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EXHIBIT 1
PURCHASE AND SALE AGREEMENT
DATED AS OF MARCH 20, 2000
BETWEEN
ECT MERCHANT INVESTMENTS CORP.
AS PURCHASER
AND
SE THUNDERBIRD L.P.
AS SELLER
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THIS PURCHASE AND SALE AGREEMENT (this "Agreement") is entered into as of
March 20, 2000 and is by and among ECT MERCHANT INVESTMENTS CORP., a Delaware
corporation (the "Purchaser"), and SE THUNDERBIRD L.P., a Delaware limited
partnership (the "Seller").
R E C I T A L S:
A. The Seller owns the Kafus Shares, as defined below, and certain rights
associated therewith.
B. Subject to the terms and conditions of this Agreement and in exchange
for the consideration set forth herein, the Seller hereby agrees to sell to the
Purchaser, and the Purchaser hereby agrees to purchase from the Seller, such
assets.
NOW, THEREFORE, in consideration of the premises and mutual covenants and
agreements set forth herein, and for good and valuable consideration, the
receipt and sufficiency of which is acknowledged by all parties, the parties
hereto agree as follows:
ARTICLE 1.
DEFINITIONS
Section 1.1 Definitions. Unless the context otherwise requires, the
following capitalized terms used in this Agreement shall have the following
meanings:
"Affiliate" means any other Person that directly or indirectly, through one
or more intermediaries, controls, or is controlled by, or is under common
control with, a Person.
"Ancillary Agreements" means the agreements and instruments to be delivered
pursuant to Section 2.1(a) of this Agreement.
"Disputed Claims" is defined in Section 6.7(a).
"Kafus" means Kafus Industries Ltd., a British Columbia corporation.
"Kafus Shares" means 1,999,999 shares of common stock, without par value,
of Kafus.
"Person" means an individual, a corporation, a partnership, an association,
a limited liability company, a joint stock company, a trust or other
unincorporated organization.
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"Closing Date" is defined in Section 2.1(a).
"Purchase Price" means $13,624,993.
"Purchased Assets" means the Kafus Shares and all rights to be transferred
to the Purchaser pursuant to the Ancillary Agreements.
"Securities Act" means the Securities Act of 1933, as amended, and all the
rules and regulations promulgated thereunder.
ARTICLE 2.
CONVEYANCE OF THE PURCHASED ASSETS
Section 2.1 Conveyance of Purchased Assets. On the date first set forth
above (the "Closing Date"):
(a) The Seller shall sell, transfer, assign, set over, and otherwise convey
to the Purchaser, and the Purchaser shall purchase from the Seller, all of the
right, title, and interest of the Seller in and to the Purchased Assets in
exchange for payment, in immediately available funds, of the Purchase Price in
consideration of such Purchased Assets. In connection therewith, the Seller
shall deliver to the Purchaser: (i) the stock certificates representing the
Kafus Shares, (ii) a duly executed Transfer of Shares in form and substance
satisfactory to the parties, (iii) a duly executed Assignment and Assumption
Agreement related to rights applicable to the Kafus Shares under the
Registration Rights Agreement described therein in form and substance
satisfactory to the parties, and (iv) a duly executed letter from Seller to
Kafus providing notice of the transfer to Purchaser in form and substance
satisfactory to the parties.
(b) The parties expressly intend that this is an absolute sale of the
Purchased Assets and both parties agree to account for the transactions
contemplated hereunder in this manner.
(c) Payments for the Purchased Assets shall be made by wire transfer of
immediately available federal funds to the following account: SE Thunderbird
L.P. ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, Citibank, New York, NY, Account
number: 3042-4197, ABA number: ▇▇▇-▇▇▇-▇▇▇.
Section 2.2 Closing. The closing for the sale of the Purchased Assets shall
occur at the offices of Enron North America Corp. at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇ on the Closing Date or at such other time or place as the Purchaser
and the Seller may agree.
Section 2.3 Costs and Expenses. All costs and expenses (including legal
fees, professional fees, and other transaction costs) incurred by either party
hereto in connection
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with the transfer and delivery of the Purchased Assets in the manner
contemplated herein shall be borne by the party that incurred such costs and/or
expenses.
Section 2.4 Payments to Purchaser. The Seller hereby agrees that from and
after the Closing Date it shall pay over to the Purchaser, as assignee of the
Purchased Assets, all amounts received by the Seller with respect to the
Purchased Assets. Any amounts received by the Seller contrary to the preceding
sentence shall be received by the Seller in trust for the benefit of the
Purchaser and shall be immediately paid by the Seller to and as directed by the
Purchaser.
ARTICLE 3.
REPRESENTATIONS AND WARRANTIES
Section 3.1 Representations and Warranties of the Seller. The Seller hereby
represents and warrants to the Purchaser that as of the Closing Date:
(a) The Seller has taken all steps necessary to transfer all of the
Seller's right, title, and interest in and to the Purchased Assets to the
Purchaser.
(b) Immediately prior to the transfers contemplated by this Agreement, the
Seller was the sole owner and holder of the Purchased Assets, free and clear of
any and all liens, pledges, charges, or security interests of any nature.
(c) The Seller (i) is duly organized, validly existing, and in good
standing under the laws of Delaware, (ii) has the full right, power, and
authority to enter into and perform its obligations under this Agreement and the
Ancillary Agreements and to consummate the transactions contemplated hereby and
(iii) has obtained all requisite company or similar authorizations, consents, or
approvals applicable to do so.
(d) This Agreement and the Ancillary Agreements have been duly executed and
delivered by the Seller and constitute the legal, valid, and binding obligations
of the Seller enforceable against it in accordance with their terms, except as
the enforceability thereof may be limited by any applicable bankruptcy,
reorganization, insolvency, moratorium, or similar laws affecting creditors'
rights generally and by general principles of equity.
(e) Since September 30, 1999, to the knowledge of the Seller there has not
occurred any material adverse change or any threatened material adverse change
in the business, operations, properties, assets, or condition (financial or
otherwise) of Kafus, other than those disclosed to the public and those
disclosed to the Purchaser in writing prior to the date hereof.
(f) To the knowledge of Seller, no action, suit, or proceeding has been
commenced against Kafus before any court or arbitrator or any governmental body,
agency, or official except for such action, suit, or proceeding that could not
reasonably be expected to
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have a material and adverse effect on the business, operations, properties,
assets, or condition (financial or otherwise) of Kafus.
(g) All material information given by the Seller to the Purchaser in
connection with the transactions contemplated by this Agreement was true and
correct in all material respects on the date such information was given and on
the date hereof.
(h) Any approvals, filings, and consents relating to the transfer of the
Purchased Assets from the Seller to the Purchaser required to be obtained from
or made with any governmental or quasi-governmental agency, entity, or body from
whom approval is required under applicable law have been made or obtained.
(i) Assuming that the Purchaser's representations set forth in this
Agreement are true and correct, the sale of the Purchased Assets in the manner
contemplated by this Agreement by the Seller will be exempt from the
registration requirements of the Securities Act by reason of Section 4(2)
thereof.
(j) No agent, broker, or other Person acting pursuant to authority of the
Seller is entitled to any commission or finder's fee in connection with the
transactions contemplated by this Agreement.
Except as set forth in this Section 3.1, the Seller makes no representation
or warranty whatsoever to the Purchaser concerning the Purchased Assets. Without
limiting the generality of the foregoing, the Seller makes no representation or
warranty concerning Kafus, its assets, financial performance, financial
condition, and prospects, or any other matter affecting it.
Section 3.2 Representations and Warranties of the Purchaser. The Purchaser
hereby makes the following representations and warranties to the Seller:
(a) The Purchaser is an Accredited investor within the meaning of Rule 501
under the Securities Act and is acquiring the Purchased Assets for its own
account and not with a view toward their distribution.
(b) The Purchaser is able to bear the economic risk of an investment in the
Purchased Assets and can afford to sustain a total loss of such investment and
has such knowledge and experience in financial and business matters that it is
capable of evaluating the merits and risks of the proposed investment in Kafus.
The Purchaser has had an adequate opportunity to ask questions and receive
answers from the officers of Kafus and the Seller concerning all matters
relating to the transactions described herein. The Purchaser has asked all
questions in the nature described in the preceding sentence, and such questions
have been answered to their satisfaction.
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(c) The Purchaser is aware that the Kafus Shares are restricted securities
within the meaning of Rule 144 under the Securities Act and therefore may not be
sold, transferred, or otherwise disposed of unless they are registered and/or
qualified under the Securities Act and applicable state securities laws, or
unless an exemption from the registration or qualification requirements is
otherwise available.
(d) The Purchaser (i) is duly organized, validly existing, and in good
standing under the laws of the State of Delaware, (ii) has the full right,
power, and authority to enter into and perform its obligations under this
Agreement and the Ancillary Agreements and to consummate the transactions
contemplated hereby, and (iii) has obtained all requisite company and similar
authorizations, consents, or approvals applicable to do so.
(e) This Agreement and the Ancillary Agreements have been duly executed and
delivered by the Purchaser and constitute the legal, valid and binding
obligations of the Purchaser enforceable against the Purchaser in accordance
with their terms, except as the enforceability thereof may be limited by any
applicable bankruptcy, reorganization, insolvency, moratorium or similar laws
affecting creditors' rights generally and by general principles of equity.
(f) No agent, broker, or other Person acting pursuant to authority of the
Purchaser is entitled to any commission or finder's fee in connection with the
transactions contemplated by this Agreement.
ARTICLE 4.
CONDITIONS TO CLOSING
Section 4.1 Condition to the Obligations of Each Party. The obligations of
the Purchaser and the Seller to consummate the transactions contemplated by this
Agreement are subject to the satisfaction of the following conditions:
(a) As of the Closing Date, all approvals, filings, waivers, and consents
relating to the transfer of the Purchased Assets from the Seller to the
Purchaser required to be made or obtained pursuant to any applicable documents
or agreements shall have been made or obtained.
(b) All actions, proceedings, instruments, and documents required to carry
out this Agreement or incidental hereto and all other related legal matters
shall be reasonably satisfactory to each party and its counsel. No action or
proceeding before a court or any other governmental agency or body shall have
been instituted or threatened to restrain or prohibit the transactions
contemplated herein and no governmental agency or body shall have taken any
other action or made any request of the Seller or the Purchaser as a result of
which either party deems it inadvisable to proceed with the transactions
hereunder.
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Section 4.2 Conditions to the Obligations of Purchaser. The obligation of
the Purchaser to consummate the transactions contemplated by this Agreement is
subject to the satisfaction of the following further conditions:
(a) The Seller shall have performed in all material respects all of its
obligations under this Agreement required to be performed by it on or prior to
the Closing Date.
(b) The representations and warranties of the Seller contained in this
Agreement shall be true in all material respects at and as of the Closing Date.
Section 4.3 Conditions to the Obligations of the Seller. The obligation of
the Seller to consummate the transactions contemplated by this Agreement is
subject to the satisfaction of the following further conditions:
(a) The Purchaser shall have performed in all material respects all of its
obligations under this Agreement required to be performed by it on or prior to
the Closing Date.
(c) The representations and warranties of the Purchaser contained in this
Agreement shall be true in all material respects at and as of the Closing Date,
as if made at and as of such date.
ARTICLE 5.
LIMITATION OF LIABILITY
It is expressly understood and agreed by the parties hereto that,
notwithstanding any other term of this Agreement, (i) the Purchaser shall not be
permitted to recover punitive, consequential, economic, or indirect damages from
the Seller, whether by way of indemnification or under any other legal document,
causes of action, or theory of recovery, and (ii) the Seller's maximum liability
with respect to this Agreement and the Ancillary Agreements shall not exceed the
Purchase Price.
ARTICLE 6.
MISCELLANEOUS
Section 6.1 Notices. All notices, demands, and requests that may be given
or that are required to be given hereunder shall be sent by United States
certified mail, postage prepaid, return receipt requested, to the parties at
their respective addresses as follows:
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If to the Seller:
SE Thunderbird L.P.
C/o The Corporation Trust Company
Corporation Trust Center
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
with a copy to:
SE Thunderbird L.P.
C/o Enron Corp.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
If to the Purchaser:
ECT Merchant Investments Corp.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇
with a copy to:
ECT Merchant Investments Corp.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
Section 6.2 Counterparts. For the purpose of facilitating the execution and
proving of this Agreement, as herein provided and for other purposes, this
Agreement may be executed simultaneously in any number of counterparts, each of
which counterparts shall be deemed to be an original, and such counterparts
shall constitute but one and the same instrument.
Section 6.3 Governing Law. This Agreement shall be construed in accordance
with the laws of the State of Texas.
Section 6.4 Specific Performance. Any party hereto may enforce specific
performance of this Agreement.
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Section 6.5 Further Assurances. The parties hereto agree to execute and
deliver such other instruments and take such other actions as may be necessary
to effectuate the purposes and to carry out the terms of this Agreement.
Section 6.6 Entire Agreement. This Agreement constitutes the entire
agreement of the parties with respect to its subject matter and supersedes all
oral communications and prior writing with respect thereto.
Section 6.7 Arbitration.
(a) Any and all claims, counterclaims, demands, causes of action, disputes,
controversies, and other matters in question arising under this Agreement or the
alleged breach of any provision hereof (all of which are referred to herein as
"Disputed Claims"), whether such Disputed Claims arise at law or in equity,
under state or federal law, for damages or any other relief, shall be resolved
by binding arbitration in the manner set forth herein.
(b) The validity, construction, and interpretation of this agreement to
arbitrate and all procedural aspects of the arbitration conducted pursuant to
this agreement to arbitrate and the rules governing the conduct of arbitration
(including the time for filing an answer, the time for the filing of counter
Disputed Claims, the times for amending the pleadings, the specificity of the
pleadings, the extent and scope of discovery, the issuance of subpoenas, the
time for the designation of experts, whether the arbitration is to be stayed
pending resolution of related litigation involving third parties not bound by
this Agreement, the receipt of evidence, and the like) shall be decided by the
arbitrators. In deciding the substance of the parties' Disputed Claims, the
arbitrators shall refer to the substantive laws of the State of Texas for
guidance (excluding Texas choice-of-law principles that might call for the
application of some other state's law); provided, however, that IT IS EXPRESSLY
AGREED THAT NOTWITHSTANDING ANY OTHER PROVISION IN THIS AGREEMENT TO THE
CONTRARY, THE ARBITRATORS SHALL HAVE ABSOLUTELY NO AUTHORITY TO AWARD
CONSEQUENTIAL DAMAGES (SUCH AS LOSS OF PROFIT), INCIDENTAL, TREBLE, EXEMPLARY,
OR PUNITIVE DAMAGES OF ANY TYPE UNDER ANY CIRCUMSTANCES REGARDLESS OF WHETHER
SUCH DAMAGES MAY BE AVAILABLE UNDER TEXAS LAW, THE LAW OF ANY OTHER STATE, OR
FEDERAL LAW, OR UNDER THE UNITED STATES ARBITRATION ACT OR UNDER ANY OTHER RULES
OF ARBITRATION. The arbitrators shall have the authority to assess the costs and
expenses of the arbitration proceeding (including the arbitrators' fees and
expenses) against either or both parties. However, each party shall bear its own
attorneys fees and the arbitrators shall have no authority to award attorneys
fees.
(c) The arbitration proceedings shall be conducted in Houston, Texas, by
three arbitrators in accordance with the American Arbitration Association
Commercial Arbitration Rules. Within 30 days of the notice of initiation of the
arbitration procedure, the parties shall select three arbitrators. Each party
shall select one person to act as arbitrator and the two arbitrators so selected
shall select a third arbitrator within 10 days of their appointment. If the
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arbitrators selected by the parties are unable or fail to agree upon the
identity of the third, within the time set forth herein, the third arbitrator
shall be selected by the American Arbitration Association. The arbitration shall
be governed by the United States Arbitration Act, 9 U.S.C. Sections 1-16, as
such Act is modified by this Agreement and judgment upon the award rendered by
the arbitrators may be entered by an court having jurisdiction thereof.
(d) All fees of the arbitrators and other administrative charges related to
the arbitration shall be borne equally by the parties.
(e) The parties hereby agree that the arbitration proceeding and the
arbitrators' award are to remain confidential and none of the parties or their
counsel will divulge or discuss, directly or indirectly, in the newspaper,
electronic media, or other public or private forum, or with any third parties,
the arbitration proceedings and/or the arbitrators' award except: (i) to the
extent required by a court of law or any federal, state, or local government,
agency or regulatory body or to the extent required to comply with applicable
securities laws or stock exchange requirements; (2) to the extent further agreed
by the parties hereto; or (3) to the extent necessary under subsection (f)
below.
(f) The award of the arbitrators shall be final and binding on the parties,
and judgment thereon may be entered in a court of competent jurisdiction.
[signature pages follow]
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IN WITNESS WHEREOF, the parties hereto have caused their names to be signed
hereto by their respective officers thereunto duly authorized, all as of the day
and year first above written.
SE THUNDERBIRD L.P. ECT MERCHANT INVESTMENTS
By: Blue Heron I LLC, its general partner CORP.
By: Whitewing Associates L.P., its sole member
By: Whitewing Management LLC, its general partner By:
By: Egret I LLC, its managing member ------------------------
Name:
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Title:
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By:
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Name:
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Title:
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