Exhibit 99.1
THIS DISTRIBUTION AGREEMENT is made and entered into as of the 17th day
of March 2003 by Earth Sciences, Inc., a Colorado corporation ("ESI") and
ADA-ES, Inc., a Colorado corporation ("ADA-ES").
RECITALS
WHEREAS, the Board of Directors of ESI has deemed it appropriate
and advisable, to:
(a) separate and divide the existing businesses of ESI so that
the ADA-ES Business (as defined below) shall be owned directly by ADA-
ES, and
(b)distribute, following such separation and division, as a
dividend to the holders of shares of common stock, $.01 par value per
share, of ESI (the "ESI Common Stock") all of the outstanding shares of
common stock, no par value, of ADA-ES (the "ADA-ES Common Stock") held
by ESI;
WHEREAS, ESI and ADA-ES have determined that it is necessary and
desirable to set forth the principal corporate transactions required to
effect such separation, division and distribution and to set forth other
agreements that will govern certain other matters prior to and following such
separation, division and distribution.
NOW, THEREFORE, in consideration of the mutual agreements, provisions
and covenants contained in this Agreement, the parties hereto hereby agree as
follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. General. Unless otherwise defined herein or unless the
context otherwise requires, the following terms will have the following
meanings (such meanings to be equally applicable to the singular and plural
forms of the terms defined).
"Action" means any action, suit, arbitration, inquiry, proceeding or
investigation by or before any Governmental Authority or any arbitration
tribunal.
"ADA-ES" means ADA-ES, Inc., a Colorado corporation, the ADA-ES
Subsidiaries and the corporations, partnerships, joint ventures, investments and
other entities that represent equity investments of ADA-ES or any of the ADA-ES
Subsidiaries following the consummation of the Corporate Restructuring
Transactions and the Distribution.
"ADA-ES Assets" means, collectively, all of the following rights and
assets that are owned by ESI and or any of its Subsidiaries as of the close
of business on the Distribution Date:
(i) the capital stock of the ADA-ES Subsidiaries;
(ii) all of the assets included on the ADA-ES Business Pro Forma Balance Sheet
that are owned by ESI or any of its Subsidiaries as of the close of business on
the Distribution Date;
(iii) all of the assets and rights expressly allocated to ADA-ES
or any of the ADA-ES Subsidiaries under this Agreement or any of the
Ancillary Agreements; and
(iv) any other asset acquired by ESI or any of its Subsidiaries
from the date of the ADA-ES Business Pro Forma Balance Sheet to the
close of business on the Distribution Date that is owned by ESI or any
of its Subsidiaries as of the close of business on the Distribution
Date and that is of a nature or type that would have resulted in such
asset being included as an asset on the ADA-ES Business Pro Forma
Balance Sheet had it been acquired on or prior to the date of the ADA-
ES Business Pro Forma Balance Sheet, determined on a basis consistent
with the determination of the assets included on the ADA-ES Business
Pro Forma Balance Sheet.
"ADA-ES Business" means the businesses that, after giving effect to the
Corporate Restructuring Transactions, are conducted by:
(i) ADA-ES and its Subsidiaries or any of the other members
of the ADA-ES Group; and
(ii) any business entity acquired or established by or for ESI
or ADA-ES or any of their Subsidiaries between the date of this
Agreement and the close of business on the Distribution Date that is
engaged in, or intends to engage in, any business that is of a type or
nature that would have resulted in such business being included either
as a Subsidiary or an asset of ADA-ES on the ADA-ES Business Pro Forma
Balance Sheet had it been acquired or established on or prior to the
date of the ADA-ES Business Pro Forma Balance Sheet, determined on a
basis consistent with the determination of the Subsidiaries and assets
included on the ADA-ES Business Pro Forma Balance Sheet.
"ADA-ES Common Shares" means the shares of ADA-ES Common Stock owned by
ESI after giving effect to the stock dividend provided for in Section 2.02
hereof.
"ADA-ES Common Stock" has the meaning ascribed to such term in the
Recitals to this Agreement.
"ADA-ES Group" means ADA-ES, the ADA-ES Subsidiaries and the
corporations, partnerships, joint ventures, investments and other entities
that represent equity investments of ADA-ES or any of the ADA-ES Subsidiaries
following the consummation of the Corporate Restructuring Transactions and
the Distribution.
"ADA-ES Indemnified Parties" means:
(i) ADA-ES and each Affiliate thereof after giving effect to
the Corporate Restructuring Transactions and the Distribution; and
(ii) each of the respective past, present and future directors,
officers, employees and agents of any of the entities described in the
immediately preceding clause (i) and each of the heirs, executors,
successors and assigns of any of such directors, officers, employees
and agents.
"ADA-ES Information Statement" means the Information Statement or
Registration Statement relating to ADA-ES and the transactions contemplated
hereby to be distributed to holders of ESI Common Stock pursuant to the terms
of this Agreement.
"ADA-ES Liabilities" means, collectively, all of the Liabilities of
ADA-ES, the ADA-ES Subsidiaries and each of the other members of the ADA-ES
Group after giving effect to the Corporate Restructuring Transactions, the
Distribution and the transactions contemplated under the Debt and Cash
Allocation Agreement, including, without limitation:
(i) all of the Liabilities included on the ADA-ES Business Pro
Forma Balance Sheet that remain outstanding as of the close of business
on the Distribution Date;
(ii) all other Liabilities that are incurred or which accrue or
are accrued at any time on, prior to or after the date of the ADA-ES
Business Pro Forma Balance Sheet and that arise or arose out of, or in
connection with, the ADA-ES Assets, the ADA-ES Business or the Prior
ADA-ES Businesses, determined on a basis consistent with the
determination of Liabilities of ADA-ES on the ADA-ES Business Pro Forma
Balance Sheet;
(iii) all of the Liabilities of ADA-ES, the ADA-ES Subsidiaries
or any of the other members of the ADA-ES Group under, or to be
retained or assumed by ADA-ES, any ADA-ES Subsidiary or any of the
other members of the ADA-ES Group pursuant to this Agreement or any of
the Ancillary Agreements;
(iv) all the Liabilities of the parties hereto or their
respective Subsidiaries (whenever arising whether prior to, on or
following the Distribution Date) arising out of or in connection with
or otherwise relating to the management or conduct before or after the
Distribution Date of the ADA-ES Business;
(v) ADA-ES Securities Liabilities; and
(vi) Securities Liabilities arising out of events occurring after
the Distribution Date and relating to the ADA-ES Business.
"ADA-ES Pro Forma Balance Sheet" means the Pro Forma Consolidated
Balance Sheet for ADA-ES and the ADA-ES Subsidiaries as of December 31, 2002
attached hereto as Exhibit G.
"ADA-ES Records" has the meaning ascribed to such term in Section
6.01(a) hereof.
"ADA-ES Registration Statement" or "Registration Statement" means the
Registration Statement on Form 10-SB to be filed with the Commission pursuant
to the requirements of Section 12 of the Exchange Act and the rules and
regulations thereunder in order to register the ADA-ES Common Stock under
Section 12(b) of the Exchange Act.
"ADA-ES Securities Liabilities" means any and all Securities
Liabilities arising out of, or in connection with, or relating in whole or in
part to any of the following: (i) the ADA-ES Registration Statement; (ii) the
ADA-ES Information Statement; (iii) any of the information, data (financial
or otherwise) or disclosures in (or any alleged failure to set forth certain
information, data or disclosures) in the ADA-ES Registration Statement or
ADA-ES Information Statement irrespective of (A) who authored, prepared or
provided such information, data or disclosures (or, as the case may be, the
section or discussion in which certain information, data or disclosure is
alleged to have been omitted), or (B) the form in which, or medium through
which (e.g., verbally, in writing, etc.), such information, data,
disclosures, discussion or section were provided.
"ADA-ES Subsidiaries" means the Subsidiaries listed in Exhibit H
hereto.
"Affiliate" means, when used with respect to a specified Person,
another Person that directly, or indirectly through one or more
intermediaries, controls or is controlled by or is under common control with
the Person specified.
"Agent" means Computershare Trust Company, Inc., or such other trust
company or bank designated by ESI, who shall act as agent for the holders of
ESI Common Stock in connection with the Distribution.
"Agreement" means this Distribution Agreement by and between ESI and
ADA-ES, including any amendments hereto and each Schedule and Exhibit
attached hereto.
"Ancillary Agreement" means all of the written agreements, instruments,
understandings, assignments or other arrangements (other than this Agreement)
entered into by the parties hereto or any other member of their respective
Groups in connection with the Corporate Restructuring Transactions, the
Distribution and the other transactions contemplated hereby or thereby,
including, without limitation, the following:
(i)the Debt and Cash Allocation Agreement;
(ii)the Insurance Agreement;
(iii)the Conveyancing and Assumption Instruments;
(iv)the Benefits and Pension Plan Agreement;
(v)the Tax Sharing Agreement;
(vi)the Transition Services Agreement; and
(vii)the Transition Trademark License.
"Benefits and Pension Plan Agreement" means the Benefits and Pension
Plan Agreement by and between ESI and ADA-ES, which agreement shall be
entered into on or prior to the Distribution Date in the form attached hereto
as Exhibit A.
"Books and Records" means all books, records, manuals, agreements and
other materials (in any form or medium), including without limitation, all
mortgages, licenses, indentures, contracts, financial data, customer lists,
marketing materials and studies, advertising materials, price lists,
correspondence, distribution lists, supplier lists, production data, sales
and promotional materials and records, purchasing materials and records,
personnel records, manufacturing and quality control records and procedures,
blue prints, research and development files, records, data and laboratory
books, accounts records, sales order files, litigation files, computer files,
microfiche, tape recordings and photographs.
"CBCA" means the Colorado Business Corporations Act.
"Code" means the Internal Revenue Code of 1986, as amended, or any
successor law.
"Commission" means the United States Securities and Exchange
Commission.
"Consents" has the meaning ascribed to such term in Section 2.07
hereof.
"Conveyancing and Assumption Transactions" means, collectively, the
various written agreements, instruments and other documents to be entered
into to effect the Corporate Restructuring Transactions or to otherwise
effect the transfer of assets and the assumption of Liabilities in the manner
contemplated by this Agreement, the Ancillary Agreements and the Corporate
Restructuring Transactions.
"Corporate Restructuring Transactions" means, collectively, (a) each of
the distribution, transfers, conveyances, contributions, assignments and
other transactions described and set forth in Exhibit B attached hereto, and
(b) such other distribution, transfers, conveyances, contributions,
assignments and other transactions (so long as such other distribution,
transfers, conveyances, contributions, assignments and other transactions do
not, individually or in the aggregate, adversely affect the ESI Business
(other than to a de minimis extent) that may be required to be accomplished,
effected or consummated by ESI, ADA-ES or any of their respective
Subsidiaries and Affiliates in order to separate and divide, in a series of
transactions that, to the extent intended to qualify for tax-free
transactions under the Code, shall qualify for tax-free treatment under the
Code, the existing businesses of ESI so that, except as otherwise expressly
set forth in Exhibit B hereto:
(i) assets, liabilities and business necessary for the
continuing operation of the ADA-ES Business shall be owned, directly
and indirectly, by ADA-ES:
(ii) the businesses, assets and liabilities of ESI that remain
after the separations and divisions described in clause (i) above,
including, without limitation, the assets, liabilities and business
necessary for the continuing operation of the ESI Business, are, after
giving effect to the Distribution, owned, directly and indirectly, by
ESI.
"Debt and Cash Allocation Agreement" means the Debt and Cash Allocation
Agreement by and between ESI and ADA-ES, which agreement shall be entered
into on or prior to the Distribution Date in the form attached hereto as
Exhibit C, except for such changes or modifications thereto that do not,
individually or in the aggregate, adversely affect the ESI Business (other
than to a de minimis extent).
"Distribution" means the distribution on the Distribution Date as a
dividend to holders of record of shares of ESI Common Stock as of the
Distribution Record Date of all of the outstanding ADA-ES Common Shares owned
by ESI on the basis provided in Section 3.02 hereof.
"Distribution Date" means such date as may hereafter be determined by
ESI's Board of Directors as the date on which the Distribution shall be
effected.
"Distribution Record Date" means the close of business on the date
determined by the Board of Directors of ESI for the purpose of determining
the holders of record of ESI Common Stock entitled to participate in the
Distribution.
"Environmental Laws" means any and all federal, state, local and
foreign statutes, Laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or
other governmental restrictions (including without limitation the
Comprehensive Environmental Response, Compensation and Liability Act, 42
U.S.C. Sec. 9601, et seq.), whether now or hereafter in existence, relating
to the environment, natural resources or human health and safety or endangered
or threatened species of fish, wildlife and plants or to emissions,
discharges or releases of pollutants, contaminants, petroleum a petroleum
products, chemicals or toxic or hazardous substances or waste into the
environment, including, without limitation, ambient air, surface water,
ground water or land, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
pollutants, contaminants, petroleum or petroleum products, chemicals or toxic
or hazardous substances or waste or the cleanup or other remediation thereof.
"ESI" means Earth Sciences, Inc., a Colorado corporation.
"ESI Assets" means, collectively, all the rights and assets owned by
ESI or any of its Subsidiaries as of the close of business on the
Distribution Date other than the ADA-ES Assets and the capital stock of ADA-
ES, including without limitation:
(i) the capital stock of the ESI Subsidiaries;
(ii) all of the assets included on the ESI Business Pro Forma
Balance Sheet that are owned by ESI and its Subsidiaries as of the
close of business on the Distribution Date and any other asset acquired
by ESI or any of its Subsidiaries from the date of the ESI Business Pro
Forma Balance Sheet to the close of business on the Distribution Date
that is owned by ESI and its Subsidiaries as of the close of business
on the Distribution Date and that is of a type or nature that would
have resulted in such asset being included as an asset on the ESI
Business Pro Forma Balance Sheet had it been acquired on or prior to
the date of the ESI Business Pro Forma Balance Sheet, determined on a
basis consistent with the determination of assets included on the ESI
Business Pro Forma Balance Sheet; and
(iii) all of the assets and rights expressly allocated to ESI or
any of the Subsidiaries under this Agreement or any of the Ancillary
Agreements.
"ESI Business" means the businesses (other than the ADA-ES Business)
that, after giving effect to the Corporate Restructuring Transactions, are or
were conducted by:
(i) ESI, the ESI Subsidiaries or any of the other members of the
ESI Group;
(ii) any other division, Subsidiary or investment of ESI, or
any ESI Subsidiary or any of the other members of the ESI Group managed
or operated or in existence as of the date of this Agreement or any
prior time, unless such other division, Subsidiary or investment is
expressly included in the ADA-ES Group immediately after giving effect
to the Corporate Restructuring Transactions; and
(iii) any business entity acquired or established by or for ESI
or any of the ESI Subsidiaries between the date of this Agreement and
the close of business on the Distribution Date that is engaged in, or
intends to engage in, any business that is of a type or nature that
would have resulted in such business being included either as a ESI
Subsidiary or an asset of ESI on the ESI Business Pro Forma Balance
Sheet had it been acquired or established on or prior to the date of
the ESI Business Pro Forma Balance Sheet, determined on a basis
consistent with the determination of the Subsidiaries and assets
included on the ESI Business Pro Forma Balance Sheet.
"ESI Pro Forma Balance Sheet" means the Pro Forma Consolidated Balance
Sheet for ESI and the ESI Subsidiaries as of December 31, 2002 attached
hereto as Exhibit E.
"ESI Common Stock" has the meaning ascribed to such term in the
Recitals to this Agreement.
"ESI Corporate Records" has the meaning ascribed to such term in
Section 6.01(a) hereof.
"ESI Group" means ESI, the ESI Subsidiaries and the corporations,
partnerships, joint ventures, investments and other entities that represent
equity investments of ESI or any of the ESI Subsidiaries following
consummation of the Corporate Restructuring Transactions and the
Distribution.
"ESI Holders" means the holders of record of ESI Common Stock as of the
Distribution Record Date.
"ESI Indemnified Parties" means:
(i) ESI, the ESI Subsidiaries and each Affiliate thereof after
giving effect to the Corporate Restructuring Transactions and the
Distribution; and
(ii) each of the respective past, present and future directors,
officers, employees and agents of any of the entities described in the
immediately preceding clause (i) and each of the heirs, executors,
successors and assigns of such directors, officers, employees and
agents.
"ESI Liabilities" means, collectively, all of the Liabilities of ESI
and the ESI Subsidiaries and each of the other members of the ESI Group
remaining after giving effect to the Corporate Restructuring Transactions,
the Distribution and the transactions contemplated under the Debt and Cash
Allocation Agreement, including without limitation:
(i) all of the Liabilities included on the ESI Business Pro
Forma Balance Sheet that remain outstanding as of the close of business
on the Distribution Date;
(ii) all Liabilities that are incurred or that otherwise accrue
or are accrued at any time on, prior to or after the date of the ESI
Business Pro Forma Balance Sheet and that arise or arose out of, or in
connection with, the ESI Assets or the ESI Business, determined on a
basis consistent with the determination of Liabilities of ESI included
on the ESI Business Pro Forma Balance Sheet;
(iii) all of the Liabilities of ESI, the ESI Subsidiaries or any
of the other members of the ESI Group or to be retained or assumed by
ESI, any ESI Subsidiary or any of the other members of the ESI Group
pursuant to the Corporate Restructuring Transactions, this Agreement or
any of the Ancillary Agreements;
(iv) all of the Liabilities of the parties hereto or their
respective Subsidiaries (whenever arising whether prior to, on or
following the Distribution Date) arising out of or in connection with
or otherwise relating to the management or conduct before or after the
Distribution Date of the ESI Business;
(v) all other Liabilities of ESI, the ESI Subsidiaries or any
of the other members of the ESI Group (that do not constitute ADA-ES
Liabilities), which other Liabilities of ESI, the ESI Subsidiaries or
any of the other members of the ESI Group shall include, without
limitation, any and all Liabilities arising out of or relating to any
Action or Third Party Claim by any Governmental Authority or any other
Person that is based on any alleged breach of fiduciary duty by the
Board of Directors of ESI or any member thereof, or any ESI stockholder
derivative suit or other similar Actions;
(vi) Securities Liabilities arising out of events occurring
prior to the Distribution Date, and Securities Liabilities arising out
of events occurring after the Distribution Date and relating to the
ESI.
"ESI Records" has the meaning ascribed to such term in Section 6.01(b)
hereof.
"ESI Subsidiaries" means the Subsidiaries of ESI set forth in Exhibit F
hereto and all other Subsidiaries of ESI other than ADA-ES or its
Subsidiaries.
"ESI Trademarks and Trade Names" means all trademarks, service marks,
and trade names containing "ESI" or variations thereof, along with their
respective applications and registrations wherever used or registered.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Act File Material" means the Registration Statement, as
amended at the time it was declared effective under the Exchange Act, the
related Information Statement or any amendment or supplement thereto, the
related letter of transmittal, any related stockholder communication, any
other exhibits to any of the foregoing and any amendment or supplement
thereto, in each case including all information incorporated by reference
therein.
"GAAP" means United States generally accepted accounting principles and
practices, as in effect on the date of this Agreement, as promulgated by the
Financial Accounting Standards Board and its predecessors.
"Governmental Authority" means any government or any agency, bureau,
board, commission, court, department, official, political subdivision,
tribunal or other instrumentality of any government, whether federal, state
or local, domestic or foreign.
"Indemnifiable Losses" means, with respect to any Person, any and all
losses, liabilities, penalties, claims, damages, demands, costs and expenses
(including, without limitation, reasonable attorneys' fees, investigation
expenses and any and all other out-of-pocket expenses, but excluding any
punitive or consequential damages) or other Liabilities whatsoever that are
assessed, imposed, awarded against, incurred or accrued by such Person either
(a) in investigating, preparing for, defending against or otherwise arising
out of or in connection with any Actions, any potential or threatened Actions
or any Third Party Claims for which such Person would be entitled to
indemnification under Article VII hereof, or (b) in respect of any other
event, occurrence or matter for which such Person would be entitled to
indemnification under Article VII hereof, in each case whether accrued or
incurred on, before or after the date of this Agreement.
"Indemnifying Party" has the meaning ascribed to such term in Section
7.03(a) hereof.
"Indemnified Party" has the meaning ascribed to such tern in Section
7.03(a) hereof.
"Information Statement" means the ADA-ES Information Statement.
"Insurance Agreement" means the Insurance Agreement by and between ESI
and ADA-ES, which agreement shall be entered into on or prior to the
Distribution Date in the form attached hereto as Exhibit D except for such
changes or modifications thereto that do not, individually or in the
aggregate, adversely affect the ESI Business other than to a de minimis
extent.
"Insurance Proceeds" means, with respect to any insured party, those
monies, net of any applicable premium adjustment, retrospectively-rated
premium, deductible, retention, or cost of reserve paid or held by or for the
benefit of such insured, which are either.
(i) received by an insured from an insurance carrier, or
(ii) paid by an insurance carrier on behalf of an insured.
"Law" means all laws, statutes and ordinances and all regulations,
rules and other pronouncements of Governmental Authorities having the effect
of law of the United States, any foreign country, or any domestic or foreign
state, province, commonwealth, city, country, municipality, territory,
protectorate, possession or similar instrumentality, or any Governmental
Authority thereof.
"Liabilities" means any and all debts, liabilities, obligations,
responsibilities, response actions, losses, damages (whether compensatory,
punitive or treble), fines, penalties and sanctions, absolute or contingent,
matured or unmatured, liquidated or unliquidated, foreseen or unforeseen,
joint, several or individual, asserted or unasserted, accrued or unaccrued,
known or unknown, whenever arising, including, without limitation, those
arising under or in connection with any Law (including any Environmental
Law), Action, threatened Action, order or consent decree of any Governmental
Authority or any award of any arbitration tribunal, and those arising under
any contract, guarantee, commitment or undertaking, whether sought to be
imposed by a Governmental Authority, private party, or party to this
Agreement, whether based in contract, tort, implied or express warranty,
strict liability, criminal or civil statute, or otherwise, and including any
costs, expenses, interest, attorneys' fees, disbursements and expense of
counsel, expert and consulting fees and costs related thereto or to the
investigation or defense thereof.
"OTCBB" means the OTC Bulletin Board exchange.
"Person" means any natural person, corporation, business trust, joint
venture, association, company, partnership, limited liability company or
other entity, or any government, or any agency or political subdivision
thereof.
"Prior ADA-ES Businesses" means, collectively, all divisions,
Subsidiaries, other business entities or investments of ESI (or one of its
Subsidiaries) that, at any time prior to the date of the ADA-ES Business Pro
Forma Balance Sheet, were included in the ADA-ES segments for purposes of
segment reporting in any of ESI's Annual Reports on Form 10-KSB, and were
sold, transferred, otherwise disposed of or discontinued prior to such date.
"Privilege" has the meaning ascribed to such term in Section 6.07(a)
hereof.
"Privileged Information" has the meaning ascribed to such term in
Section 6.07(a) hereof.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Liabilities" means any and all losses, liabilities,
penalties, claims, damages, demands, costs or expenses or other Liabilities
whatsoever that are assessed, imposed, awarded against, incurred or accrued
by a Person arising out of or relating in whole or in part to any Action, any
potential or threatened Action or any Third Party Claim (or potential or
threatened Third Party Claim) by any Governmental Authority or any other
Person that is based on any violations or alleged violations of the
Securities Act, Exchange Act, any of the rules or regulations of the
Commission promulgated under the Securities Act or Exchange Act, or any other
securities or other similar Law.
"Subsidiary" means, with respect to any Person:
(i) any corporation of which at least a majority in interest of
the outstanding voting stock (having by the terms thereof voting power
under ordinary circumstances to elect a majority of the directors of
such corporation, irrespective of whether or not at the time stock of
any other class or classes of such corporation shall have or might have
voting power by reason of the happening of a contingency) is at the
time, directly or indirectly, owned or controlled by such Person or by
such Person and one or more of its Subsidiaries; or
(ii) any noncorporate entity in which such Person or such Person
and one or more Subsidiaries of such Person either (a) directly or
indirectly, as of the date of determination thereof, has at least a
majority ownership interest, or (b) as of the date of determination is
a general partner or an entity performing similar functions (e.g.,
manager of a Limited Liability Company or a trustee or a trust).
"Tax" or "Taxes" means any income, gross income, gross receipts,
profits, capital stock, franchise, withholding, payroll, social security,
workers compensation, unemployment, disability, property, ad valorem, stamp,
excise, occupation, services, sales, use, license, lease, transfer, import,
export, value added, alternative minimum, estimated or other similar tax
(including any fee, assessment or other charge in the nature of or in lieu of
any tax) imposed by any governmental entity or political subdivision thereof,
and any interest, penalties, additions to tax, or additional amounts in
respect of the foregoing.
"Tax Sharing Agreement" means the Tax Sharing Agreement by and between
ESI and ADA-ES which agreement shall be entered into on or prior to the
Distribution Date in the form attached hereto as Exhibit I, except for such
changes or modifications thereto that do not, individually or in the
aggregate, adversely affect the ESI Business other than to a de minimis
extent.
"Termination Date" means the date on which this Agreement is terminated
pursuant to and in accordance with the provisions of Section 8.10 of this
Agreement.
"Third Party Claim" has the meaning as defined in Section 7.04(a)
hereof.
"Transition Services Agreement" means the Transition Services Agreement
by and between ESI and ADA-ES, which agreement shall be entered into on or
prior to the Distribution Date in the form attached hereto as Exhibit J.
"Transition Trademark License" has the meaning ascribed to such term in
Section 5.02 hereof.
SECTION 1.02. References. References to an "Exhibit" or to a
"Schedule" are, unless otherwise specified, to one of the Exhibits or
Schedules attached to this Agreement, and references to a "Section" are,
unless otherwise specified, to one of the Sections of this Agreement.
ARTICLE II
PRE-DISTRIBUTION TRANSACTIONS;
CERTAIN COVENANTS
SECTION 2.01. Corporate Restructuring Transactions. On or prior to the
Distribution Date and otherwise in accordance with the terms and provisions
set forth in Exhibit B hereto, ESI and ADA-ES shall, and shall cause each of
their respective Subsidiaries to, as applicable, take such actions as are
necessary to cause, effect and consummate the Corporate Restructuring
Transactions. ESI and ADA-ES hereby agree that any one or more of the
Corporate Restructuring Transactions may be modified, supplemented or
eliminated; provided such modification, supplement or elimination (a) is
necessary or appropriate to divide the existing businesses of ESI so that the
ADA-ES Business shall be owned, directly and indirectly, by ADA-ES, and (b)
does not, individually or in the aggregate, adversely affect the ESI Business
(other than to a de minimis extent).
SECTION 2.02. Pre-Distribution Stock Dividends to ESI. On or prior to
the Distribution Date, ADA-ES shall issue to ESI, as a stock dividend, the
number of shares of ADA-ES Common Stock as is required to effect the
Distribution, as certified by the Agent. In connection therewith, ESI shall
deliver to ADA-ES for cancellation the share certificate (or certificates)
currently held by it representing all ADA-ES Common Stock.
SECTION 2.03. Articles of Incorporation and Bylaws of ADA-ES. On or
prior to the Distribution Date, ESI and ADA-ES shall take all necessary
actions so that, as of the Distribution Date, the Amended and Restated
Articles of Incorporation and Bylaws of ADA-ES will be substantially in the
forms set forth in Exhibits K and L, respectively.
SECTION 2.04. Election of Directors of ADA-ES. On or prior to the
Distribution Date, ESI, as the sole or majority stockholder of ADA-ES, shall
take all necessary action so that as of the Distribution Date the directors
of ADA-ES will be as set forth in the ADA-ES Information Statement.
SECTION 2.05. Transfer and Assignment of Certain Licenses and Permits.
(a)Licenses and Permits Relating to the ADA-ES Business. On
or prior to the Distribution Date, or as soon as reasonably practicable
thereafter, ESI shall (and, if applicable, shall cause any other Person
over which it has legal or effective direct or indirect control to),
duly and validly transfer or cause to be duly and validly transferred
to the appropriate member of the ADA-ES Group (as directed by ADA-ES)
all transferable licenses, permits and authorizations issued by any
Governmental Authority that relate to the ADA-ES Business but which are
held in the name of any member of the ESI Group, or any of their
respective employees, officers, directors, stockholders or agents.
(b) Licenses and Permits Relating to the ESI Business. On or
prior to the Distribution Date, or as soon as reasonably practicable
thereafter, ADA-ES shall (and, if applicable, shall cause any other
Person over which it has legal or effective direct or indirect control
to), duly and validly transfer or cause to be duly and validly
transferred to the appropriate member of the ESI Group (as directed by
ESI) all transferable licenses, permits and authorizations issued by
any Governmental Authority that relate to the ESI Business but which
are held in the name of any member of the ADA-ES Group, or any of their
respective employees, officers, directors, stockholders or agents.
SECTION 2.06. Transfer and Assignment of Certain Agreements:
(a)Transfer and Assignment of ESI Business Agreements. On or
prior to the Distribution Date, or as soon as reasonably practicable
thereafter, and subject to the limitations set forth in this Section
2.06, ADA-ES shall (and, if applicable, shall cause any of the other
members of its Group over which it has legal or effective direct or
indirect control to), assign, transfer and convey to ESI (or such other
member of the ESI Group as ESI shall direct) all of its (or such other
member of its Group's) right, title and interest in and to any and all
agreements that relate exclusively to the ESI Business or any member of
the ESI Group.
(b)Transfer and Assignment of ADA-ES Business Agreements. On
or prior to the Distribution Date, or as soon as reasonably practicable
thereafter, and subject to the limitations set forth in this Section
2.06, ESI shall (and, if applicable, shall cause any of the other
members of its Group over which it has legal or effective direct or
indirect control to), assign, transfer and convey to ADA-ES (or such
other member of the ADA-ES Group as ADA-ES shall direct) all of its (or
such other member of its Group's) right, title and interest in and to
any and all agreements that relate exclusively to the ADA-ES Business
or any member of the ADA-ES Group.
(c)Joint Agreements. Subject to the provisions of Section
2.06(e) below, any agreement to which any party hereto (or any other
member of such party's Group) is a party that inures to the benefit of
both the ESI Business and the ADA-ES Business shall be assigned in
part, at the expense and risk of the assignee, on or prior to the
Distribution Date or as soon as reasonably practicable thereafter, so
that each party (or such other member of such party's Group) shall be
entitled to the rights and benefits inuring to its business under such
agreement.
(d) Obligations of Assignees. The assignee of any agreement
assigned, in whole or in part, hereunder (an "Assigned") shall, as a
condition to such assignment, assume and agree to pay, perform, and
fully discharge all obligations of the assignor under such agreement
(whether such obligations arose or were incurred prior to, on or
subsequent to the Distribution Date and irrespective of whether such
obligations have been asserted as of the Distribution Date) or, in the
case of a partial assignment under Section 2.06(c) above, such
Assignee's related portion of such obligations as determined in
accordance with the terms of the relevant agreement, where determinable
on the face thereof, and otherwise as determined in accordance with the
practice of the parties prior to the Distribution. Furthermore, the
Assignee shall use its commercially reasonable efforts to cause the
assignor of such agreement to be released from its obligations under
the assigned agreements.
(e) No Assignment of Certain Agreements. Notwithstanding
anything in this Agreement to the contrary, this Agreement shall not
constitute an agreement to assign any agreement, in whole or in part,
or any rights thereunder if the agreement to assign or attempt to
assign, without the consent of a third party, would constitute a breach
thereof or in any way adversely affect the rights of the Assignee
thereof until such consent is obtained. If an attempted assignment
thereof would be ineffective or would adversely affect the rights of
any party hereto so that the Assignee would not, in fact, receive all
such rights, the parties hereto will cooperate with each other to
effect any arrangement designed reasonably to provide for the Assignee
the benefits of, and to permit the Assignee to assume liabilities
under, any such agreement, subject to the remaining sentences of this
Section 2.06(e). There are certain software license agreements held in
the name of a member of the ADA-ES Group that presently inure to the
benefit of the ESI Business and the ADA-ES Business. Notwithstanding
any other provision of this Agreement, each such license agreement
shall continue to be held by that member of the ADA-ES Group without
any obligation of any party to cause the assignment of such license
agreement, or to effect any arrangement to provide such benefit, to the
ESI Business or the ADA-ES Business, except where the license agreement
expressly permits the benefits and obligations to be divided among the
Businesses or as may be negotiated with the licensor by that member of
the ADA-ES Group and such other parties and the ADA-ES Business shall
use commercially reasonable efforts to do so.
SECTION 2.07. Consents. The parties hereto shall use their reasonable
efforts to obtain any third-party consents or approvals that are required to
consummate the Corporate Restructuring Transactions, the Distribution and the
other transactions contemplated herein (the "Consents").
SECTION 2.08. Other Transactions. On or prior to the Distribution
Date (but in all events prior to the Distribution, ESI and ADA-ES shall have
consummated those other transactions in connection with the Corporate
Restructuring Transactions and the Distribution that are contemplated by the
ADA-ES Information Statement, and not specifically referred to in Sections
2.01 through 2.07 above, subject, however, to the limitations set forth in
subparagraph (b) of Section 2.01 above.
SECTION 2.09. Election of Officers. On or prior to the Distribution
Date, ESI and ADA-ES shall, as applicable, take all actions necessary and
desirable so that as of the Distribution Date the officers of ADA-ES will be
as set forth in the ADA-ES Information Statement.
SECTION 2.10. Preparation and Filing of ADA-ES Registration Statement.
ESI and ADA-ES shall prepare or cause to be prepared, and ADA-ES shall file
or cause to be filed with the Commission, the ADA-ES Registration Statement.
The ADA-ES Registration Statement shall include or incorporate by reference
the ADA-ES Information Statement setting forth appropriate disclosure
concerning ESI, ADA-ES, the Distribution and such other matter: as may be
required to be disclosed therein by the provisions of the Exchange Act and
the rules and regulations promulgated thereunder. ESI and ADA-ES shall take
all such actions as may be reasonably necessary or appropriate in order to
cause the ADA-ES Registration Statement to become effective by order of the
Commission pursuant to the Exchange Act.
SECTION 2.11. State Securities Laws. Prior to the Distribution Date,
ESI and ADA-ES shall take all such action as may be necessary or appropriate
under the securities or Blue Sky laws of states or other political
subdivisions of the United States in order to effect the Distribution.
SECTION 2.12. Listing Application. Prior to the Distribution Date, ESI
and ADA-ES shall prepare and file with the OTCBB listing applications and
related documents and shall take all such other actions with respect thereto
as shall be necessary or desirable in order to cause the OTCBB to list on or
prior to the Distribution Date, subject to official notice of issuance, the
ADA-ES Common Shares.
SECTION 2.13. Certain Financial and Other Arrangements.
(a)Settlement of Intercompany Accounts Between ADA-ES Group
and ESI Group. All intercompany receivables, payables and loans
(other than receivables, payables and loans otherwise specifically
provided for in any of the Ancillary Agreements or hereunder),
including, without limitation, in respect of any cash balances, any
cash balances representing deposited checks or drafts for which only a
provisional credit has been allowed or any cash held in any
centralized cash management system, between any member of the ADA-ES
Group and any member of the ESI Group shall, as of the close of
business on the Distribution Date, be settled, capitalized or converted into
ordinary trade accounts, in each case as may be agreed in writing prior to the
Distribution Date by duly authorized representatives of ESI and ADA-ES.
(b)Operations in Ordinary Course. Except as otherwise provided
in this Agreement or any Ancillary Agreement, during the period from
the date of this Agreement through the Distribution Date, ESI and ADA-
ES shall, and shall cause any entity that is a Subsidiary of such party
at any time during such period to, conduct its business in a manner
substantially consistent with current and past operating practices and in the
ordinary course, including, without limitation, with respect to the payment and
administration of accounts payable and the collection and administration of
accounts receivable, the purchase of capital assets and equipment and the
management of inventories.
SECTION 2.14. Director, Officer and Employee Resignations. Subject to
the provisions of Section 2.04 and Section 2.09 above:
(a)Resignations by Directors and Employees of the ESI Group.
ESI shall cause all of its directors and all employees of the ESI
Group to resign, effective as of the close of business on the
Distribution Date, from all boards of directors or similar governing
bodies of each member of the ADA-ES Group on which they serve, and
from all positions as officers or employees of any member of the ADA-ES
Group, except as otherwise set forth in the ADA-ES Information
Statement or mutually agreed to in writing on or prior to the
Distribution Date by ESI and ADA-ES.
(b)Resignations by Directors and Employees of the ADA-ES Group. ADA-ES shall
cause all of its directors and all employees of the ADA-ES Group to resign,
effective as of the close of business on the Distribution Date, from all boards
of directors or similar governing bodies of each member of the ESI Group on
which they serve, and from all positions as officers or employees of any member
of the ESI Group, except as otherwise set forth in the ADA-ES Information
Statement or mutually agreed to in writing on or prior to the
Distribution Date by ADA-ES and ESI.
SECTION 2.15. Transfers Not Effected Prior to the Distribution;
Transfers Deemed Effective as of the Distribution Date. To the extent that
any transfers contemplated by this Article II shall not have been consummated
on or prior to the Distribution Date, the parties hereto shall cooperate (and
shall cause each of their respective Affiliates and each member of their
respective Groups over which they have legal or effective direct or indirect
control to cooperate) to effect such transfers as promptly following the
Distribution Date as shall be practicable. Nothing herein shall be deemed to
require the transfer of any assets or the assumption of any Liabilities,
which by their terms or operation of Law cannot be transferred or assumed;
provided, however, that the parties hereto shall cooperate (and shall cause
each of their respective Affiliates and each member of their respective
Groups over which they have legal or effective direct or indirect control to
cooperate) to seek to obtain any necessary consents or approvals for the
transfer of all assets and Liabilities contemplated to be transferred
pursuant to this Article II. In the event that any such transfer of assets or
Liabilities has not been consummated, from and after the Distribution Date
the party retaining such asset or Liability (or, as applicable, such other
member or members of such party's Group) shall hold such asset in trust for
the use and benefit of the party entitled thereto (at the expense of the
party entitled thereto) or retain such Liability for the account of the party
by whom such Liability is to be assumed pursuant hereto, as the case may be,
and take such other action as may be reasonably requested by the party to
whom such asset is to be transferred, or by whom such Liability is to be
assumed, as the case may be, in order to place such party, insofar as is
reasonably possible, in the same position as would have existed had such
asset or Liability been transferred or assumed as contemplated hereby. As and
when any such asset or Liability becomes transferable or assumable, such
transfer shall be effected forthwith. As of the Distribution Date, each party
hereto (or, if applicable, such other members of such party's Group) shall be
deemed to have acquired (or, as applicable, retained) complete and sole
beneficial ownership over all of the assets, together with all rights, powers
and privileges incident thereto, and shall be deemed to have assumed in
accordance with the terms of this Agreement all of the Liabilities, and all
duties, obligations and responsibilities incident thereto, which such party
(or any other member of such party's Group) is entitled to acquire or
required to assume pursuant to the terms of this Agreement.
SECTION 2.16. Ancillary Agreements. Prior to the Distribution Date,
ESI and ADA-ES shall enter into, and/or where applicable shall cause such
other members of their restive Groups to enter into, (a) the Ancillary
Agreements and (b) any other agreements in respect of the Corporate
Restructuring Transactions and the Distribution as are reasonably necessary
or appropriate in connection with the transactions contemplated hereby and
thereby so long as such agreements do not adversely affect the ESI Business
other than to a de minimis extent.
ARTICLE III
THE DISTRIBUTION
SECTION 3.01. ESI Action Prior to the Distribution. Subject to the
terms and conditions set forth herein, ESI shall take, or cause to be taken,
the following acts or actions in connection with, and to otherwise effect in
accordance with the terms of this Agreement, the Distribution.
(a)Declaration of Distribution and Establishment of Distribution Date. The
Board of Directors of ESI shall, in its sole discretion and subject to and in
accordance with the applicable rules of the OTCBB and provisions of the CBCA,
declare the Distribution and establish the Distribution Record Date, the
Distribution Date, the date on which ADA-ES Common Shares and any cash in lieu
of fractional shares shall be mailed to the ESI Holders and all appropriate
procedures in connection with the Distribution to the extent not provided for
herein; provided, however, that no such action shall create any obligation on
the part of ESI to effect the Distribution or in any way limit ESI's power of
termination as set forth in Section 8.10 hereof or alter the consequences of any
such termination from those specified in such Section.
(b) Notice to OTCBB. ESI shall, to the extent possible, give the OTCBB or other
appropriate authority not less than ten days advance notice of the Distribution
Record Date in compliance with Rule 10b-17 under the Exchange Act, as required.
(c)Mailing of ADA-ES Information Statement. ESI shall, as soon as practicable
after the ADA-ES Registration Statement shall have been declared effective under
the Exchange Act, cause the ADA-ES Information Statement to be mailed to the
ESI Holders.
SECTION 3.02. The Distribution.
(a)Duties and Obligations of ESI. Subject to the conditions
contained herein, on the Distribution Date, but effective immediately
following the close of business on the Distribution Date, ESI shall:
(i) deliver to the Agent the share certificates representing the ADA-ES Common
Shares issued to ESI by ADA-ES pursuant to Section 2.02 hereof, endorsed by ESI
in blank, for the benefit of the ESI Holders; and
(ii)instruct the Agent to distribute, as soon as practicable following
consummation of the Distribution, to the ESI Holders the following:
(A)one share of ADA-ES Common Stock for every ten shares of ESI Common Stock;
and(B)cash, if applicable, in lieu of fractional shares obtained in the manner
provided in Section 3.03 hereof.
(b)Duties and Responsibilities of ADA-ES. ADA-ES shall provide, or cause to be
provided, to the Agent sufficient certificates representing ADA-ES Common Stock
in such denominations as the Agent may request in order to effect the
Distribution. All shares of ADA-ES Common Stock issued pursuant to the
Distribution will be validly issued, fully paid and nonassessable and free of
any preemptive (or similar) rights.
SECTION 3.03. Fractional Shares
(a)No Fractional Shares. Notwithstanding anything herein to
the contrary, no certificate or scrip evidencing a fractional share of
ADA-ES Common Stock shall be issued in connection with the
Distribution, and any such fractional share interests to which a ESI
Holder would otherwise be entitled will not entitle such ESI Holder to
vote or to any rights of a stockholder of ADA-ES. In lieu of any such
fractional shares, each ESI Holder who, but for the provisions of this
Section 3.03, would be entitled to receive a fractional share interest
of ADA-ES Common Stock pursuant to the Distribution shall be paid cash,
without any interest thereon, as hereinafter provided. ESI shall
instruct the Agent to determine the number of whole shares and
fractional shares of ADA-ES Common Stock allocable to each ESI Holder,
to aggregate all such fractional shares into whole shares, to sell the
whole shares obtained thereby in the open market at the then prevailing
prices on behalf of ESI Holders who otherwise would be entitled to
receive fractional share interests and to distribute to each such ESI
Holder his, her or its ratable share of the total proceeds of such
sale, after making appropriate deductions of the amount required for
federal income tax withholding purposes and after deducting any
applicable transfer taxes. All brokers' fees and commissions incurred
in connection with such sales shall be paid by ADA-ES.
(b)Unclaimed Stock or Cash. Any ADA-ES Common Stock or cash in
lieu of fractional shares and dividends or distribution with respect to
ADA-ES Common Stock that remain unclaimed by any ESI Holder 180 days
after the Distribution Date shall be returned to ESI and any such ESI
Holders shall look only to ESI for the ADA-ES Common Stock, cash, if
any, in lieu of fractional share interests and any such dividends or
distribution to which they are entitled, subject in each case to
applicable escheat or other abandoned property laws.
(c)Beneficial Owners. Solely for purposes of computing
fractional share interests pursuant to Section 3.03(a), the beneficial
owner of shares of ESI Common Stock held of record in the name of a
nominee will be treated as the holder of record of such shares.
ARTICLE IV
CONDITIONS TO THE DISTRIBUTION
SECTION 4.01. Conditions Precedent to the Distribution. The obligation
of ESI to cause the Distribution to be consummated shall be subject, at the
option of ESI, to the fulfillment or waiver, on or prior to the Termination
Date, of each of the following conditions:
(a)Tax Sharing Agreement. ESI and ADA-ES shall have executed
and delivered the Tax Sharing Agreement and such agreement shall be
in full force and effect.
(b)Benefits and Pension Plan Agreement. ESI and ADA-ES shall
have executed and delivered the Benefits and Pension Plan Agreement
and such agreement shall be in full force and effect.
(c)Insurance Agreement. ESI and ADA-ES shall have executed
and delivered the Insurance Agreement and such agreement shall be in
full force and effect.
(d)Debt and Cash Allocation Agreement. ESI and ADA-ES shall
have executed and delivered the Debt and Cash Allocation Agreement
and such agreement shall be in full force and effect.
(e)Effective Date of Registration Statement. The Registration
Statement shall have been declared effective by order of the
Commission and no stop order shall have been entered, and no
proceeding for that purpose shall have been initiated or threatened
by the Commission with respect thereto.
(f) OTCBB Listing. The ADA-ES Common Shares shall have been
approved for listing on the OTCBB, subject to official notice of
issuance.
(g) Pre-Distribution Transactions. Each of the transactions
and other matters contemplated by Article II and Section 3.01 hereof
(including, without limitation, each of the distribution, transfers,
conveyances, contributions, assignments or other transactions
included in, or otherwise necessary to consummate, the Corporate
Restructuring Transactions) shall have been fully effected,
consummated and accomplished.
(h)Covenants. The covenants contained in Article V of this
Agreement that are required to be performed on or before the
Distribution Date shall have been fully performed.
(i)No Prohibitions. Consummation of the transactions
contemplated hereby shall not be prohibited by Law and no Governmental
Authority of competent jurisdiction shall have enacted, issued,
promulgated, enforced or entered any statute, rule, regulation,
executive order, decree, injunction or other order (whether temporary,
preliminary or permanent) which is in effect and which materially
restricts, prevents or prohibits consummation of the Distribution or
any transaction contemplated by this Agreement, it being understood
that the parties hereto hereby agree to use their reasonable best
efforts to cause any such decree, judgment, injunction or other order
to be vacated or lifted as promptly as possible.
(j)Consents. ESI, ADA-ES and the other members of their
respective Groups shall have obtained all Consents the failure of which
to obtain would, in the determination of the Board of Directors of ESI,
have a material adverse effect on the ESI Group or the ADA-ES Group,
each taken as a whole, and such Consents shall be in full force and
effect.
SECTION 4.02. No Constraint. Notwithstanding the provisions of Section
4.01 above, the fulfillment or waiver of any or all of the conditions
precedent to the Distribution set forth therein shall not:
(a)create any obligation on the part of ESI or any other party
hereto to effect the Distribution;
(b)in any way limit ESI's right and power under Section 8.10
hereof to terminate this Agreement and the process leading to the
Distribution and to abandon the Distribution; or
(c) alter the consequences of any such termination under
Section 8.10 hereof from those specified in such Section.
SECTION 4.03. Deferral of Distribution Date. If the Distribution Date
shall have been established by the Board of Directors of ESI but all the
conditions precedent to the Distribution set forth in this Agreement have not
theretofore been fulfilled or waived, or ESI does not reasonably anticipate
that they will be fulfilled or waived, on or prior to the date established as
the Distribution Date, ESI may, by resolution of its Board of Directors (or a
committee thereof, so authorized), defer the Distribution Date to a later
date.
SECTION 4.04. Public Notice of Deferred Distribution Date. If the Board
of Directors (or a committee thereof, so authorized) of ESI shall defer the
Distribution Date in accordance with Section 4.03 above and public
announcement of the prior Distribution Date has theretofore been made, ESI
shall promptly thereafter issue, in accordance with the advice of legal
counsel, a public announcement with respect to such deferment and shall, with
the advice of legal counsel, take such other actions as may be deemed
necessary or desirable with respect to the dissemination of such information.
ARTICLE V
COVENANTS
SECTION 5.01. Further Assurances. ESI and ADA-ES shall use all
reasonable efforts to:
(a)take or cause to be taken all actions, and do or cause to
be done all things reasonably necessary, proper or advisable under
applicable Law and agreements or otherwise to consummate and make
effective the transactions contemplated hereby, including without
limitation using commercially reasonable efforts to obtain any consents
and approvals from, enter into any amendatory agreements with and make
any applications, registrations or filings with, any third Person or
any Governmental Authority necessary or desirable in order to
consummate the transactions contemplated hereby or to carry out the
purposes of this Agreement; and
(b)execute and deliver such further instruments and documents
and take such other actions as the other party may reasonably request
in order to consummate the transactions contemplated hereby and
effectuate the purposes of this Agreement.
SECTION 5.02. ESI Name. ESI shall xxxxx XXX-ES transition licenses, in
the forms of Exhibit M (the "Transition Trademark License"), to use the ESI
Trademarks and Trade Names for the limited use as more fully described below
in this Section 5.02 and in Section 5.03. ADA-ES shall, and shall cause each
of the other members of its Group over which it has legal or effective direct
or indirect control to, at its own expense:
(a)Within thirty (30) days following the Distribution Date,
change, if necessary, its corporate name to delete therefrom the word
"ESI" or any other word that is confusingly similar to the word "ESI;"
and
(b)Within one year following the Distribution Date, remove any
and all references to the ESI Trademark and Trade Names from any and
all signs, displays or other identification or advertising material
(excluding any such material that is the subject of Section 5.03
below). After the conclusion of such period, ADA-ES and each other
member of its respective Group or over which it has legal or effective
direct or indirect control shall not use or display any of the ESI
Trademarks and Trade Names without the prior written consent of ESI,
which consent may be withheld for any reason or no reason whatsoever.
After the Distribution date, no party hereto shall represent or permit
to be represented to any third Person that it or any member of its
Group has a business affiliation with any other party hereto or any
member of such other party's Group, except as expressly permitted by
any of the Ancillary Agreements.
SECTION 5.03. Supplies and Documents. Notwithstanding the provisions of
Section 5.02 above, for a period of six (6) months following the Distribution
Date, the Transition Trademark License shall license (on a nonexclusive
basis) to the ADA-ES Group the right to use existing supplies and documents
which have imprinted thereon any of the ESI Trademarks and Trade Names to the
extent that such supplies and documents were existing in the inventory of
such member of the ADA-ES Group as of the Distribution Date.
SECTION 5.04. Assumption and Satisfaction of Liabilities. Except as
otherwise specifically set forth in any Ancillary Agreement, from and after
the Distribution Date:
(a)ESI shall, and shall cause each of the other members of the
ESI Group over which it has legal or effective direct or indirect
control to, assume, pay, perform and discharge all ESI Liabilities in
accordance with their terms, when determinable, and otherwise as
determined in accordance with the practice of the parties prior to the
Distribution; and
(b)ADA-ES shall, and shall cause each of the other members of
the ADA-ES Group over which it has legal or effective direct or
indirect control to, assume, pay, perform and discharge all ADA-ES
Liabilities in accordance with their terms, when determinable, and
otherwise as determined in accordance with the practice of the parties
prior to the Distribution.
SECTION 5.05. No Representations or Warranties; Consents.
(a)General. Each of the parties hereto understands and agrees
that no party hereto is, in this Agreement or in any other agreement or
document contemplated by this Agreement (including the Ancillary
Agreements) or otherwise, making any representation or warranty
whatsoever, including without limitation, any representation or
warranty:
(i)as to the value or freedom from encumbrance of, or
any other matter concerning, any assets of such party; or
(ii)as to the legal sufficiency to convey title to any
asset as of the execution, delivery and filing of this Agreement
or any Ancillary Agreement, including, without limitation, any
Conveyancing and Assumption Instrument.
(b)Disclaimer of Merchantability or Fitness of Assets. Each
party hereto further understands and agrees that there are no
warranties, express or implied, as to the merchantability or fitness of
any of the assets either transferred to or retained by the ESI Group or
the ADA-ES Group, pursuant to Corporate Restructuring Transactions and
the other terms and provisions of this Agreement, any Conveyancing and
Assumption Agreement or any Ancillary Agreement, and all such assets
that are so transferred will be transferred on an "AS IS, WHERE IS"
basis, and the party to which any such assets are transferred
hereunder, or which retains assets hereunder, shall bear the economic
and legal risk that any conveyances of such assets shall prove to be
insufficient or that the title of such party or any other member of its
respective Group to any such assets shall be other than good and
marketable and free from encumbrances.
(c) Acknowledgement of Disclosure and Waiver. ADA-ES
acknowledges, for itself and on behalf of each other member of its
Group, that:
(i)ESI and the other members of the ESI Group have
disclosed, and ADA-ES have knowledge of, all matters pertaining
to the assets and properties to be conveyed to ADA-ES or any
member of its Group pursuant to the Corporate Restructuring
Transactions or otherwise pursuant to the other term of this
Agreement to the same extent that ESI and the other members of
the ESI Group have knowledge of such matters; and
(ii) such knowledge constitutes notice and disclosure of
such matters.
ADA-ES waives, to the fullest extent permitted by Law, for itself and
for each other member of its Group, any and all claims or causes of
action which any of them may have arising out of such matters or the
failure of any Conveyancing and Assumption Instrument to describe or
refer to, or provide notice of, any such matters.
(d) No Representations or Warranties Regarding Consents. Each
of the parties hereto understands and agrees that no party hereto is,
in this Agreement or any Ancillary Agreement or in any other agreement
or document contemplated by this Agreement or any Ancillary Agreement
or otherwise, representing or warranting in any way that the obtaining
of any consents or approvals, the execution and delivery of any
amendatory agreements and the making of any filings or applications
contemplated by this Agreement will satisfy the provisions of any or
all applicable agreements or the requirements of any or all applicable
Law. Each of the parties hereto further agrees and understands that the
party to which any assets are transferred as contemplated by the
Corporate Restructuring Transactions or the other provisions of this
Agreement shall bear the economic and legal risk that any necessary
consents or approvals are not obtained, that any necessary amendatory
agreements are not executed and delivered or that any requirements of
Law are not complied with.
(e) Covenant to Use Reasonable Efforts to Obtain Consents.
Notwithstanding the provisions of Section 5.05(d) above, each of the
parties hereto shall (and shall cause each other member of its
respective Group over which it has direct or indirect legal or
effective control to) use reasonable efforts to obtain all consents and
approvals, to enter into all amendatory agreements and to make all
filings and applications that may be reasonably required for the
consummation of the transactions contemplated by this Agreement and
shall take all such further reasonable actions as shall be reasonably
necessary to preserve for each of the ESI Group and the ADA-ES Group,
to the greatest extent feasible, the economic and operational benefits
of the allocation of assets and Liabilities contemplated by this
Agreement. In case at any time after the Distribution Date any further
action is necessary or desirable to carry out the purposes of this
Agreement, the proper officers and directors of each party to this
Agreement shall take all such necessary or desirable action.
SECTION 5.06. Removal of Certain Guarantees.
(a)Removal of ESI Group as Guarantor of ADA-ES and ADA-ES
Liabilities. Except as otherwise contemplated in the Corporate
Restructuring Transactions or otherwise specified in any Ancillary
Agreement ESI, and ADA-ES shall use commercially reasonable efforts to
have, on or prior to the Distribution Date, or as soon as practicable
thereafter, ESI and any other member of the ESI Group removed as a
guarantor of, or obligor under or for, any ADA-ES Liability.
(b)Removal of ADA-ES Group as Guarantor of ESI Liabilities.
Except as otherwise contemplated in the Corporate Restructuring
Transactions or otherwise specified in any Ancillary Agreement, ESI and
ADA-ES shall use commercially reasonable efforts to have, on or prior
to the Distribution Date, or as soon as practicable thereafter, ADA-ES
and any other member of the ADA-ES Group removed as a guarantor of, or
obligor under or for, any ESI Liability.
SECTION 5.07. Public Announcements. Each party hereto shall consult
with each other before issuing any press release or otherwise issuing any
other similar written public statement with respect to this Agreement or the
Distribution and shall not issue any such press release or make any such
public statement without the prior consent of each other party, which shall
not be unreasonably withheld; provided, however, that a party may, without
the prior consent of any other party, issue such press release or other
similar written public statement as may be required by Law or any listing
agreement with a national securities exchange to which any party hereto (or
any member of such party's Group) is a party if it has used all reasonable
efforts to consult with such other party and to obtain such party's consent
but has been unable to do so in a timely manner.
SECTION 5.08. Intercompany Agreements. Effective as of the consummation
of the Distribution, ADA-ES and ESI shall (and shall cause each other member
of its respective Group over which it has legal or effective direct or
indirect control) to terminate each and every agreement between it and any
member of the other Group other than this Agreement, any of the Ancillary
Agreements and any of the license agreements referred to in Section 2.06(e)
above; provided, however, that such termination shall not have any effect
whatsoever on any of its rights and/or obligations that accrued or were
incurred prior to the Distribution Date (subject to the terms of Section 2.13
above).
SECTION 5.09. Tax Matters. ESI and the ADA-ES intend the Distribution
to be treated as tax-free distribution under Code Section 355 and each such
party shall use its reasonable efforts to cause the Distribution to so
qualify. Neither ESI nor ADA-ES shall take any action that might cause:
(i) the Distribution to fail to qualify as tax-free distribution under Code
Section 355;
(ii)any other transfer described in the Corporate Restructuring Transaction that
is intended to qualify as a tax-free transfer under Code Section 332, 351, 355
or 368 to fail to so qualify; or
(iii)ESI or any ESI Subsidiary to recognize any gains relating to deferred
intercompany transactions or excess loss accounts between or among any members
of affiliated groups of corporations of which ESI is the common parent.
ARTICLE VI
ACCESS TO INFORMATION
SECTION 6.01. Provision, Transfer and Delivery of Applicable Corporate
Records.
(a)Provision, Transfer and Delivery of ADA-ES Records. Each of
ESI and ADA-ES shall (and shall cause each other member of its
respective Group over which it has legal or effective direct or
indirect control to) arrange as soon as practicable following the
Distribution Date for the transportation (at ADA-ES' cost) to ADA-ES of
the Books and Records in its possession (i) that relate primarily to
the ADA-ES Business or are necessary to operate the ADA-ES Business
(collectively, the "ADA-ES Records") and (ii) that consist of the
corporate minutes of the Board of Directors (or committees thereof) of
ESI or that otherwise relate to the business, administrative and
management operations of ESI as the parent holding company of the ESI
Business and ADA-ES Business (collectively, the "ESI Corporate
Records") except to the extent such items are already in the possession
of any member of the ADA-ES Group. The ADA-ES Records and the ESI
Corporate Records shall be the property of ADA-ES, but shall be
available to ESI for review and duplication, at its cost, pursuant to
the terms of this Agreement.
(b)Provision, Transfer and Delivery of ESI Records. ADA-ES
shall (and shall cause each other member of its respective Group over
which it has legal or effective direct or indirect control to) arrange
as soon as practicable following the Distribution Date for the
transportation (at ESI's cost) to ESI of the Books and Records in its
possession that relate primarily to the ESI Business or are necessary
to operate the ESI Business (collectively, the "ESI Records"), except
to the extent such items are already in the possession of any member of
the ESI Group. The ESI Records shall be the property of ESI, but shall
be available to ADA-ES for review and duplication, at its cost,
pursuant to the terms of this Agreement.
SECTION 6.02. Access to Information.
(a)Access to Books and Records. Unless otherwise contemplated
by Section 6.06 hereof, from and after the Distribution Date, ESI and
ADA-ES shall (and shall cause each of the other members of its
respective Group over which it has legal or effective direct or
indirect control to) afford to each other party and its authorized
accountants, counsel and other designated representatives reasonable
access and duplicating rights (all such duplicating costs to be borne
by the requesting party) during normal business hours, subject to
appropriate restrictions for classified, privileged or confidential
information, to the personnel, properties, Books and Records and other
data and information of such party and each other member of such
party's Group relating to operations prior to the Distribution insofar
as such access is reasonably required by the other requesting party for
the conduct of the requesting party's business (but not for competitive
purposes).
(b)Provision of Post-Distribution Commission Fillings. For a
period of five years following the Distribution Date, ESI and ADA-ES
shall (and shall cause each of the other members of its respective
Group over which it has legal or effective direct or indirect control
to) provide to the other, promptly following such time at which such
documents are filed with the Commission, all documents (other than
documents or portions thereof for which confidential treatment has been
granted or a request for confidential treatment is pending) filed by it
and by each other member of such party's Group with the Commission
pursuant to the Securities Act or the periodic and interim reporting
requirements of the Exchange Act and the rules and regulations of the
Commission promulgated thereunder.
SECTION 6.03. Reimbursement: Other Matters. Except to the extent
otherwise contemplated hereby or by any Ancillary Agreement, a party
providing Books and Records or access to information to any other party (or
such party's representatives) under this Article VI shall be entitled to
receive from such other party, upon the presentation of invoices therefore,
payments for such amounts, relating to supplies, disbursements and other
out-of pocket expenses, as may be reasonably incurred in providing such Books
and Records or access to information.
SECTION 6.04. Confidentiality.
(a)General Restriction on Disclosure. ESI and ADA-ES shall not
(and shall not permit any other member of its respective Group over
which it has legal or effective direct or indirect control to) use or
permit the use of (without the prior written consent of the other) and
shall hold, and shall cause its consultants, advisors and otter
representatives and any other member of its respective Group (over
which it has legal or effective direct or indirect control) to hold, in
strict confidence, all information concerning each other party hereto
and the other members of such other party's Group in its possession,
custody or control to the extent such information either
(i)relates to the period up to the Distribution
Date,
(ii)relates to any Ancillary Agreement, or
(iii)is obtained in the course of performing services for the other party
pursuant to any Ancillary Agreement, and each party hereto shall not (and shall
cause each other member of its respective Group over which it has legal or
effective direct or indirect control not to) otherwise release or disclose such
information to any other Person, except its auditors, attorneys, financial
advisors, bankers and other consultants and advisors, without the prior written
consent of the other affected party or parties, unless compelled to disclose
such information by judicial or administrative process or unless such disclosure
is required by Law and such party has used reasonable efforts to consult with
the other affected party or parties prior to such disclosure.
(b)Compelled Disclosure. To the extent that a party hereto is compelled by
judicial or administrative process to disclose such information under
circumstances in which any evidentiary privilege would be available, such party
agrees to assert such privilege in good faith prior to making such disclosure.
Each of the parties shall consult with the other party in connection with any
such judicial or administrative process, including, without limitation, in
determining whether any privilege is available, and shall not object to each
such relevant party and its counsel participating in any hearing or other
proceeding (including, without limitation, any appeal of an initial order to
disclose) in respect of such disclosure and assertion of privilege.
(c)Exceptions to Confidential Treatment. Anything herein to the contrary
notwithstanding, no party hereto shall be prohibited from using or permitting
the use of, or required to hold in confidence, any information to the extent
that (i) such information has been or is in the public domain through no fault
of such party, (ii) such information is, after the Distribution Date, lawfully
acquired from other sources by such party, or (iii) this Agreement, any
Ancillary Agreement or any other agreement entered into pursuant hereto permits
the use or disclosure of such information by such party.
SECTION 6.05. Witness Services. At all times from and after the Distribution
Date, ESI and ADA-ES shall use its reasonable efforts to make available to each
other party hereto, upon reasonable written request, the officers, directors,
employees and agents of each member of its respective Group for fact finding,
consultation or interviews and as witnesses to the extent that:
(a)such persons may reasonably be required in connection with the prosecution
or defense of any Action in which the requesting party or any member of its
respective Group may from time to time be involved; and
(b) there is no conflict in the Action between the requesting
party or any member of its respective Group and the party to which a
request is made pursuant to this Section 6.05 or any member of such
party's Group. Except as otherwise agreed by the parties, a party
providing witness services to any other party under this Section shall
be entitled to receive from the recipient of such services, upon the
presentation of invoices therefore, payments for such amounts, relating
to supplies, disbursements and other out-of-pocket expenses (but not
salary expenses) and direct and indirect costs of employees who
participate in fact finding, consultation or interviews or are
witnesses, as are actually and reasonably incurred in providing such
fact finding, consulting, interviews or witness services by the party
providing such services.
SECTION 6.06. Retention of Records. Except when a longer period is
required by Law or is specifically provided for herein or in any Ancillary
Agreement, each party hereto shall cause the members of its Group over which
it has legal or effective direct or indirect control, to retain, for a period
of at least seven years following the Distribution Date, all material
information (including without limitation all material Books and Records)
relating to such Group and its operations prior to the Distribution Date.
Notwithstanding the foregoing, any party hereto may offer in writing to
deliver to the other party all or a portion of such information as it relates
to members of the offering party's Group and, if such offer is accepted in
writing within ninety (90) days after receipt thereof, the offering party
shall promptly arrange for the delivery of such information (or copies
thereof) to the accepting party (at the expense of such accepting party). If
such offer is not so accepted, the offered information may be destroyed or
otherwise disposed of by the offering party at any time thereafter.
SECTION 6.07. Privileged Matters.
(a)Privileged Information. The parties hereto shall, and shall
cause the members of its Group over which it has legal or effective
direct or indirect control to, use its reasonable efforts to maintain,
preserve, protect and assert all privileges including, without
limitation, all privileges arising under or relating to the
attorney-client relationship (including without limitation the
attorney-client and attorney work product privileges) that relate
directly or indirectly to any member of any other Group for any period
prior to the Distribution Date ("Privilege" or "Privileges"). The
parties hereto shall use reasonable efforts not to waive, or permit any
member of its Group over which it has legal or effective direct or
indirect control to waive, any such Privilege that could be asserted
under applicable Law without the prior written consent of the other
parties. With respect to each party, the rights and obligations created
by this Section 6.07 shall apply to all information as to which a
member of any Group did assert or, but for the Distribution, would have
been entitled to assert the protection of a Privilege ("Privileged
Information") including, but not limited to, any and all information
that either:
(i)was generated or received prior to the Distribution
Date but which, after the Distribution, is in the possession of
a member of another Group; or
(ii)is generated or received after the Distribution Date
but refers to or relates to Privileged Information that was
generated or received prior to the Distribution Date.
(b)Production of Privileged Information. Upon receipt by a
party or any member of its Group of any subpoena, discovery or other
request that arguably calls for the production or disclosure of
Privileged Information, or if a party or any member of its Group
obtains knowledge that any current or former employee of such party or
any member of its Group has received any subpoena, discovery or other
request that arguably calls for the production or disclosure of
Privileged Information, such party shall promptly notify the other
party of the existence of the request and shall provide the other party
a reasonable opportunity to review the information and to assert any
rights it may have under this Section 6.07 or otherwise to prevent the
production or disclosure of Privileged Information. No party will, or
will permit any member of its Group over which it has direct or
indirect legal or effective control to. produce or disclose any
information arguably covered by a Privilege under this Section 6.07
unless:
(i)the party has provided its express written consent to
such production a disclosure; or
(ii)a court of competent jurisdiction has entered an
order, which is not then appealable or a final, nonappealable
order finding that the information is not entitled to protection
under any applicable privilege.
(c)No Waiver. The parties hereto understand and agree
that the transfer of any Books and Records or other information between
any members of the ESI Group or the ADA-ES Group shall be made in
reliance on the agreements of ESI and ADA-ES, as set forth in Section
6.04 and Section 6.07 hereof, to maintain the confidentiality of
Privileged Information and to assert and maintain all applicable
Privileges. The Books and Records being transferred pursuant to Section
6.01 hereof, the access to information being granted pursuant to
Section 6.01 hereof, the agreement to provide witnesses and individuals
pursuant to Section 6.05 hereof and the transfer of Privileged
Information to either party pursuant to this Agreement shall not be
deemed a waiver of any Privilege that has been or may be asserted under
this Section or otherwise.
ARTICLE VII
INDEMNIFICATION
SECTION 7.01. Indemnification by ESI. Except as otherwise
specifically set forth in any provision of this Agreement or of any Ancillary
Agreement, ESI shall, to the fullest extent permitted by Law, indemnify,
defend and hold harmless the ADA-ES Indemnified Parties from and against any
and all Indemnifiable Losses of the ADA-ES Indemnified Parties arising out
of, by reason of or otherwise in connection with either (i) the ESI
Liabilities, or (ii) the breach by ESI of any provision of this Agreement or
any Ancillary Agreement.
SECTION 7.02. Indemnification by ADA-ES. Except as otherwise
specifically set forth in any provision of this Agreement or of any Ancillary
Agreement, ADA-ES shall. to the fullest extent permitted by Law, indemnify,
defend and hold harmless the ESI Indemnified Parties from and against any and
all Indemnifable Losses of the ESI Indemnified Parties arising out of, by
reason of or otherwise in connection with either (i) the ADA-ES Liabilities,
or (ii) the breach by ADA-ES of any provision of this Agreement or any
Ancillary Agreement.
SECTION 7.03. Limitation on Indemnification Obligations.
(a)Reductions for Insurance Proceeds and Other Recoveries. The
amount that any party (an "Indemnifying Party") is or may be required
to pay to any other Person (an "Indemnified Party") pursuant-to Section
7.01 or Section 7.02, as applicable, shall be reduced (retroactively or
prospectively) by any Insurance Proceeds or other amounts actually
recovered from third parties by or on behalf of such Indemnified Party
in respect of the related Indemnifiable Losses (except that nothing
herein shall be construed as requiring any Indemnified Party in respect
of any ADA-ES Securities Liability to file any claim for insurance).
The existence of a claim by an Indemnified Party for insurance or
against a third party in respect of any Indemnifiable Loss shall not,
however, delay any payment pursuant to the indemnification provisions
contained herein and otherwise determined to be due and owing by an
Indemnifying Party. Rather the Indemnifying Party shall make payment in
full of such amount so determined to be due and owing by it against an
assignment by the Indemnified Party to the Indemnifying Party of the
entire claim of the Indemnified Party for such insurance or against
such third party. Notwithstanding any other provisions of this
Agreement, it is the intention of the parties hereto that no insurer or
any other third party shall be (i) entitled to a benefit it would not
be entitled to receive in the absence of the foregoing indemnification
provisions or (ii) relieved of the responsibility to pay any claims for
which it is obligated. If an Indemnified Party shall have received the
payment required by this Agreement from an Indemnifying Party in
respect of any Indemnifiable Losses and shall subsequently actually
receive Insurance Proceeds or other amounts in respect of such
indemnifiable Losses, then such Indemnified Party shall hold such
Insurance Proceeds in trust for the benefit of such Indemnifying Party
and shall pay to such Indemnifying Party a sum equal to the amount of
such Insurance Proceeds or other amounts actually received, up to the
aggregate amount of any payments received from such Indemnifying Party
pursuant to this Agreement in respect of such lndemnifiable Losses.
(b)Foreign Currency Adjustments. In the event that any
indemnification payment required to be made hereunder or under any
Ancillary Agreement shall be denominated in a currency other than U.S.
Dollars, the amount of such payment shall be translated into U.S.
Dollars using the foreign exchange rate for such currency determined in
accordance with the following rules:
(i)with respect to any Indemnifiable Losses arising from
the payment by a financial institution under a guarantee, comfort
letter, letter of credit, foreign exchange contract or similar
instrument, the foreign exchange rate for such currency shall be
determined as of the date on which such financial institution
shall have been reimbursed;
(ii) with respect to any Indemnifiable Losses covered by
insurance, the foreign exchange rate for such currency shall be
the foreign exchange rate employed by the insurance company
providing such insurance in settling such Indemnifiable Losses
with the Indemnifying Party; and
(iii)with respect to any Indemnifiable Losses not covered
by either clause (i) or (ii) above, the foreign exchange rate for
such currency shall be determined as of the date that notice of
the claim with respect to such Indemnifiable Losses shall be given
to the Indemnified Party.
SECTION 7.04. Procedures for Indemnification. Except as otherwise
specifically provided in any Ancillary Agreement, including, without
limitation, the Tax Sharing Agreement and the Benefits Agreement:
(a)Notice of Third Party Claims. If a claim or demand is made
against an Indemnified Party by any Person who is not a member of the
ESI Group or ADA-ES Group (a "Third Party Claim") as to which such
Indemnified Party is entitled to indemnification pursuant to this
Agreement, such Indemnified Party shall notify the Indemnifying Party
in writing, and in reasonable detail, of the Third Party Claim promptly
(and in any event within fifteen (15) business days) after receipt by
such Indemnified Party of written notice of the Third Party Claim;
provided, however, that failure to give such notification shall not
affect the Indemnified Party's right to indemnification hereunder
except to the extent the Indemnifying Party shall have been actually
prejudiced as a result of such failure (except that the Indemnifying
Party shall not be liable for any expenses incurred during the period
in which the Indemnified Party failed to give such notice). Thereafter,
the Indemnified Party shall deliver to the Indemnifying Party, promptly
(and in any event within fifteen (15) business days) after the
Indemnified Party's receipt thereof, copies of all notices and
documents (including court papers) received by the Indemnified Party
relating to the Third Party Claim.
(b)Legal Defense of Third Party Claims. If a Third Party Claim
is made against an Indemnified Party, the Indemnifying Party shall be
entitled to participate in the defense thereof and, if it so chooses,
to assume the defense thereof with counsel selected by the Indemnifying
Party, which counsel shall be reasonably satisfactory to the
Indemnified Party. Should the Indemnifying Party so elect to assume the
defense of a Third Party Claim, the Indemnifying Party shall not be
liable to the Indemnified Party for legal or other expenses
subsequently incurred by the Indemnified Party in connection with the
defense thereof. If the Indemnifying Party assumes such defense, the
Indemnified Party shall have the right to participate in the defense
thereof and to employ counsel, at its own expense, separate from the
counsel employed by the Indemnifying Party, it being understood that
the Indemnifying Party shall control such defense. The Indemnifying
Party shall be liable for the reasonable fees and expenses of counsel
employed by the Indemnified Party for any period during which the
Indemnifying Party has failed to assume the defense of the Third Party
Claim (other than during the period prior to the time the Indemnified
Party shall have given notice of the Third Party Claim as provided
above). If the Indemnifying Party so elects to assume the defense of
any Third Party Claim, all of the Indemnified Parties shall cooperate
with the Indemnifying Party in the defense or prosecution thereof.
Notwithstanding the foregoing:
(i) the Indemnifying Party shall not be entitled to
assume the defense of any Third Party Claim (and shall be liable
to the Indemnified Party for the reasonable fees and expenses of
counsel incurred by the Indemnified Party in defending such Third
Party Claim) if the Third Party Claim seeks an order, injunction
or other equitable relief or relief for other than money damages
against the Indemnified Party which the Indemnified Party
reasonably determines, after conferring with its counsel, cannot
be separated from any related claim for money damages; provided,
however, that if such equitable relief or other relief portion of
the Third Party Claim can be so separated from that for money
damages, the Indemnifying Party shall be entitled to assume the
defense of the portion relating to money damages;
(ii)an Indemnifying Party shall not be entitled to assume
the defense of any Third Party Claim (and shall be liable for
reasonable fees and expenses of counsel incurred by Indemnified
Party in defending such Third Party Claim) if, in the Indemnified
Party's reasonable judgment, a conflict of interest between such
Indemnified Party and such Indemnifying Party exists in respect of
such Third Party Claim; and
(iii)if at any time after assuming the defense of a Third
Party Claim an Indemnifying Party shall fail to prosecute or shall
withdraw from the defense of such Third Party Claim, the
Indemnified Party shall be entitled to resume the defense thereof
and the indemnifying Party shall be liable for the reasonable fees
and expenses of counsel incurred by the Indemnified Party in such
defense.
(c)Settlement of Third Party Claims. Except as otherwise
provided below in this Section 7.04(c), or as otherwise specifically
provided in any Ancillary Agreement, including without limitation, the
Tax Sharing Agreement and the Benefits and Pension Plan Agreement, if
the Indemnifying Party has assumed the defense of any Third Party
Claim, then
(i)in no event will the Indemnified Party admit any
liability with respect to, or settle, compromise or discharge,
any Third Party Claim without the Indemnifying Party's prior
written consent; provided, however, that the Indemnified Party
shall have the right to settle, compromise or discharge such
Third Party Claim without the consent of the Indemnifying Xxxxx
if the Indemnified Party releases the Indemnifying Party from its
indemnification obligation hereunder with respect to such Third
Party Claim and such settlement, compromise or discharge would
not otherwise adversely affect the Indemnifying Party, and
(ii)the Indemnified Party will agree to any settlement,
compromise or discharge of a Third Party Claim that the
Indemnifying Party may recommend and that by its terms obligates
the Indemnifying Party to pay the full amount of the liability in
connection with such Third Party Claim and releases the
Indemnified Party completely in connection with such Third Party
Claim and would not otherwise adversely affect the Indemnified
Party provided, however, that the Indemnified Party may refuse to agree to
any such settlement, compromise or discharge if the Indemnified Party
agrees that the Indemnifying Party's indemnification obligation with
respect to such Third Party Claim shall not exceed the amount that
would be required to be paid by or on behalf of the Indemnifying Party
in connection with such settlement, compromise or discharge. If the
Indemnifying Party has not assumed the defense of a Third Party Claim
then in no event shall the Indemnified Party settle, compromise or
discharge such Third Party Claim without providing prior written notice
to the Indemnifying Party, which shall have the option within fifteen
(15) business days following the receipt of such notice to:
(i)approve and agree to pay the settlement,
(ii)approve the amount of the settlement, reserving the
right to contest the Indemnified Party's right to indemnity
pursuant to this Agreement,
(iii)disapprove the settlement and assume in writing all
past and future responsibility for such Third Party Claim
(including all of Indemnified Patty's prior expenditures in
connection therewith), or
(iv)disapprove the settlement and continue to refrain
from participation in the defense of such Third Party Claim, in
which event the Indemnifying Party shall have no further right to
contest the amount or reasonableness of the settlement if the
Indemnified Party elects to proceed therewith.
In the event the Indemnifying Party does not respond to such
written notice from the Indemnified Party within such fifteen (15)
business-day period, the Indemnifying Party shall be deemed to
have elected option (i).
(d)Other Claims. Any claim on account of an Indemnifiable Loss
that does not result from a Third Party Claim shall be asserted by
written notice given by the Indemnified Party to the applicable
Indemnifying Party. Such Indemnifying Party shall have a period of
fifteen (15) business days after the receipt of such notice within
which to respond thereto. If such Indemnifying Party does not respond
within such fifteen (15) business-day period, such Indemnifying Party
shall be deemed to have refused to accept responsibility to make
payment. If such Indemnifying Party does not respond within such
fifteen (15) business-day period or rejects such claim in whole or in
part, such Indemnified Party shall be free to pursue such remedies as
may be available to such party under applicable Law or under this
Agreement.
SECTION 7.05. Indemnification Payments. Indemnification required by
this Article VII shall be made by periodic payments of the amount thereof
during the course of the investigation or defense, as and when bills are
received or loss, liability, claim, damage or expense is incurred.
SECTION 7.06. Other Adjustments. In addition to any adjustments
required pursuant to Section 7.04 hereof, if the amount of any Indemnifiable
Losses shall, at any time subsequent to any indemnification payment made by
the Indemnifying Xxxxx pursuant to this Article VII, be reduced by recovery,
settlement or otherwise, the amount of such reduction, less any expenses
incurred in connection therewith, shall promptly be repaid by the Indemnified
Party to the Indemnifying Party, up to the aggregate amount of any payments
received from such Indemnifying Party pursuant to this Agreement in respect
of such Indemnifiable Losses.
SECTION 7.07. Obligations Absolute. The foregoing contractual
obligations of indemnification set forth in this Article VII shall:
(a)also apply to any and all Third Party Claims that allege
that any Indemnified Xxxxx is independently, directly, vicariously or
jointly and severally liable to such third party;
(b) to the extent permitted by applicable law, apply even if
the Indemnified Party is partially negligent or otherwise partially
culpable or at fault, whether or not such liability arises under any
doctrine of strict liability; and
(c)be in addition to any liability or obligation that an
Indemnifying Party may have other than pursuant to this Agreement.
SECTION 7.08. Survival of Indemnities. The obligations of ESI and ADA-
ES under this Article VII shall survive the sale or other transfer by any of
them of any assets or businesses or the assignment by any of them of any
Liabilities, with respect to any Indemnifiable Loss of any Indemnified Party
related to such assets, businesses or Liabilities.
SECTION 7.9. Remedies Cumulative. The remedies provided in this Article
VII shall be cumulative and shall not preclude assertion by any Indemnified
Party of any other rights or the seeking of any and all other remedies
against any Indemnifying Party.
SECTION 7.10. Cooperation of the Parties with Respect to Actions and
Third Party Claims.
(a)Identification of Party In Interest. Any party to this
Agreement that has responsibility for an Action or Third Party Claim
shall identify itself as the true party in interest with respect to
such Action or Third Party Claim and shall use its reasonable efforts
to obtain the dismissal of any other party to this Agreement from such
Action or Third Party Claim.
(b)Disputes Regarding Responsibility for Actions and Third
Party Claims. If there is uncertainty or disagreement concerning which
party to this Agreement has responsibility for any Action or Third
Party Claim, the following procedure shall be followed in an effort to
reach agreement concerning responsibility for such Action or Third
Party Claim:
(i) The parties in disagreement over the responsibility
for an Action or Third Party Claim shall exchange brief written
statements setting forth their position concerning which party has
responsibility for the Action or Third Party Claim in accordance
with the provisions of this Article VII. These statements shall be
exchanged within five (5) days of a party putting another party on
written notice that the other party is or may be responsible for
the Action or Third Party Claim.
(ii)If within five (5) days of the exchange of the
written statement of each party's position agreement is not
reached on responsibility for the Action or Third Party Claim, the
General Counsel for each of the parties in disagreement over
responsibility for the Action or Third Party Claim shall speak
either by telephone or in person to attempt to reach agreement on
responsibility for the Action or Third Party Claim.
(c)Effect of Failure to Follow Procedure. Failure to follow
the procedure set forth in clause (b) above shall not affect the rights
and responsibilities of the parties as established by the other
provisions of this Article VII.
(d)Exchange of Information. In connection with the handling of
current or future Actions or Third Party Claims, the parties may
determine that it is in their mutual interest to exchange privileged or
confidential information. If so, the parties agree to discuss whether
it is in their mutual interest to enter into a joint defense agreement
or information exchange agreement to maintain the confidentiality of
their communications and to permit them to maintain the confidentiality
of proprietary information or information that is otherwise
confidential or subject to an applicable privilege, including but not
limited to the attorney-client, work product, executive, deliberative
process, or self-evaluation privileges.
SECTION 7.11. Contribution. To the extent that any indemnification
provided for under Section 7.01 or Section 7.02 is unavailable to an
Indemnified Party, then the Indemnifying Party under such Section, in lieu of
indemnifying such Indemnified Party thereunder, shall contribute to the
amount paid or payable by such Indemnified Party as a result of such
Indemnifiable Losses (i) in such proportion as is appropriate to reflect the
relative benefits received by the Indemnifying Party on the one hand and the
Indemnified Party on the other hand from the transaction or other matter that
resulted in the Indemnifiable Losses 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 also the relative fault of the Indemnifying Party on the one
hand and of the Indemnified Party on the other hand in connection with the
action, inaction, statements or omissions that resulted in such Indemnifiable
Losses as well as any other relevant equitable considerations.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01. Complete Agreement; Construction. This Agreement,
including the Exhibits and Schedules hereto, and the Ancillary Agreements
shall constitute the entire agreement between the parties with respect to the
subject matter hereof and shall supersede all previous negotiations,
commitments and writings with respect to such subject matter. In the event of
any inconsistency between this Agreement and any Schedule or Exhibit hereto,
the Schedule or Exhibit, as the case may be, shall prevail. Notwithstanding
any other provisions in this Agreement to the contrary, in the event and to
the extent that there shall be a conflict between the provisions of this
Agreement and the provisions of any Ancillary Agreement, such Ancillary
Agreement shall control.
SECTION 8.02. Counterparts. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same
agreement, and shall become effective when one or more such counterparts have
been signed by each of the parties and delivered to the other parties.
SECTION 8.03. Survival of Agreements. Except as otherwise expressly
provided herein, all covenants and agreements of the parties contained in
this Agreement shall survive the Distribution Date.
SECTION 8.04. Responsibility for Expenses.
(a)Expenses Incurred on or Prior to Distribution Date. Subject
to the provisions of Section 8.05(c) below and except as otherwise set
forth in this Agreement or any Ancillary Agreement, all costs and
expenses incurred on or prior to the Distribution Date (whether or not
paid on or prior to the Distribution Date) in connection with the
preparation, execution, delivery and implementation of this Agreement
and any Ancillary Agreement, the Information Statements and the
Distribution, and the consummation of the transactions contemplated
hereby and thereby shall be charged to and paid by ADA-ES; and, ADA-ES
shall be solely responsible and liable for any expenses, fees, or other
costs that it separately and directly incurs in connection with any of
the transactions contemplated under this Agreement or any of the
Ancillary Agreements.
(b)Expenses Incurred or Accrued After Distribution Date.
Subject to the provisions of Section 8.05(c) below and except as
otherwise set forth in this Agreement or any Ancillary Agreement, each
party shall bear its own costs and expenses first incurred or accrued
after the Distribution Date.
(c)Environmental Expenses. Notwithstanding the provisions of
Section 8.05(a) and Section 8.05(b) above, expenses and other costs
incurred in connection with compliance with any Environmental Laws
applicable to the transactions contemplated hereby shall be paid by the
party that after the Distribution Date will, or that this Agreement
contemplates will, own the assets or operate the business subject to
such Environmental Laws.
SECTION 8.05. Notices. All notices and other communications to a party
hereunder shall be in writing and hand delivered or mailed by registered or
certified mail (return receipt requested) or sent by any means of electronic
message transmission with delivery confirmed (by voice or otherwise) to such
party (and will be deemed given on the date on which the notice is received
by such party) at the address for such party set forth below (or at such
other address for the party as the party shall, from time to time, specify by
like notice to the other parties):
If to ESI, at: 0000 XxxxxXxxx Xxx, X-0
Xxxxxxxxx, XX 00000
Fax - 000-000-0000
Attention:President
If to ADA-ES, at: 0000 XxxxxXxxx Xxx, X-0
Xxxxxxxxx, XX 00000
Fax - 000-000-0000
Attention:President
SECTION 8.06. Waivers. The failure of any party hereto to require
strict performance by any other party of any provision in this Agreement will
not waive or diminish that party's right to demand strict performance
thereafter of that or any other provision hereof.
SECTION 8.07. Amendments. Subject to the terms of Section 8.10 hereof,
this Agreement may not be modified or amended except by an agreement in
writing signed by the parties hereto.
SECTION 8.08. Assignment. This Agreement shall be assignable in whole
in connection with a merger or consolidation or the sale of all or
substantially all the assets of a party hereto so long as the resulting,
surviving or transferee entity assumes all the obligations of the relevant
party hereto by operation of law or pursuant to an agreement in form and
substance reasonably satisfactory to the other parties to this Agreement.
Otherwise this Agreement shall not be assignable, in whole or in part,
directly or indirectly, by any party hereto without the prior written consent
of the others, and any attempt to assign any rights or obligations arising
under this Agreement without such consent shall be void.
SECTION 8.09. Successors and Assigns. The provisions of this Agreement
shall be binding upon, inure to the benefit of and be enforceable by the
parties and their respective permitted successors and permitted assigns.
SECTION 8.10. Termination. This Agreement may be terminated and the
Distribution may be amended, modified or abandoned at any time prior to the
Distribution by and in the sole discretion of ESI without the approval of
ADA-ES or the stockholders of ESI. In the event of such termination, no party
shall have any liability of any kind to any other party. After the
Distribution, this Agreement may not be terminated except by an agreement in
writing signed by the parties hereto; provided, however, that Article VIII
shall not be terminated or amended after the Distribution in respect of the
third party beneficiaries thereto without the consent of such persons.
SECTION 8.11. Third Party Beneficiaries. Except as provided in Article
VII hereof (relating to Indemnified Parties), this Agreement is solely for
the benefit of the parties hereto, and the members of their respective Groups
and Affiliates and should not be deemed to confer upon third parties any
remedy, claim, liability, right of reimbursement, claim of action or other
right in excess of those existing without reference to this Agreement.
SECTION 8.12. Attorney Fees. A party in breach of this Agreement shall,
on demand, indemnify and hold harmless the other parties hereto for and
against all out-of-pocket expenses, including, without limitation, reasonable
legal fees, incurred by such other party by reason of the enforcement and
protection of its rights under this Agreement. The payment of such expenses
is in addition to any other relief to which such other party may be entitled
hereunder or otherwise.
SECTION 8.13. Title and Headings. Titles and headings to Sections
herein are inserted for the convenience of reference only and are not
intended to be a part of or to affect the meaning or interpretation of this
Agreement.
SECTION 8.14. Exhibits and Schedules. The Exhibits and Schedules
attached hereto shall be construed with and as an integral part of this
Agreement to the same extent as if the same had been set forth verbatim
herein.
SECTION 8.15. Governing Law. All questions and/or disputes concerning
the construction, validity and interpretation of this agreement and the
schedules and exhibits hereto shall be governed by the internal laws, and not
the law of conflicts, of the state of Colorado. Each of the parties to this
agreement hereby irrevocably and unconditionally agrees to be subject to, and
hereby consents and submits to, the jurisdiction of the courts of the state
of Colorado and of the federal courts sitting in the state of Colorado.
SECTION 8.16. Severability. In the event any one or more of the
provisions or part thereof contained in this Agreement should be held
invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein shall not in any
way be affected or impaired thereby. The parties shall endeavor in good faith
negotiations to replace the invalid, illegal or unenforceable provisions with
valid provisions, the economic effect of which comes as close as possible to
that of the invalid, illegal or unenforceable provisions.
SECTION 8.17. Subsidiaries. Each of the parties hereto shall cause to
be performed, and hereby guarantee the performance of, all actions,
agreements and obligations set forth herein to be performed by any
Subsidiary of such party which is contemplated to be a Subsidiary of such
party on and after the Distribution Date.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
EARTH SCIENCES, INC.
By: /s/Xxxx X. XxXxxxxxx
Name: Xxxx X. XxXxxxxxx
Title: President
ADA-ES, INC.
By: /s/ Xxxxxxx X. Xxxxxx
Name: Xxxxxxx X. Xxxxxx
Title: President
LISTING OF EXHIBITS:
1.EXHIBIT A BENEFITS AND PENSION PLAN AGREEMENT
2.EXHIBIT B CORPORATE RESTUCTURING TRANSACTIONS
3.EXHIBIT C DEBT AND CASH ALLOCATION AGREEMENT
4.EXHIBIT D INSURANCE AGREEMENT
5.EXHIBIT E ESI PRO FORMA BALANCE SHEET
6.EXHIBIT F ESI SUBSIDIARIES
7.EXHIBIT G ADA-ES PRO FORMA BALANCE SHEET
8.EXHIBIT H ADA-ES SUBSIDIARIES
9.EXHIBIT I TAX SHARING AGREEMENT
10.EXHIBIT J TRANSITION SERVICES AGREEMENT
11.EXHIBIT K AMENDED AND RESTATED ARTICLES OF INCORPORATION OF ADA-ES, INC.
12.EXHIBIT L AMENDED AND RESTATED BYLAWS OF ADA-ES, INC.
13.EXHIBIT M TRANSITION TRADEMARK LICENSE
