SHARE EXCHANGE AGREEMENT





         THIS SHARE EXCHANGE  AGREEMENT  (the "Exchange  Agreement") is made and

entered into, effective as of May 2, 2001, by and among HEADWATERS INCORPORATED,

a Delaware corporation ("Headwaters"),  HEADWATERS SUB CORPORATION, a New Jersey

corporation  and  a  wholly-owned   subsidiary  of  Headwaters  ("Merger  Sub"),

HYDROCARBON  TECHNOLOGIES,  INC., a New Jersey corporation  ("HTI"), and each of

the  individuals  listed on the  signature  pages  hereto  (the  "Transferors").

(Headwaters,  HTI,  Merger Sub, and the Transferors are referred to collectively

herein as the "Parties.")



                                    RECITALS



         A. Each of the Transferors owns shares of common stock,  $.01 par value

per share, of HTI (the "HTI Common  Stock").  Each Transferor owns the number of

shares of HTI Common Stock set forth  opposite his or her name on the  signature

pages hereto.



         B. In order to  enable  Headwaters  to  directly  acquire  one  hundred

percent  (100%) of the capital  stock of HTI, the Parties are entering into this

Exchange  Agreement,  under which each Transferor agrees with Headwaters,  among

other things,  to exchange all of the Transferor's  interest in HTI Common Stock

(each an "Exchange,  and  collectively  the  "Exchanges"),  representing  in the

aggregate for all Transferors up to approximately  ninety-seven percent (97%) of

the  outstanding  shares of HTI Common Stock, to Merger Sub in exchange for cash

and shares of Headwaters  Common Stock (the  "Headwaters  Shares"),  as provided

herein.



         C.  In  connection  with  the  execution  of this  Exchange  Agreement,

Headwaters,  HTI, Merger Sub, and certain  individual HTI shareholders (the "HTI

Founders") are entering into an Agreement and Plan of Reorganization dated as of

May 2, 2001 (the "Merger Agreement"),  pursuant to which Headwaters and HTI will

enter into a business combination  transaction pursuant to which Merger Sub will

merge with and into HTI following the Exchanges (the "Merger").



         D. Headwaters, Merger Sub, HTI, and the Transferors each desire to make

certain  representations  and warranties and other agreements in connection with

the Exchanges and the Merger.



         NOW,  THEREFORE,  in  consideration  of the  premises and of the mutual

agreements herein contained, the Parties do hereby agree as follows:



                                   ARTICLE I

                               THE share Exchange



         1.1 The Share Exchange.  Subject to the  satisfaction of the conditions

precedent set forth in Articles VI and VII below,  as of the Closing (as defined

herein), each Transferor hereby agrees to transfer to Merger Sub, and Merger Sub

agrees to accept,  the number of shares of HTI Common Stock shown  opposite such

Transferor's  name on the signature  pages hereto (each such share an



{PAGE}



"Exchanged Share" and collectively the "Exchanged Shares"),  in exchange for the

consideration  provided  herein.  The Parties agree that the Exchanges  shall be

part of a single transaction.  As a result, the obligation of each Transferor to

transfer the Exchanged  Shares to Merger Sub is conditioned on the  simultaneous

transfer  by each other  Transferor  of such  Transferor's  HTI Common  Stock or

waiver  by  Merger  Sub,  in its sole  discretion,  of the  obligations  of such

non-transferring Transferors.



         1.2 Closing.  The closing of the Exchanges (the  "Closing")  shall take

place at the offices of HTI or Headwaters, at a time and date to be specified by

the Parties after the last of the conditions  precedent set forth in Articles VI

and VII below shall have been satisfied or waived,  and shall occur  immediately

prior to the  closing  of the  Merger,  pursuant  to  Section  1.2 of the Merger

Agreement,  or at such other time,  date,  and location as the Parties  agree in

writing (the date of the Closing being the "Closing Date").



         1.3 Effect on Capital Stock.



                  (a) Definitions. For purposes of this Exchange Agreement:



                           (i)  Business  Plan  shall  mean  the  business  plan

prepared by HTI and dated February 2000.



                           (ii)  Business  Unit shall mean the business  unit of

Headwaters  after the Merger that includes the business and operations of HTI as

they existed  immediately  prior to the Effective Time (as defined in the Merger

Agreement), which business unit shall include only HTI's business and operations

unless consented to in writing by the Representative.



                           (iii) EBITDA  shall mean  earnings  before  interest,

taxes, depreciation, and amortization of the Business Unit, after elimination of

intracompany  transfers and costs incurred in connection  with the  transactions

contemplated  hereby and by the Merger  Agreement,  as reported  on  Headwaters'

statement of operations prepared in accordance with GAAP consistently applied in

accordance with HTI's practices in effect immediately prior to the Closing,  and

without the effect of any restatement of the financial  statements of HTI or the

Business  Unit unless HTI (in the case of any  pre-Closing  restatement)  or the

Representative (in the case of any post-Closing restatement) consents thereto in

writing.



                           (iv) 2001  Actual  EBITDA  shall  mean  EBITDA of the

Business Unit for the year ended  December 31, 2001  (calculated  to reflect the

elimination of intracompany  transfers and costs incurred in connection with the

transactions  contemplated  hereby and by the Merger  Agreement),  not including

revenues  from any sale of  material  assets  or other  extraordinary  corporate

events;  provided that, for this purpose,  a sale of Chemsampco or its assets or

Home        Intelligence        Services        Subscriptions        News        About Us

Contact Us       Terms of Use       Resend Documents       Shopping Cart

Copyright © 2008 The Consus Group LLC