corporation with or without cause, and from time to time to devolve the powers and duties of any officer upon any other person for the time being;
3.1.5. to confer upon any officer of the Corporation the power to appoint, remove and suspend subordinate officers, employees and agents;
3.1.6. to adopt from time to time such stock option, stock purchase, bonus or other compensation plans for directors, officers, employees and agents of the Corporation and its subsidiaries as it may determine;
3.1.7. to adopt from time to time such insurance, retirement and other benefit plans for directors, officers, employees and agents of the Corporation and its subsidiaries as it may determine; and
3.1.8. to adopt from time to time regulations, not inconsistent with these Bylaws, for the management of the Corporation's business and affairs.
In the event of a vacancy on the Board of Directors, the remaining directors, except as otherwise provided by law, may exercise the powers of the full Board of Directors until the vacancy is filled.
3.2. NUMBER; ELECTION AND QUALIFICATION. Subject to Section 3.3, the number of directors which constitute the whole Board of Directors will be no greater than nine and not less than three. The number of directors may be decreased at any time and from time to time either by the Stockholders or by a majority of the directors then in office, but only to eliminate vacancies existing by reason of the death, resignation, removal or expiration of the term of one or more directors. Except as otherwise set forth in these Bylaws, the directors will be elected at the Annual Meeting of Stockholders by such Stockholders as have the right to vote at such election as set forth in these Bylaws. At each meeting of Stockholders for the election of directors at which a quorum is present, the persons receiving a plurality of the votes cast will be elected directors. Nominations for the election of directors may be made by the Board of Directors or a committee appointed by the Board of Directors, or by any Stockholder entitled to vote generally in the election of directors who complies with the procedures set forth in this Section 3.2. Directors must be at least 21 years of age. Directors need not be Stockholders of the Corporation. All nominations by Stockholders must be made pursuant to timely notice in proper written form to the Secretary. To be timely, a Stockholder's notice must be delivered to or mailed and received at the executive office of the Corporation not less than thirty days nor more than sixty days prior to the meeting; provided, however, that in the event that less than forty days' notice or prior public disclosure of the date of the meeting is given or made to Stockholders, notice by the Stockholder to be timely must be so received not later than the close of business on the tenth day following the day on which such notice of the date of the meeting was mailed or such public disclosure was made. To be in proper written form, such Stockholder's notice must set forth in writing: (i) as to each person whom the Stockholder proposes to nominate for election or reelection as a director, all information relating to such person that is required to be disclosed in solicitations of proxies for election of directors, or is otherwise required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934 (the "EXCHANGE ACT"), including such person's written consent to being a nominee and to serving as a director if elected (irrespective of whether the Exchange Act is applicable to the Corporation); and (ii) as to the Stockholder giving the notice, the (a) name and address, as they appear on the Corporation's books, of such Stockholder and (b) the class and number of shares of stock of the Corporation which are beneficially owned by such Stockholder. At the request of the Board of Directors, any person nominated by the Board of Directors for election as a director will furnish to the Secretary the information required to be set forth in a Stockholder's notice of nomination which pertains to the nominee.
3.3. ENLARGEMENT OF THE BOARD OF DIRECTORS. The number of directors may be increased at any time and from time to time by the Stockholders or by a majority of the directors then in office.
3.4. TENURE. Directors will be divided into three class, i.e., Class A, Class B and Class C. Each director will serve for a three year term, provided that the Board of Directors will set the initial term of Class A directors at one year and Class B directors at two years so that no class of directors will have terms that expire during the same year. Each director holds office for his term and until his successor is elected and qualified, or until his earlier death, resignation or removal.
3.5. VACANCIES. Unless and until filled by the Stockholders at the Annual Meeting or a special meeting of the Stockholders called for that purpose, any vacancy in the Board of Directors, however occurring, including a vacancy resulting from an enlargement of the Board of Directors, may be filled by vote of a majority of the directors then in office, although less than a quorum, or by a sole remaining director. A director elected to fill a vacancy will be elected for the unexpired term of his predecessor in office. A director chosen to fill a position resulting from an increase in the number of directors will hold office until the expiration of his term and until his successor is elected and qualified, or until his earlier death, resignation or removal.
3.6. RESIGNATION. Any director may resign at any time upon notice given in writing or electronic transmission to the Corporation at its executive office or to the Chairman, Chief Executive Officer or Secretary. Such resignation is effective upon receipt unless it is specified to be effective at some other time or upon the happening of some other event. Unless otherwise specified therein, the acceptance of such resignation will not be necessary to make it effective.
3.7. PLACE OF MEETINGS. Meetings of the Board of Directors will be held at the Corporation's executive office or at such other places within or without the State of Delaware as the Board of Directors may from time to time determine or as may be specified or fixed in the notice or waiver of notice of any such meeting.
3.8. REGULAR MEETINGS. Regular meetings of the Board of Directors may be held without notice at such date and time as may be determined by the Board of Directors; provided that any director who is absent when such determination is made must be duly given notice of the determination. A regular meeting of the Board of Directors may be held without notice immediately before or after and at the same place as the Annual Meeting of Stockholders.
3.9. SPECIAL MEETINGS. Special meetings of the Board of Directors may be held at any date and time designated in a call by the Chairman, the Chief Executive Officer, two or more directors or by one director in the event that there is only a single director in office.
3.10. NOTICE OF SPECIAL MEETINGS. Notice of any special meeting of directors must be given to each director by the Secretary or by the officer or one of the directors calling the meeting. Notice of each special meeting of the Board of Directors, stating the time and place thereof, must be either: (i) mailed to each director not less than three days prior to the meeting, addressed to such director at his or her residence or usual place of business; or (ii) sent to him by facsimile, telex, cable or telegram or other electronic transmission so addressed, or given personally or by telephone, on twenty four hours notice. A notice or waiver of notice of a meeting of the Board of Directors need not specify the purposes of the meeting.
3.11. MEETINGS BY TELEPHONE CONFERENCE CALLS. Directors may participate in meetings of the Board of Directors by means of a conference telephone or other communications equipment by means of which all persons participating in the meeting can hear each other. Participation by such means constitutes presence in person at such meetings.
3.12. QUORUM. A majority of the total number of the whole Board of Directors constitutes a quorum at all meetings of the Board of Directors. In the event one or more of the directors is disqualified to vote at any meeting, then the required quorum will be reduced by one for each such director so disqualified; provided, however, that in no case will less than one-third of the total number of the whole Board of Directors constitute a quorum. In the absence of a quorum at any such meeting, a majority of the directors present may adjourn the meeting from time to time, without further notice other than announcement at the meeting, until a quorum is present.
3.13. ACTION AT MEETING. At any meeting of the Board of Directors at which a quorum is present, the vote of a majority of the directors present is sufficient to take any action, unless a different vote is required or permitted by law, the Certificate of Incorporation or these Bylaws.
3.14. ACTION BY CONSENT. Any action required or permitted to be taken at any meeting of the Board of Directors may be taken without a meeting if all directors then in office consent in writing or by electronic transmission to the action and the written consents or electronic transmissions are filed with the minutes of the proceedings of the Board of Directors.
3.15. REMOVAL. Subject to the rights of holders of Preferred Stock to elect directors under circumstances specified in a resolution of the Board of Directors adopted pursuant to the provisions of the Certificate of Incorporation and these Bylaws establishing such series, a director may be removed from office, but only for cause, by the affirmative vote of the holders of more than fifty percent of the voting power of the Voting Stock (as defined below), voting together as a single class. "VOTING STOCK" means the Common Stock and any Preferred Stock entitled to vote generally in the election of directors of the Corporation.
3.16. COMPENSATION OF DIRECTORS. The Board of Directors may provide for the payment to any of the directors of a specified amount for services as director or member of a committee of the Board of Directors, or of a specified amount for attendance at each regular or special Board of Directors meeting or committee meeting, or of both. All directors will be reimbursed for ordinary and necessary expenses of attendance at any such meeting. No such payment precludes any director from serving the Corporation or any of its subsidiary corporations in any other capacity and receiving compensation for such services.
ARTICLE 4 - COMMITTEES OF THE BOARD OF DIRECTORS
4.1. APPOINTMENT AND POWERS OF EXECUTIVE COMMITTEE. The Board of Directors may, by affirmative vote of a majority of the directors, establish an Executive Committee with such members as it chooses. Any Executive Committee designated under this Section 4.1 may exercise the power and authority of the Board of Directors to declare dividends, to authorize the issuance of stock or to adopt a certificate of ownership and merger pursuant to Section 253 of the Delaware General Corporation Law if the resolution that designates the committee or a supplemental resolution of the Board of Directors so provides. Except as provided by Delaware law, during the interval between the meetings of the Board of Directors, the Executive Committee will possess and may exercise all the powers of the Board of Directors in the management and direction of all the business and affairs of the Corporation (except the matters hereinafter assigned to any other committee of the Board of Directors), in such manner as the Executive Committee deems in the best interests of the Corporation in all cases in which specific directions have not been given by the Board of Directors. The Executive Committee may determine its manner of acting and fix the time and place of its meetings, unless the Board of Directors otherwise provides. Either the Chairman or any member of the Executive Committee may call the meetings of the Executive Committee.
4.2. APPOINTMENT AND POWERS OF AUDIT COMMITTEE. The Board of Directors may, by resolution adopted by the affirmative vote of a majority of the directors, designate an Audit Committee of the Board of Directors, which will consist of such number of members as the Board of Directors determines. The Audit Committee will: (i) make recommendations to the Board of Directors as to the independent accountants to be appointed by the Board of Directors; (ii) review with the independent accountants the scope of their examinations; (iii) receive the reports of the independent accountants and meet with representatives of such accountants for the purpose of reviewing and considering questions relating to their examination and such reports; (iv) review, either directly or through the independent accountants, the internal accounting and auditing procedures of the Corporation; (v) review related party transactions; and (vi) perform such other functions as may be assigned to it from time to time by the Board of Directors. The Audit Committee may determine its manner of acting and fix the time and place of its meetings, unless the Board of Directors otherwise provides. A majority of the members of the Audit Committee constitutes a quorum for the transaction of business by the committee and the act of a majority of the members of the committee present at a meeting at which a quorum is present is the act of the committee.
4.3. APPOINTMENT AND POWERS OF NOMINATING COMMITTEE. The Board of Directors may establish, by resolution adopted by the affirmative vote of a majority of the directors, a Nominating
Committee for purposes of selecting nominees to be recommended by the Board of Directors for election as directors. Such committee will consist of such number of directors as the Board of Directors may determine.
4.4. COMPENSATION COMMITTEE; OTHER COMMITTEES. The Board of Directors may, by resolution adopted by the affirmative vote of a majority of the directors, designate members of the Board of Directors to constitute a Compensation Committee and such other committees of the Board of Directors as the Board of Directors may determine.
4.5. POWERS OF SUCH COMMITTEES. Such committees will in each case consist of such number of directors as the Board of Directors may determine, and will have and may exercise, to the extent permitted by law, such powers as the Board of Directors may delegate to them in the respective resolutions appointing them. Each such committee may determine its manner of acting and fix the time and place of its meetings, unless the Board of Directors or these Bylaws otherwise provide. Unless the Board of Directors or these Bylaws otherwise provide, a majority of the members of any such committee constitutes a quorum for the transaction of business by the committee and the act of a majority of the members of such committee present at a meeting at which a quorum is present is the act of the committee.
4.6. ACTION BY CONSENT; PARTICIPATION BY TELEPHONE OR SIMILAR EQUIPMENT. Unless the Board of Directors otherwise provides, any action required or permitted to be taken by any committee may be taken without a meeting if all members of the committee consent in writing to the adoption of a resolution authorizing the action. The resolution and the written consents thereto by the members of the committee must be filed with the minutes of the proceedings of the committee. Unless the Board of Directors otherwise provides, any one or more members of any such committee may participate in any meeting of the committee by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other. Participation by such means constitutes presence in person at a meeting of the committee.
4.7. RESIGNATIONS; REMOVALS. Any member of any committee may resign at any time by giving notice to the Corporation; provided, however, that notice to the Board of Directors, the Chairman, the Chief Executive Officer, the chairman of such committee or the Secretary will be deemed to constitute notice to the Corporation. Such resignation will take effect upon receipt of such notice or at any later time specified therein and, unless otherwise specified therein, acceptance of such resignation will not be necessary to make it effective. Any member of any such committee may be removed at any time, either with or without cause, by the affirmative vote of a majority of the directors at any meeting of the Board of Directors called for that purpose. Any vacancies on any committee of the Board of Directors will be filled in the manner set forth above in respect of the appointment of such committee.
ARTICLE 5 - OFFICERS
5.1. ENUMERATION. The Corporation will have such officers as may be necessary or desirable for the business of the Corporation. The officers of the Corporation will consist of a Chief Executive Officer, president ("PRESIDENT"), treasurer ("TREASURER"), Secretary and such other officers with such other titles as the Board of Directors determines from time to time, including a Chairman, vice-chairman of the Board of Directors ("VICE-CHAIRMAN OF THE BOARD") and one or more vice presidents ("VICE PRESIDENT"), assistant treasurers ("ASSISTANT TREASURER") and assistant secretaries ("ASSISTANT SECRETARY").
5.2. ELECTION. The Chief Executive Officer, President, Treasurer and Secretary will be elected annually by the Board of Directors at its first meeting following every Annual Meeting of Stockholders. Other officers may be appointed by the Board of Directors at such meeting or at any other meeting. The failure to elect an officer will not affect the existence of the Corporation.
5.3. QUALIFICATION. No officer need be a Stockholder. Any two or more offices may be held by the same individual.
5.4. TENURE. Except as otherwise provided by law, by the Certificate of Incorporation or by these Bylaws, each officer will hold office until his successor is elected and qualified, unless a different term is specified in the vote choosing or appointing him, or until his earlier death, resignation or removal.
5.5. RESIGNATION AND REMOVAL. Any officer may resign at any time by delivering his written resignation to the Corporation at its executive office or to the Chief Executive Officer or Secretary. Such resignation is effective upon receipt unless it is specified to be effective at some other time or upon the happening of some other event. Unless otherwise specified therein, the acceptance of such resignation will not be necessary to make it effective. Any officer of the Corporation may be removed at any time, with or without cause, by the Chief Executive Officer or by vote of a majority of the entire number of directors then in office. Except as the Board of Directors may otherwise determine, no officer who resigns or is removed will have any right to any compensation as an officer for any period following his resignation or removal, or any right to damages on account of such removal, whether his compensation be by the month or by the year or otherwise, but any such resignation or removal is without prejudice to the contract rights, if any, of the individual so resigning or removed.
5.6. VACANCIES. Any vacancy among the officers, whether caused by death, resignation, removal or any other cause, will be filled in the manner prescribed for election or appointment to such office. The Board of Directors may, in its discretion, leave unfilled for any period as it may determine any offices other than President, Treasurer and Secretary.
5.7. CHAIRMAN OF THE BOARD AND VICE-CHAIRMAN OF THE BOARD. The Board of Directors will appoint a Chairman and may appoint a Vice-Chairman of the Board. The Chairman will preside over all meetings of the Board of Directors and at all meetings of the Stockholders and will perform such other duties and possess such other powers as are assigned to him by these Bylaws or by the Board of Directors from time to time. If the Board of Directors appoints a Vice-Chairman of the Board, he will, in the absence or disability of the Chairman, perform the duties and exercise the powers of the Chairman and will perform such other duties and possess such other powers as may from time to time be vested in him by the Board of Directors.
5.8. CHIEF EXECUTIVE OFFICER. The Chief Executive Officer is the senior-most executive officer of the Corporation and has the powers and duties incident to that position. Subject to the powers and direction of the Board of Directors, the Chief Executive Officer is in charge of the entire business and affairs of the Corporation, and is the Corporation's chief policy making officer. The Chief Executive Officer will have such other powers and will perform such other duties as may be prescribed by these Bylaws or by the Board of Directors from time to time. Subject to the provisions of these Bylaws and to the direction of the Board of Directors, he will perform all duties and have all powers which are commonly incident to the office of chief executive officer. He will have power to sign all stock certificates, contracts and other instruments of the Corporation which are authorized and will have general supervision and direction of all of the other officers, employees and agents of the Corporation.
5.9. PRESIDENT. The President will, subject to the direction of the Board of Directors and the Chief Executive Officer, supervise the daily operations of the business of the Corporation, and will report to the Chief Executive Officer. Unless the Board of Directors has appointed a Chief Executive Officer, the President will be the Chief Executive Officer. Subject to the provisions of these Bylaws and to the direction of the Chief Executive Officer or the Board of Directors, the President will perform all duties and have all powers which are commonly incident to the office of president or which are delegated to him by the Chief Executive Officer or the Board of Directors.
5.10. VICE PRESIDENTS. Any Vice President will perform such duties and possess such powers as the Board of Directors, the Chief Executive Officer or the President may from time to time prescribe. In the event of the absence, inability or refusal to act of the President, the Vice President (or if there is more than one, the Vice Presidents in the order determined by the Board of Directors) will perform the duties of the President and when so performing will have all the powers and be subject to all the restrictions upon the President. The Board of Directors may assign to any Vice President the title of "Executive Vice President", "Senior Vice President" or any other title selected by the Board of Directors.
5.11. SECRETARY AND ASSISTANT SECRETARIES. The Secretary will perform such duties and have such powers as the Board of Directors, the Chief Executive Officer or the President may from time to time prescribe. In addition, the Secretary will perform such duties and have such powers as are incident to the office of secretary of a corporation, including the duty and power to give notices of all meetings of the Stockholders and special meetings of the Board of Directors, to attend all meetings of the Stockholders and the Board of Directors and keep a record of the proceedings, to maintain a stock ledger and prepare lists of Stockholders and their addresses as required by these Bylaws or applicable law, to be custodian of corporate records and the corporate seal and to affix and attest to the same on documents. Any Assistant Secretary will perform such duties and possess such powers as the Board of Directors, the Chief Executive Officer, the President or the Secretary may from time to time prescribe. In the event of the absence, inability or refusal to act of the Secretary, the Assistant Secretary (or if there is more than one, the Assistant Secretaries in the order determined by the Board of Directors) will perform the duties of the Secretary and when so performing will have all the power of and be subject to all the restrictions upon the Secretary. In the absence of the Secretary or any Assistant Secretary at any meeting of Stockholders or directors, the person presiding at the meeting will designate a temporary secretary to keep a record of the meeting.
5.12. TREASURER AND ASSISTANT TREASURERS. The Treasurer will perform such duties and have such powers as may from time to time be assigned to him by the Board of Directors, the Chief Executive Officer or the President. In addition, the Treasurer will perform such duties and have such powers as are incident to the office of treasurer of a corporation, including the duty and power to keep and be responsible for all funds and securities of the Corporation, to deposit funds of the Corporation in depositories selected in accordance with these Bylaws, to disburse such funds as ordered by the Board of Directors or Chief Executive Officer or President, to make proper accounts of such funds and to render as required by the Board of Directors, Chief Executive Officer or President statements of all such transactions and of the financial condition of the Corporation. The Assistant Treasurer will perform such duties and possess such powers as the Board of Directors, the Chief Executive Officer, the President or the Treasurer may from time to time prescribe. In the event of the absence, inability or refusal to act of the Treasurer, the Assistant Treasurer (or if there is more than one, the Assistant Treasurers in the order determined by the Board of Directors) will perform the duties of the Treasurer and when so performing will have all the powers of and be subject to all the restrictions upon the Treasurer.
5.13. SALARIES. Officers of the Corporation will be entitled to such salaries, compensation or reimbursement as may be fixed or allowed from time to time by the Board of Directors or the Compensation Committee.
5.14. DELEGATION OF AUTHORITY. The Chief Executive Officer or the Board of Directors may from time to time delegate the powers or duties of any officer to any other officers or agents, notwithstanding any provision hereof.
5.15. BONDS OF OFFICERS. If required by the Chief Executive Officer or the Board of Directors, any officer of the Corporation will give a bond for the faithful discharge of his or her duties in such amount and with such surety or sureties as the Board of Directors or Chief Executive Officer may require.
ARTICLE 6 - CAPITAL STOCK
6.1. ISSUANCE OF STOCK. Unless otherwise voted by the Stockholders and subject to the provisions of the Certificate of Incorporation, the whole or any part of any unissued balance of the authorized capital stock of the Corporation or the whole or any part of any unissued balance of the authorized capital stock of the Corporation held in its treasury may be issued, sold, transferred or otherwise disposed of by vote of the Board of Directors in such manner, for such consideration and on such terms as the Board of Directors may determine.
6.2. CERTIFICATES OF STOCK. Every Stockholder will be entitled to have a certificate, in such form as may be prescribed by law and by the Board of Directors, certifying the number and class of shares of stock owned by him in the Corporation. Each such certificate will be signed by, or in the name of the Corporation by, the Chairman, the Vice-Chairman of the Board, if any, or the Chief Executive Officer, the President or a Vice President, and by the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary. Any or all of the signatures on the certificate may be by facsimile. Each certificate for shares of stock which are subject to any restriction on transfer pursuant to the Certificate of Incorporation, these Bylaws, applicable securities laws or any agreement among any number of Stockholders or among Stockholders and the Corporation will have conspicuously noted on the face or back of the certificate either the full text of the restriction or a statement of the existence of the restriction.
6.3. STOCK LIST. A complete list of Stockholders entitled to vote at any meeting of Stockholders, arranged in alphabetical order for each class of stock and showing the address of each such Stockholder and the number of shares of the Corporation which are registered in such Stockholder's name, will be maintained by the Corporation and open to the examination of any such Stockholder, for any purpose germane to a Stockholder meeting, during ordinary business hours for a period of at least ten days prior to the meeting, either at a place within the city where the meeting is to be held, which place will be specified in the notice of the meeting, or if not so specified, at the place where the meeting is to be held. The stock list will also be kept at the place of the meeting during the whole time thereof and will be open to the examination of any such Stockholder who is present. This list will presumptively determine the identity of the Stockholders entitled to vote at the meeting and the number of shares held by each of them.
6.4. TRANSFERS. Except as otherwise established by rules and regulations adopted by the Board of Directors, and subject to applicable law or other restrictions on transfers, shares of stock may be transferred on the books of the Corporation by the surrender to the Corporation or its transfer agent of the certificate representing such shares properly endorsed or accompanied by a written assignment or power of attorney properly executed, and with such proof of authority or the authenticity of signatures as the Corporation or its transfer agent may reasonably require. Except as may be otherwise required by law, by the Certificate of Incorporation or by these Bylaws, the Corporation will be entitled to treat the record holder of stock as shown on its books as the owner of such stock for all purposes, including the payment of dividends and the right to vote with respect to such stock, regardless of any transfer, pledge or other disposition of such stock until the shares have been transferred on the books of the Corporation in accordance with the requirements of these Bylaws.
6.5. LOST, STOLEN OR DESTROYED CERTIFICATES. The Corporation may issue a new certificate of stock in place of any previously issued certificate alleged to have been lost, stolen or destroyed, upon such terms and conditions as the Board of Directors may prescribe, including the presentation of reasonable evidence of such loss, theft or destruction and the giving of such bond as the Board of Directors may require sufficient to indemnify the Corporation, any transfer agent or registrar against any claim that may be made against any or all of them on account of the alleged loss, theft or destruction of any such certificate or the issuance of any such new certificate.
6.6. RECORD DATE.
6.6.1. FIXING OF RECORD DATE. The Board of Directors may fix in advance a date as a record date for the determination of the Stockholders entitled to notice of or to vote at any meeting of Stockholders, or entitled to receive payment of any dividend or other distribution or allotment of any rights or to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action. Such record date may not be more than sixty nor less than ten days before the date of such meeting, nor more than sixty days prior to any other action to which such record date relates. If no record date is fixed by the Board of Directors, the record date for determining Stockholders entitled to notice of or to vote at a meeting of Stockholders will be at the close of business on the day before the day on which notice is given or, if notice is waived, at the close of business on the day before the day on which the meeting is held and, for determining Stockholders entitled to receive payment of any dividend or other distribution or allotment of rights or to exercise any rights of change, conversion or exchange of stock or for any other purpose, the record date will be at the close of business on the day on which the Board of Directors adopts a resolution relating thereto.
6.6.2. STOCKHOLDER CONSENTS. In order that the Corporation may determine the Stockholders entitled to consent to a corporate action in writing without a meeting, the Board of Directors may fix a record date, which may not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which record date may be not more than ten days after the date upon which the resolution fixing the record date is adopted. Any Stockholder of record seeking to have the Stockholders authorize or take a corporate action by written consent will, by written notice to the Secretary, request the Board of Directors to fix a record date. The Board of Directors will promptly, but in all events within ten days after the date on which such a request is received, adopt a resolution fixing the record date. If no record date has been fixed by the Board of Directors and no prior action by the Board of Directors is required by the Delaware General Corporation Law, the record date will be the first date on which a signed written consent setting forth the action taken or proposed to be taken is delivered to the Corporation in the manner prescribed by Section 2.10. If no record date has been fixed by the Board of Directors and prior action by the Board of Directors is required by the Delaware General Corporation Law with respect to the proposed action by written consent of the Stockholders, the record date for determining Stockholders entitled to consent to corporate action in writing will be at the close of business on the day on which the Board of Directors adopts the resolution taking such prior action.
6.6.3. ADJOURNED MEETINGS. A determination of Stockholders of record entitled to notice of or to vote at a meeting of Stockholders will apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting.
6.7. REGULATIONS. The issue, transfer, conversion and registration of certificates of stock will be governed by such other regulations as the Board of Directors may establish.
ARTICLE 7 - CONTRACTS, CHECKS, LOANS, DEPOSITS, ETC.
7.1. CONTRACTS. The Board of Directors or Chief Executive Officer or President may authorize any officer or officers, agent or agents, in the name and on behalf of the Corporation, to enter into any contract or to execute and deliver any instrument, which authorization may be general or confined to specific instances; and, unless so authorized by the Board of Directors or the Chief Executive Officer or the President, no officer, agent or employee will have any power or authority to bind the Corporation by any contract or engagement or to pledge its credit or to render it liable pecuniary for any purpose or for any amount.
7.2. CHECKS, ETC. All checks, drafts, bills of exchange or other orders for the payment of money out of the funds of the Corporation, and all notes or other evidences of indebtedness of the
Corporation, will be signed in the name and on behalf of the Corporation in such manner as may from time to time be authorized by the Board of Directors, which authorization may be general or confined to specific instances.
7.3. LOANS. No loan will be contracted on behalf of the Corporation, and no negotiable paper will be issued in its name, unless authorized by the Board of Directors, which authorization may be general or confined to specific instances, and bonds, debentures, notes and other obligations or evidences of indebtedness of the Corporation issued for such loans will be made, executed and delivered as the Board of Directors may authorize.
7.4. DEPOSITS. All funds of the Corporation not otherwise employed will be deposited from time to time to the credit of the Corporation in such banks, trust companies or other depositors as may be selected by or in the manner designated by the Board of Directors. The Board of Directors or its designees may make such special rules and regulations with respect to such bank accounts, not inconsistent with the provisions of the Certificate of Incorporation or these Bylaws, as they may deem advisable.
ARTICLE 8 - NOTICES
8.1. NOTICES. Except as otherwise specifically provided herein or required by law, all notices required to be given to any Stockholder, director, officer, employee or agent must be in writing and may in every instance be effectively given by hand delivery to the recipient thereof, by depositing such notice in the mails, postage paid, or with a recognized overnight delivery service or by sending such notice by prepaid telegram, mailgram or by facsimile transmission or other form of electronic transmission such as e-mail. Any such notice must be addressed to such Stockholder, director, officer, employee or agent at such person's last known address as the same appears on the books of the Corporation. The time when such notice is received, if hand delivered, or dispatched, if delivered through the mails or by overnight delivery service, or by telegram, mailgram or facsimile or other form of electronic transmission, is the time of the giving of the notice.
8.2. WAIVER OF NOTICE. Whenever any notice whatsoever is required to be given by law, by the Certificate of Incorporation or by these Bylaws, a waiver of such notice either in writing signed by the person entitled to such notice or the duly authorized attorney of such person, or by telegraph, cable or any other available method, whether before, at or after the time stated in such waiver, will be deemed equivalent to such notice. The appearance of such person at a meeting in person or by proxy constitutes a waiver of lack of notice or defective notice of such meeting, except when the person or proxy at the beginning of the meeting objects to holding the meeting or transacting any business at the meeting because the meeting is not lawfully called or convened. Attendance of a person or proxy at any special meeting of the Stockholders constitutes a waiver of objections to consideration of a particular matter at the meeting that is not within the purpose described in the meeting notice unless such person or proxy objects to considering the matter when it is presented. Neither the business nor the purpose of any meeting need be specified in such a waiver.
ARTICLE 9 - GENERAL PROVISIONS
9.1. FISCAL YEAR. The fiscal year of the Corporation will be as fixed by the Board of Directors.
9.2. CORPORATE SEAL. The Board of Directors may, but is not required to, provide a suitable seal, containing the name of the Corporation, which seal will be in the charge of the Secretary. If and when so directed by the Board of Directors or a committee thereof, duplicates of the seal may be kept and used by the Treasurer or by an Assistant Secretary or Assistant Treasurer.
9.3. VOTING OF SECURITIES OF OTHER CORPORATIONS. Except as the Board of Directors may otherwise designate, the Chief Executive Officer, the President or the Treasurer may waive notice of, and act as, or appoint any person or persons to act as proxy or attorney-in-fact for the Corporation (with or without power of substitution) with the power to vote and otherwise act on behalf of the Corporation at any meeting of stockholders of or with respect to any action of stockholders of any other corporation or organization in which the Corporation may hold stock or equity interests and otherwise to exercise any and all rights and powers which the Corporation may possess by reason of its ownership of stock or equity interests in such other corporation or organization.
9.4. EVIDENCE OF AUTHORITY. A certificate by the Secretary or an Assistant Secretary or a temporary secretary as to any action taken by the Stockholders, the directors, a committee or any officer or representative of the Corporation is, as to all persons who rely on the certificate in good faith, conclusive evidence of such action.
9.5. CERTIFICATE OF INCORPORATION. All references in these Bylaws to the Certificate of Incorporation refer to the certificate of incorporation of the Corporation as amended and in effect from time to time.
9.6. TRANSACTIONS WITH INTERESTED PARTIES. No contract or transaction between the Corporation and one or more of its directors, officers or Stockholders or between the Corporation and any other person (as used herein, "PERSON" means any other natural person, corporation, limited partnership, general partnership, joint venture, association, company, trust, joint stock company, bank, trust company, land trust, vehicle trust, business trust, real estate investment trust, estate, limited liability company, limited liability partnership, limited liability limited partnership, employee benefit plan or other organization irrespective of whether it is a legal entity, and any governmental authority) in which one or more of its directors, officers or Stockholders are directors, officers or shareholders, or have a financial interest, will be void or voidable solely for this reason, or solely because the director or officer or Stockholder is present at or participates in the meeting of the Board of Directors or a committee of the Board of Directors or the Stockholders which authorizes the contract or transaction, or solely because his vote is counted for such purpose, if: (i) the material facts as to his relationship or interest and as to the contract or transaction are disclosed or are known to the Board of Directors or the committee, and the Board of Directors or committee in good faith authorizes the contract or transaction by the affirmative votes of a majority of the disinterested directors, even though the disinterested directors are less than a quorum; or (ii) the material facts as to his relationship or interest and as to the contract or transaction are disclosed or are known to the Stockholders entitled to vote thereon, and the contract or transaction is specifically approved in good faith by vote of such Stockholders; or (iii) the contract or transaction is fair as to the Corporation as of the time it is authorized, approved or ratified by the Board of Directors, a committee of the Board of Directors or the Stockholders. Common or interested directors may be counted in determining the presence of a quorum at a meeting of the Board of Directors or of a committee thereof which authorizes the contract or transaction.
9.7. SEVERABILITY. Any determination that any provision in these Bylaws is for any reason inapplicable, illegal or ineffective will not affect or invalidate any other provision of these Bylaws.
9.8. CONSTRUCTION. Unless the context of these Bylaws clearly
requires otherwise: (i) references to the plural include the singular and
vice versa; (ii) references to any person include such person's successors
and assigns but, if applicable, only if such successors and assigns are
permitted by this Agreement; (iii) references to one gender include all
genders; (iv) "including" is not limiting; (v) "or" has the inclusive
meaning represented by the phrase "and/or"; (vi) the words "hereof",
"herein", "hereby", "hereunder" and similar terms in these Bylaws refer to
these Bylaws as a whole and not to any particular provision of these Bylaws;
(vii) Article and Section references are to these Bylaws unless
otherwise specified; (viii) reference to any agreement (including these Bylaws), 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 and, if applicable, the terms hereof; and (ix) general or specific references to any law mean such law as amended, modified, codified or reenacted, in whole or in part, and in effect from time to time.
9.9. FACSIMILE SIGNATURES. In addition to the provisions for use of facsimile signatures elsewhere specifically authorized in these Bylaws, facsimile signatures of any officer or officers of the Corporation may be used whenever and as authorized by the Board of Directors or a committee thereof.
9.10. RELIANCE UPON BOOKS, REPORTS AND RECORDS. Each director, each member of any committee designated by the Board of Directors and each officer of the Corporation will, in the performance of his duties, be fully protected in relying in good faith upon the books of account or other records of the Corporation and upon such information, opinions, reports or statements presented to the Corporation by any of its officers or employees or committees of the Board of Directors so designated, or by any other person as to matters which such director or committee member reasonably believes are within such other person's professional or expert competence and who has been selected with reasonable care by or on behalf of the Corporation.
9.11. TIME PERIODS. In applying any provision of these Bylaws which requires that an act be done or not be done a specified number of days prior to an event or that an act be done during a period of a specified number of days prior to an event, calendar days will be used, the day of the doing of the act will be excluded, and the day of the event will be included.
ARTICLE 10 - AMENDMENTS
10.1. BY THE BOARD OF DIRECTORS. Subject to the rights of the Stockholders set forth in Section 10.2, these Bylaws may be altered, amended or repealed or new bylaws may be adopted by the affirmative vote of a majority of the directors present at any regular or special meeting of the Board of Directors at which a quorum is present, provided that notice of any alteration, amendment or repeal voted by the directors is given within ten days of the vote to all of the Stockholders entitled to vote at any regular or special meeting of the Stockholders.
10.2. BY THE STOCKHOLDERS. These Bylaws may be altered, amended or repealed or new Bylaws may be adopted by the affirmative vote of the holders of a majority of the shares of the capital stock of the Corporation issued and outstanding, present in person or by proxy and entitled to vote at any regular meeting of Stockholders, or at any special meeting of the Stockholders, provided that notice of such alteration, amendment, repeal or adoption of new bylaws has been stated in the notice of any such special meeting.
Exhibit 3.2.b.
AMENDED BYLAWS
OF VICEROY ACQUISITION CORPORATION
Pursuant to the unanimous written consent of the Board of Directors of VICEROY ACQUISITION CORPORATION. (the "Corporation") dated May 24th, 2006, the Bylaws are hereby amended as follows:
ARTICLE 6 of the Corporation's Bylaws is amended by adding new section 6.8 containing the following text:
"SECTION 6.8. TRANSFER OF SECURITIES. The Company will be required to refuse to register any transfer of its securities not made in accordance with the provisions of Rule 144A, Rule 144 (if available) or pursuant to registration under the Securities Act of 1933 or another exemption from registration under the Securities Act of 1933."
Exhibit 4.1
STOCK ESCROW AGREEMENT dated as of July 12, 2006 (the "AGREEMENT"), by and among:
(1) VICEROY ACQUISITION CORPORATION, a company organised under the laws of the state of Delaware, USA (the "COMPANY");
(2) ST ALBANS GLOBAL MANAGEMENT, LIMITED PARTNERSHIP, LLLP, LEE E. MIKLES AS TRUSTEE OF THE LEE E. MIKLES REVOCABLE TRUST DATED MARCH 26, 1996 AND THE LEE E. MIKLES GIFT TRUST DATED OCTOBER 6, 1999, DOUGLAS D. HOMMERT AS TRUSTEE OF THE DOUGLAS D. HOMMERT REVOCABLE TRUST, EDWIN A. LEVY IN HIS INDIVIDUAL CAPACITY, JOE C. LEACH IN HIS INDIVIDUAL CAPACITY, RAS LLC, MARK R. MILLER IN HIS INDIVIDUAL CAPACITY, EDWIN L. WAHL IN HIS INDIVIDUAL CAPACITY, JEFFERY H. CALL IN HIS INDIVIDUAL CAPACITY AND KEN FENTON IN HIS INDIVIDUAL CAPACITY (each a "FOUNDING SHAREHOLDER" and together the "FOUNDING SHAREHOLDERS"); and
(3) CAPITA TRUST COMPANY (JERSEY) LIMITED, a company incorporated in and registered under the laws of Jersey (the "ESCROW AGENT");
WHEREAS, the Founding Shareholders subscribed for, and the Company issued to such Founding Shareholders, in aggregate, 5,625,000 shares of common stock, par value $0.0001 per share, in the capital of the Company (the "SHARES"), such Shares being the "FOUNDING SHARES";
WHEREAS, the Founding Shareholders have agreed to deposit such Founding Shares as are set forth opposite their respective names in Exhibit A attached hereto (collectively the "ESCROW SHARES"), in escrow as hereinafter provided;
WHEREAS, the Company and the Founding Shareholders desire that the Escrow Agent hold the Escrow Shares, in escrow, to be held and disbursed as hereinafter provided.
IT IS AGREED:
(a) is being dissolved or liquidated at any time during the Escrow Period, then the Escrow Shares shall be forfeited and the Escrow Agent shall promptly return the certificates representing the Escrow Shares to the Company or the Company's registrar, upon the Company's order, for cancellation;
(b) having consummated a Qualified Business Combination (as such term is used in the offering circular of the Company relating to the offering of units by the Company (the "OFFERING CIRCULAR")), intends to consummate a merger, amalgamation, share exchange or other similar transaction which results in (or would result in) all of the shareholders of such resulting entity having the right to exchange their Shares for cash, securities or other property, then the Escrow Agent will, upon receipt of a certificate executed by the chairman of the Company, in a form reasonably acceptable to the Escrow Agent, stating that such transaction is then being consummated, release the Escrow Shares to the Founding Shareholders upon consummation of the transaction so that they can similarly participate; or
(c) is repurchasing any of the Escrow Shares in accordance with its bylaws or otherwise for cancellation, then the Escrow Agent will, upon receipt of a certificate stating that such repurchase is being undertaken, executed by the chairman of the Company and in a form reasonably acceptable to the Escrow Agent (the "REPURCHASE NOTICE"), release the Escrow Shares specified in the Repurchase Notice to the Company for repurchase and cancellation.
The Escrow Agent shall have no further duties hereunder in respect of any Escrow Shares which have been disbursed or destroyed in accordance with this Section 3 and shall have no further duties under this Agreement once all Escrow Shares have been disbursed or destroyed in accordance with this Section 3.
accordance with the terms hereof. As used herein, the term "ESCROW SHARES" shall be deemed to include the Non-Cash Dividends distributed thereon, if any.
services of the Escrow Agent hereunder, or the Escrow Shares held by it
hereunder, other than expenses or losses arising from the gross negligence,
fraud, bad faith, willful default or willful misconduct of the Escrow Agent.
Promptly after the receipt by the Escrow Agent of notice of any demand or
claim or the commencement of any action, suit or proceeding, the Escrow
Agent shall notify the other parties hereto in writing. In the event of the
receipt of such notice, the Escrow Agent shall retain the Escrow Shares
pending receipt of instructions from each of the Company and the Founding
Shareholders or receipt of an order of a court having jurisdiction over any
of the parties hereto directing to whom and under what circumstances the
Escrow Shares are to be disbursed and delivered. The provisions of this
Section 5.2 shall survive in the event the Escrow Agent resigns or is
discharged pursuant to Sections 5.5 or 5.6 below.
If to the Company, to:
VICEROY ACQUISITION CORPORATION
8235 Forsyth Boulevard
Suite 400
St. Louis, Missouri 63105
Attn: Paul Novelly, Chairman
If to a Founding Shareholder, to his address set forth in Exhibit A.
and if to the Escrow Agent, to:
Capita Trust Company (Jersey) Limited
PO Box No 378
JERSEY
JE4 0FF
Attn: Paul Horton
A copy of any notice sent hereunder shall be sent to (but shall not constitute notice):
CRT Capital Group LLC
262 Harbor Drive
Stamford
Connecticut
06902
Attn: President
and:
KBC Peel Hunt Ltd
111 Old Broad Street
London
EC2N 1PH
Attn: Adam Hart
The parties may change the persons and addresses to which the notices or other communications are to be sent by giving written notice to any such change in the manner provided herein for giving notice.
right, title interest or claim in or to monies in the Trust Fund (a "CLAIM") and the Escrow Agent and its affiliates hereby waive any Claim against the Trust Fund that it or they may have now or in the future as a result of or arising out of this Agreement and will not seek recourse against the Trust Fund for any reason whatsoever, including in respect of the Company's indemnification obligations set out in this Agreement.
(a) that service upon the Agent shall be deemed valid service upon the Appointer whether or not the process is forwarded to or received by the Appointer;
(b) to inform all other parties to this Agreement, in writing, of any change of such Appointer's Agent or the address of its Agent within 28 days of such change;
(c) that if the Agent ceases to be able to act as process agent or to have an address in England, the Appointer irrevocably agrees to appoint a new process agent in England and to deliver to the other parties to this Agreement within 14 days a copy of a written acceptance of appointment by the new process agent and if the Appointer fails to so appoint a new process agent in accordance with this Section the other parties to this Agreement shall be entitled to appoint such person by giving written notice of the appointment to the relevant Appointer; and
(d) nothing in this Agreement shall effect the right to serve process in any manner permitted by law.
WITNESS the execution of this Agreement as of the date first above written.
VICEROY ACQUISITION CORPORATION
By: /s/ Douglas D. Hommert
---------------------------------
[Director]
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FOUNDING SHAREHOLDERS:
ST ALBANS GLOBAL MANAGEMENT, LIMITED
PARTNERSHIP, LLLP BY SAGM HOLDINGS,
LLC, GENERAL PARTNER
By: /s/ Douglas D. Hommert
---------------------------------
DOUGLAS D HOMMERT
MANAGER
/s/ Lee E. Mikles
--------------------------------------
LEE E MIKLES AS TRUSTEE OF THE
LEE MIKLES REVOCABLE TRUST DATED
MARCH 26, 1996
/s/ Lee E. Mikles
--------------------------------------
LEE E MIKLES AS TRUSTEE OF THE
LEE MIKLES GIFT TRUST DATED
OCTOBER 6, 1999
--------------------------------------
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/s/ Douglas D. Hommert -------------------------------------- DOUGLAS D HOMMERT AS TRUSTEE OF THE DOUGLAS D. HOMMERT REVOCABLE TRUST |
/s/ Edwin A. Levy -------------------------------------- EDWIN A LEVY, IN HIS INDIVDUAL CAPACITY /s/ Lee E. Mikles -------------------------------------- RAS LLC By: /s/ Joe C. Leach -------------------------------------- JOE C. LEACH, IN HIS INDIVIDUAL CAPACITY /s/ M. R. Miller -------------------------------------- MARK R. MILLER, IN HIS INDIVIDUAL CAPACITY /s/ Edwin L. Wahl -------------------------------------- EDWIN L. WAHL, IN HIS INDIVIDUAL CAPACITY /s/ Jeffery H. Call -------------------------------------- JEFFERY H. CALL, IN HIS INDIVIDUAL CAPACITY /s/ Ken Fenton -------------------------------------- KEN FENTON, IN HIS INDIVIDUAL CAPACITY |
CAPITA TRUST COMPANY (JERSEY) LIMITED
By: /s/ Anthony O'Keeffe
----------------------------------
Name: Anthony O'Keeffe
Title: Director
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EXHIBIT A
SHARE
NAME AND ADDRESS OF NUMBER CERTIFICATE DATE OF DATE OF
FOUNDING SHAREHOLDER OF SHARES NUMBER INSIDER LETTER LOCK-IN DEED
------------------------------------------------- ----------- ------------- -------------- --------------
St. Albans Global Management, Limited
Partnership, LLLP of 8235 Forsyth Boulevard,
4th Floor, Clayton, Missouri 63105 2,250,000 C-1 July __,2006 July __,2006
Lee E. Mikles Revocable Trust dated 3.26.96 of
1801 Century Park East #460, Los Angeles,
California 90067 2,000,000 C-2 July __,2006 July __,2006
Lee E. Mikles Gift Trust dated 10.6.99 of 1801
Century Park East #460, Los Angeles, California
90067 100,000 C-3 July __,2006 July __,2006
Edwin A. Levy of 570 Lexington Avenue, 27th
Floor, New York 10022 250,000 C-4 July __,2006 July __,2006
Douglas D. Hommert Revocable Trust of 8235
Forsyth Boulevard, 4th Floor, Clayton, Missouri
63105 250,000 C-5 July __,2006 July __,2006
Joe C. Leach of 1999 Avenue of the Stars, Los
Angeles, California 90067 250,000 C-6 July __,2006
Mark R. Miller of 1801 Century Park East #460,
Los Angeles, California 90067 100,000 C-7 July __,2006
RAS, LLC of 1801 Century Park East #460, Los
Angeles, California 90067 50,000 C-8 July __,2006
Edwin L. Wahl of 8235 Forsyth Boulevard, 4th
Floor, Clayton, Missouri 63105 150,000 July __,2006
-10-
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Jeffery H. Call of 8235 Forsyth Boulevard, 4th Floor, Clayton, Missouri 63105 150,000 July __,2006 Ken Fenton of 8235 Forsyth Boulevard, 4th Floor, Clayton, Missouri 63105 75,000 July __,2006 |
Exhibit 4.2
WARRANT DEED
This Warrant Deed (the "DEED") is made as of July 12, 2006 between Viceroy Acquisition Corporation, a company incorporated under the laws of Delaware, with its registered office at 1209 Orange Street, Corporation Trust Center, Wilmington, Delaware 19801 (the "COMPANY") and Capita IRG (Offshore) Limited, a company incorporated under the laws of Jersey, with its registered office at Victoria Chambers, Liberation Square, 1/3 The Esplanade, St. Helier, Jersey (the "WARRANT AGENT").
WHEREAS, pursuant to an offering circular dated on or around the date hereof (the "OFFERING CIRCULAR") the Company is engaged in an offering of units ("UNITS") each comprised of one share of common stock, par value $0.0001 per share, in the share capital of the Company (the "COMMON SHARES") and one warrant (the "WARRANTS"), each Warrant evidencing the right of the holder thereof to purchase one Common Share for US$6.00, on the terms and subject to the conditions set forth in the Offering Circular and subject to adjustment as described herein; and
WHEREAS the Company desires, for the benefit of the holders from time to time of the Warrants, the Warrant Agent to act on behalf of the Company, and the Warrant Agent is willing to so act, in connection with the issuance, registration, transfer, exchange, redemption and exercise of the Warrants; and
WHEREAS, the Company desires to provide for the form and provisions of the Warrants, the terms upon which they shall be issued and exercised, and the respective rights, limitation of rights, and immunities of the Company, the Warrant Agent, and the holders of the Warrants; and
WHEREAS, all acts and things have been done and performed which are necessary to make the Warrants, when executed on behalf of the Company and countersigned by or on behalf of the Warrant Agent, as provided herein, the valid, binding and legal obligations of the Company, and to authorize the execution and delivery of this Deed.
NOW, THEREFORE, the Company and the Warrant Agent have executed as a Deed the following:
officer of the Company. In the event the person whose facsimile signature has been placed upon any Warrant shall have ceased to serve in the capacity in which such person signed the Warrant before such Warrant is issued, it may be issued with the same effect as if he or she had not ceased to be such at the date of issuance.
3.2.1 commencing on the earlier of (i) the consummation by the Company of a business combination which either by itself or, when combined with all of the Company's previous business combinations, has an aggregate transaction value of at least 50% of the initial amount held in a trust established by the Company pursuant to an agreement with Continental Stock Transfer and Trust Company immediately following the end of the Stabilization Period (as defined in the Offering Circular) (a "QUALIFIED BUSINESS COMBINATION"), and (ii) if one or more business combinations have occurred but a Qualified Business Combination has not occurred, the date that is 12 months from the Admission Date (unless the deadline for consummating a Qualified Business Combination has been extended (the date by which such Qualified Business Combination has to occur following such extension being the "EXTENDED DATE"), in which case the relevant date shall be the Extended Date); and
3.2.2 terminating at 5:00 p.m., New York City time on the earlier to occur of (i) the fourth anniversary of the Admission Date and (ii) the date fixed for redemption of the Warrants as provided in Section 6 of this Deed ("EXPIRATION DATE").
Except with respect to the right to receive the Redemption Price (as defined in Section 6 hereunder), each Warrant not exercised on or before the Expiration Date shall become void, and all rights thereunder and all rights in respect thereof under this Deed shall automatically cease at the close of business on the Expiration Date. The Company in its sole discretion may extend (but not shorten) the Exercise Period.
request an opinion of counsel reasonably satisfactory to the Company that such transfer is to be effected in a transaction meeting the requirements of Regulation S under the Act or is exempt from registration.
7.1 The Company has engaged CRT Capital Group, LLC ("CRT"), on a non-exclusive basis, as its agent for the solicitation of the exercise of the Warrants beginning one year following the Admission Date. The Company will (i) assist CRT with respect to such solicitation, as reasonably requested by CRT, and (ii) at CRT's request, provide CRT, and direct the Company's transfer agent and the Warrant Agent to deliver to CRT, at the Company's cost, lists of the registered holders and, to the extent known, beneficial owners of the Warrants. The Company hereby instructs the Warrant Agent to cooperate with CRT in every respect in connection with CRT's solicitation activities, including, but not limited to, providing to CRT, at the Company's cost, a list of record and beneficial holders of the Warrants. In addition to the conditions set forth in Section 7.2, CRT shall receive payment of the warrant solicitation fee provided in Section 7.4 only where it has provided services to the Company in connection with the exercise of the Warrants and only to the extent CRT has solicited the exercise of the Warrants. In addition to soliciting the exercise of Warrants by a Warrant holder such services may (subject to compliance with applicable laws) also include disseminating information, orally or in writing, to Warrant holders about the Company or the market for the Company's securities, or assisting in the processing of the exercise of Warrants.
7.2 In each instance in which a Warrant is
exercised following the Company's publication of an
announcement of redemption pursuant to Section 6 above, the
Warrant Agent shall promptly give written notice of such
exercise to the Company and CRT ("WARRANT AGENT'S EXERCISE
NOTICE"). Notwithstanding the foregoing and subject to
clause 7.3 below, a fee shall be paid only if, (i) the
Company has requested CRT to solicit the exercise of the
Warrants, (ii) the Warrant was not held in a discretionary
account except where prior written approval for exercise of
the Warrants in such account is received from the customer,
(iii) the solicitation of the exercise of the Warrant was
not in violation of Regulation M, to the extent applicable
at the time of any solicitation, (as such rules or any
successor rule may be in effect as such time of exercise)
promulgated under the Securities Exchange Act of 1934, as
amended or any provision of the Financial Services and
Markets Act 2000 or any other applicable law or regulation
then applicable to the Warrants, their exercise or the
solicitation of such exercise, (iv) CRT (or its sub-agent)
has solicited the exercise of the Warrants, (v) the Warrant
Solicitation Fee and related arrangements are disclosed to
the Warrant holders at that time of exercise of the Warrants
in a prospectus, solicitation notice or any other written
solicitation materials provided to the Warrant holders in
connection with the exercise of the Warrants, (vi) the
Warrant holder has confirmed in writing that CRT or one of
its sub-agents has solicited the exercise of the Warrants
being exercised, (vii) a notice of the redemption of the
Warrants has been published by the Company, and (viii) the
exercise price of the Warrant is paid by the Warrant holder
in cash to the Company.
7.3 In addition, no Warrant Solicitation Fee will be paid upon the exercise of such Warrants if the market price of the underlying Common Shares is
lower than 102% of the exercise price at the time of such exercise. Notwithstanding the foregoing, no Warrant Solicitation Fee will be paid to CRT with respect to the exercise of any Warrants by CRT or KBC Peel Hunt Ltd or any of their respective affiliates, directors or officers or the Founding Shareholders or their designees or the directors or officers of the Company, including any Warrants owned by Paul Anthony Novelly or his designee and purchased in the Placing or acquired after Admission.
7.4 The Company shall, simultaneously with the distribution by the Warrant Agent of the Common Shares underlying the Warrants so exercised following receipt of the proceeds to the Company received upon exercise of such Warrant(s) pay to CRT a warrant solicitation fee of two percent of the exercise price for each Warrant exercised (the "WARRANT SOLICITATION FEE"); provided, however, that no Warrant Solicitation Fee shall be payable with respect to such Warrants exercised on or subsequent to the date of any public announcement of a sale of substantially all the assets or more than 50 percent of the outstanding issued share capital of the Company through the date such sale is consummated unless such sale is not consummated in a reasonable time for transactions of the type, in which case the entitlement to the Warrant Solicitation Fee shall be reinstated; and provided further that CRT delivers to the Warrant Agent within ten (10) business days from the date on which CRT has received the Warrant Agent's Exercise Notice, a certificate that the conditions set forth in the preceding clause 7.2 (i) through (viii) inclusive, have been satisfied. CRT and the Company may at any time during business hours, examine the records of the Warrant Agent, including its ledger of original Warrant certificates returned to the Warrant Agent upon exercise of Warrants.
7.5 The provisions of this Section 7 may not be modified, amended or deleted without the prior written consent of CRT.
effectually vesting in and confirming to such successor Warrant Agent all such authority, powers, rights, immunities, duties, and obligations.
Warrant Agent and save it harmless against any and all liabilities, including judgments, costs and reasonable counsel fees, for anything done or omitted by the Warrant Agent in the execution of this Deed except as a result of the Warrant Agent's negligence, fraud, willful misconduct or bad faith.
Viceroy Acquisition Corporation
8235 Forsyth Boulevard
4th Floor
Clayton, Missouri
63105
USA
Attn: Chairman
Any notice, statement or demand authorised by this Deed to be given or made by the holder of any Warrant or by the Company to or on the Warrant Agent shall be sufficiently given when so delivered if by hand or overnight delivery or if sent by certified mail or private courier service within five days after deposit of such notice, postage prepaid, addressed (until another address is filed in writing by the Warrant Agent with the Company), as follows:
Capita IRG (Offshore) Limited Victoria Chambers Liberation Square 1/3 The Esplanade St. Helier Jersey Attn: Compliance Department
IN WITNESS WHEREOF, this Deed has been duly executed by the parties hereto as of the day and year first above written.
EXECUTED AS A DEED (BUT NOT DELIVERED UNTIL DATED)
BY VICEROY ACQUISISTION CORPORATION
By: /s/ Lee E. Mikles
-----------------------------------
Name: Lee E. Mikles
Title: Chief Executive Officer
By: /s/ Douglas D. Hommert
-----------------------------------
Name: Douglas D. Hommert
Title: Executive Vice President
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EXECUTED AS A DEED (BUT NOT DELIVERED UNTIL DATED)
BY CAPITA IRG (OFFSHORE) LIMITED
By: /s/ Anthony O'Keeffe
-----------------------------------
Name: Anthony O'Keeffe
Title: Director
By: /s/
-----------------------------------
Name:
Title: Director
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EXHIBIT A
VICEROY - WARRANTS CERTIFICATE FACE
VICEROY ACQUISITION CORPORATION
(Incorporated under the laws of the State of Delaware pursuant to Delaware General Corporation Law)
WARRANTS
ISIN: USU 92229 1187
CUSIP: U92229 118
SEDOL: B150QQ67
This is to certify that:
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Is/are the registered holder(s) of
Warrants to subscribe for fully paid Common Shares, having a par value of US$0.0001 fully paid in VICEROY ACQUISITION CORPORATION subject to the Certificate of Incorporation and the Bylaws of the Company and the Deed. The exercise price of the Warrants is $6.00, subject to adjustment as described in the Deed, and the Warrants expire on [date]. The Warrant Agreement can be viewed at Victoria Chambers, Liberation Square, 1/3 The Esplanade, St. Helier, Jersey.
PRIOR TO INVESTING IN THE SECURITIES OR CONDUCTING ANY TRANSACTIONS IN THE SECURITIES, INVESTORS ARE ADVISED TO CONSULT PROFESSIONAL ADVISERS REGARDING THE RESTRICTIONS ON TRANSFER SUMMARIZED BELOW AND ANY OTHER RESTRICTIONS.
THIS SECURITY (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND THIS SECURITY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THIS SECURITY IS HEREBY NOTIFIED THAT THE SELLER OF THIS SECURITY MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.
THE HOLDER OF THIS SECURITY AGREES FOR THE BENEFIT OF THE COMPANY THAT (A)
THIS SECURITY MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY
(I) IN THE UNITED STATES TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS
A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT) IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144A, (II) OUTSIDE OF THE UNITED STATES IN
AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 904 UNDER THE SECURITIES
ACT, (III) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES
ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE) OR (IV) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH OF CASES
(I) THROUGH (IV) IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY
STATE OF THE UNITED STATES, AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT
HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THIS SECURITY FROM IT OF THE
RESALE RESTRICTIONS REFERRED TO IN (A) ABOVE.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO TRANSFER RESTRICTIONS WHICH REQUIRE THAT IN ADDITION TO ANY CERTIFICATIONS REQUIRED FROM A TRANSFEROR AS SET FORTH ON THE REVERSE OF THIS CERTIFICATE, PRIOR TO THE EXPIRATION OF A ONE-YEAR DISTRIBUTION COMPLIANCE PERIOD, THE TRASFEREE CERTIFIES AS TO WHETHER OF NOT IT IS A U.S. PERSON WITHIN THE MEANING OF REGULATION S AND PROVIDES CERTAIN OTHER CERTIFICATIONS AND AGREEMENTS. PRIOR TO PERMITTING ANY TRANSFER, THE COMPANY MAY REQUEST AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH TRANSFER IS TO BE EFFECTED INA TRANSACTION MEETING THE REQUIREMENTS OF REGULATION S UNDER THE SECURITIES ACT OR IS EXEMPT FROM REGISTRATION.
Director _______________ Director _______________
No transfer of the warrants (or any portion thereof) comprised in this certificate can be registered until this certificate has been lodged with the Company's Registrars: Capita IRG (Offshore) Limited, Victoria Chambers, Liberation Square, 1/3 The Esplanade, St Helier, Jersey JE4 0FF UK Transfer Agent: Capita Registrars, The Registry, 34 Beckenham Road, Beckenham, Kent. BR3 4TU
The common shares underlying this Warrant Certificate shall be held (pending exercise of this Warrant Certificate) subject to all of the provisions of the Certificate of Incorporation and the Bylaws of the Company and any amendments thereto, a copy of each of which is on file at the registered office of the Company's Registrar and made a part hereof as fully as though the provisions of said Certificate of Incorporation and Bylaws were imprinted in full on this Warrant Certificate, to all of which the holder of this Warrant Certificate, by acceptance hereof, assents and agrees to be bound. The Company will furnish without charge to each holder of warrants (a "Holder") who so requests a copy of the Certificate of Incorporation and the Bylaws of the Company.
In connection with any transfer of this Warrant Certificate to be consummated prior to such time as the Company shall have otherwise notified all Holders writing, the undersigned holder of warrants certifies that (check one):
BOX (a) This Warrant Certificate is being transferred to the Company.
BOX (b) This Warrant Certificate is being transferred pursuant to an
effective registration statement under the Securities Act and in
accordance with any applicable laws of the United States and any state of
the United States.
BOX (c) (i) This Warrant Certificate is being transferred in an offshore
transaction not subject to the registration requirements of the
Securities Act, by virtue of Regulation S thereunder; (ii) the offer of
the warrants was not made to a person in the United States; (iii) (A) at
the time the buy order was originated, the transferee was outside the
United States or the Holder and any person acting on its behalf
reasonably believed that the transferee was outside the United States or
(B) the transaction is executed in, or through the facilities of the AIM
Market operated by the London Stock Exchange plc, and neither the Holder
nor any person acting on its behalf knows that the transaction has been
BOX (e) This Warrant Certificate is being transferred to a person whom the
Holder reasonably believes is a qualified institutional buyer (as defined
in Rule 144A under the Securities Act) in a transaction meeting the
requirements of Rule 144A and is in accordance with applicable US state
securities laws.
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The Company may determine to extend or shorten the certification periods set forth above, or to modify the form of the certificates, or to require additional certifications and/or related documentation to evidence an exemption from registration, in each case in accordance with applicable law.
The exercise of this Warrant Certificate must be in accordance with the procedures implemented by the Company to ensure that the warrants are not exercised in the U.S., and that the common shares underlying the warrants are not delivered within the United States upon exercise, other than in offerings in accordance with Regulation S, or unless registered under the Securities Act, or exempt from such registration. These procedures include delivery of an exercise notice. If you do not have a form of exercise notice, please contact the Transfer Agent.
The Transfer Agent shall not be obligated to register this Warrant Certificate in the name of any person other than the Holder thereof unless and until the conditions to any such transfer of registration set forth herein and on the face hereof shall have been satisfied.
Assignment and transfer of this Warrant Certificate shall not be effected by an endorsement on this certificate, but by execution and delivery of a separate stock transfer form, which may be obtained from the Company's Transfer Agent.
-------------------------------------------------------------------------------
pre-arranged with a buyer in the United States; (iv) the transferee is
not a U.S. person (as defined in Regulation S) and is not purchasing for
the account or benefit of a U.S. person; (v) no directed selling efforts
have been made in contravention of the requirements of Regulation S; (vi)
the transaction is not part of a plan or scheme to evade the registration
requirements of the Securities Act; (vii) if applicable, in the case of a
transfer by a Holder who is a dealer or a person receiving a selling
concession, fee or other remuneration in connection with such transfer,
such Holder has complied with the additional conditions set forth in Rule
904(b) of Regulation S, and (viii) the Holder has complied with all
applicable additional requirements imposed by Rule 903 of Regulation S;
BOX (d) This Warrant Certificate is being transferred pursuant to an
exemption from registration under the Securities Act in compliance with
Rule 144, if applicable, under the Securities Act and is in accordance
with applicable US state securities laws and in relation to which the
Holder has furnished to the Company an opinion to such effect from
counsel of recognized standing in form and substance satisfactory to the
Company prior to such offer, sale, pledge or transfer. entitled to rely
upon this certificate and are irrevocably authorized to produce this
Certificate or a copy hereof to any interested party in any
administrative or legal proceeding or official inquiry with respect to
the matters covered hereby.
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Exhibit 4.3.a.
INSIDER LETTER
Viceroy Acquisition Corporation
8235 Forsyth Boulevard
Suite 400
St. Louis, Missouri 63105
CRT Capital Group LLC
262 Harbor Drive
Stamford
Connecticut 06902
KBC Peel Hunt Ltd
111 Old Broad Street
London
EC2N 1PH
Gentlemen:
The undersigned shareholder and director of Viceroy Acquisition Corporation (the "COMPANY"), in consideration of CRT Capital Group LLC ("CRT") and KBC Peel Hunt Ltd ("KBC") agreeing to act as placement agents in the offering ("OFFERING") of 22,500,000 units (the "UNITS"), each Unit consisting of one share of common stock in the capital of the Company, par value $0.0001 per share (the "SHARES"), and one warrant (the "WARRANTS"), each Warrant entitling the holder to purchase one Share, as more particularly explained in the offering circular of the Company in connection with such Offering (the "OFFERING CIRCULAR") and embarking on the placement process, hereby agrees as follows:
1. Until the earlier of (a) the completion by the Company of a Qualified Business Combination and (b) the distribution of all amounts held in the Trust Fund following the failure by the Company to complete a Qualified Business Combination by the Qualified Business Combination Deadline, to the extent the Company solicits the approval of its shareholders for a Business Combination, the undersigned irrevocably agrees to vote all Founding Shares owned by him and the Shares included in Units purchased by the undersigned in the Offering in accordance with the majority of the votes cast by the New Shareholders.
2. In the event that the Company fails to complete a Business Combination by the Qualified Business Combination Deadline, the undersigned will take all reasonable actions
within his power to cause the Company to liquidate as soon as reasonably practicable. On such a liquidation, the undersigned hereby waives any and all right, title, interest or claim of any kind in or to any distribution of the funds held in the Trust Fund as a result of such liquidation with respect to his Founding Shares (any such right, title, interest or claim, a "CLAIM") and hereby waives any Claim he may have in the future as a result of, or arising out of, any contracts or agreements with the Company in respect of his Founding Shares and will not seek recourse against the Trust Fund for any reason whatsoever in respect of his Founding Shares.
3. In order to minimize potential conflicts of interest which may arise from multiple corporate affiliations, the undersigned agrees to present to the Company for its consideration, prior to presentation to any other person or entity, any suitable opportunity to acquire a Target Business, until the earlier of (a) the completion by the Company of a Qualified Business Combination, (b) the distribution of all amounts held in the Trust Fund following the failure by the Company to complete a Qualified Business Combination by the Qualified Business Combination Deadline, and (c) such time as the undersigned ceases to be either an officer or a director of the Company, subject to any pre-existing fiduciary or contractual obligations the undersigned might have.
4. The undersigned acknowledges and agrees that until the earlier
of (a) the completion by the Company of a Qualified Business Combination and
(b) the distribution of all amounts held in the Trust Fund following the
failure by the Company to complete a Qualified Business Combination by the
Qualified Business Combination Deadline, the Company will not complete any
Business Combination which involves an entity which is affiliated with the
undersigned unless the Company obtains an opinion from an independent
investment banking firm which is a member of the National Association of
Securities Dealers, Inc. (such firm being reasonably acceptable to each of
CRT and KBC) that the Business Combination is fair to the Company's
shareholders from a financial perspective.
5. Until the completion by the Company of a Business Combination neither the undersigned, any member of the family of the undersigned, nor any affiliate of the undersigned will be entitled to receive, and will not accept, any compensation for services rendered to the Company prior to such Business Combination; provided that the undersigned shall be entitled to reimbursement from the Company (out of the funds not held in the Trust Fund) for his reasonable out-of-pocket expenses incurred in connection with seeking and completing any Business Combination. Upon completion of a Business Combination, the Company may enter into an employment agreement with the undersigned for the payment of reasonable compensation, provided that such compensation may not be paid from the Trust Fund except to the extent approved by the shareholders of the Company in connection with such Business Combination.
6. Until the earlier of (a) the completion by the Company of a Qualified Business Combination and (b) the distribution of all amounts held in the Trust Fund following the failure by the Company to complete a Qualified Business Combination by the Qualified Business Combination Deadline, neither the undersigned, any member of the family of the undersigned, nor any affiliate of the undersigned will be entitled to receive or accept a finder's fee or any other
compensation in the event the undersigned, any member of the family of the undersigned or any affiliate of the undersigned originates a Business Combination.
7. The undersigned agrees to enter into an escrow agreement with the Company and an escrow agent (such escrow agent being reasonably acceptable to each of CRT and KBC) with respect to his Founding Shares whereby his Founding Shares will be held in escrow for a three-year period commencing on the Admission Date. The undersigned agrees not to amend the terms of any escrow agreement entered into without the prior written consent of each of CRT and KBC.
8. (a) The undersigned agrees, for the purposes of, and subject to the provisions of, Rule 7 of the AIM Rules (as further described in the Offering Circular) and the Rule 7 Lock-in Deed, dated as of the date hereof and executed by the undersigned, not to dispose of any interest in the Shares or Warrants held by the undersigned, whensoever such Shares or Warrants were purchased, for the period of one year from the Admission Date.
(b) The undersigned further agrees that he will not sell or otherwise dispose of any securities of the Company owned by him including the Shares and Warrants, except pursuant to a registration statement under the U.S. Securities Act of 1933, as amended (the "SECURITIES ACT") or pursuant to an exemption from such registration; provided, however, that in the case of any sale or disposition otherwise than pursuant to a registration statement, the undersigned shall take such steps, including without limitation legending the certificates representing the securities, to make sure that the securities may be segregated from the pool of securities that are or may become tradeable in the U.S free of any restrictions. Additionally, the undersigned will not engage in any hedging transactions involving the securities of the Company owned by him (including the Shares and Warrants) other than in compliance with the Securities Act.
9. The undersigned agrees to be the chairman and a member of the board of directors of the Company until the earlier of (a) the completion by the Company of a Qualified Business Combination, or (b) the distribution of all amounts held in the Trust Fund following the failure by the Company to complete a Qualified Business Combination by the Qualified Business Combination Deadline. The undersigned's biographical information furnished to the Company and CRT and attached hereto as Exhibit A is true and accurate in all respects, does not omit any material information with respect to the undersigned's background and contains all of the information required to be disclosed pursuant to Section 401 of Regulation S-K, promulgated under the Securities Act, in a registration statement filed under the Securities Act or to be contained in the Admission Document prepared for the purposes of the rules and regulations of AIM. The undersigned represents and warrants that:
(a) he is not subject to or a respondent in any legal action for, any injunction, cease-and-desist order or order or stipulation to desist or refrain from any act or practice relating to the offering of securities in any jurisdiction;
(b) he has never been convicted of or pleaded guilty to any crime (i) involving any fraud or (ii) relating to any financial transaction or handling of funds of another person, or (iii) pertaining to any dealings in any securities and he is not currently a defendant in any such
criminal proceeding; and
(c) he has never been suspended or expelled from membership in any securities or commodities exchange or association or had a securities or commodities license or registration denied, suspended or revoked.
10. The undersigned has full right and power, without violating any agreement by which he is bound, to enter into this letter agreement and to serve as chairman and a member of the board of directors of the Company.
11. The undersigned authorizes any employer, financial institution, or consumer credit reporting agency to release to CRT and KBC and their legal representatives or agents (including any investigative search firm retained by CRT or KBC) any information they may have about the undersigned's background and finances ("INFORMATION"). Neither CRT, KBC nor their agents shall be violating the undersigned's right of privacy in any matter in requesting and obtaining the Information and the undersigned hereby releases them from liability for any damage whatsoever in that connection. The Information obtained shall be kept confidential in perpetuity by CRT, KBC and their legal representatives and agents except as required by law or by judicial order.
12. Capitalized terms used but not defined in this letter have the meanings given to them in the Offering Circular.
13. This letter shall be governed in all respects by the laws of the State of New York.
PAUL ANTHONY NOVELLY
/s/ Paul Anthony Novelly
-----------------------------------
Signature
|
EXHIBIT A
PAUL ANTHONY NOVELLY has been the Company's Chairman since inception. Mr. Novelly has been chairman and chief executive officer of Apex Oil Company, Inc. ("APEX"), a privately-held company based in St. Louis engaged in wholesale marketing, storage and distribution of petroleum products, since 1995 and was president and chief executive officer from 1979 to 1994. Mr. Novelly, his family and certain of their affiliates currently hold approximately 89% of the equity interest in Apex. Apex and its subsidiaries are involved in the trading, storage, marketing and transportation of petroleum products, including liquid terminal facilities in the Midwest and Eastern United States, and towboat and barge operations on the inland waterway system. Mr. Novelly is president and a director of AIC Limited, a Bermuda-based oil trading company, chairman of World Point Terminals Inc., a publicly-held Canadian company based in Calgary, which owns and operates petroleum storage facilities in the Netherlands, Bahamas and United States, and chief executive officer of St. Albans Global Management, Limited Partnership, LLP, which provides corporate management services. Mr. Novelly, his family and certain of their affiliates currently hold approximately 51% of the equity interest in World Point Terminals Inc. He has served on boards of directors for numerous public companies, including current directorships at The Bear Stearns Companies Inc., a broker-dealer and global securities and investment firm, Intrawest Corporation, a company that is a world leader in destination resorts and adventure travel, and Boss Holdings, Inc., a distributor of work gloves, boots and rainwear and other consumer products.
Mr. Novelly was president and chief executive officer of Apex Oil Company when Apex Oil Company and 51 of its subsidiaries and affiliates filed for protection under Chapter 11 of the United States Bankruptcy Code on December 24, 1987. During these bankruptcy proceedings and prior to emerging from bankruptcy, Apex Oil Company sold the Clark Oil & Refining Corporation operations and other non-core assets (including the Copper Mountain ski resort) to AOC Acquisition Corporation, a company owned 60% by The Horsham Corporation and 40% by Mr. Novelly and Mr. Samuel Goldstein and their families. AOC Acquisition Corporation completed this acquisition in a two-step process. First, it acquired an option to purchase the $545 million of secured debt owed by Apex Oil Company to its secured lender group for an aggregate consideration of $413 million. It then negotiated the acquisition of these Clark Oil & Refining Corporation's operations and other non-core assets from Apex Oil Company, which sale was approved by the Apex Oil Company creditors' committee and the Bankruptcy Court. This sale was consummated in November 1988. Apex Oil Company, Inc., as successor to Apex Oil Company, emerged from bankruptcy on August 30, 1990.
Exhibit 4.3.b.
INSIDER LETTER
Viceroy Acquisition Corporation
8235 Forsyth Boulevard
Suite 400
St. Louis, Missouri 63105
CRT Capital Group LLC
262 Harbor Drive
Stamford
Connecticut 06902
KBC Peel Hunt Ltd
111 Old Broad Street
London
EC2N 1PH
Gentlemen:
The undersigned shareholder of Viceroy Acquisition Corporation (the "COMPANY"), in consideration of CRT Capital Group LLC ("CRT") and KBC Peel Hunt Ltd ("KBC") agreeing to act as placement agents in the offering ("OFFERING") of 22,500,000 units (the "UNITS"), each Unit consisting of one share of common stock in the capital of the Company, par value $0.0001 per share (the "SHARES"), and one warrant (the "WARRANTS"), each Warrant entitling the holder to purchase one Share, as more particularly explained in the offering circular of the Company in connection with such Offering (the "OFFERING CIRCULAR") and embarking on the placement process, hereby agrees as follows:
1. Until the earlier of (a) the completion by the Company of a Qualified Business Combination and (b) the distribution of all amounts held in the Trust Fund following the failure by the Company to complete a Qualified Business Combination by the Qualified Business Combination Deadline, to the extent the Company solicits the approval of its shareholders for a Business Combination, the undersigned irrevocably agrees to vote all Founding Shares owned by him and the Shares included in Units purchased by the undersigned in the Offering in accordance with the majority of the votes cast by the New Shareholders.
2. In the event that the Company fails to complete a Business Combination by the Qualified Business Combination Deadline, the undersigned will take all reasonable actions
within its power to cause the Company to liquidate as soon as reasonably practicable. On such a liquidation, the undersigned hereby waives any and all right, title, interest or claim of any kind in or to any distribution of the funds held in the Trust Fund as a result of such liquidation with respect to its Founding Shares (any such right, title, interest or claim, a "CLAIM") and hereby waives any Claim it may have in the future as a result of, or arising out of, any contracts or agreements with the Company in respect of its Founding Shares and will not seek recourse against the Trust Fund for any reason whatsoever in respect of its Founding Shares.
3. In order to minimize potential conflicts of interest which may arise from multiple corporate affiliations, the undersigned agrees to present to the Company for its consideration, prior to presentation to any other person or entity, any suitable opportunity to acquire a Target Business, until the earlier of (a) the completion by the Company of a Qualified Business Combination and (b) the distribution of all amounts held in the Trust Fund following the failure by the Company to complete a Qualified Business Combination by the Qualified Business Combination Deadline.
4. The undersigned acknowledges and agrees that until the earlier
of (a) the completion by the Company of a Qualified Business Combination and
(b) the distribution of all amounts held in the Trust Fund following the
failure by the Company to complete a Qualified Business Combination by the
Qualified Business Combination Deadline, the Company will not complete any
Business Combination which involves an entity which is affiliated with the
undersigned unless the Company obtains an opinion from an independent
investment banking firm which is a member of the National Association of
Securities Dealers, Inc. (such firm being reasonably acceptable to each of
CRT and KBC) that the Business Combination is fair to the Company's
shareholders from a financial perspective.
5. Until the completion by the Company of a Business Combination neither the undersigned, nor any affiliate of the undersigned will be entitled to receive, and will not accept, any compensation for services rendered to the Company prior to such Business Combination; provided that the undersigned shall be entitled to reimbursement from the Company (out of the funds not held in the Trust Fund) for its reasonable out-of-pocket expenses incurred in connection with seeking and completing any Business Combination.
6. Until the earlier of (a) the completion by the Company of a Qualified Business Combination and (b) the distribution of all amounts held in the Trust Fund following the failure by the Company to complete a Qualified Business Combination by the Qualified Business Combination Deadline, neither the undersigned, nor any affiliate of the undersigned will be entitled to receive or accept a finder's fee or any other compensation in the event the undersigned, or any affiliate of the undersigned originates a Business Combination.
7. The undersigned agrees to enter into an escrow agreement with the Company and an escrow agent (such escrow agent being reasonably acceptable to each of CRT and KBC) with respect to its Founding Shares whereby its Founding Shares will be held in escrow for a three-year period commencing on the Admission Date. The undersigned agrees not to amend the terms of any escrow agreement entered into without the prior written consent of each of CRT and KBC.
8. (a) The undersigned agrees, for the purposes of, and subject to the provisions of, Rule 7 of the AIM Rules (as further described in the Offering Circular) and the Rule 7 Lock-in Deed, dated as of the date hereof and executed by the undersigned, not to dispose of any interest in the Shares or Warrants held by the undersigned, whensoever such Shares or Warrants were purchased, for the period of one year from the Admission Date.
(b) The undersigned further agrees that he will not sell or otherwise dispose of any securities of the Company owned by it including the Shares and Warrants, except pursuant to a registration statement under the U.S. Securities Act of 1933, as amended (the "SECURITIES ACT") or pursuant to an exemption from such registration; provided, however, that in the case of any sale or disposition otherwise than pursuant to a registration statement, the undersigned shall take such steps, including without limitation legending the certificates representing the securities, to make sure that the securities may be segregated from the pool of securities that are or may become tradeable in the U.S free of any restrictions. Additionally, the undersigned will not engage in any hedging transactions involving the securities of the Company owned by it (including the Shares and Warrants) other than in compliance with the Securities Act.
9. The undersigned authorizes any employer, financial institution, or consumer credit reporting agency to release to CRT and KBC and their legal representatives or agents (including any investigative search firm retained by CRT or KBC) any information they may have about the undersigned's background and finances ("INFORMATION"). Neither CRT, KBC nor their agents shall be violating the undersigned's right of privacy in any matter in requesting and obtaining the Information and the undersigned hereby releases them from liability for any damage whatsoever in that connection. The Information obtained shall be kept confidential in perpetuity by CRT, KBC and their legal representatives and agents except as required by law or by judicial order.
10. Capitalized terms used but not defined in this letter have the meanings given to them in the Offering Circular.
11. This letter shall be governed in all respects by the laws of the State of New York.
ST ALBANS GLOBAL MANAGEMENT,
LIMITED PARTNERSHIP, LLLP
BY SAGM HOLDINGS, LLC, GENERAL
PARTNER
BY DOUGLAS D. HOMMERT AS MANAGER
/s/ Douglas D. Hommert
-----------------------------------------
Signature
|
Exhibit 4.3.c.
INSIDER LETTER
Viceroy Acquisition Corporation
8235 Forsyth Boulevard
Suite 400
St. Louis, Missouri 63105
CRT Capital Group LLC
262 Harbor Drive
Stamford
Connecticut 06902
KBC Peel Hunt Ltd
111 Old Broad Street
London
EC2N 1PH
Gentlemen:
The undersigned shareholder and director of Viceroy Acquisition Corporation (the "COMPANY"), in consideration of CRT Capital Group LLC ("CRT") and KBC Peel Hunt Ltd ("KBC") agreeing to act as placement agents in the offering ("OFFERING") of 22,500,000 units (the "UNITS"), each Unit consisting of one share of common stock in the capital of the Company, par value $0.0001 per share (the "SHARES"), and one warrant (the "WARRANTS"), each Warrant entitling the holder to purchase one Share, as more particularly explained in the offering circular of the Company in connection with such Offering (the "OFFERING CIRCULAR") and embarking on the placement process, hereby agrees as follows:
1. Until the earlier of (a) the completion by the Company of a Qualified Business Combination and (b) the distribution of all amounts held in the Trust Fund following the failure by the Company to complete a Qualified Business Combination by the Qualified Business Combination Deadline, to the extent the Company solicits the approval of its shareholders for a Business Combination, the undersigned irrevocably agrees to vote all Founding Shares owned by him and the Shares included in Units purchased by the undersigned in the Offering in accordance with the majority of the votes cast by the New Shareholders.
2. In the event that the Company fails to complete a Business Combination by the Qualified Business Combination Deadline, the undersigned will take all reasonable actions
within his power to cause the Company to liquidate as soon as reasonably practicable. On such a liquidation, the undersigned hereby waives any and all right, title, interest or claim of any kind in or to any distribution of the funds held in the Trust Fund as a result of such liquidation with respect to his Founding Shares (any such right, title, interest or claim, a "CLAIM") and hereby waives any Claim he may have in the future as a result of, or arising out of, any contracts or agreements with the Company in respect of his Founding Shares and will not seek recourse against the Trust Fund for any reason whatsoever in respect of his Founding Shares.
3. In order to minimize potential conflicts of interest which may arise from multiple corporate affiliations, the undersigned agrees to present to the Company for its consideration, prior to presentation to any other person or entity, any suitable opportunity to acquire a Target Business, until the earlier of (a) the completion by the Company of a Qualified Business Combination, (b) the distribution of all amounts held in the Trust Fund following the failure by the Company to complete a Qualified Business Combination by the Qualified Business Combination Deadline, and (c) such time as the undersigned ceases to be either an officer or a director of the Company, subject to any pre-existing fiduciary or contractual obligations the undersigned might have.
4. The undersigned acknowledges and agrees that until the earlier
of (a) the completion by the Company of a Qualified Business Combination and
(b) the distribution of all amounts held in the Trust Fund following the
failure by the Company to complete a Qualified Business Combination by the
Qualified Business Combination Deadline, the Company will not complete any
Business Combination which involves an entity which is affiliated with the
undersigned unless the Company obtains an opinion from an independent
investment banking firm which is a member of the National Association of
Securities Dealers, Inc. (such firm being reasonably acceptable to each of
CRT and KBC) that the Business Combination is fair to the Company's
shareholders from a financial perspective.
5. Until the completion by the Company of a Business Combination neither the undersigned, any member of the family of the undersigned, nor any affiliate of the undersigned will be entitled to receive, and will not accept, any compensation for services rendered to the Company prior to such Business Combination; provided that the undersigned shall be entitled to reimbursement from the Company (out of the funds not held in the Trust Fund) for his reasonable out-of-pocket expenses incurred in connection with seeking and completing any Business Combination. Upon completion of a Business Combination, the Company may enter into an employment agreement with the undersigned for the payment of reasonable compensation, provided that such compensation may not be paid from the Trust Fund except to the extent approved by the shareholders of the Company in connection with such Business Combination.
6. Until the earlier of (a) the completion by the Company of a Qualified Business Combination and (b) the distribution of all amounts held in the Trust Fund following the failure by the Company to complete a Qualified Business Combination by the Qualified Business Combination Deadline, neither the undersigned, any member of the family of the undersigned, nor any affiliate of the undersigned will be entitled to receive or accept a finder's fee or any other
compensation in the event the undersigned, any member of the family of the undersigned or any affiliate of the undersigned originates a Business Combination.
7. The undersigned agrees to enter into an escrow agreement with the Company and an escrow agent (such escrow agent being reasonably acceptable to each of CRT and KBC) with respect to his Founding Shares whereby his Founding Shares will be held in escrow for a three-year period commencing on the Admission Date. The undersigned agrees not to amend the terms of any escrow agreement entered into without the prior written consent of each of CRT and KBC.
8. (a) The undersigned agrees, for the purposes of, and subject to the provisions of, Rule 7 of the AIM Rules (as further described in the Offering Circular) and the Rule 7 Lock-in Deed, dated as of the date hereof and executed by the undersigned, not to dispose of any interest in the Shares or Warrants held by the undersigned, whensoever such Shares or Warrants were purchased, for the period of one year from the Admission Date.
(b) The undersigned further agrees that he will not sell or otherwise dispose of any securities of the Company owned by him including the Shares and Warrants, except pursuant to a registration statement under the U.S. Securities Act of 1933, as amended (the "SECURITIES ACT") or pursuant to an exemption from such registration; provided, however, that in the case of any sale or disposition otherwise than pursuant to a registration statement, the undersigned shall take such steps, including without limitation legending the certificates representing the securities, to make sure that the securities may be segregated from the pool of securities that are or may become tradeable in the U.S free of any restrictions. Additionally, the undersigned will not engage in any hedging transactions involving the securities of the Company owned by him (including the Shares and Warrants) other than in compliance with the Securities Act.
9. The undersigned agrees to be the chief executive officer,
president and a member of the board of directors of the Company until the
earlier of (a) the completion by the Company of a Qualified Business
Combination, or (b) the distribution of all amounts held in the Trust Fund
following the failure by the Company to complete a Qualified Business
Combination by the Qualified Business Combination Deadline. The
undersigned's biographical information furnished to the Company and CRT and
attached hereto as Exhibit A is true and accurate in all respects, does not
omit any material information with respect to the undersigned's background
and contains all of the information required to be disclosed pursuant to
Section 401 of Regulation S-K, promulgated under the Securities Act, in a
registration statement filed under the Securities Act or to be contained in
the Admission Document prepared for the purposes of the rules and
regulations of AIM. The undersigned represents and warrants that:
(a) he is not subject to or a respondent in any legal action for, any injunction, cease-and-desist order or order or stipulation to desist or refrain from any act or practice relating to the offering of securities in any jurisdiction;
(b) he has never been convicted of or pleaded guilty to any crime (i) involving any fraud or (ii) relating to any financial transaction or handling of funds of another person, or (iii) pertaining to any dealings in any securities and he is not currently a defendant in any such
criminal proceeding; and
(c) he has never been suspended or expelled from membership in any securities or commodities exchange or association or had a securities or commodities license or registration denied, suspended or revoked.
10. The undersigned has full right and power, without violating any agreement by which he is bound, to enter into this letter agreement and to serve as chief executive officer, president and a member of the board of directors of the Company.
11. The undersigned authorizes any employer, financial institution, or consumer credit reporting agency to release to CRT and KBC and their legal representatives or agents (including any investigative search firm retained by CRT or KBC) any information they may have about the undersigned's background and finances ("INFORMATION"). Neither CRT, KBC nor their agents shall be violating the undersigned's right of privacy in any matter in requesting and obtaining the Information and the undersigned hereby releases them from liability for any damage whatsoever in that connection. The Information obtained shall be kept confidential in perpetuity by CRT, KBC and their legal representatives and agents except as required by law or by judicial order.
12. Capitalized terms used but not defined in this letter have the meanings given to them in the Offering Circular.
13. This letter shall be governed in all respects by the laws of the State of New York.
LEE E. MIKLES
/s/ Lee E. Mikles
-------------------------------------
Signature
|
EXHIBIT A
LEE E. MIKLES has been the Company's chief executive officer and a member of the Board since inception. Mr. Mikles has been chairman of Mikles/Miller Management, Inc., a registered investment adviser and home to the Kodiak family of funds, since 1992. He has also been chairman of Mikles/Miller Securities, LLC, a registered broker-dealer, since 1999. Mr. Mikles is a former board member of Imperial Bancorp and Imperial Bank where he led the spin-off of Official Payments Corporation in November 1999. Imperial Bank was subsequently sold to Comerica Bank in January 2001 for $1.3 billion. Additionally, Mr. Mikles has served on the board of directors of Official Payments Corporation, Coastcast Corporation and Nelnet, Inc. He currently serves on the board of directors of Boss Holdings, Inc., and is the chair of the audit committee for Boss Holdings.
Mr. Mikles was a first vice president with Drexel Burnham Lambert, Inc., from 1981 through 1989. While there he formed KCM Equities to become a co-general partner of several joint venture limited partnerships with DBL Group, Inc. Mr. Mikles was instrumental in the creation, financing and management of these limited partnerships. Mr. Mikles filed for personal bankruptcy in 1992 as part of a personal restructuring as a direct result of his service as a general partner of a real estate partnership organised in 1986 by DBL Group. DBL Group filed for bankruptcy in February 1990. Mr. Mikles was unconditionally discharged from bankruptcy in February 1993.
Exhibit 4.3.d.
INSIDER LETTER
Viceroy Acquisition Corporation
8235 Forsyth Boulevard
Suite 400
St. Louis, Missouri 63105
CRT Capital Group LLC
262 Harbor Drive
Stamford
Connecticut 06902
KBC Peel Hunt Ltd
111 Old Broad Street
London
EC2N 1PH
Gentlemen:
The undersigned shareholder of Viceroy Acquisition Corporation (the "COMPANY"), in consideration of CRT Capital Group LLC ("CRT") and KBC Peel Hunt Ltd ("KBC") agreeing to act as placement agents in the offering ("OFFERING") of 22,500,000 units (the "UNITS"), each Unit consisting of one share of common stock in the capital of the Company, par value $0.0001 per share (the "SHARES"), and one warrant (the "WARRANTS"), each Warrant entitling the holder to purchase one Share, as more particularly explained in the offering circular of the Company in connection with such Offering (the "OFFERING CIRCULAR") and embarking on the placement process, hereby agrees as follows:
1. Until the earlier of (a) the completion by the Company of a Qualified Business Combination and (b) the distribution of all amounts held in the Trust Fund following the failure by the Company to complete a Qualified Business Combination by the Qualified Business Combination Deadline, to the extent the Company solicits the approval of its shareholders for a Business Combination, the undersigned irrevocably agrees to vote all Founding Shares owned by him and the Shares included in Units purchased by the undersigned in the Offering in accordance with the majority of the votes cast by the New Shareholders.
2. In the event that the Company fails to complete a Business Combination by the Qualified Business Combination Deadline, the undersigned will take all reasonable actions
within its power to cause the Company to liquidate as soon as reasonably practicable. On such a liquidation, the undersigned hereby waives any and all right, title, interest or claim of any kind in or to any distribution of the funds held in the Trust Fund as a result of such liquidation with respect to its Founding Shares (any such right, title, interest or claim, a "CLAIM") and hereby waives any Claim it may have in the future as a result of, or arising out of, any contracts or agreements with the Company in respect of its Founding Shares and will not seek recourse against the Trust Fund for any reason whatsoever in respect of its Founding Shares.
3. In order to minimize potential conflicts of interest which may arise from multiple corporate affiliations, the undersigned agrees to present to the Company for its consideration, prior to presentation to any other person or entity, any suitable opportunity to acquire a Target Business, until the earlier of (a) the completion by the Company of a Qualified Business Combination and (b) the distribution of all amounts held in the Trust Fund following the failure by the Company to complete a Qualified Business Combination by the Qualified Business Combination Deadline.
4. The undersigned acknowledges and agrees that until the earlier
of (a) the completion by the Company of a Qualified Business Combination and
(b) the distribution of all amounts held in the Trust Fund following the
failure by the Company to complete a Qualified Business Combination by the
Qualified Business Combination Deadline, the Company will not complete any
Business Combination which involves an entity which is affiliated with the
undersigned unless the Company obtains an opinion from an independent
investment banking firm which is a member of the National Association of
Securities Dealers, Inc. (such firm being reasonably acceptable to each of
CRT and KBC) that the Business Combination is fair to the Company's
shareholders from a financial perspective.
5. Until the completion by the Company of a Business Combination neither the undersigned, nor any affiliate of the undersigned will be entitled to receive, and will not accept, any compensation for services rendered to the Company prior to such Business Combination; provided that the undersigned shall be entitled to reimbursement from the Company (out of the funds not held in the Trust Fund) for its reasonable out-of-pocket expenses incurred in connection with seeking and completing any Business Combination.
6. Until the earlier of (a) the completion by the Company of a Qualified Business Combination and (b) the distribution of all amounts held in the Trust Fund following the failure by the Company to complete a Qualified Business Combination by the Qualified Business Combination Deadline, neither the undersigned, nor any affiliate of the undersigned will be entitled to receive or accept a finder's fee or any other compensation in the event the undersigned, or any affiliate of the undersigned originates a Business Combination.
7. The undersigned agrees to enter into an escrow agreement with the Company and an escrow agent (such escrow agent being reasonably acceptable to each of CRT and KBC) with respect to its Founding Shares whereby its Founding Shares will be held in escrow for a three-year period commencing on the Admission Date. The undersigned agrees not to amend the terms of any escrow agreement entered into without the prior written consent of each of CRT and KBC.
8. (a) The undersigned agrees, for the purposes of, and subject to the provisions of, Rule 7 of the AIM Rules (as further described in the Offering Circular) and the Rule 7 Lock-in Deed, dated as of the date hereof and executed by the undersigned, not to dispose of any interest in the Shares or Warrants held by the undersigned, whensoever such Shares or Warrants were purchased, for the period of one year from the Admission Date.
(b) The undersigned further agrees that he will not sell or otherwise dispose of any securities of the Company owned by it including the Shares and Warrants, except pursuant to a registration statement under the U.S. Securities Act of 1933, as amended (the "SECURITIES ACT") or pursuant to an exemption from such registration; provided, however, that in the case of any sale or disposition otherwise than pursuant to a registration statement, the undersigned shall take such steps, including without limitation legending the certificates representing the securities, to make sure that the securities may be segregated from the pool of securities that are or may become tradeable in the U.S free of any restrictions. Additionally, the undersigned will not engage in any hedging transactions involving the securities of the Company owned by it (including the Shares and Warrants) other than in compliance with the Securities Act.
9. The undersigned authorizes any employer, financial institution, or consumer credit reporting agency to release to CRT and KBC and their legal representatives or agents (including any investigative search firm retained by CRT or KBC) any information they may have about the undersigned's background and finances ("INFORMATION"). Neither CRT, KBC nor their agents shall be violating the undersigned's right of privacy in any matter in requesting and obtaining the Information and the undersigned hereby releases them from liability for any damage whatsoever in that connection. The Information obtained shall be kept confidential in perpetuity by CRT, KBC and their legal representatives and agents except as required by law or by judicial order.
10. Capitalized terms used but not defined in this letter have the meanings given to them in the Offering Circular.
11. This letter shall be governed in all respects by the laws of the State of New York.
LEE E MIKLES AS TRUSTEE OF
THE LEE MIKLES GIFT TRUST
DATED OCTOBER 6, 1999
/s/ Lee E. Mikles
-------------------------------------
Signature
|
Exhibit 4.3.e.
INSIDER LETTER
Viceroy Acquisition Corporation
8235 Forsyth Boulevard
Suite 400
St. Louis, Missouri 63105
CRT Capital Group LLC
262 Harbor Drive
Stamford
Connecticut 06902
KBC Peel Hunt Ltd
111 Old Broad Street
London
EC2N 1PH
Gentlemen:
The undersigned shareholder of Viceroy Acquisition Corporation (the "COMPANY"), in consideration of CRT Capital Group LLC ("CRT") and KBC Peel Hunt Ltd ("KBC") agreeing to act as placement agents in the offering ("OFFERING") of 22,500,000 units (the "UNITS"), each Unit consisting of one share of common stock in the capital of the Company, par value $0.0001 per share (the "SHARES"), and one warrant (the "WARRANTS"), each Warrant entitling the holder to purchase one Share, as more particularly explained in the offering circular of the Company in connection with such Offering (the "OFFERING CIRCULAR") and embarking on the placement process, hereby agrees as follows:
1. Until the earlier of (a) the completion by the Company of a Qualified Business Combination and (b) the distribution of all amounts held in the Trust Fund following the failure by the Company to complete a Qualified Business Combination by the Qualified Business Combination Deadline, to the extent the Company solicits the approval of its shareholders for a Business Combination, the undersigned irrevocably agrees to vote all Founding Shares owned by him and the Shares included in Units purchased by the undersigned in the Offering in accordance with the majority of the votes cast by the New Shareholders.
2. In the event that the Company fails to complete a Business Combination by the Qualified Business Combination Deadline, the undersigned will take all reasonable actions
within its power to cause the Company to liquidate as soon as reasonably practicable. On such a liquidation, the undersigned hereby waives any and all right, title, interest or claim of any kind in or to any distribution of the funds held in the Trust Fund as a result of such liquidation with respect to its Founding Shares (any such right, title, interest or claim, a "CLAIM") and hereby waives any Claim it may have in the future as a result of, or arising out of, any contracts or agreements with the Company in respect of its Founding Shares and will not seek recourse against the Trust Fund for any reason whatsoever in respect of its Founding Shares.
3. In order to minimize potential conflicts of interest which may arise from multiple corporate affiliations, the undersigned agrees to present to the Company for its consideration, prior to presentation to any other person or entity, any suitable opportunity to acquire a Target Business, until the earlier of (a) the completion by the Company of a Qualified Business Combination and (b) the distribution of all amounts held in the Trust Fund following the failure by the Company to complete a Qualified Business Combination by the Qualified Business Combination Deadline.
4. The undersigned acknowledges and agrees that until the earlier
of (a) the completion by the Company of a Qualified Business Combination and
(b) the distribution of all amounts held in the Trust Fund following the
failure by the Company to complete a Qualified Business Combination by the
Qualified Business Combination Deadline, the Company will not complete any
Business Combination which involves an entity which is affiliated with the
undersigned unless the Company obtains an opinion from an independent
investment banking firm which is a member of the National Association of
Securities Dealers, Inc. (such firm being reasonably acceptable to each of
CRT and KBC) that the Business Combination is fair to the Company's
shareholders from a financial perspective.
5. Until the completion by the Company of a Business Combination neither the undersigned, nor any affiliate of the undersigned will be entitled to receive, and will not accept, any compensation for services rendered to the Company prior to such Business Combination; provided that the undersigned shall be entitled to reimbursement from the Company (out of the funds not held in the Trust Fund) for its reasonable out-of-pocket expenses incurred in connection with seeking and completing any Business Combination.
6. Until the earlier of (a) the completion by the Company of a Qualified Business Combination and (b) the distribution of all amounts held in the Trust Fund following the failure by the Company to complete a Qualified Business Combination by the Qualified Business Combination Deadline, neither the undersigned, nor any affiliate of the undersigned will be entitled to receive or accept a finder's fee or any other compensation in the event the undersigned, or any affiliate of the undersigned originates a Business Combination.
7. The undersigned agrees to enter into an escrow agreement with the Company and an escrow agent (such escrow agent being reasonably acceptable to each of CRT and KBC) with respect to its Founding Shares whereby its Founding Shares will be held in escrow for a three-year period commencing on the Admission Date. The undersigned agrees not to amend the terms of any escrow agreement entered into without the prior written consent of each of CRT and KBC.
8. (a) The undersigned agrees, for the purposes of, and subject to the provisions of, Rule 7 of the AIM Rules (as further described in the Offering Circular) and the Rule 7 Lock-in Deed, dated as of the date hereof and executed by the undersigned, not to dispose of any interest in the Shares or Warrants held by the undersigned, whensoever such Shares or Warrants were purchased, for the period of one year from the Admission Date.
(b) The undersigned further agrees that he will not sell or otherwise dispose of any securities of the Company owned by it including the Shares and Warrants, except pursuant to a registration statement under the U.S. Securities Act of 1933, as amended (the "SECURITIES ACT") or pursuant to an exemption from such registration; provided, however, that in the case of any sale or disposition otherwise than pursuant to a registration statement, the undersigned shall take such steps, including without limitation legending the certificates representing the securities, to make sure that the securities may be segregated from the pool of securities that are or may become tradeable in the U.S free of any restrictions. Additionally, the undersigned will not engage in any hedging transactions involving the securities of the Company owned by it (including the Shares and Warrants) other than in compliance with the Securities Act.
9. The undersigned authorizes any employer, financial institution, or consumer credit reporting agency to release to CRT and KBC and their legal representatives or agents (including any investigative search firm retained by CRT or KBC) any information they may have about the undersigned's background and finances ("INFORMATION"). Neither CRT, KBC nor their agents shall be violating the undersigned's right of privacy in any matter in requesting and obtaining the Information and the undersigned hereby releases them from liability for any damage whatsoever in that connection. The Information obtained shall be kept confidential in perpetuity by CRT, KBC and their legal representatives and agents except as required by law or by judicial order.
10. Capitalized terms used but not defined in this letter have the meanings given to them in the Offering Circular.
11. This letter shall be governed in all respects by the laws of the State of New York.
LEE E MIKLES AS TRUSTEE OF
THE LEE MIKLES REVOCABLE TRUST
DATED MARCH 26, 1996
/s/ Lee E. Mikles
-------------------------------------
Signature
|
Exhibit 4.3.f.
INSIDER LETTER
Viceroy Acquisition Corporation
8235 Forsyth Boulevard
Suite 400
St. Louis, Missouri 63105
CRT Capital Group LLC
262 Harbor Drive
Stamford
Connecticut 06902
KBC Peel Hunt Ltd
111 Old Broad Street
London
EC2N 1PH
Gentlemen:
The undersigned shareholder and director of Viceroy Acquisition Corporation (the "COMPANY"), in consideration of CRT Capital Group LLC ("CRT") and KBC Peel Hunt Ltd ("KBC") agreeing to act as placement agents in the offering ("OFFERING") of 22,500,000 units (the "UNITS"), each Unit consisting of one share of common stock in the capital of the Company, par value $0.0001 per share (the "SHARES"), and one warrant (the "WARRANTS"), each Warrant entitling the holder to purchase one Share, as more particularly explained in the offering circular of the Company in connection with such Offering (the "OFFERING CIRCULAR") and embarking on the placement process, hereby agrees as follows:
1. Until the earlier of (a) the completion by the Company of a Qualified Business Combination and (b) the distribution of all amounts held in the Trust Fund following the failure by the Company to complete a Qualified Business Combination by the Qualified Business Combination Deadline, to the extent the Company solicits the approval of its shareholders for a Business Combination, the undersigned irrevocably agrees to vote all Founding Shares owned by him and the Shares included in Units purchased by the undersigned in the Offering in accordance with the majority of the votes cast by the New Shareholders.
2. In the event that the Company fails to complete a Business Combination by the Qualified Business Combination Deadline, the undersigned will take all reasonable actions
within his power to cause the Company to liquidate as soon as reasonably practicable. On such a liquidation, the undersigned hereby waives any and all right, title, interest or claim of any kind in or to any distribution of the funds held in the Trust Fund as a result of such liquidation with respect to his Founding Shares (any such right, title, interest or claim, a "CLAIM") and hereby waives any Claim he may have in the future as a result of, or arising out of, any contracts or agreements with the Company in respect of his Founding Shares and will not seek recourse against the Trust Fund for any reason whatsoever in respect of his Founding Shares.
3. In order to minimize potential conflicts of interest which may arise from multiple corporate affiliations, the undersigned agrees to present to the Company for its consideration, prior to presentation to any other person or entity, any suitable opportunity to acquire a Target Business, until the earlier of (a) the completion by the Company of a Qualified Business Combination, (b) the distribution of all amounts held in the Trust Fund following the failure by the Company to complete a Qualified Business Combination by the Qualified Business Combination Deadline, and (c) such time as the undersigned ceases to be either an officer or a director of the Company, subject to any pre-existing fiduciary or contractual obligations the undersigned might have.
4. The undersigned acknowledges and agrees that until the earlier
of (a) the completion by the Company of a Qualified Business Combination and
(b) the distribution of all amounts held in the Trust Fund following the
failure by the Company to complete a Qualified Business Combination by the
Qualified Business Combination Deadline, the Company will not complete any
Business Combination which involves an entity which is affiliated with the
undersigned unless the Company obtains an opinion from an independent
investment banking firm which is a member of the National Association of
Securities Dealers, Inc. (such firm being reasonably acceptable to each of
CRT and KBC) that the Business Combination is fair to the Company's
shareholders from a financial perspective.
5. Until the completion by the Company of a Business Combination neither the undersigned, any member of the family of the undersigned, nor any affiliate of the undersigned will be entitled to receive, and will not accept, any compensation for services rendered to the Company prior to such Business Combination; provided that the undersigned shall be entitled to reimbursement from the Company (out of the funds not held in the Trust Fund) for his reasonable out-of-pocket expenses incurred in connection with seeking and completing any Business Combination. Upon completion of a Business Combination, the Company may enter into an employment agreement with the undersigned for the payment of reasonable compensation, provided that such compensation may not be paid from the Trust Fund except to the extent approved by the shareholders of the Company in connection with such Business Combination.
6. Until the earlier of (a) the completion by the Company of a Qualified Business Combination and (b) the distribution of all amounts held in the Trust Fund following the failure by the Company to complete a Qualified Business Combination by the Qualified Business Combination Deadline, neither the undersigned, any member of the family of the undersigned, nor any affiliate of the undersigned will be entitled to receive or accept a finder's fee or any other
compensation in the event the undersigned, any member of the family of the undersigned or any affiliate of the undersigned originates a Business Combination.
7. The undersigned agrees to enter into an escrow agreement with the Company and an escrow agent (such escrow agent being reasonably acceptable to each of CRT and KBC) with respect to his Founding Shares whereby his Founding Shares will be held in escrow for a three-year period commencing on the Admission Date. The undersigned agrees not to amend the terms of any escrow agreement entered into without the prior written consent of each of CRT and KBC.
8. (a) The undersigned agrees, for the purposes of, and subject to the provisions of, Rule 7 of the AIM Rules (as further described in the Offering Circular) and the Rule 7 Lock-in Deed, dated as of the date hereof and executed by the undersigned, not to dispose of any interest in the Shares or Warrants held by the undersigned, whensoever such Shares or Warrants were purchased, for the period of one year from the Admission Date.
(b) The undersigned further agrees that he will not sell or otherwise dispose of any securities of the Company owned by him including the Shares and Warrants, except pursuant to a registration statement under the U.S. Securities Act of 1933, as amended (the "SECURITIES ACT") or pursuant to an exemption from such registration; provided, however, that in the case of any sale or disposition otherwise than pursuant to a registration statement, the undersigned shall take such steps, including without limitation legending the certificates representing the securities, to make sure that the securities may be segregated from the pool of securities that are or may become tradeable in the U.S free of any restrictions. Additionally, the undersigned will not engage in any hedging transactions involving the securities of the Company owned by him (including the Shares and Warrants) other than in compliance with the Securities Act.
9. The undersigned agrees to be executive vice president,
secretary, treasurer and a member of the board of directors of the Company
until the earlier of (a) the completion by the Company of a Qualified
Business Combination, or (b) the distribution of all amounts held in the
Trust Fund following the failure by the Company to complete a Qualified
Business Combination by the Qualified Business Combination Deadline. The
undersigned's biographical information furnished to the Company and CRT and
attached hereto as Exhibit A is true and accurate in all respects, does not
omit any material information with respect to the undersigned's background
and contains all of the information required to be disclosed pursuant to
Section 401 of Regulation S-K, promulgated under the Securities Act, in a
registration statement filed under the Securities Act or to be contained in
the Admission Document prepared for the purposes of the rules and
regulations of AIM. The undersigned represents and warrants that:
(a) he is not subject to or a respondent in any legal action for, any injunction, cease-and-desist order or order or stipulation to desist or refrain from any act or practice relating to the offering of securities in any jurisdiction;
(b) he has never been convicted of or pleaded guilty to any crime (i) involving any fraud or (ii) relating to any financial transaction or handling of funds of another person, or
(iii) pertaining to any dealings in any securities and he is not currently a defendant in any such criminal proceeding; and
(c) he has never been suspended or expelled from membership in any securities or commodities exchange or association or had a securities or commodities license or registration denied, suspended or revoked.
10. The undersigned has full right and power, without violating any agreement by which he is bound, to enter into this letter agreement and to serve as executive vice president, secretary, treasurer and a member of the board of directors of the Company.
11. The undersigned authorizes any employer, financial institution, or consumer credit reporting agency to release to CRT and KBC and their legal representatives or agents (including any investigative search firm retained by CRT or KBC) any information they may have about the undersigned's background and finances ("INFORMATION"). Neither CRT, KBC nor their agents shall be violating the undersigned's right of privacy in any matter in requesting and obtaining the Information and the undersigned hereby releases them from liability for any damage whatsoever in that connection. The Information obtained shall be kept confidential in perpetuity by CRT, KBC and their legal representatives and agents except as required by law or by judicial order.
12. Capitalized terms used but not defined in this letter have the meanings given to them in the Offering Circular.
13. This letter shall be governed in all respects by the laws of the State of New York.
DOUGLAS D. HOMMERT
/s/ Douglas D. Hommert
---------------------------------------
Signature
|
EXHIBIT A
DOUGLAS D. HOMMERT has been the Company's executive vice president, secretary, treasurer and a member of the Board since inception. Mr. Hommert has been executive vice president and general counsel of Apex Oil Company, Inc. since September 2002. Between October 1988 and September 2002, he was a partner in the St. Louis law firm of Lewis, Rice & Fingersh, L.C. With that firm, he practiced in the areas of business law, taxation, mergers and acquisitions, financing and partnerships. He was licensed as a Certified Public Accountant in 1982.
Exhibit 4.3.g.
INSIDER LETTER
Viceroy Acquisition Corporation
8235 Forsyth Boulevard
Suite 400
St. Louis, Missouri 63105
CRT Capital Group LLC
262 Harbor Drive
Stamford
Connecticut 06902
KBC Peel Hunt Ltd
111 Old Broad Street
London
EC2N 1PH
Gentlemen:
The undersigned shareholder of Viceroy Acquisition Corporation (the "COMPANY"), in consideration of CRT Capital Group LLC ("CRT") and KBC Peel Hunt Ltd ("KBC") agreeing to act as placement agents in the offering ("OFFERING") of 22,500,000 units (the "UNITS"), each Unit consisting of one share of common stock in the capital of the Company, par value $0.0001 per share (the "SHARES"), and one warrant (the "WARRANTS"), each Warrant entitling the holder to purchase one Share, as more particularly explained in the offering circular of the Company in connection with such Offering (the "OFFERING CIRCULAR") and embarking on the placement process, hereby agrees as follows:
1. Until the earlier of (a) the completion by the Company of a Qualified Business Combination and (b) the distribution of all amounts held in the Trust Fund following the failure by the Company to complete a Qualified Business Combination by the Qualified Business Combination Deadline, to the extent the Company solicits the approval of its shareholders for a Business Combination, the undersigned irrevocably agrees to vote all Founding Shares owned by him and the Shares included in Units purchased by the undersigned in the Offering in accordance with the majority of the votes cast by the New Shareholders.
2. In the event that the Company fails to complete a Business Combination by the Qualified Business Combination Deadline, the undersigned will take all reasonable actions
within its power to cause the Company to liquidate as soon as reasonably practicable. On such a liquidation, the undersigned hereby waives any and all right, title, interest or claim of any kind in or to any distribution of the funds held in the Trust Fund as a result of such liquidation with respect to its Founding Shares (any such right, title, interest or claim, a "CLAIM") and hereby waives any Claim it may have in the future as a result of, or arising out of, any contracts or agreements with the Company in respect of its Founding Shares and will not seek recourse against the Trust Fund for any reason whatsoever in respect of its Founding Shares.
3. In order to minimize potential conflicts of interest which may arise from multiple corporate affiliations, the undersigned agrees to present to the Company for its consideration, prior to presentation to any other person or entity, any suitable opportunity to acquire a Target Business, until the earlier of (a) the completion by the Company of a Qualified Business Combination and (b) the distribution of all amounts held in the Trust Fund following the failure by the Company to complete a Qualified Business Combination by the Qualified Business Combination Deadline.
4. The undersigned acknowledges and agrees that until the earlier
of (a) the completion by the Company of a Qualified Business Combination and
(b) the distribution of all amounts held in the Trust Fund following the
failure by the Company to complete a Qualified Business Combination by the
Qualified Business Combination Deadline, the Company will not complete any
Business Combination which involves an entity which is affiliated with the
undersigned unless the Company obtains an opinion from an independent
investment banking firm which is a member of the National Association of
Securities Dealers, Inc. (such firm being reasonably acceptable to each of
CRT and KBC) that the Business Combination is fair to the Company's
shareholders from a financial perspective.
5. Until the completion by the Company of a Business Combination neither the undersigned, nor any affiliate of the undersigned will be entitled to receive, and will not accept, any compensation for services rendered to the Company prior to such Business Combination; provided that the undersigned shall be entitled to reimbursement from the Company (out of the funds not held in the Trust Fund) for its reasonable out-of-pocket expenses incurred in connection with seeking and completing any Business Combination.
6. Until the earlier of (a) the completion by the Company of a Qualified Business Combination and (b) the distribution of all amounts held in the Trust Fund following the failure by the Company to complete a Qualified Business Combination by the Qualified Business Combination Deadline, neither the undersigned, nor any affiliate of the undersigned will be entitled to receive or accept a finder's fee or any other compensation in the event the undersigned, or any affiliate of the undersigned originates a Business Combination.
7. The undersigned agrees to enter into an escrow agreement with the Company and an escrow agent (such escrow agent being reasonably acceptable to each of CRT and KBC) with respect to its Founding Shares whereby its Founding Shares will be held in escrow for a three-year period commencing on the Admission Date. The undersigned agrees not to amend the terms of any escrow agreement entered into without the prior written consent of each of CRT and KBC.
8. (a) The undersigned agrees, for the purposes of, and subject to the provisions of, Rule 7 of the AIM Rules (as further described in the Offering Circular) and the Rule 7 Lock-in Deed, dated as of the date hereof and executed by the undersigned, not to dispose of any interest in the Shares or Warrants held by the undersigned, whensoever such Shares or Warrants were purchased, for the period of one year from the Admission Date.
(b) The undersigned further agrees that he will not sell or otherwise dispose of any securities of the Company owned by it including the Shares and Warrants, except pursuant to a registration statement under the U.S. Securities Act of 1933, as amended (the "SECURITIES ACT") or pursuant to an exemption from such registration; provided, however, that in the case of any sale or disposition otherwise than pursuant to a registration statement, the undersigned shall take such steps, including without limitation legending the certificates representing the securities, to make sure that the securities may be segregated from the pool of securities that are or may become tradeable in the U.S free of any restrictions. Additionally, the undersigned will not engage in any hedging transactions involving the securities of the Company owned by it (including the Shares and Warrants) other than in compliance with the Securities Act.
9. The undersigned authorizes any employer, financial institution, or consumer credit reporting agency to release to CRT and KBC and their legal representatives or agents (including any investigative search firm retained by CRT or KBC) any information they may have about the undersigned's background and finances ("INFORMATION"). Neither CRT, KBC nor their agents shall be violating the undersigned's right of privacy in any matter in requesting and obtaining the Information and the undersigned hereby releases them from liability for any damage whatsoever in that connection. The Information obtained shall be kept confidential in perpetuity by CRT, KBC and their legal representatives and agents except as required by law or by judicial order.
10. Capitalized terms used but not defined in this letter have the meanings given to them in the Offering Circular.
11. This letter shall be governed in all respects by the laws of the State of New York.
DOUGLAS D. HOMMERT AS TRUSTEE OF
THE DOUGLAS D. HOMMERT REVOCABLE
TRUST
/s/ Douglas D. Hommert
---------------------------------------
Signature
|
Exhibit 4.3.h.
INSIDER LETTER
Viceroy Acquisition Corporation
8235 Forsyth Boulevard
Suite 400
St. Louis, Missouri 63105
CRT Capital Group LLC
262 Harbor Drive
Stamford
Connecticut 06902
KBC Peel Hunt Ltd
111 Old Broad Street
London
EC2N 1PH
Gentlemen:
The undersigned shareholder and director of Viceroy Acquisition Corporation (the "COMPANY"), in consideration of CRT Capital Group LLC ("CRT") and KBC Peel Hunt Ltd ("KBC") agreeing to act as placement agents in the offering ("OFFERING") of 22,500,000 units (the "UNITS"), each Unit consisting of one share of common stock in the capital of the Company, par value $0.0001 per share (the "SHARES"), and one warrant (the "WARRANTS"), each Warrant entitling the holder to purchase one Share, as more particularly explained in the offering circular of the Company in connection with such Offering (the "OFFERING CIRCULAR") and embarking on the placement process, hereby agrees as follows:
1. Until the earlier of (a) the completion by the Company of a Qualified Business Combination and (b) the distribution of all amounts held in the Trust Fund following the failure by the Company to complete a Qualified Business Combination by the Qualified Business Combination Deadline, to the extent the Company solicits the approval of its shareholders for a Business Combination, the undersigned irrevocably agrees to vote all Founding Shares owned by him and the Shares included in Units purchased by the undersigned in the Offering in accordance with the majority of the votes cast by the New Shareholders.
2. In the event that the Company fails to complete a Business Combination by the Qualified Business Combination Deadline, the undersigned will take all reasonable actions
within his power to cause the Company to liquidate as soon as reasonably practicable. On such a liquidation, the undersigned hereby waives any and all right, title, interest or claim of any kind in or to any distribution of the funds held in the Trust Fund as a result of such liquidation with respect to his Founding Shares (any such right, title, interest or claim, a "CLAIM") and hereby waives any Claim he may have in the future as a result of, or arising out of, any contracts or agreements with the Company in respect of his Founding Shares and will not seek recourse against the Trust Fund for any reason whatsoever in respect of his Founding Shares.
3. In order to minimize potential conflicts of interest which may arise from multiple corporate affiliations, the undersigned agrees to present to the Company for its consideration, prior to presentation to any other person or entity, any suitable opportunity to acquire a Target Business, until the earlier of (a) the completion by the Company of a Qualified Business Combination, (b) the distribution of all amounts held in the Trust Fund following the failure by the Company to complete a Qualified Business Combination by the Qualified Business Combination Deadline, and (c) such time as the undersigned ceases to be either an officer or a director of the Company, subject to any pre-existing fiduciary or contractual obligations the undersigned might have.
4. The undersigned acknowledges and agrees that until the earlier
of (a) the completion by the Company of a Qualified Business Combination and
(b) the distribution of all amounts held in the Trust Fund following the
failure by the Company to complete a Qualified Business Combination by the
Qualified Business Combination Deadline, the Company will not complete any
Business Combination which involves an entity which is affiliated with the
undersigned unless the Company obtains an opinion from an independent
investment banking firm which is a member of the National Association of
Securities Dealers, Inc. (such firm being reasonably acceptable to each of
CRT and KBC) that the Business Combination is fair to the Company's
shareholders from a financial perspective.
5. Until the completion by the Company of a Business Combination neither the undersigned, any member of the family of the undersigned, nor any affiliate of the undersigned will be entitled to receive, and will not accept, any compensation for services rendered to the Company prior to such Business Combination; provided that the undersigned shall be entitled to reimbursement from the Company (out of the funds not held in the Trust Fund) for his reasonable out-of-pocket expenses incurred in connection with seeking and completing any Business Combination. Upon completion of a Business Combination, the Company may enter into an employment agreement with the undersigned for the payment of reasonable compensation, provided that such compensation may not be paid from the Trust Fund except to the extent approved by the shareholders of the Company in connection with such Business Combination.
6. Until the earlier of (a) the completion by the Company of a Qualified Business Combination and (b) the distribution of all amounts held in the Trust Fund following the failure by the Company to complete a Qualified Business Combination by the Qualified Business Combination Deadline, neither the undersigned, any member of the family of the undersigned, nor any affiliate of the undersigned will be entitled to receive or accept a finder's fee or any other
compensation in the event the undersigned, any member of the family of the undersigned or any affiliate of the undersigned originates a Business Combination.
7. The undersigned agrees to enter into an escrow agreement with the Company and an escrow agent (such escrow agent being reasonably acceptable to each of CRT and KBC) with respect to his Founding Shares whereby his Founding Shares will be held in escrow for a three-year period commencing on the Admission Date. The undersigned agrees not to amend the terms of any escrow agreement entered into without the prior written consent of each of CRT and KBC.
8. (a) The undersigned agrees, for the purposes of, and subject to the provisions of, Rule 7 of the AIM Rules (as further described in the Offering Circular) and the Rule 7 Lock-in Deed, dated as of the date hereof and executed by the undersigned, not to dispose of any interest in the Shares or Warrants held by the undersigned, whensoever such Shares or Warrants were purchased, for the period of one year from the Admission Date.
(b) The undersigned further agrees that he will not sell or otherwise dispose of any securities of the Company owned by him including the Shares and Warrants, except pursuant to a registration statement under the U.S. Securities Act of 1933, as amended (the "SECURITIES ACT") or pursuant to an exemption from such registration; provided, however, that in the case of any sale or disposition otherwise than pursuant to a registration statement, the undersigned shall take such steps, including without limitation legending the certificates representing the securities, to make sure that the securities may be segregated from the pool of securities that are or may become tradeable in the U.S free of any restrictions. Additionally, the undersigned will not engage in any hedging transactions involving the securities of the Company owned by him (including the Shares and Warrants) other than in compliance with the Securities Act.
9. The undersigned agrees to be a member of the board of directors of the Company until the earlier of (a) the completion by the Company of a Qualified Business Combination, or (b) the distribution of all amounts held in the Trust Fund following the failure by the Company to complete a Qualified Business Combination by the Qualified Business Combination Deadline. The undersigned's biographical information furnished to the Company and CRT and attached hereto as Exhibit A is true and accurate in all respects, does not omit any material information with respect to the undersigned's background and contains all of the information required to be disclosed pursuant to Section 401 of Regulation S-K, promulgated under the Securities Act, in a registration statement filed under the Securities Act or to be contained in the Admission Document prepared for the purposes of the rules and regulations of AIM. The undersigned represents and warrants that:
(a) he is not subject to or a respondent in any legal action for, any injunction, cease-and-desist order or order or stipulation to desist or refrain from any act or practice relating to the offering of securities in any jurisdiction;
(b) he has never been convicted of or pleaded guilty to any crime (i) involving any fraud or (ii) relating to any financial transaction or handling of funds of another person, or
(iii) pertaining to any dealings in any securities and he is not currently a defendant in any such criminal proceeding; and
(c) he has never been suspended or expelled from membership in any securities or commodities exchange or association or had a securities or commodities license or registration denied, suspended or revoked.
10. The undersigned has full right and power, without violating any agreement by which he is bound, to enter into this letter agreement and to serve as a member of the board of directors of the Company.
11. The undersigned authorizes any employer, financial institution, or consumer credit reporting agency to release to CRT and KBC and their legal representatives or agents (including any investigative search firm retained by CRT or KBC) any information they may have about the undersigned's background and finances ("INFORMATION"). Neither CRT, KBC nor their agents shall be violating the undersigned's right of privacy in any matter in requesting and obtaining the Information and the undersigned hereby releases them from liability for any damage whatsoever in that connection. The Information obtained shall be kept confidential in perpetuity by CRT, KBC and their legal representatives and agents except as required by law or by judicial order.
12. Capitalized terms used but not defined in this letter have the meanings given to them in the Offering Circular.
13. This letter shall be governed in all respects by the laws of the State of New York.
EDWIN A. LEVY
/s/ Edwin A. Levy
---------------------------------------
Signature
|
EXHIBIT A
EDWIN A. LEVY has been a member of the Board since November 2005. In 1979, Mr. Levy co-founded Levy, Harkins & Co., Inc., an investment advisory firm, where he now serves as chairman of the board and individual advisor. From 1959 to 1979, Mr. Levy served in various capacities, including as a partner beginning in 1971, for Bear, Stearns & Company, a broker-dealer and global securities and investment firm. Mr. Levy has been a director of Traffix, Inc. since November 1995, and he currently serves as a member of the audit committee and the stock options committee. He is also a director of Forward Industries, Inc., a publicly-held company in the business of designing, manufacturing and distributing custom carrying case solutions, and World Point Terminals, Inc., a publicly-held Canadian company based in Calgary, which owns and operates petroleum storage facilities in the Netherlands, Bahamas and United States.
Exhibit 4.3.i.
INSIDER LETTER
Viceroy Acquisition Corporation
8235 Forsyth Boulevard
Suite 400
St. Louis, Missouri 63105
CRT Capital Group LLC
262 Harbor Drive
Stamford
Connecticut 06902
KBC Peel Hunt Ltd
111 Old Broad Street
London
EC2N 1PH
Gentlemen:
The undersigned shareholder of Viceroy Acquisition Corporation (the "COMPANY"), in consideration of CRT Capital Group LLC ("CRT") and KBC Peel Hunt Ltd ("KBC") agreeing to act as placement agents in the offering ("OFFERING") of 22,500,000 units (the "UNITS"), each Unit consisting of one share of common stock in the capital of the Company, par value $0.0001 per share (the "SHARES"), and one warrant (the "WARRANTS"), each Warrant entitling the holder to purchase one Share, as more particularly explained in the offering circular of the Company in connection with such Offering (the "OFFERING CIRCULAR") and embarking on the placement process, hereby agrees as follows:
1. Until the earlier of (a) the completion by the Company of a Qualified Business Combination and (b) the distribution of all amounts held in the Trust Fund following the failure by the Company to complete a Qualified Business Combination by the Qualified Business Combination Deadline, to the extent the Company solicits the approval of his shareholders for a Business Combination, the undersigned irrevocably agrees to vote all Founding Shares owned by him and the Shares included in Units purchased by the undersigned in the Offering in accordance with the majority of the votes cast by the New Shareholders.
2. In the event that the Company fails to complete a Business Combination by the Qualified Business Combination Deadline, the undersigned will take all reasonable actions
within his power to cause the Company to liquidate as soon as reasonably practicable. On such a liquidation, the undersigned hereby waives any and all right, title, interest or claim of any kind in or to any distribution of the funds held in the Trust Fund as a result of such liquidation with respect to his Founding Shares (any such right, title, interest or claim, a "CLAIM") and hereby waives any Claim he may have in the future as a result of, or arising out of, any contracts or agreements with the Company in respect of his Founding Shares and will not seek recourse against the Trust Fund for any reason whatsoever in respect of his Founding Shares.
3. In order to minimize potential conflicts of interest which may arise from multiple corporate affiliations, the undersigned agrees to present to the Company for his consideration, prior to presentation to any other person or entity, any suitable opportunity to acquire a Target Business, until the earlier of (a) the completion by the Company of a Qualified Business Combination and (b) the distribution of all amounts held in the Trust Fund following the failure by the Company to complete a Qualified Business Combination by the Qualified Business Combination Deadline.
4. The undersigned acknowledges and agrees that until the earlier
of (a) the completion by the Company of a Qualified Business Combination and
(b) the distribution of all amounts held in the Trust Fund following the
failure by the Company to complete a Qualified Business Combination by the
Qualified Business Combination Deadline, the Company will not complete any
Business Combination which involves an entity which is affiliated with the
undersigned unless the Company obtains an opinion from an independent
investment banking firm which is a member of the National Association of
Securities Dealers, Inc. (such firm being reasonably acceptable to each of
CRT and KBC) that the Business Combination is fair to the Company's
shareholders from a financial perspective.
5. Until the completion by the Company of a Business Combination neither the undersigned, nor any affiliate of the undersigned will be entitled to receive, and will not accept, any compensation for services rendered to the Company prior to such Business Combination; provided that the undersigned shall be entitled to reimbursement from the Company (out of the funds not held in the Trust Fund) for his reasonable out-of-pocket expenses incurred in connection with seeking and completing any Business Combination.
6. Until the earlier of (a) the completion by the Company of a Qualified Business Combination and (b) the distribution of all amounts held in the Trust Fund following the failure by the Company to complete a Qualified Business Combination by the Qualified Business Combination Deadline, neither the undersigned, nor any affiliate of the undersigned will be entitled to receive or accept a finder's fee or any other compensation in the event the undersigned, or any affiliate of the undersigned originates a Business Combination.
7. The undersigned agrees to enter into an escrow agreement with the Company and an escrow agent (such escrow agent being reasonably acceptable to each of CRT and KBC) with respect to his Founding Shares whereby his Founding Shares will be held in escrow for a three-year period commencing on the Admission Date. The undersigned agrees not to amend the terms of any escrow agreement entered into without the prior written consent of each of CRT and KBC.
8. (a) The undersigned agrees, for the purposes of, and subject to the provisions of, Rule 7 of the AIM Rules (as further described in the Offering Circular) and the Rule 7 Lock-in Deed, dated as of the date hereof and executed by the undersigned, not to dispose of any interest in the Shares or Warrants held by the undersigned, whensoever such Shares or Warrants were purchased, for the period of one year from the Admission Date.
(b) The undersigned further agrees that he will not sell or otherwise dispose of any securities of the Company owned by him including the Shares and Warrants, except pursuant to a registration statement under the U.S. Securities Act of 1933, as amended (the "SECURITIES ACT") or pursuant to an exemption from such registration; provided, however, that in the case of any sale or disposition otherwise than pursuant to a registration statement, the undersigned shall take such steps, including without limitation legending the certificates representing the securities, to make sure that the securities may be segregated from the pool of securities that are or may become tradeable in the U.S free of any restrictions. Additionally, the undersigned will not engage in any hedging transactions involving the securities of the Company owned by him (including the Shares and Warrants) other than in compliance with the Securities Act.
9. The undersigned authorizes any employer, financial institution, or consumer credit reporting agency to release to CRT and KBC and their legal representatives or agents (including any investigative search firm retained by CRT or KBC) any information they may have about the undersigned's background and finances ("INFORMATION"). Neither CRT, KBC nor their agents shall be violating the undersigned's right of privacy in any matter in requesting and obtaining the Information and the undersigned hereby releases them from liability for any damage whatsoever in that connection. The Information obtained shall be kept confidential in perpetuity by CRT, KBC and their legal representatives and agents except as required by law or by judicial order.
10. Capitalized terms used but not defined in this letter have the meanings given to them in the Offering Circular.
11. This letter shall be governed in all respects by the laws of the State of New York.
JOE C. LEACH
/s/ Joe C. Leach
-----------------------------------------
Signature
|
Exhibit 4.3.j.
INSIDER LETTER
Viceroy Acquisition Corporation
8235 Forsyth Boulevard
Suite 400
St. Louis, Missouri 63105
CRT Capital Group LLC
262 Harbor Drive
Stamford
Connecticut 06902
KBC Peel Hunt Ltd
111 Old Broad Street
London
EC2N 1PH
Gentlemen:
The undersigned shareholder of Viceroy Acquisition Corporation (the "COMPANY"), in consideration of CRT Capital Group LLC ("CRT") and KBC Peel Hunt Ltd ("KBC") agreeing to act as placement agents in the offering ("OFFERING") of 22,500,000 units (the "UNITS"), each Unit consisting of one share of common stock in the capital of the Company, par value $0.0001 per share (the "SHARES"), and one warrant (the "WARRANTS"), each Warrant entitling the holder to purchase one Share, as more particularly explained in the offering circular of the Company in connection with such Offering (the "OFFERING CIRCULAR") and embarking on the placement process, hereby agrees as follows:
1. Until the earlier of (a) the completion by the Company of a Qualified Business Combination and (b) the distribution of all amounts held in the Trust Fund following the failure by the Company to complete a Qualified Business Combination by the Qualified Business Combination Deadline, to the extent the Company solicits the approval of his shareholders for a Business Combination, the undersigned irrevocably agrees to vote all Founding Shares owned by him and the Shares included in Units purchased by the undersigned in the Offering in accordance with the majority of the votes cast by the New Shareholders.
2. In the event that the Company fails to complete a Business Combination by the Qualified Business Combination Deadline, the undersigned will take all reasonable actions
within his power to cause the Company to liquidate as soon as reasonably practicable. On such a liquidation, the undersigned hereby waives any and all right, title, interest or claim of any kind in or to any distribution of the funds held in the Trust Fund as a result of such liquidation with respect to his Founding Shares (any such right, title, interest or claim, a "CLAIM") and hereby waives any Claim he may have in the future as a result of, or arising out of, any contracts or agreements with the Company in respect of his Founding Shares and will not seek recourse against the Trust Fund for any reason whatsoever in respect of his Founding Shares.
3. In order to minimize potential conflicts of interest which may arise from multiple corporate affiliations, the undersigned agrees to present to the Company for his consideration, prior to presentation to any other person or entity, any suitable opportunity to acquire a Target Business, until the earlier of (a) the completion by the Company of a Qualified Business Combination and (b) the distribution of all amounts held in the Trust Fund following the failure by the Company to complete a Qualified Business Combination by the Qualified Business Combination Deadline.
4. The undersigned acknowledges and agrees that until the earlier of (a) the completion by the Company of a Qualified Business Combination and (b) the distribution of all amounts held in the Trust Fund following the failure by the Company to complete a Qualified Business Combination by the Qualified Business Combination Deadline, the Company will not complete any Business Combination which involves an entity which is affiliated with the undersigned unless the Company obtains an opinion from an independent investment banking firm which is a member of the National Association of Securities Dealers, Inc. (such firm being reasonably acceptable to each of CRT and KBC) that the Business Combination is fair to the Company's shareholders from a financial perspective.
5. Until the completion by the Company of a Business Combination neither the undersigned, nor any affiliate of the undersigned will be entitled to receive, and will not accept, any compensation for services rendered to the Company prior to such Business Combination; provided that the undersigned shall be entitled to reimbursement from the Company (out of the funds not held in the Trust Fund) for his reasonable out-of-pocket expenses incurred in connection with seeking and completing any Business Combination.
6. Until the earlier of (a) the completion by the Company of a Qualified Business Combination and (b) the distribution of all amounts held in the Trust Fund following the failure by the Company to complete a Qualified Business Combination by the Qualified Business Combination Deadline, neither the undersigned, nor any affiliate of the undersigned will be entitled to receive or accept a finder's fee or any other compensation in the event the undersigned, or any affiliate of the undersigned originates a Business Combination.
7. The undersigned agrees to enter into an escrow agreement with the Company and an escrow agent (such escrow agent being reasonably acceptable to each of CRT and KBC) with respect to his Founding Shares whereby his Founding Shares will be held in escrow for a three-year period commencing on the Admission Date. The undersigned agrees not to amend the terms of any escrow agreement entered into without the prior written consent of each of CRT and KBC.
8. (a) The undersigned agrees, for the purposes of, and subject to the provisions of, Rule 7 of the AIM Rules (as further described in the Offering Circular) and the Rule 7 Lock-in Deed, dated as of the date hereof and executed by the undersigned, not to dispose of any interest in the Shares or Warrants held by the undersigned, whensoever such Shares or Warrants were purchased, for the period of one year from the Admission Date.
(b) The undersigned further agrees that he will not sell or otherwise dispose of any securities of the Company owned by him including the Shares and Warrants, except pursuant to a registration statement under the U.S. Securities Act of 1933, as amended (the "SECURITIES ACT") or pursuant to an exemption from such registration; provided, however, that in the case of any sale or disposition otherwise than pursuant to a registration statement, the undersigned shall take such steps, including without limitation legending the certificates representing the securities, to make sure that the securities may be segregated from the pool of securities that are or may become tradeable in the U.S free of any restrictions. Additionally, the undersigned will not engage in any hedging transactions involving the securities of the Company owned by him (including the Shares and Warrants) other than in compliance with the Securities Act.
9. The undersigned authorizes any employer, financial institution, or consumer credit reporting agency to release to CRT and KBC and their legal representatives or agents (including any investigative search firm retained by CRT or KBC) any information they may have about the undersigned's background and finances ("INFORMATION"). Neither CRT, KBC nor their agents shall be violating the undersigned's right of privacy in any matter in requesting and obtaining the Information and the undersigned hereby releases them from liability for any damage whatsoever in that connection. The Information obtained shall be kept confidential in perpetuity by CRT, KBC and their legal representatives and agents except as required by law or by judicial order.
10. Capitalized terms used but not defined in this letter have the meanings given to them in the Offering Circular.
11. This letter shall be governed in all respects by the laws of the State of New York.
MARK R MILLER
/s/ M. R. Miller
-----------------------------------------
Signature
|
Exhibit 4.3.k.
INSIDER LETTER
Viceroy Acquisition Corporation
8235 Forsyth Boulevard
Suite 400
St. Louis, Missouri 63105
CRT Capital Group LLC
262 Harbor Drive
Stamford
Connecticut 06902
KBC Peel Hunt Ltd
111 Old Broad Street
London
EC2N 1PH
Gentlemen:
The undersigned shareholder of Viceroy Acquisition Corporation (the "COMPANY"), in consideration of CRT Capital Group LLC ("CRT") and KBC Peel Hunt Ltd ("KBC") agreeing to act as placement agents in the offering ("OFFERING") of 22,500,000 units (the "UNITS"), each Unit consisting of one share of common stock in the capital of the Company, par value $0.0001 per share (the "SHARES"), and one warrant (the "WARRANTS"), each Warrant entitling the holder to purchase one Share, as more particularly explained in the offering circular of the Company in connection with such Offering (the "OFFERING CIRCULAR") and embarking on the placement process, hereby agrees as follows:
1. Until the earlier of (a) the completion by the Company of a Qualified Business Combination and (b) the distribution of all amounts held in the Trust Fund following the failure by the Company to complete a Qualified Business Combination by the Qualified Business Combination Deadline, to the extent the Company solicits the approval of its shareholders for a Business Combination, the undersigned irrevocably agrees to vote all Founding Shares owned by him and the Shares included in Units purchased by the undersigned in the Offering in accordance with the majority of the votes cast by the New Shareholders.
2. In the event that the Company fails to complete a Business Combination by the Qualified Business Combination Deadline, the undersigned will take all reasonable actions
within its power to cause the Company to liquidate as soon as reasonably practicable. On such a liquidation, the undersigned hereby waives any and all right, title, interest or claim of any kind in or to any distribution of the funds held in the Trust Fund as a result of such liquidation with respect to its Founding Shares (any such right, title, interest or claim, a "CLAIM") and hereby waives any Claim it may have in the future as a result of, or arising out of, any contracts or agreements with the Company in respect of its Founding Shares and will not seek recourse against the Trust Fund for any reason whatsoever in respect of its Founding Shares.
3. In order to minimize potential conflicts of interest which may arise from multiple corporate affiliations, the undersigned agrees to present to the Company for its consideration, prior to presentation to any other person or entity, any suitable opportunity to acquire a Target Business, until the earlier of (a) the completion by the Company of a Qualified Business Combination and (b) the distribution of all amounts held in the Trust Fund following the failure by the Company to complete a Qualified Business Combination by the Qualified Business Combination Deadline.
4. The undersigned acknowledges and agrees that until the earlier of (a) the completion by the Company of a Qualified Business Combination and (b) the distribution of all amounts held in the Trust Fund following the failure by the Company to complete a Qualified Business Combination by the Qualified Business Combination Deadline, the Company will not complete any Business Combination which involves an entity which is affiliated with the undersigned unless the Company obtains an opinion from an independent investment banking firm which is a member of the National Association of Securities Dealers, Inc. (such firm being reasonably acceptable to each of CRT and KBC) that the Business Combination is fair to the Company's shareholders from a financial perspective.
5. Until the completion by the Company of a Business Combination neither the undersigned, nor any affiliate of the undersigned will be entitled to receive, and will not accept, any compensation for services rendered to the Company prior to such Business Combination; provided that the undersigned shall be entitled to reimbursement from the Company (out of the funds not held in the Trust Fund) for its reasonable out-of-pocket expenses incurred in connection with seeking and completing any Business Combination.
6. Until the earlier of (a) the completion by the Company of a Qualified Business Combination and (b) the distribution of all amounts held in the Trust Fund following the failure by the Company to complete a Qualified Business Combination by the Qualified Business Combination Deadline, neither the undersigned, nor any affiliate of the undersigned will be entitled to receive or accept a finder's fee or any other compensation in the event the undersigned, or any affiliate of the undersigned originates a Business Combination.
7. The undersigned agrees to enter into an escrow agreement with the Company and an escrow agent (such escrow agent being reasonably acceptable to each of CRT and KBC) with respect to its Founding Shares whereby its Founding Shares will be held in escrow for a three-year period commencing on the Admission Date. The undersigned agrees not to amend the terms of any escrow agreement entered into without the prior written consent of each of CRT and KBC.
8. (a) The undersigned agrees, for the purposes of, and subject to the provisions of, Rule 7 of the AIM Rules (as further described in the Offering Circular) and the Rule 7 Lock-in Deed, dated as of the date hereof and executed by the undersigned, not to dispose of any interest in the Shares or Warrants held by the undersigned, whensoever such Shares or Warrants were purchased, for the period of one year from the Admission Date.
(b) The undersigned further agrees that he will not sell or otherwise dispose of any securities of the Company owned by it including the Shares and Warrants, except pursuant to a registration statement under the U.S. Securities Act of 1933, as amended (the "SECURITIES ACT") or pursuant to an exemption from such registration; provided, however, that in the case of any sale or disposition otherwise than pursuant to a registration statement, the undersigned shall take such steps, including without limitation legending the certificates representing the securities, to make sure that the securities may be segregated from the pool of securities that are or may become tradeable in the U.S free of any restrictions. Additionally, the undersigned will not engage in any hedging transactions involving the securities of the Company owned by it (including the Shares and Warrants) other than in compliance with the Securities Act.
9. The undersigned authorizes any employer, financial institution, or consumer credit reporting agency to release to CRT and KBC and their legal representatives or agents (including any investigative search firm retained by CRT or KBC) any information they may have about the undersigned's background and finances ("INFORMATION"). Neither CRT, KBC nor their agents shall be violating the undersigned's right of privacy in any matter in requesting and obtaining the Information and the undersigned hereby releases them from liability for any damage whatsoever in that connection. The Information obtained shall be kept confidential in perpetuity by CRT, KBC and their legal representatives and agents except as required by law or by judicial order.
10. Capitalized terms used but not defined in this letter have the meanings given to them in the Offering Circular.
11. This letter shall be governed in all respects by the laws of the State of New York.
RAS LLC
/s/ Lee E. Mikles
-----------------------------------------
Signature
|
Exhibit 4.3.l.
INSIDER LETTER
Viceroy Acquisition Corporation
8235 Forsyth Boulevard
Suite 400
St. Louis, Missouri 63105
CRT Capital Group LLC
262 Harbor Drive
Stamford
Connecticut 06902
KBC Peel Hunt Ltd
111 Old Broad Street
London
EC2N 1PH
Gentlemen:
The undersigned director of Viceroy Acquisition Corporation (the "COMPANY"), in consideration of CRT Capital Group LLC ("CRT") and KBC Peel Hunt Ltd ("KBC") agreeing to act as placement agents in the offering ("OFFERING") of 22,500,000 units (the "UNITS"), each Unit consisting of one share of common stock in the capital of the Company, par value $0.0001 per share (the "SHARES"), and one warrant (the "WARRANTS"), each Warrant entitling the holder to purchase one Share, as more particularly explained in the offering circular of the Company in connection with such Offering (the "OFFERING CIRCULAR") and embarking on the placement process, hereby agrees as follows:
1. In order to minimize potential conflicts of interest which may arise from multiple corporate affiliations, the undersigned agrees to present to the Company for its consideration, prior to presentation to any other person or entity, any suitable opportunity to acquire a Target Business, until the earlier of (a) the completion by the Company of a Qualified Business Combination, (b) the distribution of all amounts held in the Trust Fund following the failure by the Company to complete a Qualified Business Combination by the Qualified Business Combination Deadline, and (c) such time as the undersigned ceases to be either an officer or a director of the Company, subject to any pre-existing fiduciary or contractual obligations the undersigned might have.
2. The undersigned acknowledges and agrees that until the earlier of (a) the completion by the Company of a Qualified Business Combination and (b) the distribution of all amounts held in the Trust Fund following the failure by the Company to complete a Qualified Business Combination by the Qualified Business Combination Deadline, the Company will not complete any Business Combination which involves an entity which is affiliated with the undersigned unless the Company obtains an opinion from an independent investment banking firm which is a member of the National Association of Securities Dealers, Inc. (such firm being reasonably acceptable to each of CRT and KBC) that the Business Combination is fair to the Company's shareholders from a financial perspective.
3. Until the completion by the Company of a Business Combination neither the undersigned, any member of the family of the undersigned, nor any affiliate of the undersigned will be entitled to receive, and will not accept, any compensation for services rendered to the Company prior to such Business Combination; provided that the undersigned shall be entitled to reimbursement from the Company (out of the funds not held in the Trust Fund) for his reasonable out-of-pocket expenses incurred in connection with seeking and completing any Business Combination. Upon completion of a Business Combination, the Company may enter into an employment agreement with the undersigned for the payment of reasonable compensation, provided that such compensation may not be paid from the Trust Fund except to the extent approved by the shareholders of the Company in connection with such Business Combination.
4. Until the earlier of (a) the completion by the Company of a Qualified Business Combination and (b) the distribution of all amounts held in the Trust Fund following the failure by the Company to complete a Qualified Business Combination by the Qualified Business Combination Deadline, neither the undersigned, any member of the family of the undersigned, nor any affiliate of the undersigned will be entitled to receive or accept a finder's fee or any other compensation in the event the undersigned, any member of the family of the undersigned or any affiliate of the undersigned originates a Business Combination.
5. The undersigned further agrees that he will not sell or otherwise dispose of any securities of the Company owned by him including the Shares and Warrants, except pursuant to a registration statement under the U.S. Securities Act of 1933, as amended (the "SECURITIES ACT") or pursuant to an exemption from such registration; provided, however, that in the case of any sale or disposition otherwise than pursuant to a registration statement, the undersigned shall take such steps, including without limitation legending the certificates representing the securities, to make sure that the securities may be segregated from the pool of securities that are or may become tradeable in the U.S free of any restrictions. Additionally, the undersigned will not engage in any hedging transactions involving the securities of the Company owned by him (including the Shares and Warrants) other than in compliance with the Securities Act.
6. The undersigned agrees to be a member of the board of directors of the Company until the earlier of (a) the completion by the Company of a Qualified Business Combination, or (b) the distribution of all amounts held in the Trust Fund following the failure by the Company to complete a Qualified Business Combination by the Qualified Business Combination Deadline. The undersigned's biographical information furnished to the Company and CRT and attached
hereto as Exhibit A is true and accurate in all respects, does not omit any material information with respect to the undersigned's background and contains all of the information required to be disclosed pursuant to Section 401 of Regulation S-K, promulgated under the Securities Act, in a registration statement filed under the Securities Act or to be contained in the Admission Document prepared for the purposes of the rules and regulations of AIM. The undersigned represents and warrants that:
(a) he is not subject to or a respondent in any legal action for, any injunction, cease-and-desist order or order or stipulation to desist or refrain from any act or practice relating to the offering of securities in any jurisdiction;
(b) he has never been convicted of or pleaded guilty to any crime (i) involving any fraud or (ii) relating to any financial transaction or handling of funds of another person, or (iii) pertaining to any dealings in any securities and he is not currently a defendant in any such criminal proceeding; and
(c) he has never been suspended or expelled from membership in any securities or commodities exchange or association or had a securities or commodities license or registration denied, suspended or revoked.
7. The undersigned has full right and power, without violating any agreement by which he is bound, to enter into this letter agreement and to serve as a member of the board of directors of the Company.
8. The undersigned authorizes any employer, financial institution, or consumer credit reporting agency to release to CRT and KBC and their legal representatives or agents (including any investigative search firm retained by CRT or KBC) any information they may have about the undersigned's background and finances ("INFORMATION"). Neither CRT, KBC nor their agents shall be violating the undersigned's right of privacy in any matter in requesting and obtaining the Information and the undersigned hereby releases them from liability for any damage whatsoever in that connection. The Information obtained shall be kept confidential in perpetuity by CRT, KBC and their legal representatives and agents except as required by law or by judicial order.
9. Capitalized terms used but not defined in this letter have the meanings given to them in the Offering Circular.
10. This letter shall be governed in all respects by the laws of the State of New York.
WILLIAM J. DORE
/s/ William J. Dore
-----------------------------------------
Signature
|
EXHIBIT A
WILLIAM J. DORE has been a member of the Board since May 24, 2006. Since 1973, Mr. Dore has served as chairman of the board and chief executive officer of Global Industries, Ltd., a worldwide organisation of over 3,000 employees which operates one of the largest fleet of marine construction assets in the world. Mr. Dore was formerly president of the Association of Diving Contractors and the Offshore Pipeline Contractors Association, and a former director of the National Ocean Industries Association. In 2001, Mr. Dore created and is the sole supporter of the Louisiana Horatio Alger Scholarship Program, awarding fifty $7,500 scholarships annually. His Louisiana State scholarship program complements an ongoing Horatio Alger national program that provides two scholarships for students of each state. Mr. Dore currently serves on the Louisiana Public Affairs Research Council board of directors, the Horatio Alger board of directors, the M. D. Anderson Center's board of visitors, and the LSU Health Sciences Center advisory board.
Exhibit 4.3.m.
Viceroy Acquisition Corporation
8235 Forsyth Boulevard
Suite 400
St. Louis, Missouri 63105
CRT Capital Group LLC
262 Harbor Drive
Stamford
Connecticut 06902
KBC Peel Hunt Ltd
111 Old Broad Street
London
EC2N 1PH
Gentlemen:
The undersigned director of Viceroy Acquisition Corporation (the "COMPANY"), in consideration of CRT Capital Group LLC ("CRT") and KBC Peel Hunt Ltd ("KBC") agreeing to act as placement agents in the offering ("OFFERING") of 22,500,000 units (the "UNITS"), each Unit consisting of one share of common stock in the capital of the Company, par value $0.0001 per share (the "SHARES"), and one warrant (the "WARRANTS"), each Warrant entitling the holder to purchase one Share, as more particularly explained in the offering circular of the Company in connection with such Offering (the "OFFERING CIRCULAR") and embarking on the placement process, hereby agrees as follows:
1. In order to minimize potential conflicts of interest which may arise from multiple corporate affiliations, the undersigned agrees to present to the Company for its consideration, prior to presentation to any other person or entity, any suitable opportunity to acquire a Target Business, until the earlier of (a) the completion by the Company of a Qualified Business Combination, (b) the distribution of all amounts held in the Trust Fund following the failure by the Company to complete a Qualified Business Combination by the Qualified Business Combination Deadline, and (c) such time as the undersigned ceases to be either an officer or a director of the Company, subject to any pre-existing fiduciary or contractual obligations the undersigned might have.
2. The undersigned acknowledges and agrees that until the earlier of (a) the
completion by the Company of a Qualified Business Combination and (b) the distribution of all amounts held in the Trust Fund following the failure by the Company to complete a Qualified Business Combination by the Qualified Business Combination Deadline, the Company will not complete any Business Combination which involves an entity which is affiliated with the undersigned unless the Company obtains an opinion from an independent investment banking firm which is a member of the National Association of Securities Dealers, Inc. (such firm being reasonably acceptable to each of CRT and KBC) that the Business Combination is fair to the Company's shareholders from a financial perspective.
3. Until the completion by the Company of a Business Combination neither the undersigned, any member of the family of the undersigned, nor any affiliate of the undersigned will be entitled to receive, and will not accept, any compensation for services rendered to the Company prior to such Business Combination; provided that the undersigned shall be entitled to reimbursement from the Company (out of the funds not held in the Trust Fund) for his reasonable out-of-pocket expenses incurred in connection with seeking and completing any Business Combination. Upon completion of a Business Combination, the Company may enter into an employment agreement with the undersigned for the payment of reasonable compensation, provided that such compensation may not be paid from the Trust Fund except to the extent approved by the shareholders of the Company in connection with such Business Combination.
4. Until the earlier of (a) the completion by the Company of a Qualified Business Combination and (b) the distribution of all amounts held in the Trust Fund following the failure by the Company to complete a Qualified Business Combination by the Qualified Business Combination Deadline, neither the undersigned, any member of the family of the undersigned, nor any affiliate of the undersigned will be entitled to receive or accept a finder's fee or any other compensation in the event the undersigned, any member of the family of the undersigned or any affiliate of the undersigned originates a Business Combination.
5. The undersigned further agrees that he will not sell or otherwise dispose of any securities of the Company owned by him including the Shares and Warrants, except pursuant to a registration statement under the U.S. Securities Act of 1933, as amended (the "SECURITIES ACT") or pursuant to an exemption from such registration (except pursuant to paragraph 10 below); provided, however, that in the case of any sale or disposition otherwise than pursuant to a registration statement, the undersigned shall take such steps, including without limitation legending the certificates representing the securities, to make sure that the securities may be segregated from the pool of securities that are or may become tradeable in the U.S free of any restrictions. Additionally, the undersigned will not engage in any hedging transactions involving the securities of the Company owned by him (including the Shares and Warrants) other than in compliance with the Securities Act.
6. The undersigned agrees to be a member of the board of directors of the Company until the earlier of (a) the completion by the Company of a Qualified Business Combination, or (b) the distribution of all amounts held in the Trust Fund following the failure by the Company to complete a Qualified Business Combination by the Qualified Business Combination Deadline. The undersigned's biographical information furnished to the Company and CRT and attached
hereto as Exhibit A is true and accurate in all respects, does not omit any material information with respect to the undersigned's background and contains all of the information required to be disclosed pursuant to Section 401 of Regulation S-K, promulgated under the Securities Act, in a registration statement filed under the Securities Act or to be contained in the Admission Document prepared for the purposes of the rules and regulations of AIM. The undersigned represents and warrants that:
(a) he is not subject to or a respondent in any legal action for, any injunction, cease-and-desist order or order or stipulation to desist or refrain from any act or practice relating to the offering of securities in any jurisdiction;
(b) he has never been convicted of or pleaded guilty to any crime (i) involving any fraud or (ii) relating to any financial transaction or handling of funds of another person, or (iii) pertaining to any dealings in any securities and he is not currently a defendant in any such criminal proceeding; and
(c) he has never been suspended or expelled from membership in any securities or commodities exchange or association or had a securities or commodities license or registration denied, suspended or revoked.
7. The undersigned has full right and power, without violating any agreement by which he is bound, to enter into this letter agreement and to serve as a member of the board of directors of the Company.
8. The undersigned authorizes any employer, financial institution, or consumer credit reporting agency to release to CRT and KBC and their legal representatives or agents (including any investigative search firm retained by CRT or KBC) any information they may have about the undersigned's background and finances ("INFORMATION"). Neither CRT, KBC nor their agents shall be violating the undersigned's right of privacy in any matter in requesting and obtaining the Information and the undersigned hereby releases them from liability for any damage whatsoever in that connection. The Information obtained shall be kept confidential in perpetuity by CRT, KBC and their legal representatives and agents except as required by law or by judicial order.
9. Capitalized terms used but not defined in this letter have the meanings given to them in the Offering Circular.
10. This letter shall be governed in all respects by the laws of the State of New York.
THOMAS R. EVANS
/s/ Thomas R. Evans
-----------------------------------------
Signature
|
EXHIBIT A
THOMAS R. EVANS has been a member of the Board since May 24, 2006. Since June 2004, he has served as President and Chief Executive Officer of Bankrate, Inc., one of the Internet's leading aggregators of financial rate information. Mr. Evans was elected to Bankrate, Inc.'s board of directors in May 2004. From 1999 to 2002, Mr. Evans was chairman and chief executive officer of Official Payments, an internet processor of payment to government entities which went public and was subsequently acquired by Tier Technologies. From 1998 to 1999, Mr. Evans was president and chief executive officer of GeoCities, an internet company, which went public and was later acquired by Yahoo!.
Exhibit 4.3.n.
INSIDER LETTER
Viceroy Acquisition Corporation
8235 Forsyth Boulevard
Suite 400
St. Louis, Missouri 63105
CRT Capital Group LLC
262 Harbor Drive
Stamford
Connecticut 06902
KBC Peel Hunt Ltd
111 Old Broad Street
London
EC2N 1PH
Gentlemen:
The undersigned shareholder of Viceroy Acquisition Corporation (the "COMPANY"), in consideration of CRT Capital Group LLC ("CRT") and KBC Peel Hunt Ltd ("KBC") agreeing to act as placement agents in the offering ("OFFERING") of 22,500,000 units (the "UNITS"), each Unit consisting of one share of common stock in the capital of the Company, par value $0.0001 per share (the "SHARES"), and one warrant (the "WARRANTS"), each Warrant entitling the holder to purchase one Share, as more particularly explained in the offering circular of the Company in connection with such Offering (the "OFFERING CIRCULAR") and embarking on the placement process, hereby agrees as follows:
1. Until the earlier of (a) the completion by the Company of a Qualified Business Combination and (b) the distribution of all amounts held in the Trust Fund following the failure by the Company to complete a Qualified Business Combination by the Qualified Business Combination Deadline, to the extent the Company solicits the approval of his shareholders for a Business Combination, the undersigned irrevocably agrees to vote all Founding Shares owned by him and the Shares included in Units purchased by the undersigned in the Offering in accordance with the majority of the votes cast by the New Shareholders.
2. In the event that the Company fails to complete a Business Combination by the Qualified Business Combination Deadline, the undersigned will take all reasonable actions
within his power to cause the Company to liquidate as soon as reasonably practicable. On such a liquidation, the undersigned hereby waives any and all right, title, interest or claim of any kind in or to any distribution of the funds held in the Trust Fund as a result of such liquidation with respect to his Founding Shares (any such right, title, interest or claim, a "CLAIM") and hereby waives any Claim he may have in the future as a result of, or arising out of, any contracts or agreements with the Company in respect of his Founding Shares and will not seek recourse against the Trust Fund for any reason whatsoever in respect of his Founding Shares.
3. In order to minimize potential conflicts of interest which may arise from multiple corporate affiliations, the undersigned agrees to present to the Company for his consideration, prior to presentation to any other person or entity, any suitable opportunity to acquire a Target Business, until the earlier of (a) the completion by the Company of a Qualified Business Combination and (b) the distribution of all amounts held in the Trust Fund following the failure by the Company to complete a Qualified Business Combination by the Qualified Business Combination Deadline.
4. The undersigned acknowledges and agrees that until the earlier of (a) the completion by the Company of a Qualified Business Combination and (b) the distribution of all amounts held in the Trust Fund following the failure by the Company to complete a Qualified Business Combination by the Qualified Business Combination Deadline, the Company will not complete any Business Combination which involves an entity which is affiliated with the undersigned unless the Company obtains an opinion from an independent investment banking firm which is a member of the National Association of Securities Dealers, Inc. (such firm being reasonably acceptable to each of CRT and KBC) that the Business Combination is fair to the Company's shareholders from a financial perspective.
5. Until the completion by the Company of a Business Combination neither the undersigned, nor any affiliate of the undersigned will be entitled to receive, and will not accept, any compensation for services rendered to the Company prior to such Business Combination; provided that the undersigned shall be entitled to reimbursement from the Company (out of the funds not held in the Trust Fund) for his reasonable out-of-pocket expenses incurred in connection with seeking and completing any Business Combination.
6. Until the earlier of (a) the completion by the Company of a Qualified Business Combination and (b) the distribution of all amounts held in the Trust Fund following the failure by the Company to complete a Qualified Business Combination by the Qualified Business Combination Deadline, neither the undersigned, nor any affiliate of the undersigned will be entitled to receive or accept a finder's fee or any other compensation in the event the undersigned, or any affiliate of the undersigned originates a Business Combination.
7. The undersigned agrees to enter into an escrow agreement with the Company and an escrow agent (such escrow agent being reasonably acceptable to each of CRT and KBC) with respect to his Founding Shares whereby his Founding Shares will be held in escrow for a three-year period commencing on the Admission Date. The undersigned agrees not to amend the terms of any escrow agreement entered into without the prior written consent of each of CRT and KBC.
8. (a) The undersigned agrees, for the purposes of, and subject to the provisions of, Rule 7 of the AIM Rules (as further described in the Offering Circular) and the Rule 7 Lock-in Deed, dated as of the date hereof and executed by the undersigned, not to dispose of any interest in the Shares or Warrants held by the undersigned, whensoever such Shares or Warrants were purchased, for the period of one year from the Admission Date.
(b) The undersigned further agrees that he will not sell or otherwise dispose of any securities of the Company owned by him including the Shares and Warrants, except pursuant to a registration statement under the U.S. Securities Act of 1933, as amended (the "SECURITIES ACT") or pursuant to an exemption from such registration; provided, however, that in the case of any sale or disposition otherwise than pursuant to a registration statement, the undersigned shall take such steps, including without limitation legending the certificates representing the securities, to make sure that the securities may be segregated from the pool of securities that are or may become tradeable in the U.S free of any restrictions. Additionally, the undersigned will not engage in any hedging transactions involving the securities of the Company owned by him (including the Shares and Warrants) other than in compliance with the Securities Act.
9. The undersigned authorizes any employer, financial institution, or consumer credit reporting agency to release to CRT and KBC and their legal representatives or agents (including any investigative search firm retained by CRT or KBC) any information they may have about the undersigned's background and finances ("INFORMATION"). Neither CRT, KBC nor their agents shall be violating the undersigned's right of privacy in any matter in requesting and obtaining the Information and the undersigned hereby releases them from liability for any damage whatsoever in that connection. The Information obtained shall be kept confidential in perpetuity by CRT, KBC and their legal representatives and agents except as required by law or by judicial order.
10. Capitalized terms used but not defined in this letter have the meanings given to them in the Offering Circular.
11. This letter shall be governed in all respects by the laws of the State of New York.
EDWIN L. WAHL
/s/ Edwin L. Wahl
-----------------------------------------
Signature
|
Exhibit 4.3.o.
INSIDER LETTER
Viceroy Acquisition Corporation
8235 Forsyth Boulevard
Suite 400
St. Louis, Missouri 63105
CRT Capital Group LLC
262 Harbor Drive
Stamford
Connecticut 06902
KBC Peel Hunt Ltd
111 Old Broad Street
London
EC2N 1PH
Gentlemen:
The undersigned shareholder of Viceroy Acquisition Corporation (the "COMPANY"), in consideration of CRT Capital Group LLC ("CRT") and KBC Peel Hunt Ltd ("KBC") agreeing to act as placement agents in the offering ("OFFERING") of 22,500,000 units (the "UNITS"), each Unit consisting of one share of common stock in the capital of the Company, par value $0.0001 per share (the "SHARES"), and one warrant (the "WARRANTS"), each Warrant entitling the holder to purchase one Share, as more particularly explained in the offering circular of the Company in connection with such Offering (the "OFFERING CIRCULAR") and embarking on the placement process, hereby agrees as follows:
1. Until the earlier of (a) the completion by the Company of a Qualified Business Combination and (b) the distribution of all amounts held in the Trust Fund following the failure by the Company to complete a Qualified Business Combination by the Qualified Business Combination Deadline, to the extent the Company solicits the approval of his shareholders for a Business Combination, the undersigned irrevocably agrees to vote all Founding Shares owned by him and the Shares included in Units purchased by the undersigned in the Offering in accordance with the majority of the votes cast by the New Shareholders.
2. In the event that the Company fails to complete a Business Combination by the Qualified Business Combination Deadline, the undersigned will take all reasonable actions
within his power to cause the Company to liquidate as soon as reasonably practicable. On such a liquidation, the undersigned hereby waives any and all right, title, interest or claim of any kind in or to any distribution of the funds held in the Trust Fund as a result of such liquidation with respect to his Founding Shares (any such right, title, interest or claim, a "CLAIM") and hereby waives any Claim he may have in the future as a result of, or arising out of, any contracts or agreements with the Company in respect of his Founding Shares and will not seek recourse against the Trust Fund for any reason whatsoever in respect of his Founding Shares.
3. In order to minimize potential conflicts of interest which may arise from multiple corporate affiliations, the undersigned agrees to present to the Company for his consideration, prior to presentation to any other person or entity, any suitable opportunity to acquire a Target Business, until the earlier of (a) the completion by the Company of a Qualified Business Combination and (b) the distribution of all amounts held in the Trust Fund following the failure by the Company to complete a Qualified Business Combination by the Qualified Business Combination Deadline.
4. The undersigned acknowledges and agrees that until the earlier of (a) the completion by the Company of a Qualified Business Combination and (b) the distribution of all amounts held in the Trust Fund following the failure by the Company to complete a Qualified Business Combination by the Qualified Business Combination Deadline, the Company will not complete any Business Combination which involves an entity which is affiliated with the undersigned unless the Company obtains an opinion from an independent investment banking firm which is a member of the National Association of Securities Dealers, Inc. (such firm being reasonably acceptable to each of CRT and KBC) that the Business Combination is fair to the Company's shareholders from a financial perspective.
5. Until the completion by the Company of a Business Combination neither the undersigned, nor any affiliate of the undersigned will be entitled to receive, and will not accept, any compensation for services rendered to the Company prior to such Business Combination; provided that the undersigned shall be entitled to reimbursement from the Company (out of the funds not held in the Trust Fund) for his reasonable out-of-pocket expenses incurred in connection with seeking and completing any Business Combination.
6. Until the earlier of (a) the completion by the Company of a Qualified Business Combination and (b) the distribution of all amounts held in the Trust Fund following the failure by the Company to complete a Qualified Business Combination by the Qualified Business Combination Deadline, neither the undersigned, nor any affiliate of the undersigned will be entitled to receive or accept a finder's fee or any other compensation in the event the undersigned, or any affiliate of the undersigned originates a Business Combination.
7. The undersigned agrees to enter into an escrow agreement with the Company and an escrow agent (such escrow agent being reasonably acceptable to each of CRT and KBC) with respect to his Founding Shares whereby his Founding Shares will be held in escrow for a three-year period commencing on the Admission Date. The undersigned agrees not to amend the terms of any escrow agreement entered into without the prior written consent of each of CRT and KBC.
8. (a) The undersigned agrees, for the purposes of, and subject to the provisions of, Rule 7 of the AIM Rules (as further described in the Offering Circular) and the Rule 7 Lock-in Deed, dated as of the date hereof and executed by the undersigned, not to dispose of any interest in the Shares or Warrants held by the undersigned, whensoever such Shares or Warrants were purchased, for the period of one year from the Admission Date.
(b) The undersigned further agrees that he will not sell or otherwise dispose of any securities of the Company owned by him including the Shares and Warrants, except pursuant to a registration statement under the U.S. Securities Act of 1933, as amended (the "SECURITIES ACT") or pursuant to an exemption from such registration; provided, however, that in the case of any sale or disposition otherwise than pursuant to a registration statement, the undersigned shall take such steps, including without limitation legending the certificates representing the securities, to make sure that the securities may be segregated from the pool of securities that are or may become tradeable in the U.S free of any restrictions. Additionally, the undersigned will not engage in any hedging transactions involving the securities of the Company owned by him (including the Shares and Warrants) other than in compliance with the Securities Act.
9. The undersigned authorizes any employer, financial institution, or consumer credit reporting agency to release to CRT and KBC and their legal representatives or agents (including any investigative search firm retained by CRT or KBC) any information they may have about the undersigned's background and finances ("INFORMATION"). Neither CRT, KBC nor their agents shall be violating the undersigned's right of privacy in any matter in requesting and obtaining the Information and the undersigned hereby releases them from liability for any damage whatsoever in that connection. The Information obtained shall be kept confidential in perpetuity by CRT, KBC and their legal representatives and agents except as required by law or by judicial order.
10. Capitalized terms used but not defined in this letter have the meanings given to them in the Offering Circular.
11. This letter shall be governed in all respects by the laws of the State of New York.
JEFFERY H. CALL
/s/ Jeffery H. Call
-----------------------------------------
Signature
|
Exhibit 4.3.p.
INSIDER LETTER
Viceroy Acquisition Corporation
8235 Forsyth Boulevard
Suite 400
St. Louis, Missouri 63105
CRT Capital Group LLC
262 Harbor Drive
Stamford
Connecticut 06902
KBC Peel Hunt Ltd
111 Old Broad Street
London
EC2N 1PH
Gentlemen:
The undersigned shareholder of Viceroy Acquisition Corporation (the "COMPANY"), in consideration of CRT Capital Group LLC ("CRT") and KBC Peel Hunt Ltd ("KBC") agreeing to act as placement agents in the offering ("OFFERING") of 22,500,000 units (the "UNITS"), each Unit consisting of one share of common stock in the capital of the Company, par value $0.0001 per share (the "SHARES"), and one warrant (the "WARRANTS"), each Warrant entitling the holder to purchase one Share, as more particularly explained in the offering circular of the Company in connection with such Offering (the "OFFERING CIRCULAR") and embarking on the placement process, hereby agrees as follows:
1. Until the earlier of (a) the completion by the Company of a Qualified Business Combination and (b) the distribution of all amounts held in the Trust Fund following the failure by the Company to complete a Qualified Business Combination by the Qualified Business Combination Deadline, to the extent the Company solicits the approval of his shareholders for a Business Combination, the undersigned irrevocably agrees to vote all Founding Shares owned by him and the Shares included in Units purchased by the undersigned in the Offering in accordance with the majority of the votes cast by the New Shareholders.
2. In the event that the Company fails to complete a Business Combination by the Qualified Business Combination Deadline, the undersigned will take all reasonable actions
within his power to cause the Company to liquidate as soon as reasonably practicable. On such a liquidation, the undersigned hereby waives any and all right, title, interest or claim of any kind in or to any distribution of the funds held in the Trust Fund as a result of such liquidation with respect to his Founding Shares (any such right, title, interest or claim, a "CLAIM") and hereby waives any Claim he may have in the future as a result of, or arising out of, any contracts or agreements with the Company in respect of his Founding Shares and will not seek recourse against the Trust Fund for any reason whatsoever in respect of his Founding Shares.
3. In order to minimize potential conflicts of interest which may arise from multiple corporate affiliations, the undersigned agrees to present to the Company for his consideration, prior to presentation to any other person or entity, any suitable opportunity to acquire a Target Business, until the earlier of (a) the completion by the Company of a Qualified Business Combination and (b) the distribution of all amounts held in the Trust Fund following the failure by the Company to complete a Qualified Business Combination by the Qualified Business Combination Deadline.
4. The undersigned acknowledges and agrees that until the earlier of (a) the completion by the Company of a Qualified Business Combination and (b) the distribution of all amounts held in the Trust Fund following the failure by the Company to complete a Qualified Business Combination by the Qualified Business Combination Deadline, the Company will not complete any Business Combination which involves an entity which is affiliated with the undersigned unless the Company obtains an opinion from an independent investment banking firm which is a member of the National Association of Securities Dealers, Inc. (such firm being reasonably acceptable to each of CRT and KBC) that the Business Combination is fair to the Company's shareholders from a financial perspective.
5. Until the completion by the Company of a Business Combination neither the undersigned, nor any affiliate of the undersigned will be entitled to receive, and will not accept, any compensation for services rendered to the Company prior to such Business Combination; provided that the undersigned shall be entitled to reimbursement from the Company (out of the funds not held in the Trust Fund) for his reasonable out-of-pocket expenses incurred in connection with seeking and completing any Business Combination.
6. Until the earlier of (a) the completion by the Company of a Qualified Business Combination and (b) the distribution of all amounts held in the Trust Fund following the failure by the Company to complete a Qualified Business Combination by the Qualified Business Combination Deadline, neither the undersigned, nor any affiliate of the undersigned will be entitled to receive or accept a finder's fee or any other compensation in the event the undersigned, or any affiliate of the undersigned originates a Business Combination.
7. The undersigned agrees to enter into an escrow agreement with the Company and an escrow agent (such escrow agent being reasonably acceptable to each of CRT and KBC) with respect to his Founding Shares whereby his Founding Shares will be held in escrow for a three-year period commencing on the Admission Date. The undersigned agrees not to amend the terms of any escrow agreement entered into without the prior written consent of each of CRT and KBC.
8. (a) The undersigned agrees, for the purposes of, and subject to the provisions of, Rule 7 of the AIM Rules (as further described in the Offering Circular) and the Rule 7 Lock-in Deed, dated as of the date hereof and executed by the undersigned, not to dispose of any interest in the Shares or Warrants held by the undersigned, whensoever such Shares or Warrants were purchased, for the period of one year from the Admission Date.
(b) The undersigned further agrees that he will not sell or otherwise dispose of any securities of the Company owned by him including the Shares and Warrants, except pursuant to a registration statement under the U.S. Securities Act of 1933, as amended (the "SECURITIES ACT") or pursuant to an exemption from such registration; provided, however, that in the case of any sale or disposition otherwise than pursuant to a registration statement, the undersigned shall take such steps, including without limitation legending the certificates representing the securities, to make sure that the securities may be segregated from the pool of securities that are or may become tradeable in the U.S free of any restrictions. Additionally, the undersigned will not engage in any hedging transactions involving the securities of the Company owned by him (including the Shares and Warrants) other than in compliance with the Securities Act.
9. The undersigned authorizes any employer, financial institution, or consumer credit reporting agency to release to CRT and KBC and their legal representatives or agents (including any investigative search firm retained by CRT or KBC) any information they may have about the undersigned's background and finances ("INFORMATION"). Neither CRT, KBC nor their agents shall be violating the undersigned's right of privacy in any matter in requesting and obtaining the Information and the undersigned hereby releases them from liability for any damage whatsoever in that connection. The Information obtained shall be kept confidential in perpetuity by CRT, KBC and their legal representatives and agents except as required by law or by judicial order.
10. Capitalized terms used but not defined in this letter have the meanings given to them in the Offering Circular.
11. This letter shall be governed in all respects by the laws of the State of New York.
KEN FENTON
/s/ Ken Fenton
-----------------------------------------
Signature
|
Exhibit 4.4
INVESTOR RIGHTS AGREEMENT
among
Viceroy Acquisition Corporation,
CRT Capital Group LLC
and
KBC Peel Hunt Ltd.
INVESTOR RIGHTS AGREEMENT
The parties hereby agree as follows:
SECTION 1. DEFINITIONS
As used in this Agreement, the following capitalized terms shall have the following meanings:
SECTION 2. EXCHANGE ACT REGISTRATION AND LISTING
(a) The Company shall (i) no later than the date that is one hundred eighty (180) days following the Exchange Act Registration Trigger cause to be filed with the Commission an Exchange Act Registration Statement, and (ii) use its commercially reasonable efforts to cause such Exchange Act Registration Statement to be declared effective on or prior to the date that is two hundred seventy (270) days following the Exchange Act Registration Trigger.
(b) As promptly as practicable after the Exchange Act Registration Statement shall have been declared effective, the Company shall use its commercially reasonable efforts to cause the Common Shares to be authorized to be quoted and/or listed (to the extent applicable) on the American Stock Exchange, the New York Stock Exchange, the NASD. Automated Quotation System or the NASDAQ National Market (or, in each case, a successor thereto) or a similarly recognized national trading platform, if the Common Shares so qualify.
SECTION 3. "PIGGYBACK" REGISTRATIONS
(a) If at any time the Company shall propose to register under the Securities Act (other than pursuant to Section 2 of this Agreement) any of its Common Shares for the account of its Founding Shareholders (as defined in the Offering Circular), it will promptly give written notice to all Holders of Common Shares that are (i) Holders of Common Shares bearing a restrictive legend that are not freely saleable in the United States under Rule 144(k) of the Securities Act, and (ii) that are known by the Company to be affiliates of the Company (other than officers and directors of the Company) (such Common Shares hereinafter referred to as "Registrable Shares") of its intention so to do. Upon the written request of any such Holder, received by the Company within 20 days after the giving of any such notice by the Company, to register any or all of its Registrable Shares, the Company will use its reasonable best efforts to cause the Registrable Shares as to which registration shall have been so requested to be included in the securities to be covered by the registration statement proposed to be filed by the Company, all to the extent requisite to
permit the sale or other disposition by the Holder (in accordance with its written request) of such Registrable Shares so registered.
(c) Notwithstanding any other provision of this Section 4, if the underwriter determines that marketing factors require a limitation on the number of shares to be underwritten, the underwriter may exclude from such registration and underwriting all or a portion of the Registrable Shares which would otherwise be underwritten pursuant to this Section 4; provided that such reduction of Registrable Shares from such registration and underwriting shall be in accordance with the provisions of Section 2.1.4 or 2.2.2, as applicable, of the Founding Shareholders' Registration Rights Agreement.
(d) The Company shall so advise all Holders of securities requesting registration of any limitations on the number of shares to be underwritten and the number of shares of securities that are entitled to be included in the registration; provided, that the number of shares to be underwritten shall be allocated pro rata among all Holders of Registrable Shares and the Other Shareholders in proportion, as nearly as practicable, to the respective amounts of Registrable Shares owned by them.
SECTION 4. LIQUIDATED DAMAGES
be payable for a maximum period of twelve (12) months following the occurrence of the Exchange Act Registration Default.
(b) Notwithstanding any other provision of this Agreement, the liquidated damages contemplated in this Section 4 shall be the sole and exclusive remedy available to the Holders in the event of any failure by the Company to comply with the terms of this Agreement.
SECTION 5. CURRENT PUBLIC INFORMATION
(a) Following completion of a Qualified Business Combination until the Exchange Act Registration Statement shall have become effective, the Company shall provide to the Holders annual, semi-annual, quarterly and current reports and to ensure when practicable, in light of the availability of information, compliance costs and other factors, that such reports and any other materials distributed to shareholders for operations subsequent to completion of a business combination are substantially consistent with the materials that would be required if such materials were subject to the requirements of the Commission (it being understood that, due to such factors, such reports and other materials may not contain information substantially consistent with the materials that would be required if such materials were subject to the Commission's requirements).
(b) With respect to any shareholder circular or proxy materials required to be prepared by the Company in connection with a business combination, the Company will endeavour to provide a narrative description of the business and operations of the Target Business (as defined in the Offering Circular) similar to those required by the US proxy rules, but only to the extent that the Company's board in its business judgment determines that it would be reasonably practicable to provide such information, taking into account factors such as time, expense and other relevant considerations under the particular circumstances. In addition, if available, and to the extent deemed relevant and reasonably practicable by the directors of the Company and taking into account all other factors mentioned above, audited or unaudited historical financial statements and/or a pro forma balance sheet or other pro forma financial information of the Target Business will be included. The proxy materials will also contain a description of the amount to be released from the Trust Fund (as defined in the Offering Circular), including a breakdown of the amount of funds that constitute (i) consideration and expenses for the transaction, (ii) working capital and (iii) transaction expenses.
(c) For so long as any Common Shares or Warrants are
"restricted securities" within the meaning of Rule 144(a)(3) of the Securities
Act, the Company shall, during any period in which it is not subject to
Section 13 or 15(d) of the Exchange Act, provide, to Holders, any owner of any
beneficial interest in the Common Shares or Warrants or to any prospective
purchaser designated by such Holder or beneficial owner, upon the request of
such Holder, beneficial owner or prospective purchaser, the information
specified in, and meeting the requirements of, Rule 144A(d)(4) under the
Securities Act.
SECTION 6. REGISTRATION EXPENSES
(a) All expenses incident to the Company's performance of or compliance with this Agreement will be borne by the Company regardless of whether any registration statement hereunder becomes effective, including without limitation and as applicable: (i) all Commission, securities exchange or NASD registration and filing fees and expenses; (ii) all
fees and expenses of compliance with U.S. federal securities and state blue
sky laws and compliance with the rules of a securities exchange or NASD, as
applicable; (iii) all expenses of printing, messenger and delivery services;
(iv) all fees and disbursements of counsel for the Company; and (v) all fees
and disbursements of independent certified public accountants of the Company
(including the expenses of any special audit and comfort letters required by
or incident to such performance) but excluding those fees borne by other
parties as detailed in the Placing Agreement and any portion of commissions or
discounts attributable to the Common Shares being offered and sold by the
Holders.
(b) The Company will, in any event, bear its internal expenses (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties), the expenses of any annual audit and the fees and expenses of any Person, including special experts, retained by the Company.
SECTION 7. INDEMNIFICATION
(a) The Company shall indemnify and hold harmless each Holder, its officers and employees and each Person, if any, who controls any such Holders, within the meaning of the Securities Act, from and against any loss, claim, damage or liability, joint or several, or any action in respect thereof, to which that Holder, officer, employee or controlling Person may become subject, under the Securities Act or otherwise, insofar as such loss, claim, damage, liability or action arises out of, or is based upon (i) any untrue statement or alleged untrue statement of a material fact contained in any registration statement filed pursuant hereto or in any amendment or supplement thereto; or (ii) the omission or alleged omission to state in any registration statement filed pursuant hereto or in any amendment or supplement thereto any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, and shall reimburse each Holder and each such officer, employee or controlling Person promptly upon demand for any legal or other expenses reasonably incurred by that Holder, officer, employee or controlling Person in connection with investigating or defending or preparing to defend against any such loss, claim, damage, liability or action as such expenses are incurred provided that no Holder shall be indemnified for misstatements or omissions arising from information provided by the Holder in writing for inclusion in any registration statement filed pursuant hereto. The foregoing indemnity agreement is in addition to any liability which the Company may otherwise have to any Holder or to any officer, employee or controlling Person of that Holder.
(b) Promptly after receipt by an indemnified party under
this Section 7 of notice of any claim or the commencement of any action, the
indemnified party shall, if a claim in respect thereof is to be made against
the Company under this Section 7, notify the Company in writing of the claim
or the commencement of that action; provided, however, that the failure to
notify the Company shall not relieve it from any liability which it may have
under this Section 7 except to the extent it has been materially prejudiced by
such failure; and provided, further, that the failure to notify the Company
shall not relieve it from any liability which it may have to an indemnified
party otherwise than under this Section 7. If any such claim or action shall
be brought against an indemnified party, and it shall notify the Company
thereof, the Company shall be entitled to participate therein and, to the
extent that it wishes to assume the defense thereof with counsel reasonably
satisfactory to the indemnified party. After notice from the Company to the
indemnified party of its election to assume the defense of such claim or
action, the Company shall not be liable to the indemnified party under this
Section 7 for any legal or other expenses subsequently incurred by the
indemnified party in
connection with the defense thereof other than reasonable costs of investigation; provided, however, any indemnified party shall have the right to employ separate counsel in any such action and to participate in the defense thereof but the fees and expenses of such counsel shall be at the expense of the indemnified party unless (i) the employment of such counsel has been specifically authorized by the Company in writing, or (ii) such indemnified party shall have been advised by such counsel that there may be one or more legal defenses available to it which are different from or additional to those available to the Company and in the reasonable judgment of such counsel it is advisable for such indemnified party to employ separate counsel or (iii) the Company has failed to assume the defense of such action and employ counsel reasonably satisfactory to the indemnified party, in which case, if such indemnified party notifies the Company in writing that it elects to employ separate counsel at the expense of the Company, the Company shall not, in connection with any one such action or separate but substantially similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances, be liable for the reasonable fees and expenses of more than one separate firm of attorneys (in addition to one local counsel) at any time for all such indemnified parties, which firm shall be designated in writing by the Holders of a majority in principal amount of the outstanding Common Shares and the Common Shares issuable upon exercise of the Warrants. The Company shall not (i) without the prior written consent of the indemnified parties (which consent shall not be unreasonably withheld), settle or compromise or consent to the entry of any judgment with respect to any pending or threatened claim, action, suit or proceeding in respect of which indemnification or contribution may be sought hereunder (whether or not the indemnified parties are actual or potential parties to such claim or action) unless such settlement, compromise or consent includes an unconditional release of each indemnified party from all liability arising out of such claim, action, suit or proceeding or (ii) be liable for any settlement of any such action effected without its written consent (which consent shall not be unreasonably withheld), but if settled with the consent of the Company or if there be a final judgment of the plaintiff in any such action, the Company agrees to indemnify and hold harmless any indemnified party from and against any loss or liability by reason of such settlement or judgment.
(c) If the indemnification provided for in this Section 7
shall for any reason be unavailable to or insufficient to hold harmless an
indemnified party under Section 7(a) in respect of any loss, claim, damage or
liability, or any action in respect thereof, referred to therein, then the
Company shall, in lieu of indemnifying such indemnified party, contribute to
the amount paid or payable by such indemnified party as a result of such loss,
claim, damage or liability, or action in respect thereof, (i) in such
proportion as shall be appropriate to reflect the relative benefits received
by the Company, on the one hand, and the Holders on the other, from the sale
of the Common Shares or (ii) if the allocation provided by clause (i) above is
not permitted by applicable law, in such proportion as is appropriate to
reflect not only the relative benefits referred to in clause (i) above but any
other relevant equitable considerations. The Company and the Holders agree
that it would not be just and equitable if contributions pursuant to this
Section 7(c) were to be determined by pro rata allocation (even if the Holders
were treated as one entity for such purpose) or by any other method of
allocation which does not take into account the equitable considerations
referred to herein. The amount paid or payable by an indemnified party as a
result of the loss, claim, damage or liability, or action in respect thereof,
referred to above in this Section 7 shall be deemed to include, for purposes
of this Section 7(c), any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section 7(c), no
Holder shall be required to contribute any amount in excess of the amount by
which the net proceeds
received by it in connection with its sale of Common Shares exceeds the amount of any damages which such Holder has otherwise paid or become liable to pay by reason of the untrue or alleged untrue statement or omission or alleged omission. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation. The Holders' obligations to contribute as provided in this Section 7(c) are several and not joint.
SECTION 8. MISCELLANEOUS
(i) if to a Holder, at the address set forth in the record books of the Company; and
if to the Company to:
Viceroy Acquisition Corporation
8235 Forsyth Boulevard, Suite 400
Clayton, Missouri 63105
USA
Attn: Chief Executive Officer
with copies to:
CRT Capital Group LLC
262 Harbor Drive
Stamford, Connecticut 06902
Attn: Steve Bragg
and
KBC Peel Hunt
111 Old Broad Street
London EC2N 1PH
Attn: Adam Hart
Any such notices and communications shall take effect at the time of receipt thereof.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.
VICEROY ACQUISITION CORPORATION
By: /s/ Douglas D. Hommert
-----------------------------------------
Douglas D. Hommert, Executive
Vice President
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CRT CAPITAL GROUP, LLC
By: /s/ Charles Severs
-----------------------------------------
Name: Charles Severs
Title: Senior Vice President
|
KBC PEEL HUNT LTD.
By: /s/ Adam Hart
-----------------------------------------
Name: Adam Hart
Title: Head of Business Development
|
Exhibit 4.5
REGISTRATION RIGHTS AGREEMENT
WHEREAS, the Investors currently hold all of the issued and outstanding securities of the Company;
WHEREAS, the Investors and the Company desire to enter into this Agreement to provide the Investors with certain rights relating to the registration of the Shares held by them;
NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
1. DEFINITIONS. The following capitalized terms used herein have the following meanings:
2. REGISTRATION RIGHTS.
(i) If the registration is undertaken for the Company's account: (A) first, the Shares or other securities that the Company desires to sell that can be sold without exceeding the Maximum Number of Shares; (B) second, to the extent that the Maximum Number of Shares has not been reached under the foregoing clause (A), the Shares, if any, including the Registrable Securities, as to which registration has been requested pursuant to written contractual piggy-back registration rights of security holders (pro rata in accordance with the number of Shares which each such person has actually requested to be included in such registration, regardless of the number of Shares with respect to which such persons have the right to request such inclusion) that can be sold without exceeding the Maximum Number of Shares; and
(ii) If the registration is a "demand" registration undertaken at the demand of persons other than the holders of Registrable Securities pursuant to written contractual arrangements with such persons, (A) first, the Shares for the account of the demanding persons that can be sold without exceeding the Maximum Number of Shares; (B) second, to the extent that the Maximum Number of Shares has not been reached under the
3. REGISTRATION PROCEDURES.
stop order (and the Company shall take all actions required to prevent the entry of such stop order or to remove it if entered); and (iv) any request by the Commission for any amendment or supplement to such Registration Statement or any prospectus relating thereto or for additional information or of the occurrence of an event requiring the preparation of a supplement or amendment to such prospectus so that, as thereafter delivered to the purchasers of the securities covered by such Registration Statement, such prospectus will not contain an untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, and promptly make available to the holders of Registrable Securities included in such Registration Statement any such supplement or amendment; except that before filing with the Commission a Registration Statement or prospectus or any amendment or supplement thereto, the Company shall furnish to the holders of Registrable Securities included in such Registration Statement, that have so requested in writing, and to the legal counsel for any such holders, copies of all such documents proposed to be filed sufficiently in advance of filing to provide such holders and legal counsel with a reasonable opportunity to review such documents and comment thereon, and the Company shall not file any Registration Statement or prospectus or amendment or supplement thereto, including documents incorporated by reference, to which such holders or their legal counsel shall reasonably object.
Section 2.3, and all expenses incurred in performing or complying with its other obligations under this Agreement, whether or not the Registration Statement becomes effective, including, without limitation: (i) all registration and filing fees; (ii) fees and expenses of compliance with securities or "blue sky" laws (including fees and disbursements of counsel in connection with blue sky qualifications of the Registrable Securities); (iii) printing expenses; (iv) the Company's internal expenses (including, without limitation, all salaries and expenses of its officers and employees); (v) the fees and expenses incurred in connection with the listing of the Registrable Securities as required by Section 3.1.10; (vi) National Association of Securities Dealers, Inc. fees; (vii) fees and disbursements of counsel for the Company and fees and expenses for independent certified public accountants retained by the Company (including the expenses or costs associated with the delivery of any opinions or comfort letters requested pursuant to Section 3.1.9); (viii) the fees and expenses of any special experts retained by the Company in connection with such registration and (ix) the fees and expenses of one legal counsel selected by the holders of a majority-in-interest of the Registrable Securities included in such registration. The Company shall have no obligation to pay any underwriting discounts or selling commissions attributable to the Registrable Securities being sold by the holders thereof, which underwriting discounts or selling commissions shall be borne by such holders. Additionally, in an underwritten offering, all selling shareholders and the Company shall bear the expenses of the underwriter pro rata in proportion to the respective amount of shares each is selling in such offering.
4. INDEMNIFICATION AND CONTRIBUTION.
4.4.1. If the indemnification provided for in the foregoing Sections 4.1, 4.2 and 4.3 is unavailable to any Indemnified Party in respect of any loss, claim, damage, liability or action referred to herein, then each such Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall contribute to the amount paid or payable by such Indemnified Party as a result of such loss, claim, damage, liability or action in such proportion as is appropriate to reflect the relative fault of the Indemnified Parties and the Indemnifying Parties in connection with the actions or omissions which resulted in such loss, claim, damage, liability or action, as well as any other relevant equitable considerations. The relative fault of any Indemnified Party and any Indemnifying Party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by such Indemnified Party or such Indemnifying Party and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission.
actually received by such holder from the sale of Registrable Securities which gave rise to such contribution obligation. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation.
5. UNDERWRITING AND DISTRIBUTION.
6. MISCELLANEOUS.
as provided herein shall be deemed given on the next business day following timely delivery of such notice to a reputable air courier service with an order for next-day delivery.
To the Company:
Viceroy Acquisition Corporation
8235 Forsyth Boulevard, Suite 400
Clayton, Missouri 63105
USA
Attn: Chief Executive Officer
To an Investor, to the address of such investor on the books of the Company,
with a copy to:
CRT Capital Group LLC
262 Harbor Drive
Stamford, Connecticut 06902
Attn: Steve Bragg
and
KBC Peel Hunt
111 Old Broad Street
London EC2N 1PH
Attn: Adam Hart
REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
IN WITNESS WHEREOF, the parties have caused this Registration Rights Agreement to be executed and delivered by their duly authorized representatives as of the date first written above.
VICEROY ACQUISITION CORPORATION
A Delaware corporation
By: /s/ Douglas D. Hommert
-----------------------------------------------
Name: Douglas D. Hommert
Title: Executive Vice President
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INVESTORS:
/s/ Lee E. Mikles ------------------------------------------------------- Lee E. Mikles Revocable Trust dated March 26, 1996 By: Lee E. Mikles, Trustee /s/ Lee E. Mikles ------------------------------------------------------- Lee E. Mikles Gift Trust dated October 6, 1999 By: Lee E. Mikles, Trustee /s/ Lee E. Mikles ------------------------------------------------------- RAS, LLC By: Lee E. Mikles /s/ Douglas D. Hommert ------------------------------------------------------- St. Albans Global Management, Limited Partnership, LLLP By: SAGM Holdings, LLC By: Douglas D. Hommert, Manager /s/ Douglas D. Hommert ------------------------------------------------------- Douglas D. Hommert Revocable Trust By: Douglas D. Hommert, Trustee /s/ Joe C. Leach ------------------------------------------------------- Joe C. Leach |
/s/ Edwin A. Levy ------------------------------------------------------- Edwin A. Levy /s/ M.R. Miller ------------------------------------------------------- Mark R. Miller /s/ Edwin L. Wahl ------------------------------------------------------- Edwin L. Wahl /s/ Jeffery H. Call ------------------------------------------------------- Jeffery H. Call /s/ Ken Fenton ------------------------------------------------------- Ken Fenton |
Exhibit 4.6
DATED JULY 12 2006
THE COVENANTORS
AND
VICEROY ACQUISITION CORPORATION
AND
KBC PEEL HUNT LTD.
LOCK-IN DEED
RELATING TO SHARES AND WARRANTS IN
VICEROY ACQUISITION CORPORATION
THIS DEED is dated July 2006 and is made AMONG:
(1) The persons whose names are stated in Schedule 1 (each a "COVENANTOR" and together the "COVENANTORS");
(2) VICEROY ACQUISITION CORPORATION, a corporation organised under the laws of the State of Delaware pursuant to the Delaware General Corporation Law, whose principal place of business is 8235 Forsyth Boulevard, Suite 400, St. Louis, Missouri 63105 (the "COMPANY"); and
(3) KBC PEEL HUNT LTD., whose registered office is at 111 Old Broad Street, London EC2N 1PH ("PEEL HUNT").
WHEREAS
(A) The Company proposes to raise funds by the Placing of the Units for
cash and is proposing to seek the admission of its entire issued
and to be issued share capital and Warrants of the Company to
trading on AIM.
(B) Subject to the terms of this Deed, the Covenantors have agreed with
the Company and Peel Hunt to enter into certain restrictions with
regard to the disposal by them (or any of their Associates) of the
Locked-in Shares and Warrants.
1 DEFINITIONS AND INTERPRETATIONS
1.1 The following expressions used in this Deed shall have the following
meanings:
"ADMISSION" means the admission of the entire issued
and to be issued share capital and the
Warrants of the Company to trading on AIM
becoming effective in accordance with
Rule 6 of the AIM Rules;
"ADMISSION DOCUMENT" means the document in the agreed form to
be issued by the Company in connection
with Admission;
"AIM" means the Alternative Investment Market
operated by the London Stock Exchange;
"AIM RULES" means the rules published by the London
Stock Exchange governing admission to AIM,
and the regulation of AIM companies and
their nominated advisers, as amended or
reissued from time to time;
"ASSOCIATE" means, in relation to any Covenantor,
their associates as defined in the
definition of "related party" in Schedule
9 of the AIM Rules;
"BUSINESS DAY" means a day on which dealings take place
on the London Stock Exchange;
"COMMON SHARES" means the shares of common stock, par
value $0.0001 each, in the capital of the
Company (or such other nominal amount of
the Company's common stock
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following any consolidation, sub-division,
repayment or reduction of capital or other
event giving rise to an adjustment of the
nominal amount of such common shares
hereafter), including any such shares
allotted (whether or not subject to any
condition) but not yet issued;
"DISPOSAL" includes any sale, transfer, mortgage,
assignment, grant of options over,
charge, pledge, or other disposal or an
agreement to sell, transfer, mortgage,
assign, grant options over, charge,
pledge or otherwise dispose, or any
transaction which has the same economic
effect as any of the foregoing
(including, without limitation, any swap
or contract for differences) and
"DISPOSE" shall be construed accordingly;
"LOCKED-IN SHARES AND WARRANTS" means:
(a) the Common Shares or Warrants held
or controlled, whether directly or
indirectly, by the Covenantors or
any of their Associates on or
immediately following the date of
Admission;
(b) any additional Common Shares or
Warrants allotted or issued to
and/or acquired by the Covenantors
or any of their Associates up to and
including the Relevant Date; and
(c) any additional Common Shares issued
to the Covenantors or any of their
Associates pursuant to the
conversion of any convertible debt
securities, Warrants, options or
similar rights held by it on the
date of Admission;
"LONDON STOCK EXCHANGE" means London Stock Exchange plc;
"PLACING" means the proposed placing of Units
pursuant to the Placing Agreement;
"PLACING AGREEMENT" means the agreement of even date herewith
between the Company, the directors of the
Company, Peel Hunt and CRT Capital Group
LLC, relating to the Placing;
"RELEVANT DATE" means the date falling 12 calendar months
after the date of Admission;
"UNIT" means a unit of one Common Share and one
Warrant; and
"WARRANTS" means the warrants issued by the Company
giving each holder the right to one
Common Share.
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1.2 References to clauses and schedules are, unless otherwise stated,
to clauses of and schedules to this Deed.
1.3 References to statutory provisions shall be construed as references
to those provisions as respectively replaced, amended or re-enacted
(whether before or after the date hereof) and shall include any
provisions of which they are re-enactments (whether with or with
out modification) and any subordinate legislation made under such
provisions.
1.4 Words importing the singular include the plural and vice versa,
words importing any gender include every gender and references to
persons include bodies corporate or unincorporated, unincorporated
associations and partnerships.
1.5 The headings to the clauses are for convenience only and have no
legal effect.
1.6 The obligations of the Covenantors under this Deed are several.
2 CONDITION
2.1 The obligations of the parties to this Deed are conditional upon
Admission.
2.2 If the condition set out in Clause 2.1 is not fulfilled by July 31,
2006, this Deed shall cease and determine and no party to this Deed
shall have any claim against any other party to this Deed for
costs, damages, compensation or otherwise.
3 LOCK-IN PROVISIONS AND ORDERLY MARKET
3.1 Each Covenantor undertakes to the Company and Peel Hunt that it
will not, and will procure that its Associates will not, prior to
the Relevant Date, Dispose of, or agree to Dispose of, directly or
indirectly, any of the Locked-in Shares and Warrants or any
interest in or right to them, except with the prior written consent
of the Company and Peel Hunt (which consent will only be given
where a derogation from Rule 7 of the AIM Rules has been granted by
the London Stock Exchange) and subject to the orderly market
provisions set out in clause 3.2 below, save for any of the
following:
3.1.1 any Disposal resulting from an acceptance of an offer for
the entire issued share capital of the Company or the
giving of an irrevocable undertaking to accept an offer
for the entire issued share capital of the Company (in
either case excluding Common Shares already held by the
offeror) which has either been recommended for acceptance
by the directors of the Company or has become
unconditional as to acceptances, provided that nothing in
this clause shall exclude a Covenantor from giving an
irrevocable undertaking to accept an offer for the entire
issued share capital of the Company which is conditional
upon such offer becoming or being declared unconditional
in all respects and being recommended for acceptance by
the directors of the Company;
3.1.2 any Disposal for which a derogation from Rule 7 of the AIM
Rules has been granted by the London Stock Exchange
pursuant to or in connection with an offer by the Company
for the purchase or redemption of its own share capital in
accordance with applicable law and the AIM Rules;
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3.1.3 any Disposal of Common Shares pursuant to an intervening
court order; or
3.1.4 any Disposal on the death of a Covenantor.
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3.2 For a period of 12 calendar months after the Relevant Date or in circumstances where Peel Hunt has given consent to a sale pursuant to clause 3.1, if a Covenantor wishes to Dispose of any of the Locked-in Shares and Warrants, then in order to maintain an orderly market, any such Disposal shall be effected through Peel Hunt in its capacity as the Company's nominated broker under the AIM Rules, provided that:
3.2.1 Peel Hunt is, at the time of such proposed Disposal,
authorised by the Financial Services Authority to effect
such Disposal;
3.2.2 in the execution of such Disposal, Peel Hunt offers
competitive pricing and trading terms for the quantity of
Locked-in Shares and Warrants being Disposed based on
market terms quoted by any other reputable stockbroker or
dealer in securities in the United Kingdom in respect of
such Disposal; and
3.2.3 if Peel Hunt are no longer the Company's broker, then the
benefits and obligations of this clause 3.2 shall pass to
any successor nominated broker to the Company which has
replaced Peel Hunt.
3.3 Any sale pursuant to clause 3.2 above shall be effected by Peel
Hunt within three (3) Business Days of the receipt by Peel Hunt of
notification from the Covenantor of its intention to sell any of
the Locked-in Shares and Warrants. In the event that such sale is
not effected within three (3) Business Days in accordance with this
clause, the Covenantor shall be entitled to sell the Locked-in
Shares and Warrants through any other stockbroker or dealer in
securities.
4 UNDERTAKINGS
4.1 Each Covenantor agrees that:
4.1.1 if any of the Locked-In Shares and Warrants beneficially
owned by such Covenantor are registered in the name of any
other person, it shall procure that such person complies
with the obligations set out in this Deed as though it
were a party to this Deed;
4.1.2 if it holds Locked-In Shares and Warrants as nominee for
any other person, it shall use its reasonable endeavours
to procure that such person complies with the obligations
set out in this Deed as though it were a party to this
Deed; and
4.1.3 the restriction on Disposals and the other provisions in
this Deed will be binding on each such person and its
successors and assigns.
4.2 Each Covenantor consents to the inclusion in the Admission Document
of references to this Deed and a summary of its contents.
4
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5 WARRANTIES
5.1 Each Covenantor warrants that it has full power and authority to
undertake its obligations set out in this Deed.
5.2 Each Covenantor warrants that upon Admission, it will be the
registered holder of the number of Common Shares and Warrants set
out next to its name in Schedule 1.
6 GENERAL
6.1 This Deed shall be governed by and construed in accordance with
English law. The parties hereby submit for all purposes connected
herewith to the non-exclusive jurisdiction of the High Court of
Justice in England in relation to any matter arising out of this
Deed. All parties expressly waive any objections to such
jurisdiction on the ground of venue.
6.2 This Deed is personal to the parties hereto and may not be assigned
by any party without the prior written consent of the other parties
hereto. This Deed is binding on and enures for the benefit of the
successors and permitted assigns of the parties.
6.3 If any provision in this Deed shall be held to be illegal, invalid
or unenforceable, in whole or in part:
6.3.1 either under any enactment or rule of law, such provision
or part shall to that extent be deemed not to form part of
this Deed; or
6.3.2 under the law of any other jurisdiction, the legality,
validity and enforceability of the remainder of this Deed
shall not be affected.
6.4 At any time after the date of this Deed, each Covenantor shall, at
the Company's expense, do such acts and things as the Company or
Peel Hunt may reasonably require for the purpose of giving the
Company or Peel Hunt the full benefit of all the provisions of this
Deed in relation to the obligations of the Covenantors.
6.5 The Company agrees to take such action as Peel Hunt shall
reasonably require to enforce the provisions of this Deed for the
benefit of the Company.
6.6 No variation of this Deed shall be effective unless in writing and
signed by or on behalf of each of the parties.
6.7 The parties to this Deed do not intend that any term of this Deed
should be enforceable, by virtue of the Contracts (Rights of Third
Parties) Act 1999 or otherwise, by any person who is not a party to
this Deed.
6.8 This Deed may be entered into in any number of counterparts and by
the parties to it on separate counterparts, each of which when
executed and delivered shall be an original, but all the
counterparts shall together constitute one and the same instrument.
6.9 Save as specifically otherwise provided in this Deed, any notice to
be given under this Deed shall be in writing and shall be delivered
to or sent by registered or recorded post to the parties'
respective addresses or registered offices as set out in Schedule 1
or as otherwise notified by them from time to time (in accordance
with the provisions of this clause). Any such notice shall be
deemed to be served when left at the address of the party to be
served and, if sent by post to an address within the same country as
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the sender, on the Business Day next following the day of posting
or, if sent by post to a country different to the country of
posting, on the fifth Business Day following the date of posting.
In proving the giving of notice it shall be sufficient to prove
that the notice was left or that the envelope containing such
notice was properly addressed and posted.
6.10 Each of the Covenantors and the Company appoints, without power of
revocation, [Jordans Limited] of [20-22 Bedford Row, London WC1R
4JS, England] as its agent for service of process in England and
Wales and hereby irrevocably consents to the service of process in
any proceedings by delivery to such agent.
6.11 Each of the Covenantors acknowledges that any decision by Peel Hunt
to withhold consent in accordance with the provisions of this Deed
shall not form the basis of any claim against the Company or Peel
Hunt for any damage, loss, cost or expense alleged to have been
caused by such decision, unless Peel Hunt has not complied with its
obligations, if any, to act reasonably in circumstances where its
consent is required under this Deed.
6.12 Each of the Covenantors acknowledges that the remedies at law for
breach or threat of breach of the provisions of Clauses 3 and/or 4
by any Covenantors may be inadequate, and that the Company and/or
Peel Hunt shall be entitled to an injunction or injunctions to
prevent breaches of such provisions and to enforce specifically
such provisions; such injunction or injunctions to be in addition
to any other remedy to which the Company and/or Peel Hunt may be
entitled at law or in equity.
IN WITNESS whereof this Deed has been executed and delivered as a
deed on the date first above written.
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SCHEDULE 1
THE COVENANTORS
------------------------------------------------------------------------------------------------------------------
NAME AND CONTACT DETAILS OF NUMBER OF COMMON SHARES NUMBER OF WARRANTS
COVENANTOR HELD AT ADMISSION HELD AT ADMISSION
------------------------------------------------------------------------------------------------------------------
St. Albans Global Management Limited 2,500,000
Partnership LLLP
8235 Forsyth Boulevard 4th Floor
Clayton, Missouri 63105
------------------------------------------------------------------------------------------------------------------
Lee E. Mikles Revocable Trust dated 3.26.96 2,500,000
1801 Century Park East #460
Los Angeles, California 90067
------------------------------------------------------------------------------------------------------------------
Lee E. Mikles Gift Trust dated 10.6.99 125,000
1801 Century Park East #460
Los Angeles, California 90067
------------------------------------------------------------------------------------------------------------------
Edwin Levy 312,500
570 Lexington Avenue, 27th Floor
New York, New York 10022
------------------------------------------------------------------------------------------------------------------
Douglas D. Hommert Revocable Trust 312,500
8235 Forsyth Boulevard 4th Floor
Clayton, Missouri 63105
------------------------------------------------------------------------------------------------------------------
Paul Anthony Novelly 0
8235 Forsyth Boulevard
Suite 400, Clayton
Missouri 63105
------------------------------------------------------------------------------------------------------------------
Lee E. Mikles 0
1486 E. Valley Road
Santa Barbara
California 93108
------------------------------------------------------------------------------------------------------------------
Douglas D. Hommert 0
8235 Forsyth Boulevard
Suite 400, Clayton
Missouri 63105
------------------------------------------------------------------------------------------------------------------
Thomas R. Evans 0
477 Madison Avenue
Suite 430, New York
New York 10022
------------------------------------------------------------------------------------------------------------------
7
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------------------------------------------------------------------------------------------------------------------ William J. Dore 0 8000 Global Drive Carlyss, LA 70665 ------------------------------------------------------------------------------------------------------------------ |
EXECUTED AS A DEED BY THE PARTIES:
EXECUTED and DELIVERED )
as a Deed by SAGM HOLDINGS, LLC )
duly authorised to execute this document )
as a DEED as general partner on behalf of )
ST. ALBANS GLOBAL MANAGEMENT )
LIMITED PARTNERSHIP LLLP )
in accordance with the laws of [o] Delaware ) /s/ Douglas D. Hommert
-------------------------
DOUGLAS D HOMMERT
Manager
/s/ Mary B. Hockle
----------------------------
Signature of Witness
|
Address of Witness
EXECUTED and DELIVERED )
as a Deed by LEE E MIKLES )
duly authorised to execute this document )
as a DEED as trustee on behalf of )
THE LEE MIKLES REVOCABLE TRUST )
DATED MARCH 26, 1996 )
in accordance with the laws of [o] ) /s/ Lee E. Mikles
-------------------------
/s/ Mason Campbell
----------------------------
Signature of Witness
Mason Campbell
----------------------------
Name of Witness
1071 Casitas Pass Rd
Carpinteria, CA 93013
----------------------------
Address of Witness
|
EXECUTED and DELIVERED )
as a Deed by LEE E MIKLES )
duly authorised to execute this document )
as a DEED as trustee on behalf of )
THE LEE MIKLES GIFT TRUST DATED )
OCTOBER 6, 1999 )
in accordance with the laws of [o] ) /s/ Lee E. Mikles
-------------------------
/s/ Mason Campbell
----------------------------
Signature of Witness
Mason Campbell
----------------------------
Name of Witness
1071 Casitas Pass Rd
Carpinteria CA
----------------------------
Address of Witness
EXECUTED and DELIVERED )
as a Deed by DOUGLAS D HOMMERT )
duly authorised to execute this document )
as a DEED as trustee on behalf of )
THE DOUGLAS D. HOMMERT )
REVOCABLE TRUST )
in accordance with the laws of [o] Missouri ) /s/ Douglas D. Hommert
-------------------------
/s/ Mary B. Hockle
----------------------------
Signature of Witness
|
Executed as a Deed by )
PAUL ANTHONY NOVELLY )
in his individual capacity )
in the presence of: ) /s/ Paul Anthony Novelly
) -------------------------
/s/ Mary B. Hockle
----------------------------
Signature of Witness
Mary B. Hockle
----------------------------
Name of Witness
8235 Forsyth Blvd.
St. Louis, MO 63105
----------------------------
Address of Witness
|
Executed as a Deed by )
EDWIN LEVY )
in his individual capacity )
in the presence of: ) /s/ Edwin Levy
) -------------------------
/s/ Sherri Ann Cassara
----------------------------
Signature of Witness
Sherri Ann Cassara
----------------------------
Name of Witness
570 Lexington Ave.
New York, NY 10022
----------------------------
Address of Witness
|
Executed as a Deed by )
DOUGLAS D. HOMMERT )
in his individual capacity )
in the presence of: ) /s/ Douglas D. Hommert
) -------------------------
/s/ Mary B. Hockle
----------------------------
Signature of Witness
Mary B. Hockle
----------------------------
Name of Witness
8235 Forsyth Blvd.
St. Louis, MO 63105
----------------------------
Address of Witness
|
Executed as a Deed by )
LEE E. MIKLES )
in his individual capacity )
in the presence of: ) /s/ Lee E. Mikles
) -------------------------
/s/ Mason Campbell
----------------------------
Signature of Witness
Mason Campbell
----------------------------
Name of Witness
1071 Casitas Pass Rd
Carpinteria, CA
----------------------------
Address of Witness
|
Executed as a Deed by )
THOMAS R. EVANS )
in his individual capacity )
in the presence of: ) /s/ Thomas R. Evans
) -------------------------
/s/ M. Powderly
----------------------------
Signature of Witness
Michelle Powderly
----------------------------
Name of Witness
238 East 24th, 2D
New York, NY 10010
----------------------------
Address of Witness
Executed as a Deed by )
WILLIAM J. DORE )
in his individual capacity )
in the presence of: ) /s/ William J. Dore
) -------------------------
/s/ Melissa K. Fontenot
----------------------------
Signature of Witness
Melissa K. Fontenot
----------------------------
Name of Witness
P.O. Box 67
Sulphur, LA 70664
----------------------------
Address of Witness
|
Executed as a Deed by Douglas D. Hommert ) /s/ Douglas D. Hommert
[o], duly authorised to execute ) -----------------------------
this document as a Deed on behalf of ) Director
Viceroy Acquisition Corporation )
in accordance with the laws of the ) Witness: /s/ Mary B. Hockle
State of Delaware ) -------------------
Name and Address
of Witness:
Mary B. Hockle
-------------------
8235 Forsyth Blvd.
-------------------
St. Louis, MO 63105
-------------------
Executed as a Deed by ) /s/
KBC Peel Hunt Ltd. ) -----------------------------
acting by: ) Director
/s/
-----------------------------
Director/Secretary
|
Exhibit 10.1
DATED 12 JULY 2006
(1) CRT Capital Group LLC
(2) KBC Peel Hunt Ltd
(3) Directors
(4) Viceroy Acquisition Corporation
PLACING AGREEMENT RELATING TO
PLACING OF UNITS
OF VICEROY ACQUISITION CORPORATION
CONTENTS
1. Definitions and Interpretation.....................................2 2. Conditions.........................................................9 3. Subscription for Units............................................10 4. [Clause intentionally omitted]....................................11 5. Price Stabilisation...............................................11 6. AIM Application...................................................12 7. Allotment.........................................................13 8. Placing...........................................................13 9. Payment to the Company............................................14 10. Settlement........................................................15 11. Fees, Commissions and Expenses....................................15 12. Warranties........................................................17 13. Indemnity.........................................................19 14. Undertakings......................................................23 15. US Undertakings...................................................24 16. Prospectus Directive Undertakings.................................25 17. Representations of the Company, CRT and Peel Hunt.................26 18. Termination.......................................................26 19. General...........................................................29 20. Rights of Third Parties...........................................31 21. Notices and Service of Proceedings................................31 22. Law of Agreement..................................................32 SCHEDULE 1 The Directors..................................................34 SCHEDULE 2 Warranties.....................................................36 SCHEDULE 3 Documents to be Delivered......................................44 SCHEDULE 4 Limitation of Liability........................................46 SCHEDULE 5 Certificate....................................................47 SCHEDULE 6 Fees, Commissions and Expenses.................................48 Part IA UK Expenses to be Deducted from Proceeds by Peel Hunt..............48 Part IB US Expenses to be Deducted from Proceeds by CRT....................50 Part II Payments of Fees out of Working Capital by the Company.............51 |
THIS AGREEMENT IS MADE ON JULY 2006
BETWEEN:
(1) CRT CAPITAL GROUP LLC, a limited liability company organised under the laws of the State of Delaware, with its principal place of business at 262 Harbor Drive, Stamford, Connecticut, 06902 ("CRT");
(2) KBC PEEL HUNT LTD, whose registered office is at 111 Old Broad Street, London EC2N 1PH ("PEEL HUNT");
(3) THE SEVERAL PERSONS whose names and addresses are set out in Schedule
1 (the "DIRECTORS"); and
(4) VICEROY ACQUISITION CORPORATION, a corporation organised under the laws of the State of Delaware pursuant to the Delaware General Corporation Law, whose principal place of business is 8235 Forsyth Boulevard, Suite 400, St Louis, Missouri 63105 (the "COMPANY").
WHEREAS:
(A) The Company is a corporation formed and organised as a corporation under the laws of the State of Delaware.
(B) Peel Hunt has agreed, subject to the terms, conditions and provisions of this Agreement, to act as Nominated Adviser and Broker and as UK placing agent in relation to Admission and the Placing and CRT has agreed, subject to the terms and conditions and provisions of this Agreement, to act as non-UK placing agent in relation to Admission and the Placing.
(C) CRT and Peel Hunt have agreed on the terms and subject to the conditions referred to in this Agreement to act as placing agents for the Company in relation to Admission and the Placing and to use their respective reasonable endeavours to procure subscribers for the Subscription Units at the Placing Price.
(D) The Company has authorised Peel Hunt to make the AIM Application on its behalf in respect of all Common Shares and Warrants of the Company in issue.
IT IS AGREED as follows:
1. DEFINITIONS AND INTERPRETATION
1.1 Throughout this Agreement, including the Schedules, the following words and expressions have the meanings given to them below:
ACCOUNTS DATE 30 April, 2006.
ACT the Companies Act 1985, as amended.
ADMISSION the admission of the whole of
the common stock and warrants of
the Company to trading on AIM
becoming effective in accordance
with Rule 6 of the AIM Rules.
ADMISSION DOCUMENT the document in the agreed form
proposed to be published on behalf
of the Company in connection with
the AIM
2
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Application as required by Rule 3
of the AIM Rules.
ADMISSION DOCUMENT the verification notes in the
VERIFICATION NOTES agreed form (as of the date of
this Agreement) prepared by the
Company (and its advisors) in
connectio with the Placing and
for the purpose of
substantiating the accuracy and
completeness of the information
contained in the Admission
Document and the Presentation
Materials.
AIM the market of that name operated
by the London Stock Exchange.
AIM APPLICATION the application to be made by or
on behalf of the Company to the
London Stock Exchange for
Admission.
AIM RULES the rules published by the
London Stock Exchange governing
admission of securities to
trading on AIM and the
regulation of AIM companies and
their nominated advisers as
amended or reissued from time to
time.
ASSOCIATE in relation to a person, each of
its subsidiaries, holding
companies (and subsidiaries of
any such holding companies) and
each of their respective
officers, directors and
employees.
BROKER a member firm appointed by the
Company who assumes the
responsibilities set out in Rule
35 of the AIM Rules.
CERTIFICATE certificates in the agreed form
issued in respect of Common
Shares and Warrants
respectively.
COMMON SHARES shares of common stock par value
US$0.0001, in the capital of the
Company, having the rights and
being subject to the restrictions
set out in the certificate of
incorporation and bylaws of the
Company.
CONDITIONS the conditions set out in clause
2.1.
DEALING CODE the code for dealings in the
securities of the Company in the
agreed form.
DEALING DAY a day upon which dealings in
domestic securities may take
place on AIM with the authority
of the London Stock Exchange.
ENGAGEMENT LETTERS the letters of engagement between
the Company and CRT and between
the Company and Peel Hunt dated 13
April and 4 May 2006 respectively,
(and in the case of Peel Hunt,
including without limitation, its
standard terms and conditions as
provided to the Company) entered
into in relation to the Placing,
the AIM Application and Admission,
which shall terminate upon
Admission.
EXCHANGE ACT the US Securities Exchange Act of
1934, as amended.
3
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EXECUTIVE DIRECTORS the Directors whose names appear
in Part A of Schedule 1.
FOUNDING SHAREHOLDERS the persons who hold, directly or
indirectly, Common Shares issued
immediately prior to the Placing.
FSA the UK Financial Services Authority.
FSMA the UK Financial Services and
Markets Act 2000.
IMPACT DAY the date of this Agreement.
INDEMNIFIED PERSONS CRT and Peel Hunt and each of their
respective Associates.
INDEMNITY the indemnity in favour of the
Indemnified Persons set out in
clause 13.
LOCK-IN DEED the deed to be entered into
between each of the Directors
and Founding Shareholders, the
Company and Peel Hunt in the
agreed form setting out certain
restrictions in relation to the
disposal of the Company's
securities by the Directors and
Founding Shareholders and
certain of their connected
persons.
LONDON STOCK EXCHANGE London Stock Exchange plc.
LONG STOP DATE 5 p.m. on 31 July, 2006.
LOSSES all losses, claims, costs,
damages, liabilities, charges
(including stamp duty and stamp
duty reserve tax) and expenses
properly and reasonably incurred
(including reasonable fees and
costs and expenses of legal
counsel).
MEMBER STATE the countries which are members of
the European Economic Area.
NOMINATED ADVISER the person appointed by the
Company as its nominated adviser
pursuant to Rule 1 of the AIM
Rules who assumes the
responsibilities set out in Rule
39 and Schedule 6 of the AIM
Rules.
NOMINATED ADVISER the agreement entered into on the
AGREEMENT date of this Agreement between the
Company and Peel Hunt, appointing
Peel Hunt as nominated adviser and
broker to the Company with effect
from Admission.
NON-EXECUTIVE DIRECTORS the Directors whose names appear
in part B of Schedule 1.
PLACEES the persons whom CRT and Peel Hunt
procure to subscribe for the
Subscription Units on the terms
and subject to the conditions of
the Placing Letters (excluding,
for the avoidance of doubt, Paul
Anthony Novelly, or his
designees).
PLACING the proposed placing by CRT and
Peel Hunt of the Subscription
Units in accordance with the
terms of this Agreement, the
Placing Letters and the other
Placing
4
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Documents and as described in
the Admission Document.
PLACING DOCUMENTS the Admission Document, the
Placing Letters and any other
documents issued in connection
with the Placing including,
without limitation, any
Supplementary Admission Document
(or any pathfinder version of the
Admission Document).
PLACING LETTERS US Placing Letter and the UK
Placing Letter.
PLACING PRICE US $8.00 per Unit.
PRESENTATION MATERIALS the presentation materials in the
agreed form prepared by CRT on
behalf of the Company and used by
it in meetings with institutional
investors in connection with the
Placing prior to the date of this
Agreement.
PRESS RELEASE the press release relating to the
Placing in the agreed form.
PRICE PER STABILISATION SHARE a price equal to the average price
per Stabilisation Share paid by
Peel Hunt for all Stabilisation
Shares calculated as follows:
total price paid by Peel Hunt for
all Stabilisation Shares divided
by the Stabilisation Shares
Quantity.
PROCEEDS the total subscription amount
payable by Placees in respect of
Subscription Units at the
Placing Price to CRT and Peel
Hunt, as agents for the Company,
in connection with the Placing.
PROSPECTUS DIRECTIVE Directive 2003/71/EC and includes
any relevant implementing measure
in the applicable Member State.
REDUCED PROCEEDS an amount equal to the Proceeds
minus the Stabilisation
Withholding Amount.
REGISTRAR Capita IRG (Offshore) Limited.
REGULATION D Rules 501-508 of the Securities Act.
REGULATION S Rules 901-906 of the Securities Act.
REPORTING ACCOUNTANTS KPMG LLP.
SECURITIES ACT the US Securities Act of 1933, as
amended.
SHORT FORM REPORT the short form accountants' report
on the Company prepared by the
Reporting Accountants and
reproduced in Part III of the
Admission Document.
STABILISATION ACTIVITIES the purchase on AIM by Peel Hunt
of Common Shares at the market
price applicable to Common Shares
at the time of such purchase for
the purpose of supporting the
market price of the Common Shares.
STABILISATION PERIOD the period starting at 8:00 a.m.
on the day of Admission and ending
at 5:00 p.m. on the 29th day
following the day of Admission.
|
STABILISATION RETENTION ACCOUNT the account maintained by Peel Hunt
for the purposes of holding the
Stabilisation Withholding
Amount.
STABILISATION SHARES the Common Shares purchased by
Peel Hunt during the Stabilisation
Period pursuant to Stabilisation
Activities.
STABILISATION SHARES PRICE an amount equal to 100.3% x the
Price per Stabilisation Share x
the Stabilisation Shares Quantity
(together with any Tax paid or
payable by Peel Hunt in respect of
the transfer of the Stabilisation
Shares from Peel Hunt to the
Company including stamp duty of
approximately 0.5 per cent. of the
average price per share); and (for
the avoidance of doubt) the
additional 0.3% incorporated
within the 100.3% referred to
above represents an agreed
broker's commission for Peel Hunt
in respect of the Stabilisation
Shares.
STABILISATION SHARES QUANTITY the total number of Common Shares
comprising the Stabilisation
Shares immediately following the
end of the Stabilisation Period.
STABILISATION WITHHOLDING AMOUNT US$9,000,000.
SUBSCRIPTION UNITS the 22,250,000 Units to be
allotted and issued by the
Company, comprising the 5,625,000
Units to be subscribed for by Paul
Anthony Novelly, or his designees,
and the 16,875,000 Units to be
subscribed for by potential
Placees pursuant to the Placing,
but not for the avoidance of doubt
including the 5,625,000 Units to
be subscribed for by Paul Anthony
Novelly, or his designees.
SUPPLEMENTARY ADMISSION DOCUMENT any supplementary admission
document published for and on
behalf of the Company under the
AIM Rules and prepared in
accordance with clauses 18.4 and
18.5.
TAX OR TAXATION any form of taxation whenever
created or imposed and whether of
the United Kingdom or elsewhere,
including all forms of taxation,
impositions, duties (including
stamp duty), contributions and
levies and all penalties, fines,
charges, costs and interest
relating thereto.
TAX AUTHORITY OR TAXATION any revenue, customs,
AUTHORITY governmental, statutory,
provincial, federal or other
fiscal revenue authority competent
to impose, administer and collect
Tax, whether in the United Kingdom
or elsewhere.
TRUST ACCOUNT the trust account created pursuant
to the terms of the Trust
Agreement into which certain
proceeds of the Placing are to be
deposited.
TRUST AGREEMENT the investment management trust
agreement in the agreed form to be
entered into by the Company and
Continental
6
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Stock Transfer & Trust Company, as
trustee.
UK NET PROCEEDS The subscription monies paid to
and received by Peel Hunt from UK
Placees, less the commissions owed
to Peel Hunt by the Company in
accordance with clause 11.1, and
as set out at Part I-A of
Schedule 6, but not for the
avoidance of doubt including the
fees and expenses to be paid out
of the Company's working capital
listed at Part II of Schedule 6.
UK PLACEES Placees who have entered into UK
Placing Letters.
UK PLACING LETTERS the subscription agreements, each
with an accompanying form of
acceptance, to be entered into by
prospective Placees who are not US
Persons.
UNITED KINGDOM OR UK the United Kingdom of Great
Britain and Northern Ireland.
UNITS units of one Common Share and one
Warrant.
US GAAP Generally Accepted Accounting
Principles in the United States
(in effect from time to time).
US NET PROCEEDS the subscription monies paid to
and received by CRT from US
Placees, less (i) commissions owed
to CRT by the Company in
accordance with clause 11.1 as set
out at Part IB of Schedule 6, (ii)
the Working Capital Amount, and
(iii) any amount paid to Peel Hunt
in accordance with clause 9.1, but
not for the avoidance of doubt
including the fees and expenses to
be paid out of the Company's
working capital listed at Part II
of Schedule 6.
US PERSONS a US person, as defined in
Regulation S.
US PLACEES Placees who have entered into US
Placing Letters.
US PLACING LETTERS the subscription agreements, each
with an accompanying form of
acceptance, to be entered into by
prospective Placees who are US
Persons.
VAT United Kingdom Value Added Tax.
WARRANTIES the warranties set out in clause 12
and Schedule 2.
WARRANTORS the Company and the Executive
Directors, together with, in
relation to clauses 12 and 13 and
Warranties 16, 17 and 19 of
Schedule 2 only, the Non-Executive
Directors.
WARRANTS the warrants issued by the Company
and comprised in the Units, the
details of which are set out in
the Admission Document.
WORKING CAPITAL AMOUNT US$750,000.
7
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WORKING CAPITAL REPORT the working capital report on the
Company dated on or around the
date of this Agreement, prepared
by the Reporting Accountants and
addressed to the Company and CRT
and Peel Hunt.
|
1.2 Where used in this Agreement:
(a) "SUBSIDIARY", "SUBSIDIARY UNDERTAKING", "PARENT UNDERTAKING", "FINANCIAL YEAR" and "CONNECTED PERSONS" shall have the meanings respectively attributed to them by the Act at the date of this Agreement;
(b) "AFFILIATE" shall have the meaning given to such term pursuant to Rule 501(b) of the Securities Act; and
(c) "ACTING IN CONCERT" shall have the meaning given in the City Code on Takeovers and Mergers.
1.3 A reference to any statute or statutory provision or AIM Rule in this Agreement:
(a) includes any order, instrument, regulation, permission and direction made or issued under such statute or statutory provision or AIM Rule or deriving validity from it;
(b) shall be construed as a reference to such statute or statutory provision as in force at the date of this Agreement (including, for the avoidance of doubt, any amendments made to such statute or statutory provision or AIM Rule that are in force at the date of this Agreement); and
(c) shall also be construed as a reference to any statute or statutory provision or AIM Rule of which such statute or statutory provision or AIM Rule is a re-enactment or consolidation.
1.4 The headings in this Agreement are for convenience only and shall not affect its meaning.
1.5 References to a recital, clause, Schedule or paragraph are (unless otherwise stated) to a recital to, clause of or Schedule to this Agreement or to a paragraph of the relevant Schedule. The recitals and Schedules form part of the operative provisions of this Agreement and references to this Agreement shall, unless the context otherwise requires, include references to the recitals and the Schedules.
1.6 A document expressed to be "in the agreed form" shall mean a document, the terms, conditions and form of which have been agreed by the Company, CRT and Peel Hunt and a copy of which has been identified as such and initialled by or on behalf of CRT and Peel Hunt and the Company (subject to any further amendments which the Company, CRT and Peel Hunt may subsequently agree).
1.7 Words importing one gender shall (where appropriate) include any other gender and words importing the singular shall (where appropriate) include the plural and vice versa.
1.8 In construing this Agreement general words introduced by the word "other" shall not be given a restrictive meaning by reason of the fact that they are preceded by words indicating a particular class of acts, matters or things and general words shall not be given a restrictive meaning by reason of the fact that they are followed by particular examples intended to be embraced by the general words.
1.9 References to time of day, unless otherwise expressly stated, are to
London (England) times.
1.10 References to a person include an individual, a body corporate, a
corporation, a firm, association, partnership, joint venture,
organisation, institute, trust or agency, whether or not having a
separate legal personality and irrespective of the jurisdiction in
or under the law of which it was incorporated or exists.
2. CONDITIONS
2.1 Subject to this clause 2 and clause 17, the obligations of the
parties under this Agreement are conditional upon satisfaction of
each of the following conditions, in each case by the relevant time
and/or date referred to below (or, unless otherwise specified, such
later time and/or date as CRT, Peel Hunt and the Company may
determine, being no later than the Long Stop Date):
(a) an electronic copy of the Admission Document being submitted
to the London Stock Exchange as required by Rule 5 of the
AIM Rules together with the completed AIM Application (in
the form specified by the AIM Rules) and the fee payable in
respect of the AIM Application (with the accompanying
declaration from Peel Hunt pursuant to Rule 39 of the AIM
Rules) by not later than 9.00 a.m. on 7 July, 2006 (or such
other time and/or date as the Company and Peel Hunt may
agree); and
(b) the performance by the Company of its obligations under this
Agreement so far as the same fall to be performed prior to
Admission; and
(c) the delivery by the Company to Bingham McCutchen LLP on
behalf of Peel Hunt of a letter in the form set out in
Schedule 5 signed by a Director or duly authorised officer
on behalf of the Company by not later than 5.00 p.m. on the
Dealing Day immediately prior to the expected date of
Admission; and
(d) Admission occurring not later than 8.00 a.m. on 12 July,
2006; and
(e) the Nominated Adviser Agreement being entered into by not
later than the date of this Agreement; and
(f) the London Stock Exchange granting a derogation in writing
from the requirement for (i) electronic settlement of
securities contained in Rule 36 of the AIM Rules in respect
of the Common Shares and the Warrants, and (ii) annual
consent from the Company's shareholders to the Company's
investing strategy contained in Rule 8 of the AIM Rules
being delayed in accordance with the description of such
derogation contained in the Admission Document.
2.2 The Conditions set out in clauses 2.1(a) and 2.1(b) may be waived
in whole or in part by CRT and Peel Hunt in their absolute
discretion by notice in writing to the Company. The Company, CRT
and Peel Hunt may agree in writing to extend the time for
satisfaction of any Condition (but in any event no later than the
Long Stop Date).
2.3 The Company and the Directors undertake to each of CRT and Peel
Hunt to use all their respective reasonable endeavours to fulfil
or, at the Company's own expense, to procure the fulfilment of the
Conditions by the times and dates specified in clause 2.1 and CRT
and Peel Hunt agree to provide the Company and the Directors, where
applicable, with their reasonable assistance in connection
therewith.
2.4 Subject to the provisions of clause 18.3, if any Condition shall
not have been fulfilled (or waived) on or before the date or time
specified for the fulfilment thereof (or at such later time
9
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and/or date as CRT, Peel Hunt and the Company may agree (but in any
event no later than the Long Stop Date)) or becomes incapable of
being fulfilled (and is not so waived) no party shall be obliged to
perform any further obligations under this Agreement (other than
under or by reference to this clause 2.4 and clauses 1, 11.2, 11.3,
13, 18, 19, 20, 21 and 22 which shall remain in full force and
effect) and in such event (except in relation to any breaches prior
to the relevant date) no party to this Agreement shall have any claim
against any other party to this Agreement for costs, damages,
compensation or otherwise.
3. SUBSCRIPTION FOR UNITS
3.1 The Company hereby irrevocably appoints (i) CRT to act as its
placing agent to US Persons and to Placees located in Switzerland
and Canada, and (ii) Peel Hunt to act as its placing agent to
non-US Persons, in each case for the purpose of carrying out the
Placing and arranging subscribers for the subscription of the
Subscription Units at the Placing Price in the manner set out in
this Agreement and the Placing Documents.
3.2 CRT and Peel Hunt hereby accept their respective appointments under
clause 3.1 and agree as agents for the Company, to use their
reasonable endeavours to procure subscribers in cash for the
Subscription Units upon and subject to the terms and conditions of
the Placing Documents at the Placing Price.
3.3 The Company confirms that the respective appointments under clause
3.1 confer on CRT and Peel Hunt respectively all powers,
authorities and discretions on behalf of the Company which are
necessary for, or reasonably incidental to, the carrying out of the
Placing to the extent that they relate to the procuring of
subscribers for the Subscription Units, and undertakes to ratify
and confirm everything which CRT and Peel Hunt lawfully do in
carrying out or exercising their responsibilities with respect to
such appointments, powers, authorities and discretions, not
inconsistent with the Admission Document, the Presentation
Materials and the Placing Documents. The Company authorises CRT and
Peel Hunt to give instructions to the Registrar in relation to the
Placing and the allotment of Subscription Units to Placees in
accordance with clause 7.
3.4 The Company undertakes to do all such other acts as may be
reasonably required to vest the Subscription Units in subscribers
procured by CRT or Peel Hunt, or otherwise as CRT or Peel Hunt may
reasonably direct (as the circumstances shall require).
3.5 The Company undertakes to each of CRT and Peel Hunt not to create
any adverse interest over the Subscription Units to be allotted and
issued by it pursuant to this Agreement.
3.6 The subscription price for each of the Subscription Units shall be
the Placing Price, which shall be satisfied in cash in accordance
with clauses 9 and 10.
3.7 The Common Shares subscribed for as part of the Subscription Units
shall be issued fully paid, free from all liens, mortgages,
charges, encumbrances and other third party rights and will, as
from the date when they are issued and are fully paid up, rank in
full for all dividends and other distributions declared, made or
paid on the Common Shares after Admission and otherwise rank pari
passu in all respects with, and be identical to, the existing
Common Shares then in issue.
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4. [CLAUSE INTENTIONALLY OMITTED]
5. PRICE STABILISATION
5.1 Subject to the other provisions of this clause 5, if at any time
during the Stabilisation Period (and for so long as) the market
price of one Common Share is lower than $7.20, Peel Hunt (wherever
practicable following consultation with CRT and the Company) may
(but shall not be obliged to) perform Stabilisation Activities.
5.2 Any Stabilisation Shares purchased by Peel Hunt shall be purchased
using Peel Hunt's own funds (and not any funds (including the
Stabilisation Withholding Amount) held by Peel Hunt on behalf of
the Company) and shall be owned by Peel Hunt (both as to legal and
equitable title) until transferred to the Company pursuant to
clause 5.7.
5.3 Peel Hunt shall not:
(a) purchase or agree to purchase Common Shares pursuant to
Stabilisation Activities having an aggregate Stabilisation
Shares Price greater than the Stabilisation Withholding
Amount;
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(b) purchase Warrants pursuant to Stabilisation Activities; or
(c) be obliged to perform any Stabilisation Activities to the extent such Stabilisation Activities would (or, in Peel Hunt's absolute discretion, may) be prohibited by applicable laws and/or regulations (including, without limitation, the provisions of the Act, FSMA, the AIM Rules and/or any other rules and/or regulations promulgated by the FSA).
5.4 The Company undertakes on the third Dealing Day following performance of any Stabilisation Activities by Peel Hunt or at the end of the Stabilisation Period (each, a "STABILISATION SETTLEMENT DATE") to purchase from Peel Hunt and Peel Hunt undertakes to sell to the Company all of the Stabilisation Shares at the Stabilisation Shares Price, but not in an amount exceeding the Stabilisation Withholding Amount.
5.5 Within 2 Dealing Days of the end of the Stabilisation Period, Peel Hunt shall notify the Company of the Stabilisation Shares Price (specifying the Stabilisation Shares Quantity and the Price per Stabilisation Share) and such amount shall be immediately due and payable on the date of such notice.
5.6 Peel Hunt shall, on any Stabilisation Settlement Date, set-off
(from the account maintained in accordance with clause 9.2(a)(ii))
Peel Hunt's obligation to pay to the Company an amount of the
Stabilisation Withholding Amount equal to the Stabilisation Shares
Price (as referred to in clause 9.3.) in full and final discharge
of the Company's obligation to pay the Stabilisation Shares Price
to Peel Hunt.
5.7 Within five Dealing Days of receipt of full payment from the Company in cleared funds of the amounts due to Peel Hunt pursuant to this clause 5 which, unless otherwise agreed by the Company, shall be by way of the agreed set-off referred to in clause 5.6, Peel Hunt shall (or shall procure another person to) send to the Company duly executed stock transfer forms, all relevant share certificates and such other documentation as the Company may reasonably require in order to transfer all of the Stabilisation Shares to the Company.
6. AIM APPLICATION
6.1 The Company shall and each Executive Director shall procure that the Company shall immediately following the execution of this Agreement deliver, or procure that there are delivered to Peel Hunt, the documents specified in Schedule 3 at the times specified in, and otherwise in accordance with, the requirements of that Schedule.
6.2 Peel Hunt may, in its absolute discretion, waive the requirement that the Company deliver to it any document required to be so delivered pursuant to clause 6.1 and Schedule 3 or may extend the time and date for delivery of any such document. Any waiver or extension may be granted by Peel Hunt subject to such conditions as it may in its absolute discretion consider appropriate.
6.3 The Company shall promptly make the AIM Application through Peel Hunt, as Nominated Adviser, and shall comply with all reasonable requirements which the London Stock Exchange shall make of it so as to enable the AIM Application to be granted and the Company undertakes to each of CRT and Peel Hunt that it shall use its reasonable endeavours to achieve Admission by the date specified in clause 2.1(d) and will at its own expense supply or procure to be supplied, all such information and documentation, give or procure the giving of all such undertakings, execute, or procure the execution of all such documents, pay all such fees and generally do, or procure to be done, all such things, in each case as may be necessary, or properly required by the London Stock Exchange, in connection therewith and will comply fully with all relevant provisions of the Act, FSMA, the AIM Rules and/or any other rules and/or regulations promulgated by the FSA, applicable thereto.
6.4 The Company and Peel Hunt shall also procure (so far as is within their power of procurement) that:
(a) the information specified in Schedule One to the AIM Rules, in the form specified, is submitted to the London Stock Exchange as required by Rule 2 of the AIM Rules not later than 9.00 a.m. on 7 July, 2006;
(b) one copy of the Admission Document and the completed application form (in the form specified by the AIM Rules) are delivered to the London Stock Exchange as required by Rule 5 of the AIM Rules not later than 9.00 a.m. on 7 July, 2006;
(c) copies of the Admission Document are published in accordance with the requirements of the AIM Rules;
(d) by 5.00 p.m. on the day before Impact Day, resolutions of the board of directors of the Company conditionally allotting the Common Shares and Warrants, conditional upon Admission, are delivered to CRT and Peel Hunt; and
(e) any and all documents as are reasonably required by CRT and Peel Hunt for the purposes of Admission are made available to them at the Company's expense.
6.5 Peel Hunt, in its capacity as Nominated Adviser, shall provide to the Company appropriate advice and guidance for the purposes of obtaining approval of the AIM Application and shall comply with such of the AIM Rules as are applicable to it in its capacity as Nominated Adviser for the purposes of Admission in completing and submitting to the London Stock Exchange the declaration required under Rule 39 of the AIM Rules in connection therewith, provided that Peel Hunt shall only be required to issue such declaration, in its sole discretion, if it is satisfied that the Company has complied with all applicable AIM Rules in relation to Admission.
6.6 Peel Hunt, in its capacity as Nominated Adviser, shall provide to the Company appropriate advice and guidance for the purposes of obtaining from the London Stock Exchange the derogations referred to at clause 2.1(f), but shall have no obligation or liability to the Company or any other person if the London Stock Exchange refuses to grant such derogations for whatever reason.
6.7 The Company shall provide the Registrar with all necessary authorisations and (to the extent it is reasonably able) information to enable the Registrar to perform its duties as registrar in accordance with and as contemplated by this Agreement, the Placing Documents and any agreement between the Company and the Registrar in relation to the AIM Application and Admission. Prior to Admission, Peel Hunt confirms that it shall liaise with the Registrar on behalf of the Company and the Company confirms that it shall, upon request by Peel Hunt, provide such information to the Registrar as may reasonably be required.
6.8 The Company shall make available free of charge to the public for not less than one month from the date of Admission a copy of the Admission Document at the offices of Peel Hunt and the London offices of the Company's solicitors, Mintz Levin Cohn Ferris Glovsky and Popeo PC, to enable the Company to comply with its obligations under Rule 3 of the AIM Rules.
7. ALLOTMENT
7.1 The Directors undertake that prior to Admission they will convene and hold a meeting of the board of Directors of the Company for the purpose of considering and passing all resolutions required in connection with the allotment and issue of the Subscription Units, the Common Shares and the Warrants (such resolutions to be in a form approved by CRT and Peel Hunt) and all resolutions otherwise required in connection with the Placing and Admission and will ensure that all such resolutions are or will be duly and validly passed.
7.2 The Company irrevocably undertakes to each of CRT and Peel Hunt that it shall, upon receipt from CRT and Peel Hunt of their respective lists of subscribers for the Subscription Units pursuant to clause 8.3, allot the Common Shares and Warrants comprised in the Subscription Units at the Placing Price to the Placees in the numbers and proportions set out in such lists (including to CRT or Peel Hunt as nominee for all or any of the subscribers), subject to the Certificate of Incorporation and Bylaws of the Company and conditional only upon Admission occurring.
8. PLACING
8.1 The Company authorises and directs Peel Hunt, and Peel Hunt agrees, to arrange for the release of the Press Release to the press as soon as practicable following 8.00 a.m. on the date of Admission.
8.2 Within one day of the date of this Agreement, CRT and Peel Hunt shall, to the extent that they have not already done so, dispatch the Placing Letters and the draft Admission Document to such persons as they determine in their absolute discretion and use their reasonable endeavours to place the Subscription Units at the Placing Price with Placees selected by them (which may include CRT and Peel Hunt and/or members of the respective groups of companies of which they are a member) on and subject to the terms set out in the Placing Letters.
8.3 CRT and Peel Hunt shall by no later than noon (US Eastern Standard Time) on the Dealing Day after the date of the Agreement notify the Company and/or the Registrar (as appropriate)
of the names, addresses and entitlements to Subscription Units of the Placees procured by CRT and Peel Hunt respectively to subscribe for the Subscription Units.
8.4 Peel Hunt shall be entitled to make for itself or on behalf of any Indemnified Person any announcement concerning the Placing as may in its reasonable and sole opinion be necessary in order to comply with its obligations and duties as a Nominated Adviser if, in Peel Hunt's sole opinion (acting reasonably), the Placing Documents contain a misleading statement for the purposes of section 397 of the FSMA.
8.5 CRT and Peel Hunt shall receive all payments on behalf of the Company from US Placees and UK Placees respectively, and hold and apply such amounts in accordance with clause 9.
9. PAYMENT TO THE COMPANY
9.1 In the event that as at the date of Admission, the aggregate
subscription monies paid to Peel Hunt by UK Placees is less than
the aggregate of (i) the commissions owed to Peel Hunt under clause
11.1 (a) and (b), and (ii) the Stabilisation Withholding Amount,
CRT shall on behalf of the Company, pay to Peel Hunt (by
telegraphic transfer) out of the aggregate subscription monies paid
to CRT by US Placees, an amount equal to such difference (plus the
costs of such transfer), to be applied by Peel Hunt in payment of
such fees and commissions and towards payment of the Stabilisation
Withholding Amount into the Stabilisation Retention Account
pursuant to clause 9.2(a).
9.2 By 5.00 p.m. (New York time) on the date of Admission, CRT shall pay the Working Capital Amount to the Company out of the aggregate subscription monies CRT has received from US Placees. Subject to and following the Company complying with its obligations under clause 11 (and specifically without limitation, with its obligation to pay corporate finance fees under clause 11.1(b), all fees and expenses referred to in clause 11.2, and any payments required in accordance with clause 11.3) and subsequent to the making of any payments by CRT pursuant to clause 9.1 and the payment of the Working Capital Amount to the Company:
(a) Peel Hunt shall transfer on behalf of the Company:
(i) the UK Net Proceeds less the Stabilisation Withholding Amount to the Trust Account provided that amount is greater than zero; and
(ii) the Stabilisation Withholding Amount into a segregated, non-interest bearing account maintained by Peel Hunt pending the end of the Stabilisation Period (being the Stabilisation Retention Account), which shall be distributed in accordance with clause 9.3 below; and
(b) CRT shall transfer on behalf of the Company the US Net Proceeds to the Trust Account,
in each case, as soon as practicable following Admission and in any event not later than 5.00 p.m. on the first Dealing Day immediately following Admission. Such payment for the Subscription Units (subject to the deductions referred to above) shall occur by telegraphic transfer in immediately available funds in accordance with instructions provided by the Company in writing to CRT and Peel Hunt not less than two Dealing Days prior to Admission (which the Company undertakes so to provide).
9.3 Within 3 Dealing Days of the end of the Stabilisation Period (but subject to the agreed set-off described in clause 5.6 and the deductions described in this clause 9) Peel Hunt shall, on
behalf of the Company, transfer to the Trust Account, an amount equal to the Stabilisation Withholding Amount less the Stabilisation Shares Price.
9.4 The Company:
(a) agrees that clause 9.3 sets out the Company's sole and complete entitlement to receive (and Peel Hunt's sole and complete obligation to pay to the Company) all or part of the Stabilisation Withholding Amount; and
(b) undertakes that it will not create (or permit the creation of) any charge, mortgage, lien, pledge, encumbrance or other third party right over or in respect of all or any part of the Stabilisation Withholding Amount.
9.5 Payment of such monies in the manner and to the accounts mentioned in clauses 9.1 to 9.4 shall constitute a complete discharge of the payment and Placing obligations of CRT and Peel Hunt pursuant to this Agreement.
10. SETTLEMENT
10.1 The Company agrees with CRT and Peel Hunt that it will, on or
before Admission, instruct the Registrar to promptly register
(without registration fee) the persons named by CRT and Peel Hunt
(in respect of such persons from whom CRT and Peel Hunt have
received signed binding Placing Letters confirming their
subscription for Common Shares and Warrants) in accordance with
clause 8.3 as the holders of Common Shares and Warrants,
conditional only on Admission taking place.
10.2 The Company shall prior to Admission provide, or procure the
provision of, all information and authorisations required by the
Registrar to perform its duties as registrar in accordance with and
as contemplated by the terms of this Agreement, the Placing
Documents and any agreement between the Company and the Registrar.
10.3 As soon as practicable following their registration, the Company
shall procure that the Registrar issue Certificates to those
persons registered as holders of Common Shares and Warrants
pursuant to clause 10.1 above. These Certificates shall be
dispatched either to the holders directly or to CRT and Peel Hunt
respectively, as the Company, CRT or Peel Hunt may instruct the
Registrar.
10.4 The Company and, if any Certificates are dispatched by them to the
Registrar, CRT and Peel Hunt, shall procure that Certificates are
delivered to all holders registered pursuant to clause 10.1 not
later than five Dealing Days following Admission.
11. FEES, COMMISSIONS AND EXPENSES
11.1 In consideration of CRT and Peel Hunt's respective covenants and
obligations under this Agreement and CRT and Peel Hunt's respective
services in connection with the Placing and the AIM Application,
the Company shall, subject to clause 11.6, pay to CRT and Peel Hunt
on the date of Admission:
(a) a basic commitment commission of six per cent. (6%) of the
aggregate value of the Subscription Units in respect of
which Placees have been secured at the Placing Price
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apportioned between CRT and Peel Hunt as follows:
(i) CRT to receive a basic commitment commission of
US$7,290,000, less the deferred commission of
US$2,430,000, to be deposited in the Trust Account,
referred to in 11.1(c) below;
(ii) Peel Hunt to receive a basic commitment commission
of US$810,000, less the deferred commission of
US$270,000 to be deposited in the Trust Account,
referred to in 11.1(c) below,
and CRT and Peel Hunt are hereby authorised to deduct an
amount equal to the aggregate of such commissions from the
payments to be made by CRT and Peel Hunt in accordance
with this Agreement; and
(b) corporate finance fees of US$1,350,000 to CRT and US$200,000
to Peel Hunt,
provided that,
(c) CRT and Peel Hunt have agreed to defer US$2,700,000 of their
commitment commission payable pursuant to clause 11.1(a)
above until the consummation of a Qualified Business
Combination (as defined and described in more detail in the
Admission Document) such deferred commissions comprising
US$2,430,000 commission to be deferred by CRT and US$270,000
to be deferred by Peel Hunt to be deposited in the Trust
Account and to be paid to CRT and Peel Hunt upon the
consummation of such Qualified Business Combination, in
accordance with the terms of the Trust Agreement;
11.2 The parties acknowledge that the Company is not expected to bear
any VAT as a result of the Placing and Admission. However, to the
extent that any VAT is payable, the Company shall bear the cost of
such payment. The Company shall bear all costs, charges and
expenses of, or incidental to, the satisfaction of the Conditions,
the Placing, the AIM Application, the issue of the Subscription
Units and the arrangements referred to in, or contemplated by, this
Agreement (together with any VAT chargeable thereon) including,
without limitation, all fees and expenses payable in connection
with Admission, the London Stock Exchange AIM admission fees, all
expenses of the Registrar, printing and advertising expenses,
postage and all legal, accountancy, actuarial and other
professional fees and expenses which shall include the fees and
expenses of CRT and Peel Hunt's legal advisers, but only up to a
maximum amount of US$75,000, all as set out at Part I-B, and Part
II-B of Schedule 6. The Company shall immediately upon request by
CRT and Peel Hunt reimburse to CRT and Peel Hunt, as the case may
be, the amount of any such costs, charges and expenses which CRT
and Peel Hunt may have paid.
11.3 Where, pursuant to the Placing and Admission, this clause 11 or
clause 13, a sum is payable to CRT or Peel Hunt, in respect of any
cost or expense incurred by CRT or Peel Hunt and that cost or
expense includes an amount in respect of VAT, the Company shall(if
applicable) in addition pay to CRT or Peel Hunt, as the case may
be, in respect of VAT:
(a) where the payment (or any part of it) constitutes the
consideration (or any part of the consideration) for any
supply by CRT or Peel Hunt, or anything which is treated for
VAT purposes as a supply by CRT or Peel Hunt to the Company,
such amount as equals any VAT properly payable thereon and
on such VAT, if any, as is referred to in clause 11.3(b);
(b) (except where the payment falls within clause 11.3(c)) where
the payment is in respect of costs, charges or expenses
incurred by CRT or Peel Hunt, such amount as equals any VAT
charged to or incurred by CRT or Peel Hunt in respect of
that cost,
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charge or expense and which CRT or Peel Hunt certifies is
not recoverable by CRT or Peel Hunt by repayment or credit
(such certificate to be conclusive in the absence of
manifest error); and
(c) where the payment is in respect of costs, charges or
expenses incurred by CRT or Peel Hunt as agent for the
Company, such amount as equals the amount included in the
costs, charges or expenses in respect of VAT,
such payments to be made within seven days of CRT or Peel Hunt, as
the case may be, requesting the same and against product by CRT or
Peel Hunt of an appropriate tax invoice.
11.4 In the event that any stamp duty, stamp duty reserve tax or similar
tax is payable in respect of the Common Shares or Warrants to
ensure that those persons becoming entitled pursuant to this
Agreement to be registered as holders of the same be so registered,
such duty shall be borne by the Placees.
11.5 Notwithstanding that CRT or Peel Hunt are acting as agents for the
Company in connection with the Placing, each of them may retain any
commissions payable to it, pursuant to clause 11.1 (subject to the
deferred commissions referred to in clause 11.1(c). Any
Subscription Units which each of CRT and Peel Hunt purchases or
subscribes as principal may be retained or dealt in by it for its
own use and benefit.
11.6 Notwithstanding any other provision of the Agreement, the fees,
costs, charges, commissions and expenses payable by the Company to
CRT and Peel Hunt hereunder:
(a) under clause 11.1 shall be due and payable upon Admission,
save that the deferred fees and commissions referred to in
clause 11.1(c) will be payable upon consummation of a
Qualified Business Combination (as such term is defined in
the Admission Document);
(b) under any other part of this clause 11 shall be due and
payable upon the earlier of Admission, the Long Stop Date or
a termination of this Agreement under clause 18;
(c) are not in addition to the fees, costs, charges, commissions
and expenses payable under the Engagement Letters and
represent all the fees and expenses payable by the Company
to CRT and Peel Hunt in respect of the Placing; and
(d) no fees or commissions whatsoever shall be payable with
regard to the US$45 million subscription of Paul Anthony
Novelly or his designees for Subscription Units in the
Placing, as is described in more detail in the Admission
Document.
12. WARRANTIES
12.1 The Warrantors jointly and severally warrant to CRT and Peel Hunt
that each Warranty is true, accurate and not misleading at the date
of this Agreement, save that the Directors severally warrant to CRT
and Peel Hunt in respect of clause 12.3, and Warranties 16, 18 and
19 of Schedule 2 as at the date of this Agreement.
12.2 The Warrantors severally agree not to cause, and severally to use
all reasonable endeavours not to permit, any event to occur or
allow any omission which would render any of the Warranties untrue,
inaccurate or misleading if it were to be repeated immediately
prior to Admission by reference to the facts and circumstances then
subsisting.
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12.3 Each Director further severally warrants to CRT and Peel Hunt that
the responses given by him to the directors' questionnaire and the
information set out in the Admission Document relating to him and
his connected persons are true and accurate and each is not by
itself or by omission misleading and that all information relating
to himself which would reasonably be considered material for
disclosure in the Admission Document has been disclosed to CRT and
Peel Hunt.
12.4 Without prejudice to the provisions of clause 18.4 each of the
Warrantors undertakes to notify CRT and Peel Hunt in writing,
immediately upon him or it becoming aware of any fact or
circumstance, which would or is likely to indicate at any time up
to Admission:
(a) that any of the Warranties was untrue, inaccurate or
misleading at the date of this Agreement;
(b) that any of the Warranties would be untrue, inaccurate or
misleading if it were to be repeated immediately prior to
Admission by reference to the facts and circumstances at
that time subsisting; or
(c) any other facts or circumstances which occur or arise at any
time prior to Admission which is or may constitute a
significant change or new matter for the purposes of the AIM
Rules.
12.5 Where any statement in the Warranties is qualified by the
expression "to the best of the knowledge, information and belief of
the Warrantors" or "so far as the Warrantors are aware" or any
similar expression, each Warrantor shall be deemed to have
knowledge of:
(a) other than in respect of the Warranty given at clause 12.3
and Warranties 18 and 19 of Schedule 2, anything of which
the other Warrantors have knowledge or are deemed by
paragraphs (b) or (c) below to have knowledge;
(b) anything of which he ought reasonably to have knowledge
given his particular position in and responsibilities to the
Company; and
(c) anything of which he would have had knowledge had he made
due and careful enquiry before giving the Warranties.
12.6 The Warranties shall continue in full force and effect
notwithstanding the completion of all matters and arrangements
referred to in or contemplated by this Agreement.
12.7 The Warranties shall be qualified to the extent of any facts or
information fairly disclosed in the Admission Document, or
otherwise fairly disclosed pursuant to the terms of this Agreement.
12.8 The Warrantors acknowledge that CRT and Peel Hunt are entering into
this Agreement in reliance upon each of the Warranties which has
also been given with the intention of inducing CRT and Peel Hunt to
enter into this Agreement.
12.9 Each of the Warranties shall be construed separately and shall not
be limited or restricted by reference to or inference from the
terms of any other of them or any term of this Agreement (other
than clauses 12.7 and 12.10).
12.10 The liability of the Warrantors shall be limited as set out in
Schedule 4.
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12.11 References in this Agreement to a warranty or undertaking being (or
not being) true and accurate or being (or not being) misleading
shall mean material in the context of the Company or the Placing.
12.12 To the extent that a Supplementary Admission Document is published
after the date of this Agreement in accordance with clauses 18.4
and 18.5, all references to the Admission Document in this clause
12 and Schedule 2 shall be taken to include any such Supplementary
Admission Document and the Warranties shall be deemed to be
qualified by any statement made therein with effect from the date
of publication of such Supplementary Admission Document.
13. INDEMNITY
13.1 The Company agrees, and each of the Directors severally agrees to
indemnify CRT and Peel Hunt (for themselves and as trustees for
each of the other Indemnified Persons) against and to pay on demand
an amount equal to all Losses which any Indemnified Person may pay,
suffer or incur indirectly or directly (including, without
limitation, those paid, suffered or incurred in investigating,
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seeking advice as to, defending or disputing any such claim, action, demand, proceedings, investigation or liability and in enforcing its rights under this clause) and which in any case is occasioned by or results from or is attributable to or would not have arisen but for:
(a) the issue or despatch of the Placing Documents (or any of them) in breach of any applicable law or regulation;
(b) the allotment and issue of the Subscription Units in breach of any applicable law or regulation;
(c) any breach or alleged breach (other than a breach alleged only by an Indemnified Person) by the Company of any of the Warranties or breach of any of the other provisions of, or their respective obligations or undertakings under, this Agreement or otherwise in connection with the Placing;
(d) the Placing Documents not containing, or being alleged not to contain, all information required to be stated therein (including by law or regulation and, for the avoidance of doubt, the AIM Rules) or any statement therein (whether of fact, opinion, expectation or intention and including any forecast, projection or estimate) being or being alleged to be untrue, inaccurate, incomplete or misleading or as having been made negligently or otherwise without the required standard of skill and care or reasonableness expected of a director of an AIM listed company;
(e) the approval or issue by CRT or Peel Hunt of any invitation or inducement to engage in investment activity (as defined in section 21 of the FSMA) relating to the Placing;
(f) the proper performance by CRT or Peel Hunt of its services to the Company in connection with the Placing and the AIM Application or the content, preparation, publication and distribution of any of the Placing Documents; or
(g) any failure or alleged failure by the Company or any of its agents, employees, officers or professional advisers (other than the Indemnified Persons) to comply with the FSMA, the AIM Rules, the Securities Act, the Exchange Act or any other requirements of statute or statutory regulations or laws or regulations of any country in relation to the Placing, the publication and despatch of the Placing Documents, this
Agreement, the AIM Application or Admission (including any
requirements imposed upon it by the London Stock Exchange in
connection with the AIM Application).
13.2 The Indemnity contained in clause 13.1:
(a) shall not extend to any Losses to the extent that they are
agreed by CRT or Peel Hunt or finally determined by a court
of competent jurisdiction to arise out of the negligence,
wilful default or fraudulent or criminal act, or fraudulent
misrepresentation of any Indemnified Person or as a result
of a breach by any Indemnified Person of any duties and
obligations owed by that Indemnified Person under the AIM
Rules, the rules of the FSA or under the regulatory system
established pursuant to the FSMA, under the Securities Act
or the Exchange Act or from the breach by CRT or Peel Hunt
of their respective obligations under this Agreement, or any
other agreement with the Company or its Directors
(including, to the extent it continues and survives, the
Engagement Letter between the Company and Peel Hunt;
(b) shall not apply to the extent prohibited by law; and
(c) shall not extend to any Tax paid or payable by or on behalf
of Peel Hunt or CRT on any fees or commissions received or
payable by them pursuant to clause 11.
13.3 Subject to the provisions of Schedule 4, the Indemnity set out in
clause 13.1 shall remain in full force and effect notwithstanding
the completion of all matters and arrangements referred to in or
contemplated by this Agreement or the Placing Documents.
13.4 The Company undertakes and each Director severally undertakes to
each Indemnified Person that no claim shall be made against any of
the Indemnified Persons (and that no Indemnified Person shall have
any liability (whether direct or indirect, in contract, tort or
otherwise)) by the Company or any of its Associates to recover any
Losses which the Company or any of its Associates may suffer or
incur by reason of or arising out of the Placing by CRT and Peel
Hunt of the Subscription Units, the performance of CRT and Peel
Hunt's other obligations under this Agreement, the issue of the
Subscription Units or the publication or despatch of the Placing
Documents, unless and except to the extent that such Losses arise
as a result of a breach by CRT or Peel Hunt of their respective
obligations under this Agreement or the fraudulent or criminal act,
fraudulent misrepresentation, negligence or wilful default of such
Indemnified Person or as a result of a breach by such Indemnified
Person of any duties and obligations owed by that Indemnified
Person under the rules of the FSA, the AIM Rules, the Exchange Act,
the Securities Act, under this Agreement or any other agreement
with the Company and its Directors (to the extent it is continuing)
or under the regulatory system established pursuant to the FSMA.
13.5 For the avoidance of doubt, should any amount paid or payable under
this Agreement (excluding the fees and commissions payable under
clause 11) to CRT, Peel Hunt or any of the other Indemnified
Persons be itself subject to tax in the hands of the recipient or
be required by law to be paid under any deduction or withholding,
the person making such payment shall pay such sum as will after any
such tax, deduction or withholding leave the recipient with the
same amount as he would have had if no such tax had been payable
and no deduction or withholding had been made, and such payments
and adjustments shall be made as may be necessary to give effect to
this clause 13.5.
13.6 Provided the relevant Indemnified Person is entitled to be
indemnified pursuant to this clause 13, the Indemnity set out in
clause 13.1 shall extend to all reasonable costs, charges and
expenses (including without limitation all reasonable legal fees
and expenses) which any Indemnified Person may incur or bear in
disputing any claim made against it or him or in
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establishing any claim on its or his part under the provisions of
this clause 13 or in seeking advice as to any claim in respect of
which it or he is entitled to be indemnified pursuant to this clause
13.
13.7 CRT and Peel Hunt have entered into this clause 13 for themselves and
as trustee for each Indemnified Person on the following basis:
(a) only CRT or Peel Hunt, as the case may be, may decide
whether or not to enforce an Indemnified Person's right
under the trust (and only it may decide the terms and
conditions of that enforcement) and investigate a matter, or
give information to an Indemnified Person, in connection
with the trust;
(b) notwithstanding the trust, CRT or Peel Hunt may enter into
an agreement, arrangement or transaction with a person
(including, without limitation, the Company) and may deal
with his or its rights under this Agreement without regard
to an Indemnified Person's interest and is not liable to
account to an Indemnified Person for any benefit realised by
that agreement, arrangement, transaction or dealing; and
(c) CRT and Peel Hunt are not liable to another Indemnified
Person for any of its acts or omissions as trustee.
13.8 [Intentionally deleted].
13.9 CRT and Peel Hunt shall use reasonable endeavours to procure that
any Indemnified Person will, to the extent lawful, promptly give
written notice to the Company as soon as practicable after it
becomes aware of:
(a) any actual or potential claim which may give rise to a
liability upon the Company under the Indemnity given to the
Indemnified Persons pursuant to this clause 13; or
(b) any other matter which is likely to give rise to such
liability,
provided that no failure or delay by an Indemnified Person in
giving written notice shall relieve the Warrantors of their
obligations unless (and only to the extent that) the Warrantors
have been materially prejudiced by such failure or delay (and
non-disclosure by reason of legal or regulatory restriction shall
not constitute failure by an Indemnified Person).
13.10 CRT and Peel Hunt shall have the right to separate legal counsel of
their own choosing and will consult with the Company in relation to
any actual or potential claim by a third party or other matter
notified to the Company in accordance with clause 13.9 (the
"INDEMNITY CLAIM") and will thereafter maintain consultation with
the Company on all material aspects of the matters or circumstances
giving rise to the Indemnity Claim and shall provide the Company
with such information and copies of such documentation relating to
the Indemnity Claim as the Company and the Directors may reasonably
request. In relation to any Indemnity Claim, CRT and Peel Hunt will
either:
(a) allow the Company at its own expense and in its absolute
discretion to avoid, dispute, resist, compound or defend the
Indemnity Claim in the name and on behalf of CRT and Peel
Hunt or any other Indemnified Person and to have conduct of
any appeal or incidental negotiations; or
(b) at the request of the Company for itself and, in so far as
it is authorised and it is reasonably practicable for it so
to do, on behalf of any other person, take or procure that
the Indemnified Person take such action as it deems
necessary to avoid, dispute,
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resist, appeal or compromise any Indemnity Claim, subject to
CRT and Peel Hunt being indemnified and secured to its/their
reasonable satisfaction by the Company against all losses,
costs, damages and expenses which may be thereby incurred.
Notwithstanding the aforesaid, if the Warrantors have committed any
acts or omissions which constitute fraudulent conduct, CRT and Peel
Hunt may without reference to the Warrantors pay, settle or otherwise
deal with the Indemnity Claim as it feels or they feel (as the case
may be) fit.
13.11 Notwithstanding any rule of law or equity to the contrary, any
release, waiver or compromise or other arrangement of any kind
whatsoever which CRT and Peel Hunt or any other Indemnified Person
may agree to or effect as regards one or more of the Warrantors in
connection with this Agreement and, in particular (but without
limitation), the Indemnity shall not affect the rights of the
Indemnified Person as regards any other of such parties.
13.12 If CRT or Peel Hunt recovers from some other person and actually
receives payment of any sum which compensates it for any Loss in
respect of any matter giving rise to a claim under the Warranties
or under clause 13.1, then either:
(a) the amount payable by the Warrantors in respect of such
claim shall be reduced by an amount equal to the sum so
recovered and actually received by the Indemnified Person
(less the reasonable costs and expenses of recovering it and
any Taxation payable by the Indemnified Person as a result
of its receipt); or
(b) if an amount shall already have been paid to the Indemnified
Person by any of the Warrantors in respect of such claim,
there shall be repaid to the relevant Warrantor an amount
equal to the amount so recovered and actually received by
the Indemnified Person (less the reasonable costs and
expenses of its recovery and any Taxation payable by the
Indemnified Person as a result of its receipt) or (if less)
such amount as has already been paid by the Warrantors to
the Indemnified Person in respect of such claim.
13.13 The Warrantors confirm that they have given to CRT and Peel Hunt
written notice of any express financial limitation of liability by
any of the Company's advisers in existence at the date of this
agreement. If the Warrantors have accepted (or subsequently accept)
any such limitation then any liability which any Indemnified Person
may have to the Company (but for this clause 13.13) for loss
suffered in connection with the performance of its obligations and
services hereunder or otherwise in connection with the Admission or
Placing shall be reduced if such loss would have been recoverable
by the Company from a third party but for an agreement between that
party and the Company which limits that party's liability to the
Company. Such reduction shall be to the extent that such agreement
has the effect of reducing the ability of the Indemnified Person to
recover under rights of contribution from that party. The
Warrantors shall inform CRT and Peel Hunt immediately if any such
agreements are entered into by the Company hereafter.
13.14 The Company and the Directors acknowledge that the Indemnity set
out in this clause 13 shall be a separate obligation to any
indemnities granted in favour of CRT or Peel Hunt in accordance
with the terms of their Engagement Letters (so far as they continue
until Admission), or the Nominated Adviser Agreement.
13.15 An Indemnified Person shall not be entitled to recover more than once
in respect of the same Loss.
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14. UNDERTAKINGS
14.1 The Company and each of the Directors undertake to each of CRT and
Peel Hunt that between the date of this Agreement and the date
falling 18 months after Admission they shall not, without the prior
written consent of Peel Hunt as Nominated Adviser (such consent not
to be unreasonably withheld, conditioned or delayed), enter into or
procure or (so far as they are respectively able) permit the Company
or any of its Associates to enter into any commitment or agreement,
or put itself in a position where it is obliged to announce that any
commitment or agreement may be entered into, which:
(a) is not contemplated or otherwise referred to in the Placing
Documents; or
(b) could materially or adversely affect the Placing or which is
or may be material in relation to the Placing; or
(c) is material in the context of the business or affairs of the
Company,
other than in relation to a Business Combination (as defined in the
Admission Document) which has been approved by the necessary
shareholder vote in accordance with the terms of the Admission
Document.
14.2 Each of the Directors undertakes with Peel Hunt, as Nominated
Adviser and Broker, and with the Company that he shall, and shall
procure that any person connected with him shall, comply with Rule
21 of the AIM Rules relating to directors' dealings in securities
as applicable to AIM companies.
14.3 The Company and each Director hereby undertakes to each of CRT and
Peel Hunt that it will at all times comply and act in accordance
with its obligations under FSMA, the rules and requirements of the
London Stock Exchange (including, without limitation, the AIM
Rules), the Dealing Code and any other requirements, statutory or
otherwise, from time to time in force in relation to companies
listed on AIM.
14.4 Save as expressly contemplated by this Agreement, or as required by
law, the Securities Act, the Exchange Act, the AIM Rules or by the
London Stock Exchange or any other regulatory authority, neither
the Company nor any Director shall make or dispatch any public
announcement, statement or communication or publish any document
concerning the Company or in connection with the Placing (whether
in response to enquiries or otherwise) between the date of this
Agreement and the date falling 6 months after Admission, without
the prior written consent of Peel Hunt (such consent not to be
unreasonably withheld, conditioned or delayed) and the Company
shall forward to Peel Hunt for comment any proofs of all such
documents and take into account all reasonable requirements of Peel
Hunt in relation thereto.
14.5 The Company undertakes to each of CRT and Peel Hunt that, except as
set forth in this Clause 14.5, the Company shall not pay any Director
or any of their Associates any fees or compensation from the Company,
for services rendered to the Company prior to, or in connection with,
the consummation of a Business Combination; provided that the
Directors shall be entitled to reimbursement from the Company for
their out-of-pocket expenses incurred in connection with seeking and
consummating a Business Combination (as defined in the Admission
Document).
14.6 The Company undertakes to each of CRT and Peel Hunt that it shall
cause the proceeds of the Placing to be held in the Trust Account
to be invested only in money market funds meeting conditions of the
Investment Company Act of 1940 or securities issued or guaranteed
by the
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United States with specific maturity dates, as set forth in the Trust
Agreement and disclosed in the Admission Document.
14.7 The Company undertakes to each of CRT and Peel Hunt that prior to
commencing its due diligence investigation of any operating
business which the Company seeks to acquire for an initial Business
Combination (as defined in the Admission Document) (a "TARGET
BUSINESS") or obtaining the services of any vendor, it will use its
reasonable efforts to cause the Target Business or vendor to
execute a waiver letter in relation to any claims against the Trust
Account. In the event that a vendor or Target Business refuses to
enter into such a waiver letter, the Company may engage such vendor
or commence due diligence investigations of, or enter into
discussions with, such Target Business, provided the Company
determines that it would be unable to obtain, on reasonable terms,
substantially similar services or opportunities from another entity
willing to enter into such a waiver.
14.8 Prior to the consummation of an initial Business Combination (as
defined in the Admission Document), the Company undertakes to each
of CRT and Peel Hunt that it will submit such transaction to the
Company's shareholders for their approval even if the nature of the
acquisition is such as would not ordinarily require shareholder
approval under applicable law.
15. US UNDERTAKINGS
15.1 Each of CRT and Peel Hunt severally and not jointly:
15.1.1. represent, warrant and agree that the Units, Common Shares
and Warrants (the "SECURITIES") have not been, and will not
be, registered under the Securities Act, and that they will
not offer the Securities in a manner that would require the
offered Securities to be registered under the Securities
Act; and
15.1.2. acknowledge that the offer and sale of the Securities or any
beneficial interests in the Securities prior to the date
which is one year after the later of (1) the date when the
Securities are first offered to persons (other than
distributors) pursuant to Regulation S and (2) the date of
closing of the offering (the "COMPLIANCE PERIOD") must be
only:
(ii) in compliance with the restrictions set forth under
"Category 3 Offering - Compliance Period" in the
Admission Document;
(iii) pursuant to an effective registration statement
under the Securities Act; or
(iv) pursuant to an available exemption for the
registration requirements of the Securities Act;
and that during the Compliance Period, neither CRT nor
Peel Hunt may engage in hedging transactions involving the
Securities unless in compliance with the Securities Act,
and that all offers and sales of securities contemplated
hereunder must be in accordance with "Offering
Restrictions", as such term is defined under Regulation S.
15.2 Neither the Company nor CRT, Peel Hunt nor their respective
affiliates nor any person acting on their behalf or on the behalf
of their affiliates will:
(a) directly or indirectly make offers or sales of Securities,
or solicit offers to buy or sell, or otherwise negotiate in
respect of, any Security under circumstances that would
require the registration of the Securities under the
Securities Act; or
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(b) offer to sell the Units other than:
(i) in offshore transactions to non-US persons in accordance with Regulation S;
(ii) to persons whom they reasonably believe are "qualified institutional buyers"; or
(iii) sales to certain affiliates of the Company in accordance with Regulation D,
as such term is defined under Rule 144A of the Securities Act; or
(c) solicit offers for, or offer to sell, the Securities by any form of general solicitation or general advertising (within the meaning of Regulation D) or in any manner involving a public offering within the meaning of Section 4(2) of the Securities Act; or
(d) engage in directed selling efforts (within the meaning of Regulation S) in respect of the Securities.
16. PROSPECTUS DIRECTIVE UNDERTAKINGS
None of the Company, CRT nor Peel Hunt, nor any of their respective
Associates nor any person acting on their behalf or on behalf of
any of their Associates will:
16.1 directly or indirectly make offers or sales of Units, Common Shares
or Warrants, or solicit offers to buy or sell, or otherwise
negotiate in respect of, any security under circumstances that
would require the Admission Document to be approved as a prospectus
by the FSA pursuant to sections 85 and 86 of the FSMA or vetted by
the FSA and certified by the FSA as containing the same level of
information as would be contained in a prospectus pursuant to the
Prospectus Directive; or
16.2 in relation to each Member State which has implemented the
Prospectus Directive, make an offer of the Units, Common Shares or
Warrants to the public in any such Member State, except that it may
make an offer of the Common Shares or Warrants in a Member State:
(a) to legal entities which are authorised or regulated to
operate in the financial markets or, if not so authorised or
regulated, whose corporate purpose is solely to invest in
securities;
(b) to any legal entity which does not meet two or more of the
following criteria, according to their last annual or
consolidated accounts:
(i) it has an average of at least 250 employees during
the last financial year;
(ii) it has a total balance sheet of more than
(euro)43,000,000; and
(iii) it has an annual net turnover of more than
(euro)50,000,000; or
(c) in any other circumstances which do not require the
publication by the Company of a prospectus pursuant to
Article 3 of the Prospectus Directive.
For the purposes of this clause 16.2, the phrase "offer of Units,
Common Shares or Warrants to the public" in relation to the sale or
offer of the Units, Common Shares or Warrants in any Member State
means the communication to one hundred or more persons in any one
Member State in any form and by any means of sufficient information
on the terms of the offer and the Units, Common Shares or Warrants
to be offered so as to enable a potential investor to decide to
purchase or subscribe for the Units, Common Shares or Warrants.
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17. REPRESENTATIONS OF THE COMPANY, CRT AND PEEL HUNT
Each of the Company, CRT and Peel Hunt hereby represents and
warrants to each of the other parties to this Agreement that it:
(a) will only communicate or cause to be communicated any
invitation or inducement to engage in investment activity
(within the meaning of Section 21 of the FSMA) in connection
with the issue or sale of the Units, Common Shares or
Warrants in circumstances in which Section 21(1) of FSMA
does not apply or pursuant to an exemption therefrom;
(b) prior to the date which is six months after the Admission
Date will not offer to sell, any Units, Common Shares or
Warrants sold through the Placing to persons in the United
Kingdom except to persons whose ordinary activities involve
them in acquiring, holding, managing or disposing of
investments for the purposes of their business or otherwise
in circumstances which have not resulted and will not result
in an offer to the public in the United Kingdom within the
meaning of the Prospectus Directive;
(c) has complied with and will continue to comply with all
applicable provisions of the FSMA with respect to anything
done by it in relation to the Units, Common Shares or
Warrants in, from or otherwise involving the United Kingdom;
and
(d) has only issued or passed on and will only issue and pass on
in the United Kingdom any document received by it in
connection with the sale of the Units, Common Shares or
Warrants to a person who is of a kind described in Articles
19 and 49 of the Financial Services and Markets Act 2000
(Financial Promotion) Order 2005 or is a person to whom such
document may otherwise lawfully be issued or passed on.
18. TERMINATION
18.1 If at any time prior to Admission there shall have occurred, happened
or come into effect:
(a) any government regulation which in the reasonable opinion of
CRT and Peel Hunt seriously and adversely affects or will or
is reasonably likely to seriously and adversely affect the
business of the Company; or
(b) any major outbreak or escalation of hostilities, any attack
on or act of terrorism involving the United Kingdom, any
other Member State or the United States of America, or any
declaration of a national emergency or war by the United
Kingdom, any other Member State or the United States of
America which in the reasonable opinion of CRT and Peel Hunt
makes it impractical or inadvisable to proceed with the
Placing; or
(c) any other crisis or material change in the financial,
political, economic or market conditions in the United
Kingdom, any other Member State or the United States of
America, or elsewhere or in currency exchange rates or
controls which in the reasonable opinion of CRT and Peel
Hunt makes it impractical or inadvisable to proceed with the
Placing (including any disruption to trading generally on
any stock exchange or in any over-the-counter market); or
(d) any other crisis of international or national effect which
in the reasonable opinion of CRT and Peel Hunt makes it
impracticable or inadvisable to proceed with the Placing; or
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(e) any material adverse change in the financial position or
prospects of the Company and its subsidiary undertakings
(taken as a whole) and in the reasonable opinion of CRT and
Peel Hunt, the effect of such change is such that it would
materially prejudice the success of the Placing or the
distribution of Subscription Units,
then CRT and Peel Hunt shall be entitled, after such consultation
with the Company as the circumstances may allow, to terminate their
respective obligations under this Agreement with immediate effect by
notice in writing to the Company at any time prior to Admission.
18.2 If at any time before Admission becomes effective:
(a) it comes to the knowledge of CRT and Peel Hunt (whether by
receipt of a notification under clause 12.4 or otherwise)
that any of the Warranties was untrue, inaccurate or
misleading when made and/or that any of the warranties
contained in this Agreement (including any of the
Warranties) has ceased to be true or accurate or has become
misleading by reference to the facts and circumstances from
time to time subsisting, in each case in any material
respect; or
(b) it shall come to the notice of CRT and Peel Hunt (whether by
receipt of a notification under clause 12.4 or otherwise)
that any statement in the Placing Documents is materially
incorrect or has become untrue, incorrect or misleading as a
result of a new matter or change or that a new matter has
arisen or a change has taken place which would, if the
Placing Documents were published at that time, constitute a
material omission from such documents and which would
require, pursuant to the AIM Rules, for a Supplementary
Admission Document to be published by or on behalf of the
Company; or
(c) any of the Company or the Directors have failed to comply
with any of their respective obligations under this
Agreement; or
(d) the appointment of CRT and Peel Hunt as agents to the
Company pursuant to clause 3 is terminated for any reason;
or
(e) any press or public announcement on behalf of the Company
that has not been approved by Peel Hunt as Nominated Adviser
prior to its release has been released,
then CRT and Peel Hunt shall be entitled, after such consultation
with the Company as the circumstances may allow, to terminate with
immediate effect their respective obligations under this Agreement
by giving notice to the Company at any time prior to Admission.
18.3 If this Agreement does not become unconditional or is terminated
pursuant to clauses 18.1 or 18.2, this Agreement shall cease and
determine and no party to this Agreement shall have any claim
against any other party to this Agreement for costs, damages,
compensation or otherwise except that:
(a) such termination shall be without prejudice to any accrued
rights or obligations of any party under this Agreement;
(b) the Company shall pay to CRT and Peel Hunt all expenses and
disbursements of the nature referred to in clause 11.2 and
any sums payable under clause 11.3;
(c) CRT and Peel Hunt shall as soon as practicable cause to be
redelivered to the Placees any moneys received from Placees
pursuant to the Placing; and
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(d) the provisions of this clause 18.3 and clauses 1, 11.2,
11.3, 12, 13, 19, 20, 21 and 22 shall remain in full force
and effect.
18.4 If at any time following publication of the Admission Document but
prior to Admission becoming effective:
(a) there shall occur a significant change affecting the
information given in the final form of the Admission
Document or a contract shall be entered into by the Company
or such a contract shall determine, or notice be given of
its termination, and in any such case it would be required
or proper for the Company to issue a notification required
by the AIM Rules were Admission to have occurred; or
(b) if any such change or matter arises which gives rise to an
obligation to publish a Supplementary Admission Document,
then the Company shall provide each of CRT and Peel Hunt with full
details of such change or matter, immediately upon becoming aware
of the same and make all such announcements and publish all such
documents (including a Supplementary Admission Document) as CRT and
Peel Hunt may require or as may be required by law or the AIM Rules
in the circumstances (any such steps or documents to be in a manner
and form approved, subject to clause 18.5, by CRT and Peel Hunt,
such approval not to be unreasonably withheld, conditioned or
delayed).
18.5 The Company shall ensure that if a Supplementary Admission Document
is published:
(a) each statement of fact contained in the Supplementary
Admission Document is true and accurate and not misleading;
(b) each expression of opinion, intention or expectation
contained in the Supplementary Admission Document is made on
reasonable grounds, after due and careful enquiry and is
truly and honestly held by the Directors and is fairly
based;
(c) there is no other fact known by, or which could on
reasonable enquiry have been known to the Directors the
omission of which makes or would make a statement of fact or
an expression of opinion, intention or expectation contained
in the Supplementary Admission Document misleading or which
is or might be material in the context of the Placing; and
(d) the Admission Document and the Supplementary Admission
Document contain all information as investors and their
professional advisers would reasonably require, and
reasonably expect to find there, for the purpose of making
an informed assessment of the Company's assets and
liabilities, financial position, profits and losses and
prospects and the rights attached to the Units.
18.6 Immediately upon authorisation of the issue by CRT and Peel Hunt of
the Supplementary Admission Document, the Company shall make
available free of charge sufficient copies in accordance with the
requirements of the AIM Rules.
18.7 CRT and Peel Hunt shall provide all reasonable and timely
assistance in connection with the preparation and issue of the
Supplementary Admission Document. The Company shall provide each of
CRT and Peel Hunt with all such information and documents as they
may reasonably require to enable them to discharge their respective
obligations under this Agreement, in connection with Admission and
the Placing and to comply with their obligations to the London
Stock Exchange and in accordance with the AIM Rules.
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18.8 If a Supplementary Admission Document is published in connection
with the Placing, references in this agreement to the Admission
Document are, as the context permits, to be read as references to
the Supplementary Admission Document, or as the context may
require, the Admission Document and Supplementary Admission
Document taken together.
18.9 If a Supplementary Admission Document is published, the Warranties
relating to the Admission Document shall be deemed to be repeated
on the date of publication of such Supplementary Admission Document
and when so repeated shall be read and construed as if the
references to the Admission Document were references to such
Admission Document when read together with the Supplementary
Admission Document.
19. GENERAL
19.1 The Company, and each of the Directors shall give all such
assistance and provide all such information as each of CRT and Peel
Hunt shall reasonably require for the purposes of this Agreement
and shall execute all such documents and do all such acts and
things as each of CRT and Peel Hunt may reasonably require in order
to give effect to the terms of this Agreement.
19.2 This Agreement shall be binding on each of the parties and their
successors and personal representatives as the case may be.
19.3 This Agreement may be executed as two or more counterparts in the
same form and execution by each of the parties of at least one of
such counterparts shall constitute due execution of this Agreement.
Any party may enter into this Agreement by executing a counterpart
and this Agreement shall not take effect until it has been executed
by all parties.
19.4 No failure or delay by any party to this Agreement in exercising
any remedy, right, power or privilege under or in relation to this
Agreement shall operate as a waiver of the same nor shall any
single or partial exercise of any remedy, right, power or privilege
preclude any further exercise of the same or exercise of any other
remedy, right, power or privilege.
19.5 No waiver by any of the parties of any of the requirements of this
Agreement or of any of its rights or remedies under this Agreement
shall have effect unless given in writing and signed by the waiving
or consenting party and then only in the instance and for the
purpose for which it is given. No waiver of any particular breach
of the provisions of this Agreement shall operate as a waiver of
any repetition of such breach.
19.6 Any release, waiver or compromise or any other arrangement of any
kind whatsoever which any party to this Agreement may agree to or
effect as regards one or more of the other parties in connection
with this Agreement shall not affect the rights and remedies of
that party as regards the remaining parties under this Agreement.
19.7 If at any time any provision of this Agreement is or becomes
invalid, illegal or unenforceable in any respect, the validity,
legality, and enforceability of the remaining provisions of this
Agreement shall not in any way be affected or impaired thereby.
19.8 Time shall be of the essence in this Agreement, both as regards the
dates, times and periods specifically mentioned and as to any
dates, times and periods which may, by agreement in writing between
the parties, be substituted for any of them.
19.9 This Agreement, the Nominated Adviser Agreement, the Engagement
Letters (so far as they continue until Admission) (together, the
"FRAMEWORK DOCUMENTS") constitute the entire and only legally
binding agreements between the parties relating to Admission and
the Placing.
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Except in the case of fraud, or willful misconduct, the remedies
provided in the Framework Documents are the sole remedies of the
parties hereto for breach of the relevant terms of the Framework
Documents to the exclusion of all other rights and remedies at law,
in equity or otherwise. For the avoidance of doubt, the Engagement
Letters shall continue in full force and effect until Admission,
whereupon they shall terminate.
19.10 Each of the parties to this Agreement (other than the Company)
acknowledges that CRT and Peel Hunt are acting for the Company in
connection with Admission and the Placing and no one else, and
accordingly shall not be responsible to any party to this Agreement
(other than the Company) nor to any other persons for providing
protections afforded to its clients under the rules of the FSA or
advising any party to this Agreement (other than the Company) or
any other person on the Placing.
19.11 No party shall be entitled to assign, transfer or create any trust
in respect of the benefit or burden of any provision of this
Agreement (or any of the documents referred to herein) without the
prior consent of the other parties.
19.12 No advice rendered by CRT or Peel Hunt in connection with the
services performed by CRT and Peel Hunt hereunder will be quoted,
nor will such advice or communication or the name of CRT or Peel
Hunt be referred to in any report, document, press release, public
statement or other communication by the Company or any corporation
controlled by the Company or any director, officer, employee, agent
or representative of any thereof, without CRT or Peel Hunt's prior
written authorisation.
19.13 The Company recognises that CRT and Peel Hunt have been engaged
only by the Company, and that the Company's engagement of CRT and
Peel Hunt is not and is not deemed to be on behalf of and is not
intended to confer rights upon any director, shareholder, partner
or other owner of the Company or any other person not a party
hereto as against CRT or Peel Hunt. Unless otherwise expressly
agreed, no-one other than the Company is authorised to rely upon
the Company's engagement of CRT and Peel Hunt or any statements,
advice, opinions or conduct by CRT or Peel Hunt, and the Company
will not disclose such statements, advice, opinions or conduct to
others (except the Company's professional advisors and except as
required by law). None of CRT and Peel Hunt's advice shall
constitute a recommendation to any shareholder of the Company
concerning action that such persons might or should take in their
capacity as a shareholder. CRT and Peel Hunt's roles herein are
those of an independent contractor; nothing herein is intended to
create or shall be construed as creating a fiduciary relationship
between the Company and CRT and Peel Hunt.
19.14 The Company acknowledges and agrees that CRT and Peel Hunt may have
and may continue to have investment banking, financial advisory and
other relationships with parties other than the Company (including,
without limitation, competitors of the Company) pursuant to which
CRT and Peel Hunt may acquire information of interest to the
Company. Neither CRT nor Peel Hunt shall have any obligation to
disclose such information to the Company.
19.15 CRT and Peel Hunt are engaged in securities trading and brokerage
activities as well as investment banking and financial advisory
services. In the ordinary course of their trading and brokerage
activities, CRT and Peel Hunt may hold positions, for their own
account or the account of customers, in equity, debt or other
securities of the Company or any other company. CRT and Peel Hunt
may from time to time and at their discretion publish research on
the Company.
19.16 No variation of this Agreement shall be effective unless made in
writing signed by or on behalf of all the parties and expressed to
be a variation.
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20. RIGHTS OF THIRD PARTIES
20.1 Each Indemnified Person shall have the right under the Contracts
(Rights of Third Parties) Act 1999 to enforce its rights against
the Company under clause 13 of this Agreement provided that an
Indemnified Person (in respect of clause 13) must obtain the
written consent of CRT and Peel Hunt (which may give or refuse in
their absolute discretion) before it may bring proceedings to
enforce the terms of clause 13 and, save to the extent notified in
writing by CRT and Peel Hunt to the relevant Indemnified Person,
CRT and Peel Hunt (without obligation) or one of them (as
determined by them) shall have the sole conduct of any such action
on behalf of the Indemnified Person.
20.2 Save as provided in clause 20.1, a person who is not a party to
this agreement shall have no rights under the Contracts (Rights of
Third Parties) Act 1999 to enforce any term of this Agreement but
this does not affect any right or remedy of a third party which
exists or is available apart from that Act.
20.3 Notwithstanding the provisions of clause 20.1, any rights arising
by virtue of the Contracts (Rights of Third Parties) Act 1999 may
be rescinded or varied in any way or at any time by the parties to
the Agreement without the consent of any Indemnified Person.
21. NOTICES AND SERVICE OF PROCEEDINGS
21.1 Any notice, consent, request, demand, approval or other
communication to be given or made under or in connection with this
Agreement (each a "Notice" for the purposes of this clause) shall
be, in writing and signed by or on behalf of the person giving it.
21.2 Service of a Notice must be effected by one of the following methods:
(a) by hand to the relevant address set out in clause 21.4 and
shall be deemed served upon delivery if delivered during a
Dealing Day, or at the start of the next Dealing Day if
delivered at any other time; or
(b) by prepaid first-class post to the relevant address set out
in clause 21.4 and shall be deemed served at the start of
the second Dealing Day after the date of posting; or
(c) by prepaid international airmail to the relevant address set
out in clause 21.4 and shall be deemed served at the start
of the fourth Dealing Day after the date of posting; or
(d) by facsimile transmission to the relevant facsimile number
set out in clause 21.4 and shall be deemed served on
despatch if despatched during a Dealing Day, or at the start
of the next Dealing Day if despatched at any other time,
provided that in each case a receipt indicating complete
transmission of the Notice is obtained by the sender and
that a copy of the Notice is also despatched to the
recipient using a method described in clauses 21.2(a) to (c)
(inclusive) no later than the end of the next Dealing Day.
21.3 In clause 21.2 "during a Dealing Day" means any time between 9.30
a.m. and 5.30 p.m. on a Dealing Day based on the local time where
the recipient of the Notice is located. References to "the start of
a Dealing Day" and "the end of a Dealing Day" shall be construed
accordingly.
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21.4 If to the Company: Viceroy Acquisition Corporation
8235 Forsyth Boulevard
Suite 400
St. Louis,
Missouri 63105
Fax No: 001-314-889-9603
For the attention of: Chairman
with a copy to:
Lee Mikles
1486 E.Valley Road
Santa Barbara
California 93108
USA
Fax No: 001-805-565-0800
If to CRT: CRT Capital Group LLC
262 Harbor Drive
Stamford
Connecticut 06902
Fax No.: 001-203-569-6885
For the attention of:
Doug Harvey/Charles Severs
If to Peel Hunt: KBC Peel Hunt Ltd
111 Old Broad Street
London EC2N 1PH
Fax No.: +44 (0)20 7972 0112
For the attention of:
Adam Hart/Matt Goode
If to a Director: The address stated against his name
in Schedule 1
The facsimile number stated against
his name in Schedule 1
21.5 A party may change its address for service provided that the new
address is within the same country and that it gives the other
parties not less than 28 days' prior notice in accordance with this
clause 21. Until the end of such notice period, service on the
address set out in clause 21.4 shall remain effective.
22. LAW OF AGREEMENT
22.1 This Agreement shall be governed by and construed in accordance
with English law without regard to the conflicts of laws provisions
thereof and the parties hereby irrevocably consent to the exclusive
jurisdiction of the English courts in connection with any dispute
related to this Agreement and any documents entered into pursuant
to it, provided that nothing in this Agreement shall prevent or
limit CRT, the Company or Peel Hunt from bringing any action or
claim in connection with this Agreement in any other jurisdiction
it sees fit.
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22.2 The Directors and the Company each appoint, without power of
revocation, Jordans Limited of 20-22 Bedford Row, London WC1R 4JS
as their respective agent for service of process in England and
hereby irrevocably consent to the service of process in any such
proceeding by delivery to such agent.
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THIS AGREEMENT has been duly executed by the parties on the date stated above.
SCHEDULE 1
THE DIRECTORS
PART A
THE EXECUTIVE DIRECTORS
NAME ADDRESS AND FAX NO. MAXIMUM LIABILITY
US$
Paul Anthony Novelly 8235 Forsyth Boulevard 2,000
Suite 400, Clayton
Missouri 63105
USA
Fax: 314-889-0211
Lee E. Mikles 1486 E. Valley Road 450,000
Santa Barbara
California 93108
USA
Fax: 805-565-0800
Douglas D. Hommert 8235 Forsyth Boulevard 450,000
Suite 400, Clayton
Missouri 63105
USA
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Fax: 314-889-9603
PART B
THE NON EXECUTIVE DIRECTORS
NAME ADDRESS AND FAX NO. MAXIMUM LIABILITY
US$
Edwin A. Levy 570 Lexington Avenue 2,000
27th Floor, New York
New York 10022
USA
Fax: 314-889-9603
Thomas R. Evans 477 Madison Avenue 2,000
Suite 430, New York
New York 10022
USA
Fax: 314-889-9603
William J. Dore 8000 Global Drive 2,000
Carlyss, LA 70665
USA
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Fax: 314-889-9603
SCHEDULE 2
WARRANTIES
1. COMPLIANCE WITH LAWS
The implementation of the Placing and Admission, the publication and despatch of the Admission Document and the other Placing Documents and the allotment and issue of the Units will comply with the FSMA, the AIM Rules, the Securities Act and all other relevant requirements of the rules and regulations of the London Stock Exchange and, so far as the Directors are aware, all other relevant laws and regulations of the United Kingdom, the United States and elsewhere and will, to the extent permissible by applicable law, comply with and will not infringe or exceed any limits, powers or restrictions or the terms of any agreement, obligation or commitment to which the Company or any of its Associates is a party or by which the Company or any of its Associates is bound.
2. ADMISSION DOCUMENT
2.1 All factual information contained in the Placing Documents and/or supplied to CRT or Peel Hunt (whether by the Company or the Directors) for the purposes of Admission and the Placing, including all statements of fact contained in the Admission Document, is and will, when the Admission Document is despatched, be true and accurate and not misleading or incomplete and does not omit anything likely to affect the import of such information. All statements, forecasts, estimates and expressions of opinion, intention or expectation made by the Directors and contained in the Admission Document are or will when published be honestly held by the Directors and are or will be fairly based upon facts within the knowledge of the Company and its Directors and have been or will be made on reasonable grounds after due and proper consideration of all information available to the Company and the Directors at that time.
2.2 Each agreement or other instrument (however characterised or described) to which the Company is a party or by which its property or business is or may be bound or affected and (i) that is referred to in the Admission Document, or (ii) is material to the Company's business, has been duly and validly executed by the Company, is in full force and effect and is enforceable against the Company and, to the Company's knowledge, the other parties thereto, in accordance with its terms, except (x) as such enforceability may be limited by bankruptcy, insolvency, reorganisation or similar laws affecting creditors' rights generally, (y) as enforceability of any indemnification or contribution provision may be limited under the federal and state securities laws, and (z) that the remedy of specific performance and injunctive and other forms of equitable relief may be subject to the equitable defences and to the discretion of the court before which any proceeding therefore may be brought, and none of such agreements or instruments has been assigned by the Company, and neither the Company nor, to the Company's knowledge, any other party is in breach or default thereunder and, to the Company's knowledge, no event has occurred that, with the lapse of time or the giving of notice, or both, would constitute a breach or default thereunder.
2.3 There are no facts known, or which could on reasonable and proper enquiry have been known to the Company or any of the Directors which are not disclosed in the Admission Document and which would or might reasonably be considered to:
(a) be likely to affect the import of the information contained therein; or
(b) make any statement therein (whether of fact or opinion) inaccurate or misleading; or
(c) invalidate or qualify any assumption made in support of any statement therein (whether of fact or opinion); or
(d) be material for disclosure to Peel Hunt as Nominated Adviser in relation to the Placing, or to a potential subscriber for the Units.
2.4 The Admission Document contains all such information as investors would reasonably expect to find there for the purpose of making an informed assessment of:
(a) the assets and liabilities, financial position, profits and losses and prospects of the Company; and
the rights attaching to the Subscription Units, Warrants and Common Shares.
2.5 So far as the Company is, or any of the Directors are, aware at the date of the publication of the Admission Document there is no fact or circumstance which is not disclosed in the Admission Document which if disclosed might reasonably be expected to affect the decision of CRT or Peel Hunt to enter into this Agreement or of Peel Hunt to act as Nominated Adviser and Broker to the Company for the purposes of the AIM Rules or of any person to acquire any of the Units.
3. VERIFICATION NOTES
The information contained in the replies to the Admission Document Verification Notes is true and accurate in all material respects and not misleading in any material respect and all expressions of opinion and expectation therein contained are honestly held and fairly based, such replies have been prepared or approved by persons having appropriate knowledge and responsibility to enable them properly to provide such replies and all such replies have been given in good faith.
4. US SECURITIES LAWS
4.1 Neither the Company nor any of its affiliates:
(a) has, directly or indirectly, solicited any offer to buy, sold or offered to sell or otherwise negotiated in respect of, or will solicit any offer to buy, sell or offer to sell or otherwise negotiate in respect of, in the United States or to any United States citizen or resident, any security which is or would be integrated with the sale of the Units in a manner that would require the offered Units, Common Shares or Warrants to be registered under the Securities Act;
(b) will offer or sell the Units other than:
(i) in offshore transactions to non-US persons in accordance with Regulation S;
(ii) to persons whom it reasonably believes to be qualified institutional buyers within the meaning of Rule 144A under the Securities Act; or
(iii) sales to certain affiliates of the Company in accordance with Regulation D;
(c) has engaged or will engage, in connection with the Placing, in any form of general solicitation or general advertising within the meaning of Rule 502(c) of the Securities Act; and
(d) has engaged in or will engage in, in connection with the Placing, any directed selling efforts (within the meaning of Regulation S).
4.2 The Common Shares and Warrants are eligible for resale pursuant to
Rule 144A and will not be, at Admission, of the same class as
securities listed on a national securities exchange registered
under Section 6 of the Securities Act, or quoted in a United States
automated interdealer quotation system, and the Company reasonably
believes that there is no substantial U.S. market in the Units,
Common Shares or Warrants. The Company shall provide the
information to holders and purchasers of the Units described under
Section 144A(d)(4)(i) of the Securities Act.
4.3 The registration of the Units, Common Shares and Warrants under the Securities Act is not necessary in connection with the offer, sale and delivery of the Units in the manner contemplated by this Agreement and the Admission Document.
5. ACCOUNTING INFORMATION
5.1 The historic financial information of the Company for the period since incorporation to the Accounts Date as summarised in the Short Form Report:
(a) has been prepared in accordance US GAAP;
(b) gives a true and fair view of the state of affairs of the Company as at the Accounts Date and of the loss for the period then ended; and
(c) in so far as required by and where appropriate in accordance with US GAAP fairly sets out the assets, liabilities and reserves of the Company and either makes proper provision for or (where appropriate in accordance with US GAAP) includes a note in respect of all material liabilities or commitments, whether actual, deferred or contingent of the Company as at the relevant dates and, in particular, provides for or (where appropriate in accordance with US GAAP) makes a proper disclosure of, all material liabilities whether actual, deferred, contingent or disputed of the Company for income tax or corporation tax measured by reference to actual or deemed taxable profits (including both income and chargeable gains) made or deemed to have been made during the relevant financial periods, and for any other taxes, duties or other fiscal impositions of any kind whatsoever including any interest on any amounts and any penalties or charges imposed in relation to such amounts (arising under the laws of any jurisdiction) in relation to or in consequence of any event occurring on or before the relevant balance sheet date.
5.2 All information requested by the Reporting Accountants in the course of preparation of the Short Form Report in Part III of the Admission Document has been supplied to them and all information and documentation supplied by the Company to the Reporting Accountants for the purposes of the Short Form Report was when given and remains (save to the extent amended, varied or updated subsequently but prior to the date of the Short Form Report) true and accurate and not misleading in any material respect.
6. FINANCIAL PROCEDURES
6.1 The Company has established procedures which the Directors believe provide a reasonable basis for the Directors to make proper judgements of the financial position of the Company.
6.2 The Company maintains a system of internal accounting controls sufficient in the opinion of the Directors to provide reasonable assurances that (a) transactions are executed in accordance with management's general specific authorisation; (b) transactions are recorded as necessary to permit preparation of financial statements by the Company in conformity with US GAAP and to maintain accountability for assets; (c) access to assets is permitted only in accordance with management's general or specific authorisation; and (d) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences.
7. POSITION SINCE THE ACCOUNT DATE
Save as disclosed in the Admission Document, the Company has not traded in any business sector, incurred any material liabilities or material assets and has not had any employees.
8. WORKING CAPITAL
8.1 The cash flow and working capital projections which form the basis of the Working Capital Report have been approved by the board after due and careful enquiry on the basis of the assumptions set out in such projections and the Directors believe that such assumptions are fair and reasonable and, so far as the Directors are aware, there are no other assumptions on which that report ought to have been based which have not been made, and which could reasonably be expected to have an effect thereon.
8.2 All information requested from the Company by CRT and Peel Hunt and the Reporting Accountants in connection with the review of the working capital requirements of the Company was when given, and remains, true and accurate and not misleading.
8.3 No material indebtedness of the Company has become payable before its stated maturity nor do any circumstances exist such that (with the giving of notice or the lapse of time) any secured or unsecured borrowings of the Company would become repayable prior to its stated date of maturity.
8.4 Having regard to available bank facilities and the proceeds of the Placing, the Company will have sufficient working capital for its present requirements, that is for at least the next 12 months from the date of publication of the Admission Document.
9. WORKING CAPITAL REPORT, SHORT FORM REPORT AND OPINIONS
9.1 All information supplied by the Company or any of such person's officers or employees to the Reporting Accountants for the purposes of their Working Capital Report and/or the Short Form Report, and to the Company's solicitors for the purposes of providing any legal opinions required to be provided in relation to Admission (collectively, the "Reports") and in respect of any updates to such information was when supplied true and accurate in all material respects and so far as the Directors are aware no further information has been withheld the absence of which might reasonably have affected the contents of the Reports in any material respect.
9.2 The Directors believe that the Reports are fairly presented and all information contained in the Reports was and remains true and accurate in all material respects and is not misleading in
any material respect and no fact or matter has been omitted from the Reports which would be necessary to make the information therein not misleading in any material respect save to the extent that the same has been affected by events subsequent to the date of such Reports and such events are disclosed accurately in all material respects and without omission in the Placing Documents: and the Company and the Directors have read and do not disagree to any material extent with the statements of opinion contained in, or the contents of, the Reports and (where relevant) the statements of opinion, intention or expectation attributed to the Company or the Directors in the Reports are accurate statements of the opinions, intentions or expectations held by the Company which are fairly based upon facts within the knowledge of the Company.
10. TAX
10.1 All returns of the Company for Taxation purposes that the Company is
required to make under applicable law and regulation have been made
and all such returns are correct and, so far as the Warrantors are
aware, are not the subject of any dispute with or claim by any
relevant Taxation Authority which would be material for disclosure in
the Admission Document and are not expected to be the subject of any
such dispute or claim.
10.2 The Company has, within any applicable time limit, paid all Tax
which it has become liable to pay, duly made all returns, given all
notices and supplied all other information required to be made,
given or supplied to any Tax Authority, and all such returns,
notices and information were and remain true and accurate in all
material respects and were made on a proper basis and the Company
is not involved in any dispute with, or subject to any
investigation by, any Tax Authority and, so far as the Directors
are aware, there are no facts or circumstances which are likely to
give rise to any such dispute or investigation. Other than as
fairly and specifically disclosed in the Admission Document, there
are no outstanding claims from any Tax Authority or any amounts
that the Company may be required to pay in connection with any Tax
liability.
10.3 So far as the Directors are aware having made all reasonable
enquiry all payments made by the Company to any person which ought
to have been made under deduction of Tax have been so made and the
Company has, where appropriate, duly accounted to the relevant Tax
Authority for such Tax.
11. CORPORATE MATTERS
11.1 All sums due in respect of the issued capital of the Company have
been paid to and received by the Company and there are, other than
as disclosed in the Admission Document, no outstanding options or
other rights to subscribe for or call for the issue or allotment of
any share or loan capital (or any other securities) of the Company.
11.2 Save to the extent disclosed in the Admission Document, the
shareholders of the Company are the beneficial owners free from all
encumbrances of the whole of the issued share capital of the
Company.
11.3 Save as disclosed in the Admission Document, none of the owners or
holders of Shares will, following Admission, have any rights, in
their capacity as such, in relation to the Company other than as
set out in the Certificate of Incorporation and Bylaws of the
Company.
11.4 Save as disclosed in the Admission Document, there are in force no
options or other agreements which call for the issue of or accord
to any person the right to call for the issue of any Common Shares,
warrants or other securities in the capital of the Company now or
at any time hereafter.
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12. SECURITIES
The Common Shares and Warrants will, upon allotment, be free from all
claims, mortgages, charges, pledges, liens, encumbrances and equities
and any third party rights or interests (legal or equitable) or
restrictions of any nature whatsoever (other than as set out in the
Bylaws) and will, save as provided in the Admission Document, rank
pari passu in all respects with the Common Shares and Warrants (as
applicable) in the issued share capital of the Company.
13. CAPACITY
13.1 The Company has been duly incorporated under the laws of the State
of Delaware and has the requisite power and authority to conduct
its business as described in the Admission Document and is duly
qualified to transact business in each jurisdiction in which such
qualification is required, and is operating in accordance with its
Certificate of Incorporation and Bylaws.
13.2 The Directors have all necessary power under the Certificate of
Incorporation and Bylaws of the Company to create, allot and issue
and the Common Shares and Warrants constituting the Units, to enter
into this Agreement and the Placing Documents and to perform its
obligations under this Agreement and the Common Shares and Warrants
will, following the passing of the necessary resolutions of the
board of directors of the Company, be validly issued and the Common
Shares be credited as fully paid.
13.3 The creation, allotment and issue of the Common Shares and Warrants
constituting the Units will not infringe or exceed any limits,
powers or restrictions or the terms of any contract, obligation or
commitment or other arrangement binding on the Company.
14. LITIGATION
Neither the Company nor any Director nor any other person for whose
acts and defaults the Company is or may be vicariously liable is
engaged in any legal or arbitration proceedings or is the subject of
any disciplinary proceedings or enquiries by any governmental or
regulatory bodies which individually or collectively may have, or
have had during the 12 months preceding the date of this Agreement, a
significant effect on the financial position of the Company and so
far as the Warrantors are aware, no such legal or arbitration
proceedings are threatened or pending nor are there any circumstances
of which the Warrantors are aware which may give rise to any such
legal or arbitration proceedings being threatened or commenced,
which, in any such case, may have or is likely to have a material
effect on the financial position of the Company.
15. INSOLVENCY
The Company has not taken any action nor have any other steps been
taken or legal proceedings started or, to the best of the knowledge,
information and belief of the Warrantors, are threatened against the
Company for its winding-up, striking-off or dissolution or for it to
enter into any arrangement with or composition for the benefit of
creditors (including any moratorium prior to a voluntary
arrangement), or for the appointment of a receiver, administrator,
administrative receiver, trustee or similar officer of the Company or
any of its properties, revenues or other assets, including the filing
of any administration application, notice of intention to appoint an
administrator or notice of appointment of an administrator or for the
occurrence of any event in a jurisdiction outside England and Wales
of any form of insolvency proceeding or event similar or analogous to
any of those referred to in this paragraph.
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16. DIRECTORS' RESPONSIBILITIES
The Directors have been provided with, and have read, a memorandum
prepared by the Company's solicitors the nature of their
responsibilities and obligations as directors of a listed company
under the AIM Rules.
17. LONDON STOCK EXCHANGE
17.1 The Company has informed CRT and Peel Hunt in writing of all
discussions which it or its agents (apart from CRT and Peel Hunt)
have had with the London Stock Exchange in relation to the AIM
Application or the interpretation of and AIM Application of the AIM
Rules to the Company.
17.2 All statements made by or on behalf of the Company in connection
with any AIM Application to the London Stock Exchange for certain
information to be omitted from the Admission Document as being
inapplicable or of minor importance only and not such as would
influence an assessment of the assets and liabilities, financial
position, profits and losses and prospects of the Company or any
other reason permitted by the AIM Rules were when made and continue
to be true and accurate.
18. DIRECTORS AND MANAGEMENT
18.1 No Director has given notice to, or received notice from, the
Company terminating his position as Director and no such person has
threatened or, so far as the Warrantors are aware, is expected to
give such notice.
18.2 The Directors are all the directors of the Company and there is no
other person who is or could be deemed to be a shadow director of
the Company within the meaning of section 741 of the Act.
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18.3 Save as set out in the Admission Document, none of the Directors has:
(a) been adjudged bankrupt in the United Kingdom or elsewhere;
(b) at any time been party to a deed of arrangement or made any other form of composition with his creditors;
(c) been a director of any company or other body corporate which was liquidated (other than by a members' voluntary winding-up) or had a receiver appointed while he was a director or within six months after he ceased to be one;
(d) ever been censured by or refused admission to any professional or regulatory body; or
(e) been convicted of an indictable offence.
19. CONFLICTS OF INTEREST
The Admission Document contains all information concerning any actual or, so far as the Directors are aware, potential conflicts of interest between the Company and any Director or any company of which any Director is a director or in which he has a material interest and all statements contained in the Admission Document concerning such conflicts or concerning the future relationship between such Director and the Company are truly and honestly made and are not misleading and so far as the Directors are aware there are no other facts concerning the same the omission of which makes any statement therein false or misleading.
20. SUBSIDIARIES
The Company has no subsidiaries.
SCHEDULE 3
DOCUMENTS TO BE DELIVERED
Except as otherwise stated, the parties shall procure that the following documents are delivered to Peel Hunt on Impact Day or as soon as possible thereafter (or as soon thereafter as the Company and CRT and Peel Hunt shall agree):
1. One copy of the Admission Document signed by each Director or by his agent or attorney duly authorised in writing (together with the original of any such authorisation and such number of certified copies as CRT and Peel Hunt may require).
2. An original signed copy of the Admission Document Verification Notes (including the analogous notes produced in respect of the Presentation Materials) duly signed by or on behalf of each of the Directors (and any other person indicated therein as being responsible for any of the questions contained therein).
3. A form of definitive share certificate for the Common Shares.
4. A form of definitive warrant certificate for the Warrants.
5. An original signed copy of the Short Form Report in terms previously agreed with CRT and Peel Hunt prepared by the Reporting Accountants.
6. An original signed copy of the report in terms previously agreed with CRT and Peel Hunt reporting on the working capital projections of the Company prepared by the Reporting Accountants.
7. An original signed copy of the report in terms previously agreed with CRT and Peel Hunt on the financial reporting procedures adopted by the Company prepared by the Reporting Accountants.
8. An original of each of the following comfort letters:
8.1 from the Reporting Accountants about the Company's financial reporting procedures and suitability for AIM;
8.2 from the Reporting Accountants confirming the accuracy of financial information in the Admission Document;
8.3 from the Reporting Accountants in relation to the section on UK taxation in the Admission Document;
8.4 from the Company in relation to financial reporting procedures.
9. The original signed written consent of the Reporting Accountants to the inclusion in the Admission Document of the Short Form Report and the references thereto and to their name in the form and context in which they are included.
10. An original of the letter from the Company addressed to CRT and Peel Hunt confirming that the working capital available to the Company is sufficient for its present requirements.
11. An original of each of the letters required to be provided pursuant to Rule 39 of the AIM Rules.
12. An original signed copy of the power of attorney, responsibility statement and statement of Directors' interests (in a form previously approved by CRT and Peel Hunt) signed by each Director.
13. Originals of the responses to the Directors' questionnaires prepared by Peel Hunt.
14. Copy of the Registrar's agreement duly executed by the Company and the Registrar.
15. A certified copy of the minutes of the meeting of Directors in a form previously agreed with the Company by CRT and Peel Hunt at which, inter alia, resolutions were passed approving and authorising the issue of the Placing Documents, authorising the execution of this Agreement by the Company, conditionally allotting the Subscription Units and adopting the Dealing Code and the Company's financial reporting procedures.
16. A certified copy of the minutes of the meeting of Directors in a form previously agreed with the Company by CRT and Peel Hunt at which, inter alia, resolutions were passed approving and authorising the issue of the Admission Document and the AIM Application and approving the terms of the Placing.
17. A certified copy of the Certificate of Incorporation and Bylaws of the Company.
18. The original signed AIM Application in the appropriate form issued by the London Stock Exchange.
19. A certified copy of the warrant instrument for the Warrants.
20. The Press Release.
21. The original signed Lock-in Deeds executed by each Founding Shareholder, the Company and Peel Hunt.
22. Original copies of the legal opinions being provided by the Company's solicitors in relation to certain matters of US law.
SCHEDULE 4
LIMITATION OF LIABILITY
1. Neither the Directors nor the Company shall have liability in respect of any claim for breach of the Warranties or under the Indemnity unless written notice of the claim identifying its source and circumstances (so far as within the knowledge of CRT and Peel Hunt at that date) shall have been given by CRT and Peel Hunt to the person against whom the claim is being made and in the case of the Directors only, such written notice must be made prior to the date which is three months after the publication of the audited accounts of the Company for the financial year ending 31 December 2007. There shall be no time limitation for giving notice of any claim against the Company for breach of the Warranties or under the Indemnity.
2. The maximum aggregate liability of each of the Directors under clause 12 and Schedule 2 and clause 13 of this Agreement shall not exceed the amount set out opposite his name in Schedule 1.
3. The maximum liability of the Company under clause 12 and Schedule 2 and clause 13 of this Agreement shall be the aggregate value of the Subscription Units acquired or subscribed for pursuant to the Placing at the Placing Price and before taking into account the expenses of the Placing.
4. Neither the Company nor the Directors shall have any liability in respect of any claim under the Warranties if and to the extent that such a claim occurs or is increased as a result of any change in legislation after the date of this Agreement (or any legislation not in force at the date of this Agreement) which takes effect retrospectively or the withdrawal after the date of this Agreement with retrospective effect of any published concession, or published general practice by any Tax Authority.
5. Neither the Company nor the Directors shall be liable to any of the Indemnified Persons for or in respect of:
(a) indirect loss or damage, special or punitive damages; or
(b) loss of profits;
suffered or incurred by any Indemnified Person arising out of, or in connection with or resulting from this Agreement, whether any claim for such loss or damage is based on tort (including negligence), strict liability, contract (including breach of or failure to perform this Agreement or the breach of any representation or Warranty hereunder, whether express or implied) or otherwise.
6. For the avoidance of doubt, none of the provisions of this Schedule 4 shall apply in the event of fraud or dishonesty on the part of the relevant person, nor in respect of a breach of clause 12.3.
SCHEDULE 5
CERTIFICATE
[LETTERHEAD OF THE COMPANY]
CRT CAPITAL GROUP LLC
262 HARBOR DRIVE
STAMFORD
CONNECTICUT 06902
KBC PEEL HUNT LTD
111 OLD BROAD STREET
LONDON EC2N 1PH
[o][o] 2006
Dear Sirs
PLACING OF [o] UNITS
We refer to the placing agreement between us dated [o][o] 2006 relating to the above-mentioned placing (the "PLACING AGREEMENT"). Words and expressions defined in the Placing Agreement have the same meanings herein.
The Company and each of the Directors hereby confirm to you that:
(a) each of the Conditions referred to in paragraphs (a) to (f) (inclusive) of clause 2.1 of the Placing Agreement has been fulfilled in accordance with its terms;
(b) save as previously notified to CRT and Peel Hunt in accordance with clause 12.4 of the Placing Agreement (if relevant), none of the Warranties was untrue, inaccurate or misleading at the date of the Placing Agreement or would cease to be true or accurate or would become misleading if such Warranties were repeated at any time before Admission by reference to the facts and circumstances then subsisting; and
(c) the Company and the Directors have complied with or performed their respective obligations under the Placing Agreement to the extent that the same fall to be performed prior to Admission.
Yours faithfully
...........................
[Officer], duly authorised
for and on behalf of Viceroy Acquisition Corporation
and on behalf of the Directors
SCHEDULE 6
FEES, COMMISSIONS AND EXPENSES
PART IA
AMOUNTS TO BE DEDUCTED FROM PROCEEDS BY PEEL HUNT
Peel Hunt shall pay out of the aggregate subscription monies paid to Peel Hunt by UK Placees, together with any amounts paid to Peel Hunt by CRT pursuant to clause 9.1:
1. For US$ Amounts To The Account Of Peel Hunt, To The Account Held By Peel Hunt At Barclays Bank Plc And Having The Following Details:
Sort Code: 20-19-90 Account No: 79120288 Account Name: KBC Peel Hunt Ltd Swift: BARCGB22 Iban: GB32 BARC 2019 9079 1202 88 |
For UK(pounds) amounts to the account of Peel Hunt, to the account held by Peel Hunt at Barclays Bank plc and having the following details:
Sort Code: 20-19-90 Account Number: 60058548 Account Name: KBC Peel Hunt Ltd Swift: BARCGB22 Iban: GB47 BARC 2019 9060 0585 48 |
US$540,000, calculated by deducting from US$810,000 representing Peel Hunt's commission of six per cent. of 10 per cent. of the aggregate value of the Subscription Units, less US$270,000, being that portion of commission that Peel Hunt has agreed to defer until the consummation of a Qualified Business Combination; and
2. US$9,000,000, being the Stabilisation Withholding Amount, into the Stabilisation Retention Account, being an account having the following details:
Bank: Barclays Bank plc
Sort Code: 20-19-90
Account No: 79120288
Account Name: KBC Peel Hunt Ltd
47
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Swift: BARCGB22 Iban: GB32 BARC 2019 9079 1202 88 |
PART IB
AMOUNTS TO BE DEDUCTED FROM PROCEEDS BY CRT
CRT shall pay out of the aggregate subscription monies paid to CRT by US Places:
1. For US$ amounts to the account of CRT, to the account held by CRT at The Bank of New York and having the following details:
ABA #: 021-000-018 Beneficiary: Pershing LLC Beneficiary Account No: 890-051238-5 Ultimate Beneficiary: CRT Capital Group LLC Ultimate Beneficiary Account No: 4LM- |
US$4,860,000, calculated by deducting from US$7,290,000 representing CRT's commission of six per cent. of 90 per cent. of the aggregate value of the Subscription Units, less US$2,430,000, being that portion of commission that CRT has agreed to defer until the consummation of a Qualified Business Combination.
PART II
PAYMENTS OF FEES OUT OF WORKING CAPITAL BY THE COMPANY
The Company shall, as at Admission, pay out of its working capital:
1. all amounts necessary to satisfy all expenses (together with VAT or other Tax chargeable thereon) for which the Company may be responsible pursuant to clause 11.2 (other than those expenses listed in Schedule 6 Part I), and specifically:
1.1 the professional fees and expenses of:
(a) Mintz Levin Cohn Ferris Glovsky and Popeo LLP, Mintz Levin Cohn Ferris Glovsky and Popeo P.C. in the amount of US$400,000 to the following account:
Bank name: Bank of America NA
Bank address: 5 Canada Square, London E14 5AQ
Sort Code: 16-50-50
SWIFT Code: BOFAGB22 (for international wires)
Account Name: Mintz Levin Cohn LLP RE Client Funds
Account number: 600868030049
(b) KPMG LLP in the amount of (pounds)36,225 to the following
account:
Sort Code: 20-00-00
Bank: Barclays Bank PLC
One Churchill Plaza
London EC14 5HP
Account Number: 40851590
SWIFT ID: BARCGB22
(c) Bingham McCutchen LLP in the amount of US$75,000 to the
following account:
Bank: Barclays Bank PLC
99 Hatton Garden
London EC1N 8DN
Account Number: 48833455
SWIFT ID: BARCGB22
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(d) Capital Printing (UK) in an amount of up to US$50,000 to such account as they may notify in writing to the Company.
1.2 to the accounts of Peel Hunt set out at Part IA of this Schedule:
(a) initial AIM listing fees of (pounds)4,340;
(b) pro rata payment of AIM annual fee of (pounds)3,127.18
(c) a corporate finance fee of US$200,000;
(d) an initial fee in respect of Peel Hunt's appointment as Nominated Adviser under the Nominated Adviser Agreement of US$12,500; and
(e) out-of-pocket expenses of (pounds)3,997.
1.3 to the account of CRT set out at Part IB of this Schedule a corporate finance fee of US$1,350,000.
SIGNED by CHARLES SEVERS ) /s/ Charles Severs
for and on behalf of )
CRT CAPITAL GROUP LLC )
SIGNED by ADAM HART ) /s/ Adam D. Hart
for and on behalf of )
KBC PEEL HUNT LTD )
SIGNED by PAUL ANTHONY NOVELLY )
/s/ Paul Anthony Novelly )
)
)
SIGNED by LEE E. MIKLES )
/s/ Lee E. Mikles )
)
)
SIGNED by DOUGLAS D. HOMMERT )
/s/ Douglas D. Hommert )
)
)
SIGNED by Douglas D. Hommert )
for and on behalf of )
VICEROY ACQUISITION CORPORATION )
in the presence of: Mary B. Hockle )
/s/ Douglas D. Hommert
/s/ Mary B. Hockle
52
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SIGNED by EDWIN A. LEVY )
/s/ Edwin A. Levy )
)
)
SIGNED by THOMAS R. EVANS )
/s/ Thomas R. Evans )
)
)
SIGNED by WILLIAM J. DORE )
/s/ William J. Dore )
)
)
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Exhibit 10.2
JULY 12, 2006
VICEROY ACQUISITION CORPORATION
AND
CAPITA IRG (OFFSHORE) LIMITED
OFFSHORE REGISTRAR AGREEMENT
1. Viceroy Acquisition Corporation whose registered office is at 8235 Forsyth Boulevard, Suite 400, St. Louis, Missouri 63105 (the "Company"); and
2. Capita IRG (Offshore) Limited whose registered office is situated at Victoria Chambers, Liberation Square, 1/3 The Esplanade, St Helier, Jersey (the "Registrar"):
WHEREAS: -
A. The Company issued an admission document on or before July __, 2006 (the "Admission Document") seeking admission of all of the shares of common stock (the "Shares") and warrants (the "Warrants") in the Company to trading on the Alternative Investment Market of the London Stock Exchange ("Admission").
B. Following the placing in full of the Shares and the Warrants described in the Admission Document, the Company shall have, immediately following Admission, an issued share capital comprised of 28,125,000 shares of Common Stock of par value $0.0001 each.
C. The Shares and the Warrants will at all times be registered on the register of members (the "Offshore Registers") kept in Jersey.
NOW IT IS HEREBY AGREED AND DECLARED AS FOLLOWS: -
1. APPOINTMENT OF REGISTRAR
The Company hereby appoints the Registrar to act as the registrar of the Offshore Registers in respect of the Shares and the Warrants on the terms and conditions hereof and the Registrar hereby accepts such appointment.
2. REGISTRAR'S DUTIES AND RESPONSIBILITIES
2.1 The Registrar shall:
2.1.1 carry out and follow all reasonable Proper Instructions
which may from time to time be given to it with regard to
the Registrar's duties hereunder; and
2.1.2 subject to Clause 2.3 below, provide a registration and
transfer office at such place as the Registrar may decide,
being in Jersey, and shall perform the services specified
in Appendix 1 to this Agreement (the "Registration
Services").
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2.2 The Registrar undertakes to provide the Registration Services using due diligence, reasonable skill and expertise in the execution of its duties. The Registrar shall perform its duties hereunder in a conscientious manner and shall comply with all statutory and regulatory requirements applicable to it.
2.3 The Company shall give such assistance to the Registrar as may reasonably be necessary to enable the Registrar to carry out its obligations hereunder.
2.4 When acting pursuant to Proper Instructions the Registrar shall not be under any duty to make any enquiry as to the genuineness or authenticity of any such instructions so long as such instructions reasonably appear to be genuine and authentic.
3. AGENTS AND DELEGATION
3.1 Subject to Clause 3.2, the Registrar may, in the performance of its duties and in the exercise of any of the powers vested in it hereunder, act by an authorised officer or officers for the time being and employ and pay an agent or agents (including any Associate of the Registrar) at the expense of the Registrar to perform or concur in performing any of the duties required to be performed hereunder and may act or rely upon the opinion or advice or any information obtained from any broker, lawyer, valuer, surveyor, auctioneer or other expert (whether reporting to the Company or the Registrar) appointed in good faith and without negligence and the Registrar shall not be responsible for any loss occasioned by its acting upon such opinion, advice or information.
3.2 The Registrar may at any time delegate in whole or in part any of its duties, functions, powers and discretions under this Agreement to a transfer agent in the United Kingdom or to any other delegate or agent and may disclose to such transfer agent or other delegate or agent such information about the Company as the Registrar considers necessary or desirable for such transfer agent or other delegate or agent to carry out its duties.
4. LIABILITY AND INDEMNITY
4.1 The Company shall indemnify and keep indemnified the Registrar and its agents, officers and employees from and against any and all Liabilities which may be suffered or incurred by or asserted against the Registrar and its agents, officers and employees arising out of or in connection with the performance of its or their duties hereunder except such as may be due to the fraud, wilful misconduct, negligence or breach of the terms of this Agreement of or by the Registrar or its agents, officers or employees.
4.2 Subject always to the foregoing provisions of this Clause 4 and except in the case of the fraud of the Registrar or its agents, officers or employees:
4.2.1 the aggregate liability of the Registrar and its agents,
officers or employees arising out of or in connection with
this Agreement (whether in contract, negligence, breach of
statutory duty, restitution or otherwise) will be limited
to the lesser of (pounds)1,000,000 (one million pounds) or
an amount equal to ten (10) times the total annual fee
payable to the Registrar under this Agreement; and
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4.2.2 in no event shall the Registrar or its agents, officers or
employees be liable to the Company under or in connection
with this Agreement for indirect or consequential loss or
damage, loss of profit, revenue, actual or anticipated
savings or goodwill, in all cases (whether caused by
negligence or otherwise).
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4.3 For the purposes of Clause 4.2, the extent of any liability shall always be calculated in accordance with the annual fee payable in force at the time such event happened to give rise to a claim, and not at the date such event is discovered.
4.4 Nothing in this Clause 4 shall exclude or limit the right of the Registrar to recover, or the obligation of the Company to pay, any sums properly due and payable to the Registrar under the terms of this Agreement including, without limitation, any fees.
5. NON-EXCLUSIVITY
5.1 The Registrar and any Associate of the Registrar may:
(a) act as manager, administrator or in any other role for any other company, corporation or body of persons on such terms as may be arranged with such company, corporation or body of persons and shall be deemed not to be affected with notice of or to be under any duty to disclose to the Company any fact or thing which may come to the knowledge of the Registrar or its Associate or any servant or agent of the Registrar or its Associate in the course of so doing or in the course of its business in any other capacity or in any manner whatsoever otherwise than in the course of carrying out its duties hereunder;
(b) acquire, hold or deal with for its own account or for the account of any customer or other person and in its own name or in the name of such customer or person or of a nominee any shares or securities for the time being issued by the Company and any securities or other investments.
5.2 Neither the Registrar nor any Associate of the Registrar shall be liable to account to the Company, its shareholders or any of them for any profits or benefits made by or derived from or in connection with any transaction permitted by Clause 5.1 above.
5.3 Nothing herein contained shall prevent the Registrar or any Associate of the Registrar from contracting or entering into any financial, banking or other transaction with the Company or any of its shareholders or from being interested in any such transaction and neither the Registrar nor any Associate of the Registrar shall be liable to account to any person for any profits or benefits made or derived by them in connection with any such transaction.
6. INSURANCE AND LOST SHARE CERTIFICATES
6.1 Where a shareholder claims that its share certificate (the "OLD CERTIFICATE") has been defaced, worn-out, lost or destroyed and requests the Registrar to issue, on behalf of the Company, a replacement share certificate (the "REPLACEMENT CERTIFICATE"), the Registrar shall require the shareholder to submit an indemnity ("INDEMNITY"), in favour of the
Company and the Registrar, in respect of loss suffered as a result of the issue of the replacement certificate and take any other steps required in the Company's Certificate of Incorporation.
6.2 On receipt of an Indemnity from the relevant shareholder the Registrar will use reasonable endeavours to procure that the Company does not suffer a loss as a result thereof, provided always:
(a) in cases where the shareholder arranges a guarantee or insurance in support of its Indemnity to the Company and the Registrar, the Registrar shall have no further obligation to the Company in relation to any loss arising as a result of the issue of the replacement certificate or the subsequent presentation of the old certificate; and
(b) in cases where the shareholder does not arrange a guarantee or insurance in support of its Indemnity, the shareholder will be asked to pay an appropriate administration fee to the Registrar and the Registrar will insure itself for any loss arising as a result of the issue of the replacement certificate or the subsequent presentation of the old certificate. In such case, the Registrar's liability to the Company to use reasonable endeavours to procure that the Company does not suffer a loss as a result of the issuing of a replacement certificate shall be expressly limited to the extent and amount that the Registrar is entitled to recover, and in fact does recover, from its insurers in respect of the same (net of any excess which applies).
6.3 The Company hereby assigns to the Registrar all its future right title and interest to recover under any such Indemnity from the relevant shareholder to the extent that any compensation payment, expressly limited to the extent and amount that the Registrar is able to recover, and in fact does recover from its insurers, may be made by the Registrar to the Company. The Company agrees that the Registrar may seek to recover the Company's entitlement pursuant to the Indemnity.
6.4 Where the Registrar has acted upon a forged transfer, the duty to procure that the Company does not suffer loss shall be expressly limited to the extent and amount that the Registrar is entitled to recover, and in fact does recover, from its insurers in respect of the same under the forged transfer insurance policy (net of any excess which applies).
6.5 Where, the replacement certificate, old certificate or forged transfer has been used to effect a fraudulent or otherwise wrongful transaction through a broker, which causes loss to the Company, the Registrar shall take reasonable steps to recover such loss from the said broker (not including commencing legal action) and the Registrar's liability to the Company shall be expressly limited to the extent and amount that the Registrar in fact does recover from the said broker.
7. PROCEEDINGS
7.1 Neither the Registrar nor any transfer agent in the United Kingdom appointed by the Registrar nor any other delegate or agent appointed by the Registrar hereunder shall be required to take any legal action unless fully indemnified to its reasonable satisfaction for all costs and liabilities that may be incurred or suffered by the Registrar or such other party and if the Company requires the Registrar or such other party to take any action of whatsoever nature which in the reasonable opinion of the Registrar or such other party might make the Registrar or such other party liable for the payment of money or liable in any other way the Registrar or such other party shall be and be kept indemnified in any reasonable amount and form satisfactory to the Registrar or such other party as a pre-requisite to taking action.
7.2 The Registrar shall be entitled at the expense of the Company (subject to obtaining the prior approval of the Company in each and every case) to obtain legal advice from its lawyers for the time being and/or the opinion of counsel on any matter relating to the Company or this Agreement.
8. PROSPECTUSES AND ADVERTISEMENT
8.1 No prospectus, explanatory memorandum, application form, sales literature, advertisement, circular or other similar document shall be issued by or on behalf of the Company to prospective shareholders without the prior approval of the Registrar (such approval not to be unreasonably withheld, delayed or conditioned) in respect of any references made therein to the Registrar or any transfer agent in the United Kingdom appointed by the Registrar or any other delegate or agent appointed by the Registrar.
8.2 For the purposes of the Admission, the Registrar hereby agrees to the references made to the Registrar or any transfer agent in the United Kingdom appointed by the Registrar or any other delegate or agent appointed by the Registrar in any prospectus, explanatory memorandum, application form, sales literature, advertisement, circular or other similar document in relation to the Admission issued by or on behalf of the Company to prospective shareholders.
9. DISCLOSURE
9.1 Except in so far as required by any governmental or regulatory organisation or any applicable law or rule in any jurisdiction, the Registrar shall not (except in exercise of its duties hereunder or as required by any statutory or regulatory requirement applicable to it) disclose any information relating to the affairs of the Company or any of its subsidiaries which is not in the public domain to any person (other than to the Directors, officers, auditors and accountants of the Company or to any transfer agent in the United Kingdom appointed by the Registrar or to any other delegate or agent appointed by the Registrar) not authorised by the Company to receive such information and the Registrar shall use its reasonable endeavours to prevent any such disclosure.
9.2 None of the parties hereto shall do or commit any act, matter or thing which would or might prejudice or bring into disrepute in any manner the business or reputation of the
other parties hereto or any agent, officer or employee thereof (which, in the case of the Registrar, shall include any transfer agent in the United Kingdom appointed by the Registrar).
9.3 In the event of this Agreement being terminated the provisions of this Clause 9 shall remain in full force and effect.
10. WARRANTIES
The Company hereby represents and warrants to the Registrar that:
10.1 it is a company duly incorporated and validly existing under the
laws of the jurisdiction of its incorporation;
10.2 it has the legal right and full power and authority to carry on its
business as it is being conducted and to enter into and perform its
obligations under this Agreement, which when executed will
constitute valid and binding obligations of the Company in
accordance with the terms hereof; and
10.3 the Company has the power and all necessary governmental,
statutory, regulatory and other consents, approvals, licences,
authorisations, registrations, waivers or exemptions (together, the
"Consents") required to carry on its business as it is being
conducted and it has complied with the terms of all such Consents
in all material respects and none of the Consents have been revoked
or otherwise terminated.
11. FEES AND EXPENSES
11.1 Subject to Clauses 11.4 and 11.5, fees at such rate or rates as are
set out in Appendix 2 shall be payable to the Registrar by the
Company quarterly in arrears based on the number of shareholder
accounts appearing on the Offshore Registers including nil accounts
each 1st January, 1st April, 1st July and 1st October, subject to
any minimum annual fee specified in Appendix 2. The Company shall
settle all such quarterly invoices immediately on receipt.
11.2 The Registrar shall be entitled to charge interest on all amounts
due from the Company and outstanding for more than thirty days at a
rate of 3% over the base rate of HSBC Bank Plc prevailing from time
to time.
11.3 Subject to Clause 11.5, the initial fee as shown in the attached
Appendix 2 shall be fixed for a period of not less than twelve
months.
11.4 The Fees of the Registrar pursuant to this Agreement and set out in
the Appendix 2 are subject to reasonable review by the Registrar in
its absolute discretion not more often than once in any calendar
year (subject to clause 11.5) and the Registrar will give to the
Company at least one month's notice of any alteration of such
charges which alteration will take effect forthwith upon the
expiration of such notice. The Fees will be subject to a minimum
annual increase at the rate of the Retail Prices Index prevailing
at that time.
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11.5 Notwithstanding the restriction in clause 11.4 above, the Registrar
shall at its own discretion be entitled to revise the Fees at any
time where a change in law or regulation (including but not limited
to the regulations from time to time relating to CREST) affects the
obligations of the Registrar making it uneconomical for the
Registrar to provide the services of a registrar at the agreed
Fees, such revisions being effective from the 21 days after the
date of the notification being delivered to the Company.
11.6 The Company shall reimburse to the Registrar all reasonable out of
pocket expenses properly incurred on behalf of the Company in the
performance of its duties hereunder; including but not limited to
reasonable postage, CRESTCo and related Syntegra network charges,
telephone, facsimile and courier expenses; reasonable travelling
expenses incurred on the Company's business (including those
incurred in attending a general meeting of the Company); reasonable
printing, stationery, photocopying, storage and forged transfer
insurance.
11.7 The Registrar is entitled to pass on all taxes, duties and tariffs
directly attributable to any amounts charged in accordance with
this Clauses 11.
12. TERMINATION
12.1 This Agreement shall be terminated:
12.1.1 upon the expiry of not less than three months' notice of
termination given by the Company to the Registrar, such
notice to expire no earlier than the first anniversary of
the date of this Agreement; or
12.1.2 upon the expiry of not less than three months' notice of
termination given by the Registrar to the Company; or
12.1.3 upon the expiry of not less than one month's notice of
termination given by the Company to the Registrar
following receipt by the Company of notice of an increase
in charges pursuant to clause 11.4 which is not acceptable
to the Company;
12.1.4 immediately, upon one party giving to the other notice of
immediate termination in the event of:
(a) the property of the other party being declared en
desastre or that other party becoming insolvent
or going into liquidation (other than a voluntary
liquidation for the purpose of reconstruction or
amalgamation upon terms previously approved in
writing by the other party) or a receiver being
appointed of any of its assets or if some event
having equivalent effect occurs; or
(b) the other party committing a material breach of
this Agreement and (if such breach shall be
capable of remedy) the other party not making
good such breach within thirty days of service
upon the party in breach of notice requiring the
remedy of such breach or, in the case of the
Registrar, being
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in the opinion of the Directors guilty of fraud,
wilful misconduct or gross negligence in the
performance of its duties hereunder; or
12.1.5 immediately, upon the Company giving to the Registrar
notice of immediate termination in the event of the
Registrar ceasing to be the holder of any licence,
consent, permit or registration enabling it to act as a
Registrar of the Company under any law applicable to it;
12.2 The termination of this Agreement shall be without prejudice to any
antecedent liability of either of the parties hereto. The Registrar
shall be entitled to receive all fees and other monies accrued due
up to the date of such termination provided that the Registrar
shall not be entitled to compensation in respect of such
termination.
12.3 In the event of termination of the Registrar's appointment under
this Agreement the Registrar (acting reasonably) shall have the
right by written request to require the Company for a period of
twelve months from the date of such termination in all
prospectuses, explanatory memoranda, advertising material,
letterheads and other material designed to be read by investors and
prospective investors to state in a prominent position and in
prominent type (as may reasonably be approved by the Registrar)
that the Registrar has ceased to be its Registrar and also that any
transfer agent in the United Kingdom appointed by the Registrar or
any other delegate or agent appointed by the Registrar has ceased
to act as such.
12.4 Immediately upon the termination of this Agreement the Registrar
shall deliver to the Company and shall use all reasonable
endeavours to procure that its officers, servants, agents, and
advisers shall deliver to the Company all Records appertaining to
the Company's business as are in the possession or under the
control of the Registrar or any such persons, provided that the
Registrar shall have a lien against and shall not be required to
make delivery of such books and records until full payment has been
made to the Registrar for all fees, disbursements and expenses due
to it under this Agreement (including any costs associated with the
termination of this Agreement and the delivery of such books and
records).
13. AMENDMENT
13.1 Subject to Clause 13.2, no variation of this Agreement shall be
valid unless in writing and signed by or on behalf of each of the
parties.
13.2 In the event of a change of law or practice applicable to the
Registrar or any transfer agent in the United Kingdom appointed by
the Registrar, the Registrar may add, amend or vary the terms and
conditions of this Agreement by giving the Company thirty days
prior written notice of such amendments provided that if the
Company gives written notice to the Registrar within such period
objecting to any proposed amendment the same shall be effective
only with the written agreement of both parties.
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14. ASSIGNMENT
14.1 The Company shall not be entitled to assign or transfer all or any
of its rights, benefits and obligations hereunder.
14.2 The Registrar may at any time assign all or any of its rights and
benefits hereunder with the prior written consent of the Company
(which shall not be unreasonably delayed or withheld), provided
that no such written consent shall be required in the case of an
assignment by the Registrar to an Associate.
15. NOTICES
Any notice served hereunder shall be sufficiently served if:
15.1.1 delivered by hand or sent by registered mail addressed to
the other party concerned at its registered or principal
office (as the case may be) for the time being and a
notice so sent by registered mail shall be deemed to be
received at the expiry of two clear days after the day of
posting; and
15.1.2 by facsimile to the other party concerned at its
registered or principal office (as the case may be) for
the time being and a notice so sent by facsimile shall be
deemed to be received on completion of its transmission.
16. ENTIRE AGREEMENT
This Agreement constitutes the entire agreement relating to the
provision of services by the Registrar to the Company and shall
supersede and extinguish all prior agreements and understandings
between the parties relating to such matters.
17. GOVERNING LAW AND JURISDICTION
This Agreement shall be governed by and construed in accordance
with the laws of England and Wales and the parties hereto
irrevocably submit to the exclusive jurisdiction of the English
Courts as regards any matter or claim relating to this Agreement.
18. INTERPRETATION AND CONSTRUCTION
18.1 In this Agreement, unless the context otherwise requires, the
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following expressions shall have the following meanings:
"ASSOCIATE" means in relation to a company,
any company which is a subsidiary
or a holding company of that
company or a subsidiary of any
such holding company and any
individual, partnership or other
incorporated association or firm
which has direct or indirect
control of that company and any
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company which is directly or
indirectly controlled by any such
individual, partnership or other
incorporated association or firm,
and in relation to an individual,
partnership or other
unincorporated association, means
any company directly or
indirectly controlled by that
individual, partnership or other
association;
"DIRECTORS" means the Directors of the
Company for the time being and
includes where applicable any
alternate directors;
"PROPER INSTRUCTIONS" means written, cabled, facsimiled
or telexed instructions or
instructions given by any other
means of electronic transmission
in a readable form in respect of
any of the matters referred to in
this Agreement signed or
purported to be signed by such
one or more person(s) (whose
name, signature and office
address shall have been delivered
to the Registrar) as the
Directors shall from time to time
have authorised to give the
particular class of instruction
in question. In instances
indicated in advance by the
Directors, and agreed with the
Registrar, the Registrar may also
act pursuant to instructions by
telephone given or purported to
be given by designated persons
and such telephonic instructions
shall be deemed to be Proper
Instructions. Where Proper
Instructions are given by
telephone, written confirmation
thereof shall be sent to the
Registrar as soon as practicable
thereafter. Different persons may
be authorised to give
instructions for different
purposes and such persons may
also include officers of
corporations other than the
Company so authorised by the
Directors. A certified copy of a
resolution of the Directors may
be received and accepted by the
Registrar as conclusive evidence
of the authority of any such
person to act and may
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be considered as in full force and
effect until receipt of written
notice to the contrary;
"RECORDS" means all corporate records,
registers, books of account,
correspondence, files, tables,
documents, discs, print outs,
data and information systems.
18.2 In this Agreement, any reference to:
18.2.1 a Recital, Clause or a Schedule is, unless the context
otherwise requires, a reference to a recital or clause of,
or a schedule to, this Agreement and any reference to a
sub-clause is, unless otherwise stated, a reference to the
sub-clause of the Clause in which the reference appears;
18.2.2 this Agreement or to any agreement or document referred to
in this Agreement shall be construed as a reference to
such agreement or document as amended, varied, modified,
supplemented, restated, novated or replaced from time to
time;
18.2.3 any statute or statutory provision shall, unless the
context otherwise requires, be construed as a reference to
such statute or statutory provision as the same may have
been or may from time to time be amended, modified,
extended, consolidated, re-enacted or replaced and shall
include any subordinate legislation made thereunder;
18.2.4 a "subsidiary", "group" or "holding company" shall be
construed in accordance with Article 2 of the Companies
(Jersey) Law 1991.
18.3 In this Agreement, except where the context otherwise requires,
words denoting the singular include the plural and vice versa,
words denoting a gender include every gender and references to
persons include bodies corporate and unincorporate.
18.4 The Recitals and Schedule form part of this Agreement and shall
have the same force and effect as if they were expressly set out in
the body of this Agreement and any reference to this Agreement
shall include the Recitals and Schedule.
18.5 Clause headings in this Agreement are inserted for convenience only
and shall not affect the construction of this Agreement.
18.6 This Agreement shall prevail over the Company's standard terms and
conditions (if any).
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IN WITNESS whereof this Agreement has been entered into the day and year first above written.
SIGNED by ) /s/ Douglas D. Hommert ) ------------------------------- ) for and on behalf of ) Viceroy Acquisition Corporation ) SIGNED by ) /s/ ) /s/ ------------------------------- ) for and on behalf of ) /s/ Capita IRG (Offshore) Limited ) |
The Registrar will in Jersey keep the Offshore Register and where applicable registers of loan stock, debenture and warrant holders.
In addition, the Registrar will in the Island of Jersey or through its Transfer Agent in the United Kingdom as appropriate: -
1. In compliance with instructions received from the Company, and notwithstanding that Admission has not yet occurred, issue share certificates and warrant certificates after the date hereof to certain US placees who have subscribed for such Shares and Warrants in accordance with the terms of the Placing Agreement dated the same date as this Agreement between the Company, its Directors, CRT Capital Group, LLC, as lead manager and KBC Peel Hunt Ltd ("KBC Peel Hunt"), as UK placing agent and certain ancillary documents thereto.
2. Maintain the Offshore Registers from the date of this Agreement, notwithstanding that the issue of certain Shares and Warrants in accordance with paragraph 1 above is conditional upon Admission and provided that notwithstanding the issue of such share certificates and warrant certificates, the Registrar shall ensure that the Offshore Registers shall remain closed with respect to transfers of any such Shares and/or Warrants until such time as:
(a) all funds required to be paid to the Company in respect of such Shares and Warrants have been paid, as confirmed to the Registrar by KBC Peel Hunt, and
(b) Admission has occurred.
3. Receive and register (within the time limits set down by the rules of the London Stock Exchange plc) transfers, probates, powers of attorney, changes of address, and all similar documents normally needed to maintain the Offshore Registers in accordance with the laws of the Jersey and the CREST Regulations.
4. Maintain and update the Offshore Register and where applicable registers of loan stock, debenture and warrant holders.
5. Maintain and update dividend and interest payment instructions.
6. Prepare and despatch dividend and interest warrants for up to two dividends per year per class of share or stock and reconcile the respective bank accounts.
7. Prepare, seal and issue new shares or stock certificates and issue duplicate certificates in place of certificates alleged to be lost, destroyed or mutilated, following
7.1 the return of any mutilated certificate; or
7.2 requiring such evidence as the Registrar or Transfer Agent shall deem necessary of the loss or destruction of certificates and an indemnity countersigned by a bank or insurance company in respect thereof; or
7.3 if such evidence and indemnity is not offered then the Registrar or Transfer Agent will submit any such request for duplicate certificates to the Company.
8. Provide an internal audit and submit audit reports on transfers and new certificates.
9. Ensure that the Register of Members shall be operated in such a way as to enable the holding and transfer of shares in uncertificated form.
10. Facilitate the provision of a secure computer link to the Company or any designated person to facilitate the viewing of the Register of Members. An additional fee is chargeable for this service.
11. Prepare and despatch name and address labels as the Company may require for the despatch of the annual Report and Accounts and the Interim Statement.
Additional name and address labels will be provided as and when required by the Company at a fee agreed between the Registrar and the Company.
12. Deal with all correspondence and enquiries relating to the Register of Members including, but not limited to, holding the Register of Members open for inspection at the Registered Office of the Company and prepare such lists and extracts of the Register of Members as are required to be or are customarily produced under the Law.
13. Receive, check, evaluate and report on forms of proxy for the Company's Annual General Meeting.
14. Take all such precautions as are usual and reasonable for the purpose of ascertaining the genuineness of all transfers, certificates, warrants for dividends or other documents or instruments in connection with any of the Company's registers or with any dividends.
15. Maintain in force an insurance policy to cover any claim, which may arise by reason of any forged transfer, certificate, warrant for dividend or other document or instrument in connection with the aforementioned matters.
16. Undertake such additional duties on such terms and conditions as may be agreed with the Company.
17. Deal with all shareholder approval documentation relating to a Business Combination (as defined in the Admission Document) including but not limited to the circulation of any shareholder circular and the receiving, checking evaluating and reporting on Proxy forms.
Annual stockholder account
maintenance : (pounds)2.00 Per Account
REGISTER MAINTENANCE
Annual stockholder account maintenance : (pounds)8,000
To include up to 500 shareholder accounts,
350 Transfers per annum, one Processing
Acquisition Acceptance and the UK transfer
agent
TRANSFERS
Each transfer over 650 : (pounds)12.50 Per shareholder
account
PROCESSING ACQUISITION ACCEPTANCES
Per acceptance : (pounds)7.50
Issuing repurchase cheque : (pounds)1.50
WARRANTS
Redemptions
Minimum Fee : (pounds)260
Management and set up fee : (pounds)3.50
Per account : (pounds)3.50
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DISBURSEMENTS
A fee of (pounds)10 per month to cover storage costs and (pounds)0.05 per account per annum, subject to a minimum fee of (pounds)250, to cover Forged Transfer Insurance.
Additional specific disbursements for stationery, couriers, postage, telephone and other out of pocket expenses would be charged based on actual amounts incurred or on a recovery basis.
LISTINGS AND LABELS
Ad hoc requests for various listings and analysis can be processed and delivered by fax, couriers or post (at the Company's option) at any time. These are charged separately at the time and the cost reflects the work undertaken, presently 3p per account detail printed with a minimum charge of (pounds)60.
The above fees are exclusive of all taxes, duties and tariffs
Exhibit 10.3
JULY 12, 2006
Viceroy Acquisition Corporation
8235 Forsyth Boulevard
Suite 400
St. Louis, Missouri 63105
In connection with the placing and admission to the Alternative Investment Market of the London Stock Exchange plc ("AIM") of the Shares and Warrants of Viceroy Acquisition Corporation (the "COMPANY") as more particularly described in the admission document dated July __, 2006 relating thereto (the "ADMISSION DOCUMENt"), we are writing to confirm the basis on which the Company is to engage CRT Capital Group LLC ("CRT") as its agent for the solicitation of the exercise of the Warrants (the "SOLICITATION ENGAGEMENT").
NATURE OF THE SOLICITATION ENGAGEMENT
The Company hereby engages CRT, on a non-exclusive basis, as its agent for the solicitation of the exercise of the Warrants. The Company will (i) assist CRT with respect to such solicitation, as reasonably requested by CRT, and (ii) at CRT's request, provide CRT, and direct the Company's transfer agent and warrant agent to deliver to CRT, at the Company's cost, lists of the registered holders and, to the extent known, beneficial owners of, the Warrants. In addition to soliciting the exercise of the Warrants, CRT's services may (subject to compliance with applicable laws) also include disseminating information, orally or in writing, to Warrant holders about the Company or the market for the Company's securities and assisting in the processing of the exercise of the Warrants.
WARRANT SOLICITATION FEES
Subject to the terms set out herein, commencing one year from the date of admission the Company will pay CRT for such services rendered in connection with the solicitation of such Warrants a warrant solicitation fee (the "WARRANT SOLICITATION FEE") of two percent of the exercise price for each Warrant exercised for cash as a result of CRT's solicitation efforts on the terms provided for herein and in the warrant deed executed by the Company and the warrant agent on or about the date hereof (the "WARRANT DEED"). The Warrant Solicitation Fee will be payable on the date of the exercise of each Warrant in accordance with the terms of this letter to the extent not inconsistent with the rules and regulations of AIM or the terms and conditions of the Warrant Deed; provided, however, no Warrant Solicitation Fee shall be payable with respect to such Warrants exercised on or subsequent to any public announcement of a potential sale of all or substantially all of the assets or more than 50 percent of the outstanding issued share
capital of the Company through the earlier of (1) the date of consummation of such sale, (2) the abandonment of such sale or (3) the date occurring six months after the date of such commencement, and following such event the entitlement to the Warrant Solicitation Fee shall be reinstated with respect to Warrants exercised on or after that date.
Notwithstanding the foregoing, the Warrant Solicitation Fee shall be paid only if:
(i) the market price of the underlying Shares at the time of such exercise of the Warrants is not lower than an amount equal to 102% of the exercise price of the Warrants (the "WARRANT PRICE") at the time of exercise;
(ii) the Warrant Solicitation Fee and related arrangements are disclosed to the Warrant holders at the time of exercise of the Warrants in a prospectus, solicitation notice or any other written solicitation materials provided to Warrant holders in connection with the exercise of the Warrants;
(iii) the Warrant Price is paid by the Warrant holder to the Company in cash;
(iv) the exercise of the Warrants was solicited by CRT (or its sub-agent) and the Warrant holder has confirmed this in writing;
(v) the Warrants were not held in a discretionary account except where prior written approval for exercise of the Warrants in such account has been received from the relevant customer;
(iv) the Company requested CRT to solicit the exercise of the Warrants and has published a notice of the redemption of the Warrants; and
(v) the solicitation of the exercise of the Warrants was not in violation of Regulation M, to the extent applicable at the time of any solicitation, (as such rules or any successor rule may be in effect as of such time of exercise) promulgated under the Securities Exchange Act of 1934, as amended or any provision of the Financial Services and Markets Act 2000 or any other applicable law or regulation then applicable to the Warrants, their exercise or the solicitation of such exercise.
CRT may engage sub-agents (including KBC Peel Hunt Ltd. ("KBC")) in its solicitation efforts. Notwithstanding the foregoing, no Warrant Solicitation Fee will be paid to CRT with respect to the exercise of Warrants owned by CRT or KBC or any of their respective affiliates, directors or officers, or the directors or officers of the Company or the Founding Shareholders or their designees, including any Warrants owned by Paul Anthony Novelly or his designees and purchased in the Placing or acquired after Admission. The Company and CRT agree to disclose the arrangement to pay such Warrant Solicitation Fee to CRT in any offering document used by the Company in connection with the offering of the Units.
MISCELLANEOUS
Capitalised terms used but not defined in this letter have the meanings given to them in the Admission Document.
This letter shall be governed in all respects by the laws of England and Wales.
Please sign and return the attached copy of this letter to indicate your agreement to its terms.
Yours faithfully
FOR CRT CAPITAL GROUP LLC
/s/ -------------------------------------- |
Accepted by:
/s/ Douglas D. Hommert
-----------------------------------------------------------------------
Douglas D. Hommert, Executive
Vice President
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For and on behalf of
Viceroy Acquisition Corporation
Exhibit 10.4
STORAGE AND THRUPUT AGREEMENT
This Storage and Thruput Agreement ("AGREEMENT") is made effective the 1st day of November, 2006 (the "EFFECTIVE DATE") between Center Point Terminal Company, a Delaware corporation ("TERMINAL"), and FutureFuel Chemical Company, a Delaware corporation formerly known as Eastman SE, Inc. ("CUSTOMER").
RECITALS
A. Terminal is the owner of storage facilities located at Little Rock, Arkansas, Memphis, Tennessee and Port Allen, Louisiana (each a "TERMINAL FACILITY" and collectively the "TERMINAL FACILITIES").
B. Customer and Terminal desire to enter into this Agreement to provide for the storage and handling of biodiesel (the "PRODUCT") at the Terminal Facilities.
AGREEMENT
In consideration of the foregoing, the mutual covenants herein contained and other good and valuable consideration (the receipt, adequacy and sufficiency of which are hereby acknowledged by the parties by their execution hereof), the parties agree as follows.
1. FACILITY. Terminal agrees to provide a safe area for the purpose of loading or unloading storage tanks at the Terminal Facilities ("TANKS") suitable for storage of biodiesel, biodiesel/petrodiesel blends, palm oil, methanol and other biodiesel feedstocks ("PRODUCTS") in Terminal's above-ground tankage at the Terminal Facilities. Terminal and Customer will determine from time to time in accordance with Exhibit A the amount of storage capacity required by Customer at each Terminal and the allocation of such Tanks to Customer's Products, provided that the total capacity will not exceed 250,000 barrels. Terminal further agrees to provide all suitable terminal and related facilities required to safely perform all operations contemplated to be performed by Terminal herein. All such facilities are to be maintained in good working order by Terminal at its own cost and expense at all times during the term of this Agreement.
2. OPERATIONS. Customer will deliver its Products to the Terminal Facilities in bulk by tanker truck or barge or, in the case of the Port Allen Terminal Facility, ship. Terminal will, in compliance with all applicable state, federal and local laws and regulations, receive, store, handle and reship such Products in accordance with Customer's reasonable requirements submitted to Terminal by Customer in writing, and will tender such Products to carriers for shipment as directed by Customer in writing. The receipt, formulating, storage, handling, reshipment and related operations contemplated hereunder will be conducted by or on behalf of Terminal in accordance with generally accepted terminalling practices. Receipts will be issued by Terminal to Customer for all Products delivered to Terminal by or for Customer. All marine movements will be verified by a suitable Independent Inspection Agency selected by Terminal and reasonably satisfactory to Customer; the cost of such Agency will be borne by Customer.
3. TERM. The term of this Agreement runs for a period of two years commencing with the Effective Date and expiring on October 31, 2008 (the "INITIAL TERM"). This Agreement automatically renews itself after the end of the Initial Term for successive one-year periods (the "RENEWAL TERMS") unless either party hereto notifies the other party hereto in writing at least 90 days prior to expiration of the Initial Term or the then current Renewal Term, as applicable, of its intent to cancel this Agreement, in which event this Agreement terminates at the end of the Initial Term or such Renewal Term, as applicable.
4. CHARGES. In consideration of the Tanks, other facilities and services to be provided by Terminal to Customer hereunder, Customer agrees to pay Terminal: (i) a monthly fee equal to $0.35 of shell capacity available for Product thruput at each Terminal each month as determined in accordance with Exhibit A; and (ii) fees for heating as generally charged by Terminal at each of the Facilities; and (iii) fees for such other services as are provided by Terminal to Customer and customarily charged to Terminal's other customers at the Terminal Facilities.
5. TITLE. Title to all Products delivered by or for Customer to Terminal remains in Customer's name.
6. INDEPENDENT CONTRACTOR. It is understood and agreed by the parties hereto that Terminal, in performing the services hereunder, is acting as an independent contractor and not as an agent of Customer.
7. INDEMNIFICATION.
7.1. BY TERMINAL. Subject to Sections 7.3, 8, 9 and 11, and except as otherwise provided in Section 12, Terminal hereby unconditionally, irrevocably and absolutely agrees to protect, defend, indemnify and hold harmless Customer and Customer's past, present and future officers, directors, employees, agents, attorneys and representatives, and each of the foregoing's successors and assigns (collectively the "CUSTOMER INDEMNITEES"), from any and all manner of actions, suits, debts, sums of money, interest owed, accounts, controversies, agreements, guaranties, promises, undertakings, charges, damages, judgments, executions, obligations and reasonably incurred costs, expenses and fees (including reasonable attorneys' fees and court costs), counterclaims, claims, demands, causes of action, liabilities, losses and amounts paid in settlement (collectively "ADVERSE CONSEQUENCES") incurred, paid or sustained by any of the Customer Indemnitees, in each case in connection with, arising out of, based upon, relating to or otherwise involving the negligent or willful acts or omissions on the part of Terminal, its employees, agents or contractors in the performance of this Agreement.
7.2. BY CUSTOMER. Subject to Sections 7.3, 9 and 11, and except as otherwise provided in Section 12, Customer hereby unconditionally, irrevocably and absolutely agrees to protect, defend, indemnify and hold harmless Terminal and Terminal's past, present and future officers, directors, employees, agents, attorneys and representatives, and each of the foregoing's successors and assigns (collectively the "TERMINAL INDEMNITEES"), from any and all Adverse Consequences incurred, paid or sustained by any of the Terminal Indemnitees, in each case in connection with, arising out of, based upon, relating to or otherwise involving: (i) the negligent or willful acts or omissions on the part of Customer, its employees, agents, or contractors (including any contractors transporting Products to or from a Terminal Facility unless under the employ or under contract to Terminal) in the performance of this Agreement; and (ii) the receipt, formulating, storage, handling or reshipment of Customer's Products pursuant to this Agreement.
7.3. CONCURRENT FAULT. In the event that any Adverse Consequences are caused in whole or in part by the concurrent negligent or willful acts or omissions of Terminal, its employees, agents or contractors, on the one hand, and Customer, its employees, agents or contractors, on the other hand, then the obligation of the parties to indemnify under this Section 7 will be comparative and each party will indemnify the other to the extent that such party's act or omission (or the acts or omissions of such party's employees, agents or contractors) was the cause of such injury, damage or death.
7.4. CONTROL OF CLAIM. If any such action, suit or proceeding is commenced against, or any such claim, demand or amount is assessed against, any person in respect of which such person proposes to demand indemnification hereunder (the "INDEMNITEE"), the person from whom the Indemnitee is seeking indemnification hereunder (the "INDEMNITOR") is to be notified to that effect with reasonable promptness.
The Indemnitee is to control the defense of any such action, and may employ counsel in defense thereof, all at Indemnitor's expense, unless and until Indemnitor satisfies or otherwise settles such action and obtains a release of the Indemnitee from the third party bringing such action, in a form acceptable to the Indemnitee and his counsel.
8. LIMITATION ON LIABILITY. If loss or damage to any of Customer's Products arises from any cause (including improper loading and unloading of Customer's Products or actions not conforming to Customer's orders on the part of Terminal, its employees, agents, or contractors), Terminal will not be liable to Customer for more than the actual cost to Customer of any lost or damaged Product, less salvage value. Terminal will not be responsible for Adverse Consequences resulting from the loss or destruction of any of Customer's Products except and to the extent that such loss or destruction is caused by the negligence of Terminal, its employees, agents or invitees (other than Customer or Customer's employees, agents or invitees). Terminal will not be responsible for chemical deterioration of any of Customer's Products resulting from the ordinary storage of Customer's Products at a Terminal Facility. Terminal will have no liability to a Customer Indemnitee unless a written claim is delivered to Terminal by the Customer Indemnitee within four months after Terminal reports the alleged loss to the Customer or the Customer discovers the alleged loss, whichever is earlier. Customer may not make any deductions from any invoice presented by Terminal pending the resolution of any claim. EXCEPT AS EXPRESSLY HEREIN PROVIDED, THERE ARE NO GUARANTEES OR WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED, INCLUDING ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, WHETHER ARISING BY OPERATION OF LAW OR OTHERWISE. Notwithstanding anything to the contrary contained in this Agreement, Terminal will not have liability for any reason whatsoever to Customer for evaporation, shrinkage or other loss of Product in an amount equal to or less than .5% (one-half of one percent) of the average volume of Customer's Products stored at the Terminal Facilities for the relevant period of time.
9. INSURANCE.
9.1. TERMINAL. Terminal agrees to provide and carry (or cause to be provided and carried) the following insurance during the term of this Agreement, at its expense and in forms and with insurance companies reasonably acceptable to Customer:
(i) Statutory Workmen's Compensation and Employer's Liability Insurance with a minimum limit of the greater of $1,000,000 per occurrence or the applicable amount required by state or federal laws;
(ii) Comprehensive General Liability Insurance as follows:
(a) Bodily Injury Liability in an amount of not less than $1,000,000 for injuries, including death, to any one person in any one occurrence, and in an amount of not less than $2,000,000.00 covering injuries, including death, to more than one person in any one occurrence; and
(b) Property Damage Liability in an amount of not less than $1,000,000 covering damage to or destruction of property in any one occurrence; and
(iii) Fire and Extended Coverage to cover replacement value of the Terminal Facilities.
Terminal has no obligation under this Agreement to insure Customer's Product and property or property of others.
9.2. CUSTOMER. Customer agrees to provide and carry (or cause to be provided and carried) the following insurance during the term of this Agreement (for itself and its subcontractors and third party carriers), at its expense and in forms and with insurance companies reasonably acceptable to Terminal:
(i) Statutory Workmen's Compensation and Employer's Liability Insurance with a minimum limit of the greater of $1,000,000 per occurrence or the applicable amount required by state or federal laws;
(ii) Comprehensive General Liability Insurance as follows:
(a) Bodily Injury Liability in an amount of not less than $1,000,000 for injuries, including death, to any one person in any one occurrence, and in an amount of not less than $2,000,000.00 covering injuries, including death, to more than one person in any one occurrence; and
(b) Property Damage Liability in an amount of not less than $1,000,000 covering damage to or destruction of property in any one occurrence; and
(iii) Comprehensive Automobile Liability Insurance with liability limits of $2,000,000 per occurrence for bodily injury and property damage.
The Commercial/Comprehensive General Liability insurance coverage required to be carried by or on behalf of Customer must include Terminal as an additional insured as its interest may appear. Other insurance, if desired by Customer or Customer's contractors, must be carried by Customer or its contractors at their own expense. If Customer carries any insurance on Customer's Product or Customer's property, Customer must cause its insurance carrier to endorse the policies to waive subrogation against Terminal. If Customer is self-insured for losses to Customer's Product or Customer's property, Customer hereby waives subrogation against Terminal. Copies of any and all of the foregoing insurance policies and endorsements must be furnished to Terminal upon request.
10. DEFAULT. If a party (the "DEFAULTING PARTY") fails to perform any of the covenants or obligations of performance or payment imposed upon it under and by virtue of this Agreement (except where such failure is excused under other applicable provisions hereof), then in such event the other party (the "NON-DEFAULTING PARTY") must give the Defaulting Party written notice thereof, stating specifically the cause for which such notice of default is given. The Non-Defaulting Party may cancel this Agreement (by written notice to the Defaulting Party) without any further obligation and has the right to collect any amount due it hereunder for any Adverse Consequences suffered by it if: (i) the Defaulting Party fails to make payment within ten days after receipt of notice of default in payment for charges; or (ii) within a period of 30 days after receipt of notice of any other default hereunder the Defaulting Party does not commence with diligence to remove and remedy the default, fully indemnify the Non-Defaulting Party from any and all Adverse Consequences resulting from such default and thereafter pursue and complete removal of such default with diligence.
11. FORCE MAJEURE.
11.1. EFFECT OF FORCE MAJEURE. If either party is rendered unable by force majeure to perform or comply fully or in part with any obligation or condition of the Agreement (other than the payment of money), the affected party must give written notice to the other party of such force majeure event within 48 hours after receiving notice of the occurrence of force majeure event relied upon. In such event, both parties will be relieved of liability and will suffer no prejudice for failure to perform their obligations hereunder during such period, except for the obligations to make payment of any and all charges for services provided pursuant to this Agreement prior to the occurrence of such force majeure event (and any
indemnification obligations hereunder). In addition, Terminal will have the right to curtail storage space or allocate its supply of storage in a manner which, in its sole discretion, is fair and reasonable in the circumstances, and will not be obligated to obtain or purchase other storage space for Customer and Customer will not hold Terminal responsible in any manner for any losses or damages which Customer may claim as a result of any such failure, curtailment or allocation by Terminal. Terminal will not be required to make up any storage space not available as a result of any force majeure event. In the event that the period of suspension under this Section 11.1 continues in excess of 30 calendar days, this Agreement may be canceled with respect to the applicable Terminal Facility at the option of either party, without liability of either party.
11.2. DEFINITION. As used herein, the term "force majeure" includes, by way of example and not in limitation, fire, acts of god, adverse weather, navigational accidents, vessel damage or loss, accidents at or closing of a navigational or transportation mechanism, strikes, grievances or actions by or among workers, lock-outs or other labor disturbances, explosions or accidents to wells, pipelines, storage depots, refinery facilities, machinery and other facilities, actions of any government or by any person purporting to represent a government, shortage, interruption or curtailment of crude oil, acts of terrorists or other causes not reasonably within the control of the affected party and which such party by the exercise of reasonable diligence could not have prevented or overcome.
12. ENVIRONMENTAL MATTERS. In the event of any Product spill, discharge or other casualty resulting in or having the potential to cause environmental pollution in connection with the performance of this Agreement, Terminal immediately may commence containment or clean-up operations as deemed appropriate or necessary by Terminal or as required by any governmental authority. Terminal will notify Customer immediately of the event and those operations. Terminal will take commercially reasonable steps to keep Customer advised of such plans and activities. Customer will have the right to participate in the decisions and remedial activities being taken and, if appropriate, promptly send response personnel to the site. If remedial activities are required and the responsible party has not been identified, the responsibilities for prompt payments for the remedial activities being incurred, as well as initial response costs incurred by Terminal and Customer will be shared equally between Customer and Terminal. The ultimate apportionment between Customer and Terminal of all costs and other damages occasioned by the occurrence will be determined in the following manner.
(i) If the occurrence was caused by the negligence of Terminal, its agent, employees, contractors or customers, Terminal will indemnify and hold Customer harmless as set forth in Section 7.1.
(ii) If the occurrence was caused by the negligence of Customer, its agents, contractors, customers (including vessels tendered by Customer and its customers), Customer will indemnify and hold Terminal harmless as set forth in Section 7.2.
(iii) If the occurrence was caused by the negligence of both Terminal and Customer or the parties associated with them as defined above, the costs and damages will be shared ratably based upon the percentage of negligence attributable to each party as set forth in Section 7.3.
(iv) If the occurrence was caused by a third party either known or unknown in conjunction with the loading or unloading of Product, Customer and Terminal will cooperate and will equally share all costs related to the occurrence and the cost of recovering the damages from the third party or any available clean-up fund. If recovery is made, such recovery will be apportioned so as to equalize each party's share. If partial or no recovery is made, the loss will be shared equally.
Terminal maintains capabilities to respond to emergency situations which may include spill containment booms, oil absorbent material and, if applicable, a boat at the terminal in readiness at all times. Emergency response teams are trained from volunteer employees and training is up-dated and reinforced on a regular basis. Terminal emergency procedures are set forth in appropriate sections of the following documents: U.S. Coast Guard Dock Operations Manual, EPA's Spill Prevention Control and Counter Measures Plan; OSHA's Risk Assessment and Emergency Response Contingency Plan, as well as the Oil Pollution Act of 1990 Manual for both the U.S. Coast Guard and EPA. These plans are currently in place and are maintained on an up-to-date basis. The provisions of this Section 12 are contractual in nature and apply only within the content of this Agreement. Nothing herein is intended to nor may be construed as establishing legal liabilities or responsibilities between Customer or Terminal, on the one hand, and third-party or governmental agencies, on the other hand.
13. REMOVAL OF PRODUCT. Immediately upon the termination of this Agreement for any reason, Customer agrees to remove from the Terminal Facilities all of its Product, supplies, equipment and other materials. Customer may waive such right as to all or part of same, in which case, if accepted in writing by Terminal at its sole option, the Product, supplies, equipment and other materials so waived will become the property of Terminal; provided, however, that in all cases Customer must clean or cause to be cleaned all the Tanks and also is liable for and will pay all directly-related disposal costs. If waste is generated on the Terminal Facility's premises as a result of the Product's removal, Customer required flushings or transfer into pipeline, then Terminal and Customer must mutually agree on an environmentally sound method of disposal of waste in accordance with all applicable laws and regulations. If the parties fail to agree to an environmentally sound method for disposal of such waste within ten days following a proposal by Terminal, then Terminal has the right to direct and carry out the disposal of such waste in accordance with applicable laws and regulation, in its name or in the name of Customer, all at Customer's sole cost and expense. Customer agrees to pay the cost of such removal and disposal, including such costs or charges as Terminal may be required to pay in regard to such waste, including the cost of preparing and processing any documents in connection therewith.
14. REGULATORY COMPLIANCE. Terminal agrees to notify (the "COMPLIANCE NOTICE") Customer if, in order to comply with applicable laws or governmental regulations or in order to prevent, reduce, control or monitor any emission or discharge into the environment of any nature whatsoever, any governmental or regulatory body initiates a requirement subsequent to the Effective Date which causes Terminal to: (i) incur additional expense; (ii) effect changes in the operation of a Terminal Facility; (iii) make any addition to the improvements on a Terminal Facility; or (iv) change Terminal's normal methods of operation. Such Compliance Notice must include Terminal's estimate of Customer's share of the additional expense and of the additional expense of making such changes or additions (the "COMPLIANCE EXPENSE"). The estimate of Compliance Expense may only include Terminal's estimate of the actual or pro-rata incremental cost of such additional expense, change or additions (including engineering and overhead expense and subsequent direct changes or additions attributable to the presence of Customer at the Terminal Facility). On or before 30 days following delivery of the Compliance Notice, Customer and Terminal agree to negotiate in good faith to reach an agreement as to the amount and terms of payment of the agreed-to amount of the Compliance Expense to be paid by Customer to Terminal. The terms of payment must reasonably compensate Terminal for financing the agreed-to amount of Compliance Expense in the event that the terms of payment do not provide for Customer's complete and immediate reimbursement of Terminal's actual cash expenditures. In the event Terminal and Customer are unable to agree upon Customer's share of the Compliance Expense, either party has the right to terminate this Agreement within 180 days of Terminal's delivery of the Compliance Notice to Customer.
15. AMENDMENT AND MODIFICATION. No amendment, modification, supplement, termination, consent or waiver of any provision of this Agreement, nor consent to any departure therefrom, will in any event be effective unless the same is in writing and is signed by the party against whom enforcement of the same is
sought. Any waiver of any provision of this Agreement and any consent to any departure from the terms of any provision of this Agreement is to be effective only in the specific instance and for the specific purpose for which given.
16. ASSIGNMENTS. Customer may not assign or transfer any of its rights or obligations under this Agreement to any other person without the prior written consent of Terminal, which consent may not be unreasonably withheld, delayed or conditioned. Notwithstanding the preceding sentence, Customer may without the prior consent of Terminal assign its rights under this Agreement to: (i) any affiliate of Customer, but no such assignment relieves Customer of any of its obligations under this Agreement; and (ii) an assignee who acquires all or substantially all of Customer's assets (including by way of a merger), but in the case of this clause (ii), Customer must give Terminal prior written notice of such transfer and Terminal may, if it is not satisfied with such transferee in its sole discretion, terminate this Agreement within 30 days of receipt of notice of such transfer.
17. CAPTIONS. Captions contained in this Agreement have been inserted herein only as a matter of convenience and in no way define, limit, extend or describe the scope of this Agreement or the intent of any provision hereof.
18. CONFIDENTIALITY. Customer has confidential information, know-how and technical data concerning formulae and methods of manufacturing the Products handled hereunder, and mixtures thereof (collectively the "CONFIDENTIAL INFORMATION"). Customer may from time to time make such Confidential Information available to Terminal. Terminal agrees to maintain any Confidential Information that it may receive from Customer confidential and will not disclose such information to any person without the prior written consent of Customer. However, Terminal may disclose such Confidential Information: (i) to legal counsel of Terminal; (ii) to other professional advisors of Terminal (but only if they have been informed of the confidential nature of such Confidential Information and agree in writing to be bound by the terms of this Section); (iii) to regulatory officials having jurisdiction over Terminal; and (iv) as required by law or legal process or in connection with any legal proceeding to which Terminal is a party or is otherwise subject. In each such event (other than clause (i)), Terminal, prior to such disclosure, is to inform Customer.
19. CONSTRUCTION. Unless the context of this Agreement clearly requires
otherwise: (i) references to the plural include the singular and vice versa;
(ii) references to any person include such person's successors and assigns
but, if applicable, only if such successors and assigns are permitted by
this Agreement; (iii) references to one gender include all genders; (iv)
"including" is not limiting; (v) "or" has the inclusive meaning represented
by the phrase "and/or"; (vi) the words "hereof", "herein", "hereby",
"hereunder" and similar terms in this Agreement refer to this Agreement as a
whole and not to any particular provision of this Agreement; (vii) section
and exhibit references are to this Agreement unless otherwise specified;
(viii) reference to any agreement (including this 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 and, if applicable, the terms hereof; and (ix) general or specific
references to any law mean such law as amended, modified, codified or
reenacted, in whole or in part, and in effect from time to time.
20. COUNTERPART FACSIMILE EXECUTION. For purposes of this Agreement, a document (or signature page thereto) signed and transmitted by facsimile machine or telecopier is to be treated as an original document. The signature of any party thereon, for purposes hereof, is to be considered as an original signature, and the document transmitted is to be considered to have the same binding effect as an original signature on an original document. At the request of any party, any facsimile or telecopy document is to be re-executed in original form by the parties who executed the facsimile or telecopy document. No party may raise the use of a facsimile machine or telecopier or the fact that any signature was transmitted
through the use of a facsimile or telecopier machine as a defense to the enforcement of this Agreement or any amendment or other document executed in compliance with this Section.
21. COUNTERPARTS. This Agreement may be executed by the parties on any number of separate counterparts, and all such counterparts so executed constitute one agreement binding on all the parties notwithstanding that all the parties are not signatories to the same counterpart.
22. FAILURE OR DELAY. No failure on the part of any party to exercise, and no delay in exercising, any right, power or privilege hereunder operates as a waiver thereof; nor does any single or partial exercise of any right, power or privilege hereunder preclude any other or further exercise thereof, or the exercise of any other right, power or privilege. No notice to or demand on any party in any case entitles such party to any other or further notice or demand in similar or other circumstances.
23. GOVERNING LAW. This Agreement and the rights and obligations of the parties hereunder are to be governed by and construed and interpreted in accordance with the laws of the State of Missouri applicable to contracts made and to be performed wholly within Missouri, without regard to choice or conflict of laws rules.
24. LEGAL FEES. Except as otherwise provided herein, all legal and other costs and expenses incurred in connection with this Agreement and the transactions contemplated hereby are to be paid by the party incurring such costs and expenses. In the event any party brings suit to construe or enforce the terms hereof, or raises this Agreement as a defense in a suit brought by another party, the prevailing party is entitled to recover its attorneys' fees and expenses.
25. NOTICES. All notices, consents, requests, demands and other communications hereunder are to be in writing, and are deemed to have been duly given or made: (i) when delivered in person; (ii) three days after deposited in the United States mail, first class postage prepaid; (iii) in the case of telegraph or overnight courier services, one business day after delivery to the telegraph company or overnight courier service with payment provided for; (iv) in the case of telex or telecopy or fax, when sent, verification received; or (v) in the case of electronic transmission such as e-mail, when sent; in each case addressed as follows:
if to Customer:
FutureFuel Chemical Company
2800 Gap Road
State Highway 394 South
Batesville, Arkansas 72501-9680
Attn: President
Fax #: (870) 698-5303
if to Terminal:
Center Point Terminal Company
8235 Forsyth Blvd., Suite 400
St. Louis, Missouri 63105
Attn: President
Fax #: (314) 854-8539
or to such other address as any party may designate by notice to the other party in accordance with the terms of this Section.
26. REMEDIES CUMULATIVE. Each and every right granted hereunder and the remedies provided for under this Agreement are cumulative and are not exclusive of any remedies or rights that may be available to any party at law, in equity or otherwise.
27. SEVERABILITY. Any provision of this Agreement which is prohibited, unenforceable or not authorized in any jurisdiction is, as to such jurisdiction, ineffective to the extent of any such prohibition, unenforceability or nonauthorization without invalidating the remaining provisions hereof, or affecting the validity, enforceability or legality of such provision in any other jurisdiction, unless the ineffectiveness of such provision would result in such a material change as to cause completion of the transactions contemplated hereby to be unreasonable.
28. SUCCESSORS AND ASSIGNS. All provisions of this Agreement are binding upon, inure to the benefit of and are enforceable by or against the parties and their respective permitted successors and assigns.
29. THIRD-PARTY BENEFICIARY. This Agreement is solely for the benefit of the parties and their respective successors and permitted assigns, and no other person has any right, benefit, priority or interest under or because of the existence of this Agreement.
CENTER POINT TERMINAL COMPANY
By: /s/ Christopher J. Schmidt
-------------------------------------------------
Christopher J. Schmidt, Assistant Secretary
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FUTUREFUEL CHEMICAL COMPANY
By: /s/ Randall W. Powell 10/30/06
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Randal W. Powell, President
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EXHIBIT A
STORAGE CAPACITY
Terminal will initially provide to Customer a 45,000 barrel tank at the Little Rocker Terminal Facility and the initial fee will be based upon 45,000 barrels of shell capacity availability.
From time to time, Terminal and Customer may agree on additional tanks to be allocated to Customer at each of the Terminal Facilities, in which case the monthly fee will be adjusted to include such additional tanks.
Exhibit 10.5
COMMODITY TRADING ADVISOR AGREEMENT
This Commodity Trading Advisor Agreement ("AGREEMENT") is made this 1st day of November, 2006 between FutureFuel Chemical Company, a Delaware corporation formerly known as Eastman SE, Inc. ("CLIENT"), and Apex Oil Company, Inc., a Missouri corporation ("ADVISER").
RECITALS
A. Client is in the business of producing biofuels (biodiesel, bioethanol and lignin/biomass solid fuels) and biobased specialty products (biobased lubricants, solvents and intermediates) (the "BUSINESS").
B. In connection with its Business, Client needs to acquire substantial quantities of feedstocks and diesel products and needs to hedge its feedstocks and finished products and requires advice with respect to such activities.
C. Adviser has expertise in the acquisition of feedstocks and the hedging of various commodities and is willing to provide advice to Client with respect to such matters on the terms set forth herein.
AGREEMENT
In consideration of the foregoing, the mutual covenants herein contained and other good and valuable consideration (the receipt, adequacy and sufficiency of which are hereby acknowledged by the parties by their execution hereof), the parties agree as follows.
1. COMMODITY TRADING ADVISER. Client hereby employs Adviser, and Adviser
agrees to serve, as a commodity trading adviser for Client on the following
terms and subject to the following conditions.2. COMMODITY TRADING ADVICE.
Adviser hereby agrees to advise Client with respect to the purchase, sale,
exchange, conversion or hedging of commodities as Client may request from
time to time. For purposes of this Agreement, the term "commodity" includes:
(i) any and all feedstocks that Client uses in the operation of the
Business, including fats and oils (including lard, tallow, cottonseed oil,
peanut oil, soybean oil, palm oil and all other fats and oils), cottonseed
meal, cottonseed, soybeans, soybean meal, livestock and livestock products
and methanol; (ii) diesel fuel, heating oil, gasoline and ethanol; (iii)
biofuels, including biodiesel and bioethanol, and co-products from biofuels,
including glycerin; and (iv) pour-point depressants, color stabilizers and
other petroleum products. Such advice will also include advice as to
contracts of sale for commodities and as to options for commodities. For
purposes of this Agreement, the term "contract of sale" includes sales,
agreements of sale and agreements to sell, and the term "option" means an
agreement, contract or transaction that is of the character of, or is
commonly known to the trade as, an "option", "privilege", "indemnity",
"bid", "offer", "put", "call", "advance guaranty", or "decline guaranty".
3. POWER OF ATTORNEY. Client hereby grants to Adviser a power of attorney, and hereby appoints Adviser as Client's agent with full power and authority, to enter into contracts of sale for the purchase or sale of commodities and options on commodities and the leasing of rail cars. Adviser will exercise this power of attorney and authority only in accordance with objectives set forth by Client from time to time. Adviser's authority will include the authority:
(i) to give instructions for commodity transactions, including the buying and selling of commodities and options with respect to commodities; and
(ii) to make, execute, and deliver any and all contracts of sale and written instruments of assignment and transfer and to take any and all actions necessary or proper to effectuate the authority hereby conferred.
Adviser is expressly not authorized hereby to exercise the following powers:
(a) to withdraw, acquire possession of or direct the disbursement of assets held in any account maintained on behalf of Client;
(b) to trade securities as such term is defined in the Securities Act of 1933, as amended (the "SECURITIES ACT"); or
(c) to make filings and disclosures under federal and state securities and other laws and regulations.
Whenever this Agreement or Exhibit B is attached to any instrument of assignment and transfer, all persons are entitled, without further inquiry or investigation and regardless of the date of such authorization, to act in reliance upon the assumption that the commodities or options named in such instrument were theretofore duly and properly transferred, endorsed, sold, assigned, set over and delivered, and that with respect to such instrument the authority conferred herein is still in full force and effect. This authorization and power of attorney will remain effective until Client has revoked it by written notice delivered personally or sent by registered or certified mail to Adviser. Such revocation will not affect Client's obligations resulting from transactions initiated prior to receipt of such written notice.
4. FEES. As compensation for Adviser's adviser services provided to Client
hereunder and for Adviser exercising the authority granted to Adviser under
Section 3, Client will pay Adviser a fee equal to $10,000 per month. Such
fee is payable within ten days of receipt of invoice.
5. REPORTS. Adviser will prepare such reports, including daily position reports, with respect to any activities conducted by it on Client's behalf under this Agreement. Such reports are to be in such forms, and be prepared with such frequency, as Client may reasonably request from time to time.
6. TERMINATION. This Agreement may be terminated by either party at any time upon written notice. In the event of such termination, Client will owe Adviser a pro rata portion of the fees specified in Section 4, calculated to the date of termination
7. STANDARD OF CARE. The parties agree that the sole standard of care imposed on Adviser by this Agreement is to act with the care, prudence and diligence under the circumstances then prevailing that a prudent man acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of like character and with like aims; provided, however, that nothing in this Agreement will be deemed to limit any responsibility or liability that Adviser may have to Client to the extent such limitation would be inconsistent with applicable laws, including the Securities Act, the Securities Exchange Act of 1934, as amended, the Investment Adviser Act or the Commodity Exchange Act.
8. RESTRICTIONS ON ADVISER'S AUTHORITY. Except pursuant to an exemption under the Commodity Exchange Act or any rule or regulation promulgated thereunder, Adviser will not pursuant to Section 3 offer on behalf of Client to enter into, enter into, execute or confirm the execution of a contract for the purchase or sale of a commodity for future delivery (other than a contract which is made on or subject to the rules of a board of trade, exchange, or market located outside the United States, its territories or possessions) unless: (i) such transaction is conducted on or subject to the rules of a board of trade which has been designated or registered by the Commodity Futures Trading Commission (the "COMMISSION") as a contract market or derivatives transaction execution facility for such commodity; (ii) such contract is
executed or consummated by or through a contract market; and (iii) such contract is evidenced by a record in writing which shows the date, the parties to such contract and their addresses, the property covered and its price, and the terms of delivery. The foregoing restriction does not apply to transactions or positions which are bona fide hedging transactions or positions as such terms are defined by the Commission.
9. NO REGISTRATION. Adviser hereby advises Client, and Client hereby acknowledges, that neither Adviser nor any of Adviser's employees are registered under the Commodity Exchange Act as a commodity trading adviser (as such term is defined in the Commodity Exchange Act) in that, during the course of the twelve months preceding the date of this Agreement, Adviser has not furnished commodity trading advice to more than fifteen persons and does not hold itself out generally to the public as a commodity trading advisor.
10. NO APPROVAL BY THE UNITED STATES. Client acknowledges that Adviser has not been sponsored, recommended or approved, and that Adviser's abilities or qualifications have not in any respect been passed upon, by the United States or any agency or officer thereof.
11. DISCLOSURE DOCUMENT. Client hereby acknowledges receipt of the Disclosure Document attached hereto as Exhibit A.
12. AMENDMENT AND MODIFICATION. No amendment, modification, supplement, termination, consent or waiver of any provision of this Agreement, nor consent to any departure therefrom, will in any event be effective unless the same is in writing and is signed by the party against whom enforcement of the same is sought. Any waiver of any provision of this Agreement and any consent to any departure from the terms of any provision of this Agreement is to be effective only in the specific instance and for the specific purpose for which given.
13. ASSIGNMENTS. No party may assign or transfer (voluntarily or involuntarily, by operation of law (including by merger or consolidation), judicial decree or otherwise) any of its rights or obligations under this Agreement to any other person without the prior written consent of the other parties.
14. CAPTIONS. Captions contained in this Agreement have been inserted herein only as a matter of convenience and in no way define, limit, extend or describe the scope of this Agreement or the intent of any provision hereof.
15. CONFIDENTIALITY. Each party agrees to maintain any confidential information that it may receive from the other parties confidential and may not disclose such information to any person without the prior written consent of the party originally furnishing such confidential information. However, a party may disclose such confidential information (the "DISCLOSING PARTY"): (i) to legal counsel of the Disclosing Party; (ii) to other professional advisors of the Disclosing Party (but only if they have been informed of the confidential nature of such confidential information and agree in writing to be bound by the terms of this Section); (iii) to regulatory officials having jurisdiction over the Disclosing Party; and (iv) as required by law or legal process or in connection with any legal proceeding to which the Disclosing Party is a party or is otherwise subject. In each such event (other than clause (i)), the Disclosing Party, prior to such disclosure, is to inform the party originally furnishing such confidential information.
16. CONSTRUCTION. Unless the context of this Agreement clearly requires
otherwise: (i) references to the plural include the singular and vice versa;
(ii) references to any person include such person's successors and assigns
but, if applicable, only if such successors and assigns are permitted by
this Agreement; (iii) references to one gender include all genders; (iv)
"including" is not limiting; (v) "or" has the inclusive meaning represented
by the phrase "and/or"; (vi) the words "hereof", "herein", "hereby",
"hereunder" and similar terms in this Agreement refer to this Agreement as a
whole and not to any
particular provision of this Agreement; (vii) section and Exhibit references are to this Agreement unless otherwise specified; (viii) reference to any agreement (including this 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 and, if applicable, the terms hereof; and (ix) general or specific references to any law mean such law as amended, modified, codified or reenacted, in whole or in part, and in effect from time to time.
17. COUNTERPART FACSIMILE EXECUTION. For purposes of this Agreement, a document (or signature page thereto) signed and transmitted by facsimile machine or telecopier is to be treated as an original document. The signature of any party thereon, for purposes hereof, is to be considered as an original signature, and the document transmitted is to be considered to have the same binding effect as an original signature on an original document. At the request of any party, any facsimile or telecopy document is to be re-executed in original form by the parties who executed the facsimile or telecopy document. No party may raise the use of a facsimile machine or telecopier or the fact that any signature was transmitted through the use of a facsimile or telecopier machine as a defense to the enforcement of this Agreement or any amendment or other document executed in compliance with this Section.
18. COUNTERPARTS. This Agreement may be executed by the parties on any number of separate counterparts, and all such counterparts so executed constitute one agreement binding on all the parties notwithstanding that all the parties are not signatories to the same counterpart.
19. EXHIBITS. All of the Exhibits attached to this Agreement are deemed incorporated herein by reference.
20. FAILURE OR DELAY. No failure on the part of any party to exercise, and no delay in exercising, any right, power or privilege hereunder operates as a waiver thereof; nor does any single or partial exercise of any right, power or privilege hereunder preclude any other or further exercise thereof, or the exercise of any other right, power or privilege. No notice to or demand on any party in any case entitles such party to any other or further notice or demand in similar or other circumstances.
21. FURTHER ASSURANCES. The parties will execute and deliver such further instruments and do such further acts and things as may be required to carry out the intent and purpose of this Agreement.
22. GOVERNING LAW. This Agreement and the rights and obligations of the parties hereunder are to be governed by and construed and interpreted in accordance with the laws of the State of Missouri applicable to contracts made and to be performed wholly within Missouri, without regard to choice or conflict of laws rules.
23. LEGAL FEES. Except as otherwise provided herein, all legal and other costs and expenses incurred in connection with this Agreement and the transactions contemplated hereby are to be paid by the party incurring such costs and expenses. In the event any party brings suit to construe or enforce the terms hereof, or raises this Agreement as a defense in a suit brought by another party, the prevailing party is entitled to recover its attorneys' fees and expenses.
24. NO JOINT VENTURE OR PARTNERSHIP. The parties agree that nothing contained herein is to be construed as making the parties joint venturers or partners.
25. SEVERABILITY. Any provision of this Agreement which is prohibited, unenforceable or not authorized in any jurisdiction is, as to such jurisdiction, ineffective to the extent of any such prohibition, unenforceability or nonauthorization without invalidating the remaining provisions hereof, or affecting the validity, enforceability or legality of such provision in any other jurisdiction, unless the
ineffectiveness of such provision would result in such a material change as to cause completion of the transactions contemplated hereby to be unreasonable.
26. SUCCESSORS AND ASSIGNS. All provisions of this Agreement are binding upon, inure to the benefit of and are enforceable by or against the parties and their respective heirs, executors, administrators or other legal representatives and permitted successors and assigns.
27. THIRD-PARTY BENEFICIARY. This Agreement is solely for the benefit of the parties and their respective successors and permitted assigns, and no other person has any right, benefit, priority or interest under or because of the existence of this Agreement.
APEX OIL COMPANY, INC.
By: /s/ Douglas D. Hommert
-------------------------------------------
Douglas D. Hommert, Executive Vice
President
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FUTUREFUEL CHEMICAL COMPANY
By: /s/ Randall W. Powell 10/30/06
-------------------------------------------
Randall W. Powell, President
|
EXHIBIT A
DISCLOSURE STATEMENT
Although the giving of commodity trading advice is not the principal business activity of Apex Oil Company, Inc. ("APEX"), Apex is giving to FutureFuel Chemical Company ("FUTUREFUEL", "YOU" or "YOUR") this Disclosure Statement.
THE COMMODITY FUTURES TRADING COMMISSION ("COMMISSION") HAS NOT PASSED UPON THE MERITS OF PARTICIPATING IN THIS TRADING PROGRAM NOR HAS THE COMMISSION PASSED ON THE ADEQUACY OR ACCURACY OF THIS DISCLOSURE STATEMENT.
THE RISK OF LOSS IN TRADING COMMODITIES CAN BE SUBSTANTIAL. YOU SHOULD THEREFORE CAREFULLY CONSIDER WHETHER SUCH TRADING IS SUITABLE FOR YOU IN LIGHT OF YOUR FINANCIAL CONDITION. IN CONSIDERING WHETHER TO TRADE OR TO AUTHORIZE SOMEONE ELSE TO TRADE FOR YOU, YOU SHOULD BE AWARE OF THE FOLLOWING.
(1) IF YOU PURCHASE A COMMODITY OPTION YOU MAY SUSTAIN A TOTAL LOSS OF THE PREMIUM AND OF ALL TRANSACTION COSTS.
(2) IF YOU PURCHASE OR SELL A COMMODITY FUTURE OR SELL A COMMODITY OPTION, YOU MAY SUSTAIN A TOTAL LOSS OF THE INITIAL MARGIN FUNDS AND ANY ADDITIONAL FUNDS THAT YOU DEPOSIT WITH YOUR BROKER TO ESTABLISH OR MAINTAIN YOUR POSITION. IF THE MARKET MOVES AGAINST YOUR POSITION, YOU MAY BE CALLED UPON BY YOUR BROKER TO DEPOSIT A SUBSTANTIAL AMOUNT OF ADDITIONAL MARGIN FUNDS, ON SHORT NOTICE, IN ORDER TO MAINTAIN YOUR POSITION. IF YOU DO NOT PROVIDE THE REQUIRED FUNDS WITHIN THE PRESCRIBED TIME, YOUR POSITION MAY BE LIQUIDATED AT A LOSS, AND YOU WILL BE LIABLE FOR ANY RESULTING DEFICIT IN YOUR ACCOUNT.
(3) UNDER CERTAIN MARKET CONDITIONS, YOU MAY FIND IT DIFFICULT OR IMPOSSIBLE TO LIQUIDATE A POSITION. THIS CAN OCCUR, FOR EXAMPLE, WHEN THE MARKET MAKES A "LIMIT MOVE."
(4) THE PLACEMENT OF CONTINGENT ORDERS BY YOU OR YOUR TRADING ADVISOR, SUCH AS A "STOP-LOSS" OR "STOP-LIMIT" ORDER, WILL NOT NECESSARILY LIMIT YOUR LOSSES TO THE INTENDED AMOUNTS, SINCE MARKET CONDITIONS MAY MAKE IT IMPOSSIBLE TO EXECUTE SUCH ORDERS.
(5) A "SPREAD" POSITION MAY NOT BE LESS RISKY THAN A SIMPLE "LONG" OR "SHORT" POSITION.
(6) THE HIGH DEGREE OF LEVERAGE THAT IS OFTEN OBTAINABLE IN COMMODITY TRADING CAN WORK AGAINST YOU AS WELL AS FOR YOU. THE USE OF LEVERAGE CAN LEAD TO LARGE LOSSES AS WELL AS GAINS.
IN SOME CASES, MANAGED COMMODITY ACCOUNTS ARE SUBJECT TO SUBSTANTIAL CHARGES FOR MANAGEMENT AND ADVISORY FEES. IT MAY BE NECESSARY FOR THOSE ACCOUNTS THAT ARE SUBJECT TO THESE CHARGES TO MAKE SUBSTANTIAL TRADING
PROFITS TO AVOID DEPLETION OR EXHAUSTION OF THEIR ASSETS. THE COMMODITY TRADING ADVISER AGREEMENT TO WHICH THIS DISCLOSURE DOCUMENT IS ATTACHED CONTAINS A COMPLETE DESCRIPTION OF EACH FEE TO BE CHARGED TO YOU BY APEX.
THIS BRIEF STATEMENT CANNOT DISCLOSE ALL THE RISKS AND OTHER SIGNIFICANT ASPECTS OF THE COMMODITY MARKETS. YOU SHOULD THEREFORE CAREFULLY STUDY THIS DISCLOSURE DOCUMENT AND COMMODITY TRADING BEFORE YOU TRADE.
THE RISK OF LOSS IN TRADING FOREIGN FUTURES AND FOREIGN OPTIONS CAN BE SUBSTANTIAL. THEREFORE, YOU SHOULD CAREFULLY CONSIDER WHETHER SUCH TRADING IS SUITABLE FOR YOU IN LIGHT OF YOUR FINANCIAL CONDITION. IN CONSIDERING WHETHER TO TRADE FOREIGN FUTURES OR FOREIGN OPTIONS, YOU SHOULD BE AWARE OF THE FOLLOWING.
(1) PARTICIPATION IN FOREIGN FUTURES AND FOREIGN OPTIONS TRANSACTIONS INVOLVES THE EXECUTION AND CLEARING OF TRADES ON OR SUBJECT TO THE RULES OF A FOREIGN BOARD OF TRADE.
(2) NEITHER THE COMMISSION, THE NATIONAL FUTURES ASSOCIATION NOR ANY DOMESTIC EXCHANGE REGULATES ACTIVITIES OF ANY FOREIGN BOARDS OF TRADE, INCLUDING THE EXECUTION, DELIVERY AND CLEARING OF TRANSACTIONS, OR HAS THE POWER TO COMPEL ENFORCEMENT OF THE RULES OF A FOREIGN BOARD OF TRADE OR ANY APPLICABLE FOREIGN LAWS. GENERALLY, THE FOREIGN TRANSACTION WILL BE GOVERNED BY APPLICABLE FOREIGN LAW. THIS IS TRUE EVEN IF THE EXCHANGE IS FORMALLY LINKED TO A DOMESTIC MARKET SO THAT A POSITION TAKEN ON THE MARKET MAY BE LIQUIDATED BY A TRANSACTION ON ANOTHER MARKET. MOREOVER, SUCH LAWS OR REGULATIONS WILL VARY DEPENDING ON THE FOREIGN COUNTRY IN WHICH THE FOREIGN FUTURES OR FOREIGN OPTIONS TRANSACTION OCCURS.
(3) FOR THESE REASONS, YOU MAY NOT BE AFFORDED CERTAIN OF THE PROTECTIVE MEASURES PROVIDED BY THE COMMODITY EXCHANGE ACT, THE COMMISSION'S REGULATIONS OR THE RULES OF THE NATIONAL FUTURES ASSOCIATION AND ANY DOMESTIC EXCHANGE, INCLUDING THE RIGHT TO USE REPARATIONS PROCEEDINGS BEFORE THE COMMISSION AND ARBITRATION PROCEEDINGS PROVIDED BY THE NATIONAL FUTURES ASSOCIATION OR ANY DOMESTIC FUTURES EXCHANGE. IN PARTICULAR, FUNDS RECEIVED FROM CUSTOMERS FOR FOREIGN FUTURES OR FOREIGN OPTIONS TRANSACTIONS MAY NOT BE PROVIDED THE SAME PROTECTIONS AS FUNDS RECEIVED IN RESPECT OF TRANSACTIONS ON UNITED STATES FUTURES EXCHANGES. THEREFORE, YOU SHOULD OBTAIN AS MUCH INFORMATION AS POSSIBLE FROM APEX CONCERNING THE FOREIGN RULES WHICH WILL APPLY TO YOUR PARTICULAR TRANSACTION.
(4) YOU SHOULD ALSO BE AWARE THAT THE PRICE OF ANY FOREIGN FUTURES OR FOREIGN OPTIONS CONTRACT AND, THEREFORE, THE POTENTIAL PROFIT AND LOSS THEREON, MAY BE AFFECTED BY ANY VARIANCE IN THE FOREIGN EXCHANGE RATE BETWEEN THE TIME YOUR ORDER IS PLACED AND THE TIME IT IS LIQUIDATED, OFFSET OR EXERCISED.
You should be aware of the following disclosures and considerations, which relate specifically to Apex.
(1) Apex is a Missouri corporation that is not registered with the Commission as a commodity trading advisor. The address and telephone number of Apex's business office are:
Apex Oil Company, Inc. 8235 Forsyth Blvd., 4th Floor Clayton, Missouri 63105 (314) 889-9600
Jeff Call and Tim Duehren are the primary employees of Apex who will be performing the services for you under the Agreement.
Jeff Call has spent the last 28 years with Apex and/or its affiliates buying, selling and scheduling petroleum products via truck, pipeline, rail, barge and tankers, and has engaged in risk management with respect to petroleum products via swaps, futures and options.
Tim Duehren has spent the last 26 years with Apex and/or its affiliates buying, selling and scheduling petroleum products via truck, pipeline, rail, barge and tankers, and has engaged in risk management with respect to petroleum products via swaps, futures and options.
(2) The Commission requires a commodity trading advisor to disclose to prospective clients the actual performance record of all accounts for which the trading advisor and its principals have had the authority to cause transactions to be effected without clients' specific authorization. You should note that this trading advisor and its principals previously have not had such authority.
(3) You should be aware of the following actual or potential conflicts of interest.
Apex will devote so much of its time to your activities as Apex deems necessary. Apex is not restricted from entering into additional advisory relationships or from engaging in other business activities, even though such activities may be in competition with your affairs or may involve substantial time and resources of Apex. Apex is currently engaged buying, selling, trading, storage and distribution of petroleum and petroleum products, among other things.
Apex may purchase commodities or options from or sell commodities or options to you or your affiliates. Such commodities and options are intended to be priced at published or listed rates plus applicable location differentials.
Apex will trade in commodity interests for its own account.
(4) There have been no material administrative, civil or criminal actions against Apex or any of the principals of Apex within the five-year period preceding the date of the Agreement.
(5) Additional Risk Factors.
prices beyond the "daily limit." Once the price of a future contract for a particular commodity has increased or decreased by an amount equal to the daily limit, positions in the commodity can neither be taken nor liquidated unless traders are willing to effect trades at or within the limit. Futures prices have occasionally moved the daily limit for several consecutive days with little or no trading. Similar occurrences could prevent clients from promptly liquidating unfavorable positions and subject clients to substantial losses.
THE FOREGOING LIST OF RISK FACTORS DOES NOT PURPORT TO BE A COMPLETE EXPLANATION OF THE RISKS INVOLVED IN COMMODITY TRADING.
EXHIBIT B
CONFIRMATION OF DELEGATION OF AUTHORITY
THIS CONFIRMATION OF DELEGATION OF AUTHORITY is made the 1st day of November, 2006, between APEX OIL COMPANY, INC., a Missouri corporation ("Advisor") and FUTUREFUEL CHEMICAL COMPANY, a Delaware corporation ("FFCC"). Advisor and FFCC are referred to herein individually, as a "Party" and collectively, as the "Parties".
RECITALS
A. Pursuant to a Commodity Trading Advisor Agreement between Advisor and FFCC entered as of the date hereof ("Advisor Agreement"), Advisor has agreed to advise FFCC in connection with commodity trading transactions and railcar leasing and FFCC has granted Advisor a power of attorney to enter into commodity contracts and railcar leases on behalf of FFCC.
B. The Parties desire to memorialize in writing the delegation of authority and power of attorney granted by FFCC under the Advisor Agreement.
AGREEMENT
In consideration of the foregoing, the mutual covenants herein contained and other good and valuable consideration (the receipt, adequacy and sufficiency of which are hereby acknowledged by the parties by their execution hereof), the Parties agree as follows.
1. APPOINTMENT. FFCC confirms its appointment of Advisor via power of attorney, as FFCC's agent and advisor with respect to contracts for the purchase or sale of commodities and options on commodities and the leasing of rail cars; provided, however, that FFCC shall at all times and in all events retain the right to act on its own behalf on any matter.
2. EXTENT OF AUTHORITY. Advisor's authority includes authority to (i) give instructions for commodity transactions and the leasing of rail cars, including the buying and selling of commodities and options with respect to commodities, and (ii) to make, execute, and deliver any and all contracts of sale, leases and written instruments of assignment and transfer and to take any and all actions necessary or proper to effectuate such transactions.
3. AUTHORITY TO CONTRACT. Advisor shall have and is authorized to represent itself as having, full authority and power to make contracts and legal commitments in the name of and binding on FFCC which are for the purchase or sale of commodities, options on commodities or the leasing of rail cars.
4. TERM. This delegation of authority shall be effective as of the date hereof, and continue in effect until terminated by FFCC or Advisor in accordance with the terms of the Advisor Agreement.
5. COMPLIANCE WITH LAWS. Advisor shall conduct all of its activities on behalf of FFCC in accordance with all applicable laws and all terms of the Advisor Agreement.
APEX OIL COMPANY, INC. FUTUREFUEL CHEMICAL COMPANY
By: /s/ Douglas D. Hommert By: /s/ Randall W. Powell 10/30/06
----------------------------- -------------------------------------
Douglas D. Hommert, Randall W. Powell,
Executive V. P. President
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Exhibit 10.6
SERVICE AGREEMENT
This Service Agreement is made as of the 1st day of November, 2006 between Pinnacle Consulting, Inc., a Missouri corporation ("PROVIDER"), and FutureFuel Corp., a Delaware corporation ("RECIPIENT").
RECITALS
A. Recipient is in need of certain financial, accounting and other services.
B. Provider is willing to provide such services to Recipient on the terms set forth herein.
AGREEMENT
In consideration of the foregoing, the mutual covenants herein contained and other good and valuable consideration (the receipt, adequacy and sufficiency of which are hereby acknowledged by the parties by their execution hereof), the parties agree as follows.
1. DEFINITIONS. For purposes of this Agreement, the following capitalized terms have the following meanings.
"ACCOUNTING SERVICES" means any tax, accounting, financial or payroll reporting services requested by Recipient, including: (i) the preparation of general ledgers and monthly or other periodic accounting statements, reports and Financial Statements; (ii) the obtaining of necessary licenses and permits; and (iii) the filing of tax returns and other reports or records with appropriate Governmental Authorities.
"AFFILIATE" means: (i) any person which, directly or indirectly, is in control of, is controlled by or is under common control with the party for whom an affiliate is being determined; or (ii) any person who is a director or officer (or comparable position) of any person described in clause (i) above or of the party for whom an affiliate is being determined. For purposes hereof, control of a person means the power, direct or indirect, to: (a) vote 10% or more of the securities having ordinary voting power for the election of directors (or comparable positions) of such person; or (b) direct or cause the direction of the management and policies of such person, whether by contract or otherwise and either alone or in conjunction with others.
"AGREEMENT" means this Service Agreement, including all Exhibits hereto.
"CONFIDENTIAL INFORMATION" means: (i) information not available to the public concerning Provider's business and financial affairs delivered by or on behalf of Provider to Recipient; (ii) information not available to the public concerning Recipient's business and financial affairs delivered by or on behalf of Recipient to Provider; and (iii) analyses, compilations, forecasts, studies and other documents prepared on the basis of such information by the parties or their agents, representatives, Affiliates, employees or consultants.
"DATA PROCESSING SERVICE" means that computer and data processing personnel time required to develop, maintain and run the necessary programs to prepare and store Recipient's operating, financial and tax reports, Financial Statements, billing statements and payroll and other records, all as requested by Recipient.
"DISCLOSING PARTY" has the meaning set forth in Section 11.4.
"FINANCIAL SERVICES" means: (i) processing the payment of expenditures; (ii) negotiating with lenders and servicing all loans; (iii) opening bank accounts; (iv) managing investments; (v) performing bookkeeping and record keeping associated with the foregoing; and (vi) performing any other financial services; all as requested by Recipient.
"FINANCIAL STATEMENTS" means the consolidated and consolidating financial statements of Recipient and Recipient's Subsidiaries for the applicable period, containing balance sheets, statements of income, changes in stockholders' equity and cash flow, prepared in accordance with GAAP on a consistent basis, and includes all notes thereto.
"GAAP" means generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as may be approved by a significant segment of the accounting profession.
"GENERAL ADMINISTRATIVE SERVICES" means those general office services requested by Recipient, including secretarial and clerical work.
"PROVIDER" has the meaning set forth in the opening paragraph of this Agreement.
"RECIPIENT" has the meaning set forth in the opening paragraph of this Agreement.
"SERVICES" means, collectively, the Accounting Services, the Data Processing Services, the Financial Services and the General Administrative Services.
"SUBSIDIARY" with respect to any person means: (i) any corporation of which such person and its other Subsidiaries own not less than 50% of the outstanding stock of such corporation having ordinary voting power for the election of directors of such corporation; (ii) any limited liability company in which such person is a manager thereof (if management of the limited liability company is vested in one or managers) or in which such person and its other Subsidiaries own not less than 50% of the outstanding member interests of such limited liability company (if management of the limited liability company is vested in members); or (iii) any partnership, limited or general, in which such person is a general partner.
2. SERVICES PROVIDED. Subject to the terms and conditions hereof, during the term of this Agreement, Provider agrees to provide Recipient and its Affiliates with all requested Services.
3. COMPENSATION FOR SERVICES. In consideration of Provider providing the Services hereunder, Recipient agrees to pay to or for the account of Provider, within ten days of invoice, for employees or independent consultants of Provider in performing the Services the amounts set forth on Exhibit A. In addition, Recipient agrees to reimburse Provider, within ten days of invoice, for the reasonable, out-of-pocket ordinary and necessary business expenses incurred by Provider in performing the Services for Recipient hereunder.
4. INVOICING. Provider agrees to invoice Recipient not more regularly than monthly for the Services provided by Provider to Recipient hereunder.
5. EMPLOYEES. Provider agrees that all personnel providing the Services to Recipient required hereunder are the employees or independent consultants of Provider and in no event are any such personnel employees (nor are they to be deemed to be employees) of Recipient.
6. COMPLIANCE WITH LAWS. Provider agrees that all Services provided to Recipient hereunder will comply with all applicable laws in all material respects.
7. WARRANTIES AND DAMAGES. Provider makes no warranty regarding any
Service provided by Provider to Recipient hereunder except as set forth in
Section 6. Provider will not be liable to Recipient for any damages
resulting from the delay or failure in providing a Service hereunder if the
delay or failure was caused by events beyond Provider's control.
8. TERM. This Agreement remains effective until terminated by either party upon 30 days prior written notice to the other party. Notwithstanding any such termination, Recipient is obligated to pay any amounts owed to Provider hereunder through the date of such termination.
9. RECORDS. Any and all financial records, computer records or other data or documentation that Provider prepares on behalf of Recipient in providing the Services as set forth in this Agreement are the property of Recipient. Provider agrees to deliver reasonably promptly such records, data and documentation to Recipient upon Recipient's request therefor and upon the termination of this Agreement. The obligation of Provider to release any such records, data and documentation related to or stored on behalf of Recipient, including that which is in Provider's computer or computer programs or software, survives the termination of this Agreement.
10. RIGHT TO AUDIT. Recipient has the right, upon reasonable notice and during reasonable times, to review Provider's books and records with respect to the Services provided by Provider to Recipient in accordance with this Agreement.
11. MISCELLANEOUS.
11.1. AMENDMENT AND MODIFICATION. No amendment, modification, supplement, termination, consent or waiver of any provision of this Agreement, nor consent to any departure herefrom, will in any event be effective unless the same is in writing and is signed by the party against whom enforcement of the same is sought. Any waiver of any provision of this Agreement and any consent to any departure from the terms of any provision of this Agreement is to be effective only in the specific instance and for the specific purpose for which given.
11.2. ASSIGNMENTS. No party may assign or transfer, voluntarily or involuntarily, by operation of law (including a merger or consolidation), judicial decree or otherwise, any of its rights or obligations under this Agreement to any other person without the prior written consent of the other party, which consent may not be unreasonably withheld.
11.3. CAPTIONS. Captions contained in this Agreement have been inserted herein only as a matter of convenience and in no way define, limit, extend or describe the scope of this Agreement or the intent of any provision hereof.
11.4. CONFIDENTIALITY. Each party agrees to maintain any
Confidential Information that it may receive from the
other party confidential and may not disclose such
information to any person without the prior written
consent of the party originally furnishing such
Confidential Information. However, a party (the
"DISCLOSING PARTY") may disclose such Confidential
Information: (i) to legal counsel of the Disclosing Party;
(ii) to other professional advisors of the Disclosing
Party (but only if they have been informed of the
confidential nature of such Confidential Information and
agree in writing to be bound by the terms of this
Section); (iii) to regulatory officials having
jurisdiction over the Disclosing Party; and (iv) as
required by law or legal process or in connection with any
legal proceeding to which the Disclosing Party is a party
or is otherwise subject. In each such event (other than
pursuant to clause (i)), the Disclosing Party, prior to
such disclosure, is to inform the party originally
furnishing such
Confidential Information. The obligations of the parties under this Section survive the termination of this Agreement.
11.5. CONSTRUCTION. Unless the context of this Agreement clearly
requires otherwise: (i) references to the plural include
the singular and vice versa; (ii) references to any person
include such person's successors and assigns but, if
applicable, only if such successors and assigns are
permitted by this Agreement; (iii) references to one
gender include all genders; (iv) "including" is not
limiting; (v) "or" has the inclusive meaning represented
by the phrase "and/or"; (vi) the words "hereof", "herein",
"hereby", "hereunder" and similar terms in this Agreement
refer to this Agreement as a whole and not to any
particular provision of this Agreement; (vii) section and
Exhibit references are to this Agreement unless otherwise
specified; (viii) reference to any agreement (including
this 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 and, if applicable, the terms hereof; and
(ix) general or specific references to any law mean such
law as amended, modified, codified or reenacted, in whole
or in part, and in effect from time to time.
11.6. COUNTERPART FACSIMILE EXECUTION. For purposes of this Agreement, a document (or signature page thereto) signed and transmitted by facsimile machine or telecopier is to be treated as an original document. The signature of any party thereon, for purposes hereof, is to be considered as an original signature, and the document transmitted is to be considered to have the same binding effect as an original signature on an original document. At the request of any party, any facsimile or telecopy document is to be re-executed in original form by the parties who executed the facsimile or telecopy document. No party may raise the use of a facsimile machine or telecopier or the fact that any signature was transmitted through the use of a facsimile or telecopier machine as a defense to the enforcement of this Agreement or any amendment or other document executed in compliance with this Section.
11.7. COUNTERPARTS. This Agreement may be executed by the parties on any number of separate counterparts, and all such counterparts so executed constitute one agreement binding on all the parties notwithstanding that all the parties are not signatories to the same counterpart.
11.8. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement among the parties pertaining to the subject matter hereof and supersedes all prior agreements, letters of intent, understandings, negotiations and discussions of the parties, whether oral or written.
11.9. EXHIBITS. All of the Exhibits attached to this Agreement are deemed incorporated herein by reference.
11.10. FAILURE OR DELAY. No failure on the part of any party to exercise, and no delay in exercising, any right, power or privilege hereunder operates as a waiver thereof; nor does any single or partial exercise of any right, power or privilege hereunder preclude any other or further exercise thereof, or the exercise of any other right, power or privilege. No notice to or demand on any party in any case entitles such party to any other or further notice or demand in similar or other circumstances.
11.11. FURTHER ASSURANCES. The parties will execute and deliver such further instruments and do such further acts and things as may be required to carry out the intent and purpose of this Agreement.
11.12. GOVERNING LAW. This Agreement and the rights and obligations of the parties hereunder are to be governed by and construed and interpreted in accordance with the laws of the State of Missouri applicable to contracts made and to be performed wholly within Missouri, without regard to choice or conflict of laws rules.
11.13. NO JOINT VENTURE OR PARTNERSHIP. The parties agree that nothing contained herein is to be construed as making the parties joint venturers or partners.
11.14. REMEDIES CUMULATIVE. Each and every right granted hereunder and the remedies provided for under this Agreement are cumulative and are not exclusive of any remedies or rights that may be available to any party at law, in equity or otherwise.
11.15. SEVERABILITY. Any provision of this Agreement which is prohibited, unenforceable or not authorized in any jurisdiction is, as to such jurisdiction, ineffective to the extent of any such prohibition, unenforceability or nonauthorization without invalidating the remaining provisions hereof, or affecting the validity, enforceability or legality of such provision in any other jurisdiction, unless the ineffectiveness of such provision would result in such a material change as to cause completion of the transactions contemplated hereby to be unreasonable.
11.16. SPECIFIC PERFORMANCE AND INJUNCTIVE RELIEF. Each party recognizes that, if it fails to perform, observe or discharge any of its obligations under this Agreement, no remedy at law will provide adequate relief to the other party. Therefore, each party is hereby authorized to demand specific performance of this Agreement, and is entitled to temporary and permanent injunctive relief, in a court of competent jurisdiction at any time when any other party fails to comply with any of the provisions of this Agreement applicable to it. To the extent permitted by applicable law, each party hereby irrevocably waives any defense that it might have based on the adequacy of a remedy at law which might be asserted as a bar to such remedy of specific performance or injunctive relief.
11.17. SUCCESSORS AND ASSIGNS. All provisions of this Agreement are binding upon, inure to the benefit of and are enforceable by or against the parties and their respective heirs, executors, administrators or other legal representatives and permitted successors and assigns.
11.18. THIRD-PARTY BENEFICIARY. This Agreement is solely for the benefit of the parties hereto and their respective successors and permitted assigns, and no other person has any right, benefit, priority or interest under or because of the existence of this Agreement.
PINNACLE CONSULTING, INC.
By: /s/ Steven G. Twele
---------------------------------------------
Steven G. Twele, President
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FUTUREFUEL CORP.
By: /s/ Douglas D. Hommert
---------------------------------------------
Douglas D. Hommert, Executive Vice President
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EXHIBIT A
TO
SERVICE AGREEMENT
CHARGES FOR EMPLOYEES AND CONSULTANTS
Recipient agrees to pay for below employees or independent consultants of Provider in performing the Services for Recipient in the amounts set forth below.
Steve Twele $400 Christopher Schmitt $250 Jessie Yehling $150 Joe Ingram $250 |
Exhibit 10.7
NOBS Supply Agreement
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Such information is noted by three asterisks, as follows "***."
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2/15/00
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This Agreement (hereinafter "Agreement") is effective as of January 1, 1999, between Eastman Chemical Company, a Delaware corporation, with its principal office in Kingsport, Tennessee (hereinafter "Eastman") and The Procter & Gamble Manufacturing Company, an Ohio corporation, with offices in Cincinnati, Ohio (hereinafter "P&G"). This Agreement supersedes, effective as of the date hereof, the January 1, 1996, NOBS Supply Agreement and any modifications thereto, the term of which started January 1, 1996 between Eastman Chemical Company and The Procter & Gamble Manufacturing Company (the "Prior Agreement") and supercedes the NOBS Letter Agreement between the parties dated April 7, 1998.
NOTE: For simplicity of terminology, the facility currently being utilized for the production of NOBS is hereafter referred to as "NOBS 1B", with the construction to debottleneck it from its previous status (hereinafter referred to as "NOBS 1A") having been previously completed. In addition, a separate plant (hereinafter referred to as "NOBS 2") has been restarted from Mothball Mode. All quantities of NOBS referenced in this Agreement are on a 100% active basis.
1. Sale of NOBS Eastman agrees to sell, and P&G agrees to buy, a minimum of *** million pounds, and a maximum of *** million pounds, of 100% active stabilized sodium salt of nonanoyloxybenzenesulfonate(hereinafter "NOBS") derived from *** (hereinafter "Acid") produced from NOBS 1B during each period of 3 consecutive calendar months commencing each January 1, April 1, July 1 and October 1 (each such three-month period being hereinafter referred to as a "Contract Quarter") from the date hereof through the term of this Agreement.
In addition, Eastman agrees to sell, and P&G agrees to buy, a minimum of *** pounds and a maximum of *** million pounds of NOBS produced from NOBS 2 during each Contract Quarter.
Eastman hereby agrees to sell to P&G, and P&G hereby agrees to buy from Eastman, NOBS, in the quantities described above and in Article 4 below, that meets the specifications set forth in Attachment A or any modifications thereof mutually agreed upon in writing (the "Specifications").
If Eastman produces material which does not meet the Specifications, P&G may purchase the material but is under no obligation to do so. The terms and conditions of such a sale shall be negotiated.
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through the term of this Agreement. Eastman shall not use NOBS 1B or NOBS 2 for production of a bleach activator for five (5) years from the termination or cancellation date hereof unless otherwise agreed to by P&G.
The Agreement shall commence on January 1, 1999 and shall be in effect until December 31, 2002 (the "Agreement Term").
If Eastman receives orders for NOBS from NOBS 1B or NOBS 2 in excess of its contractual obligations during any Contract Quarter or month, Eastman will attempt to supply the excess to P&G but is not obligated to supply. During each Calendar Year during the Agreement Term, P&G and Eastman agree to adjust orders and shipping schedules to allow Eastman twenty-one (21) days of maintenance for NOBS 1B and NOBS 2 during which the production of NOBS will be limited. Eastman will plan appropriately to minimize the duration of these maintenance periods. These maintenance periods do not relieve Eastman of its obligation to supply NOBS as herein required.
P&G affiliates will release against this contract quantity by issuing purchase orders which reference and incorporate the terms of this Agreement, and Eastman will invoice each affiliate directly in accordance with this Agreement.
Eastman will endeavor to have sales hereunder made by the various marketing affiliates of Eastman for sales in their respective geographies of operation and references herein to sales by Eastman shall be deemed to be references to sales by such affiliates as appropriate.
Payment terms are net 30 days from date of invoice unless otherwise specifically agreed in writing for any particular order.
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To ensure the accuracy of the base price adjustments that result from variations in the quarterly forecast versus actual shipments, adjustments to the base prices for each upcoming Contract Quarter shall be calculated within three working days of the end of the current Contract Quarter.
Eastman will provide an incentive to P&G for purchases of NOBS using the following table. Eastman will reimburse P&G under the incentive by adjusting the NOBS selling price at the end of each calendar quarter using the miscellaneous cost factor - "M" as described Attachment C, Schedules III and IV.
QUANTITIES PURCHASED ANNUALIZED INCENTIVE ANNUALIZED
100% ACTIVE BASIS MILLIONS $ U.S.
*** ***
*** ***
*** ***
*** ***
*** ***
*** ***
*** ***
5. Supply of Nonanoic Acid
-----------------------
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Inability to fill P&G orders because of an insufficient supply of Acid from P&G's specified source(s) shall not constitute a default hereunder or a Force Majeure Event (as defined in Article 15) on the part of Eastman, but will constitute a Force Majeure Event on the part of P&G if the circumstances fit within the definition of Force Majeure in Article 15.
P&G agrees to provide to Eastman all necessary information and to assist Eastman's purchase of Acid from P&G's specified source(s) throughout the term of the Agreement.
Notwithstanding any provision herein to the contrary, Eastman shall have no liability for any defect in NOBS which is directly caused by or directly results from a latent defect in the Acid which was unknown to Eastman at time of use of such Acid, provided such Acid
NOBS Supply Agreement
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was analyzed in accordance with Eastman's standard procedures upon receipt from P&G's specified source(s).
7. NOBS Conversion Ratio
---------------------
The conversion ratio is the number of pounds of *** required to
produce one pound of NOBS, and shall not exceed ***.
8. Process Improvements
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Eastman shall pursue improving Eastman's manufacturing process for NOBS. Eastman will implement various equipment and operational changes to NOBS 1B and NOBS 2 by June, 1999, at Eastman's expense, anticipated to improve process reliability and lower the NOBS manufacturing costs. Upon the completion of twelve months operation after these changes have been implemented, Eastman will share any material cost savings with P&G which result in a NOBS costs: (a) for NOBS 1B, below the planned costs for NOBS 1B which were used in the Prior Agreement (adjusted for changes in the Producer Price Index); and (b) for NOBS 2, below the cost structure used in the price curves for the April 7, 1998 Letter Agreement between the parties. Future material cost improvements will be shared with P&G after Eastman has recovered its costs associated in achieving said improvements. All sharing of cost savings will be by an appropriate adjustment in the Base Sales Price of NOBS and/or the applicable adjustment formula(s).
NOBS Supply Agreement
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NOBS Supply Agreement
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rail or truck loading of NOBS to meet the order schedule consistent with Article 11. Eastman is obligated to help coordinate transportation. Not later than thirty (30) days after the end of each Contract Quarter, Eastman will furnish P&G a statement of inventories of NOBS as of the last day of that Contract Quarter, including a list of receipts of Acid and other materials furnished in accordance with Articles 5 and 6 and NOBS shipments during that quarter.
(b) Eastman shall deliver to P&G with each shipment of NOBS a certificate of analysis substantially in the form currently in use or as otherwise mutually agreed by the parties. P&G shall examine the certificate of analysis prior to accepting or using the shipment, but has no obligation to Eastman to analyze a shipment. If when loaded for shipment at Eastman's Magness, Arkansas plant, NOBS does not meet the Specifications, or otherwise contains objectionable levels of foreign substance or latent defects which makes the NOBS unsafe or unusable by P&G, or is unsafe or unusable due to changes in raw material or process by Eastman contemplated in Article 8 but which were not approved by P&G in accordance with Article 8 ("Nonconforming NOBS"), then Eastman agrees to accept return of such NOBS and, at P&Gs option, shall either replace NOBS returned at no cost to P&G or credit P&G's account for the price of pounds returned.
(c) Subject to the limitations of Section 14(g), and provided P&G uses reasonable efforts to mitigate its damages proximately caused by Nonconforming NOBS and P&G provides reasonable evidence to Eastman supporting the causal connection between the defect and P&G damages:
(i) Eastman shall pay 100% of the out-of-pocket cost P&G incurs for added analytical services, cleaning and repair of transportation equipment, production costs, and product transportation, if the NOBS which is the subject of the claim has not been used by P&G; or
(ii) Eastman shall pay 70% of the out-of-pocket cost P&G incurs for used NOBS, other materials combined with NOBS, lost packaging materials, added analytical services, cleaning and repair of production and transportation equipment, production costs, loss of finished product, recalled product, and product transportation, if the NOBS which is the subject of the claim has been used in other product by P&G.
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(d) Subject to the limitations of Section 14(g), Eastman agrees to indemnify and hold harmless P&G for all claims, damages and losses from any person or entity not a party to this Agreement that are directly attributable to NOBS after it has been loaded for shipment at Eastman's Magness, Arkansas plant to the extent such claims, damages and losses are proximately caused by Nonconforming NOBS.
(e) P&G agrees to indemnify and hold harmless Eastman for all claims, damages and losses from any person or entity not a party to this Agreement that are directly attributable to NOBS after it has been loaded for shipment at Eastman's Magness, Arkansas plant, except such claims, damages and losses to the extent they are proximately caused by Nonconforming NOBS and do not exceed the limitation set forth in Paragraph 14(g). P&G further agrees to indemnify and hold harmless Eastman for all claims, damages and losses from any person or entity not a party to this Agreement to the extent such claims, damages and losses exceed the limitation set forth in Paragraph 14(g) even though they were proximately caused by Nonconforming NOBS.
(f) EASTMAN'S TOTAL MAXIMUM AGGREGATE LIABILITY TO P&G UNDER THIS ARTICLE 14 SHALL NOT BE GREATER THAN *** MILLION, LESS ANY AMOUNTS PREVIOUSLY PAID UNDER THIS AGREEMENT.
(g) Except as expressly specified in Articles 14, 16, 17, 21 and 22, IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER FOR ANY INCIDENTAL, INDIRECT, SPECIAL OR CONSEQUENTIAL DAMAGES, OR ANY COSTS OF COVER.
(a) The performance or observance by either party of any obligations of such party under this Agreement may be suspended by it, in whole or in part, in the event of any of the following which prevents such performance or observance: Act of God, war, riot, fire, explosion, accident, flood, sabotage, strike, lockout, injunction, inability to obtain fuel, power, raw materials, labor, containers or transportation facilities, national defense requirements, compliance with governmental law, regulations, orders or action, breakage or failure of machinery or equipment which could not have been prevented through the exercise of standard industrial maintenance procedures, or any other cause (whether similar or dissimilar) beyond the reasonable control of such party (a "Force Majeure Event"); provided, however, that the party so prevented from complying with its obligation hereunder shall immediately notify in writing the other party thereof and such party so prevented shall exercise diligence in an endeavor to remove or overcome the cause of such inability to comply, and provided further that neither party shall be required to settle a labor dispute against its own judgment.
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Except as described in Article 5, deliveries suspended or not made by reason of this Paragraph 15 shall be canceled without liability to either party and this Agreement shall otherwise remain unaffected. If performance by either party is suspended for any period of one-hundred and twenty (120) consecutive days because of a Force Majeure Event either party may terminate the Agreement, and the Cancellation Fee described in Article 17 shall only be paid if the termination is due to a Force Majeure Event asserted by P&G.
(b) In the event the Agreement is suspended for reasons of a Force Majeure Event asserted by Eastman, and is thereafter terminated by P&G as provided in Article 15(a), P&G shall have the right to arrange for alternate supplier(s) to provide NOBS in full or part, and Eastman shall provide a non-exclusive license to such alternate suppliers procured by P&G covering all the technology and know-how required to produce NOBS from *** and *** that Eastman then owns. Such license shall be provided royalty free for five (5) years after termination. Thereafter, for successive periods up to a total of ten (10) years or until any patented portion of technology expires, Eastman shall provide a non-exclusive license at a reasonable royalty not to exceed two percent (2%) of the Price then applicable. If during this ten (10) year period non-patented, proprietary and confidential technology is used, a similar reasonable royalty shall apply. However, in no case shall the combined royalties for patented and non- patented technology exceed two percent (2%) of the Price then applicable. Further, Eastman will assist such alternate supplier(s) until the supplier(s) are producing product that meets specification; however, this effort shall not exceed one (1) year or *** million in costs or expenses, whichever occurs first. P&G shall have the right, should it procure alternate suppliers, to continue to purchase all amounts of product P&G requires from alternate suppliers rather than from Eastman.
(b) Except as may be otherwise excused by Article 15, should Eastman materially default or otherwise fail to perform any material duty under the terms of this Agreement, P&G shall give written notice of such default to Eastman whereupon Eastman shall have sixty (60) days to remedy such default. If Eastman fails to remedy the material default within the sixty (60) days, P&G may terminate the Agreement and in doing so will not impair its rights under Article 17. If the Agreement is terminated because of Eastman's default, P&G shall not pay any
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Cancellation Fee (as described in Article 17), nor shall
P&G pay for any NOBS not shipped as of the termination
date. The remedies set out in this paragraph of Article 16
shall be P&G' s sole remedy for Eastman's default in the
supply of NOBS hereunder except as provided in Paragraph
(c) below.
(c) In addition, if Eastman willfully and intentionally elects not to honor material terms of this Agreement and P&G terminates the Agreement, then, in addition to P&G's rights set forth in Paragraph (b) above, P&G shall have the right to arrange for alternate suppliers to provide NOBS in full or in part, and Eastman shall:
(1) pay any and all out of pocket costs or expenses, not to exceed *** million, less any amounts previously paid under this Agreement, and provide assistance to develop alternate supplier(s) until the suppliers are producing product which meets specification in commercial quantities. This obligation shall not require Eastman to provide assistance and monies for more than three (3) years after any default under this paragraph occurs; and
(2) provide a non-exclusive royalty-free license to such alternate suppliers procured by P&G covering all the technology and know-how required to produce NOBS from *** and *** that Eastman then owns. Such license shall be provided royalty free for five (5) years after termination. Thereafter, for successive periods up to a total of ten (10) years or until any patented portion of technology expires, Eastman shall provide a non-exclusive license at a reasonable royalty not to exceed two percent (2%) of the Price then applicable. If during this ten (10) year period non-patented, proprietary and confidential technology is used, a similar reasonable royalty shall apply. However, in no case shall the combined royalties for patented and non-patented technology exceed two percent (2%) of the Price then applicable. P&G shall have the right, should it procure alternate suppliers, to continue to purchase all amounts of product P&G requires from alternate suppliers rather than from Eastman.
(d) Article 16 shall not be construed as giving either P&G or Eastman a right to terminate this Agreement where a legitimate dispute arises between the parties as to applicability and/or enforcement of any Article.
NOBS Supply Agreement
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After Eastman's capital for all NOBS projects, including without limitation, NOBS 1A, NOBS 1B and NOBS 2 (dust control) has been recovered in accordance with Eastman's capital recovery schedule, the Stand-by Fee will be *** per month for NOBS 1B and *** per month for NOBS 2.
If P&G does not submit orders for any upcoming Calendar Quarter for at least *** million pounds of NOBS from NOBS 1B, then NOBS 1B shall be put into Stand-by Mode for such Calendar Quarter and the Stand-by Fees shall apply. If P&G does not submit orders for any upcoming Calendar Quarter for at least *** pounds of NOBS from NOBS 2, then NOBS 2 shall be put into Stand-by Mode for such Calendar Quarter and the Stand-by Fees shall apply. If P&G expects orders to remain below such thresholds for subsequent quarters, then P&G may request that NOBS 1B and/or NOBS 2 be put in Mothball Mode as provided below.
After Eastman's capital for all NOBS projects, including without limitation, NOBS 1A, NOBS 1B and NOBS 2 (dust control) has been recovered in accordance with Eastman's capital recovery schedule, the Mothball Fee will be *** per month for NOBS 1B and *** per month for NOBS 2.
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At anytime after such portions of the plant have been put into the Mothball Mode, P&G may request in writing on at least 3 months' notice or such greater period of time (up to 6 months) as may be required by Eastman, that Eastman restart such portion of NOBS 1B and NOBS 2 from a Mothball Status for a one time start up fee (the "Startup Fee") of *** million for NOBS 1B and *** million for NOBS 2.
All fees described in this Article shall be adjusted for changes in the Producer Price Index as follows:
*PPI(3) is the Producer Price Index for Finished Goods as defined for Base Price adjustments in Attachments C and F.
(b) During the Agreement Term, in addition to its rights under Article 16 and paragraph (a) of this Article 17, P&G may elect one of the following termination options by giving Eastman 180 days written notification (90 days written notification while in Mothball Mode) of the termination option selected:
NOBS Supply Agreement
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production from both NOBS 1B and NOBS 2 and is obligated to minimize any and all liabilities that P&G has, and this Agreement shall thereupon be terminated except for previously accrued obligations and obligations under Articles 14, 16, 18, 19, 22, and 23.
If P&G is not satisfied with the appraised salvage value, then P&G may, at its option and expense, have an independent appraiser acceptable to Eastman review and assess such salvage value. If the appraiser's salvage value is greater than the salvage value finished by Eastman, then P&G and Eastman will negotiate in good faith, for a period not to exceed sixty (60) days from receipt of the appraiser's salvage value, a mutually agreed salvage value.
If no agreement regarding the salvage value of the machinery, equipment and support facilities is reached during that period, then within sixty (60) days thereafter, P&G may notify Eastman in writing that it chooses to take the appraised machinery, equipment and support facilities in lieu of payment of the appraised salvage value. If no notice is received by Eastman within such sixty (60) day period, Eastman shall repay or credit to P&G that portion of the Cancellation Fee equal to the average of the two appraised salvage values. If P&G elects to take the appraised machinery, equipment and support facilities within the sixty (60) day period, then P&G will select a suitable contractor, approved by Eastman, to dismantle and remove the machinery, equipment and support facilities. All costs of dismantling and removing items and restoring the site shall be paid by P&G. P&G shall also be responsible for any damage to property or personal injury caused by or resulting from efforts of P&G or its agents or contractors to dismantle and remove items and restore the site, and shall indemnify Eastman for any loss, liability or reasonable cost Eastman may incur as a result of such efforts. Title to the appraised machinery, equipment and support facilities or any part thereof removed by P&G shall pass to P&G when the property leaves Eastman's premises.
For purposes of determining the applicable Cancellation Fee(s), the NOBS 1B and/or NOBS 2 facilities shall be considered to have been in operation, and this Agreement not cancelled, for any periods during which the applicable Standby Fee or Mothball Fee was paid.
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P&G may terminate its obligations to purchase NOBS from either NOBS 1B, NOBS 2, or from both facilities upon at least 180 days' written notice while in operating or standby mode; and upon at least 90 days written notice while in Mothball Mode.
P&G may exercise the Partial or Full Termination options upon less than the required prior written notice, as follows (the "Additional Early Termination Fee"):
1) Early termination while in Operational or Stand-by Mode, with less than 180 days written notice: P&G will pay an additional early termination fee of ***/day for NOBS 1B and ***/day for NOBS 2 for the number of days by which the prior notice was less than 180 days, in additionto all other applicable fees.
2) Early termination while in Mothball Mode, with less than 90 days written notice: P&G will pay an additional early termination fee of ***/day for NOBS 1B and ***/day for NOBS 2 for the number of days by which the prior notice was less than 90 days, in addition to all other applicable fees.
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(a) Title to and risk of loss of NOBS shall be transferred from Eastman to P&G when shipped from Eastman's plant, Magness, Arkansas, except when Eastman agrees in writing that title to and risk of loss shall pass upon delivery to P&G's facilities.
(b) Eastman will follow mutually agreed loading procedures for P&G provided transportation. Eastman will not load any suspect carriers and will notify P&G promptly. Further, while carriers are on Eastman's property, Eastman will take reasonable measures to protect such carriers against tampering.
(c) Other materials, including raw materials purchased by Eastman, coproducts, wastes, and residues resulting from the production of NOBS, shall be the property of Eastman.
(a) Eastman acknowledges that P&G has provided Eastman with recommended precautions for exposure to and handling of NOBS and wastes generated therefrom. Eastman represents to P&G that Eastman understands such information. Eastman also represents to P&G that Eastman shall advise and inform its employees of the nature of such products and the potential hazards connected therewith prior to such individuals' employment in connection with NOBS production. The form and content of such advice and information will be at Eastman's discretion.
Eastman shall employ those safety and handling precautions required by law or regulation to protect the safety and well-being of persons, property and the environment in the production of NOBS. Eastman agrees to inform P&G in writing of any toxic or otherwise hazardous property relating to NOBS which becomes known to Eastman during the term of this Agreement.
(b) Eastman represents to P&G that with respect to the operations described in this Agreement, Eastman is in compliance with all present laws, rules, regulations and governmental actions applicable hereunder, including the Canadian
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Environmental Protection Act, the U.S. Toxic Substances Control Act, regulations under said Acts and all other relevant United States Federal and State legislation. Eastman will comply with all laws, rules, regulations, and governmental actions hereafter applicable and will apply for permits and licenses hereafter required; provided, however, P&G shall reimburse Eastman all costs and expenses incurred by Eastman for compliance therewith; and provided further that if in either Eastman's or P&G's judgment compliance with laws, rules, regulations, or governmental actions hereafter made applicable is unduly onerous or expensive, P&G and Eastman shall endeavor to renegotiate the Price; and if Eastman and P&G fail to reach an agreement upon a new Price within sixty (60) days after renegotiation is requested, Eastman or P&G shall thereafter have the right to terminate this Agreement by giving the other party at least sixty (60) days prior written notice. In the event Eastman elects to terminate this Agreement, pursuant to this Paragraph, P&G shall not pay the Cancellation Fee as described in Article 17 and the provisions of Article 15(b) will apply in the event P&G elects to arrange for an alternative supplier(s) using Eastman's technology.
(c) Eastman warrants compliance with applicable U.S. and Canadian Customs and related governmental laws and regulations. Eastman agrees to indemnify and save P&G harmless for any liability, cost or expense incurred as a result of Eastman's failure to comply. On shipments originating outside of Canada, Eastman shall prepare Canada Customs Invoices, otherwise conform to Canadian Customs and related governmental laws and regulations and mail promptly the required documents as instructed on P&G's purchase order. The commercial invoice will be sent to the address specified on the purchase order. In case of L. T. L. Shipments individual packages shall be numbered and these numbers shall be shown on the Canada Customs Invoice in the space provided.
(d) Some of the material or services covered by this Agreement
are used on a contract with the Federal Government to
which the provisions of Section 202 of Executive Order
11246, Section 402 of The Vietnam Era Veterans
Readjustment Assistance Act of 1974 and Section 503 of The
Rehabilitation Act of 1973 apply, and consequently the
provisions of Section 202, Section 402 and 503 will become
binding upon the Eastman upon acceptance of this
Agreement, if this Agreement exceeds $10,000 or applies
against a contract exceeding $10,000 in one year with
respect to Sections 202 and 402, and $2,500 with respect
to Section 503. Regulation under the Executive Order, The
Vietnam Era Veterans Readjustment Act and the
Rehabilitation Act may require Eastman to develop an
Affirmative Action Compliance Program, to file an Employee
Information Report EEO-1 or other reports as prescribed,
and to certify that its facilities are not segregated on
the basis of race, color, religion or national origin.
(See 41 CFR 60)
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manufacture NOBS under this Agreement. P&G agrees to indemnify Eastman against all damages, costs, and expenses which result from a claim of infringement of U.S. and non- U.S. patents on account of the manufacture and sale of NOBS or any part of the NOBS under this Agreement using technology selected by P&G.
Either party claiming indemnity shall note the other party promptly upon receipt of notice of any claim. The indemnitor shall, at its option, have the right to assume the defense of any such lawsuit, and to settle any claim. If it elects not to assume the defense, the Indemnitor shall reimburse reasonable attorney's fees incurred by the Indemnitee. The indemnitee agrees to make available any information in its possession reasonably necessary for the defense of such suit.
As long as Eastman is supplying material to P&G exclusively, P&G grants Eastman a fully-paid, non-exclusive license, without sub licensing rights, under any P&G patents protecting processes for the manufacture of NOBS and reduced to practice prior to the termination of this Agreement. As long as this Agreement is in effect, Eastman grants P&G a fully-paid, non-exclusive license, without sub licensing rights, except per Articles 15 and 16, under any Eastman patents protecting processes for the manufacture of NOBS from *** and *** and reduced to practice prior to the termination of this Agreement.
P&G and Eastman hereby agree that any disclosure by P&G to Eastman
regarding the Information shall be upon the following conditions:
(i) that the disclosure of the Information will be received and
held in confidence by Eastman as Eastman holds in confidence its
own information of a similar nature, and (ii) that Eastman will not
utilize the Information to produce NOBS for others.
The commitments set forth in (i) and (ii) above shall not extend to any portion of the Information which: (1) is known to Eastman; (2) hereafter, through no act on the part of Eastman, is or becomes information generally available to the public; (3) corresponds in substance to information furnished to Eastman by any third party having a bona fide right to do so; (4) corresponds to information furnished by P&G to any third party on a non confidential basis other than in connection with Limited consumer testing; or (5) is independently developed by Eastman, as evidenced by Eastman's written records.
Moreover, Eastman's obligations hereunder shall terminate after a period of five (5) years from the termination of this Agreement. Following termination of the commitments set forth in (i) and (ii) above with respect to the whole of the Information, or upon termination thereof in connection with specific portions of the Information by operation
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of any of Items (1) through (5) in the preceding paragraph, Eastman shall be completely free of any expressed or implied obligations hereunder restricting disclosure and use of the Information and subject to P&G's patent rights.
Eastman may provide the chemical name of the product and shipping destination (company and location) and any other information required by law to carriers required to ship NOBS to P&G.
Eastman Chemical Company
Box 431
Kingsport, Tennessee 37662
Attention: Business Manager, Fine Chemicals
The Procter & Gamble Manufacturing Company 5299 Spring Grove Avenue Cincinnati, Ohio 45217 Attention: Associate Director, F&HC Chemical Purchases
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(a) Article headings, as to the contents of particular Articles, are for convenience only but shall not act as a limitation of the scope of the particular Articles to which they refer where other Articles may modify, qualify or further delineate the obligations of the parties.
(b) The validity, interpretation, and performance of this Agreement and any dispute connected herewith shall be governed and construed in accordance with the laws of the State of Ohio.
The attachments listed below are incorporated into the Agreement and are a part hereof:
A. NOBS Extrudate Specifications and Testing Procedure
B. *** Specification
C. NOBS Fee Schedules
D. Super Sacking Fee
E. Cancellation Fee Schedules
F. Selection of Appropriate Index
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ACCEPTED: ACCEPTED:
EASTMAN CHEMICAL COMPANY THE PROCTER & GAMBLE
MANUFACTURING COMPANY
/s/ Robert K. Hornsey /s/ Bruce D. Stirling
----------------------------------------------------- --------------------------------------------
Robert K. Hornsey Bruce D. Stirling
Vice President and General Manager Vice President
Eastman Fine Chemicals Business Organization Global Fabric and Home Care Purchases
Eastman Chemical Company
Date: Feb 23, 2000 Date: March 26, 2000
------------------------------------------------ ---------------------------------------
|
ATTACHMENT A
NOBS EXTRUDATE SPECIFICATIONS AND TESTING PROCEDURES
PROCTER & GAMBLE GLOBAL RAW MATERIAL SPECIFICATION
----------------------------------------------------------------------------------------------------------------------
Supersedes: NEW Specification Number: 10090497
Issue Number: 1
Issue Date: 10 September, 1999
Page: 1 of 4
----------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------
MODIFICATIONS TO THIS RMS CAN ONLY BE MADE BY TECHNICAL BUYING SERVICE, NTC
----------------------------------------------------------------------------------------------------------------------
|
1. Human and Environmental Safety Considerations, Regulated Products Statements & other considerations of supply: It is Procter & Gamble's intent and responsibility to provide its customers with products which perform as expected, and which are safe for humans and are also safe in the environment. To ensure that these obligations are properly discharged, there are certain procedures with regard to raw materials which must be followed. These procedures are to permit Procter & Gamble Technical Buying Service, prior to shipment, to make a determination whether any process modifications or questionable material quality will have any negative effect on Procter & Gamble processes, finished products, the human and environmental safety of products; as well as to add to our basic safety information:
* It is the supplier's responsibility to notify Procter & Gamble's
Laundry & Cleaning Purchasing, in writing, before making any
significant changes in the method of manufacturing or supply of any
material. This includes, but is not restricted to:-
a) Quality, type and derivation of the raw material ingredients.
b) Manufacturing conditions such as temperature, reaction rates,
storage and shipping vessels, catalysts, batch vs. continuous
process, and material of construction.
c) Blending of material having unusual properties.
d) Substituting its own product -
i) with one of another producer, or
ii) with product from toll processing (complete or partial) by
others.
e) Changing its source of supply if it is a Manufacturer
Representative (Agent, Trader, etc.), or a Manufacturer with
more than one producing plant.
* The supplier agrees upon request to submit to Procter & Gamble the results of all investigations which it has conducted, or which have been conducted for it, pertaining to the human and environmental safety of this material, except for proprietary information developed by or for a third party.
2. Quality Assurance
(i) Suppliers are required to provide data via a Certificate of
Analysis and/or a periodic quality summary for all items
identified on this RMS as Critical Quality Items.
(ii) Certificate of Analysis (COA) In order to provide
reassurance on quality, suppliers are required to provide
each P&G receiving plant with a COA which covers those
Critical Quality Items listed below, along with or ahead of
each delivery.
The COA must contain:
-------------------------------------------------------------------------------------------------------------
Supplier information Product information Analytical Results
-------------------------------------------------------------------------------------------------------------
>>Name & Address of Supplier >>P&G RMS No. & Issue No. >>All Critical Quality Items on
>>Name & Address of >>P&G Order No. this RMS.
Manufacturer (if different >>Supplier's product Trade Name. >>Target value/limits/units as
to Supplier) >>Supplier's Batch/Lot No. or other specified on this RMS.
>>Contact Name, Position & unique identification. >>Analytical Result.
Telephone/FAX No. to be used >>For bulk deliveries - Tank car >>Method used - Mark with * if
in case of questions. license plate No./Name of Ship or different to that shown on this
Vessel & Date loaded. RMS.
-------------------------------------------------------------------------------------------------------------
===================================================================================================================
Changes to this issue: New RMS
-------------------------------------------------------------------------------------
Approvals
----------------------------------------------------------------------------------------------------------------------
Originator: Date: R&D Analytical: Date: TBS QA: Date: TBS Manager: Date:
R.J. Grosse M.T. Denning D.G. Merelie P.R. Brougham
----------------------------------------------------------------------------------------------------------------------
|
This document has been printed from GMDB on 17 February, 2000. It is your responsibility to make sure that it is still current.
ATTACHMENT A
NOBS EXTRUDATE SPECIFICATIONS AND TESTING PROCEDURES
PROCTER & GAMBLE GLOBAL RAW MATERIAL SPECIFICATION
----------------------------------------------------------------------------------------------------------------------
Supersedes: NEW Specification Number: 10090497
Issue Number: 1
Issue Date: 10 September, 1999
Page: 2 of 4
----------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------
MODIFICATIONS TO THIS RMS CAN ONLY BE MADE BY TECHNICAL BUYING SERVICE, NTC
----------------------------------------------------------------------------------------------------------------------
|
===================================================================================================================
Changes to this issue: New RMS
-------------------------------------------------------------------------------------
Approvals
----------------------------------------------------------------------------------------------------------------------
Originator: Date: R&D Analytical: Date: TBS QA: Date: TBS Manager: Date:
R.J. Grosse M.T. Denning D.G. Merelie P.R. Brougham
----------------------------------------------------------------------------------------------------------------------
|
This document has been printed from GMDB on 17 February, 2000. It is your responsibility to make sure that it is still current.
ATTACHMENT A
NOBS EXTRUDATE SPECIFICATIONS AND TESTING PROCEDURES
PROCTER & GAMBLE GLOBAL RAW MATERIAL SPECIFICATION
----------------------------------------------------------------------------------------------------------------------
Supersedes: NEW Specification Number: 10090497
Issue Number: 1
Issue Date: 10 September, 1999
Page: 3 of 4
----------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------
MODIFICATIONS TO THIS RMS CAN ONLY BE MADE BY TECHNICAL BUYING SERVICE, NTC
----------------------------------------------------------------------------------------------------------------------
NONANOYLOXY BENZENE SULFONATE (NOBS) EXTRUDATES
-----------------------------------------------
CHARACTERISTICS:
----------------
3. Chemical Description: Extrudate of Nonanoyloxy Benzene Sulfonate (NOBS) with ***
agents.
4. Appearance: ***
***
***
5. Odour a) As Is Free from objectionable odours and typical of previous
acceptable receipts. Specifically, there should be no
more than a slight smell ***
b) In Solution By *** in
***
CRITICAL QUALITY ITEMS (To be included on all Certificates of Analysis):
------------------------------------------------------------------------
Item Limits Analytical Method
---- ------ -----------------
6. Hunter Colour *** To be ***
*** ***
*** ***
***
7. Attrition *** ***
***
8. Activity (as NOBS) *** To be ***
***
OTHER ITEMS:
------------
9. Bulk Density *** ***
***
10. Cake Grade *** ***
11. Rate of Solubility *** ***
12. pH, *** *** ***
13. Water Insolubles *** ***
14. *** *** ***
***
15. *** *** ***
16. *** *** ***
***
===================================================================================================================
Changes to this issue: New RMS
-------------------------------------------------------------------------------------
Approvals
----------------------------------------------------------------------------------------------------------------------
Originator: Date: R&D Analytical: Date: TBS QA: Date: TBS Manager: Date:
R.J. Grosse M.T. Denning D.G. Merelie P.R. Brougham
----------------------------------------------------------------------------------------------------------------------
|
This document has been printed from GMDB on 17 February, 2000. It is your responsibility to make sure that it is still current.
ATTACHMENT A
NOBS EXTRUDATE SPECIFICATIONS AND TESTING PROCEDURES
PROCTER & GAMBLE GLOBAL RAW MATERIAL SPECIFICATION
----------------------------------------------------------------------------------------------------------------------
Supersedes: NEW Specification Number: 10090497
Issue Number: 1
Issue Date: 10 September, 1999
Page: 4 of 4
----------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------
MODIFICATIONS TO THIS RMS CAN ONLY BE MADE BY TECHNICAL BUYING SERVICE, NTC
----------------------------------------------------------------------------------------------------------------------
NONANOYLOXY BENZENE SULFONATE (NOBS) EXTRUDATES
-----------------------------------------------
***
17. *** *** ***
18. *** *** ***
19. Particle Size ***
***
*** ***
*** ***
===================================================================================================================
Changes to this issue: New RMS
-------------------------------------------------------------------------------------
Approvals
----------------------------------------------------------------------------------------------------------------------
Originator: Date: R&D Analytical: Date: TBS QA: Date: TBS Manager: Date:
R.J. Grosse M.T. Denning D.G. Merelie P.R. Brougham
----------------------------------------------------------------------------------------------------------------------
|
This document has been printed from GMDB on 17 February, 2000. It is your responsibility to make sure that it is still current.
NOBS Supply Agreement
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P&G Contract CT3696
Attachment B
------------
*** Specification
***
------------------------------------------------------------------
*** ***
*** ***
*** ***
*** ***
*** ***
*** ***
*** ***
|
NOBS Supply Agreement
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P&G Contract CT3696
Base Sales Price *** for NOBS 1B
Quantity (NOBS 100%) Million Pounds Price
----------------------------------- -----
Annual Rate Quarterly Rate U.S. $/Lb
----------- -------------- ---------
*** *** ***
*** *** ***
*** *** ***
*** *** ***
*** *** ***
*** *** ***
*** *** ***
*** *** ***
*** *** ***
*** *** ***
*** *** ***
*** *** ***
*** *** ***
*** *** ***
*** *** ***
*** *** ***
*** *** ***
*** *** ***
*** *** ***
*** *** ***
|
Prices are based on the quarterly rate of purchases; annual rates are for information only.
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P&G Contract CT3696
Attachment C
------------
NOBS Fee Schedules
------------------
Schedule II
-----------
Base Sales Price *** for NOBS 2
Quantity (NOBS 100%) Million Pounds Price
----------------------------------- -----
Annual Rate Quarterly Rate Base Price U.S. $/Lb
----------- -------------- --------------------
*** *** ***
*** *** ***
*** *** ***
*** *** ***
*** *** ***
*** *** ***
*** *** ***
*** *** ***
*** *** ***
*** *** ***
*** *** ***
*** *** ***
*** *** ***
*** *** ***
*** *** ***
|
Prices are based on the quarterly rate of purchases; annual rates are for information only.
For invoicing purposes, the Price for NOBS from NOBS 1B and NOBS 2 shall be multiplied by the estimated assay percentage of NOBS delivered during each Contract Quarter, and the quantity shown thereon shall be the actual pounds of NOBS-containing material delivered (not multiplied by or otherwise adjusted for such average assay). At the end of each Contract Quarter, an appropriate adjustment to the price (in the Miscellaneous Cost Factor, below) shall be made to reflect any differences between such estimated invoiced assay and such actual assay of NOBS delivered during such quarter.
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Formula: N(1) = O(1) + A(1) + A(2) + A(3) + A(4) + A(5) + A(6) + B + C + D +
M + CR
N(1) = The quarterly selling price
O(1) = Base Sales Price, f.o.b. Magness, Arkansas, as established above.
A(1) = *** Index = *** x R
where *** = Eastman's purchase price for ***, delivered to Eastman's plant per pound. For the quarter beginning Jan. 1, 1999 and all subsequent quarters, Eastman's purchase price for *** will be the forecast price provided by the *** supplier.
where R = The conversion ratio for ***, as stated in Article 7.
A2 = *** Index = *** x ***
where *** = Eastman's purchase price for ***, delivered to Eastman's plant, beginning with a price of *** per pound. For the quarter beginning Jan. 1, 1999, Eastman's purchase price for *** will be the price paid by Eastman for Sep-Oct-Nov 1998 purchases. For each succeeding quarter, the purchase price will be the average purchase price paid by Eastman during the three months preceding the month in which quarterly notice is to be given to P&G.
A3 = *** Index = *** x ***
where *** = Eastman's purchase price for ***, delivered to Eastman's plant, beginning with a price of *** per pound. For the quarter beginning Jan. 1, 1999, Eastman's purchase price for *** will be the price paid by Eastman for Sep-Oct-Nov 1998 purchases. For each succeeding quarter, the purchase price will be the average purchase price paid by Eastman during the three months preceding the month in which quarterly notice is to be given to P&G.
A4 = *** Index = *** x ***
where *** = Eastman's purchase price for ***, delivered to Eastman's plant, beginning with a price of *** per pound. For the quarter beginning Jan. 1, 1999, Eastman's purchase price for *** will be the price paid by Eastman for Sep-Oct-Nov 1998 purchases. For each succeeding quarter, the purchase price will be the average purchase price paid by Eastman during the three months preceding the month in which quarterly notice is to be given to P&G.
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P&G Contract CT3696
A5 = *** Index = *** x ***
where S = Eastman's purchase price for *** delivered to Eastman's plant, beginning with a price of *** per pound. For the quarter beginning Jan. 1, 1999, Eastman's purchase price for *** will be the price paid by Eastman for Sep-Oct-Nov 1998 purchases. For each succeeding quarter, the purchase price will be the average purchase price paid by Eastman during the three months preceding the month in which quarterly notice is to be given to P&G.
A6 = *** Index - *** x ***
***
where *** = ***
|
beginning with a base of ***,
non adjusted, published monthly by the US. Department of Labor, Bureau of
Labor Statistics.
B = *** Index = ***
***
where *** = ***
***
|
*** published monthly by the U.S. Department of Labor, Bureau of Labor Statistics, *** beginning with a base of *** July, 1994.
C = *** Index = ***
***
where *** = ***
|
*** published monthly by the U.S. Department of Labor, Bureau of Labor Statistics, *** beginning with a base of *** (August 1994).
D = *** Index = ***
***
where *** = ***,
|
NOBS Supply Agreement
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P&G Contract CT3696
CR = Capital Recovery
CR = CR-A + CR-B
CR-A = Capital Recovery 1A = ***
CR-B = Capital Recovery 1B = $XX/lb (see Attachment C, Schedule VII)
All price adjustments pursuant to the above formula will be to the nearest $0.001 (dropping fractions of less than $0.0005 and rounding up fractions of $0.0005 or more).
NOBS Supply Agreement
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P&G Contract CT3696
Formula: N(2) = O(2) + A(12) + A(22) + A(32) + A(42) + A(52) + A(62) + B(2)
+ C(2) + D(2) + M(2) + CR(2)
N(2) = The quarterly selling price
O(2) = Base Sales Price, ex works Magness, Arkansas as established
above.
A(12) = *** Index = *** X R
where *** = Eastman's purchase price for *** delivered Eastman's
plant per kg. For the quarter beginning January 1,
1999, and all subsequent quarters, Eastman's price
for *** will be the forecast price provided by the
*** supplier.
where R = The conversion ratio for *** as stated in
article 7)
A(22) = *** Index = *** X ***
|
where *** = Eastman's purchase price for *** delivered to Eastman's plant, beginning with a price of ***/lb. For the quarter beginning January 1, 1999, Eastman's purchase price for *** will be the price paid by Eastman for Sept.-Oct.-Nov. 1998 purchase. For each succeeding quarter, the purchase price, will be the average purchase price paid by Eastman during the three months preceding the month in which the quarterly price is to be given to P&G.
A(32) = *** Index = *** X ***
where*** = Eastman's purchase price for *** delivered to Eastman's plant, beginning until a price of ***/lb. For the quarter beginning January 1, 1999, Eastman's purchase price will be the price paid by Eastman for Sept.-Oct.-Nov. 1998 purchases. For each succeeding quarter the purchase price will be the average purchase price paid by Eastman during the three month preceding the month in which the quarterly notice is to be given to P&G.
NOBS Supply Agreement
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P&G Contract CT3696
A(42) - *** Index = *** X ***
where *** = Eastman's purchase price for ***, delivered
Eastman's plant beginning with a price of ***/lb.
For the quarter beginning January 1, 1999,
Eastman's purchase price will be the price paid by
Eastman for Sept.-Oct.-Nov. 1998 purchases. For
each succeeding quarter the purchase price will be
the average purchase price paid by Eastman during
the three month preceding the month in which the
quarterly notice is to be given to P&G.
A(52) = *** Index = *** X ***
where *** = Eastman's purchase price of ***,
delivered to Eastman's plant, beginning with a
price of ***/lb. For the quarter beginning January
1, 1999, Eastman's purchase price will be the price
paid by Eastman for Sept.-Oct.-Nov. 1998 purchases.
For each succeeding quarter the purchase price will
be the average purchase price paid by Eastman
during the three month preceding the month in which
the quarterly notice is to be given to P&G.
A(62) = *** Index = for NOBS 2
***
***
where *** = ***
***, beginning with a base of *** (January, 1998) ***
*** in Producer Price Indexes non adjusted
published monthly by the U.S. Department of Labor,
Bureau of Labor Statistics.
B(2) = *** Index = ***
***
where *** = ***
***
***
Department of Labor, Bureau of Labor Statistics
|
*** beginning with a base of *** January, 1998.
NOBS Supply Agreement
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P&G Contract CT3696
C2 = *** Index = ***
***
where *** = ***
*** in Producer Price Indexes, published
monthly by the U.S. Department of Labor, Bureau
of Labor Statistics *** , beginning with a base
of *** (January, 1998).
D2 = *** Index for NOBS 2 = ***
***
where *** = *** Producer Price
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Indexes published monthly by the U. S. Department of Labor, Bureau of Labor Statistics (NSA), beginning with a base of *** (January, 1998) and *** = the *** *** from Attachment C, Schedule VI.
M2 = Miscellaneous Cost Factor for NOBS 2 =
Miscellaneous Costs
-------------------
Million Lbs. as (100%) per quarter
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to distribute quarterly the miscellaneous costs which are mutually agreed to by Eastman and the P&G Associate Director of H&FC Purchases, including the adjustments needed if the previous quarters actual volume is different enough from the forecast volume to require a change in the base sales price (from Attachment C, Schedule II). This factor will also be used to credit savings that are generated through cost reduction efforts of P&G or Eastman as described in Article 8.
If the "M" adjustment for the previous quarter due to volume changes for both NOBS 1 and NOBS 2 is greater than *** , the party owing this amount will reimburse the other party during the succeeding quarter by making the appropriate adjustment to the "M" calculation. ("M" adjustment multiplied by ***)
NOBS Supply Agreement
1/1/99-12/31/01
P&G Contract CT3696
CR(2) = Capital Recovery NOBS 2
The base sales price (O(2)) for purchases from NOBS 2 will be increased by the appropriate capital recovery charge, CR(2), as noted, in Attachment C, Schedule VIII - Capital Recovery for NOBS 2 capital investment and capital recovery charge of *** million and will apply to all pounds purchased after the start-up of NOBS 2 until the total pounds purchased multiplied by the appropriate capital recovery charge (CR(2)) equals *** million. After the *** million has been fully amortized, the capital recovery charge (CR(2)) will no longer apply.
All price adjustments pursuant to the above formula will be to the nearest $0.001 (dropping fractions of less than $.0005 and rounding up fractions of $.0005 or more).
NOBS Supply Agreement
1/1/99-12/31/01
P&G Contract CT3696
Annual Rate Quarterly Rate *** Index ----------- -------------- --------- *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** |
NOBS Supply Agreement
1/1/99-12/31/01
P&G Contract CT3696
Annual Rate Quarterly Rate *** Index ----------- -------------- --------- *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** |
NOBS Supply Agreement
1/1/99-12/31/01
P&G Contract CT3696
Attachment C
------------
Schedule VII
------------
NOBS 2 Quarterly Capital Recovery Schedule
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Annual Rate Quarterly Rate Direct Capital $/lb Infrastructure
----------- -------------- ------------------- --------------
Millions of Pounds Millions of Pounds Capital - $/lb
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*** *** *** ***
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*** *** *** ***
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*** *** *** ***
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*** *** *** ***
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*** *** *** ***
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*** *** *** ***
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*** *** *** ***
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NOBS Supply Agreement
1/1/99-12/31/01
P&G Contract CT3696
NOBS Super Sacking Fee
P&G will be invoiced as an invoice line item (a) for NOBS produced fiom NOBS 1B and from NOB S 2: a supersacking fee determined using the schedule below:
Millions of Pounds of NOBS to
be supersacked during such
Contract* Quarter Base Supersacking Fee (X)($/lb)
-----------------------------------------------------------------------------
> *** ***
-----------------------------------------------------------------------------
*** ***
-----------------------------------------------------------------------------
*** ***
-----------------------------------------------------------------------------
*** ***
-----------------------------------------------------------------------------
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*Based on forecast quantities. In the event actual supersacked quantities would result in a different Base Fee (X) being applicable, an adjustment will be made in the miscellaneous cost factor (Attachment C) in the next contract Quarter price calculations.
Each of the base fees shall be adjusted by the following formula at the beginning of each Contract Quarter:
*** ***
where NSF = New Supersacking Fee
PPI(3) = Producer Price Index most recently
published for the prior contract quarter
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NOBS Supply Agreement
1/1/99-12/31/01
P&G Contract CT3696
NOBS 2 Cumulative Capital Recovery Schedule (for calculating
NOBS 2 Cancellation Fee)
NOBS 2 Cumulative Capital Recovery (CCR(2)) -
-------------------------------------------
Millions $
----------
Contract Quarter
----------------
Jan-Mar `99 ***
Apr - Jun `99 ***
Jul - Sept `99 ***
Oct - Dec `99 ***
Jan-Mar `00 ***
Apr - Jun `00 ***
Jul - Sept `00 ***
Oct - Dec `00 ***
Jan-Mar `01 ***
Apr - Jun `01 ***
Jul - Sept `01 ***
Oct - Dec `01 ***
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Should P&G cancel the NOBS 2 portion of this Agreement, the Cancellation Fee owed by P&G will be the NOBS 2 Cumulative Capital Recovery for the appropriate Contract Quarter reduced by the total amount of capital for the total NOBS 2 pounds purchased, including Mothball Mode fees since January 1, 1999 multiplied by the actual capital recovery charged.
Cancellation Fee NOBS 2 = CCR(2) - (pounds purchased since NOBS 2 start-up X the actual capital recovery charged) - [capital recovery during Stand-by and Mothball Mode periods]
As of January, 2000, the NOBS 1B cancellation fee is zero ($0).
NOBS Supply Agreement
1/1/99-12/31/01
P&G Contract CT3696
The appropriate Producer Price Indexes for calculating the quarterly Base Sales Price adjustments are the values available for the next to last month before the applicable quarter. The appropriate Hourly Earnings Index is the value available two months prior to the last month before the applicable quarter.
Applicable
----------
Index Publisher Quarter Date of Index
----- --------- ------- -------------
Producer Price U.S. Department of Jan.-March November
Indexes Labor, Bureau of Labor April-June February
Statistics July- Sep. May
Oct.-Dec. August
Employment and U.S. Department of Jan.-March October
Earnings Labor, Bureau of Labor April-June January
Statistics July-Sep. April
Oct.-Dec. July
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The appropriate estimated price for, *** and ***, for purposes of calculating the quarterly Base Sales Price adjustments, will be determined, except per Articles 5 and 6 and as otherwise noted in this Attachment, as follows:
Applicable
Index Publisher Quarter Date of Index
----- --------- ------- -------------
Eastman's Average Eastman Jan.-March Sept.-Oct.-Nov.
Purchase Price Purchasing April- June Dec.-Jan.-Feb.
Delivered to Magness Department July-Sep. March-April-May
for Oct.-Dec. June-July-Aug.
3-month periods
|
The appropriate price of *** will be determined by P&G and the *** supplier, and provided to Eastman prior to the start of each Contract Quarter.
October 6, 1999
Mr. Bill Hess
The Procter & Gamble Company
5299 Spring Grove Avenue
Cincinnati, OH 45217
Subject - NOBS Letter Agreement Relating to the "Small NOBS" Project
Dear Bill,
This Letter Agreement is between Eastman Chemical Company (Eastman) and The Procter & Gamble Manufacturing Company (P&G).
P&G has expressed to Eastman the need to have the NOBS extrudate reduced in physical size. Several plant trials have been run in the NOBS 1B manufacturing facility by Eastman at P&G's request to determine the feasibility of converting NOBS 1B and NOBS 2 to produce small NOBS.
In order to develop the necessary technical and financial information for both parties to make a business decision regarding "small NOBS", the two companies will work together as follows:
1. Confirmation plant trials will be run during October, 1999 at Eastman. Any additional costs, not to exceed ***, incurred by Eastman as a result of the small NOBS trial will be invoiced by Eastman to P&G to be paid within 30 days of invoice. P&G will provide the required amounts of *** without charge.
P&G will purchase within 60 days of completing the confirmation trial the inventory of the small NOBS which is produced during the confirmation trial at the normal weighted average contract sales price as adjusted in the quarter shipped. Any small NOBS which is produced during the confirmation, that is off-quality due to process changes needed to produce small NOBS will be purchased by P&G at the adjusted Quarter 4, 1999 contract sales price plus any rework or disposal costs. Eastman will not charge P&G for any costs associated with small NOBS which is produced during the confirmation that is off quality due to other reasons, including production errors.
Procter & Gamble
Small NOBS
Eastman and P&G will work together to minimize costs incurred in the confirmation trials.
2. Following the confirmation trial, P&G and Eastman will agree on the final product specifications for small NOBS.
3. Eastman will develop and provide to P&G an estimate of the cash-flow spending curve for the small NOBS capital project based on the current "ball-park" estimate of $*** (attached) of the total capital, as well as an estimate of adjusted Base Prices by October 1, 1999.
At P&G's written request, Eastman will initiate Phase I Engineering which will require up to six months to develop detailed engineering and capital estimates. The Phase I engineering cost will not exceed $***. Additional charges may be incurred, at P&G's option, to purchase long lead-time equipment in order to reduce the overall project timeline.
If Eastman and P&G agree to complete the capital project, the Phase I engineering costs and equipment purchases will be included in the capital cost of the project. If Eastman and P&G do not agree to complete the small NOBS project, the costs incurred by Eastman will be reimbursed by P&G within 30 days of date of invoice.
Upon completion of Phase I engineering, Eastman will provide P&G with revised "not to exceed" capital costs and base sales prices based on the actual change in the cost per pound to produce small NOBS. The new price schedules will go into effect when product meeting the small NOBS specifications is shipped.
4. At P&G's written request, Eastman will initiate the small NOBS capital project to provide small NOBS capacity in both NOBS 1B and NOBS 2 at an estimated total cost of $***.
Eastman will provide a detailed spending curve for the construction project, base price curve, stand-by fee, mothball fee, and termination fee schedules to P&G by March 31, 2000. If during the construction period which is estimated to be 11 months, P&G terminates the project, Eastman will be reimbursed by P&G for all expenses reasonably incurred and not to exceed the spending curve with payment due within 30 days of date of invoice; provided, however, that P&G will have no obligation to reimburse Eastman if P&G terminates the project because Eastman
Procter & Gamble
Small NOBS
materially breaches this Letter Agreement and such breach does not result from events beyond Eastman's reasonable control.
5. Upon mechanical completion of the small NOBS project for NOBS 1B and NOBS 2, P&G will reimburse to Eastman 50% of the total capital for each plant. Upon Eastman attaining production rates (NOBS 1B of *** million pounds/year and NOBS 2 of *** million pounds/year) for a two week run for each plant, P&G will reimburse Eastman for the remaining direct and support capital.
The Stand-By Fee, Mothball Fee, Termination Fee and Capital Recovery Fee schedules will be adjusted for the new direct and support capital associated with the changes required to produce small NOBS.
6. If it is required to build a surge inventory to cover P&G purchases during the time that NOBS 1B and NOBS 2 are not in operation due to the construction project and start-up, Eastman will produce and hold the surge inventory in P&G's railcars or in super sacks. P&G will pay to Eastman an inventory carrying cost on the total surge inventory at an annual interest rate of *** of Eastman's actual manufacturing costs. The surge inventory is defined as the amount by which end of week inventories exceed the normal safety stock of *** active pounds plus *** active pounds (a total of *** pounds) to protect both companies' business from potential delays in completing construction and restarting production.
7. Eastman shall maintain all documentation in support of the small NOBS capital project for at least one year following mechanical completion. P&G shall have the right to request an audit of Eastman's supporting documentation within one year after mechanical completion, upon thirty days prior written notice. P&G and Eastman shall mutually agree on the date, time and location of the audit. The audit shall be conducted by P&G's Internal Controls Department or other mutually agreeable independent third party. The auditor shall maintain the confidentiality of all data reviewed which was not previously known to the auditor or available to third parties on a non-confidential basis. This obligation of confidentiality shall continue until the material becomes generally available to the public, is shared with others by Eastman on a non-confidential basis, is available to the auditor from third parties on a non-confidential basis or upon the expiration of a period of three years following the date of the audit, whichever occurs first. The auditor shall return to Eastman all materials submitted to the auditor, and destroy all working papers, notes, memoranda, reports and other derivatives thereof, upon conclusion of the audit and resolution of any disputed amounts; provided, however, the auditor may retain one archival copy of the foregoing solely for the purpose of administering its confidentiality obligations. The
Procter & Gamble
Small NOBS
auditor shall share with P&G's Purchasing Personnel only the results of the audit. In the event the audit does not support the capital costs invoiced by Eastman, then P&G and Eastman will meet to review the results and make appropriate adjustments.
8. Eastman will maintain the capability to revert back to the production of the current NOBS product for one year after start of production of small NOBS.
The foregoing sections supplement and amend the relevant provisions of the NOBS Supply Agreement currently in effect and any subsequent superseding Agreement. Except as modified by this Letter Agreement, the previously referenced Agreement remains in full force and effect and services provided hereunder will be subject to that Agreement.
If the foregoing is accepted, please sign below and have one copy returned to the undersigned. Eastman looks forward to implementing the small NOBS project and continuing to work with P&G on this and future projects.
Sincerely,
/s/ John D. Boaz John D. Boaz Business Manager Industrial & Consumer Intermediates |
EASTMAN CHEMICAL COMPANY THE PROCTER & GAMBLE
MANUFACTURING COMPANY
By: /s/ Robert Hornsey By: /s/ Bruce D. Stirling
----------------------------------- -----------------------------------
Robert Hornsey Bruce D. Stirling
Vice President & General Manager Vice President
Fine Chemicals Global F&HC Purchases
Date: 10-18-99 Date: 10/20/99
----------------------------------- -----------------------------------
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Procter & Gamble
Small NOBS
Small NOBS Project Estimate
---------------------------
A) Engineering
Preliminary ***
Final ***
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Total Engineering ***
B) Equipment/Construction
*** ***
*** ***
*** ***
*** ***
*** ***
*** ***
*** ***
*** ***
*** ***
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Total Equipment/Construction ***
C) Indirect Field and Office Costs ***
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Total Engineering, Field and Office Costs ***
D) Contingency ***
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Subtotal ***
Corporate Support Capital ***
------------------------------------------------------------------------------
Total ***
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Procter & Gamble
Small NOBS
MONTHLY CUMULATIVE
------- ----------
1999
----
October *** ***
November *** ***
December *** ***
2000
----
January *** ***
February *** ***
March *** ***
April *** ***
May *** ***
June *** ***
July *** ***
August *** ***
September *** ***
October *** ***
November *** ***
December *** ***
2001
----
January *** ***
February *** ***
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This serves as an addendum to the current NOBS SUPPLY AGREEMENT (P&G Contract CT3696) between the Eastman Chemical Company and The Procter & Gamble Manufacturing Company for the supply of nonanoyloxybenzenesulfonate (hereinafter "NOBS").
P&G hereby communicates the termination of the aforementioned NOBS SUPPLY AGREEMENT (hereinafter "Supply Agreement") effective June 30, 2002. This letter states specific amendments to the Supply Agreement which Eastman and P&G have mutually agreed upon for the purpose of facilitating the termination process. These amendments do not release either party from remaining terms and conditions of the Supply Agreement not specifically referred to in this document.
Specifics of Addendum:
1. Both parties agree that this serves as written notification of termination for the NOBS2 portion of the agreement effective March 31, 2002.
2. Both parties agree that this serves as written notification of termination for the NOBS1B portion of the agreement effective June 30, 2002.
3. Both parties agree to waive the appraisal requirement for the determination of cancellation penalties (Article 17, Paragraph b) and reimbursement for Alternate Use (Article 17, Paragraph d). All remaining terms in Article 17 shall remain. P&G agrees to pay *** million in cancellation penalties by September 30, 2001. This will begin the establishment of a "cancellation penalties account" to be updated throughout the termination process and reconciled per paragraph 10 below. Title and ownership of the NOBS plants, equipment and support facilities will remain with Eastman; provided, however, that use thereof shall be for any use other than the production of bleach activators according to Article 2 of the NOBS Supply Agreement. If Eastman finds an alternate use for the NOBS facilities, Eastman will be free to use the plan, equipment and support facilities without any reimbursement to P&G.
4. This serves as written notification from P&G for Eastman to put NOBS2 in standby mode effective October 1, 2001. P&G will pay a standby fee of ***/mth until such time as P&G requests NOBS2 to be taken out of standby mode or until March 31, 2002. This fee will be incorporated into the applicable quarterly material price via the "M-Calculation" as stated in Attachment C, Schedule III of the Supply Agreement. If P&G notifies Eastman to take NOBS2 out of standby mode at any time during the period from October 1, 2001 through March 31, 2002, the minimum quantity purchases requirement stated in Article 1 of the Supply Agreement will apply.
5. P&G agrees to purchase *** million pounds of NOBS on 100% active basis between October 1, 2001 and June 30, 2002 (approximately *** pounds from October- December 2001, approximately *** pounds from January-March 2002, and approximately *** pounds from April-June 2002). Article 11 (Estimated Orders) of the Supply Agreement shall still apply to this quantity.
6. Both parties agree that pricing for October 1, 2001 through March 31, 2002 will be calculated quarterly per terms and conditions of the Supply Agreement.
7. Both parties agree that actual pricing for April 1, 2002 through June 30, 2002 will be EMS 9/25/01 ***/lb on 100% active basis, which is different than the Supply Agreement, indexed per
Supply Agreement terms. P&G will be invoiced and pay Eastman ***/lb
fixed price for all product purchased during this period. The balance
[(actual price minus *** lb) * volume purchased] will be incorporated
into the cancellation penalties account balance.
8. For the period of April 1, 2002 through June 30, 2002 the NOBS1B facility will be put into standby mode when not in production for a fee of ***/mth, which is different than the Supply Agreement. The standby fee will be adjusted to compensate for actual pounds purchased using the following equation, which is not in the Supply Agreement:
Standby Fee = (*** Pounds - Actual Pounds Purchased) / *** Pound Capacity X *** Quarterly Standby Fee
This standby fee will be incorporated into the cancellation penalties account balance.
9. For the period of April 1, 2002 through June 30, 2002, Eastman will endeavor to produce up to *** million pounds of NOBS on a 100% active basis if needed with appropriate notice from P&G in order to obtain sufficient raw materials. Pricing will be ***/lb on 100% active basis indexed per terms of the Supply Agreement. If P&G should need additional quantities of NOBS beyond June 2002, both parties will negotiate in good faith to reach an agreement for quantities and prices to be manufactured and sold by Eastman.
10. During the first week of June 2002, both parties will meet to reconcile the cancellation penalties account balance. At this time, a total summary of applicable penalties will be compiled. If the total is above *** million (previously paid by P&G in September 2001), an invoice will be issued to be paid by P&G to Eastman within 30 days. If the total is below *** million, a credit will be issued to be paid by Eastman to P&G within 30 days.
11. Throughout this termination process, Eastman and P&G will work closely together to minimize costs and inventory balances. P&G will instruct Eastman on the final disposition of remaining inventories of all materials used in the production of NOBS and both parties will adhere to the principles of Article 19 of the NOBS Supply Agreement.
12. Upon business restructuring at the Eastman Chemical Company, this Addendum and the Supply Agreement shall be assigned to the Eastman Company as of close of business December 31, 2001.
13. All other terms and conditions of the Supply Agreement not herein modified shall remain in full force and effect.
ACCEPTED: ACCEPTED:
The Procter & Gamble Eastman Chemical Company
Manufacturing Company
/s/ Edward M. Sawicki /s/ Keith T. Gockenbach
------------------------------ -----------------------------------------
Edward M. Sawicki Keith T. Gockenbach
Associate Director Vice President & General Manager
Fabric and Home Care Purchases Performance Chemicals & Intermediates
Date: 25 Sept. 2001 Date: 10/1/01
---------------------- ------------------------------------
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July 1, 2002
NOBS
SECOND ADDENDUM TO
MEMORANDUM OF AGREEMENT
This serves as a second addendum ("Second Addendum") to the NOBS Supply Agreement (P&G Contract CT3696) between Eastman Chemical Company ("Eastman") and The Procter & Gamble Manufacturing Company ("P&G") for the supply of nonanoyloxybenzenesulfonate (hereafter "NOBS"), as amended by the Addendum to Memorandum of Agreement ("First Amendment") accepted by P&G on September 25, 2001 and Eastman Chemical Company on October 1, 2001.
Subsequent to the First Amendment, P&G has expressed to Eastman the need to have the NOBS manufacturing facilities remain operational after June 30, 2002 when the NOBS Supply Agreement was scheduled for termination as set forth in the First Amendment. As per this Second Addendum, the NOBS Supply Agreement shall be continued in full force and effect up through and including June 30, 2003, except that any references therein to the NOBS2 facility shall be considered deleted, and the remaining text conformed to said deletions.
1. The First Amendment shall be cancelled in its entirety except for paragraph 1, and not withstanding anything else in the NOBS Supply Agreement or this Second Addendum, P&G shall have no further obligations whatsoever with respect to the NOBS2 facility or capital associated therewith.
2. Both parties agree to waive the appraisal requirement for the determination of cancellation penalties (Article 17, Paragraph b) and reimbursement for Alternate Use (Article 17, Paragraph d). All remaining terms in Article 17 shall remain.
P&G paid *** million in cancellation penalties by September 30, 2001. This began the establishment of a "Cancellation Penalties Account" to be updated throughout the termination process and reconciled as below. Furthermore, during the time period April 1, 2002 through June 30, 2002, the parties agreed that the base sales price for April 1, 2002 through June 30, 2002 was ***/lb on 100% active basis, which is different than the base sales price described in the NOBS Supply Agreement. The actual price of NOBS for this April 1, 2002 through June 30, 2002 quarter was the base sales price indexed per Attachment C of the NOBS Supply Agreement. P&G has been invoiced and is paying Eastman ***/lb for all product purchased during this period. The balance [(actual price minus ***/lb) * volume purchased] will be incorporated into the Cancellation Penalties Account balance.
During the second week of July 2003, both parties will meet to reconcile the Cancellation Penalties Account balance. At this time, a total summary of applicable penalties will be compiled, and either a credit or invoice will be sent by Eastman to P&G, with credit issued or payment due within 30 days.
Title and ownership of the NOBS plants, equipment and support facilities will remain with Eastman; provided, however, that use thereof shall be for any use other than the production of bleach activators according to Article 2 of the NOBS Supply Agreement. Pursuant to the First Amendment, Eastman had title and
EMS 7/2/02
KG 7/10/02
July 1, 2002
ownership of the NOBS2 facility as of April 1, 2002; therefore, if, during the term of the NOBS Supply Agreement as extended by this Second Addendum, Eastman finds an alternate use for the NOBS2 facility that is permitted under Paragraph 2 of the NOBS Supply Agreement, Eastman will be free to use the plant, equipment and support facilities without any reimbursement to P&G. The parties agree that the time period in Paragraph 2 of the NOBS Supply Agreement as it applies to the NOBS2 facility began running as of April 1, 2002. If, after the term of the NOBS Supply Agreement as extended by this Second Addendum, Eastman finds an alternate use for the NOBS1 facility that is permitted under Paragraph 2 of the NOBS Supply Agreement, Eastman will be free to use the plant, equipment and support facilities without any reimbursement to P&G.
P&G agrees to purchase 100% of its requirements for NOBS or NOBS-like materials for use as bleach activators, not to exceed *** million pounds on a 100% active basis per Contract Quarter, from Eastman for the period October 1, 2002 through June 30, 2003. P&G agrees to purchase 100% of its requirements for NOBS or NOBS-like materials for use as bleach activators, not to exceed *** million pounds on a 100% active basis for the period July 1, 2002 through September 30, 2002. Should P&G require in excess of *** million pounds during the time period July 1, 2002 through September 30, 2002 Eastman will endeavor to produce the requested excess amounts. P&G shall purchase a minimum of *** million pounds of NOBS on a 100% active basis per Contract Quarter beginning July 1, 2002, unless P&G has placed NOBS 1 in Stand-by Mode as defined in the NOBS Supply Agreement. Notwithstanding anything contained herein, P&G may purchase up to *** million pounds from an alternate supplier during the term of this Second Addendum.
P&G agrees to buy from Eastman, and Eastman agrees to produce for P&G, in the quantities described above, NOBS that meets the specifications set forth in Exhibit A of the NOBS Supply Agreement ("Specifications") or any modifications agreed to by both parties and made a part of this Agreement.
If Eastman produced material which does not meet the Specifications, P&G may purchase the material but is under no obligation to do so. The terms and conditions of such a sale shall be negotiated.
4. The quarterly sales price for NOBS for invoicing purposes shall be as calculated per the NOBS Supply Agreement and all Attachments thereto ("Quarterly Invoice Price").
5. In addition to the Quarterly Invoice Price, P&G agrees to pay a Quarterly Capacity Reservation Fee of *** million for four calendar quarters beginning July 1, 2002. The Capacity Reservation Fee shall be billed at the beginning of each calendar quarter (July 1, 2002; October 1, 2002; January 1, 2003; April 1, 2003) and shall be due and payable thirty days from the date of invoicing.
6. In addition to the Quarterly Invoice Price and Quarterly Capacity Reservation Fee, P&G shall pay a cost recovery fee of *** million which shall be billed on
EMS 7/2/02
KG 7/10/02
July 1, 2002
July 1, 2002 and due thirty days thereafter and a cost recovery fee of*** million which shall be billed on October 1, 2002 and due thirty days thereafter ("Cost Recovery Fees").
7. Should P&G desire to purchase NOBS from Eastman beyond June 30, 2003, a New NOBS Supply Agreement must be executed by the parties no later than May 1, 2003; otherwise, Eastman will not have sufficient time to plan for NOBS production beyond June 30, 2003.
8. For the purposes of this Second Addendum, should P&G notify Eastman of its intent to exercise its rights under paragraph 17(b) of the NOBS Supply Agreement prior to January 1, 2003, P&G shall immediately pay Eastman a Termination Fee of ***, in addition to any and all other amounts due and payable pursuant to the NOBS Supply Agreement and/or this Second Addendum.
9. P&G agrees to indemnify and hold harmless Eastman from and against all liabilities, claims, demands, causes of action and other litigation of every kind and character ("Claims") brought against Eastman by Clariant International Ltd., its parent, subsidiaries, agents, employees, contractors, subcontractors, or suppliers as a result of P&G's purchases of NOBS from Eastman under this Second Addendum and the NOBS Supply Agreement or any New NOBS Supply Agreement. Any limitations on indemnity obligations contained in either the NOBS Supply Agreement or any New NOBS Supply Agreement that may be signed by the parties shall not apply to this indemnification obligation. This indemnity obligation shall survive termination of the NOBS Supply Agreement, all Addendums, and any New NOBS Supply Agreement which may be executed by the parties.
ACCEPTED: ACCEPTED:
EASTMAN CHEMICAL COMPANY THE PROCTER & GAMBLE
MANUFACTURING COMPANY
/s/ Keith Gockenbach /s/ Bob McDonald
--------------------------------------- ------------------------------------
Keith Gockenbach Bob McDonald
Vice President and General Manager President
Performance Chemicals and Intermediates Fabric and Home Care
Business Organization
Eastman Chemical Company
Date: 10 July 02 Date: July 2, 2002
---------------------------------- -------------------------------
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EMS 7/2/02
NOBS
THIRD ADDENDUM TO
NOBS SUPPLY AGREEMENT
This serves as a third addendum ("Third Addendum") to the NOBS Supply Agreement (P&G Contract CT3696) between Eastman Chemical Company ("Eastman") and The Procter & Gamble Manufacturing Company ("P&G") for the supply of nonanoyloxybenzenesulfonate (hereafter "NOBS"), as amended by the Addendum to Memorandum of Agreement ("First Amendment") accepted by P&G on September 25, 2001 and Eastman Chemical Company on October 1, 2001, and as amended by the Second Addendum to Memorandum of Agreement accepted by P&G on July 2, 2002 and Eastman on July 3, 2002 ("Second Addendum").
Subsequent to the Second Addendum, P&G expressed to Eastman the need to have the NOBS manufacturing facilities remain operational after June 30, 2003 when the NOBS Supply Agreement was scheduled for termination as set forth in the Second Addendum. As per the Second Addendum, the NOBS Supply Agreement was continued in full force and effect up through and including June 30, 2003, except that any references therein to the NOBS2 facility were deleted, and the remaining text conformed to said deletions.
As per this Third Addendum, the NOBS Supply Agreement, and any provisions of the Second Addendum not specifically cancelled herein, shall be continued in full force and effect up through and including June 30, 2004, unless otherwise extended as set forth in paragraphs 6 and 8 of this Third Addendum.
1. The First Amendment was cancelled in its entirety by the Second Addendum except for paragraph 1, and not withstanding anything else in the NOBS Supply Agreement or the Second Addendum, P&G shall have no further obligations whatsoever with respect to the NOBS2 facility or capital associated therewith.
2. The sections with numbers 3, 4, 5, 6, 7, and 8 of the Second Addendum shall be cancelled in their entirety.
3. Section 2 of the Second Addendum shall be cancelled in its entirety and be replaced by the following: "P&G paid *** million in cancellation penalties by September 30, 2001 which began the establishment of a Cancellation Penalties Account. The payment by P&G to Eastman of *** *** Dollars and *** Cents *** on or before July 15,2003 shall constitute payment in full of all P&G obligations to Eastman described in Section 2 of the Second Addendum. Both parties agree to waive the
appraisal requirement for the determination of cancellation penalties (Article 17, Paragraph b) and reimbursement for Alternate Use (Article 17, Paragraph d). All remaining terms in Article 17 shall remain in full force and effect.
Title and ownership of the NOBS plants, equipment and support facilities will remain with Eastman; provided, however, that use thereof shall be for any use other than the production of bleach activators according to Article 2 of the NOBS Supply Agreement. Pursuant to the First Amendment, Eastman had title and ownership of the NOBS2 facility as of April 1, 2002; therefore, if, during the term of the NOBS Supply Agreement as extended by this Second Addendum, Eastman finds an alternate use for the NOBS2 facility that is permitted under Paragraph 2 of the NOBS Supply Agreement, Eastman will be free to use the plant, equipment and support facilities without any reimbursement to P&G. The parties agree that the time period in Paragraph 2 of the NOBS Supply Agreement as it applies to the NOBS2 facility began running as of April 1, 2002. If, after the term of the NOBS Supply Agreement as extended by this Second Addendum, Eastman finds an alternate use for the NOBS1 facility that is permitted under Paragraph 2 of the NOBS Supply Agreement, Eastman will be free to use the plant, equipment and support facilities without any reimbursement to P&G.
4. Section 9 of Addendum 2 will be cancelled in its entirety and replaced as follows: P&G agrees to indemnify and hold harmless Eastman from and against all liabilities, claims, demands, causes of action and other litigation ("Claims") brought against Eastman by Clariant International Ltd., its parent, subsidiaries, agents, employees, contractors, subcontractors, or suppliers as a result of P&G's purchases of NOBS from Eastman under the Second Addendum and all future Addenda and the NOBS Supply Agreement or any new NOBS Supply Agreement. Any limitations on indemnity obligations contained in either the NOBS Supply Agreement or any new NOBS Supply Agreement that may be signed by the parties shall not apply to this indemnification obligation. This indemnity obligation shall survive termination of the NOBS Supply Agreement, all Addendums, and any new NOBS Supply Agreement which may be executed by the parties.
5. The first paragraph of the .NOBS Supply Agreement titled Sale of NOBS shall be stricken and replaced with the following:
Eastman agrees to sell, and P&G agrees to purchase 100% of its requirements for NOBS or NOBS-like materials for use as bleach activators with the exception as described in Paragraph 5; not to exceed *** million pounds on a 100% active basis per Contract Quarter, from Eastman for the duration of this Third Addendum. P&G shall purchase a
minimum of *** million pounds of NOBS on a 100% active basis per Contract Quarter beginning July 1, 2003.
P&G agrees to buy from Eastman, and Eastman agrees to produce for P&G, in the quantities described above, NOBS that meet the specification set forth in Exhibit A of the NOBS Supply Agreement ("Specifications") or any modifications agreed to by both parties and made a part of this Agreement.
If Eastman produces material which does not meet the Specifications, P&G may purchase the material but is under no obligation to do so. The terms and conditions of such a sale shall be negotiated.
6. The following exceptions are made to the 100% requirements purchase and sale obligations set forth in paragraph 4 of this Third Addendum:
6.1 Notwithstanding anything stated in paragraph 4, P&G may purchase up to *** lbs./yr. of NOBS on 100% active basis from an alternate supplier during the first year of the term of this Third Addendum.
6.2 Pursuant to the NOBS Supply Agreement, should P&G's orders for NOBS on a 100% active basis exceed *** million lbs./quarter Eastman shall require 45 days written notice from P&G. Eastman shall within 14 days of receiving such order accept, in part, or in full, such order. If Eastman elects not to accept some or all of such order then P&G may purchase the amount Eastman rejects from alternate suppliers. The price for any NOBS above *** million Ibs./quarter shall be negotiated and agreed to by the parties at such time. Should the parties be unable to agree upon a price, P&G may purchase any amounts over *** million Ibs./quarter from alternate suppliers.
6.3 Should Eastman during any calendar quarter covered by this Third Addendum be unable to supply NOBS on a 100% active basis for which it has accepted a forecast or an order, then P&G may purchase the quantity of NOBS on a 100% active basis that Eastman is unable to supply from an alternate supplier. The amounts purchased pursuant to this paragraph 6.3 shall be included in the volumes used to set the Quarterly Invoice Price and all other fees.
7. Provided that P&G notifies Eastman no later than June 30, 2003 that P&G desires to extend the term of this Third Addendum through and including June 30, 2008, the quarterly sales price for NOBS for invoicing purposes
for the remaining term of the contract shall be calculated by replacing Attachment C, Schedule 1 of the NOBS Supply Agreement with Exhibit 1 of the Third Addendum and all other Attachments to the NOBS Supply Agreement shall apply (The foregoing shall be referred to as the "New Quarterly Invoice Price").
Barring notification from P&G by June 30, 2003; beginning on July 1, 2003, the quarterly sales price for NOBS for invoicing purposes shall be calculated as per the NOBS Supply Agreement and all Attachments thereto ("Quarterly Invoice Price").
Provided that P&G notifies Eastman after June 30, 2003 but by no later than October 1, 2003 that P&G desires to extend the term of this Third Addendum through and including June 30, 2008, then the quarterly sales price for NOBS for invoicing purposes for the remaining term of the contract shall be the New Quarterly Invoice Price.
Should P&G fail to notify Eastman by October 1, 2003 that it wishes to extend this Third Addendum through and including June 30, 2008, then the quarterly sales price for NOBS for the remaining term of the contract, for invoicing purposes shall be the Quarterly Invoice Price.
Provided that P&G notifies Eastman after October 1, 2003 but by no later than January 1, 2004 that P&G desires to extend the term of this Third Addendum through and including June 30, 2008, then the quarterly sales price for NOBS for invoicing purposes for the remaining term of the contract shall be the New Quarterly Invoice Price.
Should P&G fail to notify Eastman by January 1, 2004 that it wishes to extend this Third Addendum through and including June 30, 2008, then the quarterly sales price for NOBS for the remaining term of the contract for invoicing purposes shall be the Quarterly Invoice Price.
Provided that P&G notifies Eastman after January 1, 2004 but by no later than April 1, 2004 that P&G desires to extend the term of this Third Addendum through and including June 30, 2008, then the quarterly sales price for NOBS for invoicing purposes for the remaining term of the contract shall be the New Quarterly Invoice Price.
Should P&G fail to notify Eastman by April 1, 2004 that it wishes to extend this Third Addendum through and including June 30, 2008, then the quarterly sales price for NOBS for the remaining term of the contract for invoicing purposes shall be calculated as per the NOBS Supply Agreement and all Attachments thereto ("Quarterly Invoice Price").
8. Should P&G extend the term of this Third Addendum through and including June 30, 2008, Attachment D of the NOBS Supply Agreement shall be removed and replaced with Exhibit 2 as attached hereto and made a part hereof.
9. Should P&G extend the term of this Third Addendum through and including June 30, 2008, the payment term shall be net 40 days from the date of invoice. This revised payment term shall be effective the first day of the quarter following P&G's exercise of the option described in paragraph 6.
10. At any time, either party may provide notice that it wishes to extend the terms and conditions of this Third Addendum up through and including June 30, 2011. The party receiving notice shall have 30 days to accept or reject such extension. If the receiving party rejects, the contract remains in force as it exists at the time of the notice. Nothing in this paragraph shall modify or eliminate the option in paragraph 6 to extend this contract through and including June 30, 2008. In any event, any such extension of this Third Addendum up through and including June 30, 2011 shall be executed by both parties no later than December 31, 2007.
11. In addition to the Quarterly Invoice Price, P&G agrees to pay the
following Quarterly Fees. A quarterly fee of *** million shall be
assessed on July 1, 2003; a quarterly fee of *** million shall be
assessed on October 1, 2003; a quarterly fee of *** million shall be
|
assessed on January 1, 2004; and a quarterly fee of *** million shall be assessed on April 1, 2004. Each of these fees shall be billed at the beginning of each calendar quarter as noted (July 1, 2003; October 1, 2003; January 1, 2004; April 1, 2004) and shall be due and payable thirty days from date of invoicing.
P&G's extension of this Third Addendum through June 30, 2008 before the assessment/invoice dates in this paragraph shall relieve it of the obligation to remit future Quarterly Fees.
All other fees in the NOBS Supply Agreement shall remain and apply to this Third Addendum.
12. Section 8 of the NOBS supply agreement titled "Process Improvements" shall be deleted in its entirety and replaced with the following:
If, during the Agreement Term, Eastman proposes a material process improvement or material change in raw material which will result in a material change to the characteristics of any NOBS attribute listed on Attachment A of the NOBS Supply Agreement, Eastman will notify in writing P&G of the proposed change. P&G shall notify Eastrnan within
thirty (30) days thereafter whether such change is acceptable. If the change is acceptable and does not require requalification, Eastman may proceed with the change. If the change is acceptable and requires requalification, Eastman and P&G shall negotiate in good faith a price adjustment and schedule for the proposed change, and P&G may agree to such change, if economically viable and if requalification can be accomplished.
If during the Agreement Term Eastman and P&G jointly develop any process improvements that result in cost savings the savings will be shared by the parties, after Eastman has recovered its costs associated in achieving the improvement.
13. Should P&G desire to purchase NOBS from Eastman beyond June 30, 2004, extension of this Third Addendum must be executed no later than April 1,2004. Otherwise, Eastman will not have sufficient time to plan for NOBS production beyond June 30, 2004.
14. For the purposes of this Third Addendum, should P&G notify Eastman of its intent to exercise its rights under paragraph 17(b) of the NOBS Supply Agreement during the term of this Third Addendum, P&G shall immediately pay Eastman a fee of *** ("Additional Termination Fee"), in addition to any and all other amounts due and payable pursuant to the NOBS Supply Agreement and/or all Addenda.
15. Any and all fees due hereunder including but not limited to the Additional Termination Fee and quarterly fees in paragraph 5 hereunder shall be due and payable in addition to all other fees as provided for in the NOBS Supply Agreement should a default occur pursuant to Section 16 of the NOBS Supply Agreement.
ACCEPTED: ACCEPTED:
EASTMAN CHEMICAL COMPANY THE PROCTER & GAMBLE
MANUFACTURING COMPANY
/s/ Fred Buehler /s/ Keith Harrison
---------------------------------- ------------------------------------
Fred Buehler Keith Harrison
Vice President and General Manager Global Product Supply Officer
Performance Chemicals The Procter & Gamble Company
Business Organization
Eastman Chemical Company
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Quantity (NOBS 100%) Million Pounds Price ----------------------------------- ----- Annual Rate Quarterly Rate U.S. $/Lb ----------- -------------- --------- *** *** $ *** *** *** $ *** *** *** $ *** *** *** $ *** *** *** $ *** *** *** $ *** *** *** $ *** *** *** $ *** *** *** $ *** *** *** $ *** *** *** $ *** *** *** $ *** *** *** $ *** *** *** $ *** *** *** $ *** *** *** $ *** |
Prices are based on the quarterly rate of purchases; annual rates are for information only.
NOBS Supersacking Fee
P&G will be invoiced as an invoice line item (a) for NOBS produced from NOBS 1B a supersacking fee determined using the schedule below:
-------------------------------------------------------------------------------------------------
Base Supersacking Fee (X) ($/lb)
------------------------------------------------------------
Millions of Pounds of NOBS to Upon Extension
be Supersacked during such Effective 7/1/2004 to
Contract* Quarter 7/1/2003 to 6/30/2004 6/30/2008
-------------------------------------------------------------------------------------------------
*** *** ***
-------------------------------------------------------------------------------------------------
*** *** ***
-------------------------------------------------------------------------------------------------
*** *** ***
-------------------------------------------------------------------------------------------------
*** *** ***
-------------------------------------------------------------------------------------------------
*Based on forecast quantities. In the event actual supersacked
quantities would result in a different Base Fee (X) being
applicable, an adjustment will be made in the miscellaneous cost
factor (Attachment C of NOBS Supply Agreement) in the next contract
Quarter price calculations.
|
Each of the base fees shall be adjusted by the following formula at the beginning of each Contract Quarter:
***
***
where NSF = New Supersacking Fee
PPI(3) = Producer Price Index most
recently published for the prior
contract quarter
8
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18 June 2003
Mr. Fred Buehler
|
Vice President and General Manager
Performance Chemicals
Business Organization
Eastman Chemical Company
The purpose of this letter is to inform you that The Procter & Gamble Manufacturing Company, et. al ("P&G") is hereby exercising our option with Eastman Chemical Company to extend the Third Addendum of the NOBS Supply Agreement ("Agreement") through and including June 30, 2008 according to Paragraph 7 of the Agreement.
By exercising this option, the following actions shall result:
o As per Paragraph 11 of the Agreement, P&G will be relieved of all Quarterly Fee payments.
o As per Paragraph 7 of the Agreement, P&G's price will be the New Quarterly Price. This shall be calculated by replacing Attachment C, Schedule 1 of the NOBS Supply Agreement with Exhibit 1 of the Third Addendum and all other Attachments to the NOBS Supply Agreement shall apply.
MWB
Debbie Hanser
Debbie, please Sincerely,
put this in the P&G
NOBS contract file.
MAJ
/s/ R. Keith Harrison
R. Keith Harrison
Global Product Supply Officer
The Procter & Gamble Company
cc: R. A. McDonald
S. van Straelen
E. M. Sawicki
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Exhibit 10.8
CUSTOM MANUFACTURING AGREEMENT
BETWEEN
TOMEN CORPORATION
AND
EASTMAN KODAK COMPANY
CUSTOM MANUFACTURING AGREEMENT
This Custom Manufacturing Agreement (this "Agreement") is made as of September 1, 1992 by and between Tomen Corporation, a Japan corporation with its principal place of business located at 14-27 Akasaka 2 chome, Minato-ku, Tokyo, Japan ("Tomen") and Eastman Kodak Company through its Eastman Chemical Company Division, Arkansas Eastman Division and Eastman Fine Chemical business organization, a New Jersey corporation, with offices located at 1999 E. Stone Drive, Kingsport, Tennessee 37662-5300 ("Eastman").
WHEREAS
A. Eastman has the knowledge, expertise and the facilities ,to process certain Raw Materials into Products, each as defined below, in conformance with the specifications set forth in Exhibits A and B hereto, and in manner and fashion which complies with all applicable Environmental Requirements, as defined below.
B. Tomen desires to engage Eastman and Eastman agrees to accept Tomen's engagement to perform the custom manufacturing services described in this Agreement, in accordance with the terms and conditions set forth below.
Accordingly, with the intent to be bound hereby, the parties hereby agree as follows:
When used in this Agreement the capitalized terms listed in this
Section 1 shall have the following meanings:
1.1 "Business Day" means Monday, Tuesday, Wednesday, Thursday or Friday of any week other than such day which constitutes an official United States holiday.
1.2 "Chemicals" means those chemicals and supplies and the specifications therefor, which the parties shall agree to no later than September 25, 1992 and which shall be listed in Exhibit D and incorporated into and made a part of this Agreement (which list expressly excludes any Raw Materials), as necessary for the Processing hereunder and to be obtained by Eastman, at Eastman's expense, from time to time during the Term according to the terms set forth below. The list of, and specifications for Chemicals may be amended by mutual assent of the parties from time to time during the Term.
1.3 "Contract Year" means each period of one year from September 1 of any year through and including August 31 of the next following year.
1.4 "Environmental Requirements" means, any and all present and future federal, state and local laws (whether under common law, statute, rule, regulation or otherwise), requirements under permits issued with respect thereto, and other orders, decrees, judgments, directives or other requirements of any governmental authority relating to health, safety and the environment, to any Hazardous Substances or to any activity involving Hazardous Substances in each case, as applicable to the Plant and Eastman's operations and obligations under this Agreement.
1.5 "Hazardous Substances" means any substance, (i) which is or
becomes defined as a "hazardous waste", "hazardous substance", "pollutant" or
"contaminant" or which otherwise is or becomes regulated under any applicable
federal, state or local statute, regulation, rule or ordinance or common law,
or by any federal, state or local governmental authority with jurisdiction or
(ii) the presence of which requires any investigation or remediation under any
applicable federal, state or local statute, regulation, rule, ordinance or
common law, or by any federal, state or local governmental authority with
jurisdiction. In each case such substances are to include those containing
gasoline, diesel fuel or other petroleum hydrocarbons.
1.6 "Manufacturing Specifications" means the manufacturing, operating and engineering specifications and procedures for each of the Products, as established by the parties and set forth in Exhibit B, which specifications may be amended, in writing, by mutual assent of the parties from time to time during the term of this Agreement.
1.7 "Plant" means the manufacturing facility and the real property underlying such manufacturing facility operated by the Arkansas Eastman Division, located at 2800 Gap Road, Highway 394 East, Batesville, Arkansas, at which the processing of Raw Materials into Products shall occur.
1.8 "Process" or "Processing" means all actions to be taken by Eastman to process Raw Materials into Products, as required under this Agreement, including without limitation: the receiving, unloading, sampling, quality control analysis and storing of all Raw Materials, the conversion of Raw Materials into Products; and the packaging, labeling, quality control analysis and preparing the Products for shipment.
1.9 "Product" or "Products" means, individually or collectively, ***
*** in the form of *** *** and *** (as such terms are defined in Exhibit A), each of which conforming to the applicable Product specifications, as defined in Section 1.10.
1.10 "Product Specifications" means the specifications for each of the Products, as registered with the United States Environmental Protection Agency ("EPA") and set forth in Exhibit A, which specifications may be amended, in writing, by mutual assent of the parties from time to time during the term of this Agreement.
1.11 "Raw Materials" means the two key raw materials, ***, and the specifications therefor, as listed in Exhibit C, as necessary for the Processing hereunder, which raw materials are to be supplied by Tomen to Eastman, at Tomen's expense, from time to time during the Term according to the terms set forth below. Raw Materials expressly includes those materials in the course of being Processed, but prior to becoming a final Product. The list of, and specifications for, Raw Materials may be amended, in writing, by mutual assent of the parties from time to time during the Term.
1.12 "Subject Intellectual Property" means information relating to inventions, discoveries, developments, improvements, methods and processes, know-how, drawings, blueprints, specifications, patents and patent applications, copyrights and trade secrets relating to Products, Product Specifications, Manufacturing Specifications and Processing. Subject Intellectual Property will be disclosed in writing and identified as confidential, or if disclosed otherwise, will be noted as confidential at the time of disclosure and will be confirmed in writing within thirty (30) days of disclosure.
1.13 "Term" means the period of time as set forth in Section 7 below.
2.1 Eastman shall, from time to time during the Term, procure from third party suppliers a sufficient amount of Chemicals, meeting the specifications of Exhibit D, as necessary to fill orders for Processing, placed by Tomen pursuant to Section 3.
2.2 Tomen shall provide to Eastman, at Tomen's expense and as requested by Eastman from time to time during the Term, such amounts of Raw Materials meeting the specifications set forth in Exhibit C, as necessary to fill orders for Processing placed by Tomen under Section 3.
2.3 Eastman shall send Tomen a notice in writing, as soon as possible but at least one hundred and eighty (180) days prior to the date Eastman needs Raw Materials to meet Tomen's request for Products. A notice shall specify the quantity of Raw Materials required and the requested date for delivery. Tomen will use best efforts to deliver such quantity of Materials on the specified date. If, notwithstanding its best efforts, Tomen is unable to deliver the requested quantity on the specified date, Tomen shall promptly notify Eastman and the parties will discuss alternative delivery arrangements and, if necessary, any adjustment to the time period within which Eastman must deliver the batch of Product concerned to Tomen.
2.4 Tomen warrants to Eastman that all Raw Materials shall meet the specifications set forth in Exhibit C. Eastman shall sample and analyze in accordance with the specifications therefor the deliveries of all Raw Materials upon receipt from Tomen but in no event later than thirty (30) days after receipt thereof, and shall determine if such Raw Materials meet the specifications set forth in Exhibit C. Eastman shall report any shortage of Raw Materials or any failure to meet specifications to Tomen, immediately upon becoming aware thereof, but in no event later than forty-five (45) days after receipt unless the nonconformity was not ascertainable or detectable by the testing methods included in the specifications for such Raw Materials.
2.5 Upon receipt of a written notification under Section 2.4, Tomen shall promptly arrange for the delivery of Raw Materials to supplement any shortage, or to replace any Raw Materials not meeting the specifications of Exhibit C. In addition, the parties may discuss, if necessary, any adjustments to the time period within which Eastman must deliver the batch of Product concerned to Tomen. Except as set forth in Section 2.4, Tomen makes no other warranty concerning the merchantability, fitness or other quality of the Raw Materials and Eastman's rights and remedies with respect to any breach of warranty regarding Raw Materials are expressly limited to those set forth in this Section 2.5.
2.6 Eastman shall install, at its expense, refrigerated storage facilities for one truckload of *** and a storage tank for *** gallons of ***, which facilities shall be adequate to maintain the assay of the Raw Materials and which shall comply with applicable Environmental Requirements. If additional storage for Raw Materials is needed during the Term, the parties agree t o discuss arrangements for the provision of such additional storage.
2.7 Eastman shall retain four (4) ounce samples of all Raw Materials received, (refrigerated at *** Fahrenheit, in the case of ***), for a period of not less than one year after receipt from Tomen.
2.8 Raw Materials and Product remaining in the possession of Eastman on the effective date of termination of this Agreement shall be returned to Tomen, or otherwise removed from the Plant upon a schedule to be mutually agreed by the parties, but in no event later than 30 days following the effective date of termination. Tomen agrees that it shall pay the costs of any Raw Materials or Product returned or otherwise disposed by Eastman, provided, however, that Tomen shall not be responsible for any other liabilities, costs or expenses associated with such disposal. Tomen's payment of such disposal fees shall not confer upon Tomen any authority or obligation to direct, in any manner, Eastman's disposal activities hereunder.
3.1 Eastman shall Process for Tomen and Tomen shall accept delivery from Eastman certain quantities of Products meeting the specifications of Exhibits A and B, based upon orders placed by Tomen from time to time during the Term, pursuant to the provisions of Sections 3.3 and 3.4 below.
3.2 Notwithstanding the provisions of Section 3.1, Tomen shall be obligated to accept delivery, and Eastman shall be required to Process a minimum of *** lbs. of *** (in the form of any of the Products) during the first year of the Term and *** lbs. of *** (in the form of any of the Products) during the second year of the Term. Tomen's cumulative acceptance obligations during the first three years of the Term shall be *** lbs. of *** (in the form of any of the Products). In the event that the Term is extended for additional one year periods pursuant to Section 7, the parties shall mutually agree upon the minimum volume of *** to be Processed by Eastman and accepted for delivery by Tomen for such additional periods.
3.3 Tomen shall provide to Eastman, in writing, rolling four-quarter
forecasts of Tomen's expected *** demand, including a specific demand by
volume for the first quarter thereof, which shall be considered a "Fixed
Period". The first rolling four-quarter forecast shall be delivered to Eastman
no later than September 1, 1992. Tomen's forecasts with respect to any Fixed
Period during the Term shall include, to the extent possible, an estimate of
Tomen's monthly demands for ***, specifying the particular Product needed and
the country of final destination. Tomen agrees that it shall place orders,
pursuant to Section 3.4, totaling a minimum of *** pounds of *** during each
Fixed Period, so that Eastman may maximize its manufacturing efficiency. Tomen
shall deliver to Eastman subsequent rolling four-quarter forecasts of its ***
demands, including forecasts for succeeding Fixed Periods no later than thirty
(30) Business Days prior to the first Business
Day of the next succeeding Fixed Period. Forecasts provided by Tomen for any such Fixed Periods shall be final and Tomen shall be obligated to purchase its prior forecasted volumes of *** for such Fixed Period, unless Tomen has delivered written notice to Eastman, on or prior to the first Business Day of such Fixed Period that it wishes to modify its previous demands. In the event Tomen makes such a change it shall be responsible for any demurrage charges applicable to Raw Materials delivered pursuant to the previously forecasted volumes and the shortfall payment specified in Section 3.4.
The parties agree that Tomen may request, from time to time
during the Term, increases in its demand for the then-existing Fixed Period by
sending a written notice thereof to Eastman. Subject to the limitations of
Section 3.5 below, Eastman shall use its best efforts to accommodate any such
request and shall notify Tomen in writing as soon as possible, but in no event
later than five (5) Business Days after receipt of such request, whether or
not Eastman will be able to accommodate the request and any additional costs
which may be associated therewith. As soon as practicable, but in no event
later than five (5) Business Days following Tomen's receipt of Eastman's
response, Tomen will notify Eastman in writing whether or not it accepts the
terms thereof.
3.4 Tomen shall submit written orders to Eastman in quantities of
Product which, when taken in the aggregate for the then existing Fixed Period,
equal the quantity of *** forecasted for such Fixed Period, as provided in
Section 3.3. Tomen shall submit all orders as soon as possible, but in no
event later than five (5) Business Days prior to the date specified by Tomen
in such order for Product pickup. If Tomen should fail to place orders for any
volume of *** forecasted during the then existing Fixed Period, Eastman shall
have the right to invoice Tomen for any such shortfall, within sixty (60)
calendar days following the end of such Fixed Period for an amount equal to
the Processing fee to the extent of such shortfall. Eastman agrees to store
the Product resulting from such shortfall, at no cost to Tomen, up to the
limits of Eastman's then available storage capacity. If Tomen's written orders
during such Fixed Period are for different Products than Tomen forecast for
that Fixed Period, Eastman will use reasonable efforts to fill Tomen's orders
by re-processing Product in inventory and/or relabeling such Products. Tomen
shall pay the fees in Section 4.1 for such re-Processing and/or relabeling. If
Eastman is unable to meet Tomen's orders for different Products in time to
meet Tomen's shipping dates, this shall not constitute a breach hereunder by
Eastman.
3.5 Eastman shall not be obligated to Process in excess of *** lbs.
of *** during any Fixed Period, provided however, that if Tomen provides
-------- -------
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Eastman with written notice no
less than thirty (30) Business Days prior to the first Business Day of the next succeeding Fixed Period, in which such excess volumes of *** are required, Eastman will use its best efforts to utilize any unused available manufacturing capacity to meet Tomen's Processing requirements.
3.6 Eastman shall retain and properly maintain representative samples of each batch of Product, refrigerated as necessary, for a period of not less than two years from the date of manufacture.
3.7 Tomen and Eastman intend that the Raw Materials will be Processed into Products in accordance with the conversion ratios set forth in Exhibit B excluding Products which are re-Processed into different Products as the result of a Tomen order change for which re-Processed Products Eastman shall use its best efforts to achieve the conversion ratios. However, Eastman shall not proceed to the trial campaigns provided in this Section 3.7 until it has been able to successfully achieve the conversion ratios demonstrated by *** in its laboratory on a small-scale in Eastman's laboratory. Eastman shall begin the first trial campaign no later than October 1, 1992.
Recognizing that the conversion ratios set forth in Exhibit B have been developed in pilot scale commercial manufacturing, Eastman will use its best efforts to achieve these ratios during the first trial campaign of ten (10) batches, of approximately *** pounds each. If conversion ratios for either of the Raw Materials is greater than 110% of those listed in Exhibit B after the first three (3) trial batches, Tomen and Eastman will meet to discuss and agree upon a course of action to improve the ratios. If, after an additional two (2) trial batches, no further improvement in conversions has been realized, Tomen and Eastman will meet to discuss and agree upon an interim plan to (i) remedy the higher conversion ratios and (ii) equitably compensate Tomen for losses due to higher Product costs as a result of significantly higher Raw Material usages for the remainder of the trial campaigns. Data from the first trial campaign will be used by Eastman to establish, in writing, ratios for the fifteen (15) batches comprising the second trial campaign. Based on data generated in the second trial campaign, Tomen and Eastman will establish, in writing, final conversion ratios which shall apply for the remainder of the Term.
(6) months has elapsed since the date of any such termination notice, whichever shall occur first.
3.8 During the two trial campaigns to be carried out pursuant to
Section 3.7 and, on an as-needed-basis during calendar year 1993, Tomen shall
use its best efforts to make available to Eastman, representatives of ***
skilled in the manufacturing of the Products, so as to provide technical
assistance to Eastman regarding custom manufacturing. In addition, Tomen shall
use its best efforts to arrange for representatives of Eastman to obtain
access to *** Pilot Plant Manufacturing facility in ***.
3.9 Eastman warrants to Tomen that all Products Processed under this
Agreement shall meet the specifications of Exhibit A and Exhibit B and Tomen
will accept and ship Product on the basis of Eastman's certificate of
analysis. Tomen may, from time to time, spot sample and analyze Product
manufactured by Eastman and Eastman agrees to provide samples of such Product
upon Tomen's request. If Tomen should discover, whether by its own spot
sampling and analysis or otherwise, any shortage, contamination or other
nonconformity hereunder by such Products it shall notify Eastman immediately
upon becoming aware thereof, but in no event later than one hundred and sixty
five (165) days after shipment of such Product. Tomen may elect (i) to not pay
the Processing fee for the deficient Product or to obtain a refund for any
Processing fee paid with respect thereto, (ii) require Eastman to provide
replacement Product, with the cost of additional Raw Materials and delivery
costs associated with such replacement Product to be paid by Eastman. EXCEPT
AS SET FORTH IN THIS SECTION 3.9, EASTMAN MAKES NO OTHER WARRANTY, EXPRESS OR
IMPLIED, INCLUDING WITHOUT LIMITATION ANY WARRANTY CONCERNING THE
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR OTHER QUALITY OF THE
PRODUCTS AND TOMEN'S RIGHTS AND REMEDIES WITH RESPECT TO ANY BREACH OF
WARRANTY REGARDING PRODUCTS, ARE EXPRESSLY LIMITED TO THOSE SET FORTH IN THIS
SECTION 3.9 AND IN SECTION 12.1. IN NO EVENT SHALL EASTMAN BE LIABLE TO TOMEN
HEREUNDER FOR ANY CONSEQUENTIAL OR INCIDENTAL DAMAGES OF TOMEN, EXCEPT AS
SPECIFIED IN SECTION 12.1.
3.10 During the Term, the parties agree to investigate and discuss, on a periodic basis, potential Process improvements which could result in cost savings to either or both of the parties. The parties agree that any cost savings resulting from Process improvements should be shared equally by both parties. In the event that a potential Process improvement is identified, the parties shall discuss mutually agreeable terms for sharing the cost savings thereof, taking into consideration, among other things, the cost of any capital improvements or other costs associated with the implementation of such Process improvements.
3.11 Eastman shall be permitted to make minor changes in the Processing hereunder, provided that Tomen is notified of any changes on a monthly basis of any changes made during the preceding month. Notwithstanding the foregoing, any significant changes proposed by Eastman regarding the Processing must be agreed to by Tomen in writing in advance of Eastman's implementation thereof.
4.1 Tomen shall pay to Eastman a fee for Processing the Raw Materials into Products in accordance with the schedule set forth below. All prices are F.O.B. the Plant, delivered into 55 gallon, non-returnable lined steel drums (as specified in Exhibit B).
Product Base Unit Fee Per Pound
------- -----------------------
*** ***/lb. (as is, ***
***)
*** ***/lb. (as is, ***
*** ***)
*** ***/lb. (as is, ***
***)
4.1.1 For the purposes of meeting the conversion ratios set
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forth in Exhibit B, the parties' minimum purchasing and Processing requirements and the calculation of any shortfall fee or termination fee hereunder, the pounds of Product shipped shall be converted to a 100% assay basis, assuming the Products have the following percentage of active ingredient ***:
Percentage Active
-----------------
Product Ingredient [w/w]
------- ----------------
*** ***
*** ***
***
*** ***
4.1.2 The base unit fees set forth in this Section 4.1 for
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each of the Products shall be subject to annual adjustment, according to the formula set forth in Exhibit E. Eastman shall notify Tomen of such fee adjustment, no later than October 1 of each Contract Year beginning in 1993 with an effective date of January 1 of the following year.
4.1.3 In the event that Tomen purchases less than *** pounds of *** during any of the first three years of the Term, Tomen shall pay a shortfall fee for such year calculated as follows: Tomen shall pay *** per pound for each pound of *** representing the difference between the pounds of *** actually purchased and *** except that Tomen shall pay *** per pound for each pound of *** representing the difference between the pounds of *** actually purchased and ***. Eastman shall invoice Tomen for any shortfall at the end of such contract year and payment shall be due thirty (30) days from the date of such invoice. In the event the term is extended for an additional one year period pursuant to Section 7, the parties shall mutually agree upon the shortfall fee for such additional periods.
4.1.4 If Eastman has to re-Process and/or relabel Product in inventory in order to meet the changes in Tomen's orders in Section 3.4, Eastman shall provide Tomen with reasonable and appropriate fees for such re-Processing and for relabeling.
4.1.5 Eastman shall submit invoices to Tomen, dated as of the date of each shipment of Product. The invoice will detail the Processing fees associated with such shipment, as calculated in accordance with the fee schedule set forth in Section 4.1. Payment shall be due thirty (30) calendar days following the date of such invoice. Unless otherwise expressly provided herein, Tomen's payment obligations shall be limited to the payment of such periodic Processing fees and Tomen shall have no obligation to pay Eastman for any other costs or expenses, of any kind whatsoever, arising from, or associated with Eastman's Processing or its other obligations under this Agreement.
5.1 From time to time during the Term, Tomen shall arrange with Eastman for the periodic pickup from the Plant of Products, Processed pursuant to orders placed by Tomen. Such pickups shall be made in accordance with a time schedule and by carriers mutually agreeable to the parties. The destination for the delivery of Products shall be designated by Tomen, in its sole discretion, F.O.B. the Plant.
5.2 Eastman shall ensure that all Products are properly stored and packaged, and accompanied by appropriate documentation (including without limitation, material safety data sheets to be provided to the carrier), and that such Products are otherwise properly prepared for pickup and transport, in accordance with applicable Environmental Requirements, including without limitation requirements of the Federal Insecticide, Fungicide and Rodenticide Act. Eastman shall provide, on a monthly basis, Certificates of Analysis for each batch of Product picked up by
Tomen's carriers. Tomen shall be responsible for providing appropriate labeling for all packages of Product and Eastman shall be responsible for applying the appropriate label to each Product shipment in accordance with directions from Tomen. A sample copy of the appropriate labels for each of the Products is attached as Exhibit G.
5.3 Eastman will install and maintain at the Plant refrigerated storage facilities for one truckload of Product pending pickup by Tomen's carrier. If additional storage for any Product is needed during the Term, the parties agree to meet and discuss arrangements for the provision of such additional storage. Storage facilities shall be installed and maintained in compliance with applicable Environmental Requirements.
5.4 On a monthly basis, Eastman shall provide any inventory records or similar records necessary to establish a schedule for Product pickup. It is expressly understood that such records will be used only for Tomen's internal business purposes and Eastman's provision of such records to Tomen shall not confer upon Tomen any authority or obligation to direct, in any manner, Eastman's Processing or other obligations hereunder.
6.1 Title to and all other incidents of ownership of all Raw Materials supplied by Tomen and of all Products (upon completion of Processing) shall at all times be in Tomen.
6.2 While any and all Raw Materials, Products, and other property owned by Tomen are in the possession or custody of Eastman, Eastman agrees to bear the risk of loss, degradation, contamination or damage, of any kind or nature whatsoever, except to the extent caused solely by specific technical advice provided by Tomen or on behalf of Tomen by *** technical representatives or by the failure, as determined in accordance with Section 2.4 of this Agreement, to meet the specifications set forth in Exhibit C. The Raw Materials and Products shall be deemed to be in the possession or custody of Eastman until delivered to Tomen's carrier as provided in Section 5.
6.3 During the Term, Eastman shall not impose or permit to be imposed upon any of the Products or Raw Materials any liens or encumbrances of any kind whatsoever.
6.4 Risk of loss regarding any Products shall pass to Tomen upon delivery of the Product to Tomen's carrier, F.O.B. the Plant.
7.1 This Agreement shall become effective and binding upon the parties as of the date first written above.
7.2 Unless earlier terminated pursuant to the provisions of Sections
7.4 or 7.5, this Agreement shall have a term of three years, ending on
September 1, 1995, subject to automatic one- year extensions, as provided in
Section 7.3.
7.3 Unless either party has provided the other with written notice, no later than 270 days prior to the expiration of the then existing term, that such party desires to terminate this Agreement effective as of the date of expiration of such then existing term, the term of this Agreement shall be deemed automatically extended for an additional one-year period. Any extensions shall be upon the terms and conditions set forth in this Agreement, except as otherwise agreed by the parties. All references to "Term" in this Agreement shall apply to any extension term.
7.4 Notwithstanding any other provisions of this Agreement, and subject to the procedures of Section 7.4.1, either party may, without waiver of, or prejudice to any of its other rights and remedies under this Agreement, under applicable law or otherwise, effect a termination of this Agreement by written notice, at any time, if the other party breaches any of its obligations under this Agreement.
7.5 This Agreement also may be terminated:
7.5.1 By mutual assent of the parties;
7.5.2 By either party, in the event that a force majeure event as provided in Section 16 has occurred and has continued for a period of 180 days;
7.5.3 By either party, upon the other party's filing of a voluntary petition for bankruptcy, reorganization or arrangement under any state statute, or upon assignment for the benefit of creditors, or upon the appointment of a receiver or trustee with respect to such party or its assets, or upon the filing of a petition of the kind referenced above, against a party or its assets by a third party, which filing is made without the agreement of the subject party and is not removed or dismissed within sixty (60) calendar days of the date of such filing.
7.5.4 By Tomen, upon sixty (60) days written notice, provided that in the event Tomen elects to terminate under this Section 7.5.4 Tomen shall pay Eastman a termination fee in an amount equal to *** minus *** per pound, for each pound of *** previously purchased by Tomen under this Agreement and for each pound of *** which Tomen is obligated to purchase during the then existing Fixed Period. Such termination fee also shall apply in the event of a termination based upon a breach by Tomen.
8.1 Tomen and Eastman agree to exchange Subject Intellectual Property during the Term in order to assist Eastman in supplying Products to Tomen, and in carrying out all other purposes of this Agreement. Such exchange of Subject Intellectual Property will be according to the following terms:
8.2 For a period of twenty (20) years from the date of the Agreement, Eastman will not use Subject Intellectual Property received from Tomen to produce agricultural or pesticidal chemicals and intermediates therefore for anyone other than Tomen without Tomen's prior written consent.
8.3 For a period of twenty (20) years from the date of this Agreement, Tomen will not use Subject Intellectual Property received from Eastman for any purposes other than to assist Eastman in producing Products for Tomen, except as provided in Section 9, below.
8.4 Subject Intellectual Property will be received and maintained in confidence by the recipient, and the recipient will exercise all reasonable efforts to avoid disclosure of all or any portion of Subject Intellectual Property, except to Recipient's Affiliates, as defined herein, who need such Subject Intellectual Property to fulfill the obligations of the recipient under this Agreement and are bound to the recipient by written obligations
and assurances at least as stringent as those to which the recipient is bound under this Agreement. "Recipients Affiliates" refers to any corporation, company, joint venture, partnership or business organization in which the recipient, directly or indirectly, has a fifty percent (50%) or greater interest in the ownership or control thereof, or any third party which is engaged or consulted or assigned rights and obligations pursuant to the provisions of this Agreement.
8.5 The recipient shall not make copies of Subject Intellectual Property, or any portion thereof, except as required to carry out the purposes of this Agreement and the recipient shall, upon the request of the discloser, return to the discloser all Subject Intellectual Property furnished the recipient in written form, including diagrams, charts, drawings, and shall destroy all copies thereof made by the recipient, or reduced to written form by the recipient, with the exception of one archival copy which shall be kept in a separate limited access file and used solely for the purpose of determining the recipients' obligation hereunder.
8.6 The obligations of Sections 8.2, 8.3, 8.4 and 8.5, above, shall
not apply with respect to any portion of Subject Intellectual Property, (i)
which the recipient proves was developed by the recipient and in the
recipient's possession, prior to the first receipt thereof, directly or
indirectly, from the disclosure; or (ii) which is now, or hereafter becomes
through no act or failure to act on the recipient's part, part of the public
knowledge or is disclosed in a printed publication available to the public;
(iii) otherwise lawfully becomes available to recipient from sources other
than the disclosure; or (iv) which the recipient proves to a court of law's
satisfaction by written evidence, is developed by the recipient without the
benefit of Subject Intellectual Property; provided, however, that the
occurrence of any or all of (i), (ii), (iii) and (iv) shall not be construed
to grant any rights, express or implied, under any patent licensable by the
discloser except as provided under Section 9, herein. Subject Intellectual
Property shall not be deemed to be within one of the foregoing exceptions if
it is merely embraced by more general information available on a
non-confidential basis or in the recipient's possession. In addition, any
combination of features shall not be deemed to be within the foregoing
exceptions unless the combination itself and its principle of operation are
embraced by corresponding information which is within one of the foregoing
exceptions.
8.7 Neither party hereto shall knowingly export, directly or indirectly, any United States source technical data acquired from the other party hereto or any company affiliated with that party, or any direct product of that data, to any country for which the United States government or any agency of that government at the time of export requires an export license or
other governmental approval without first obtaining that license or approval when required by applicable United States law. This obligation shall survive any termination or expiration of this Agreement and shall be independent of any other obligations, any limitations thereon, and any exceptions thereto, which may be stated elsewhere in this Agreement.
9.1 Upon request, Eastman will grant to Tomen a fully paid up,
irrevocable, assignable and non-exclusive license to all Subject Intellectual
Property conceived, made, created, developed or reduced to practice by Eastman
relating to the Products, Product Specifications, Manufacturing Specifications
or Processing during the Term and within three (3) years following the
effective date of termination of this Agreement. Eastman agrees to cooperate
in educating Tomen through periodic meetings at mutually agreeable times and
places and keeping it appraised concerning such developments regarding Subject
Intellectual Property. Eastman agrees not to file any patent, trademark or
copyright applications relating to Subject Intellectual Property during the
Term and within three (3) years following the effective date of termination of
this Agreement, without the express written consent of Tomen. Eastman also
shall not assert any patent, trademark or copyright claims against Tomen or
its agents for the manufacture or use of the Products at any time nor will it
license patents, trademarks or copyrights to any third party for any
agricultural uses or applications of any kind whatsoever during the twenty
(20) year agricultural period referenced in Section 8.3.
9.2 Tomen shall not assert any patent against Eastman in connection with performance of obligations by Eastman under this Agreement.
9.3 Tomen shall indemnify and hold harmless Eastman against all liabilities, demands, damages, expenses or losses from infringement of patents or wrongful use of proprietary information of any third party dictated by the Product Specifications as defined under this Agreement.
9.4 Eastman shall indemnify and hold harmless Tomen against all liabilities, demands, damages, expenses or losses from infringement of patents or wrongful use of proprietary information of any third party by the Process or Processing implemented by Eastman and not dictated by the terms of this Agreement.
10.1 Eastman warrants and represents that:
10.1.1 It has full power and authority to execute, deliver and perform this Agreement; it is a corporation duly organized, validly existing and in good standing under the laws governing its incorporation and has full corporate power and authority to execute, deliver and perform this Agreement;
10.1.2 The execution, delivery and performance of this Agreement have been duly authorized by all necessary action of Eastman.
10.1.3 This Agreement constitutes a legal, valid and binding agreement of Eastman, enforceable against Eastman in accordance with its terms, except as limited by bankruptcy, insolvency, receivership and similar laws in effect from time to time.
10.1.4 Eastman currently possesses the requisite skill, experience, knowledge, personnel and facilities (in respect of custom manufacturing in general, and in respect of the Processing and other obligations of Eastman, specifically) and to the best of its knowledge Eastman further possesses and is in compliance with all necessary licenses, permits and approvals required validly to execute, deliver and perform its obligations under this Agreement, except for those matters described in Section 13 hereof which are the responsibility of Tomen, and is qualified to do business in all jurisdictions where such qualification is required for Eastman's performance hereunder.
10.1.5 Eastman has read and understands the Exhibits attached hereto and fully understands the nature of all Raw Materials, Products, Environmental Requirements, including without limitation, applicable health and safety considerations, and other matters involved in the Processing required hereunder.
10.2 Tomen warrants and represents that:
10.2.1 It has full power and authority to execute, deliver and perform this Agreement; it is a corporation duly organized, validly existing and in good standing under the laws governing its incorporation and has full corporate power and authority to execute, deliver and perform this Agreement;
10.2.2 The execution, delivery and performance of this Agreement have been duly authorized by all necessary action of Tomen; and
10.2.3 This Agreement constitutes a legal, valid and binding agreement of Tomen, enforceable against Tomen in accordance with its terms, except as limited by bankruptcy, insolvency, receivership and similar laws in effect from time to time.
10.2.4 Tomen currently possesses the requisite skill, experience, knowledge, personnel and authority necessary to perform its obligations under this Agreement.
11.1 In addition to the specific covenants of Eastman set forth in this Agreement, Eastman hereby covenants that it shall, at all times during the Term, act in good faith and use sound judgment in performing the Processing and its other obligations hereunder. In performing such obligations, Eastman shall endeavor to the best of its ability to comply with all applicable federal, state and local laws and regulations, including without limitation any Environmental Requirements. In addition, Eastman also shall take such steps which, in the exercise of Eastman's knowledge and expertise in custom manufacturing, may serve to protect human health and the environment.
11.2 Tomen has requested and Eastman intends that no accidental release of Hazardous Substances shall occur during any Processing. Eastman shall, in the exercise of its knowledge and expertise, take all steps as reasonably necessary to prevent any accidental release of Hazardous Substances from occurring.
In the event that any accidental release should occur, it is the responsibility of, and Eastman shall promptly notify applicable governmental authorities and completely investigate, remediate, or otherwise cleanup all released material, in accordance with applicable Environmental Requirements.
In the event that any accidental release of Raw Materials or Product shall occur, Eastman shall notify Tomen when Eastman notifies applicable governmental authorities. Notwithstanding such notification, the parties agree that Eastman shall remain fully responsible for notifying governmental authorities and for undertaking to investigate, remediate, or otherwise cleanup such released material in compliance with applicable Environmental Requirements. Eastman's provision of notice of any release to Tomen shall be solely for Tomen's internal business purposes and shall not confer upon Tomen any authority or obligation to direct, in any manner, any notification, investigation, remediation, or cleanup activities with respect thereto.
11.3 In order to facilitate Eastman's ongoing compliance with its obligations under this Agreement, Eastman shall arrange for an independent consultant selected from the following list of consultants: ***, *** and ***, to perform, at Tomen's expense, a comprehensive environmental assessment of all aspects of Eastman's Processing activities and its other obligations under this Agreement, on a periodic basis but no more frequently than once each Contract Year. The
consultant selected shall prepare a report of its findings and any recommendations with respect thereto.
Promptly upon receipt of an assessment report, Eastman shall implement, to the extent necessary based on its knowledge and expertise, any recommendations required to ensure Eastman's continued compliance with applicable Environmental Requirements. Notwithstanding the recommendations set forth in any assessment report, the parties agree that ultimate responsibility for compliance with Environmental Requirements shall remain with Eastman.
Upon request, Eastman shall provide a copy of any such assessment report to Tomen. The parties agree that such assessment report shall be used solely for Tomen's internal business purposes and neither Eastman's provision of such assessment reports, nor Tomen's payment of the consultant's fees shall confer upon Tomen any authority or obligation to direct, in any manner, Eastman's Processing and other obligations hereunder.
11.4 Eastman shall be responsible for providing all equipment, utilities and personnel necessary for Processing the Raw Materials into Products, as required under this Agreement. All Processing shall be conducted at the Plant and Eastman will endeavor to the best of its ability to conduct this Processing and to operate and maintain the equipment facilities in compliance with applicable Environmental Requirements. Tomen shall, upon request, endeavor to arrange for limited consultation between *** and Eastman, as provided in Section 3.8.
11.5 Eastman will report to Tomen the chemicals previously produced in *** equipment. Eastman will clean all *** equipment so as to obtain a 100 ppm or less residue upon final analysis of the cleaning solutions. This level of cleanliness will be documented, with the records retained for the same period of time as batch records.
11.6 The parties agree that title to any waste generated in connection with the Processing of Raw Materials into Products hereunder shall remain with Eastman and Eastman shall ensure that substantially all wastes, are handled, treated, stored, transported and disposed only at Eastman's on-site facilities; except that, ash generated by Eastman's on-site incinerator and, when such facility due to circumstances beyond Eastman's control is not working, used solvents, shall be properly transported to, and disposed of in a duly licensed offsite hazardous waste facility. Totes and drums shall be properly transported to a duly licensed drum reclaiming facility, selected by Eastman. Eastman shall arrange for the handling, treatment, storage, transporting and disposal of all wastes, totes, and drums and each such action or activity shall be conducted in compliance with applicable Environmental Requirements.
12.1 Eastman shall defend, indemnify, save and hold harmless Tomen and its agents, employees, directors and officers ("Tomen Indemnitees"), from and against any and all damages (including without limitation, compensatory, incidental and consequential damages) indirect and direct losses, claims, liabilities, obligations, demands, judgments, awards, settlements, penalties, deficiencies, suits, proceedings, actions, costs and expenses (including without limitation, the fees and disbursements of attorneys and any consultants), of any kind or nature, whether or not accrued or fixed, absolute or contingent,, due or to become due, which are asserted against or incurred by any of the Tomen Indemnitees, by reason of, arising out of, or in connection with, in whole or in part, any of the following:
(i) except as otherwise expressly limited under this Agreement, any breach of any representation, warranty or covenant of Eastman under this Agreement;
(ii) any Processing or other obligations to be performed by Eastman under this Agreement;
(iii) except as otherwise expressly limited under this Agreement, any loss, damage, degradation or contamination to any Raw Material or Product while such materials are in Eastman's custody or control;
(iv) any actual or alleged presence of Hazardous Substances, on, under, within or migrating from, or into the Plant and any adjacent property (including without limitation the real property underlying Eastman's waste treatment and disposal facilities); and
(v) any actual or alleged liability or responsibility for any investigation, remediation, or other cleanup activity arising from any Hazardous Substances which Eastman, or any of its affiliates by contract, agreement, or otherwise arranged for disposal or treatment or for transport for disposal or treatment, whether at the Plant, Eastman's on-site waste treatment and disposal facility or any other off-site facility.
Notwithstanding the foregoing, Eastman's aggregate liability to Tomen for incidental and conventional damages of Tomen arising from any (i) Product recall; (ii) any failure by Eastman to provide Products to Tomen, as required under Section 3, or (iii) any failure of the Product to meet the specifications of Exhibits A and B and Eastman's aggregate liability for damages arising from third party claims brought against Eastman under
Section 12.2(ii), except as otherwise expressly provided in Section 12.2(ii), shall not exceed *** *** dollars ***. Without limitation of any other rights and remedies of Tomen under this Agreement, the parties agree that Tomen's right to recover any and all costs and expenses, of any kind whatsoever, incurred in connection with Tomen's effort to secure Product from alternate custom manufacturers, on a temporary or permanent basis, as the case may be, including such costs and expenses incurred for any period of time in which Tomen is unable to secure Product, shall not be limited in any way by the preceding sentence. In such event, Eastman shall, at its sole expense cooperate fully with Tomen to facilitate an effective transition to such temporary or permanent alternate custom manufacturer.
The parties also agree that Eastman shall have no liability under
this Section 12.1 for damages, of any kind whatsoever, arising from any (i)
Product recall; (ii) product liability claims with respect to any Product; and
(iii) any failure by Eastman to provide Products to Tomen, as required under
Section 3, to the extent that such damages were caused by the failure, as
determined in accordance with Section 2.4 of this Agreement, of the Raw
Materials to meet the specifications set forth in Exhibit C.
12.2 Tomen shall defend, indemnify, save and hold harmless Eastman and its agents, employees, directors and officers (Eastman "Indemnities" from and against any and all damages (including without limitation, compensatory, incidental and consequential damages) indirect and direct losses, claims, liabilities, obligations, demands, judgments, awards settlements, penalties, deficiencies, suits proceedings, actions, costs and expenses (including without limitation, the fees and disbursements of attorneys and any consultants), of any kind or nature, whether or not accrued or fixed, absolute or contingent, due or to become due, which are asserted against or incurred by any of the Tomen indemnities, by reason of, arising out of, or in connection with, in whole or in part, any of the following:
(i) except as otherwise expressly limited under this Agreement any breach of any representation, warranty or covenant of Tomen under this Agreement;
(ii) any liability or responsibility arising out of any
use of the Products or of products made in whole or
in part from any of the Products including without
limitation claims based on liability attributable
to Eastman's negligence, provided that any such
Product has met the specifications of Exhibit A and
Exhibit B, unless the failure of the Product to
meet the applicable specifications was caused by
the failure, as determined in accordance with
Section 2.4 of this Agreement, of the Raw Materials
to meet the specifications set forth
Notwithstanding the foregoing, in no event shall Tomen be obligated to Eastman under this Section 12.2 to the extent any claims or liability were caused by Eastman's gross negligence or willful misconduct.
14.1 Eastman shall, at its expense, maintain the following insurance during the Term:
(a) Worker's Compensation and Employer's Liability Insurance, as prescribed by applicable law.
(b) Fire Insurance which shall cover all Raw Materials supplied by Tomen, Products and other property owned by Tomen and in Eastman's custody and possession, as provided in this Agreement.
(c) Eastman shall maintain Comprehensive General Liability Insurance in an amount of not less than One Million Dollars ($1,000,000.00).
14.2 Eastman shall provide Tomen upon request with certificates or other documentary evidence of the above insurance satisfactory to Tomen.
14.3 Eastman may, at its option, self-insure as to the above risks in
lieu of providing insurance. If Eastman elects to self-insure, it shall
provide Tomen with certification of such self-insurance, satisfactory to
Tomen. The requirements set forth above are minimum coverage requirements and
are not to be construed, in any way, as a limitation of Eastman's liability
under this Agreement, including, without limitation, its obligations under
Section 12.
15.1 Tomen shall assume responsibility for, and pay all tangible personal property taxes assessed by any governmental authority with respect to the Raw Materials and Products while in Eastman's custody and possession.
15.2 The Processing fees for the Products include all federal, state and local taxes, duties and other governmental charges and fees that may hereafter be imposed on any aspect of the Processing, or the performance of other work hereunder, all of which taxes, duties, charges and fees shall be paid by Eastman.
Except as provided in this Section 16 and as further provided in
Section 7, the parties shall be excused for the period of any delay in the
performance of any obligations under this Agreement, when prevented from
performing such obligations by cause or causes beyond such party's reasonable
control or that could not have been reasonably foreseen and prevented,
including without limitation, civil commotion, war, invasion, rebellion,
hostilities, military or usurped power, sabotage, riots, fire or other acts of
God, strikes, labor disputes, major equipment breakdown, governmental acts or
requirements (including, without limitation, registration cancellation by EPA
or other U.S. or international governmental authority with respect to any of
the Products or those shortages of labor or materials, containers,
transportation equipment and delays in transportation each of
which were beyond the reasonable control of the parties or could not have been reasonably foreseen and prevented. Upon the occurrence of any force majeure event, the affected party shall provide prompt notice to the other, describing the particulars of the occurrence, including an estimate of its expected duration and probable impact on the performance of such party's obligations hereunder and shall furnish periodic reports with respect thereto. Notwithstanding the foregoing, (i) the suspension of performance shall be of no greater scope and no longer duration than is reasonably required by the force majeure event; (ii) no liability of either party which arose before the occurrence of the force majeure event shall be excused because of such occurrence, including, without limitation, any liability of Tomen to purchase Product manufactured by Eastman during any Fixed Period; (iii) the non-performing party shall use all reasonable efforts to continue to perform its obligations hereunder and to cure or correct the event or condition excusing performance; (iv) the non-performing party shall exercise all reasonable efforts to mitigate or limit damages to the other party; and (v) promptly following the occurrence of such force majeure event, the parties shall meet to discuss whether the Term should be extended as a result thereof.
17.1 Eastman shall maintain true and current books and records with regard to Eastman's Processing but excluding financial and cost information, and all transactions related thereto, and shall retain all such books and records for a period of not less than twenty-four (24) months following the effective date of termination of this Agreement.
17.2 Tomen shall have the right, but not the obligation, from time to time during the Term, to have an authorized representative of Tomen, reasonably acceptable to Eastman, interview the salaried or supervisory personnel of Eastman and to review the books and records and Processing operations of Eastman with regard to the quantities of Raw Materials and the actual conversion ratios realized, but excluding financial or cost information with respect thereto. It is expressly agreed that the right to conduct such interviews and reviews shall be solely for Tomen's internal business purposes and Eastman's provision of such rights shall not confer upon Tomen any authority or obligation to direct, in any manner, any of Eastman's Processing or other obligations hereunder. Any interview or review conducted by Tomen pursuant to this section shall be at its own expense and shall be conducted at times reasonably agreeable to Eastman. Eastman agrees to cooperate and assist Tomen in connection therewith.
18.1 No director, employee or agent of Eastman shall give or receive
any commission, fee, rebate, gift or entertainment of significant cost or
value in connection with this Agreement, or enter into any business
arrangement with any director, employee or agent of Tomen or any affiliate
other than as a representative of Tomen, without prior written notification
thereof to Tomen. Eastman shall promptly notify Tomen of any violation of this
Section and any consideration so received shall be paid over or credited to
Tomen. Additionally, if any violation of this section occurring prior to the
date of this Agreement resulted directly or indirectly in Tomen's consent to
enter into this Agreement with Eastman, Tomen may, at its sole option,
terminate this Agreement at any time and, notwithstanding any other provision
of this Agreement, pay no compensation or reimbursement to Eastman whatsoever
for any work done after the effective date of termination of this Agreement.
18.2 No director, employee or agent of Tomen shall give or receive any commission, fee, rebate, gift or entertainment of significant cost or value in connection with this Agreement, or enter into any business arrangement with any director, employee or agent of Eastman or any affiliate other than as a representative of Eastman, without prior written notification thereof to Eastman. Tomen shall promptly notify Eastman of any violation of this Section and any consideration so received shall be paid over or credited to Eastman. Additionally, if any violation of this section occurring prior to the date of this Agreement resulted directly or indirectly in Eastman's consent to enter into this Agreement with Tomen, Eastman may, at its sole option, terminate this Agreement at any time and, notwithstanding any other provision of this Agreement, pay no compensation or reimbursement to Tomen whatsoever for any work done after the effective date of termination of this Agreement.
19.1 Notices under this Agreement shall be given in writing and delivered:
If to Tomen to: Tomen Corporation
14-27 Akasaka 2-chome
Minato-ku
Tokyo, Japan
Attn: General Manager Agro Ecology
Department
|
Fax: 011-813-35889895
With a copy to: Tomen Pacific Agro Company
444 Market Street, Suite 1000
San Francisco, California 94111
Attention: President
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Tel.: 415/788-3400 Fax: 415/788-4070
If to Eastman to: Eastman Fine Chemicals
1999 E. Stone Drive Kingsport, Tennessee 37662-5300 Attn: Manager - Custom Manufacturing Tel.: 615/229-6810 Fax: 615/229-8133 |
or to such other address as may be designated by such party.
19.2 Notices shall be deemed to have been given:
(a) On the same Business Day if the notice has been delivered by hand or sent by facsimile with confirmation of receipt on or prior to 5:00 p.m. as of the place of receipt, or on the next succeeding Business Day if so delivered or sent after 5:00 p.m.; or
(b) On the next succeeding Business Day following receipt of a notice sent by registered or certified U.S. mail, return receipt requested or by a reputable courier service, as evidenced by the return receipt card, or other similar receipt properly endorsed by the receiving party.
The parties hereto agree that all of the provisions of this Agreement and any questions concerning its interpretation and enforcement shall be governed by the internal laws of the State of New York, without applying any rules regarding choice of laws, and the execution and delivery of this Agreement shall be deemed to be the transaction of business within the State of New York for purposes of conferring jurisdiction upon courts located within the State.
Neither party's waiver of the other's breach of any of the provisions of this Agreement shall be deemed to be a waiver of any other provisions hereof (whether or not similar), nor shall any such waiver constitute a continuing waiver, unless otherwise expressly provided by the party granting such waiver.
The representations, warranties and covenants of the parties under this Agreement and each of the parties' respective rights and remedies hereunder (including without limitation, the parties' rights and remedies under Section 12) expressly survive the effective date of termination of this Agreement.
This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors in interest and permitted assigns.
Except as otherwise expressly provided herein, nothing in this Agreement shall entitle any person other than Tomen or Eastman and each of their respective successors and assigns to any claim, cause of action, remedy or right of any kind under this Agreement.
Nothing in this Agreement shall be construed to establish Tomen or Eastman as a partner, joint venturer, agent or other representative of the other. Each is an independent company retaining complete control over and complete responsibility for its own operations and employees. Nothing in this Agreement shall be construed to grant either party any right or authority to assume or create any obligation on behalf or in the name of the other; to accept summons or legal process for the other; or to bind the other in any manner whatsoever.
To the extent applicable to this Agreement and required for
agreements of the size and nature hereof, Eastman shall comply with the
following clauses contained in the Code of Federal Regulations and
incorporated herein by reference: 48 C.F.R. Section 52.203-6 (Subcontractor
Sales to Government); 48 C.F.R. Section 52.219-8, 52.219-9 (utilization of
Small and Small Disadvantaged Business Concerns); 48 C.F.R. Section 52.219-13
(Utilization of Women-Owned Business Concerns); 48 C.F.R. Section 52.222-26
(Equal Opportunity); 48 C.F.R. Section 52.222-35 (Disabled and Vietnam Era
Veterans); 48 C.F.R. Section 52.222-36 (Handicapped Workers); 48 C.F.R.
Section 52.223-2 (Clean Air and Water); and 48 C.F.R. Section 52.223-3
(Hazardous Material Identification and Material Safety Data). Unless
previously provided, if the value of this Agreement exceeds $10,000 and if
required for agreements of the size and nature hereof, Eastman shall provide a
Certificate of Nonsegregated Facilities to Tomen in the form attached as
Exhibit F. Eastman agrees and covenants that none of its employees who provide
services to Tomen pursuant to this Agreement are unauthorized aliens as
defined in the Immigration Reform and Control Act of 1986.
This Agreement constitutes the entire agreement between the parties hereto pertaining to the subject matter hereof and supersedes all prior agreements, understandings, negotiations and discussions of the parties, whether oral or written, and there are no warranties, representations or other agreements between the parties in connection with the subject matter hereof except as specifically set forth herein. No supplement, modification, waiver or termination of this Agreement shall be implied from any conduct of the parties or trade custom or usage, but to be binding must be executed in writing by the party to be bound thereby.
In the event that the parties are unable within a period of ninety
(90) days to resolve any dispute between them concerning the scope or
interpretation of this Agreement following the exercise of diligent efforts by
both parties, either party may submit the matter to arbitration for
resolution. Arbitration shall be held in San Francisco, California before
three arbitrators. Each party shall select one arbitrator and the two
arbitrators so selected shall select the third arbitrator. The rules of
commercial arbitration of the American Arbitration Association in effect on
the date the matter is submitted to arbitration shall apply. The decision of
the arbitrators shall be in writing and shall contain the findings of fact and
conclusions of law on which their decision is based. Unless clearly erroneous, such decision shall be final and binding on the parties and may be enforced in any court of competent jurisdiction.
This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
If any provision of this Agreement shall be determined to be void or unenforceable, the remaining provisions of this Agreement shall not be affected thereby, and every other provision of this Agreement shall remain in full force and effect and enforceable to the fullest extent permitted by law.
The headings appearing in this Agreement are inserted only as a
matter of convenience and in no way define or limit the scope or intent of any
Section of this Agreement.
The parties each agree to execute additional instruments and documents and to do all such further things as the other party may reasonably require in order to carry out the intent of this Agreement. In addition, the parties agree to reasonably cooperate with one another in connection with the execution of the other parties' obligations hereunder.
THIS AGREEMENT HAS BEEN DULY EXECUTED AND DELIVERED BY THE UNDERSIGNED AUTHORIZED OFFICERS OF BOTH PARTIES AS OF THE DATE FIRST WRITTEN ABOVE.
EASTMAN KODAK COMPANY TOMEN CORPORATION
By: /s/ Robert M. Morrow By: /s/
--------------------------------- ---------------------------------
Title: Title:
Vice President and General Manager Managing Director
------------------------------------ ------------------------------------
28
|
September 25, 1992 Tomen Pacific Agro Company Division of Tomen America Inc. 444 Market Street, Suite 1060 San Francisco, CA 94111 |
Gentlemen:
Subject: Custom Manufacturing Agreement Dated September 1, 1992
With respect to the above-captioned agreement between Eastman Kodak Company ("Eastman") and Tomen Corporation ("Tomen"), Eastman and Tomen hereby agree that, in addition to the services therein specified to be performed by Eastman, Eastman shall prepare shipping documents, including without limitation bills of lading, for and on behalf of Tomen in connection with the shipment of Product (as therein defined) in accordance with directions to be given to Eastman by Tomen, and Eastman is hereby appointed Tomen's agent and given a limited revocable power of attorney to sign such shipping documents, limited solely to such actions. In no event shall Eastman be considered to be an agent of Tomen for any other purpose, or shall Tomen be considered an employee or partner of Eastman. Eastman's compensation for performing such services shall be the fees stated in the Custom Manufacturing Agreement cited above, and the agreement set forth in this letter, insofar as it relates to the performance by Eastman of such additional services and the grant of an agency and power of attorney herein made may be terminated by either party at any time on ten (10) days' prior written notice to the other party. Notwithstanding the execution of such documents as hereinabove described by Eastman, Eastman shall not be considered the shipper of Products, nor are the terms of delivery or provisions on risk of loss applicable under the above-captioned contract amended or modified in any way, but remain in full force and effect.
Tomen Pacific Agro Company
September 25, 1992
In addition, in consideration of the performance by Eastman of such services, Tomen agrees to indemnify and bold Eastman harmless from and indemnify Eastman for any and all losses, claims and liability (including reasonable attorneys' fees and expenses) incurred by Eastman in performing the services relating to preparation of shipping documents described above where such services are performed in accordance with directions received from Tomen.
If you are in agreement with the foregoing please sign below and deliver one executed copy of this letter to the undersigned.
Eastman Kodak Company, through its Eastman Chemical Company division
By: /s/ R. M. Morrow
-----------------------------------
R. M. Morrow
Vice President and General Manager
Eastman Fine Chemicals
Eastman Chemical Company
|
Agreed upon:
Tomen Corporation
By: /s/
-----------------------------------
Date: Oct 2, `92
-----------------------------------
|
WP0048
February 1, 1993
Dr. D. K. Krass
Tomen Pacific Agro Company
Division of Tomen America
444 Market Street, Suite 1060
San Francisco, CA 94111
Re: Custom Manufacturing Agreement
Dear Denny:
This letter agreement is being sent to address the issue of the purity of the Raw Materials being processed by Eastman Kodak Company ("Eastman") pursuant to the above-captioned agreement between Eastman and Tomen Corporation ("Toment") dated as of September 1, 1992 (the "Agreement"). Eastman and Tomen hereby agree, notwithstanding any other provisions in the Agreement, that if Eastman receives Raw Materials that either (a) meet the specifications in Exhibit C but with respect to ***, in which there is an impurity that at *** minutes has an area % of greater than *** in a "fingerprint test", which it has reason to believe might cause the Products to fail to meet any applicable product specifications or (b) fail to meet the specifications of Exhibit C therefor, and in either case Eastman notifies Tomen, as provided in Section 2.4 of the Agreement, of such impurities, and Tomen notifies Eastman that Eastman is to proceed with processing such Raw Material, then any Products manufactured totally or partially from such Raw Materials will be considered as meeting the Product Specifications for the purpose of the Agreement to the extent that Eastman demonstrates that any failure of the Product to meet the product specifications was caused by such impurity in the Raw Materials or the failure of the Raw Materials to meet the specifications of Exhibit C. The Agreement shall not otherwise be affected by this document and shall remain in full force and effect. Capitalized terms used herein and not otherwise defined shall have the meanings ascribed to them in the Agreement.
Dr. D. K Krass
February 1, 1993
If you are in agreement with the foregoing, please sign below on behalf of Tomen Corporation and deliver one executed copy of this letter to the undersigned.
EASTMAN KODAK COMPANY, through its
Eastman Chemical Company division
By: /s/ R. M. Morrow
-----------------------------------
R. M. Morrow
Vice President and General Manager
Eastman Fine Chemicals
Eastman Chemical Company
|
AGREED UPON:
TOMEN CORPORATION
By: /s/
-----------------------------------
Title: Managing Director
--------------------------------
Date: Feb 1, `93
--------------------------------
|
March 19, 1993
Mr. James S. Cornell
Manager, Business Development
Eastman Fine Chemicals
P.O. Box 431
Kingsport, Tennessee 37662
Dear Jim:
This letter will serve to summarize our earlier discussions concerning what we have agreed upon as an interim measure on conversion (usages) of *** and ***. According to Article 3.7 of the *** Custom Manufacturing Contract, the averages of batches *** would be used to establish the final conversions to be used for the remainder of the contract. However, after *** batches there was still more variability in the individual batch conversions than was desirable, and Eastman requested that Tomen accept the averages of the first *** batches rather than just batches *** (see attached JAN 06 '93 Fax from J. Cornell to D. Krass.
What has been tentatively agreed is that Eastman will accept the values currently stated in Exhibit B of the *** Custom Manufacturing Agreement *** *** and *** as the target conversion values for a three (3) month period (mutually agreed to end on March 31, 1993). During this three month period Eastman would use its best efforts to achieve these "target" values. However, Eastman would not be penalized for conversions up to the averages of the first *** batches *** and ***. Conversions would be based on the average of all batches of *** technical manufactured, starting with batch *** through the last batch completed by March 31, 1993 (minus any batches that are mutually agreed to be deleted due to assignable causes).
If Eastman achieves average conversions better than the "target" values for this three month period, they would be eligible to receive 50% of the savings that Tomen realized on the raw materials resulting from these improved conversions (based on 3 month averages as noted above). Likewise, if the averages were higher (worse) than the first *** batch average for either *** or *** *** and *** Eastman
would reimburse Tomen for the cost of the additional raw material(s) used. At the end of this three month period (March 31,1993), Eastman and Tomen will meet to discuss establishment of final conversion values to be used in the contract.
I believe this accurately represents what we have agreed upon to date. The only thing that remains is to establish a value for the *** and *** raw materials which can be used for the purposes of calculating savings/penalties. What I would like to propose, for simplicity's sake, is an average value for each raw material, based on weighted costs (including any shipping, duties, rental and warehousing costs) which could be adjusted either quarterly or semiannually.
If agreeable, I would like to propose the following values for *** and *** to be used for the purpose of conversion adjustment, if needed:
*** ***/lb (***/lb ***% basis)
*** ***/lb (***/lb ***% basis)
If this proposal is acceptable to Eastman, please indicate by signing below and returning a copy of this signed letter to me.
Sincerely,
/s/ Dennis K. Krass
Understood and Agreed to:
|
Eastman Fine Chemicals
Eastman Kodak Company
Signed: /s/ R. M. Morrow
----------------------------------------------
R. M. Morrow
Name: Vice President and General Manager
-----------------------------------------------
Date: March 30, 1993
------------------------------------------------
|
SECOND AMENDMENT TO CUSTOM MANUFACTURING AGREEMENT
This Amendment, dated as of the 28th day of September 1995, by and between Eastman Chemical Company, a Delaware corporation ("Eastman") and Tomen Corporation, Japanese corporation ("Tomen").
WITNESSETH
WHEREAS, Eastman and Tomen are parties to that certain Custom Manufacturing Agreement dated as of September 1, 1992, with Eastman being the successor in interest thereunder to Eastman Kodak Company (the "Agreement"); and
WHEREAS, the Agreement was amended on March 19, 1993; and
WHEREAS, Eastman and Tomen desire to further amend the Agreement in the manner hereinafter provided.
NOW, THEREFORE, in consideration of the premises and mutual covenants hereinafter provided, the parties hereto agree to amend the Agreement as follows:
1. Section 1.9 is hereby amended by adding the following to the definition of "Product", by inserting the following after the word ***: "***, *** and *** and ***"
2. Section 2.6 is hereby amended by changing the number "***" to "***".
3. Section 3.2 is hereby amended by adding the fallowing after
the second sentence therein: "Tomen shall be obligated to
accept delivery, and Eastman shall be required to Process,
the following pounds of *** *** during the respective
calendar years: 1995 - ***; 1996 - ***; 1997 - ***; and 1998
- ***." In the event Tomen purchases during any such
calendar year an amount in excess of the applicable
foregoing quantity, the excess amount shall be added to the
quantity purchased during the following calendar year, for
purposes of calculating hereunder any shortfall fee due for
purchases in such following calendar year pursuant to
Section 4.1.3."
4. Section 3.5 is hereby amended by changing the number "***" to "***."
5. A new Section 3.12 is hereby added to the Agreement to read as follows:
"3.12 If the quantity of any Product from a specific
batch results in the last drum for that specific
Product not being completely filled with Product
(the "Heel Drum"), the same Product from the next
batch shall be put in such Heel Drum to fill it to
its full weight, after the prior batch has been
analyzed by Eastman, and it shall then be labeled
and shipped as being filled from the such next
batch."
|
*** *** (as is, *** [w/w] ***) *** *** (as is, *** [w/w] ***) *** *** (as is, *** [w/w] ***)
*** ***
*** ***
*** ***
*** ***
*** ***
*** ***
*** ***
8. Section 4.1.3 is hereby amended by adding the following after the end of the second sentence (after the words "actually purchased and ***"): "In the event that Tomen purchases less than the amounts specified in Section 3.2 during any calendar year thereafter, beginning with calendar year 1995, Tomen shall pay a shortfall fee for such year calculated as follows: Tomen shall pay *** per pound for each such pound of *** representing the difference between the pounds of *** actually purchased and the quantity specified in Section 3.2 for such calendar year.
9. Section 5.3 is hereby amended by changing the words "*** truckload" in the first sentence thereof to "*** truckloads".
10. Section 7.2 is hereby amended by changing the words "a term of three years, ending on September 1, 1995" to "a term of six years, ending on September 1, 1998."
11. Section 7.5.4 is hereby amended by changing the number "***" to "***".
12. Exhibit A is hereby amended by adding thereto the specification sheets, Attachment A hereto, for the following products: ***; *** ***, ***; ***; ***; ***; and ***.
13. Exhibit B is hereby amended by adding the paragraphs in Attachment B hereto, to the respective sections captioned "Raw Materials/Chemical Usage," "Preparation of ***," "Analytic Methods" and "Drawings."
14. Exhibits C, D and E are hereby deleted and replaced in their entirety with such respectively captioned Exhibits attached hereto as Attachment C.
15. Exhibit G is hereby amended by adding thereto the labels for ***, ***, *** and *** included in Attachment D hereto.
The Agreement otherwise remains in full force and effect.
IN WITNESS THEREOF, the parties hereto have caused this Amendment to be executed and delivered by their duly authorized officers as of the date and year first above written.
EASTMAN CHEMICAL COMPANY TOMEN CORPORATION
By: /s/ Robert M. Morrow By: /s/ Dennis K. Krass
-------------------------------- --------------------------------
Title: VP/GM Eastman Fine Chemicals Title: President
---------------------------- ----------------------------
Tomen Agro, Inc.
|
Amendment to the Custom Manufacturing Agreement
This Amendment, effective as of October 30, 1998, is entered into by and between Eastman Chemical Company, a Delaware corporation ("Eastman") and Tomen Agro, Inc., a California corporation ("Tomen").
Recitals
A. Eastman and Tomen are parties to that certain Custom Manufacturing Agreement between Tomen Corporation and Eastman Kodak Company, effective September 1, 1992, assigned to Tomen Agro, Inc. and Eastman Chemical Company, as amended, pursuant to which Eastman manufactures *** for Tomen ("Agreement"); and
B. Eastman and Tomen desire to amend the Agreement in the manner hereinafter provided.
NOW, THEREFORE, with intent to be bound and for reasonable consideration, the parties agree as follows:
1. Section 7.2 is amended to read as follows:
7.2 Unless earlier terminated pursuant to the
provisions of Sections 7.4 or 7.5, this Agreement
shall expire on December 31, 2001, subject to
extensions, as provided in Section 7.3.
2. This Amendment supersedes all prior amendments of Sections 7.2.
3. The Agreement otherwise remains in full force and effect.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by their duly authorized officers effective as of the date and year first above written.
EASTMAN CHEMICAL COMPANY TOMEN AGRO, INC.
By: /s/ Robert M. Morrow By: /s/ Dennis K. Krass
-------------------------------- -----------------------------------
Name: Robert M. Morrow Name: Dennis K. Krass
------------------------------ ---------------------------------
Title: VP & General Manager, Title: President
Fine Chemicals Business ------------------------------
Organization Date: Nov 9, 1998
----------------------------- -------------------------------
Date: Oct. 30, 1998
------------------------------
|
FOURTH AMENDMENT TO CUSTOM MANUFACTURING AGREEMENT
This amendment, dated as of the 24th day of May 1999, by and between Eastman Chemical Company, a Delaware corporation ("Eastman") and Tomen Agro, Inc., a California corporation ("Tomen").
WITNESSETH
WHEREAS, Eastman and Tomen are parties to that certain Custom Manufacturing Agreement dated as of September 1, 1992, with Eastman being the successor in interest thereunder to Eastman Kodak Company and Tomen being the assignee of Tomen Corporation (the "Agreement"); and
WHEREAS, the Agreement was amended on March 19, 1993 and September 28, 1995, and October 30, 1998, and;
WHEREAS, Eastman and Tomen desire to further amend the Agreement in the manner hereinafter provided.
NOW, THEREFORE, in consideration of the premises and mutual covenants hereinafter provided, the parties hereto agree to amend the Agreement as follows:
1. Section 1.9 is hereby amended by adding the following to the definition of "Product", by inserting the following after the word(s) `*** ***, *** and *** and ***: ***
2. Section 4.1 is hereby amended by adding the following under the respective columns "Product" and "Base Unit Fee per
------- -----------------
Pound":
-----
*** ***/lb (as is, *** [w/w] ***)
|
3. Section 4.1.1 is hereby amended by adding to the product list therein the following, under the respective columns "Product" and "Percentage Active Ingredient [w/w]":
*** ***
4. Exhibit A is hereby amended by adding thereto the specification sheet, Attachment A hereto, for the following product: ***
5. Exhibit G is hereby amended by adding thereto the label for *** *** in Attachment D hereto.
The Agreement otherwise remains in full force and effect.
IN WITNESS THEREOF, the parties hereto have caused this Amendment to be executed and delivered by their duly authorized officers as of the date and year first above written.
EASTMAN CHEMICAL COMPANY TOMEN AGRO, INC.
By: /s/ Robert M. Morrow By: /s/ Dennis K. Krass
-------------------------------- ---------------------------------
Title: Vice President & Title: President
General Manager ------------------------------
-----------------------------
|
FIFTH AMENDMENT TO CUSTOM MANUFACTURING AGREEMENT
This Amendment, dated as of the 10th day of November, 1999, by and between Eastman Chemical Company, a Delaware corporation (`Eastman") and Tomen Agro, Inc., a California corporation ("Tomen").
WITNESSETH
WHEREAS, Eastman and Tomen are parties to that certain Custom Manufacturing Agreement dated as of September 1, 1992, with Eastman being the successor in interest thereunder to Eastman Kodak Company and Tomen being the assignee of Tomen Corporation (the "Agreement"); and
WHEREAS, the Agreement was amended on March 19, 1993 and September 28, 1995, and October 30, 1998, and May 24, 1999, and;
WHEREAS, Eastman and Tomen desire to further amend the Agreement in the manner hereinafter provided.
NOW, THEREFORE, in consideration of the premises and mutual covenants hereinafter provided, the parties hereto agree to amend the Agreement as follows:
1. Section 7.2 is hereby amended by changing the words "this Agreement shall expire on December 31 ,2001, subject to extensions, as provided in Section 7.3" to "this Agreement shall expire on September 1, 2005, subject to extensions, as provided in Section 7.3."
The Agreement otherwise remains in full force and effect.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed and delivered by their duly authorized officers as of the date and year first written above.
EASTMAN CHEMICAL COMPANY TOMEN AGRO, INC.
By: /s/ By: /s/ Dennis K. Krass
-------------------------------- ---------------------------------
Title: Vice President & Title: President
General Manager ------------------------------
-----------------------------
|
SIXTH AMENDMENT TO CUSTOM MANUFACTURING AGREEMENT
This amendment, dated as of the 12th day of December 2000, by and between Eastman Chemical Company, a Delaware corporation ("Eastman") and Tomen Agro, Inc., a California corporation ("Tomen").
WITNESSETH
WHEREAS, Eastman and Tomen are parties to that certain Custom Manufacturing Agreement dated as of September 1, 1992, with Eastman being the successor in interest thereunder to Eastman Kodak Company and Tomen being the assignee of Tomen Corporation (the "Agreement"); and
WHEREAS, the Agreement was amended on March 19, 1993, and September 28, 1995, and October 30, 1998, and May 24, 1999, and November 10, 1999, and;
WHEREAS, Eastman and Tomen desire to further amend the Agreement in the manner hereinafter provided.
NOW, THEREFORE, in consideration of the premises and mutual covenants hereinafter provided, the parties hereto agree to amend the Agreement as follows:
1. Section 1.9 is hereby amended by adding the following to the definition of "Product," by inserting the following after the word(s) "*** and ***, *** and ***; ***
*** ***/lb (***% w/w ***)
3. Section 4.1.1 is hereby amended by adding to the product list therein the following, under the respective columns "Product" and "Percentage Active Ingredients [w/w]"; *** *** ***%
4. Exhibit A is hereby amended by adding thereto the specification, Attachment A hereto, for the following product: ***
5. Exhibit G is hereby amended by adding thereto the label for *** in Attachment D hereto.
The Agreement otherwise remains in full force and effect.
IN WITNESS THEREOF, the parties hereto have caused this Amendment to be executed and delivered by their duly authorized officers as of the date and year first above written.
EASTMAN CHEMICAL COMPANY TOMEN AGRO, INC.
By: /s/ By: /s/ Dennis K. Krass
-------------------------------- ---------------------------------
Title: Vice President & Title: President
General Manager ------------------------------
-----------------------------
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July 25, 2006
Arysta LifeScience North America Corporation
15401 Weston Parkway, Suite 150
Cary, NC 27513
Attention: Mr. William Lewis, President
Re: Conversion Agreement between Tomen Corporation .(now Arysta LifeScience)
and Eastman Chemical Company effective October 1, 1993 and Custom
Manufacturing Agreement between Tomen Corporation (now Arysta LifeScience)
(the "Company") and Eastman Kodak Company (now Eastman Chemical Company)
effective September 1, 1992 (the "Agreements")
Dear Mr. Lewis:
Effective October 4, 2005, Eastman Chemical Company ("Eastman") assigned all of its right, title and interest in the assets related to its Batesville, Arkansas manufacturing site to Eastman SE, Inc. ("Eastman SE"), a wholly owned subsidiary of Eastman. As part of that assignment, Eastman agreed to assign to Eastman SE, and Eastman SE agreed to accept, Eastman's rights and obligations under the Agreements. Under the terms of the Agreements, assignments of the Agreements require the Company's prior written consent.
Please acknowledge your consent to the proposed assignment of the Agreements by Eastman to Eastman SE by signing both copies of this letter, faxing a copy to Debra Dinsmore, Advanced Paralegal, at 423.229.8489 and returning one of the duplicate originals of this letter to Ms. Dinsmore, at the above address.
Thank you for your cooperation.
Yours truly,
Eastman Chemical Company
By: /s/ Prentice McKibben/dd
--------------------------------------------------
Prentice McKibben
Vice President, Corporate Development & Strategic Planning
|
cc: Phillip Crowder, Account Executive PCIBO
Tony Mash, Arysta
Young-Jin Lee, Arysta
CONSENT TO ASSIGNMENT GRANTED BY ARYSTA LIFESCIENCE
By: /s/ William M. Lewis
-----------------------------------------
Printed Name: William M. Lewis
-------------------------------
Title: President and CEO
--------------------------------------
Date: 8/8/06
--------------------------------------
|
Exhibit 10.9
CONVERSION AGREEMENT
BETWEEN
TOMEN CORPORATION AND EASTMAN CHEMICAL COMPANY
This Conversion Agreement (this "Agreement") is made as of October 1, 1993 by and between Tomen Corporation, a Japan corporation with its principal place of business located at 14-27 Akasaka 2 chome, Minato-ku, Tokyo, Japan ("Tomen") and Eastman Chemical Company acting through its Eastman Fine Chemicals business organization, a Delaware corporation, with offices located at 1999 E. Stone Drive, Kingsport, Tennessee 37662-5300 ("Eastman").
WHEREAS:
A. Eastman has the knowledge, expertise and the facilities to process
certain Raw Materials into ***
(hereinafter "***") as defined below, in conformance with the specifications
set forth in Exhibit A.
B. Tomen desires to engage Eastman and Eastman agrees to accept Tomen's engagement to convert Raw Materials into *** as described in this Agreement, in accordance with the terms and conditions set forth below.
Accordingly, with the intent to be bound hereby, the parties hereby agree as follows:
1. Definitions
When used in this Agreement the capitalized terms listed in this Section 1 shall have the following meanings:
1.1 "Business Day" means Monday, Tuesday, Wednesday, Thursday or Friday of any week other than such day which constitutes an official United States holiday.
1.2 "***" means *** *** manufactured pursuant to the Custom Manufacturing Agreement.
1.3 "Contract Year" means each period of one year from October 1 of any year through and including September 30 of the next following year.
1.4 "Custom Manufacturing Agreement" means the Custom Manufacturing Agreement dated September 1, 1992 between Eastman and Tomen.
1.5 "Environmental Requirements" means, any and all present and future federal, state and local laws (whether under common law, statute, rule, regulation or otherwise), requirements under permits issued with respect thereto, and other orders, decrees, judgments, directives or other requirements of any governmental authority relating to health, safety and the environment, to any Hazardous Substances or to any activity involving Hazardous Substances in each case, as applicable to the Plant and Eastman's operations and obligations under this Agreement.
1.6 "Hazardous Substances" means any substance, (i) which is or
becomes defined as a "hazardous waste", "hazardous substance", "pollutant" or
"contaminant" or which otherwise is or becomes regulated under any applicable
federal, state or local statute, regulation, rule or ordinance or common law,
or by any federal, state or local governmental authority with jurisdiction or
(ii) the presence of which requires any investigation or remediation under any
applicable federal, state or local statute, regulation, rule, ordinance or
common law, or by any federal, state or local governmental authority with
jurisdiction. In each case such substances are to include those containing
gasoline, diesel fuel or other petroleum hydrocarbons.
1.7 "Plant" means the manufacturing facility and the real property underlying such manufacturing facility operated by the Arkansas Eastman Division, located at 2800 Gap Road, Highway 394 East, Batesville, Arkansas, at which conversion and supply of *** shall occur.
1.8 "*** Specifications" means the specifications set forth in Exhibit A, which specification may be amended, in writing, by mutual assent of the parties from time to time during the term of this Agreement.
1.9 "Processing" means all actions to be taken by Eastman to process Raw Materials into ***, as required under this Agreement, including, without limitation, the receiving, unloading, sampling, quality control analysis and storing of all Raw Materials, the conversion of Raw Materials into ***, and the storage, quality control analysis and preparation of *** for conversion to Products.
1.10 "Products" means ***, *** and *** Technical products manufactured by Eastman under the Custom Manufacturing Agreement.
1.11 "Raw Materials" means *** and *** supplied by Tomen and meeting the specifications set forth in Exhibit D.
1.12 "Subject Intellectual Property" means all information and know-how relating to the manufacture of *** including inventions, discoveries, developments, improvements, methods and processes, know-how, drawings, blueprints, specifications, patents and patent applications, copyrights and trade secrets. Subject Intellectual Property will be disclosed in
writing and identified as confidential, or if disclosed otherwise, will be noted as confidential at the time of disclosure and will be confirmed in writing within thirty (30) days of disclosure.
1.13 "Term" means the period of time as set forth in Section 6 below.
2. Production of ***
2.1 Eastman shall supply *** exclusively to Tomen, and Tomen shall
accept delivery from Eastman of such quantities of *** pursuant to orders
placed by Tomen from time to time during the Term, pursuant to the provisions
of Sections 2.5 and 2.6 below. During the period from the date hereof until
fifteen (15) batches of *** have been produced, Eastman will use its best
efforts to produce *** that meets the *** specifications set forth in Exhibit
A and that meets the target conversion ratios for the Raw Materials set forth
in Exhibit C. In the event that any of these batches of *** do not meet the
agreed specifications, Eastman will investigate alternate storage for such
batches until the parties can mutually decide on the disposition of such
batches. After such fifteen (15) batches have been produced, the parties will
meet to discuss any changes to these specifications and conversion ratios. If
the conversion ratio for either of the raw materials is greater than 110% of
those listed in Exhibit C or if the *** batches do not meet the specification
when averaged, after production of the first fifteen (15) batches, Tomen and
Eastman will discuss and agree on a course of action to improve the ratios and
*** quality. During the period from which agreement on such specifications and
conversion ratios is reached until fifteen (15) more batches are produced, the
*** will meet such specifications and conversion ratios as has been agreed by
the parties. In the event that any of these batches of *** do not meet the
agreed specifications, Eastman will investigate alternate storage for such
batches until the parties can mutually decide on the disposition of such
batches. After such additional fifteen (15) batches have been produced, the
parties will meet again to negotiate further changes, if desired by either
party, to the conversion ratios and specifications. If no further improvement
in conversion ratios or *** quality has been realized, Tomen and Eastman will
agree upon a further interim plan to (i) remedy the higher conversion ratios
and *** quality and (ii) equitably compensate Tomen for losses due to higher
*** cost if as a result there would be significantly higher Raw Material
usages for the remainder of the trial campaigns. During the period from which
agreement on such conversion ratios and specifications is reached until thirty
(30) more batches are produced, the *** will meet such conversion ratios and
specifications. In the event that any of these batches of *** do not meet the
agreed specifications, Eastman will investigate alternate storage for such
batches until the parties can mutually decide on the disposition of such
batches. After such additional thirty (30) batches have been produced, the
parties will meet again to negotiate further changes, if desired by either
party, to the conversion ratios and specifications, but if the parties are
unable to reach agreement on these matters within thirty (30) days after such
discussions begin, either party may notify the other in writing of its desire
to terminate this Agreement. Such termination shall be without liability to
either party (other than the liability pursuant to Sections 7, 8, and 11)
provided, however, that the
effective date of termination shall not occur until such time as Tomen has secured alternate manufacturing for ***, or until six (6) months has elapsed since the date of any such termination notice, whichever shall occur first. If the parties have agreed upon the conversion rates and specifications after such additional thirty (30) batches have been produced, and Eastman thereafter fails to meet such conversion ratios (determined as of each Contract Year for all *** produced during such Contract Year) in addition to Tomen's indemnification rights under Section 11, Eastman will compensate Tomen for such excess usage of Tomen's Raw Materials.
During the trial period, if the *** does not meet the specifications as set forth in Exhibit A, Tomen will accept such *** as long as it can be converted to *** with assay comparable to Confidential Statement of Formula and fingerprint for *** sample ***. Both parties agree that if Product does not meet this assay, Tomen is not obligated to purchase this *** from Eastman, and if Eastman is unable to blend this batch(es) with other batches of Eastman-produced *** to generate *** meeting the above assay, then it must dispose of the "off-spec" *** at its own cost and liability, and to compensate Tomen for the value of Tomen's Raw Materials used to manufacture the "off-spec" *** to the extent that the Raw Materials usage exceeds the previously agreed conversion ratios. However, Tomen at its sole discretion, may allow Eastman to use portions of *** produced by *** for the purpose of lab scale trial blending. If Eastman determines, based on these trial blends, that it can successfully blend an "off-spec" batch of Eastman *** with some of such *** ***, Eastman may, with Tomen's permission, and recognizing that Eastman bears the complete risk of loss of both batches, blend Eastman's *** with the *** in an effort to obtain a "blended batch" of *** ("Blended ***") which meets the above assay. If this blending is successful, then Tomen's cost for this Blended *** will be calculated as shown by the following formula, unless the parties mutually agree upon an alternate formula. Tomen will pay Eastman for the Blended *** according to the following formula instead of the fee in Section 3.1:
Blended *** Batch Fee/lb = ***/lb x (1-fraction of *** used) x ***
The conversion ratios as agreed in the Custom Manufacturing
Agreement will not apply for the usage of *** for these "blended" batches. If,
however, the Blended *** does not produce Products meeting the above assay,
`then Eastman shall dispose of this material at its sole cost and liability,
and shall compensate Tomen for (i) the value of Raw Materials used to produce
Eastman's *** to the extent such usage exceeds the agreed upon conversion
ratios and (ii) the full cost of the *** used in the blending operation, and
(iii) the cost of Tomen's ***.
2.2 Subject to the provisions of Sections 2.1 and 2.5, Tomen shall be obligated to accept delivery of, and Eastman shall be required to provide, a minimum of *** lbs. of *** from October 1, 1993 to December 1, 1994, *** lbs. of *** from January 1, 1995 to September 30, 1995, and *** lbs. per year of *** during the remaining
Contract Years of the Term. Tomen's liability therefor shall be as specified in Section 3.1.2. In addition, if Tomen foresees a falling demand for *** and provides Eastman with six (6) months' prior written notice of such decline, Eastman will use its best efforts to reduce the size of the *** plant and the parties will enter into negotiations on revised prices, volumes and other terms for such a reduced facility. In the event the parties are unable to agree on such revised terms, this Agreement shall continue to remain in effect on the terms provided herein. In the event that the Term is extended for additional one year periods pursuant to Section 6, the parties shall mutually agree upon the minimum volume of *** to be produced by Eastman and accepted for delivery by Tomen for such additional periods.
2.3 Tomen shall provide to Eastman, at Tomen's expense and as requested by Eastman from time to time during the Term, such amounts of Raw Materials meeting the specifications set forth in Exhibit D, as necessary to fill orders for Processing placed by Tomen under Section 2.5.
2.4 Eastman shall discuss with Tomen, as soon as possible but at least sixty (60) days prior to the date Eastman needs Raw Materials to meet Tomen's request for Products the amount of Raw Materials it will need and the times at which delivery thereof will be required. The parties shall specify the quantity of Raw Materials required and the requested date for delivery. Tomen will use its best efforts to deliver such quantity of Raw Materials on the specified date. If, notwithstanding its best efforts, Tomen is unable to deliver the requested quantity on the specified date, Tomen shall promptly notify Eastman and the parties will discuss alternative delivery arrangements and, if necessary, any adjustment to the time period within which Eastman must deliver the batch of. Product concerned to Tomen.
2.5 Tomen shall provide to Eastman, in writing, rolling four-quarter' forecasts of Tomen's expected *** demand. Eastman shall produce sufficient *** to meet Tomen's orders for each Fixed Period (as defined in the Custom Manufacturing Agreement). Forecasts for *** provided by Tomen for any such Fixed Periods shall be final and Tomen shall be obligated to purchase the *** produced for its prior forecasted volumes of *** for such Fixed Period, unless Tomen has delivered written notice to Eastman, prior to the first Business Day of such Fixed Period that it wishes to modify its previous demands for such Fixed Period. Tomen can increase or reduce its Fixed Period demand by no more than twenty (20%) percent subject to the other limitations of this Agreement.
Notwithstanding the foregoing, Tomen may request, from time to time during the Term, increases in its demand for the then-existing Fixed Period by sending a written notice thereof to Eastman. Subject to the limitations of Section 2.6 below, Eastman shall use its best efforts to accommodate any such request and shall notify Tomen in writing as soon as possible, but in no event later than fifteen (15) Business Days after receipt of such request, whether or not Eastman will be able to accommodate the request and any additional costs which may be associated therewith. As soon as practicable, but in no event later than fifteen (15) Business Days following Tomen's receipt of Eastman's response, Tomen will notify Eastman in writing whether or not it accepts the terms thereof. In the event the parties are
unable to agree on such revised terms, this Agreement shall continue to remain in effect on the terms provided herein.
2.6 Eastman shall not be obligated to produce in excess of *** lbs. of *** during any Fixed Period; provided however, that if Tomen provides Eastman with written notice no less than six (6) months prior to the first Business Day of the next succeeding Fixed Period, in which such excess volumes of *** are required, Eastman will use its best efforts to utilize any unused available manufacturing capacity to meet Tomen's purchase requirements.
2.7 Eastman shall retain and properly maintain representative samples of each batch of *** as it is produced before entering the storage tank to use in converting to Products, refrigerated as necessary, for a period of not less than one (1) year from the date of manufacture.
2.8 Tomen warrants to Eastman that all Raw Materials shall meet the specifications set forth in Exhibit D. At its option, Eastman shall sample and analyze in accordance with the specifications therefor the deliveries of all Raw Materials upon receipt from Tomen but in no event later than thirty (30) days after receipt thereof, and shall determine if such Raw Materials meet the specifications set forth in Exhibit D. Eastman shall report any shortage of Raw Materials or any failure to meet specifications to Tomen, immediately upon becoming aware thereof, but in no event later than forty-five (45) days after receipt unless the nonconformity was not ascertainable or detectable by the testing methods included in the specifications for such Raw Materials.
2.9 Upon receipt of a written notification under Section 2.8, Tomen shall promptly arrange for the delivery of Raw Materials to supplement any shortage, or to replace any Raw Materials not meeting the specifications in Exhibit D. In addition, the parties may discuss, if necessary, any adjustments to the time period within which Eastman must deliver the batch of Product concerned to Tomen. EXCEPT AS SET FORTH IN SECTION 2.8, TOMEN MAKES NO OTHER WARRANTY CONCERNING THE MERCHANTABILITY, FITNESS OR OTHER QUALITY OF THE RAW MATERIALS AND EASTMAN'S RIGHTS AND REMEDIES WITH RESPECT TO ANY BREACH OF WARRANTY REGARDING RAW MATERIALS ARE EXPRESSLY LIMITED TO THOSE SET FORTH IN THIS SECTION 2.9.
2.10 During the Term, the parties agree to investigate and discuss, on a periodic basis; potential process improvements which could result in costs savings to either or both of the parties. The parties agree that any cost savings resulting from the reduction in the use of the Raw Materials will be for the account of Tomen after taking into consideration, among other things, Eastman's cost of any capital improvements or any costs associated with the implementation of such Raw Material reduction. Any other cost savings resulting from any other process improvements will be for Eastman's account.
2.11 Eastman warrants to Tomen that all *** produced under this Agreement shall meet the *** Specifications of Exhibit A and conversion ratios in Exhibit C and Tomen will accept delivery on the basis of Eastman's certificate of analysis. Tomen may, from time to time, request Eastman to spot sample and analyze *** manufactured by Eastman and Eastman agrees to provide samples of such *** upon Tomen's request. If Eastman advises Tomen in writing that it has provided *** that does not meet specifications in Exhibit A and Tomen nevertheless requests Eastman in writing to use such *** for the manufacture of ***, then such *** shall be treated for the purposes of this Agreement as having met the aforementioned specifications and conversion ratios in Exhibit C. If Eastman supplies *** that does not meet the *** specifications, and is not accepted by Tomen pursuant to the preceding sentence, Eastman shall supply replacement ***, or at Eastman's request and with Tomen's agreement, rework such nonconforming ***. EXCEPT AS SET FORTH IN THIS SECTION 2.11, EASTMAN MAKES NO OTHER WARRANTY, EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION ANY WARRANTY CONCERNING THE MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR OTHER QUALITY OF THE *** AND TOMEN'S RIGHTS AND REMEDIES WITH RESPECT TO ANY BREACH OF WARRANTY REGARDING ***, ARE EXPRESSLY LIMITED TO THOSE SET FORTH IN SECTION 11.1. IN NO EVENT SHALL EASTMAN BE LIABLE TO TOMEN HEREUNDER FOR ANY DIRECT (INCLUDING COST OF COVER), CONSEQUENTIAL OR INCIDENTAL DAMAGES OF TOMEN, EXCEPT AS SPECIFIED IN SECTION 11.1.
2.12 Eastman shall be permitted to make minor changes in the production hereunder, provided that Tomen is notified of any changes on a monthly basis of any changes made during the preceding month. Notwithstanding the foregoing, any significant changes proposed by Eastman regarding the production must be agreed to by Tomen in writing in advance of Eastman's implementation thereof.
3. Prices
3.1 Tomen shall pay to Eastman a Base Processing Fee for *** (***% *** basis) in accordance with the schedule set forth below. All fees are F.O.B. the pipeline, delivered into the *** storage tank.
From October 1, 1993 to December 31, 1994, the Base Processing Fee for *** will be *** per pound, regardless of Tomen's Fixed Period demand. Effective January 1, 1995, the Base Processing Fee shall be as follows:
Annual Volume 1/1/95 - 10/1/95 - 10/1/96 - 10/1/97 - (Pounds) 9/30/95* 9/30/96 9/30/97 9/30/98
*** or more *** *** *** ***
*** to <*** *** *** *** ***
*** to <*** *** *** *** ***
*** to <*** *** *** *** ***
*** to <*** *** *** *** ***
<*** *** *** *** *** *Minimum volume will be adjusted for 9 months to an annualized amount **Plusshortfall fee as described in Section 3.1.2
The Processing Fee charged to Tomen in each period specified above will be based on the annualized sum of year-to-date quantity purchased in such time period above plus the quantity ordered for that Fixed Period. At the end of each Fixed Period, Eastman will debit or credit Tomen to reflect the year-to-date quantity purchased in the time periods stated above on an annualized basis.
3.1.1 The Base Processing Fee set forth in Section 3.1 for *** shall be subject to annual adjustment, according to the formula set forth in Exhibit B. Eastman shall notify Tomen of such fee adjustment, no later than October 1, 1994, with an effective date of such fee change being January 1, 1995; and no later than July 1 of each Contract Year beginning in 1995, with an effective date of such fee change being October 1 of that year.
Eastman shall amend the formula set forth in Exhibit B prior
to October 1, 1994, and prior to July 1 of each Contract Year beginning in
1995, such that the sum of the price factors (shown in parenthesis of Exhibit
B) equals the Base Processing Fee for *** pounds or more in the table above
for the period being adjusted. This amendment of the formula shall be
completed prior to making the annual adjustment specified above.
3.1.2 In the event that Tomen purchases less than *** pounds of *** during the period October 1, 1993 to December 31, 1994, *** pounds of *** during the period, January 1, 1995 to September 30, 1995, or less than *** pounds during each remaining contract year of the Term, Tomen shall pay a shortfall fee for such period of *** per pound for each pound of *** representing the difference between the pounds of *** actually purchased and stated minimum requirement for that period. Notwithstanding the foregoing, Tomen shall not be obligated to pay any shortfall fee for a particular year in the event that this Agreement is terminated during such year, pursuant to Sections 6.3, 6.5.1,
6.5.2 or 6.5.3 or in the event this Agreement is terminated during such year by Tomen pursuant to 6.4.1 or 6.5.4. Eastman shall submit Tomen for any shortfall at the end of such period or contract year and payment shall be due thirty (30) days from the date of such invoice. In the event the term is extended for an additional one year period pursuant to Section 6, the parties shall mutually agree upon the shortfall fee for such additional period. If Tomen requests and Eastman is able to reduce the size of the *** plant in accordance with Section 2.2, the minimum annual requirement will be reestablished by mutual agreement of the parties.
3.1.3 Eastman shall submit invoices to Tomen, weekly, beginning with the first delivery after successfully producing ***, which is estimated to be about March 1, 1994. The invoice will detail the quantity of *** produced and delivered into the *** storage tank during the preceding week(s) and the fee associated with such delivery, as calculated in accordance with the fee schedule set forth in Section 3.1. Tomen shall pay all the invoices received on a monthly basis using Tomen's monthly payment cycle. Unless otherwise expressly provided herein, Tomen's payment obligations shall be limited to the payment of such periodic invoices and Tomen shall have no obligation to pay Eastman for any other costs or expenses, of any kind whatsoever, arising from, or associated with Eastman's production or its other obligations under this Agreement.
4. Deliveries
4.1 Eastman shall deliver the *** to the storage tank and *** manufacturing process on a time schedule to meet Tomen's demand for *** for such Fixed Period.
4.2 Eastman shall ensure that the *** is properly stored and available for conversion to *** in accordance with applicable Environmental Requirements. Eastman shall provide, on a monthly basis, Certificates of Analysis for each batch of *** used by Eastman for the production of Products.
4.3 Eastman will install and `maintain at the Plant bulk storage facilities for at least *** (***) gallons of ***. If additional storage for *** is needed during the Term, the parties agree to meet and discuss arrangements for the provision of such additional storage. Storage facilities shall be installed and maintained in compliance with applicable Environmental Requirements.
4.4 On a monthly basis, Eastman shall provide any inventory records or similar records necessary to establish a schedule for *** conversion. It is expressly understood that such records will be used only for Tomen's internal business purposes and Eastman's provision of such records to Tomen shall not confer upon Tomen any authority or obligation to direct, in any manner, Eastman's production or other obligations hereunder.
5. Title and Risk of Loss
5.1 Title to and all other incidents of ownership of all Raw Materials supplied by Tomen and of all *** after Eastman's delivery into the *** storage tank shall be at all times in Tomen.
5.2 While any Raw Materials and *** owned by Tomen are in the possession or custody of Eastman, Eastman agrees to bear the risk of loss, degradation, contamination or damage, of any kind or nature whatsoever. The Raw Materials and *** shall be deemed to be in the possession or custody of Eastman until it is converted to *** and *** Products and delivered to Tomen's carrier as provided in Section 6 of the Custom Manufacturing Agreement, at which time the risk of loss, degradation, contamination or damage shall pass to Tomen.
5.3 During the Term, Eastman shall not impose or permit to be imposed upon any of the Raw Materials or *** any liens or encumbrances of any kind whatsoever.
5.4 Risk of loss regarding any Raw Materials or *** shall pass to Tomen upon delivery of the *** or *** Products produced from such *** to Tomen's carrier, F.O.B. the Plant.
6. Term of Agreement
6.1 This Agreement shall become effective and binding upon the parties as of the date first written above.
6.2 Unless earlier terminated pursuant to the provisions of Sections 6.4 or 6.5, this Agreement shall have a term of five (5) years, ending on September 30, 1998, subject to extensions, as provided in Section 6.3.
6.3 Unless either party has provided the other with written notice, no later than eighteen (18) months prior to the expiration of the then existing term, that such party desires to terminate this Agreement effective as of the date of expiration of such then existing term, the term of this Agreement shall be deemed automatically extended for an additional one-year period. Any extensions shall be upon the terms and conditions set forth in this Agreement, except as otherwise agreed by the parties. All references to "Term" in this Agreement shall apply to any extension term.
6.4 Notwithstanding any other provisions of this Agreement, and subject to the procedures of Section 6.4.1, either party may, without waiver of, or prejudice to any of its other rights and remedies under this Agreement, under applicable law or otherwise, effect a termination of this Agreement by written notice, at any time, if the other party breaches any of its material obligations under this Agreement.
6.4.1 In the event of any alleged breach under Section 6.4, the party declaring the breach shall provide the other party with kitten notice setting forth the nature of the breach, and the recipient shall have a period of thirty (30) days (or such shorter period if required under the circumstances and specified in such notice) to cure such breach, provided however, that if the nature of the alleged breach is such that it cannot reasonably be cured within such time period, the non-breaching party may elect, in its sole discretion, and without waiver of, or prejudice to any of its other rights and remedies under this Agreement under applicable law or otherwise, to grant the breaching party an additional extension of time to cure such breach, If the breaching party fails to cure the breach within the applicable time period the non-breaching party may terminate this Agreement, by written notice to the breaching party which notice shall be effective immediately upon receipt.
6.5 This Agreement also may be terminated:
6.5.1 By mutual assent of the parties;
6.5.2 By either party, in the event that a force majeure event as provided in Section 14 has occurred and has continued for a period of one hundred eighty (180) days;
6.5.3 By either party, upon the other party's filing of a voluntary petition for bankruptcy, reorganization or arrangement under any state statute, or upon assignment for the benefit of creditors, or upon the appointment of a receiver or trustee with respect to such party or its assets, or upon the filing of a petition of the kind referenced above, against a party or its assets by a third party, which filing is made without the agreement of the subject party and is not removed or dismissed within sixty (60) calendar days of the date of such filing.
6.5.4 By Tomen, upon sixty (60) days written notice, provided that in the event Tomen elects to terminate under this Section 6.5.4 Tomen shall pay Eastman a termination fee in an amount equal to *** minus *** per pound, for each pound of *** previously purchased by Tomen under this Agreement and for each pound of *** which Tomen is obligated to purchase during the then existing Fixed Period and minus any applicable shortfall fee that has been paid; provided, however, that no termination fee shall be paid in the event that Tomen's election under this Section 6.5.4 follows a termination of the Custom Manufacturing Agreement (except by reason `of a breach by Tomen under Section 7.4.1 thereof or by election by Tomen pursuant to Section 7.5.4 thereof). Such termination fee also shall apply in the event of a termination based upon a breach of this Agreement by Tomen and shall be Eastman's sole remedy against Tomen for a breach hereof, other than as may be provided pursuant to Section 11.2 hereof.
6.5.5 Raw Materials, Eastman supplied raw materials, materials in process and *** remaining in the possession of Eastman on the effective date of termination of this Agreement shall be returned to Tomen, or otherwise removed from the Plant upon a schedule to be mutually agreed by the parties, but in no event later than thirty (30) days following the
effective date of termination. Tomen agrees that it shall pay the costs of any Eastman supplied raw materials, materials in process (including costs of acquisition and costs of disposal) or *** returned or otherwise disposed by Eastman, provided, however, that Tomen shall not be responsible for any other liabilities, costs or expenses associated with such disposal. Tomen's payment of such disposal fees shall not confer upon Tomen any authority or obligation to direct, in any manner, Eastman's disposal activities hereunder.
7. Technical Information
7.1 Tomen and Eastman agree to exchange Subject Intellectual Property during the Term in order to assist Eastman in supplying *** to Tomen, and in carrying out all other purposes of this Agreement. Such exchange of Subject Intellectual Property will be according to the following terms:
7.2 For a period of twenty (20) years from the date of the Agreement, Eastman will not use Subject Intellectual Property received from Tomen to produce agricultural or pesticidal chemicals and intermediates therefore for anyone other than Tomen without Tomen' s prior written consent.
7.3 For a period of twenty (20) years from the date of this Agreement, Tomen will not use Subject Intellectual Property received from Eastman for any purposes other than to assist Eastman in producing *** for Tomen, except as provided in Section 8, below.
7.4 Subject Intellectual Property will be received and maintained in confidence by the recipient, and the recipient will exercise all reasonable efforts to avoid disclosure of all or any portion of Subject Intellectual Property, except to Recipient's Affiliates, as defined herein, or contract engineering firms who need such Subject Intellectual Property to fulfill the obligations of the recipient under this Agreement and are bound to the recipient by written obligations and assurances at least as stringent as those to which the recipient is bound under this Agreement. "Recipients Affiliates" refers to any corporation, company, joint venture, partnership or business organization in which the recipient, directly or indirectly, has a fifty percent (50%) or greater interest in the ownership or control thereof, or any third party which is engaged or consulted or assigned rights and obligations pursuant to the provisions of this Agreement.
7.5 The recipient shall not make copies of Subject Intellectual Property, or any portion thereof, except as required to carry out the purposes of this Agreement and the recipient shall, upon the request of the disclosing party, return to the disclosing party all Subject Intellectual Property furnished the recipient in written form, including diagrams, charts, drawings, and shall destroy all copies thereof made by the recipient, or reduced to written form by the recipient, with the exception of one archival copy which shall be kept in a separate limited access file and used solely for the purpose of determining the recipients, obligation hereunder.
7.6 The obligations of Sections 7.2, 7.3, 7.4 and 7.5, above, shall
not apply with respect to any portion of Subject Intellectual Property, (i)
which the recipient proves was developed by the recipient and in the
recipient's possession, prior to the first receipt thereof, directly or
indirectly, from the disclosure; or (ii) which is now, or hereafter becomes
through no act or failure to act on the recipient's part, part of the public
knowledge or is disclosed in a printed publication available to the public;
(iii) otherwise lawfully becomes available to recipient from sources other
than the disclosure; or (iv) which the recipient proves to a court of law's
satisfaction by written evidence, is developed by the recipient without the
benefit of Subject Intellectual Property; provided, however, that the
occurrence of any or all of (i), (ii), (iii) and (iv) shall not be construed
to grant any rights, express or implied, under any patent licensable by the
disclosure except as provided under Section 8, herein. Subject Intellectual
Property shall not be deemed to be within one of the foregoing exceptions if
it is merely embraced by more general information available on a
non-confidential basis or in the recipient's possession. In addition, any
combination of features shall not be deemed to be within the foregoing
exceptions unless the combination itself and its principle of operation are
embraced by corresponding information. which is within one of the foregoing
exceptions.
7.7 Neither party hereto shall knowingly export, directly or indirectly, any United States source technical data acquired from the other party hereto or any company affiliated with that party or any direct product of that data, to any country for which the United States government or any agency of that government at the time of export requires an export license or other governmental approval without first obtaining that license or approval when required by applicable United States law. This obligation shall survive any termination or expiration of this Agreement and shall be independent of any other obligations, any limitations thereon, and any exceptions thereto, which may be stated elsewhere in this Agreement.
8. License
8.1 Upon request and after Tomen has purchased *** pounds of ***, Eastman will grant to Tomen a fully paid up, irrevocable, assignable and non-exclusive license to all Subject Intellectual Property conceived, made, created, developed or reduced to practice by Eastman relating to the production of ***, during the Term and within three (3) years following the effective date of termination of this Agreement. Notwithstanding the foregoing, if Tomen terminates the agreement before the *** pounds purchase commitment is fulfilled and Tomen requests Eastman to provide any Eastman-developed Subject Intellectual Property, the parties will negotiate in good faith a non-exclusive license to such Property. Eastman agrees to cooperate in educating Tomen through periodic meetings at mutually agreeable times and places and keeping it appraised concerning such developments regarding Subject Intellectual Property. Eastman agrees not to file any patent, trademark or copyright applications relating to Subject Intellectual Property during the Term and within three (3) years following the effective date of termination of this Agreement, without the express written consent of Tomen, which consent shall not be unreasonably withheld. Eastman also shall not assert any patent, trademark or copyright claims against Tomen or its agents for the manufacture or use of the *** at any time nor will it license
patents, trademarks or copyrights to any third party for any uses or applications of any kind whatsoever during the twenty (20) year period referenced in Section 7.2.
8.2 Tomen shall not assert any patent against Eastman in connection with performance of obligations by Eastman under this Agreement.
9. Representations, warranties and Covenants
9.1 Eastman warrants and represents that:
9.1.1 It has full power and authority to execute, deliver and perform this Agreement; it is a corporation duly organized, validly existing and in good standing under the laws governing its incorporation and has full corporate power and authority to execute, deliver and perform this Agreement;
9.1.2 The execution, delivery and performance of this Agreement have been duly authorized by all necessary action of Eastman.
9.1.3 This Agreement constitutes a legal, valid and binding agreement of Eastman, enforceable against Eastman in accordance with its terms, except as limited by bankruptcy, insolvency, receivership and similar laws in effect from time to time;
9.1.4 Eastman currently possesses the requisite skill, experience, knowledge, personnel and facilities (in respect of manufacturing in general, and in respect of the production of *** and other obligations of Eastman, specifically) and to the best of its knowledge Eastman further possesses and is in' compliance with all necessary licenses, permits and approvals required validly to execute, deliver and perform its obligations under this Agreement, and is qualified to do business in all jurisdictions where such qualification is required for Eastman's performance hereunder;
9.1.5 Eastman fully understands the nature of the Raw Materials and *** and Environmental Requirements, including without limitation, applicable health and safety considerations, and other matters involved in the manufacturing required hereunder.
9.2 Tomen warrants and represents that:
9.2.1 It has full power and authority to execute, deliver and perform this Agreement; it is a corporation duly organized, validly existing and in good standing under the laws governing its incorporation and has full corporate power and authority to execute, deliver and perform this Agreement;
9.2.2 The execution, delivery and performance of this Agreement have been duly authorized by all necessary action of Tomen; and
9.2.3 This Agreement constitutes a legal, valid and binding agreement of Tomen, enforceable against Tomen in accordance with its terms, except as limited by bankruptcy, insolvency, receivership and similar laws in effect from time to time.
9.2.4 Tomen currently possesses the requisite skill, experience, knowledge, personnel and authority necessary to perform its obligations under this Agreement.
10. Environmental Compliance
10.1 In addition to the specific covenants of Eastman set forth in this Agreement, Eastman hereby covenants that it shall, at all times during the Term, act in good faith and use sound judgment in performing the Processing and its other obligations hereunder. In performing such obligations, Eastman shall endeavor to the best of its ability to comply with all applicable federal, state and local laws and regulations, including without limitation any Environmental Requirements. In addition, Eastman also shall take such steps which, in the exercise of Eastman's knowledge and expertise in custom manufacturing, may serve to protect human health and the environment.
10.2 Tomen has requested and Eastman intends that no accidental release of Hazardous Substances shall occur during any production. Eastman shall, in the exercise of its knowledge and expertise, take all steps as reasonably necessary to prevent any accidental release of Hazardous Substances from occurring.
In the event that any accidental release should occur, it is the responsibility of, and Eastman shall promptly notify applicable governmental authorities and completely investigate, remediate, or otherwise cleanup all released material, in accordance with applicable Environmental Requirements.
In the event that any accidental release from the *** process shall occur, Eastman shall notify Tomen when Eastman notifies applicable governmental authorities. Notwithstanding such notification, the parties agree that Eastman shall remain fully responsible for notifying governmental authorities and for undertaking to investigate, remediate, or otherwise cleanup such released material in compliance with applicable Environmental Requirements. Eastman's provision of notice of any release to Tomen shall be solely for Tomen's internal business purposes and shall not confer upon Tomen any authority or obligation to direct, in any manner, any notification, investigation, remediation, or cleanup activities with respect thereto.
10.3 Eastman shall be responsible for providing all equipment, utilities and personnel necessary for production of ***, as required under this Agreement. All production should be conducted at the Plant and Eastman will endeavor to the best of its ability to conduct this production and to operate and maintain the equipment facilities in compliance with applicable Environmental Requirements.
10.4 The parties agree that title to any waste generated in connection with the conversion of Raw Materials into *** hereunder shall remain with Eastman and Eastman shall ensure that substantially all wastes are handled, treated, stored, transported and disposed only at Eastman's on-site facilities; except that ash generated by Eastman's on-site incinerator and when such facility due to circumstances beyond Eastman's control is not working, used solvents shall be properly transported to and disposed of in a duly licensed offsite hazardous waste facility. Totes and drums shall be properly transported to a duly licensed drum reclaiming facility, selected by Eastman. Eastman shall arrange for the handling, treatment, storage, transporting and disposal of all wastes, totes, and drums and each such action or activity shall be conducted in compliance with applicable Environmental Requirements.
11. Indemnity
11.1 Eastman shall defend, indemnify, save and hold harmless Tomen and its agents, employees, directors and officers ("Tomen Indemnitees"), from and against any and all damages (including without limitation, compensatory, incidental and consequential damages) indirect and direct losses, claims, liabilities, obligations, demands, judgments, awards, settlements, penalties, deficiencies, suits, proceedings, actions, costs and expenses (including without limitation, the fees and disbursements of attorneys and any consultants), of any kind or nature, whether or not accrued or fixed, absolute or contingent, due or to become due, which are asserted against or incurred by any of the Tomen Indemnitees, by reason of, arising out of, or in connection with, in whole or in part, any of the following:
(i) except as otherwise expressly limited under this Agreement, any breach of any representation, warranty or covenant of Eastman under this Agreement;
(ii) any production or other obligations to be performed by Eastman under this Agreement;
(iii) except as otherwise expressly limited under this Agreement, any loss, damage, degradation or contamination to any *** while such materials are in Eastman's custody or control;
(iv) any actual or alleged presence of Hazardous Substances, on, under, within or migrating from, or into the Plant and any adjacent property (including without limitation the real property underlying Eastman's waste treatment and disposal facilities); and
(v) any actual or alleged liability or responsibility for any investigation, remediation, or other cleanup activity arising from any Hazardous Substances which Eastman, or any of its affiliates by contract, agreement, or otherwise arranged for disposal or treatment or for transport for disposal or treatment, whether at the Plant, Eastman's on-site waste treatment and disposal facility or any other off-site facility.
Notwithstanding the foregoing, Eastman's aggregate liability to Tomen for any direct (other than a credit for nonconforming ***), incidental and consequential damages of Tomen arising from (i) any failure by Eastman to provide *** to Tomen, as required under Section 2, or (ii) any failure of the *** to meet the specifications of Exhibit A shall not exceed *** dollars (***), which amount shall be in addition to any amounts paid or due and payable by Eastman to Tomen pursuant to Section 11.1 of the Custom Manufacturing Agreement. The parties agree that Tomen's right to recover any and all costs and expenses, of any kind whatsoever, incurred in connection with Tomen's effort to secure Product from alternate custom manufacturers, on a temporary or permanent basis, as the case may be, including such costs and expenses incurred for any period of time in which Tomen is unable to secure Product, is also limited by the preceding sentence. However, in such event, Eastman shall cooperate fully with Tomen to facilitate an effective transition to such temporary or permanent alternate custom manufacturer. In addition, this Section shall not limit Tomen's right to receive compensation for the failure of Eastman to achieve agreed upon conversion ratios for the Processing as provided in Section 2.1.
11.2 Tomen shall defend, indemnify, save and hold harmless Eastman and its agents, employees, directors and officers (Eastman "Indemnities") from and against any and all damages (including without limitation, compensatory, incidental and consequential damages) indirect and direct losses, claims, liabilities, obligations, demands, judgments, awards settlements, penalties, deficiencies, suits proceedings, actions, costs and expenses (including without limitation, the fees and disbursements of attorneys and any consultants), of any kind or nature, whether or not accrued or fixed, absolute or contingent, due or to become due, which are asserted against or incurred by any of the Eastman Indemnities, by reason of, arising out of, or in connection with, in whole or in part except as otherwise expressly limited under this Agreement any breach of any representation, warranty or covenant of Tomen under this Agreement.
Notwithstanding the foregoing, in no event shall Tomen be obligated to Eastman under this Section 11.2 to the extent any claims or liability were caused by Eastman's gross negligence or willful misconduct.
12. Insurance
12.1 Eastman shall, at its expense, maintain the following insurance during the Term:
(a) Worker's Compensation and Employer's Liability Insurance, as prescribed by applicable law.
(b) Fire Insurance which shall cover all *** owned by Tomen and in Eastman's custody and possession, as provided in this Agreement.
(c) Eastman shall maintain Comprehensive General Liability Insurance in an amount of not less than One Million Dollars ($1,000,000.00).
12.2 Eastman shall provide Tomen upon request with certificates or other documentary evidence of the above insurance satisfactory to Tomen.
12.3 Eastman may, at its option, self-insure as to the above risks in lieu of providing insurance. If Eastman elects to self-insure, it shall provide Tomen with certification of such self-insurance, satisfactory to Tomen.
The requirements set forth above are minimum coverage requirements and are not to be construed, in any way, as a limitation of Eastman's liability under this Agreement, including, without limitation, its obligations under Section 11.
13. Taxes
13.1 Tomen shall assume responsibility for, and pay all tangible personal property taxes assessed by any governmental authority with respect to the Raw Materials and *** while in Eastman's custody and possession.
13.2 The Processing Fees for *** include all federal, state and local taxes, duties and other governmental charges and fees that may hereafter be imposed on any aspect of the production, or the performance of other work hereunder, all of which taxes, duties, charges and fees shall be paid by Eastman.
14. Force Majeure.
Except as provided in this Section 14 and as- further provided in
Section `6, the parties shall be excused for the period of any delay in the
performance of any obligations under this Agreement, when prevented from
performing such obligations by cause or causes beyond such party's reasonable
control or that could not have been reasonably foreseen and prevented,
including without limitation, force majeure under the *** Custom Manufacturing
Agreement, civil commotion, war, invasion, rebellion, hostilities, military or
usurped power, sabotage, riots, fire or other acts of God, strikes, labor
disputes, major equipment breakdown, governmental acts or requirement
(including, without limitation, registration cancellation by EPA or other U.S.
or international governmental authority with respect to any of the Products)
or those shortages of labor or materials, containers, transportation equipment
and delays in transportation each of which were beyond the reasonable control
of the parties or could not have been reasonably foreseen and prevented. Upon
the occurrence of any force majeure event, the affected party shall provide
prompt notice to the other, describing the particulars of the occurrence,
including an estimate of its expected duration and probable impact on the
performance of such party's obligations hereunder and shall furnish periodic
reports with respect thereto. Notwithstanding the foregoing, (i) the
suspension of performance shall be of no greater scope and no longer
duration than is reasonably required by the force majeure event; (ii) no liability of either party which arose before the occurrence of the force majeure event shall be excused because of such occurrence, including, without limitation, any liability of Tomen to purchase *** manufactured by Eastman during any Fixed Period; (iii) the non-performing party shall use all reasonable efforts to continue to perform its obligations hereunder and to cure or correct the event or condition excusing performance; (iv) the non-performing party shall exercise all reasonable efforts to mitigate or limit damages to the other party; and (v) promptly following the occurrence of such force majeure event, the parties shall meet to discuss whether the term should be extended as a result thereof.
15. Right of Review
15.1 Eastman shall maintain true and current books and records with regard to Eastman's production but excluding financial and cost information, and all transactions related thereto, and shall retain all such books and records for a period of not less than twenty-four (24) months following the effective date of termination .of this Agreement.
15.2 Tomen shall have the right, but not the obligation, from time to time during the Term, to have an authorized representative of Tomen, reasonably acceptable to Eastman, interview the salaried or supervisory personnel of Eastman and to review the books and records and production operations of Eastman with regard to the quantities of Raw Materials used, the actual conversion ratios realized and the *** produced, but excluding financial or cost information with respect thereto. It is expressly agreed that the right to conduct such interviews and reviews shall be solely for Tomen's internal business purposes and Eastman's provision of such rights shall not confer upon Tomen any authority or obligation to direct, in any manner, any of Eastman's Processing or other obligations hereunder. Any interview or review conducted by Tomen pursuant to this Section shall be at its own expense and shall be conducted at times reasonably agreeable to Eastman. Eastman agrees to cooperate and assist Tomen in connection therewith.
16. Conflicts of Interest
16.1 No director, employee or agent of Eastman shall give or receive
any commission, fee, rebate, gift or entertainment of significant cost or
value in connection with this Agreement, or enter into any business
arrangement with any director, employee or agent of Tomen or any affiliate
other than as a representative of Tomen, without prior written notification
thereof to Tomen. Eastman shall promptly notify Tomen of any violation of this
Section and any consideration so received shall be paid over or credited to
Tomen. Additionally, if any violation of this Section occurring prior to the
date of this Agreement resulted directly or indirectly in Tomen's consent to
enter into this Agreement with Eastman, Tomen may, at its sole option,
terminate this Agreement at any time and, notwithstanding any other provision
of this Agreement, pay no compensation or reimbursement to Eastman whatsoever
for any work done after the effective date of termination of this Agreement.
16.2 No director, employee or agent of Tomen shall give or receive any commission, fee, rebate, gift or entertainment of significant cost or value in connection with this Agreement, or enter into any business arrangement with any director, employee or agent of Eastman or any affiliate other than as a representative of Eastman, without prior written notification thereof to Eastman. Tomen shall promptly notify Eastman, of any violation of this Section and any consideration so received shall be paid over or credited to Eastman. Additionally, if any violation of this Section occurring prior to the date of this Agreement resulted directly or indirectly in Eastman's consent to enter into this Agreement with Tomen, Eastman may, at its sole option, terminate this Agreement at any time and, notwithstanding any other provision of this Agreement, pay no compensation or reimbursement to Tomen whatsoever for any work done after the effective date of termination of this Agreement.
17. Notices
17.1 Notices under this Agreement shall be given in writing and delivered:
If to Tomen to:
Tomen Corporation
14-27 Akasaka 2-chome
Minato-ku
Tokyo, Japan
Attn: General Manager Agro Ecology Department
Fax: 011-813-35889895
With copy to:
Tomen Pacific Agro Company
444 Market Street, Suite 1060
San Francisco, California 94111
Attention: President
Tel.: 415/788-3400
Fax: 415/788-4070
If to Eastman to:
Eastman Fine Chemicals
1999 E. Stone Drive
Kingsport, Tennessee 37662-5300
Attn: Manager-Custom Manufacturing
Tel.: 615/229-6810
Fax: 615/229-8133
or to such other address as may be designated by such party.
17.2 Notices shall be deemed to have been given:
(a) On the same Business Day if the notice has been delivered by hand or sent by facsimile with confirmation of receipt on or prior to 5:00 p.m. as of the place of receipt, or on the next succeeding Business Day if so delivered or sent after 5:00 p.m.; or
(b) On the next succeeding Business Day following receipt of a notice sent by registered or certified U.S. mail, return receipt requested or by a reputable courier service, as evidenced by the return receipt card, or other similar receipt properly endorsed by the receiving party.
18. Assignment
18.1 None of the rights or obligations of either party hereunder may be assigned without the other party's prior written consent, which consent will not be unreasonably withheld. Any purported assignment without such written consent shall be void and unenforceable. Notwithstanding the foregoing, (i) Tomen shall be entitled from time to time during the Term, to appoint another party, reasonably acceptable to Eastman to administer certain or all of Tomen's duties hereunder and Eastman agrees to work with such party as it would with Tomen provided however, that Tomen shall remain ultimately responsible for its obligations hereunder, and (ii) Eastman shall be entitled to assign this Agreement to one of its wholly-owned subsidiaries, reasonably acceptable to Tomen, provided, however, that all Processing and related operations shall continue to be performed at the Plant, as provided hereunder, and that Eastman shall remain ultimately responsible for its obligations hereunder; and provided further, that notwithstanding anything herein to the contrary, this Agreement and all of Eastman's rights and obligations hereunder may be assigned to a corporation that is the transferee of substantially all of the assets of the manufacturing facility at which *** is manufactured subject to Tomen's approval.
19. Governing Law
The parties hereto agree that all of the provisions of this Agreement and any questions concerning its interpretation and enforcement shall be governed by the internal laws of the State of New York, without applying any rules regarding choice of laws, and the execution and delivery of this Agreement shall be deemed to be the transaction of business within the State of New York for purposes of conferring jurisdiction upon courts located within the State.
20. Waivers
Neither party's waiver of the other's breach of any of the provisions of this Agreement shall be deemed to be a waiver of any other provisions hereof (whether or not similar), nor shall any such waiver constitute a continuing waiver, unless otherwise expressly provided by the party granting such waiver.
21. Survival.
The representations, warranties and covenants of the parties under this Agreement and each of the parties' respective rights and remedies hereunder (including without limitation, the parties' rights and remedies under Section 12) expressly survive the effective date of termination of this Agreement.
22. Parties Bound.
This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors in interest and permitted assigns.
23. No Third Party Beneficiaries
Except as otherwise expressly provided herein, nothing in this Agreement shall entitle any person other than Tomen or Eastman and each of their respective successors and assigns to any claim, cause of action, remedy or right of any kind under this Agreement.
24. Independent Con tractor
Nothing in this Agreement shall be construed to establish Tomen or Eastman as a partner, joint venture, agent or other representative of the other. Each is an independent company retaining complete control over and complete responsibility for its own operations and employees. Nothing in this Agreement shall be construed to grant either party any right or authority to assume or create any obligation on behalf or in the name of the other; to accept summons or legal process for the other; or to bind the other in any manner whatsoever.
25. Employment Practices
To the extent applicable to this Agreement and required for agreements of the size and nature hereof, Eastman shall comply with the following clauses contained in the Code of Federal Regulations and incorporated herein by reference: 48 C.F.R. SS 52.203-6 (Subcontractor Sales to Government); 48 C.F.R. SS 52.219-8, 52.219-9 (Utilization of Small and Small Disadvantaged Business Concerns); 48 C.F.R. S'S 52.219- 13 (Utilization of Women-Owned Business Concerns); 48 C.F.R. SS 52.222-26 (Equal Opportunity); 48 C.F.R. SS 52.222-35 (Disabled and Vietnam Era Veterans); 48 C.F.R. SS 52.222-36 (Handicapped Workers); 48 C.F.R. SS 52.223-2 (Clean Air and Water); and 48 C.F.R. SS 52.223-3 (Hazardous Material Identification and Material Safety Data). Unless previously provided, if the value of this Agreement exceeds $10,000 and if required for agreements of the size and nature hereof, Eastman shall provide a Certificate of Nonsegregated Facilities to Tomen in the form attached as Exhibit F. Eastman agrees and covenants that none of its employees who provide services to Tomen pursuant to this Agreement are unauthorized aliens as defined in the Immigration Reform and Control Act of 1986.
26. Entirety of Agreement
This Agreement constitutes the entire agreement between the parties hereto pertaining to the subject matter hereof and supersedes all prior agreements, understandings, negotiations and discussions of the parties, whether oral or written, and there are no warranties, representations or other agreements between the parties in connection with the subject matter hereof except as specifically set forth herein, No supplement, modification, waiver or termination of this Agreement shall be implied from any conduct of the parties or trade custom or usage, but to be binding must be executed in writing by the party to be bound thereby.
27. Arbitration
In the event that the parties are unable within a period of ninety
(90) days to resolve any dispute between them concerning the scope or
interpretation of this Agreement following the exercise of diligent efforts by
both parties, either party may submit the matter to arbitration for
resolution. Arbitration shall be held in San Francisco, California before
three arbitrators. Each party shall select one arbitrator and the two
arbitrators so selected shall select the third arbitrator. The rules of
commercial arbitration of the American Arbitration Association in effect on
the date the matter is submitted to arbitration shall apply. The decision of
the arbitrators shall be in writing and shall contain the findings of fact and
conclusions of law on which their decision is based. Unless clearly erroneous,
such decision shall be final and binding on the parties and may be enforced in
any court of competent jurisdiction.
28. Counterparts.
This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
29. Severability.
If any provision of this Agreement shall be determined to be void or unenforceable, the remaining provisions of this Agreement shall not be affected thereby, and every other provision of this Agreement shall remain in full force and effect and enforceable to the fullest extent permitted by law.
30. Headings.
The headings appearing in this Agreement are inserted only as a
matter of convenience and in no way define or limit the scope or intent of any
Section of this Agreement.
31. Further Assurances.
The parties each agree to execute additional instruments and documents and to do all such further things as the other party may reasonably require in order to carry out the intent of this Agreement. In addition, the parties agree to reasonably cooperate with one another in connection with the execution of the other parties' obligations hereunder.
THIS AGREEMENT HAS BEEN DULY EXECUTED AND DELIVERED BY THE UNDERSIGNED AUTHORIZED OFFICERS OF BOTH PARTIES AS OF THE DATE FIRST WRITTEN ABOVE.
EASTMAN CHEMICAL COMPANY TOMEN CORPORATION
EASTMAN FINE CHEMICALS
By: /s/ Robert M. Morrow By: /s/
----------------------------------- ----------------------------------------
Title: Vice President/General Manager Title: General Manager, Agro Ecology Dept.
-------------------------------- -------------------------------------
Eastman Fine Chemicals
|
EXHIBIT A
***
EXHIBIT B
***
EXHIBIT C
***
EXHIBIT D
***
February 23, 1994
Dr. D. K. Krass
President
Tomen Pacific Agro Company
444 Market Street, Suite 1060
San Francisco, CA 94111
Dear Denny:
Exhibit D of the Conversion Agreement dated October 1, 1993, needs to be updated to add all the approved suppliers. If the enclosed amendment meets with your approval, please execute this letter and return one of the originals for our files.
Sincerely,
/s/ J. S. Cornell J. S. Cornell Manager, Business Development |
Accepted:
TOMEN CORPORATION
/s/ K. Ushizaki
--------------------------------------------
K. Ushizaki
General Manager, Agro Ecology Department
----------------------------------------
Date
March 07, 1994
Enclosure
|
EXHIBIT D
***
May 3, 1994
Dr. D. R. Krass
President
Tomen Pacific Agro Company
444 Market Street, Suite 1060
San Francisco, CA 94111
Dear Denny:
To minimize the number of *** samples we maintain per our contracts, we propose amending Section 2.7 of the *** Conversion Agreement dated October 1, 1993, as follows:
2.7 - Eastman shall retain analytical records for each batch of *** as it is produced before entering the storage tank to use in converting to products, for a period of not less than one (1) year from the date of manufacture.
We will retain samples of *** as it is used to produce *** products per
Section 2.7 of the Custom Manufacturing Agreement dated September 1, 1992.
If this change in the *** Conversion Agreement is acceptable, please sign below and return one of the originals for our files.
Sincerely,
/s/ M. K. Zoellin Max K. Zoellin Manager General Purpose Custom Chemicals |
Accepted:
TOMEN CORPORATION
/s/ K. Ushizaki
-----------------------------------------
General Manager Agro Ecology Dept.
-----------------------------------------
May 13, 1994
-----------------------------------------
Date
|
May 11, 1994
Dr. Denny Krass
President & CEO
Tomen Pacific Agro Company
444 Market Street, Suite 1060
San Francisco, CA 94111
Dear Denny:
Thank you for participating in the celebrations for the *** project when you visited Arkansas last week. All of us from Eastman Chemical Company enjoyed having you, Ted, Ryan, and Young Lee at the Cabin and in the meeting.
This letter will serve as an amendment to Section 2.1 of the Conversion Agreement, dated October 1, 1993, with reference to the specifications for ***.
As agreed in the meeting on May 6, these *** specifications will be used until the end of August. At that time we will set new specifications based on the experience during this period. The specifications set in August will be used for the long term.
These *** specifications (***) will be effective for the next three months. The table below will replace Exhibit A of the Conversion Agreement:
***
***
***
***
***
***
***
***
We plan to have a meeting to agree upon the conversion ratios of two key raw materials around June 2, 1994. The ratios that will be agreed in that meeting will be used for the next three months.
Dr. Denny Krass
May 11, 1994
If you need any additional information, 1 shall be very glad to provide it.
Best Regards,
/s/ Bhaskar Venepalli
Bhaskar Venepalli
Mgr, New Chemicals Development
APPROVED: /s/ Dennis K. Krass
----------------------------------------------------
President, Tomen Pacific Agro
----------------------------------------------------
May 17, 1994
----------------------------------------------------
|
June 9, 1994
Dr. D. K. Krass
President
Tomen Pacific Agro Company
444 Market Street, Suite 1060
San Francisco, CA 94111
Dear Denny:
This letter will serve as an amendment to Section 2.1 of the *** Conversion Agreement dated October 1, 1993, with reference to the conversion ratios of *** and ***.
As agreed a t the meeting at Arkansas on June 2, 1994, the conversion ratios will be as follows effective June 1, 1994 through August 31, 1994.
*** ***
--- ---
*** *** ***
*** *** ***
|
If this change in the *** Conversion Agreement is acceptable, please sign below and return one of the originals for our files.
Sincerely,
/s/ M. K. Zoellin Max K. Zoellin Manager General Purpose Custom Chemicals |
Accepted:
/s/ Dennis K. Krass
-------------------------
-------------------------
June 14, 1994
-------------------------
Date
|
July 19, 1994
Dr. Dennis K. Krass
Tomen Pacific Agro Company
444 Market Street
Suite 1060
San Francisco, CA 94111
Dear Dr. Krass:
With reference to my letter of February 15, 1994, the conversion ratios for *** and *** for 1994 will be as follows based on 1993 actual usage:
*** - *** *** - ***
Effective April 1, 1994, the ratios will be as follows:
***
***
These ratios will now be based on 100% active basis. The *** is based on the new standard which reveals an average assay of ***.
If these ratios are agreeable to you, please sign a copy of this letter and return it to us. We will execute a copy and return it for your files.
Sincerely,
/s/ M. K. Zoellin Max K. Zoellin Manager General Purpose Custom Chemicals |
Dr. Dennis Krass
July 19, 1994
Accepted: Tomen Corporation
/s/ Kimikazu Ushizaki
---------------------------------------
Name
General Manager, Agro Ecology Dept.
---------------------------------------
Title
---------------------------------------
Date
Accepted: Eastman Chemical Company
/s/ Robert M. Morrow
---------------------------------------
Name
Vice President and General Manager, Fine Chemicals
---------------------------------------
Title
---------------------------------------
|
Date
August 4, 1994
VIA FAX
Mr. Max Zoellin
Manager
General Purpose Custom Chemicals
Eastman Fine Chemicals
Eastman Chemical Company
P.O. Box 431
Kingsport, TN 37662
Fax: (615) 229-8133
Dear Max,
As a result of our new source of *** (Eastman) and a renegotiation of our *** contract with ***, we need to establish new prices for *** and *** for the purposes of payment adjustments resulting from usages of *** and *** in the manufacture of ***.
The price for *** is relatively straight-forward since we can use the price for 1994 from our *** contract. The price for *** is a little more involved, since it is dependent upon three factors: 1) the price of *** (which is also dependent upon the relative ratio of *** used from our two supplies, *** and ***, since their prices are significantly different, 2) the usage of *** in the *** process, and 3) the tolling fee (this can also vary since we have volume discounts in the contract). Attachment A is a summary of how we have arrived at our *** price for 1994.
Based on the above explanation, we would like to propose the following prices for use in payment adjustments for the usages of *** and *** in the production of *** for 1994:
*** - ***/lb (100% basis)
*** * - ***/lb (100% basis)
* This price is subject to adjustment based on *** usages and actual volume of *** purchased from ***.
If you agree with this proposal, please indicate your acceptance by signing and returning the letter to my attention.
Sincerely,
/s/ Dennis K. Krass
Understood and Agreed to:
|
Eastman Chemical Co.
Signed: /s/ M. K. Zoellin
----------------------------------------------
Name: Max K. Zoellin
----------------------------------------------
Title: MGR GEN PURPOSE CUSTOM CHEMICALS
----------------------------------------------
Date: 8-17-94
----------------------------------------------
|
Attachment A
***
November 21, 1994
Dr. D. K. Krass
Tomen Pacific Agro Company
444 Market Street, Suite 1060
San Francisco, CA 94111
Dear Denny:
This letter will serve as an amendment to Section 2.1 of the *** Conversion Agreement dated October 1, 1993, with reference to the conversion ratios of *** and ***. This letter will also supersede the letter dated June 9, 1994.
As agreed at the meeting at Arkansas on November 8, 1994, the conversion ratios will be as follows effective October 1, 1994.
*** - ***
*** - ***
If this change in the *** Conversion Agreement is acceptable, please sign both copies of this letter and return to us. We will execute and return a copy for your files.
Sincerely,
/s/ M.K. Zoellin
Max K. Zoellin
Manager, General Purpose
Custom Chemicals
Accepted: TOMEN CORPORATION
/s/ Dennis K. Krass
-----------------------------
Name
President
-----------------------------
Title
Feb 6, 1995
-----------------------------
Date
Accepted: EASTMAN CHEMICAL COMPANY
/s/ Robert M. Morrow
-----------------------------
Name
VP/GM EFC
-----------------------------
Title
10 Feb, 1995
-----------------------------
Date
|
Eastman Fine Chemicals May 10, 1995
1999 E. Stone Drive
Kingsport, TN 37662-5300
Attn: Manager - Custom Manufacturing
Dear Sir or Madam:
Tomen Corporation ("Tomen") has a Conversion Agreement ("Agreement") with Eastman Chemical Company, ("Eastman") dated October 1,1993, and amended on May 13, 1994, May 17, 1994, June 14, 1994, July 19, 1994, August 17, 1994 and February 6, 1995.
As part of a recent internal reorganization, Tomen Corporation has established a wholly-owned subsidiary in San Francisco known as TOMEN AGRO, Inc. ("AGRO"). Tomen hereby requests Eastman's consent to the assignment of the Agreement to AGRO pursuant to Section 18.1 of the Agreement.
Please indicate your consent by having an authorized representative of you company sign and return one of the duplicate originals of this letter to Tomen Corporation, 14-27 Akasaka 2-chome, Minato-ku, Tokyo, Japan, Attention; Mr. K. Ushizaki, General Manager, Agro Ecology Department.
Thank you for your cooperation.
Sincerely,
TOMEN CORPORATION
By: /s/ K. Ushizaki
----------------------------------
General Manager
Title: Agro Ecology Department
-------------------------------
Date: May 15, 1995
--------------------------------
|
Eastman Chemical Company consents to the assignment as of the first date above written.
EASTMAN CHEMICAL COMPANY
By: /s/ Robert M. Morrow
--------------------------------------------------
Vice President & General Manager
Title: Eastman Fine Chemicals
Date: 5/25/95
------------------------------------------------
|
cc: TOMEN AGRO, Inc. (Dr. Krass)
October 14, 1997
Tomen Agro, Inc.
100 First Street
Suite 1610
San Francisco, CA 94105
Attention President
Ladies and Gentlemen:
Eastman Chemical Company ("Eastman") and you are currently parties to a *** Conversion Contract dated October 1, 1993 (the "Contract").
Eastman is planning on or about October 1, 1997 to assign its receivables under its domestic sales contracts to Eastman Chemical Finance Corporation, a wholly-owned subsidiary of Eastman.
Your consent to the assignment of Eastman of its rights to receivables under the Contract is hereby requested. Eastman is not seeking to assign or receive a novation for any of its obligations under the Contract and will remain responsible for all such obligations. The Contract shall be otherwise unchanged and remains in effect.
We hope that the foregoing will not present any problems. If you have any questions, please feel free to call the undersigned at 1-800-327-8626, X-4779.
If this proposal is acceptable, please have one original of this letter signed where indicated below and returned to the undersigned at your earliest convenience. Thank you in advance for your cooperation and assistance in this matter.
Very truly yours,
/s/ Robert M. Morrow Robert M. Morrow Vice President and General Manager Fine Chemicals Business Organization for Eastman Chemical Company |
Tomen Corporation
October 14, 1997
The undersigned consents to the assignment by Eastman of its receivables under the Contract, to occur on or about October 1, 1997.
Tomen Agro, Inc.
By: /s/ Dennis K. Krass
-----------------------------------------
Title: President
--------------------------------------
Date: Oct 15, 1997
---------------------------------------
|
March 27, 1998
Tomen Agro, Inc.
100 First Street
Suite 1610
San Francisco, CA 94105
Gentlemen:
Tomen Corporation and Eastman Chemical Company entered into a Conversion Agreement dated October 1,1993. Eastman Chemical Company and Tomen Agro, Inc., assignee of Tomen Corporation's interests in the Conversion Agreement now wish to amend Section 6.3 of the Agreement as follows:
6.3 Unless either party has provided the other with written notice, no later than fifteen (15) months prior to the expiration of the then existing term, that such party desires to terminate this agreement effective as of the date of expiration of such then existing term, the term of this agreement shall be deemed automatically extended for an additional one-year period. Any extension shall be upon the terms and conditions set forth in this agreement, except as otherwise agreed by the parties. All references to "term" in this Agreement shall apply to any extension term.
Effective July 1, 1998, the language set forth in Section 6.3 will revert to its prior, unamended form. Please acknowledge your agreement with the above amendment by signing in the space provided and returning a copy to ms via facsimile.
Very truly yours,
/s/ Robert M. Morrow
Robert M. Morrow
cc: Tomen Corporation
C.P.O. Box 183
Tokyo, JAPAN 100-91
|
Tomen Agro, Inc.
AGREED:
TOMEN AGRO, INC. BY: /s/ Dennis K. Krass
--------------------------------
PRINTED NAME: Dennis K. Krass
---------------------------------------
TITLE: President
------------------------------------
DATE: March 27, 1998
-----------------------------------------------
|
June 15, 1998
Tomen Agro, Inc.
100 First Street
Suite 1610
San Francisco, CA 94105
Gentlemen:
Tomen Corporation and Eastman Chemical Company entered into a Conversion Agreement of October 1, 1993. Eastman Chemical Company and Tomen Agro, Inc., assignee of Tomen Corporation's interest in the Conversion Agreement, now wish to amend Section 6., "Term of Agreement", as follows:
6.2 Unless earlier terminated pursuant to the provisions of Sections 6.4 or 6.5, this Agreement shall expire on December 31, 1999, subject to extensions as provided in Section 6.3.
6.3 Either party may provide the other with written notice, no later than September 30, 1998, that such party desires to terminate this Agreement effective as of December 31, 1999, the date of expiration of the existing term of this Agreement. Unless either party has provided the other with such written notice, the term of this Agreement shall be deemed automatically extended for an additional one-year period. As to any extension terms of this Agreement subsequent to December 31, 1999, unless either party has provided the other with written notice, no later than eighteen (18) months prior to the expiration of the then existing term, that such party desires to terminate this Agreement effective as of the date of expiration of such then existing term, the term of this Agreement shall be deemed automatically extended for an additional one-year period. Any extension shall be upon the terms and conditions set forth in this Agreement, except as otherwise agreed by the parties. All references to "Term" in this Agreement shall apply to any extension term.
Effective as of the date of last signature hereto, the foregoing amendment supersedes the corresponding section of the Conversion Agreement of October 1, 1993 as originally executed by the parties and further supersedes the letter amendment dated March 27, 1998.
Tomen Agro, Inc.
June 15, 1998
Please acknowledge your agreement with the above amendment by signing the duplicate originals in the space provided and returning one of the originals to me.
Very truly yours,
/s/ Robert M. Morrow Robert M. Morrow Vice President and General Manager Fine Chemicals Business Organization |
cc: Tomen Corporation, Tokyo
C.P.O. Box 183
Tokyo, JAPAN 100-91
TOMEN AGRO, INC., BY: /s/ Dennis K. Krass
---------------------------------------
PRINTED NAME: Dennis K. Krass
---------------------------------------
TITLE: President
---------------------------------------
DATE: June 23, 1998
---------------------------------------
|
September 25, 1998
Tomen Agro, Inc.
100 First Street
Suite 1610
San Francisco, CA 94105
Gentlemen:
Tomen Corporation and Eastman Chemical Company entered into a Conversion
Agreement of October 1, 1993 and letter amendments dated March 27, 1998 and
June 15, 1998. Eastman Chemical Company and Tomen Agro, Inc., assignee of
Tomen Corporation's interest in the Conversion Agreement, now wish to amend
Section 6., "Term of Agreement", as follows:
6.3 Either party may provide the other with written notice, no later than October 31, 1998, that such party desires to terminate this Agreement effective as of December 31, 1999, the date of expiration of the existing term of this Agreement. Unless either party has provided the other with such written notice, the term of this Agreement shall be deemed automatically extended for an additional one-year period. As to any extension terms of this Agreement subsequent to December 31, 1999, unless either party has provided the other with written notice, no later than eighteen (18) months prior to the expiration of the then existing term, that such party desires to terminate this Agreement effective as of the date of expiration of such then existing term, the term of this Agreement shall be deemed automatically extended for an additional one-year period. Any extension shall be upon the terms and conditions set forth in this Agreement, except as otherwise agreed by the parties. All references to "Term" in this Agreement shall apply to any extension term.
Effective as of the date of last signature hereto, the foregoing amendment supersedes the corresponding section of the Conversion Agreement of October 1,
1993 as originally executed by the parties and further supersedes the corresponding section of the letter amendments dated March 27, 1998 and June 15, 1998.
Please acknowledge your agreement with the above amendment by signing the duplicate originals in the space provided and returning one of the originals to me.
Very truly yours,
/s/ Robert M. Morrow Robert M. Morrow Vice President and General Manager Fine Chemicals Business Organization |
cc: Tomen Corporation, Tokyo
C.P.O. Box 183
Tokyo, JAPAN 100-91
TOMEN AGRO, INC., BY: /s/ Dennis K. Krass
---------------------------
PRINTED NAME: Dennis K. Krass
-----------------------------------
TITLE: President
----------------------------------
DATE: Sept 29, 1998
----------------------------------
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Conversion Agreement Amendment
This Amendment, effective as of October 30, 1998, is entered into by and between Eastman Chemical Company, a Delaware corporation ("Eastman") and Tomen Agro, Inc., a California corporation ("Tomen").
Recitals
A. Eastman and Tomen are parties to that certain Conversion Agreement dated as of October 1, 1993, with Tomen being the assignee of Tomen Corporation (the "Agreement"); and
B. Eastman and Tomen desire to amend the Agreement in the manner hereinafter provided.
NOW, THEREFORE, with intent to be bound and for reasonable consideration, the parties agree as follows:
1. Sections 6.2 and 6.3 are amended to read as follows:
6.2 Unless earlier terminated pursuant to the provisions of Sections 6.4 or 6.5, this Agreement shall expire on December 31, 2001, subject to extensions, as provided in Section 6.3.
6.3 Unless either party has provided the other with written notice, no later than eighteen (18) months prior to the expiration of the then-existing term, that such party desires to terminate this Agreement effective as of the date of expiration of such then existing term, the term of this Agreement shall be deemed automatically extended for an additional one-year period. Any extensions shall be upon the terms and conditions set forth in this Agreement, except as otherwise agreed by the parties. All references to "Term" in this Agreement shall apply to any extension term."
2. This Amendment supersedes all prior amendments of Sections 6.2 and 6.3.
3. The Agreement otherwise remains in full force and effect.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by their duly authorized officers effective as of the date and year first above written.
EASTMAN CHEMICAL COMPANY TOMEN AGRO, INC.
By: /s/ Robert M. Morrow By: /s/ Dennis K. Krass
----------------------------------- ------------------------------
Name: Robert M. Morrow Name: Dennis K. Krass
--------------------------------- ----------------------------
Title: VP & General Manager, Fine Title: President
-------------------------------- ---------------------------
Chemicals Business Organization Date: Nov. 9, 1998
------------------------------- ----------------------------
Date: Oct. 30, 1998
---------------------------------
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SEVENTH AMENDMENT TO CONVERSION AGREEMENT
This Amendment, dated as of the 10th day of November, 1999, by and between Eastman Chemical Company, a Delaware corporation ("Eastman") and Tomen Agro, Inc., a California corporation ("Tomen").
WITNESSETH
WHEREAS, Eastman and Tomen are parties to that certain Conversion Agreement dated as of October 1, 1993, with Eastman being the successor in interest thereunder to Eastman Kodak Company and Tomen being the assignee of Tomen Corporation (the "Agreement"); and
WHEREAS, the Agreement was amended on May 3, 1994; May 11, 1994; March 27, 1998; June 15, 1998; September 15, 1998; and October 30, 1998; and;
WHEREAS, Eastman and Tomen desire to further amend the Agreement in the manner hereinafter provided.
NOW, THEREFORE, in consideration of the premises and mutual covenants hereinafter provided, the parties hereto agree to amend the Agreement as follows:
1. Section 6.2 is hereby amended by changing the words "this -- Agreement shall expire on December 31, 2001, subject to extensions, as provided in Section 6.3" to "this Agreement shall expire on September 30, 2005, subject to extensions, as provided in Section 6.3."
The Agreement otherwise remains in full force and effect.
IN WITNESS THEREOF, the parties hereto have caused this Amendment to be executed and delivered by their duly authorized officers as of the date and year first written above.
EASTMAN CHEMICAL COMPANY TOMEN AGRO, INC.
By: /s/ By: /s/ Dennis K. Krass
-------------------------------------- -----------------------------
Title: Vice President & General Manager Title: President
----------------------------------- --------------------------
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July 25, 2006
Arysta LifeScience North America Corporation
15401 Weston Parkway, Suite 150
Cary, NC 27513
Attention: Mr. William Lewis, President
Re: Conversion Agreement between Tomen Corporation (now Arysta LifeScience) and Eastman Chemical Company effective October 1,1993 and Custom Manufacturing Agreement between Tomen Corporation (now Arysta LifeScience) (the "Company") and Eastman Kodak Company (now Eastman Chemical Company) effective September 1, 1992 (the "Agreements")
Dear Mr. Lewis:
Effective October 4,2005, Eastman Chemical Company ("Eastman") assigned all of its right, title and interest in the assets related to its Batesville, Arkansas manufacturing site to Eastman SE, Inc. ("Eastman SE"), a wholly owned subsidiary of Eastman. As part of that assignment, Eastman agreed to assign to Eastman SE, and Eastman SE agreed to accept, Eastman's rights and obligations under the Agreements. Under the terms of the Agreements, assignments of the Agreements require the Company's prior written consent.
Please acknowledge your consent to the proposed assignment of the Agreements by Eastman to Eastman SE by signing both copies of this letter, faxing a copy to Debra Dinsmore, Advanced Paralegal, at 423.229.8489 and returning one of the duplicate originals of this letter to Ms. Dinsmore, at the above address.
Thank you for your cooperation.
Yours truly,
Eastman Chemical Company
By: /s/ Prentice McKibben/dd
--------------------------------------------------
Prentice McKibben
Vice President, Corporate Development & Strategic Planning
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cc: Phillip Crowder, Account Executive PCIBO
Tony Mash, Arysta
Young-Jin Lee, Arysta
CONSENT TO ASSIGNMENT GRANTED BY ARYSTA LIFESCIENCE
By: /s/ William M. Lewis
-----------------------------------------
Printed Name: William M. Lewis
-------------------------------
Title: President and CEO
--------------------------------------
Date: 8/8/06
---------------------------------------
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Exhibit 10.10
CREDIT AGREEMENT
By and Between
REGIONS BANK
and
FUTUREFUEL CHEMICAL COMPANY,
a Delaware corporation
Dated March 14, 2007
TABLE OF CONTENTS
-----------------
PAGE
----
SECTION 1. DEFINITIONS..........................................................3
1.01. CERTAIN DEFINED TERMS................................................3
1.02. ACCOUNTING TERMS....................................................12
1.03. OTHER INTERPRETIVE PROVISIONS.......................................12
SECTION 2. CREDIT FACILITY.....................................................12
2.01. TOTAL CREDIT FACILITY...............................................12
2.02. REVOLVING CREDIT LOANS..............................................12
2.03. ALL LOANS TO CONSTITUTE ONE OBLIGATION..............................13
2.04. LOAN ACCOUNT........................................................13
SECTION 3. INTEREST, FEES, REPAYMENT AND TERM..................................13
3.01. INTEREST AND CHARGES................................................13
3.02. TERM OF REVOLVING CREDIT LOAN AND AGREEMENT.........................15
3.03. PAYMENTS............................................................15
3.04. MANDATORY PREPAYMENT................................................16
3.05. APPLICATION OF PAYMENTS AND COLLECTIONS.............................16
3.06. COLLECTION OF ACCOUNTS..............................................16
3.07. STATEMENTS OF ACCOUNT...............................................17
3.08. CLOSING FEE.........................................................17
3.09. LETTER OF CREDIT AND GUARANTY FEES..................................18
3.10. UNUSED LINE FEE.....................................................18
3.11. CAPITAL ADEQUACY....................................................18
3.12. PREPAYMENT OF LOANS.................................................18
SECTION 4. CONDITIONS OF LENDING...............................................19
4.01. GENERAL.............................................................19
4.02. LOAN DOCUMENTATION..................................................19
4.03. OTHER CONDITIONS PRECEDENT TO LOANS.................................20
4.04. CONDITIONS PRECEDENT TO EACH REVOLVING CREDIT LOAN..................20
SECTION 5. REPRESENTATIONS AND WARRANTIES......................................21
5.01. REPRESENTATIONS AND WARRANTIES OF THE BORROWER......................21
SECTION 6. COVENANTS OF THE BORROWER...........................................23
6.01. AFFIRMATIVE COVENANTS...............................................23
6.02. NEGATIVE COVENANTS..................................................28
6.03. SPECIFIC FINANCIAL COVENANTS........................................29
SECTION 7. DEFAULT.............................................................29
7.01. EVENTS OF DEFAULT...................................................29
7.02. OBLIGATION TO LEND; ACCELERATION....................................31
7.03. REMEDIES............................................................31
7.04. RIGHT OF SET-OFF....................................................32
SECTION 8. MISCELLANEOUS.......................................................32
8.01. NOTICES.............................................................32
8.02. POWER OF ATTORNEY...................................................33
8.03. INDEMNITY...........................................................34
8.04. ENTIRE AGREEMENT; MODIFICATION OF AGREEMENT; SALE OF INTEREST.......34
8.05. REIMBURSEMENT OF EXPENSES...........................................34
8.06. INDULGENCES NOT WAIVERS.............................................35
8.07. SEVERABILITY........................................................35
(i)
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TABLE OF CONTENTS
-----------------
PAGE
----
8.08. SUCCESSORS AND ASSIGNS..............................................35
8.09. GENERAL WAIVERS BY THE BORROWER.....................................35
8.10. INCORPORATION BY REFERENCE..........................................35
8.11. EXECUTION IN COUNTERPARTS; FACSIMILE SIGNATURES.....................35
8.12. GOVERNING LAW; CONSENT TO JURISDICTION..............................36
8.13. STATUTORY NOTICE....................................................36
8.14. WAIVER OF JURY TRIAL................................................36
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Schedule 5.01(i) - Real and Personal Property Leases Schedule 5.01(l) - Borrower's Capital Structure Schedule 5.01(m) - Environmental Matters Schedule 5.01(q) - Intellectual Property Schedule 6.01(o) - Business Locations and Names
THIS CREDIT AGREEMENT is made as of the 14th day of March, 2007 by and between FUTUREFUEL CHEMICAL COMPANY, a Delaware corporation (the "Borrower"), with its chief executive office and principal place of business at 2800 Gap Road, Batesville, Arkansas 72501, and REGIONS BANK (the "Bank"), with an office at 8182 Maryland Ave., Suite 200, Clayton, Missouri 63105.
SECTION 1. DEFINITIONS
or other charges owing at such time by Borrower to any landlord of any premises where any of the Collateral is located; plus (iii) any amounts which Borrower is obligated to pay pursuant to the provisions of any of the Loan Documents that Bank elects to pay for the account of Borrower in accordance with authority contained in any of the Loan Documents.
specified in subsection H of Arkansas Pollution Control and Ecology Commission Regulation Number 23 (Hazardous Waste Management) Sections 264 and 265, specifically, the Non Discretionary Investment Management Agency Contract by and between Bank, d/b/a Regions Morgan Keegan Trust and Guarantor dated October 17, 2006, and the Trust Agreement dated October 20, 2006 by and between Guarantor and Bank, d/b/a Regions Morgan Keegan Trust.
of Borrower or of dtebt securities held by any shareholder of Borrower before their regularly scheduled maturity dates, and (iv) any loan or advance to a shareholder of Borrower.
this clause (xv) does not apply to Accounts resulting from tolling agreements
that Borrower has entered into in the ordinary course of business); (xvi) the
Account is evidenced by chattel paper or an instrument of any kind, or has
been reduced to judgment; (xvii) the Account represents a progress billing or
a retainage or arises from a sale on a cash-on-delivery basis (provided that
sales of [***] and [***] to Arysta are not subject to this clause (xvii));
(xviii) Borrower has made any agreement with the Account Debtor for any
deduction therefrom, except for discounts or allowances which are made in the
ordinary course of business for prompt payment and which discounts or
allowances are reflected in the calculation of the face value of each invoice
related to such Account; (xix) Borrower has made an agreement with the Account
Debtor to extend the time of payment thereof; (xx) the Account represents, in
whole or in part, a billing for interest, fees or late charges, provided that
such Account shall be ineligible only to the extent of the amount of such
billing; or (xxi) it arises from a retail sale of Inventory to a Person who is
purchasing the same primarily for personal, family or household purposes
(other than retail sales of biofuels).
(a) it is subject to a valid, first priority perfected lien in favor of Bank as security for the Obligations; and is located at a location owned or leased or subject to a storage/thruput agreement entered into by Borrower and reviewed and approved by Bank;
(b) is in good saleable condition and is not obsolete, and is of a quality which (in the locations where sold by Borrower) is marketable at prevailing market prices for such products and meets all applicable governmental regulations and standards at the place of intended sale;
(c) is owned by Borrower (or is used by Borrower in connection with product sold by Borrower pursuant to a tolling agreement) and is free and clear of any and all liens whatsoever, other than those in favor of Bank as security for the Obligations and Permitted Liens securing amounts which have been disclosed in writing by Borrower to Bank for the purposes of calculating any Availability Reserve with respect thereto; and
(d) is not commingled with Direct Inventory of any Person other than Borrower.
under any Environmental Law to the extent such goods can be transported or
sold only with licenses or permits that are not readily available; (v) it
conforms in all respects to the warranties and representations set forth in
this Agreement and is fully insured in the manner required by this Agreement;
(vi) it is at all times subject to Bank's duly perfected, first priority
security interest and no other lien except a Permitted Lien; (vii) it is in
Borrower's possession and control at a location in compliance with this
Agreement, is not in transit or outside the continental United States and is
not consigned to any Person; (viii) it is not the subject of a negotiable
warehouse receipt or other negotiable document; and (ix) it has not been sold
or leased and Borrower has not received any deposit or downpayment in respect
thereof in anticipation of a sale.
transaction, commodity swap, interest rate option, foreign exchange transaction, cap transaction, floor transaction, collateral transaction, forward transaction, currency swap transaction, cross-currency rate swap transaction, currency option or any other similar transaction (including any option with respect to any of these transactions) or any combination thereof, whether linked to one or more interest rates, foreign currencies, commodity prices, equity prices or other financial measures.
(i) Debt to trade creditors incurred in the ordinary course of the Borrower's business;
(ii) Debt to the Bank;
(iii) Debt the existence of which does not violate any of the financial covenants set forth herein;
(iv) Debt to FutureFuel Corp;
(v) Debt secured by Permitted Liens;
(vi) Debt which is subordinated to the Obligations pursuant to the terms of a subordination agreement satisfactory to the Bank in its reasonable discretion; and
(vii) other Debt approved in advance by the Bank in writing.
(i) liens for taxes, assessments or governmental charges not delinquent or being contested in good faith and by appropriate proceedings and for which adequate reserves in accordance with GAAP are maintained on the Borrower's books;
(ii) liens arising out of deposits in connection with workers' compensation, unemployment insurance, old age pensions or other social security or retirement benefits legislation;
(iii) deposits or pledges to secure bids, tenders, contracts (other than contracts for the payment of money), leases, statutory obligations, surety and appeal bonds, and other obligations of like nature arising in the ordinary course of the Borrower's business;
(iv) liens imposed by law, such as mechanics', workers', materialmen's, carriers' or other like liens arising in the ordinary course of the Borrower's business which secure the payment of obligations which are not past due or which are being diligently contested in good faith by appropriate proceedings and for which adequate reserves in accordance with GAAP are maintained on the Borrower's books;
(v) liens existing on the Closing Date, after the funding of the initial Loan hereunder;
(vi) purchase money security interests for the purchase of equipment to be used in the Borrower's business, securing solely the equipment so purchased, and which do not violate any provision of this Agreement including the limits on Borrower's right to make Capital Expenditures;
(vii) the DEQ Trust;
(viii) liens securing Debt described in clause (iii) of the definition of Permitted Debt;
(ix) liens in favor of the Bank; and
(x) rights of way, zoning restrictions, easements and similar encumbrances affecting the Borrower's real property which do not materially interfere with the use of such property.
SECTION 2. CREDIT FACILITY
(b) The Bank agrees to establish a sub-line of credit not to exceed Twenty Million and 00/100 Dollars ($20,000,000.00) for the purpose of issuing, confirming or guaranteeing payment of letters of credit; the Bank will reserve the outstanding portion of said sub-line against availability under the aforesaid revolving credit facility.
(c) A request for a Revolving Credit Loan shall be made, or shall be deemed to be made, in the following manner: (i) the Borrower shall give the Bank notice (whether in writing, by telephone or otherwise) of its intention to borrow, in which notice the Borrower shall specify the amount of the proposed borrowing and the proposed borrowing date; (ii) the becoming due of any amount required to be paid under this Agreement or any Note as interest shall be deemed irrevocably to be a request for a Revolving Credit Loan on the due date in the amount required to pay such interest; and (iii) the becoming due of any other Obligations shall be deemed irrevocably to be a request for a Revolving Credit Loan on the due date in the amount then so due. For purposes of subpart (i) above, the Borrower agrees that the Bank may rely and act upon any request for a Revolving Credit Loan from any individual who the Bank, absent gross negligence or willful misconduct, believes to be a representative of the Borrower.
(d) The Revolving Credit Loans shall be used by the Borrower solely for: (i) paying certain costs and expenses in connection with the closing of the transactions contemplated by this Agreement, (ii) the Borrower's general working capital, capital expenditure and general corporate purposes needs to the extent not inconsistent with the terms of this Agreement; and (iii) repaying loans from FutureFuel Corp., including those outstanding on the Closing Date.
SECTION 3. INTEREST, FEES, REPAYMENT AND TERM
==============================================================================================
APPLICABLE MARGIN FOR APPLICABLE MARGIN FOR COMMITMENT
LEVERAGE RATIO INTERBANK RATE LOANS BASE RATE LOANS FEE
----------------------------------------------------------------------------------------------
Greater than or equal to 1.70% -0.55% 0.25%
3.00 to 1.00
----------------------------------------------------------------------------------------------
Equal to or greater than 1.55% -0.70% 0.25%
2.00 to 1.00 but less than
3.00 to 1.00
----------------------------------------------------------------------------------------------
Equal to or greater than 1.40% -0.85% 0.25%
1.00 to 1.00 but less than
2.00 to 1.00
----------------------------------------------------------------------------------------------
Less than 1.00 to 1.00 1.25% -1.00% 0.25%
==============================================================================================
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(i) When Borrower makes a request for a Loan, Borrower shall specify whether an Interbank Rate Loan or a Base Rate Loan is requested;
(ii) Any advance for which the Interbank Rate Option is not effectively elected in accordance with the Agreement shall bear interest at the Base Rate Option;
(iii) By notice (a "Continuation/Conversion Notice") delivered to the Bank on or before 12:00 p.m. (St. Louis time) on any Business Day, Borrower may elect, from time to time (A) on not less than two (2) Business Days' notice if the Interbank Rate Option is elected, and (B) on or before the same Business Day if the Base Rate Option is elected:
(a) that all or any portion of any Revolving Credit Loan be converted from a Base Rate Loan into an Interbank Rate Loan; and
(b) on the expiration of the Interbank Interest Period applicable to any Interbank Rate Loan constituting all or part of any Loan, that all or any portion of such Loan be continued as an Interbank Rate Loan or converted into a Base Rate Loan; provided that no portion of the outstanding principal amount of any Loan may be continued as, or be converted into, an Interbank Rate Loan when any Default or Event of Default has occurred and is continuing.
(iv) No Revolving Credit Loan may be made or continued as, or converted into, an Interbank Rate Loan if, after given effect to such action, the aggregate principal amount of such Interbank Rate Loan is less than One Hundred Thousand Dollars ($100,000.00) nor with increments of less than Ten Thousand Dollars ($10,000.00);
(v) All Revolving Credit Loans which are Base Rate Loans must be in the minimum aggregate principal amount of One Thousand Dollars ($1,000.00), with no minimum increments thereafter.
(vi) All Interbank Rate Option option notices or Continuation/Conversion Notices given by the Borrower to the Bank shall be in such form as the Bank may reasonably require from time to time.
(b) If the Bank in its reasonable judgment determines that
(i) it would be illegal or impractical to offer the Interbank Rate Option for
Loans or (ii) that reasonable means do not exist for determining the Interbank
Rate, then upon notice of the Bank to the Borrower, any obligations of the
Bank to make Interbank Rate Loans shall be suspended until the Bank notifies
the Borrower that such circumstances giving rise to such determination no
longer exist and until such time all Loans that would otherwise be made by the
Bank as Interbank Rate Loans shall instead be Base Rate Loans.
(c) Upon or after the occurrence and during the continuation of any Event of Default, the principal amount of the Obligations shall bear interest, calculated daily (computed on the actual days elapsed over a year of 360 days), at a fluctuating rate per annum equal to the Base Rate plus three percent (3.0%).
(d) In no contingency or event whatsoever shall the aggregate of all amounts deemed interest hereunder or under the Notes and charged or collected pursuant to the terms of this Agreement or any other Loan Documents exceed the highest rate permissible under any law which a court of competent jurisdiction shall, in a final determination, deem applicable thereto. In the event that such a court determines that the Bank has charged or received interest hereunder or under the other Loan Documents in excess of the highest applicable rate, the Bank shall apply such excess to any other Obligations then due and payable, whether principal, interest, fees or otherwise, and shall refund the remainder of such excess interest, if any, to Borrower, and such rate shall automatically be reduced to the maximum rate permitted by such law.
(a) Principal payable on account of the Loans shall be
payable by the Borrower to the Bank immediately upon the earliest to occur of
(i) the date or dates for payment as specified in the Notes, (ii) the receipt
by the Bank or the Borrower of any proceeds of any of the Collateral, to the
extent of such proceeds, (iii) the occurrence of an Event of Default in
consequence of which the Bank elects to accelerate the maturity and payment of
any of the Obligations, (iv) termination of this Agreement for any reason or
(v) the Maturity Date; provided, however, that if the principal balance of
Revolving Credit Loans outstanding at any time shall exceed the Borrowing Base
at such time, the Borrower shall, on demand, repay the Revolving Credit Loans
in an amount sufficient to reduce the aggregate unpaid principal amount of
such Revolving Credit Loans by an amount equal to such excess;
(b) Interest accrued on the Loans shall be due on the earliest to occur of (i) the first Business Day of each month (for the immediately preceding month), computed through the last calendar
(c) Costs, fees and expenses payable pursuant to this Agreement or the other Loan Documents shall be payable by the Borrower, on demand, to the Bank or to any other Person designated by the Bank and the Borrower hereby authorizes the Bank, in the Bank's sole discretion, to advance to or on behalf of the Borrower, and to charge the Borrower's Loan Account as a Revolving Credit Loan, all such costs, fees and expenses (such advances to be considered Base Rate Loans); and
(a) To expedite collection of the Accounts, the Borrower shall notify all of its Account Debtors to make payment of the Accounts to one or more lock-box accounts or deposit accounts established or to be established with Bank (collectively, the "Lock-Box Account"). All funds in the Lock-Box Account shall be applied by the Bank to reduce the Obligations in the manner set forth herein. The Bank assumes no responsibility for such Lock-Box Accounts, including, without limitation, any claim of accord and satisfaction or release with respect to deposits accepted thereunder. All remittances received by the Borrower on account of Accounts, and the proceeds of any of the other Collateral, shall be held as the Bank's property by the Borrower as trustee of an express trust for the Bank's benefit and the Borrower shall immediately deposit the same in the Lock-Box Account.
(b) Upon or after the occurrence and during the continuation of any Event of Default, the Bank may notify the Account Debtors that Accounts have been assigned to the Bank and collect the Accounts directly in its own name and may charge the collection costs and expenses, including reasonable attorneys' fees, to the Borrower. Furthermore, upon or after the occurrence and during the continuation of any Event of Default, the Lock-Box Account shall come under and shall remain under the sole control of the Bank, and all funds in the Lock-Box Account shall immediately become the property of the Bank.
(c) The Bank has no duty to protect, insure, collect or realize upon the Accounts or preserve rights in them.
(d) All payments received by Bank into the Lock-Box Account shall be applied on a daily basis as follows:
(i) first, to cover any and all amounts payable by Borrower pursuant to checks written, wires authorized and ACH debits and credits processed against Borrower's "zero balance account" maintained with Bank;
(ii) second, against the outstanding amounts due and owing under the Obligations; and
(iii) third, as to any remaining amounts in the Lock-Box Account, as a deposit into Borrower's Eurodollar investment account maintained with Bank.
If and to the extent that funds deposited into the Lock-Box Account on any given day are insufficient to cover any and all amounts payable by Borrower pursuant to checks written, wires authorized and ACH debits and credits processed against Borrower's "zero balance account" maintained with Bank, then Borrower hereby authorizes the Bank, in the Bank's sole discretion, to advance to or on behalf of the Borrower, and to charge the Borrower's Loan Account as a Revolving Credit Loan, any such shortfall necessary to cover such amounts payable (such advances to be considered Base Rate Loans).
(e) For the purpose of computing interest hereunder, all items of payment received by Bank and applied via ACH in accordance with the provisions of Section 3.06(d)(ii) above shall be deemed to have been applied on account of the Obligations on the Business Day on which Borrower or any Account Debtor deposits such items of payment in the Lock-Box Account; subject, however, to the Bank's right to charge the Borrower any uncollected items of payment.
provision of this Agreement or the other Loan Documents or any commitment letter, letter of intent or similar agreement.
(a) In the event that the Bank shall have determined that the adoption of any law, rule or regulation regarding capital adequacy, or any change therein or in the interpretation or application thereof or compliance by the Bank with any request or directive regarding capital adequacy (whether or not having the force of law) from any central bank or governmental authority, does or shall have the effect of reducing the rate of return on the Bank's capital as a consequence of its obligations hereunder to a level below that which the Bank could have achieved but for such adoption, change or compliance (taking into consideration the Bank's policies with respect to capital adequacy) by an amount deemed by the Bank, in its sole discretion, to be material, then from time to time, after submission by the Bank to the Borrower of a written demand therefor, the Borrower shall pay to the Bank such additional amount or amounts as will compensate the Bank for such reduction; provided, however, that upon receipt by Borrower of such written demand by Bank, Borrower shall have the option to prepay any and all amounts due and owing to Bank hereunder and thereafter to terminate the Agreement.
interest which would have been payable during the Interbank Interest Period on the Interbank Rate Loan prepaid had it not been prepaid, exceeds (ii) the interest which would have been recoverable by the Bank by placing the amount prepaid on deposit in the domestic certificate of deposit market, the eurodollar deposit market, or other appropriate money market selected by the Bank, for a period starting on the date on which it was prepaid and ending on the last day of the Interbank Interest Period for such Interbank Rate Loan. The amount of any such loss or expense payable by the Borrower to the Bank under this section shall be determined by the Bank in the Bank's reasonable discretion based upon the assumption that the Bank funded its loan commitment for such Interbank Rate Loan in the London Interbank Eurodollar market and using any reasonable attribution or averaging methods which the Bank deems appropriate and practical, provided, however, that the Bank is not obligated to accept a deposit in the London Interbank Eurodollar market in order to charge interest on an Interbank Rate Loan at the Interbank Rate.
SECTION 4. CONDITIONS OF LENDING
(a) No Default or Event of Default shall exist;
(b) Since the date of the last financial statements of Borrower submitted by the Borrower to the Bank, there shall not have occurred any material adverse change in the business, financial condition or results of operations of the Borrower, or a material adverse change in the value of the Collateral taken as a whole, or any event, condition or state of facts which would reasonably be expected materially and adversely to affect the actual or prospective business, financial condition or operations of the Borrower;
(c) No action, proceeding, investigation, regulation or legislation shall have been instituted, threatened or proposed before any court, governmental agency or legislative body to enjoin, restrain or prohibit, or to obtain damages in respect of, or which is related to or arises out of this Agreement or the consummation of the transactions contemplated hereby or which, in the Bank's reasonable discretion, would make it inadvisable to consummate the transactions contemplated by this Agreement or any of the other Loan Documents; and
(d) The Borrower shall have paid all legal fees and other closing or like costs and expenses of the Bank which the Borrower is obligated to pay hereunder.
such date, and (ii) there exists no Default or Event of Default as of such date, nor would any Default or Event of Default result from the making of the Loan requested by the Borrower;
(b) The Borrower shall have signed and sent to the Bank, if the Bank so requests, a request for advance, setting forth in writing the amount of the Revolving Credit Loan requested; provided, however, that the foregoing condition precedent shall not prevent the Bank, if it so elects in its sole discretion, from making a Revolving Credit Loan pursuant to the Borrower's non-written request therefor; and
The Borrower agrees that the making of a request by the Borrower for a Revolving Credit Loan, whether in writing, by telephone or otherwise, shall constitute a certification by the Borrower and the person(s) executing or giving the same that all representations and warranties of the Borrower herein are true as of the date thereof and that all required conditions to the making of the Revolving Credit Loan have been met.
SECTION 5. REPRESENTATIONS AND WARRANTIES
moratorium, or similar laws affecting the enforceability of creditors' rights generally and subject to the discretion of courts in applying equitable remedies.
assets and other property in material violation of Environmental Laws. The Borrower has been issued all licenses, certificates, permits or other authorizations required under any Environmental Law.
SECTION 6. COVENANTS OF THE BORROWER
quarter and internally prepared income statements as of the end of such fiscal quarter and for the fiscal year-to-date, each certified by the Borrower's chief financial officer, together with a certification from Borrower's chief financial officer or other officer reasonably acceptable to Bank indicating that Borrower is not in default of the Loan Documents or any other material agreement to which Borrower is a party;
All financial statements described in clauses (i), (ii), and (iii) shall be prepared in accordance with GAAP on a basis consistent with of the most recent financial statements of the Borrower submitted to Bank, except that unaudited financial statements shall be subject to normal year-end audit adjustments, and need not contain footnotes.
as to Inventory payable solely to the Bank, and (ii) against liability on account of damage to persons or property (including product liability insurance and all insurance required under all applicable worker's compensation laws) caused by the Borrower or its officers, directors, employees, agents or contractors in such a manner and to the extent that like risks are usually insured by others conducting similar businesses in the places where the Borrower conducts its business, with the Bank being named as an additional insured under such liability policies as its interests may appear. The Borrower shall cause the insurers under all of its insurance policies to provide the Bank at least 30 days prior written notice of the termination of any such policy before such termination shall be effective and to agree to such other matters in respect of any such casualty insurance as provided in the Bank's loss payee endorsement provided to the Borrower. In addition, the Borrower will, upon request of the Bank at any time, furnish a written summary of the amount and type of insurance carried, the names of the insurers and the policy numbers, and deliver to the Bank certificates with respect thereto.
development or the occurrence of any event, financial or otherwise, which constitutes a Default or an Event of Default or which constitutes a default under any other agreement to which the Borrower is a party and which may or shall materially and adversely affect the business, properties or affairs of the Borrower or its ability to pay and perform its obligations under this Agreement or the other Loan Documents.
http:www.treas.gov/ofac/t11sdn.pdf), or (iii) whose name appears on any other
such list issued pursuant to EO13224. (Any and all parties or persons
described in subparts (i) through (iii) above are herein referred to as
"Prohibited Persons"). In addition, Borrower further warrants, represents and
covenants that Borrower will not permit the transfer of any interest in
Borrower to any Prohibited Person. Borrower covenants and agrees that neither
Borrower, Guarantor, nor any of their respective entities will knowingly (i)
conduct any business, or engage in any transaction or dealing with any
Prohibited Person, including, but not limited to, the making or receiving of
funds, goods, or services to or for the benefit of a Prohibited Person, or
(ii) engage in or conspire to engage in any transaction that evades or avoids,
or has the purpose of evading or avoiding, or attempts to violate, any of the
prohibitions set forth in EO13224. Borrower further covenants and agrees to
immediately notify Bank if Borrower has knowledge that it has not fully
complied with the representations and covenants made in this paragraph.
Borrower covenants and agrees to deliver from time to time to Bank any such
certification or other evidence as may be requested by Bank in its sole and
absolute discretion confirming that Borrower has fully complied with its
representations and covenants made in this paragraph.
------------------------------------------------------------------------------------------- MEASUREMENT DATE RATIO OF DEBT TO EBITDA ------------------------------------------------------------------------------------------- Beginning December 31, 2007 and the last day of 1.50 to 1:00 each fiscal quarter ended thereafter ------------------------------------------------------------------------------------------- |
------------------------------------------------------------------------------------------- MEASUREMENT DATE RATIO OF TOTAL FUNDED DEBT TO EBITDA ------------------------------------------------------------------------------------------- June 30, 2007 3.50 to 1:00 ------------------------------------------------------------------------------------------- September 30, 2007 3.50 to 1:00 ------------------------------------------------------------------------------------------- December 31, 2007 3.50 to 1:00 ------------------------------------------------------------------------------------------- March 31, 2008 3.25 to 1.00 ------------------------------------------------------------------------------------------- June 30, 2008 3.25 to 1.00 ------------------------------------------------------------------------------------------- September 30, 2008 3.25 to 1.00 ------------------------------------------------------------------------------------------- December 31, 2008 and the last day of 3.00 to 1.00 each fiscal quarter ended thereafter ------------------------------------------------------------------------------------------- |
SECTION 7. DEFAULT
(a) The Borrower shall fail to pay any principal of or interest on any Note within five (5) days after any such payment is due; or
(c) The Borrower shall fail to pay any other monetary Obligations within five (5) days after notice thereof is given to the Borrower; or
(e) The Borrower shall fail to perform or observe any other covenant or undertaking contained herein within ten (10) days after notice thereof is given to the Borrower by the Bank, or the Borrower shall fail to pay, perform or observe any covenant or undertaking contained in any of the other Loan Documents beyond any applicable grace or cure period; or
(f) Any representation or warranty made or furnished by the Borrower (or any of its officers) or any of the Guarantors in connection with this Agreement or the other Loan Documents shall prove to have been incorrect or misleading in any material respect when made, or any such representation or warranty shall become incorrect or misleading in any material respect and the Borrower or any Guarantor, as the case may be, shall fail to give the Bank prompt written notice thereof; or
(h) The Borrower or any Guarantor shall cease to be solvent or shall suffer the appointment of a receiver, trustee, custodian or similar fiduciary, or shall make an assignment for the benefit of creditors; or any petition for an order for relief shall be filed by or against the Borrower or any Guarantor under the federal Bankruptcy Code or any similar state insolvency statute (if against the Borrower or any Guarantor, the continuation of such proceeding for more than sixty (60) days); or the Borrower or any Guarantor shall make any offer of settlement, extension or composition to their respective unsecured creditors generally; or
(i) The Borrower or any Guarantor, or any Affiliate of either, shall challenge or contest in any action, suit or proceeding the validity or enforceability of this Agreement or any of the other Loan Documents, the legality or enforceability of any of the Obligations or the perfection or priority of any lien granted to the Bank; or
(j) Any Guarantor shall revoke or attempt to revoke the guaranty agreement signed by such Guarantor, or shall repudiate such Guarantor's liability thereunder or shall be in default under the terms thereof; or
(k) A final judgment or order for the payment of money in excess of Two Hundred Fifty Thousand Dollars ($250,000.00) or final judgments or orders for the payment of money in excess of an aggregate of Two Hundred Fifty Thousand Dollars ($250,000.00) shall be rendered against the Borrower or any Guarantor and such judgment(s) or order(s) shall not have been vacated, discharged, stayed, or bonded and shall continue unsatisfied and in effect for a period of sixty (60) consecutive days; or
(l) In the Bank's reasonable judgment, there shall occur a material adverse change in the business prospects or financial condition of the Borrower or any Guarantor.
(a) All of the rights and remedies of a secured party under the Code or under other applicable law, and all other legal and equitable rights to which the Bank may be entitled, all of which rights and remedies shall be cumulative, and none of which shall be exclusive, and all of which shall be in addition to any other rights or remedies contained in this Agreement or any of the other Loan Documents.
(b) The right to take immediate possession of the Collateral, and (i) to require the Borrower to assemble the Collateral, at the Borrower's expense, and make it available to the Bank at a place designated by the Bank which is reasonably convenient to both parties, and (ii) to enter upon and use any premises in which the Borrower has an ownership, leasehold or other interest, or wherever any of the Collateral shall be located, and to store, remove, abandon, manufacture, sell, dispose of or otherwise use all or any part of the Collateral on such premises without the payment of rent or any other fees by the Bank to the Borrower or any other Person for the use of such premises or such Collateral.
(c) The right to sell or otherwise dispose of all or any
Collateral in its then condition, or after any further manufacturing or
processing thereof, at public or private sale or sales, with such notice as
may be required by law, in lots or in bulk, for cash or on credit, all as the
Bank, in its sole discretion, may deem advisable. The Borrower agrees that ten
(10) days written notice to the Borrower of any public or private sale or
other disposition of such Collateral shall be reasonable notice thereof. The
Bank shall have the right to conduct such sales on the Borrower's premises,
without charge therefor, and such sales may be adjourned from time to time in
accordance with applicable law. The Bank shall have the right to sell, lease
or otherwise dispose of such Collateral, or any part thereof, for cash, credit
or any combination thereof, and the Bank may purchase all or any part of such
Collateral at public or, if permitted by law, private sale and, in lieu of
actual payment of such purchase price, may setoff or credit the amount of such
price against the Obligations.
(d) The Bank is hereby granted a license or other right to use, without charge, all of the Borrower's labels, patents, copyrights, rights of use of any name, trade secrets, trade names, trademarks and advertising matter, or any property of a similar nature as it pertains to the Collateral or any other property of the Borrower, in storing, removing, transporting, manufacturing, advertising, selling or otherwise using the Collateral, and the Borrower's rights in and under such property shall inure to the Bank's benefit.
(e) The proceeds realized from the sale of any Collateral may be applied, after the Bank is in receipt of good funds, as follows: first, to the reasonable costs, expenses and attorneys' fees and
expenses incurred by the Bank for collection and for acquisition, completion, manufacture, protection, removal, storage, sale and delivery of the Collateral; second, to any fees or expenses due the Bank under the Loan Documents; third, to interest due upon any of the Obligations; and fourth, to the principal of the Obligations. If any deficiency shall arise, the Borrower and each Guarantor shall remain jointly and severally liable to the Bank therefor. Any surplus remaining after payment in full of the Obligations will be returned to the Borrower or to whomever may be legally entitled thereto. The Bank shall have no obligation to marshal any assets in favor of the Borrower or any other Person.
SECTION 8. MISCELLANEOUS
Regions Bank
8182 Maryland Ave.. Suite 200
St. Louis, Missouri 63105
Attention: Daniel R. Kraus, Vice President
Facsimile No: (314) 615-2355
Armstrong Teasdale LLP One Metropolitan Square, Suite 2600 St. Louis, Missouri 63102 Attention: Michael A. Wazlawek, Esq.
Facsimile No: (314) 612-2362
FutureFuel Chemical Company
Attention: Chief Financial Officer
2800 Gap Road
Batesville, Arkansas 72501
Facsimile No: (870) 698-5303
FutureFuel Corp.
Attention: Douglas D. Hommert, Executive Vice President
8235 Forsyth Blvd., 4th Floor
St. Louis, Missouri 63105
Facsimile No: (314) 889-9603
(a) At such time or times hereafter as the Bank or such agent, in its sole discretion, may determine, endorse the Borrower's name on any checks, notes, acceptances, drafts, money orders or any other evidence of payment or proceeds of the Collateral which come into the possession of the Bank or under the Bank's control; and
(b) At such time or times upon or after the occurrence and during the continuance of any Event of Default as the Bank or its agent in its sole discretion may determine: (i) demand payment of the Accounts from the Account Debtors, enforce payment of the Accounts by legal proceedings or otherwise, and generally exercise all of the Borrower's rights and remedies with respect to the collection of the Accounts; (ii) settle, adjust, compromise, discharge or release any of the Accounts or other Collateral or any legal proceedings brought to collect any of the Accounts or other Collateral; (iii) sell or otherwise transfer any of the Accounts and other Collateral upon such terms, for such amounts and at such time or times as the Bank deems advisable; (iv) take control, in any manner, of any item of payment or proceeds relating to any Collateral; (v) prepare, file and sign the Borrower's name to a proof of claim in bankruptcy or similar document against any Account Debtor or to any notice of lien, assignment or satisfaction of lien or similar document in connection with any of the Collateral; (vi) receive, open and process all mail addressed to the Borrower and to notify postal authorities to change the address for delivery thereof to such address as the Bank may designate; (vii) endorse the name of the Borrower upon any of the items of payment or proceeds relating to any Collateral and deposit the same to the account of the Bank on account of the Obligations; (viii) endorse the name of the Borrower upon any chattel paper, document, instrument, invoice, freight bill, bill of lading or similar document or agreement relating to the Accounts, Inventory and any other Collateral; (ix) use the Borrower's stationery and sign the name of the Borrower to verifications of the Accounts and notices thereof to Account Debtors; (x) use the information recorded on or contained in any data processing equipment and computer hardware and software relating to the Accounts, inventory, equipment and any other Collateral and to which the Borrower has access; (xi) make
and adjust claims under policies of insurance; and (xii) do all other acts and things necessary, in the Bank's determination, to fulfill the Borrower's obligations under this Agreement.
of any of the Loan Documents, or the creation of any of the Obligations hereunder, by reason of any existing or hereafter enacted federal, state or local statute or other law, the Borrower will pay all such taxes, including, but not limited to, any interest and penalties thereon, and will indemnify and hold the Bank harmless from and against liability in connection therewith.
instrument. A signature of a party to any of the Loan Documents sent by facsimile or other electronic transmission shall be deemed to constitute an original and fully effective signature of such party.
SIGNATURE PAGE FOLLOWS
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed and delivered by their duly authorized representatives as of the date first above written.
FUTUREFUEL CHEMICAL COMPANY,
a Delaware corporation
By: /s/ Douglas D. Hommert -------------------------------------- Douglas D. Hommert, Executive Vice President |
REGIONS BANK
By: /s/ Daniel R. Kraus -------------------------------------- Daniel R. Kraus, Vice President |
St. Louis, Missouri
US $50,000,000.00 March 14, 2007
This Note is the Revolving Credit Note referred to in, and is issued pursuant to, that certain Credit Agreement between the Borrower and the Bank dated even date herewith (as amended or otherwise modified from time to time, the "Credit Agreement"), and is entitled to all of the benefits and security of the Credit Agreement. All of the terms, covenants and conditions of the Credit Agreement and all other instruments evidencing or securing the indebtedness hereunder are hereby made a part of this Note and are deemed incorporated herein in full. All capitalized terms used herein, unless otherwise specifically defined in this Note, shall have the meanings ascribed to them in the Credit Agreement.
This Note is secured by the Collateral described in the Credit Agreement.
Interest hereunder shall be computed on, the basis of actual days elapsed over the period of a 360-day year. Upon or after the occurrence and during the continuation of any Event of Default, the outstanding principal balance of this Note shall bear interest at a variable rate per annum equal to the Default Rate until the principal balance of this Note is paid in full.
In no contingency or event whatsoever, whether by reason of advancement of the proceeds hereof or otherwise, shall the amount paid or agreed to be paid to the Bank for the use, forbearance or detention of money advanced hereunder exceed the highest lawful rate permissible under any law which a court of competent jurisdiction may deem applicable hereto.
The Borrower may prepay this Note, in whole or in part, at any time without premium or penalty, together with accrued interest on the principal amount so prepaid at the prepayment date.
The termination of the Credit Agreement or the occurrence of an Event of Default shall entitle the Bank, at its option, to declare the then outstanding principal balance and accrued interest hereon to be, and the same shall thereupon become, immediately due and payable without notice to or demand upon the Borrower, all of which the Borrower hereby expressly waives.
Time is of the essence of this Note. To the fullest extent permitted by applicable law, and except as may be otherwise set forth in the Credit Agreement, the Borrower, for itself and its successors and assigns, expressly waives presentment, demand, protest, notice of dishonor, and any and all other notices, demands and consents in connection with the delivery, acceptance, performance, default or enforcement of this Note, and hereby consents to any extensions of time, renewals, releases or any parties to or guarantors of this Note, waivers and any other modifications that may be granted or consented to by the Bank from time to time in respect of the time of payment or any other provision of this Note.
Wherever possible each provision of this Note shall be interpreted in such a manner as to be effective and valid under applicable law, but if any provision of this Note shall be prohibited or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity without invalidating the remainder of such provision or remaining provisions of this Note. No delay or failure on the part of the Bank in the exercise of any right or remedy hereunder shall operate as a waiver thereof, nor as an acquiescence in any default, nor shall any single or partial exercise by the Bank of any right or remedy preclude any other right or remedy. The Bank, at its option, may enforce its rights against any collateral securing this Note without enforcing its rights against the Borrower, any guarantor of the indebtedness evidenced hereby or any other property or indebtedness due or to become due to the Borrower. The Borrower agrees that, without releasing or impairing the Borrower's liability hereunder, the Bank may at any time release, surrender, substitute or exchange any collateral securing this Note and may at any time release any party primarily or secondarily liable for the indebtedness evidenced by this Note.
This Note shall be governed by, and construed and enforced in accordance with, the internal laws of the State of Missouri.
BORROWER HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY (WHICH BANK ALSO WAIVES) IN ANY ACTION, SUIT, PROCEEDING OR COUNTERCLAIM OF ANY KIND ARISING OUT OF OR RELATING TO THIS NOTE OR ANY OF THE LOAN DOCUMENTS, THE COLLATERAL, OR BANK'S CONDUCT IN RESPECT OF ANY OF THE FOREGOING.
ORAL AGREEMENTS OR COMMITMENTS TO LOAN MONEY, EXTEND CREDIT OR TO FOREBEAR FROM ENFORCING REPAYMENT OF A DEBT INCLUDING PROMISES TO EXTEND OR RENEW SUCH DEBT ARE NOT ENFORCEABLE REGARDLESS OF THE LEGAL THEORY UPON WHICH IT IS BASED, THAT IS IN ANY WAY RELATED TO THE CREDIT AGREEMENT. TO PROTECT YOU (BORROWER(S)) AND US (CREDITOR) FROM MISUNDERSTANDING OR DISAPPOINTMENT, ANY AGREEMENTS WE REACH COVERING SUCH MATTERS ARE CONTAINED IN THIS WRITING, WHICH IS THE COMPLETE AND EXCLUSIVE STATEMENT OF THE AGREEMENT BETWEEN US, EXCEPT AS WE MAY LATER AGREE IN WRITING TO MODIFY IT.
IN WITNESS WHEREOF, the Borrower has caused this Note to be executed and delivered by its duly authorized representative as of the date first above written.
FUTUREFUEL CHEMICAL COMPANY
We refer to that certain Credit Agreement dated as of March 14, 2007 (as the same may be amended, restated, supplemented or otherwise modified from time to time, the "Agreement"), by and between FUTUREFUEL CHEMICAL COMPANY, a Delaware corporation ( "Borrower"), and REGIONS BANK ("Bank"). Each capitalized term contained herein and not otherwise defined herein shall have the meaning given to such term in the Agreement.
A. ELIGIBLE ACCOUNTS*
-----------------
1. Total Accounts $_______________________
2. Less: Accounts arising out of a sale made by Borrower to an $_______________________
affiliate of Borrower or to a Person controlled by an
Affiliate of Borrower at other than arm's length prices.
3. Less: Accounts that are due or unpaid for more than 60 days $_______________________
after the original due date shown on the invoice
4. Less: Accounts where 50% or more of the Accounts from the $_______________________
Account Debtor are not deemed Eligible Accounts
5. Less: Accounts where the total unpaid Accounts of the $_______________________
Account Debtor exceed 50% of the aggregate amount of all
Eligible Accounts or exceed a credit limit established by
Bank in its reasonable discretion for such Account Debtor,
in each case, to the extent of such excess (not applicable
to Accounts where the Account Debtor thereon is Procter &
Gamble)
6. Less: Accounts where any covenant, representation or $_______________________
warranty contained in the Agreement with respect to such
Account has been breached.
40
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7. Less: Accounts from Account Debtors who are also Borrower's $_______________________
creditor or supplier (excluding Procter & Gamble and Eastman
Chemical Company), or the Account Debtor has disputed
liability with respect to such Account, or the Account
Debtor has made any claim with respect to any other Account
due from such Account Debtor to Borrower, or the Account
otherwise is or may become subject to any right of setoff,
counterclaim, recoupment, reserve, defense or chargeback,
provided that, the Accounts of such Account Debtor shall be
ineligible only to the extent of such dispute or right of
offset, counterclaim, recoupment, reserve, defense or
chargeback
8. Less: Accounts where a bankruptcy proceeding has been $_______________________
commenced by or against the Account Debtor or the Account
Debtor has failed, suspended or ceased doing business
9. Less: Accounts where the Account Debtor is not or has ceased $_______________________
to be solvent
10. Less: Accounts arising from a sale to an Account Debtor that $_______________________
requires the Borrower to send its invoices regarding payment
for any such sale to an office or place of business outside
of the United States, except to the extent that the sale is
supported or secured by a letter of credit or credit
insurance that is acceptable in all respects to Bank and
duly assigned to Bank
11. Less: Accounts arising from a sale to the Account Debtor on $_______________________
a bill-and-hold, guaranteed sale, sale-or-return,
sale-on-approval, consignment or any other repurchase or
return basis (provided that sales of [***] and [***] to
Arysta are not subject to this clause)
12. Less: Accounts where the Account Debtor is the United States $_______________________
of America or any department, agency or instrumentality
thereof, unless Borrower is not prohibited from assigning
the Account and does assign its right to payment of such
Account to Bank, in a manner reasonably satisfactory to
Bank, so as to comply with the Assignment of Claims Act of
1940 (31 U.S.C. Section 3727 and 41 U.S.C. Section 15), or is
a state, county or municipality, or a political subdivision or
agency thereof and applicable law disallows or restricts an
assignment of Accounts on which it is the Account Debtor
41
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13. Less: Accounts where the Account Debtor is located in any $_______________________
state which imposes conditions on the right of a creditor to
collect accounts receivable unless the applicable Borrower
has either qualified to transact business in such state as a
foreign entity or filed a Notice of Business Activities
Report or other required report with the appropriate
officials in those states for the then current year
14. Less: Accounts where the Account Debtor is located in a $_______________________
state in which Borrower is deemed to be doing business under
the laws of such state and which denies creditors access to
its courts in the absence of qualification to transact
business in such state or of the filing of any reports with
such state, unless Borrower has qualified as a foreign
entity authorized to transact business in such state or has
filed all required reports
15. Less: Accounts subject to a lien other than a Permitted Lien $_______________________
16. Less: Accounts where goods have not been delivered to or $_______________________
accepted by the Account Debtor or the Account otherwise does
not represent a final sale (not applicable to Accounts
resulting from tolling agreements that Borrower has entered
into in the ordinary course of business)
17. Less: Accounts evidenced by chattel paper or an instrument $_______________________
of any kind, or has been reduced to judgment
18. Less: Accounts that represent a progress billing or a $_______________________
retainage or arises from a sale on a cash-on-delivery basis
(excluding sales of [***] and [***] to Arysta)
19. Less: Accounts where Borrower has made any agreement with $_______________________
the Account Debtor for any deduction therefrom, except for
discounts or allowances which are made in the ordinary
course of business for prompt payment and which discounts or
allowances are reflected in the calculation of the face
value of each invoice related to such Account
20. Less: Accounts where Borrower has made an agreement with the $_______________________
Account Debtor to extend the time of payment thereof
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21. Less: Accounts that represent, in whole or in part, a $_______________________
billing for interest, fees or late charges, provided that
such Account shall be ineligible only to the extent of the
amount of such billing
22. Less: Accounts arising from a retail sale of Inventory to a $_______________________
Person who is purchasing the same primarily for personal,
family or household purposes (other than retail sales of
biofuels)
23. TOTAL ELIGIBLE ACCOUNTS $_______________________
24. Advance Ratio of 85% for Eligible Accounts 85%
25. ACCOUNTS FORMULA AMOUNT $_______________________
B. ELIGIBLE INVENTORY
------------------
1. Total Direct Inventory $_______________________
2. Less: Ineligible Direct Inventory $_______________________
3. Total Eligible Direct Inventory $_______________________
4. Advance Ratio of 60% for Eligible Direct Inventory 60%
5. Total Availability from Direct Inventory $_______________________
6. Total Indirect Inventory $_______________________
7. Less: Ineligible Indirect Inventory $_______________________
8. Total Eligible Indirect Inventory $_______________________
9. Advance Ratio of 50% for Eligible Indirect Inventory 50%
10. Total Availability from Indirect Inventory $_______________________
11. ELIGIBLE INVENTORY ADVANCE AMOUNT (B.5 plus B.10) $_______________________
C. BORROWING BASE
--------------
1. LC Reserve $_______________________
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2. Plus: Aggregate amount of past due rent, fees or other $_______________________
charges owing at such time by Borrower to any landlord of
any premises where any of the Collateral is located
3. Plus: Amounts which Borrower is obligated to pay pursuant to $_______________________
the provisions of any of the Loan Documents that Bank elects
to pay for the account of Borrower in accordance with
authority contained therein
4. AVAILABILITY RESERVE $_______________________
D. BORROWING BASE
--------------
1. ACCOUNTS FORMULA AMOUNT (A.25 above) $_______________________
2. ELIGIBLE INVENTORY ADVANCE AMOUNT (B.11 above) $_______________________
3. LESS: AVAILABILITY RESERVE (C.4 above) $_______________________
4. Borrowing Base $_______________________
5. Less: Current outstanding borrowings under credit facility $_______________________
6. EXCESS AVAILABILITY $_______________________
*The summary descriptions of Eligible and non-Eligible Accounts and
Inventory used herein to calculate Total Availability shall not be deemed to
modify or otherwise alter the provisions regarding same contained in the
Agreement.
|
Borrower hereby: (a) as security for the repayment of the Obligations, assigns, transfers and pledges to Bank, its successors and assigns, and gives and agrees that Bank has a security interest in, under and pursuant the Loan Documents, the Accounts specifically described in the invoice copies or schedules of accounts receivable attached hereto and identified herein, and the Inventory generally identified herein or described in lien statements or security agreements attached hereto, and in all presently outstanding Accounts and in all Inventory now owned by Borrower, and all Accounts and Inventory hereafter created, acquired or purchased by Borrower; (b) warrants and certifies to Bank that all Accounts created since the prior Borrowing Base Certificate submitted to Bank are evidenced by invoice copies or schedules of accounts receivable attached hereto, and that the total of all Accounts on the books and records of Borrower at said date is as shown and there is now owing on Accounts that amount; (c) warrants and certifies to Bank that all Inventory made or acquired since the prior Borrowing Base Certificate submitted to Bank is identified herein or is evidenced by suppliers' invoices, purchased journals, production reports, or other records attached hereto, and that the total of all Inventory is as shown as of the date shown hereon for Inventory and that Borrower now has in its possession and control, or in the possession of a third party of its account which third party has been identified in writing by Borrower to Bank, Inventory in that amount; (d) warrants that the total of withdrawals since the prior Borrowing Base Certificate submitted to Bank are as shown; and (e) warrants that all collections received or credits allowed on Accounts previously assigned to Bank has been duly and regularly entered to the credit of the respective Account Debtors on the books and accounts of Borrower; that all such collections
have been remitted and all such credits have been reported to Bank promptly; that none of the Accounts previously or hereby assigned have been sold, assigned or pledged to any other party; and that prompt report has been made to Bank of returned or rejected goods covered by any Account previously assigned, with payment to Bank of the amount thereof.
IN WITNESS WHEREOF, the undersigned has executed and delivered this
certificate as of the day of , 200 .
--- ---------- -
FUTUREFUEL CHEMICAL COMPANY
By:
----------------------------
Name:
----------------------------
Title:
----------------------------
|
TO: Regions Bank
This Compliance Certificate is furnished pursuant to that certain Credit Agreement dated as of March 14, 2007 (as the same may be amended, restated or otherwise modified from time to time, the "Agreement"), between FUTUREFUEL CHEMICAL COMPANY, as Borrower, and REGIONS BANK, as Bank. Unless otherwise defined herein, capitalized terms used in this Compliance Certificate have the meanings defined in the Agreement.
THE UNDERSIGNED HEREBY CERTIFIES THAT:
2. I have reviewed the terms of the Agreement and the other Loan Documents and I have made, or have caused to be made under my supervision, a review of the transactions and conditions of Borrower and each other Person during the accounting period covered by the attached Financial Statements.
3. The examinations described in paragraph 2 did not disclose, and I have no knowledge of, the existence of any condition or event which constitutes a Default or Event of Default as of the date of this Compliance Certificate; and to my knowledge all of the representations and warranties of Borrower contained in the Agreement and other Loan Documents are true and correct.
FUTUREFUEL CHEMICAL COMPANY
Exhibit 10.11
St. Louis, Missouri
US $50,000,000.00 March 14, 2007
This Note is the Revolving Credit Note referred to in, and is issued pursuant to, that certain Credit Agreement between the Borrower and the Bank dated even date herewith (as amended or otherwise modified from time to time, the "Credit Agreement"), and is entitled to all of the benefits and security of the Credit Agreement. All of the terms, covenants and conditions of the Credit Agreement and all other instruments evidencing or securing the indebtedness hereunder are hereby made a part of this Note and are deemed incorporated herein in full. All capitalized terms used herein, unless otherwise specifically defined in this Note, shall have the meanings ascribed to them in the Credit Agreement.
This Note is secured by the Collateral described in the Credit Agreement.
Interest hereunder shall be computed on, the basis of actual days elapsed over the period of a 360-day year. Upon or after the occurrence and during the continuation of any Event of Default, the outstanding principal balance of this Note shall bear interest at a variable rate per annum equal to the Default Rate until the principal balance of this Note is paid in full.
In no contingency or event whatsoever, whether by reason of advancement of the proceeds hereof or otherwise, shall the amount paid or agreed to be paid to the Bank for the use, forbearance or detention of money advanced hereunder exceed the highest lawful rate permissible under any law which a court of competent jurisdiction may deem applicable hereto.
The Borrower may prepay this Note, in whole or in part, at any time without premium or penalty, together with accrued interest on the principal amount so prepaid at the prepayment date.
The termination of the Credit Agreement or the occurrence of an Event of Default shall entitle the Bank, at its option, to declare the then outstanding principal balance and accrued interest hereon to be, and the same shall thereupon become, immediately due and payable without notice to or demand upon the Borrower, all of which the Borrower hereby expressly waives.
Time is of the essence of this Note. To the fullest extent permitted by applicable law, and except as may be otherwise set forth in the Credit Agreement, the Borrower, for itself and its successors and assigns, expressly waives presentment, demand, protest, notice of dishonor, and any and all other notices, demands and consents in connection with the delivery, acceptance, performance, default or enforcement of this Note, and hereby consents to any extensions of time, renewals, releases or any parties to or guarantors of this Note, waivers and any other modifications that may be granted or consented to by the Bank from time to time in respect of the time of payment or any other provision of this Note.
Wherever possible each provision of this Note shall be interpreted in such a manner as to be effective and valid under applicable law, but if any provision of this Note shall be prohibited or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity without invalidating the remainder of such provision or remaining provisions of this Note. No delay or failure on the part of the Bank in the exercise of any right or remedy hereunder shall operate as a waiver thereof, nor as an acquiescence in any default, nor shall any single or partial exercise by the Bank of any right or remedy preclude any other right or remedy. The Bank, at its option, may enforce its rights against any collateral securing this Note without enforcing its rights against the Borrower, any guarantor of the indebtedness evidenced hereby or any other property or indebtedness due or to become due to the Borrower. The Borrower agrees that, without releasing or impairing the Borrower's liability hereunder, the Bank may at any time release, surrender, substitute or exchange any collateral securing this Note and may at any time release any party primarily or secondarily liable for the indebtedness evidenced by this Note.
This Note shall be governed by, and construed and enforced in accordance with, the internal laws of the State of Missouri.
BORROWER HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY (WHICH BANK ALSO WAIVES) IN ANY ACTION, SUIT, PROCEEDING OR COUNTERCLAIM OF ANY KIND ARISING OUT OF OR RELATING TO THIS NOTE OR ANY OF THE LOAN DOCUMENTS, THE COLLATERAL, OR BANK'S CONDUCT IN RESPECT OF ANY OF THE FOREGOING.
ORAL AGREEMENTS OR COMMITMENTS TO LOAN MONEY, EXTEND CREDIT OR TO FOREBEAR FROM ENFORCING REPAYMENT OF A DEBT INCLUDING PROMISES TO EXTEND OR RENEW SUCH DEBT ARE NOT ENFORCEABLE REGARDLESS OF THE LEGAL THEORY UPON WHICH IT IS BASED, THAT IS IN ANY WAY RELATED TO THE CREDIT AGREEMENT. TO PROTECT YOU (BORROWER(S)) AND US (CREDITOR) FROM MISUNDERSTANDING OR DISAPPOINTMENT, ANY AGREEMENTS WE REACH COVERING SUCH MATTERS ARE CONTAINED IN THIS WRITING, WHICH IS THE COMPLETE AND EXCLUSIVE STATEMENT OF THE AGREEMENT BETWEEN US, EXCEPT AS WE MAY LATER AGREE IN WRITING TO MODIFY IT.
SIGNATURE PAGE FOLLOWS
IN WITNESS WHEREOF, the Borrower has caused this Note to be executed and delivered by its duly authorized representative as of the date first above written.
FUTUREFUEL CHEMICAL COMPANY,
a Delaware corporation
By /s/ Douglas D. Hommert
--------------------------------------------
Douglas D. Hommert, Executive Vice President
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Exhibit 10.12
SECURITY AGREEMENT - ACCOUNTS AND INVENTORY
(a) All now owned or hereafter acquired Accounts, accounts receivable, other receivables, any right to payment of a monetary obligation, whether or not earned by performance, leases and lease payments, contract rights, any other obligations or indebtedness owed to Debtor from whatever source arising; all other rights of Debtor to receive performance or any payments in money or in kind, whether or not earned by performance, all guaranties, security interests and Supporting Obligations of any of the foregoing and insurance policies and proceeds relating thereto, and all rights of Debtor as an unpaid seller of Goods and services, including, but not limited to, the rights to stoppage in transit, replevin, reclamation, and resale, and rights to payment for money or funds advanced or sold. The rights and property described in this Section 1(a) are referred to herein collectively as the "Accounts Collateral."
(b) All now owned or hereafter acquired Inventory, merchandise, raw materials, goods in process, work in progress, materials used or consumed in a business, finished goods, findings or component materials, and all supplies, incidentals, office supplies, packaging materials, and any and all property or items used or consumed in the operation of the business of Debtor and which contribute to the finished products or to the sale, promotion and shipment thereof, all property held by Debtor for sale or lease or to be furnished under a contract for service and all Documents evidencing any part of any of the foregoing. The rights and property described in this Section 1(b) are referred to herein collectively as the "Inventory Collateral."
(c) All now owned or hereafter acquired General Intangibles which specifically relate to, are used in connection with, or are necessary in order for Bank to realize the benefits of its security interest in the Accounts Collateral and the Inventory Collateral, including but not limited to all claims and causes of action, and all other intangible personal property of Debtor of every kind and nature, whether registered or unregistered, Payment Intangibles, corporate or other business records, all books, mailing and customer lists, ledgers, books of account, records, writings, data bases, software, information and data however stored or embedded, inventions, designs, blueprints, plans specifications, patents, patent applications, service marks, trademarks, trade names, trade secrets, domain names, processes, formulas, goodwill, copyrights, registrations, licenses, permits, leases, contracts, governmental approvals, franchises, applications and renewals of any of the foregoing, privileges, rights, tax refunds and tax claims, any swap, hedging or derivatives agreements, insurance proceeds, pension and insurance surpluses. The rights and property described in this Section 1(c) are referred to herein as the "General Intangibles Collateral."
(e) All Proceeds including proceeds and products of all of the foregoing and all additions and accessions to, replacements and substitutions of, insurance policies and payments, condemnation proceeds of, and documents covering all of the foregoing, all property received wholly or partly in trade or exchange for all of the foregoing, and all income, rents, revenues, dividends, distributions, issues, profits, cash or non-cash proceeds and accessions arising from the sale, lease, license, encumbrance, collection, or any other temporary or permanent disposition of any of the foregoing or any interest therein (the "Proceeds").
Capitalized terms used and not defined herein shall have the meanings given to them in the Uniform Commercial Code as adopted and in force in the State of Arkansas, as from time to time amended.
The Accounts Collateral, Inventory Collateral General Intangibles Collateral, Other Property Collateral and Proceeds are collectively referred to herein as the "Collateral."
It is the true, clear, and express intention of Debtor that the continuing grant of this security interest remain as security for payment and performance of the Obligations, whether now existing, or
which may hereinafter be incurred, or whether or not contemplated by the parties at the time of the granting of this security interest. The notice of the continuing grant of this security interest, therefore, shall not be required to be stated on the face of any document representing any Obligations, nor otherwise identify it as being secured hereby; and if such Obligations shall remain, or become that of less than all of Debtors herein, any Debtor not liable therefrom hereby expressly hypothecates his, her, its or their ownership interest in the Collateral to the extent required to satisfy the Obligations, without restriction, or limitation. To the extent permitted by law, any Obligations shall be deemed to have been made pursuant to Section 400.9-204 of the Uniform Commercial Code of Missouri.
Collateral shall not be attached to any real estate ("Real Property"). Debtor agrees to notify Bank in writing of any intended sale, mortgage or conveyance of any Real Property on which the Collateral is located and to give written notice of the terms and conditions of this Security Agreement to any prospective purchaser, mortgagee or grantee of said Real Property and a copy of such notice to Bank.
When any Collateral is in the possession of a third party, the Debtor will join with the Bank in notifying the third party of the Bank's security interest and obtaining an acknowledgement from the third party that it is holding the Collateral for the benefit of the Debtor and the Bank. The Debtor will obtain control agreements in form satisfactory to the Bank as deemed necessary by the Bank for purposes of further perfecting or enforcing the security interests of the Bank hereunder.
greater of (1) the full replacement cost or (2) such other amount as may from time to time be required by Bank, with no co-insurance clauses or deductibles in excess of $250,000.00 (other than deductibles relating to tornado and earthquake insurance, which Bank acknowledges exceeds $250,000.00) in the policies of insurance unless Bank shall consent thereto in writing (such consent not to be unreasonably withheld, conditioned or delayed), in such form, for such periods and written by such companies as may be reasonably satisfactory to Bank, payable to and protecting Bank for not less than the total amount owing on the Obligations secured hereby. Debtor shall maintain combined form business interruption and extra expense coverage. In addition, Debtor shall maintain commercial general liability insurance in occurrence form with coverage limits of at least $2,000,000.00 annual aggregate, $1,000,000.00 per occurrence or as otherwise acceptable to Bank. All such insurance shall be carried by companies authorized to insure in Arkansas and which have an AM Best rating of AX or better and are otherwise acceptable to Bank, and all such policies shall be in form reasonably acceptable to Bank. All policies of property damage insurance covering the insurable Collateral shall provide that Bank be the loss payee with respect thereto and that such proceeds shall be paid first to Bank and that Bank shall be protected against loss from any act or neglect of Debtor or third parties, and such other endorsements as Bank may from time to time reasonably request. Debtor will promptly provide Bank with evidence of such insurance. Such insurance shall require a minimum of thirty (30) days prior written notice to Bank of any cancellation thereof or any changes affecting coverage, and no act or omission by Company shall invalidate the obligation of the insurer to Bank. Debtor hereby assigns to Bank, its successors and assigns, the proceeds of all such property damage insurance on the insurable Collateral to the extent of the unpaid balance of the Obligations secured hereby; and appoints Bank as its attorney-in-fact (exercisable only upon and during the continuance of an Event of Default (as such term is defined in the Credit Agreement)) to file claims under any such insurance policies, to receive, receipt and give acquittance for any payments that may be payable thereunder, and to execute any and all endorsements, receipts, releases, assignments, reassignments or other documents that may be necessary to effect the collection, compromise or settlement of any claims under any such insurance policies. Upon or during the continuance of an Event of Default, Bank or its successors or assigns may cancel such insurance at any time and shall receive the return premium, if any, therefor, and may apply such return premium to the purchase of similar insurance or to the balance due on the Obligations secured hereby at its election. The insurance provisions herein contained are in addition to and not in limitation of any other insurance requirements contained in other agreements of Debtor to Bank. Any such insurance proceeds received by Bank will be returned to the Debtor except upon the occurrence of an Event of Default, in which case any such insurance proceeds may be retained and applied by the Bank in the manner set forth in the Credit Agreement.
Upon request of Bank, Debtor will promptly do all other acts and things, and will execute and file all other instruments deemed necessary by Bank under applicable law to establish, maintain and continue Bank's perfected first priority security interest in the Collateral and to effectuate the intent of this Security Agreement and will pay all costs and expenses of filing and recording or promptly reimburse Bank there for if such costs and expenses are incurred by Bank, including the costs of any searches deemed necessary by Bank to establish, determine or maintain the validity and the priority of the security interest of Bank, and pay or otherwise satisfy all other claims and charges which in the opinion of Bank might prejudice, imperil or otherwise affect the Collateral or Bank's security interest therein. A photocopy of this Security Agreement shall be deemed an original for purposes of filing or recording.
(a) Debtor may have possession of the Collateral and use it in any lawful manner not inconsistent with this Agreement or with any policy of insurance thereon;
(b) Debtor may sell the Inventory Collateral in the ordinary course of Debtor's business (excluding, however, transfers or dispositions on satisfaction of debt), and Debtor may use and consume raw materials or supplies, or dispose of any obsolete Inventory Collateral, the use, consumption or disposition of which is necessary in order to carry on Debtor's business in the ordinary course; and
(c) Debtor will, at its own expense, collect, as and when due, all amounts due under the Accounts Collateral, including the taking of such action with respect to such collection as Bank may reasonably request or, in the absence of such request, as Debtor may deem advisable, and may grant, in the ordinary course of Debtor's business, to any party obligated on any of the Accounts Collateral, any rebate, refund or adjustment to which such party may be lawfully entitled, and may accept, in connection therewith, the lawful return of goods, the sale or lease or which shall have given rise to such Accounts Collateral. Bank may, however, at any time after and during the continuance of an Event of Default and at Debtor's expense, notify any parties obligated on any of the Accounts Collateral to make payment directly to Bank of any amounts due or to become due thereunder and enforce collection of any of the Accounts Collateral by suit or otherwise and surrender, release or exchange all or any part thereof, or compromise, extend or renew same for any period.
against the Collateral or the procurement of insurance) and Debtor agrees to forthwith reimburse Bank, on demand, for all expenses of Bank in connection with the foregoing, together with interest thereon at a per annum rate equal to the highest rate of interest applicable to any of the Obligations secured hereby, until reimbursed by Debtor and all amounts not so reimbursed shall be added to and become a part of the Obligations secured hereby. Bank may, for the foregoing purposes, act in its own name or that of Debtor and may also act for the purpose of adjusting or settling any policy of insurance on the Collateral, or endorsing any draft received in connection therewith. For all of the foregoing purposes, Debtor hereby grants to any officer of Bank its power of attorney, irrevocable so long as any of the Obligations secured hereby shall be outstanding.
(a) All accounts are due and payable in cash not more than forty-five (45) days from the date of the invoice evidencing the account;
(b) The accounts are genuine in all respects and are as purported and to Debtor's knowledge the account debtor has the capacity to enter into the transaction;
(c) The accounts have not been previously assigned or encumbered;
(d) Debtor has full right and authority to assign them;
(e) If arising from the sale or lease of goods, such goods have been shipped or delivered to the account debtor;
(f) To Debtor's knowledge, the accounts are valid, legally enforceable obligation of the account debtor thereunder and are not subject to any offset, counterclaim or other defense on the part of such account debtor or to any claim on the part of such account debtor denying liability thereunder in whole or in part;
(g) No partial payment not shown upon the accounts has been made by anyone;
(h) To Debtor's knowledge, the accounts are enforceable according to terms; and
(i) The accounts are evidenced by invoices, dated not later than three (3) days after shipment or performance rendered to such account debtor and are not evidenced by any instrument or chattel paper.
in connection with a disposition of the Collateral and compliance will not be considered adversely to affect the commercial reasonableness of any sale or disposition of the Collateral. Debtor waives all rights to require any marshalling of assets.
Bank shall also have the right to apply for and have a receiver appointed by a court of competent jurisdiction to enforce its rights and remedies hereunder in order to mange, protect and preserve the Collateral, continue the operation of the business of Debtor, and to collect all revenues and profits thereof and apply the same to the payment of (i) all expenses and other charges of such receivership, including the compensation of the receiver, and (ii) the Obligations secured hereby until a sale or other disposition of such Collateral shall be finally made and consummated.
Bank may notify any and all parties obligated on any of the Collateral that the Collateral has been assigned to Bank and that all payments thereon are to be made directly to Bank. Bank may settle, compromise or release, on terms acceptable to Bank, in whole or in part, any amounts owing on such Collateral; sue to enforce payments and prosecute any action or proceeding with respect to the Collateral in its own name or the name of Debtor; and extend the time of payment, make allowance and adjustments, and issue credits in its own name or the name of Debtor.
The proceeds of any sale shall be applied in the following order:
first, to pay all costs and expenses of every kind for care, safekeeping,
collection, sale, delivery or otherwise (including expenses incurred in the
protection of Bank's title to or lien upon or right in any such property,
expenses for legal services of any kind in connection therewith or in making
any such sale or sales, insurance, commission for sale and guaranty), then to
interest on Obligations of Debtor to Bank; then to the principal thereof,
whether or not such Obligations are due or accrued. Any remaining surplus
shall be paid to whomever shall be legally entitled thereto. Application of
proceeds as between particular Obligations to Bank shall be in the absolute
and sole discretion of Bank. If the proceeds of any such sales are
insufficient to pay Obligations of Debtor to Bank, Debtor shall remain liable
for the deficiency.
constitute a waiver of any subsequent or other default, failure or waiver of strict performance, whether similar or dissimilar.
to the Bank:
Regions Bank
8182 Maryland Ave. Suite 200
St. Louis, Missouri 63105
Attention: Daniel R. Kraus, Vice President Facsimile No: (314) 615-2355
and with a copy to:
Armstrong Teasdale LLP One Metropolitan Square, Suite 2600 St. Louis, Missouri 63102 Attention: Michael A. Wazlawek, Esq.
Facsimile No: (314) 612-2362
If to the Debtor:
FutureFuel Chemical Company
Attn: Chief Financial Officer
2800 Gap Road
Batesville, Arkansas 72501
Facsimile No.: (870) 698-5303
With a copy to:
FutureFuel Corp.
Attention: Douglas D. Hommert, Executive Vice President
8235 Forsyth Blvd., 4th Floor
St. Louis, Missouri 63105
Facsimile No: (314) 889-9603
or at such other address or facsimile number as shall be designated by such party in a written notice to the other parties hereto. All such notices and communications shall be effective (a) if personally delivered, when delivered, (b) if sent by certified mail, three (3) days after having been deposited in the mail, postage prepaid, (c) if sent by overnight courier, one business day after having been given to such courier, or (d) if transmitted by facsimile, when sent.
(i) any lack of validity or enforceability of the Obligations or any other agreement or instrument relating thereto:
(ii) any change in the time, manner or place of payment of, or in any other term of, all or any of the Obligations, or any other amendment or waiver of or any consent to any departure from the Obligations or any agreement or instrument relating thereto; or
(iii) any exchange, release or non-perfection of any other collateral, or any release or amendment or waiver of or consent to departure from any guaranty, for all or any of the Obligations.
with the lapse of time or the giving of notice, or both, would constitute an Event of Default, Bank is hereby authorized by Debtor, at any time or from time to time, without notice to Debtor or to any other person, any such notice being hereby expressly waived, to exercise the right of setoff that is granted to Bank pursuant to the terms and conditions of the Credit Agreement.
SIGNATURE PAGE FOLLOWS
IN WITNESS WHEREOF, this Security Agreement has been executed and delivered by Debtor this 14th day of March, 2007.
FUTUREFUEL CHEMICAL COMPANY,
a Delaware corporation
By: /s/ Douglas D. Hommert
--------------------------------------------
Douglas D. Hommert, Executive Vice President
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Exhibit 10.13
A. FUTUREFUEL CHEMICAL COMPANY, a Delaware corporation ("Borrower") has applied for credit, or is presently indebted or obligated to REGIONS BANK ("Bank"); and
B. For the purpose of inducing Bank to extend credit to Borrower, or to presently refrain from making demand on Borrower or otherwise pursuing Bank's rights or remedies against Borrower, the undersigned ("Guarantor") agrees to guarantee the prompt payment of the indebtedness and liabilities of Borrower to Bank in accordance with the terms and conditions hereinafter set forth.
NOW, THEREFORE, for value received, and in consideration of the financial accommodations given or to be given or continued to Borrower by Bank and/or of Bank's presently refraining from making demand on Borrower or otherwise pursuing Bank's legal remedies against Borrower, and for other good and valuable consideration to Guarantor moving, the receipt and sufficiency of which is hereby acknowledged:
1. Guarantor hereby unconditionally guarantees to Bank the prompt payment when due, whether by acceleration or otherwise, and at all times thereafter, of any and all indebtedness and obligations of Borrower to Bank made or entered into pursuant to the terms and conditions of that certain Credit Agreement by and between Borrower and Bank and dated of even date herewith (the "Credit Agreement"), or made pursuant to or evidenced by any of the Loan Documents (as such term is defined in the Credit Agreement), including extensions, renewals or refundings thereof (and extensions, renewals or refundings made after any release or termination hereof), whether such be direct or indirect, liquidated or unliquidated, absolute or contingent, single, joint, by the entirety or several, now existing or hereafter arising, due or to become due whether or not originally contracted with Bank, including all obligations and liabilities of Borrower arising pursuant to or in connection with any interest rate swap, basis swap, forward rate, interest rate option, collar or corridor agreement or transaction or any similar transaction between the Borrower and Bank or any of Bank's affiliates which relates to the obligations of Borrower to Bank pursuant to the Credit Agreement, which may now or hereafter be entered into or amended, modified, extended, or renewed (hereinafter collectively referred to as "Liabilities" or, in the singular, "Liability"). "Liabilities" or a "Liability" shall also include reasonable expenses, including attorney's fees, incurred by Bank in the efforts to collect any Liability or to enforce the undertakings of Guarantor hereunder. Whenever any such Liabilities shall become due and remain unpaid in accordance with the provisions of Credit Agreement and the other Loan Documents, Guarantor will, on demand, make prompt payment of the amount due thereof.
2. Guarantor shall be obligated to make payment in full to Bank in accordance with the terms and provisions hereof irrespective of the validity, regularity or enforceability of any instrument or writing evidencing such Liability or of the Liability itself, and if the Liability is secured, said obligation of Guarantor to make payment hereunder shall be made irrespective of the validity, perfection, regularity or enforceability of any instrument or writing evidencing such security or of the security itself and it shall not be necessary for Bank to resort to such security before enforcing Guarantor's liability hereunder. Demand may be made upon Guarantor for the enforcement of this Guaranty without the necessity of action at any time by Bank against Borrower or any collateral or to first accelerate the maturity of any Liabilities (subject to the provisions of the Credit Agreement). Any action taken by Bank against Borrower, including foreclosure of any security held by Bank, shall in no event be considered a waiver or diminishment of any rights against Guarantor under this Guaranty and Bank shall, at its sole discretion,
have the right at any time to discontinue any action or proceeding against Borrower and require full payment by Guarantor of the Liabilities together with reasonable attorneys' fees, cost of the proceedings and court costs. It is agreed that a compromise and settlement of any Liability shall, in no sense, compromise or settle Guarantor's liability hereunder. Bank may apply any collateral for the Liabilities in such order as it may elect and without any obligation to account to Guarantor for the manner or order of application.
3. Except as may be set forth in the Credit Agreement or in any of the other Loan Documents, Guarantor does hereby waive presentment of any instrument, demand for payment, protest and notice of dishonor or nonpayment and Guarantor waives all rights arising out of any statute now existing or hereafter enacted with respect to guaranty or suretyship and which may otherwise require Bank at any time to take legal action against Borrower. Guarantor does hereby waive notice of the acceptance of this Guaranty and notice of any Liability contracted or incurred by Borrower.
4. Bank may, from time to time, without the consent of or notice to Guarantor, change the manner, interest rate, place or terms of payment, and change or extend the time of payment of, refund, increase, decrease, renew or alter in any manner any Liability or security therefor, and may, from time to time, at its own discretion, without the consent of or notice to Guarantor, exchange, release, surrender, realize upon or otherwise deal with in any manner and in any order, any collateral pledged or mortgaged to secure any Liability, without in any way affecting Guarantor's obligation hereunder.
5. The obligations of Guarantor hereunder shall apply to all Liabilities, including Liabilities arising on or prior to notice in writing from any Guarantor that such Guarantor will not be responsible for any further Liabilities. Any such notice, to be effective, must be actually received by Bank. Notwithstanding the giving of such notice, the obligations of Guarantor shall continue in full force and effect as to all Liabilities then existing including those contingent, unliquidated or not yet accrued and to any Liabilities thereafter arising, to the extent that Bank may be bound or permitted by contract or otherwise to create or permit the creation of additional Liabilities including those which may or might have been contingent, unliquidated or not yet accrued Liabilities at the time such notice is given. Termination or revocation of this Guaranty by notice or by operation of law shall affect only the obligations of the Guarantor for or on behalf of whom such notice is given or as to whom such event occurs, the obligations of the other Guarantors to continue unabated.
6. Guarantor acknowledges and agrees that it has derived or will derive a financial advantage from each and every loan, advance, or other extension of credit and from each and every renewal, extension, modification, release of collateral, or other relinquishment of legal rights made or granted or to be granted by Bank to Borrower and further represents and warrants to Bank that it has full power and authority (corporate or otherwise) to execute and deliver this Guaranty.
7. This Guaranty shall be understood to be for the benefit of Bank or for such other person or persons as may from time to time become or be the holders of the Liabilities; and this Guaranty shall be transferable and negotiable without notice to Guarantor with the same force and effect and to the same extent as such Liabilities may be transferable, provided that Bank agrees to give Guarantor notice at such time as Bank may decide to transfer this Guaranty, along with notice of any such transferee.
8. Guarantor agrees that Guarantor's liability hereunder is several and independent of any other guaranties at any time in effect with respect to all or any part of the Liabilities, and that Guarantor's liability hereunder may be enforced regardless of the existence of any such other guaranty agreements.
9. The word "Guarantor," as used herein, shall designate one or more guarantors. In the event that more than one guarantor is a party to this Guaranty, the liability of each of the undersigned
shall be joint and several, each of the undersigned to be fully liable hereunder irrespective of the death, bankruptcy, incapacity or other disqualification of any other of the undersigned or Borrower and Bank may proceed against one or less than all of the undersigned, such proceeding not being deemed an election, and Bank may, at any time thereafter in the event full payment has not been realized, proceed against any other of the undersigned. Bank may release any Guarantor hereon or any other surety, guarantor or Borrower or any collateral or security pledged by any Guarantor or surety without affecting the liability hereunder of any Guarantor not released by Bank in writing. This Guaranty shall be binding upon Guarantor and upon Guarantor's heirs, executors, personal representatives, administrators, legal representatives, successors and assigns and shall likewise be enforceable against any trusts created by Guarantor and shall inure to the benefit of Bank, its successors and assigns.
10. This Guaranty shall not supersede any earlier guaranty of Guarantor or any of them in which Bank has an interest, nor shall any later guaranty of Guarantor or any of them in which Bank has an interest be construed to supersede this Guaranty. The effect of any earlier, later or other guaranty shall be cumulative with this Guaranty, whether or not the interests of Bank in such earlier, later or other guaranty derives from arrangements made directly with Guarantor or indirectly by way of Bank being a transferee of all or part of obligations of Borrower guaranteed by Guarantor.
11. In addition to all other collateral and security provided for herein, this Guaranty shall be secured by all collateral and security previously, now or hereafter pledged to Bank by Guarantor and any security previously, now or hereafter granted Bank by Guarantor, but only if such pledge or grant of security interest specifically relates to the Liabilities.
12. Guarantor agrees that this Guaranty, and all obligations hereunder shall remain in full force and effect at all times hereinafter during the term hereof, notwithstanding any action or undertakings by, or against, Bank, or concerning any collateral securing the Liabilities in any proceeding under any bankruptcy law; including without limitation, matters relating to valuation of collateral, election or imposition of secured or unsecured claim status upon claims by Bank, pursuant to the Bankruptcy Code, or Rules of Bankruptcy Procedure as may be applicable from time to time. Guarantor understands and agrees that in the event any payment made by or on behalf of Borrower respecting any Liability or any portion of any such payment shall at any time be repaid by the recipient in compliance with an order (whether or not final) by a court of competent jurisdiction pursuant to any provision of any bankruptcy law as now existing or hereafter amended or applicable state law, the Liabilities shall not be deemed to have been paid to the extent of the repayment so made, the obligations of Guarantor shall continue in full force and effect and such recipient, whether or not that be Bank, will continue to be entitled to the full benefits of this Guaranty notwithstanding any release, termination or return of this Guaranty. If acceleration of the time for payment of any amount payable by Borrower to Bank is stayed upon the insolvency, bankruptcy or reorganization of such Borrower, all such amounts otherwise subject to acceleration under the terms of the Liabilities shall nonetheless be payable by Guarantor hereunder forthwith on demand by Bank.
13. Bank shall have no obligation to inform Guarantor, and Guarantor agrees to assume all responsibility for keeping informed as to Borrower's or other Guarantors financial condition, the possible non-payment and non-performance of the Liabilities, the obligations of any Guarantor and all matters relating to any collateral for the Liabilities or for this Guaranty. At its option, Bank may, at any time, disclose information concerning Borrower or any collateral for the Liabilities or this Guaranty, but such disclosure shall not obligate Bank to provide the same information, now or in the future, to all of the Guarantors or additional information of any kind to Guarantor.
14. Guarantor hereby agrees that no payment of any Liability shall entitle it by subrogation, indemnification, contribution, reimbursement or otherwise to any payment by Borrower or by any other
guarantor of any Liability or from or out of any property of Borrower or of any other guarantor of any Liability until all Liabilities have been paid in full.
15. Guarantor agrees to provide upon request of Bank financial statements or such other information on Guarantor as Bank shall from time to time reasonably request.
16. This Guaranty shall be governed by and construed in accordance with the laws of the State of Missouri without regard to conflict of laws principles.
17. Upon the occurrence and continuance of an Event of Default, any and all indebtedness of Borrower for borrowed money now or hereafter owed to Guarantor is hereby subordinated in right of payment to the payment of amounts owing under this Guaranty, and if a default in the payment of any amounts owing under this Guaranty shall have occurred and be continuing, any such indebtedness of Borrower owed to Guarantor, if collected or received by Guarantor, shall be held in trust by Guarantor for Bank and be paid over to Bank for application in accordance with this Guaranty.
18. GUARANTOR HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY STATE OR FEDERAL COURT SITTING IN THE COUNTY OF ST. LOUIS, MISSOURI OVER ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS GUARANTY, AND GUARANTOR HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT TO SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH STATE OR FEDERAL COURT. GUARANTOR HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING. GUARANTOR AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.
19. The following notice is given pursuant to Section 432.047 of the Missouri Revised Statutes; nothing contained in such notice shall be deemed to limit or modify the terms of this Agreement. "ORAL AGREEMENTS OR COMMITMENTS TO LOAN MONEY, EXTEND CREDIT OR TO FOREBEAR FROM ENFORCING REPAYMENT OF A DEBT INCLUDING PROMISES TO EXTEND OR RENEW SUCH DEBT ARE NOT ENFORCEABLE REGARDLESS OF THE LEGAL THEORY UPON WHICH IT IS BASED, THAT IS IN ANY WAY RELATED TO THE CREDIT AGREEMENT. TO PROTECT YOU (GUARANTOR) AND US (CREDITOR) FROM MISUNDERSTANDING OR DISAPPOINTMENT, ANY AGREEMENTS WE REACH COVERING SUCH MATTERS ARE CONTAINED IN THIS WRITING, WHICH IS THE COMPLETE AND EXCLUSIVE STATEMENT OF THE AGREEMENT BETWEEN US, EXCEPT AS WE MAY LATER AGREE IN WRITING TO MODIFY IT."
20. GUARANTOR HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY (WHICH BANK ALSO WAIVES) IN ANY ACTION, SUIT, PROCEEDING OR COUNTERCLAIM OF ANY KIND ARISING OUT OF OR RELATING TO THIS GUARANTY, ANY LIABILITIES OR BANK'S CONDUCT IN RESPECT TO ANY OF THE FOREGOING.
SIGNATURE PAGE FOLLOWS
IN WITNESS WHEREOF, this instrument has been duly executed by Guarantor this 14th day of March, 2007.
FUTUREFUEL CORP.,
a Delaware corporation
By: /s/ Douglas D. Hommert
--------------------------------------------
Douglas D. Hommert, Executive Vice President
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Exhibit 10.14
CAR SUBLEASING AGREEMENT
This Car Subleasing Agreement ("SUBLEASE") is made effective as of November 1, 2006 between Apex Oil Company, Inc., a Missouri corporation ("SUBLESSOR"), and FutureFuel Chemical Company, a Delaware corporation ("SUBLESSEE").
RECITALS
A. Sublessor is a party to that Car Leasing Agreement #0476-97-0 (the "HEAD LEASE") effective November 1, 2006 between General Electric Railcar Services Corporation, a Delaware corporation, as lessor ("LESSOR"), and Sublessor as lessee. A copy of the Head Lease is attached hereto as Exhibit A.
B. Sublessor leases those railcars described on Exhibit B from Lessor pursuant to the Head Lease (together with any other railcars subleased pursuant to this Sublease, the "CARS").
C. Sublessee desires to sublease the Cars from Sublessor, and Sublessor desires to sublease the Cars to Sublessee, all upon the terms set forth herein.
D. Lessor has consented to this Sublease as required by the Head Lease ("CONSENT").
AGREEMENT
In consideration of the foregoing, the mutual covenants herein contained and other good and valuable consideration (the receipt, adequacy and sufficiency of which are hereby acknowledged by the parties by their execution hereof), the parties agree as follows.
1. SUBLEASE. Sublessor hereby subleases the Cars to Sublessee upon all of the terms set forth in the Head Lease, but by substituting Sublessor as the "Lessor" under the Head Lease and by substituting Sublessee as the "Lessee" thereunder. Sublessee agrees to perform timely all of the obligations of Sublessor under the Head Lease.
2. NOTICES FROM LESSOR. Sublessor agrees to provide to Sublessee promptly any notices that Sublessor receives from Lessor under the Head Lease.
3. CONSENT. Sublessee agrees to comply with all of its obligations under the Consent.
4. INDEMNIFICATION. Sublessee hereby unconditionally, irrevocably and absolutely agrees to protect, defend, indemnify and hold harmless Sublessor and Sublessor's past, present and future officers, directors, shareholders, employees, agents, attorneys, representatives and affiliates, and each of the foregoing's heirs, personal representatives, successors and assigns (collectively the "INDEMNITEES" and individually an "INDEMNITEE"), from any and all manner of actions, suits, debts, sums of money, interest owed, accounts, controversies, agreements, guaranties, promises, undertakings, charges, damages, judgments, executions, obligations and reasonably incurred costs, expenses and fees (including reasonable attorneys' fees and court costs), counterclaims, claims, demands, causes of action, liabilities, losses and amounts paid in settlement incurred, paid or sustained by any of the Indemnitees, in each case in connection with, arising out of, based upon, relating to or otherwise involving Sublessee's failure to comply with any of the provisions of the Head Lease as set forth herein or its obligations hereunder or under the Consent. If any such action, suit or proceeding is commenced against, or any such claim, demand or amount is assessed against, any of the Indemnitees in respect of which any of the Indemnitees proposes to demand indemnification hereunder, Sublessee is to be notified to that effect with reasonable promptness. Sublessee is to control the defense of any such action, and may employ counsel in defense
thereof, all at Sublessee's expense, unless and until Sublessee satisfies or
otherwise settles such action and obtains a release of the Indemnitee from the
third party bringing such action, in a form reasonably acceptable to the
Indemnitee and his counsel. Notwithstanding the above, no Indemnitee is
entitled to indemnification hereunder as a result of any Indemnitee's gross
negligence or willful misconduct. All obligations of Sublessee under this
Section 4 are payable on demand. Any amounts due and payable hereunder to any
Indemnitee by Sublessee which are not paid within ten days after written
demand hereunder from an Indemnitee with an explanation of the amounts
demanded, bear interest from the date of such demand at a rate per annum equal
to the prime rate (as published in The Wall Street Journal from time to time)
plus three percent.
5. AMENDMENT AND MODIFICATION. No amendment, modification, supplement, termination, consent or waiver of any provision of this Sublease, nor consent to any departure therefrom, will in any event be effective unless the same is in writing and is signed by the party against whom enforcement of the same is sought. Any waiver of any provision of this Sublease and any consent to any departure from the terms of any provision of this Sublease is to be effective only in the specific instance and for the specific purpose for which given.
6. ASSIGNMENTS. Sublessee may not assign or transfer (voluntarily or involuntarily, by operation of law (including by merger or consolidation), judicial decree or otherwise) any of its rights or obligations under this Sublease to any other person without the prior written consent of Sublessor.
7. CAPTIONS. Captions contained in this Sublease have been inserted herein only as a matter of convenience and in no way define, limit, extend or describe the scope of this Agreement or the intent of any provision hereof.
8. COUNTERPARTS. This Sublease may be executed by the parties on any number of separate counterparts, and all such counterparts so executed constitute one agreement binding on all the parties notwithstanding that all the parties are not signatories to the same counterpart.
9. EXHIBITS. All of the Exhibits attached to this Sublease are deemed incorporated herein by reference.
10. FAILURE OR DELAY. No failure on the part of any party to exercise, and no delay in exercising, any right, power or privilege hereunder operates as a waiver thereof; nor does any single or partial exercise of any right, power or privilege hereunder preclude any other or further exercise thereof, or the exercise of any other right, power or privilege. No notice to or demand on any party in any case entitles such party to any other or further notice or demand in similar or other circumstances.
11. FURTHER ASSURANCES. The parties will execute and deliver such further instruments and do such further acts and things as may be required to carry out the intent and purpose of this Sublease.
12. SUCCESSORS AND ASSIGNS. All provisions of this Sublease are binding upon, inure to the benefit of and are enforceable by or against the parties and their respective heirs, executors, administrators or other legal representatives and permitted successors and assigns.
13. THIRD-PARTY BENEFICIARY. This Sublease is solely for the benefit of the parties and their respective successors and permitted assigns, and no other person has any right, benefit, priority or interest under or because of the existence of this Sublease.
APEX OIL COMPANY, INC.
By: /s/ Douglas D. Hommert
-------------------------------------
Douglas D. Hommert, Executive
Vice President
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FUTUREFUEL CHEMICAL COMPANY
By: /s/ Chris Schmitt
--------------------------------------
Chris Schmitt, Assistant Secretary
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Exhibit A
CAR LEASING AGREEMENT 0476-97-0
This Car Leasing Agreement ("Agreement") is made effective as of November 1, 2006 between General Electric Railcar Services Corporation, a Delaware corporation ("Lessor") and Apex Oil Company, Inc., a Missouri corporation ("Lessee").
Lessor agrees to lease to Lessee, and Lessee agrees to lease from Lessor, the railroad Car(s) described in the Rider(s) (the "Car(s)") subject to this Agreement. Each Rider incorporates this Agreement by reference and includes the number of Car(s), the commodity the Lessee indicates will be carried, the rental rate, term of use, car numbers and other pertinent information that may be desired by both parties. Each Rider by itself constitutes a separate lease. If the terms of the Agreement and Rider conflict the terms of the Rider will govern. All Car(s) leased pursuant to such Riders, or otherwise delivered to and accepted by Lessee, are subject to the terms of this Agreement.
Lessor will deliver the Car(s) to Lessee at a point(s) designated by Lessee. Lessor's obligation to deliver is subject to delays beyond its control. Lessee will lease the Car(s) and will use them exclusively in its own service, unless otherwise provided.
Lessor to provide Car(s) in good and clean condition, according to the Association of American Railroads ("AAR") standards for condition. Each of the Car(s) will be subject to Lessee's inspection upon delivery. Failure by Lessee to report any defect in any Car within the earlier of loading, or fifteen (15) days after delivery of such Car will constitute acceptance by Lessee and will be conclusive evidence of the fit and suitable condition of such Car for the purpose of transporting the commodities loaded.
Lessee will pay rent for each of the Car(s) from the date of delivery until such Car is returned to and accepted by Lessor. Lessee's obligation to pay rent on each Car will terminate on the later of the expiration date of the Rider or the day the Car arrives and is constructively placed at a point designated by Lessor in the condition required hereunder. The rent must be paid in advance on the first day of each month. Any period which is less than a full month will be prorated. Notices and rent shall be sent to Lessor at its principal office, 161 North Clark Street, Chicago, Illinois 60601. All rental payments shall be remitted to Lessor at the address indicated on the monthly invoice delivered to Lessee. The terms of the Agreement will continue until the last Car(s) returned are accepted by the Lessor.
Lessor will credit mileage to Lessee's consolidated account when received from the railroads subject to all railroad rules and tariffs.
Lessee must reimburse Lessor for any payment Lessor is required to make to any railroad, including but not limited to, mileage equalization resulting from excess empty mileage and any other empty movement charges incurred while in Lessee's service. It is agreed that the railroad mileage and junction reports will be conclusive evidence of the facts reported absent manifest error.
If any Car is held in a private shop for Lessee responsible repairs and is under Lessor's control, a repair estimate will be sent for approval, if requested by the Lessee at the start of the lease term. Lessee will respond within 3 business days, otherwise the work will be performed as per the estimate and the Lessee has an obligation to pay.
Casualty While Not in Lessee's Possession: If any Car is destroyed or damaged beyond repair while not in the possession, custody or control of Lessee or Lessee's agent or shipper and such destruction or damage of a Car has been reported in accordance with the Interchange Rules, such Car will be removed from the rental calculations of the applicable Rider on the date car hire ceases as set forth in Rules 7 and 8 of the AAR's Code of Car Hire. Lessor shall be entitled to all casualty proceeds from the Car.
Casualty While in Lessee's Possession: If any Car, while in the possession, custody or control of Lessee or Lessee's agent or shipper, is destroyed or damaged Lessee shall promptly notify Lessor in writing of such damage or destruction. If car is totally destroyed, damaged or beyond economic repair, as deemed by the Lessor, the settlement value will be calculated using AAR Rule 107, to be remitted to the Lessor within the earlier of (i) 30 days of receipt of an invoice from Lessor or (ii) 90 days of the damage or destruction date. If any Car is totally damaged or destroyed, the rent for such Car will cease to accrue when Lessor receives notification of such damage.
Substitution of Car: Lessor has the right, but is not obligated, to substitute for any such Car another Car of the same type and capacity and the rental will commence upon delivery of the Car.
At its option, Lessor may notify Lessee in writing of proposed renewal terms
for a Rider, which notice, if issued, will be delivered no later than sixty
(60) days prior to the expiration date of each Rider. No later than fifteen
days prior to the end of the lease term, Lessor requires notice of Lessee's intention to accept Lessor's proposed renewal or to return the Car(s).
Lessee must return the Car(s) to Lessor to a point(s) designated by Lessor in the same or as good condition as delivered to Lessee, ordinary wear and tear excepted. Lessee must pay for the repair, replacement, or be liable for any item which is removed, broken, altered, missing, damaged, or replaced with a non-standard item. Lessee will return Car(s) free from all charges, liens, and encumbrances which may result from any act or default of Lessee and free from all accumulations or deposits from commodities transported in the Car(s). Lessee must reimburse Lessor for any expense incurred in cleaning, removal, and disposal of any remaining accumulation or deposits from such Car. Lessor may, at Lessee's expense, return the Car(s) to Lessee for cleaning. No rental credits will be issued while Car(s) are being cleaned, and rent will continue until such Car(s) are returned to Lessor empty at a Lessor designated point(s).
Lessor will pay all federal, state and local property taxes incurred, assessed against or levied upon the Car(s). In the event that Lessee is required by statute to file or pay property taxes, Lessor will not be liable for penalties or interest payable on such taxes. Lessee agrees to notify Lessor of assessments, contest assessments, and cooperate with Lessor in such contest upon request of Lessor. Failure by Lessee to cooperate in any contest voids Lessor's obligation to reimburse Lessee for property taxes paid. Lessee will be liable for all other taxes (other than taxes imposed on Lessor's net income) or governmental impositions with respect to the Car(s) and for any tax benefits lost by Lessor with respect to the Car(s). If any of the Car(s) are used outside of the United States, Lessee must reimburse Lessor for any customs, duties, taxes, tax benefit reductions or other expenses resulting from such use.
Lessee must indemnify Lessor from any losses, liabilities, expenses (including without limitation, the reasonable cost of investigating and defending against any claim for damages), fines or penalties, including losses related to damage caused to or by materials placed in the Car(s), which may at any time be imposed upon, incurred by or asserted or awarded against Lessor in connection with: (a) the use, operation, possession, storage, abandonment or return of the Car(s) during the term of this Agreement, except to the extent of a loss, liability or expense with respect to the Car(s) (i) which arises while such Car is in a repair shop chosen by Lessor undergoing repairs; or (ii) for which a railroad(s) has assumed full responsibility; (b) any present or future applicable law, rule or regulation, including without limitation, common law and environmental law, related to the release, removal, discharge or disposition, whether intentional or unintentional, of any materials from or placed in a Car during the term of this Agreement.
Lessee will not transfer, assign its interest in, or sublease any Car under this Agreement without Lessor's prior written consent; however, Lessee may trip lease any of the Car(s) to its customers for single trips consistent with its normal merchandising methods. Lessee will continue to remain liable to Lessor for any and all obligations and liabilities arising from the use, control or operation of the Car by any party. No title or interest in any Car will vest in Lessee except the right to use the Car(s) in accordance with the terms of this Agreement.
Events of Default: The occurrence of any of the following events will be an Event of Default: (i) The nonpayment by Lessee of any sum required to be paid under this Agreement, any Rider, schedule or letter agreement which is not cured within fifteen (15) days after the date such payment is due; (ii) The breach by
Lessee of any other term or condition of this Agreement which is not cured within thirty (30) days of notice of such breach from Lessor; (iii) The general assignment for the benefit of creditors made by Lessee, or the failure of Lessee to pay, or the statement by Lessee that it is unable to pay, or Lessee's inability to pay its debts generally as its debts become due; (iv) The failure of Lessee to assume this Agreement within ninety (90) days after the commencement of a Chapter 11 bankruptcy case in which Lessee is a debtor.
Lessor Remedies: Upon the occurrence of any Event of Default, Lessor, at its option, may (i) declare all Riders in default and recover all accrued and unpaid amounts due with respect to the applicable Rider; and (ii) terminate this Agreement and all Riders and repossess the Car(s) at Lessee's expense. Nothing in this Agreement will limit Lessor's remedies at law or in equity to seek additional damages or relief.
This Agreement and Lessee's rights are subject and subordinate to the rights of any lender, owner or other party which finances the Car(s). Some of the Car(s) may be subject to the terms of a Mortgage, Deed of Trust, Equipment Trust, Pledge or Assignment or similar security arrangement. The Car(s) may be stenciled or marked to state the ownership of such Car(s) in the name of a mortgagee, trustee, pledgee, assignee or security holder. This Agreement and the rents may have been assigned or may in the future be assigned to the holder of the superior lien on each Car (as determined by the filings with the Surface Transportation Board or successor entity). However, Lessee must pay all rents as and when due to Lessor until notified to the contrary by any third party reasonably demonstrating to Lessee's satisfaction that it is the assignee of this Agreement or the rents. Lessee consents to and accepts any such assignments. No claim or defense which Lessee may have against Lessor will be asserted or enforced against any assignee of this Agreement.
If the NTA, DOT, or any other governmental agency, or organization having jurisdiction over the operation, safety or use of railroad equipment, requires modifications to the Car(s) subject to this Agreement in order to qualify the Car(s) for operation in railroad interchange, Lessee must pay an additional monthly charge of $1.75 U.S. funds per Car for each $100 U.S. funds expended by Lessor on the Car. Such obligation by Lessee arises on the date the Car is released from the shop after application of the modifications ("Modifications"). No rental credits will be issued on Car(s) entering the shop for any Modifications for the first thirty days. If Lessor determines in the exercise of its judgment that the cost of making Modifications is not economical, and Lessor elects to permanently remove the Car from Lessee's service, the rent for such Car will terminate on the date the car is removed from Lessee's service.
Lessor may substitute for any Car another Car of the same type and capacity without the prior consent of Lessee. The rent for the substituted Car will commence upon delivery of such Car to Lessee.
LESSOR MAKES NO WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED. LESSOR MAKES NO WARRANTY OF MERCHANTABILITY, FITNESS FOR ANY PARTICULAR PURPOSE OR OTHERWISE, NOR DOES LESSOR HAVE ANY LIABILITY FOR ANY CONSEQUENTIAL OR INCIDENTAL DAMAGES ARISING OUT OF THIS AGREEMENT OR IN CONNECTION WITH ANY CAR.
This agreement represents the entire agreement and may not be modified, altered, or amended, except by a Rider or another agreement in writing signed by the parties.
Lessee agrees to comply with all federal, state, and local laws, rules, and regulations promulgated by any governmental authority or industry agency or authority which has proper jurisdiction to regulate the leasing, operation, maintenance, or use of the Car(s).
The terms of this Agreement will be governed by the laws of the State of Illinois.
Obligations of both parties survive termination of this Agreement.
If not publicly available, Lessee shall promptly furnish to Lessor the annual report or audited financial statements of Lessee not less than one hundred twenty (120) days after the end of its fiscal year and any other financial information with respect to Lessee as Lessor may reasonably request from time to time.
If Lessee fails or requests Lessor to perform any of Lessee's obligations, including without limitation, any Lessee maintenance or repair obligations, Lessor (by itself or through third parties) may perform such obligations, and Lessee shall, upon demand, pay Lessor for all expenses incurred plus a fee for processing invoices for services performed by third parties. As with all third party expenses hereunder, Lessor shall have no obligation to credit Lessee with any rebates, discounts or other benefits Lessor may receive.
Accepted on behalf of: Accepted on behalf of
APEX OIL COMPANY, INC. GENERAL ELECTRIC RAILCAR
SERVICES CORPORATION
By: By:
------------------------------- -------------------------------
Name: Name:
----------------------------- -----------------------------
Title: Title: Vice President
----------------------------- -----------------------------
Date: Date:
----------------------------- -----------------------------
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Exhibit 10.15
TIME SHARING AGREEMENT
THIS TIME SHARING AGREEMENT (the "Agreement"), is made and entered into this 18th day of April, 2007, by and between APEX OIL COMPANY, INC., a Missouri corporation ("Operator"), and FUTUREFUEL CORP., a Delaware corporation ("User").
WHEREAS, Operator owns or leases the aircraft identified in Exhibit A hereto (each, an "Aircraft," or collectively, the "Aircraft");
WHEREAS, Operator employs a fully qualified flight crew to operate the Aircraft; and
WHEREAS, Operator desires to lease said Aircraft with flight crew to User and User desires to lease said Aircraft and flight crew from Operator on a time sharing basis pursuant to Section 91.501(c)(1) of the Federal Aviation Regulations (the "FARs").
NOW THEREFORE, Operator and User declaring their intention to enter into and be bound by this Agreement, and for the good and valuable consideration set forth below, hereby covenant and agree as follows:
1. Operator agrees to lease the Aircraft to User pursuant to the provisions of FAR 91.501(c)(1) and to provide a fully qualified flight crew for all operations on a non-continuous basis commencing on the first date set forth hereinabove and continuing unless and until terminated. Either party may terminate this Agreement by giving thirty (30) days written notice to the other party.
2. User shall pay Operator for each flight conducted under this Agreement the actual expenses of each specific flight, as authorized by FAR Part 91.501(d), including the actual expense of any "deadhead" flights made for User, as authorized by FAR Part 91.501(d). The expenses authorized by FAR Part 91.501(d) include:
(a) Fuel, oil, lubricants and other additives.
(b) Travel expenses of the crew, including food, lodging and ground transportation.
(c) Hangar and tie down costs away from the Aircraft's base of operations.
(d) Insurance obtained for the specific flight.
(e) Landing fees, airport taxes and similar assessments.
(f) Customs, foreign permit, and similar fees directly related to the flight.
(g) In flight food and beverages.
(h) Passenger ground transportation.
(i) Flight planning and weather contract services.
3. Operator will pay all expenses related to the operation of the Aircraft when incurred, and will provide an invoice and bill User for the expenses enumerated in paragraph 2 above on the last day of the month in which any flight or flights for the account of User occur. User shall pay Operator for said expenses within thirty (30) days of receipt of the invoice and bill therefor.
User shall include with each payment any federal transportation excise tax due with respect to such payment, and Operator shall be responsible for collecting, reporting and remitting such tax to the U.S. Internal Revenue Service.
4. User will provide Operator with requests for flight time and proposed flight schedules as far in advance of any given flight as possible. Requests for flight time and proposed flight schedules shall be made in compliance with Operator's scheduling procedures. In addition to proposed schedules and flight times, User shall provide at least the following information for each proposed flight at some time prior to scheduled departure as required by Operator or Operator's flight crew.
(a) Proposed departure point;
(b) Destination;
(c) Date and time of flight;
(d) The number of anticipated passengers;
(e) The nature and extent of unusual luggage and/or cargo to be carried;
(f) The date and time of a return flight, if any; and
(g) Any other information concerning the proposed flight that may be pertinent or required by Operator or Operator's flight crew.
5. Operator shall pay all expenses related to the ownership and operation of the Aircraft and shall employ, pay for and provide to User a qualified flight crew for each flight undertaken under this Agreement.
6. Operator shall be solely responsible for securing maintenance, preventive maintenance and required or otherwise necessary inspections on the Aircraft, and shall take such requirements into account in scheduling the Aircraft. No period of maintenance, preventive maintenance or inspection shall be delayed or postponed for the purpose of scheduling the Aircraft, unless said maintenance or inspection can be safely conducted at a later time in compliance with all applicable laws and regulations, and within the sound discretion of the pilot in command. The pilot in command shall have final and complete authority to cancel any flight for any reason or condition which in his judgment would compromise the safety of the flight.
7. In accordance with applicable FARs, the flight crew will exercise all of its duties and responsibilities in regard to the safety of each flight conducted hereunder. User specifically agrees that the pilot in command, in his sole discretion, may terminate any flight, refuse to commence any flight, or take other action which in the considered judgment of the pilot in command is necessitated by considerations of safety. The parties agree that Operator shall not be liable for delay or failure to furnish the Aircraft and flight crew pursuant to this Agreement when such failure is caused by government regulation or authority, mechanical difficulty, war, civil commotion, strikes or labor disputes, weather conditions or acts of God.
8. Operator will provide such additional insurance coverage as User shall request or require; provided, however, that the cost of such additional insurance shall be borne by User as set forth in paragraph 2(d) hereof. A copy of Operator's Certificate of Insurance and/or aircraft insurance policy will be made available to User at User's request.
9. Each party hereto agrees to indemnify and hold harmless the other against all losses, including costs, attorneys fees and expenses by reason of claims for injury to or death of persons and loss of or damage to property arising out of or in any manner connected with the performance of such party's responsibilities under this Agreement or any breach by such party of any covenant or warranty made herein. Operator and User agree that in the event either party shall be liable to the other for any reason relating to this Agreement, that under no circumstances shall the damaged party be entitled to any special or consequential damages, including but not limited to damages for lost profits.
10. For purposes of this Agreement, the permanent base of operation of the Aircraft shall be at St. Louis Regional Airport, Bethalto, Illinois.
11. User warrants that:
(a) It will use the Aircraft for and on account of its own business only, and will not use the Aircraft for the purposes of providing transportation for passengers or cargo in air commerce for compensation or hire; and
(b) During the term of this Agreement, it will abide by and conform to all such laws, governmental and airport orders, rules and regulations, as shall from time to time be in effect relating in any way to its operation and use of the Aircraft as a time sharing user.
12. Except as otherwise provided in this Agreement, all notices, consents, requests, demands and other communications hereunder are to be in writing and are deemed to have been duly given or made: (i) when delivered in person; (ii) two (2) days after deposited in the United States mail, first class postage prepaid; (iii) in the case of overnight courier services, one business day after delivery to the overnight courier service with payment provided for; or (iv) in the case of telecopy or fax, when sent, verification received; in each case addressed as follows:
If to Operator: Apex Oil Company, Inc.
8235 Forsyth Blvd., Suite 400
St. Louis, Missouri 63105
Attn: Tim Cooper
Fax: 314-889-0211
If to User: FutureFuel Corp.
8235 Forsyth Blvd., Suite 400
St. Louis, MO 63105
Attn: Douglas D. Hommert
Fax: 314-889-9603
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13. This Agreement shall not be modified or amended except by an instrument in writing signed by authorized representatives of both parties.
14. Neither this Agreement nor either party's interest herein shall be assignable to any other party. This Agreement shall inure to the benefit of and be binding upon the parties hereto, their heirs, representatives and successors.
15. Nothing herein shall be construed to create a partnership, joint venture, franchise, employer-employee relationship or to create any relationship of principal and agent.
16. This Agreement shall be governed by and construed in accordance with the laws of the State of Illinois.
17. This Agreement may be executed by the parties in counterparts and exchanged via facsimile transmission, and each party agrees following such exchange to forward an executed original of the Agreement to the other by mail or by courier.
18. TRUTH IN LEASING STATEMENT UNDER SECTION 91.23 (FORMERLY 91.54) OF THE FEDERAL AVIATION REGULATIONS.
(A) APEX OIL COMPANY, INC. HEREBY CERTIFIES THAT THE AIRCRAFT HAVE BEEN INSPECTED AND MAINTAINED WITHIN THE 12 MONTH PERIOD PRECEDING THE DATE OF THIS AGREEMENT IN ACCORDANCE WITH THE PROVISIONS OF FAR PART 91 AND ALL APPLICABLE REQUIREMENTS FOR THE MAINTENANCE AND INSPECTION THEREUNDER HAVE BEEN MET.
(B) APEX OIL COMPANY, INC. AGREES, CERTIFIES AND KNOWINGLY ACKNOWLEDGES THAT WHEN EACH AIRCRAFT IS OPERATED UNDER THIS AGREEMENT, IT SHALL BE KNOWN AS, CONSIDERED, AND SHALL IN FACT BE THE OPERATOR OF THE AIRCRAFT.
(C) THE PARTIES UNDERSTAND THAT AN EXPLANATION OF FACTORS
AND PERTINENT FEDERAL AVIATION REGULATIONS BEARING ON
OPERATIONAL CONTROL CAN BE OBTAINED FROM THE LOCAL FLIGHT
STANDARDS DISTRICT OFFICE. OPERATOR FURTHER CERTIFIES THAT
IT WILL SEND A TRUE COPY OF THIS EXECUTED AGREEMENT TO:
FLIGHT STANDARDS TECHNICAL DIVISION, P. O. BOX 25724,
OKLAHOMA CITY, OKLAHOMA, 73125, WITHIN 24 HOURS OF ITS
EXECUTION, AS PROVIDED BY FAR 91.23(c)(1).
IN WITNESS WHEREOF, the parties hereto have caused the signatures of their authorized representatives to be affixed below on the day and year first above written. The persons signing below warrant their authority to sign.
OPERATOR: USER:
APEX OIL COMPANY, INC. FUTUREFUEL CORP.
By: /s/ Edwin L. Wahl By: /s/ Douglas D. Hommert
--------------------------------- ----------------------------------
Edwin L. Wahl, President Douglas D. Hommert, Executive V.P.
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A copy of this Agreement must be carried in the Aircraft while being operated hereunder.
EXHIBIT A
AIRCRAFT SCHEDULE
1. Gulfstream Aerospace G-IV, serial number 1111, N511PA
2. Gulfstream G-IISP (Grumman American Aviation Corp. G-1159), serial number 206, N900BF
EXHIBIT B
INSTRUCTIONS FOR COMPLIANCE WITH
TRUTH IN LEASING REQUIREMENTS
1. Mail a copy of the agreement to the following address via certified mail, return receipt requested, immediately upon execution of the agreement (14 C.F.R. 91.23 requires that the copy be sent within twenty-four hours after it is signed):
Federal Aviation Administration
Aircraft Registration Branch
ATTN: Technical Section
P.O. Box 25724
Oklahoma City, Oklahoma 73125
2. Telephone or fax the nearest Flight Standards District Office at least forty-eight hours prior to the first flight made under this agreement.
3. Carry a copy of the agreement in the Aircraft at all times when the Aircraft is being operated under the agreement.
Exhibit 11
STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS
The computation of basic and diluted earnings per common share was as follows for the years ended December 31:
2006 2005 2004
------------ ------------ ------------
Net income (loss) available to common
stockholders................................. $ 1,781 $ 381 $ (14,867)
Weighted average number of common shares
outstanding.................................. 26,950,000 26,950,000 26,950,000
Effect of warrants............................ 5,118,772 5,118,772 -
Weighted average diluted number of common
shares outstanding........................... 32,068,772 32,068,772 26,950,000
Basic earnings per share...................... $ 0.07 $ 0.01 $ (0.55)
Diluted earnings per share.................... $ 0.06 $ 0.01 $ (0.55)
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Warrants to purchase 22,500,000 common shares of FutureFuel Corp. were not included in the computation of diluted earnings per share in 2004 as FutureFuel Corp. reported a net loss for the period and the inclusion of those securities in the computation would have been antidilutive.
Exhibit 21
SUBSIDIARIES OF FUTUREFUEL CORP.
FutureFuel Chemical Company, a Delaware corporation
Exhibit 24
POWER OF ATTORNEY
REGISTRATION STATEMENT ON FORM 10
FUTUREFUEL CORP.
KNOW ALL MEN BY THESE PRESENTS, that the person whose signature appears below hereby constitutes and appoints James F. Sanders, Barbara Hawatmeh and Christopher Schmitt, and each of them, the true and lawful attorneys-in-fact and agents for him and in his name, place or stead, in any and all capacities, to sign and file, or cause to be signed and filed, with the Securities and Exchange Commission (the "COMMISSION") the registration statement of FutureFuel Corp. on Form 10 under the Securities Act of 1934, as amended, and any and all amendments and supplements thereto, before or after effectiveness of such statement, and any and all other documents required to be filed with the Commission in connection therewith, granting unto such attorneys-in-fact and agents, full power and authority to do and perform each and every act and thing requisite and necessary to be done as fully and to all intents and purposes as the undersigned might or could do in person, and ratifying and confirming all that said attorneys-in-fact and agents may lawfully do or cause to be done by virtue hereof.
Dated: April 23, 2007
/s/ Douglas D. Hommert
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Douglas D. Hommert
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