STOCK EXCHANGE AGREEMENT
THIS
STOCK EXCHANGE AGREEMENT (this
“Agreement”)
is
made and entered into as of October 30th
2008
(the “Signing
Date”),
by
and among SOLAR
THIN FILMS, INC.,
a
Delaware corporation (“STF”);
ALGATEC
SOLAR AG,
a
German corporation (the “Company”
or
“Algatec”);
ALGATEC
EQUITY PARTNERS, L.P.,
a
Delaware limited partnership (“AEP”);
XXXXXX
XXXXXXX,
an
individual (“X.
Xxxxxxx”);
XXXXXXX
XXXX,
an
individual (“X.
Xxxx”);
XX.
XXXXXX XXXXX,
an
individual (“X.
Xxxxx”);
XXXXX
XXXXX,
an
individual (“X.
Xxxxx”);
and
XXXXXX
XXXXXXX, ESQ.,
an
individual, acting as trustee for X. Xxxxxxx (the “Trustee”).
X.
Xxxxxxx, X. Xxxx, X. Xxxxx and X. Xxxxx are sometimes individually referred
to
as the “Management
Stockholder”
and
collectively as the “Management
Stockholders.”
AEP
and the Management Stockholders are hereinafter sometimes individually referred
to as a “Company
Stockholder”
and
collectively as the “Company
Stockholders.”
STF,
AEP, the Company, and the Company Stockholders are hereinafter sometimes
individually referred to as a “Party”
and
collectively as the “Parties.”
Capitalized terms not otherwise defined herein shall of the meanings set forth
in Article X of this Agreement.
Recitals
As
a
material inducement for STF to enter into this Agreement and to consummate
the
transactions contemplated hereby, the Management Stockholders make the factual
recitals set forth in paragraph A and in paragraph C through G below, each
of
which constitutes a representation and warranty of the Management Stockholders
unless otherwise modified in the Schedules. As a material inducement for the
Company, the Trustee, the Management Stockholders and STF to enter into this
Agreement and to consummate the transactions contemplated hereby, AEP makes
the
factual recital set forth in paragraphs B and C below, which constitutes
representations and warranties of AEP unless otherwise modified in the
Schedules. As a material inducement for the Company, the Trustee, the Management
Stockholders and AEP to enter into this Agreement and to consummate the
transactions contemplated hereby, STF makes the factual recital set forth in
paragraph H below, which constitutes representations and warranties of STF
unless otherwise modified in the Schedules.
A. The
Company is a stock corporation (Aktiengesellschaft)
organized under the laws of Germany, registered with the commercial register
(Handelsregister)
of the
local court (Amtsgericht)
of
Cottbus under registration number HRB 8146 CB, having its registered office
(Sitz)
in
Röderland, Germany and having a registered share capital in the amount of
EUR 50,000, which is divided into 50,000 no par-value bearer shares
(Inhaber/-Stückaktien)
each
representing a notional participation of EUR 1 (herein collectively the
“Company
Shares”
and
each a “Company
Share”).
The
articles of association of the Company, as in effect on the Signing Date, are
attached as Exhibit
A/1
(the
“Company
Articles of Association”)
and,
as of the Signing Date, a current excerpt of the Company’s commercial register
is attached to this Agreement as Exhibit
A/2,
provided, however, that the appointment of X. Xxxxxxx, X. Xxxx and X. Xxxxx
has
not been recorded in the commercial register.
B. AEP is
a
limited partnership formed under the laws of the state of
Delaware/USA.
C. On
the
Signing Date, the Management Stockholders, Xx. Xxxxxx Xxxxxxx, Esq., an
individual acting as Trustee for X. Xxxxxxx, and AEP have entered into a Share
Purchase Agreement (the “Share
Purchase Agreement”)
pursuant to which the Trustee sold to AEP certain Company Shares. The Share
Purchse Agreement and the Exhibits and Schedules thereto have been furnished
to
STF. Upon closing of the transactions contemplated by the Share Purchase
Agreement, the Company Shares will be held as follows:
|
Shareholder
|
Number of Shares
|
% of Registered Capital
|
|||||
|
Ruschke
|
10,000
|
20
|
%
|
||||
|
Xxxxx
|
7,500
|
15
|
%
|
||||
|
Malik
|
1,500
|
3
|
%
|
||||
|
Freud
|
1,500
|
3
|
%
|
||||
|
Trustee
|
5,000
|
10
|
%
|
||||
|
AEP
|
24,500
|
49
|
%
|
||||
D. Under
the
terms of the Share Purchase Agreement, the funds contributed by AEP to the
capital reserves of the Company will be used by the Company to acquire, in
a
series of transactions, the business currently operated by Trend Capital GmbH
& Co. Algatec Solarwerke Xxxxxxxxxxx KG (such entity “Trend
Capital KG”
and
the
transactions the “Trend
Capital Business Transfer”).
E. As
of the
Signing Date, Algatec is a party to a share purchase agreement dated as of
October 28, 2008 (deed-roll no. 1304/2008 of notary Sabine Taugnitz/Riesa),
a
copy of which is
attached as Exhibit
E,
relating
to the acquisition by Algatec of all of the issued and outstanding shares of
SOLAR
INVEST GMBH,
a
limited liability company (Gesellschaft
mit beschränkter
Haftung)
organized under the laws of Germany, registered with the commercial register
(Handelsregister)
of the
local court (Amtsgericht)
of
Cottbus under registration number 6628 CB (“Solar
Invest”).
The
business of the Company resulting from (i) the Trend Capital Business Transfer
and (ii) the transfer of the shares in Solar Invest contemplated by this
paragraph E is herein referred to as the “Algatec
Business”.
F. As
of the
Signing Date, the Company (as purchaser) and GB Grundbesitz Xxxxxxxxxxx GmbH
(as
seller) are party to a real estate purchase agreement dated October 23, 2008
(deed-roll no. 1290/2008 of notary Sabine Taugnitz/Riesa), a copy of
which is
attached as Exhibit
F,
relating
to the real estate set forth therein in Xxxxxx, Germany, (the “Xxxxxx
Real Estate”),
pursuant to which GB Grundbesitz Brandenburg GmbH has sold the Xxxxxx Real
Estate to the Company for a purchase price equal to € 530,000, which is
payable in twelve installments (the first installment being due on November
1,
2008 and any further installment being due on the first day of the respective
following month), provided that the in
rem transfer
of ownership of the Xxxxxx Real Estate to the Company becomes effective after
full payment of the purchase price by the Company.
G. As
of the
Signing Date, (a) Algatec has placed a purchase order with KOMAX
GROUP AG
(“Komax”),
dated
September 4, 2008, a true and complete copy of which has been furnished to
STF
for the purchase of certain equipment (the “Komax
Purchase Order”),
and
(b) is party to a Frame Contract No. ALG/2009, dated September 25, 2008 with
Q-CELLS
INTERNATIONAL GMBH
(“Q-Cells”),
a
true and complete copy of which has
been
furnished to STF, for the sale of solar modules to Q-Cells (the “Q-Cells
Agreement”).
H. STF
is a
Delaware corporation with its principal place of business at 00 Xxxxxxxx
Xxxxxxxxx, Xxx Xxxxx, Xxx Xxxx 00000. STF has an authorized share capital of
152,700,000 shares, of capital stock divided into:
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(i) 150,000,000
shares of common stock, $0.01 par value per share (the “Common
Stock”),
of
which an aggregate of 57,783,601 shares of STF Common Stock is currently issued
and outstanding,
(ii) 1,200,000
shares of Series A preferred stock, $0.01 par value per share (the “Series
A Preferred Stock”),
of
which no shares of Series A Preferred Stock are issued or outstanding, and
(iii) 1,500,000
shares of Series B preferred stock, $0.01 par value per share, containing such
rights, privileges and designations as the Board of Directors of STF may, from
time to time, designate by resolution providing for the issue of such series
(the “Series
B Preferred Stock”)
of
which (A) 228,652 shares of Series B Preferred Stock designated as Series B-1
Preferred Stock and (convertible into 228,652 shares of Common Stock) are issued
and outstanding, (B) 500,000 shares of Series B Preferred Stock designated
as
B-2 Preferred Stock were eliminated on April 10, 2003, (C) 47,518 shares of
Series B Preferred Stock designated as Series B-3 Preferred Stock (convertible
into 1,520,576 shares of Common Stock) are issued and outstanding, and (D)
none
of the 100,000 shares of Series B Preferred Stock designated as Series B-4
Preferred Stock are issued and outstanding.
I. Upon
the
terms and subject to the conditions set forth in this Agreement, STF desires
to
acquire from the Company Stockholders all, and not less than all, of the
outstanding Company Shares.
J. The
Company Stockholders have agreed to exchange the outstanding Company Shares
in
consideration for the “Exchange
Shares”
(as
hereinafter defined).
K. STF
desires to acquire the outstanding Company Shares, and the Company Stockholders
desire to exchange such Company Shares for the Exchange Shares, all upon the
terms and subject to the conditions set forth herein.
NOW
THEREFORE,
the
Parties hereto do each severally (and not jointly) hereby agree as
follows:
Agreement
NOW,
THEREFORE,
in
consideration of the premises and of the mutual covenants contained herein,
the
Parties agree as follows:
ARTICLE
I. –
TRANSFER OF COMPANY SHARES
1.1 Transfer
of Company Shares.
(a) On
the
terms and subject to the conditions of this Agreement, at the Closing referred
to in Section 3.1 hereof, the Company Stockholders shall convey, assign,
transfer and deliver to STF and STF shall acquire and accept delivery of the
Company Shares.
(b) The
share
capital of the Company is evidenced by 50,000 Company Shares, which represent
one hundred percent (100%) of the issued and outstanding share capital of the
Company on the Closing Date, on a fully-diluted basis, after giving effect
to
the exercise of all options, warrants or other rights to acquire Company Shares,
and all securities convertible into Company Shares that are outstanding as
of
the Closing Date.
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(c) The
Company Shares shall be delivered to STF by the Company Stockholders, free
and
clear of any and all liens, claims, mortgages, charges, restrictions, pledges,
security interests, options, leases or subleases, easements, encroachments,
or
encumbrances or any other rights or adverse interests of any kind of any third
Person (collectively, “Liens”).
(d) To
effect
the transfers contemplated by this Section
1.1,
at the
Closing, the Company Stockholders shall deliver or cause to be delivered to
STF,
against delivery of the consideration therefor in accordance with Section 2.1
hereof, certificates evidencing all, and not less than all, of the Company
Shares outstanding as of the Signing Date, with the shares certificates duly
endorsed in blank [with the signatures of the owners thereof notarized by an
official notary public or guaranteed by a bank or trust company.
ARTICLE
II. EXCHANGE
SHARES
2.1 STF
Series B-5 Preferred Stock.
On the
Closing Date, against delivery of the Company Shares in accordance with
Section
1.1(d),
STF
shall deliver, transfer and assign to the Company Stockholders (pro-rata as
among each of the Company Stockholders as their respective interests in the
Company Shares bear to each other, all set forth on Schedule
2.1
annexed
hereto and made a part hereof), an aggregate of 50,000 shares of the Series
B
Preferred Stock of STF, to be designated as 6% Series B-5 Convertible Voting
Preferred Stock (the “STF
Series B-5 Preferred Stock”).
The
Management Stockholders and the Trustee as a group shall be issued 25,500 of
the
shares of STF Series B-5 Preferred Stock, and AEP shall be issued 24,500 of
the
shares of STF Series B-5 Preferred Stock. The number of shares of STF Series
B-5
Preferred Stock to be issued to each of the Management Stockholders is set
forth
on Schedule
2.1
to this
Agreement.
2.2 The
Exchange Shares.
The
fifty
thousand (50,000) shares of STF Series B-5 Preferred Stock are hereinafter
sometimes collectively referred to as the “Exchange
Shares.”
Such
Exchange Shares shall contain the rights privileges and designations set forth
in the Certificate of Designations of STF Series B-5 Preferred Stock annexed
hereto as Exhibit
2.2
and made
a part hereof (the “Certificate
of Designations”).
2.3 STF
Reverse Stock Split. On
or
prior to the Closing Date, STF shall effect a one-for-two reverse stock split
of
its issued and outstanding shares of Common Stock.
ARTICLE
III. CLOSING
3.1 Closing.
The
consummation of the exchange of the Company Shares for the Exchange Shares
and
the other transactions contemplated by this Agreement (the “Closing”)
will
take place at 10:00 a.m. (local time) on a date to be agreed by the Parties,
which shall be no later than the fifth Business Day after satisfaction or waiver
of the conditions set forth in Article VII of this Agreement (the "Closing
Date"),
at
the offices of Xxxxxxx Xxxx LLP, 0000 Xxxxxxxx, 00xx
Xxxxx,
Xxx Xxxx, Xxx Xxxx 00000, counsel to STF, unless another date, time or place
is
agreed to in writing by the Parties hereto. In no event, however, shall the
Closing Date occur after March 31, 2009, unless otherwise mutually agreed upon
by the Company Stockholders and STF.
3.2 Deliveries
by the Company Stockholders.
At or
prior to the Closing, the Company Stockholders shall deliver to
STF:
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(i) Shareholder’s
list of the Company and stock certificates representing all, and not less than
all, of the Company Shares, duly endorsed by the record owners in blank,
(ii) Minutes
of the Shareholders’ meeting of the Company Stockholders approving the transfer
of the Company Shares;
(iii) the
minute books of the Company;
(iv) a
certificate executed by the Company Stockholders to the effect that the
conditions set forth in Section 7.2 (b) have been satisfied;
(v) possession
of all originals and copies of agreements, instruments, documents, deeds, books,
records, files and other data and information within the possession of the
Company Stockholders or any Affiliate of the Company Stockholders pertaining
to
the Company (collectively, the “Records”);
provided,
however,
that
the Company Stockholders may retain (1) copies of any tax returns and copies
of
Records relating thereto; (2) copies of any Records that the Company
Stockholders is reasonably likely to need for complying with requirements of
law; and (3) copies of any Records that in the reasonable opinion of the Company
Stockholders will be required in connection with the performance of their
obligations under Article VIII hereof; and, provided,
also,
that
all such agreements, instruments, documents, deeds, books, records, files and
other data and information within the possession the Company Stockholders or
any
Affiliate of the Company Stockholders pertaining to the Company which the
Company is under a legal duty to keep shall be delivered to the Company rather
than STF; and
(vi) evidence
satisfactory to STF that the Management Stockholders shall be the only
authorized signatories with respect to the Company’s various accounts, credit
lines, safe deposit boxes or vaults;
(vii) duly
executed copies of the Voting Agreement and the Registration Rights
Agreement.
3.3 Deliveries
by STF.
At or
prior to the Closing, STF shall deliver to the Company
Stockholders:
(i) certificates
evidencing the Exchange Shares pursuant to Section 2.1 hereof;
(ii) evidence
satisfactory to the Company Stockholders of the filing of the Series A Preferred
Stock Certificate of Designations with the Secretary of State of the State
of
Delaware and the completion of the transactions contemplated pursuant to Section
2.3 hereof;
(iii) a
certificate executed by an authorized officer of STF, on behalf of STF, to
the
effect that the conditions set forth in Section 7.1 (b) and (c) have been
satisfied;
(iv) the
Certificate of Designations in the form of Exhibit
2.2
annexed
hereto and made a part hereof; and
(v) duly
executed copies of the Voting Agreement and the Registration Rights
Agreement.
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3.4 Termination
in Absence of Closing.
(a) In
the
event that a STF Termination Event, or an Algatec Termination Event occurs
or if
the Closing has not occurred by the close of business on March 31, 2009, then
any Party hereto may thereafter terminate this Agreement by written notice
to
such effect, to the other Parties hereto, without liability of or to any Party
to this Agreement or any shareholder, director, officer, employee or
representative of such Party unless the reason for Closing having not occurred
is (i) such Party’s willful breach of the provisions of this Agreement, or (ii)
if all of the conditions to such Party’s obligations set forth in Article VII
have been satisfied or waived in writing by the date scheduled for the Closing
pursuant to Section 4.1, the failure of such Party to perform its obligations
under this Article III on such date; provided,
however,
that
any termination pursuant to this Section 3.4 shall not relieve any Party hereto
who was responsible for Closing having not occurred as described in clauses
(i)
or (ii) above of any liability for (x) such Party’s willful breach of the
provisions of this Agreement, or (y) if all of the conditions to such Party’s
obligations set forth in Article VII have been satisfied or waived in writing
by
the date scheduled for the Closing pursuant to Section 3.1, the failure of
such
Party to perform its obligations under this Article III on such
date.
(b) Notwithstanding
the approval of the Board of Directors of STF, this Agreement and the
transactions contemplated herein may be terminated and abandoned at any time
on
or prior to the Closing Date by STF, if any of the following shall have occurred
(each, a “STF
Termination Event”):
(i) any
representation or warranty made herein by the Company Stockholders for the
benefit of STF, or any certificate, schedule or document furnished by the
Company or the Company Stockholders to STF pursuant to this Agreement shall
be
untrue or incorrect in any material respect and the cause for such incorrectness
is either not possible to be cured or has not been cured within 20 Business
Days
from the Parties becoming aware of such incorrectness; or
(ii) the
Company, the Company Stockholders or any of their Affiliates shall have
defaulted in any material respect in the performance of any material obligation
under this Agreement on their part to be performed and such default is either
not possible to be cured or has not been cured within 20 Business Days from
the
date the Company or the Company Stockholders shall have received notice of
default from STF of its occurrence; or
(iii) the
Company or the Company Stockholders shall be subject to a Material Adverse
Effect; or
(iv) the
Algatec Financing shall not be consummated by March 31, 2009.
(c) This
Agreement and the transactions contemplated herein may be terminated and
abandoned at any time on or prior to the Closing Date by the Company
Stockholders, if any of the following shall have occurred (each, an
“Algatec
Termination Event”):
(i) any
representation or warranty made herein by STF for the benefit of the Company
Stockholders, or any certificate, schedule or document furnished by STF to
the
Company Stockholders pursuant to this Agreement shall be untrue or incorrect
in
any material respect and the cause for such incorrectness is either not possible
to be cured or has not been cured within 20 Business Days from the Parties
becoming aware of such incorrectness; or
(ii) STF
or
any of their Affiliates shall have defaulted in any material respect in the
performance of any material obligation under this Agreement on their part to
be
performed and such default is either not possible to be cured or has not been
cured within 20 Business Days from the date STF shall have received notice
of
default from Algatec or the Company Stockholders; or
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(iii) STF
shall
be subject to a Material Adverse Effect
(iv) in
the
event (and only in the event) that STF shall be required by the rules of any
stock exchange, or otherwise, to call a meeting of STF stockholders (the
“STF
Stockholders Meeting”)
to
approve and ratify this Agreement and the transactions contemplated hereby,
or
elect to call such STF Stockholders Meeting, the Board of Directors of STF
shall
have (A) failed to make the STF Recommendation, (B) withdrawn the STF
Recommendation, or (C) modified the STF Recommendation in a manner adverse
to
the Company Stockholders; or
(v) the
Algatec Financing shall not be consummated by March 31, 2009.
ARTICLE
IV. REPRESENTATIONS
AND WARRANTIES OF THE COMPANY STOCKHOLDERS
Subject
to the limitations, qualifications and disclosures set forth in this Agreement
and its Exhibits and Schedules, and the disclosures set forth in the Share
Purchase Agreement and its Exhibits and Schedules and the disclosures in the
Due
Diligence Information, each of AEP, the Trustee and each of the Management
Stockholders severally (not jointly and severally) represents and warrants
to
STF that the following statements and representations are true and correct
as of
the Signing Date and on the Closing Date, unless such statement expressly
indicates that it is or shall be limited in time or made as of only one or
the
other of the Signing Date or Closing Date, in which case, such statement and
representation shall be true and correct only as to the date it was
made.
For
the
purposes of this Agreement, “to the knowledge of the Management Stockholders”
means the actual knowledge (positive
Kenntnis)
of any
one or more of the Management Stockholders.
4A. By
AEP. AEP
represents and warrants to STF, the Trustee and the Management Stockholders
only
as to the following and makes no other representations or warranties
hereunder.
a. AEP
is
the record owner of forty-nine (49%) percent of the Share Capital of the
Company.
b. The
General Partner of AEP has been expressly authorized and directed by each of
the
Limited Partners of AEP to sell and exchange forty-nine (49%) percent of the
Share Capital of the Company to STF for twenty-four thousand five hundred
(24,500) shares of the STF Series B-5 Preferred Stock, as contemplated
hereby.
c. This
Agreement has been duly executed and delivered by AEP. This Agreement
constitutes a legal, valid and binding obligation of AEP enforceable in
accordance with its terms.
4B. By
the Trustee. The
Trustee represents and warrants to STF, AEP and the Management Stockholders
only
as to the following and makes no other representations and warranties
hereunder.
a. The
Trustee is the legal owner of the Company Shares set out next to the Trustee’s
name in Recital C.
b: The
Trustee is holding the Company Shares held by him for the sole benefit of Ruscke
and/or other Management Stockholders in accordance with trust agreements.
c. This
Agreement has been duly executed and delivered by the Trustee. This Agreement
constitutes a legal, valid and binding obligation of the Trustee enforceable
in
accordance with its terms.
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4C. By
the Management Stockholders.
4.1 Ownership
of the Sold Shares.
Each
Management Stockholder, upon consummation of the Second Closing (as defined
under the Share Purchase Agreement) is the legal owner of all Company Shares
set
out next to such Management Shareholder’s name in Recital C. The Company Shares
to be transferred by the Management Stockholders and the Trustee to STF on
the
Closing Date will be transferred to STF free and clear of any of any Lien.
4.2 Organization
and Qualification.
The
Company is a corporation and Solar Invest is a limited liability company,
validly existing under the laws of Germany, with full power and authority
(corporate and other) to own, lease, use and operate its properties and to
carry
on its business as and where now owned, leased, used, operated and conducted.
The Company and Solar Invest are each duly qualified as a foreign
corporation/limited liability company to do business and in good standing in
every jurisdiction in which their ownership or use of property or the nature
of
the business conducted by them makes such qualification necessary except where
the failure to be so qualified or in good standing would not have a Material
Adverse Effect.
4.3 Subsidiaries.
The
Company has no Subsidiaries except, as of the Second Closing Date (as defined
under the Share Purchase Agreement), for Solar Invest. Solar Invest will be,
as
of the Second Closing Date (as defined under the Share Purchase Agreement),
a
wholly-owned subsidiary of Algatec. The shares held by Algatec in Solar Invest
as of the Second Closing Date (as defined under the Share Purchase Agreement)
will be owned free and clear of any Liens.
4.4 Authorization;
Enforcement.
The
Management Stockholders, the Trustee and the Company have all requisite
corporate (or other) power and authority, to enter into and perform and/or
deliver this Agreement and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement by Algatec and the consummation
of
the transactions contemplated hereby have been duly authorized by the Algatec
Management Board and by all of the Management Stockholders. This Agreement
has
been duly executed and delivered by each of the Trustee, Algatec and each of
the
Management Stockholders. This Agreement constitutes, a legal, valid and binding
obligation of the Trustee, the Management Stockholders and Algatec enforceable
against each of them in accordance with their terms.
4.5 Issuance
of Company Shares.
The
Company Shares are duly authorized, validly issued, fully paid and
non-assessable, and free from all Liens and are not subject to preemptive rights
or other similar rights of shareholders of the Company and will not impose
personal liability upon the holder thereof.
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4.6 No
Conflicts.
The
execution, delivery and performance of this Agreement by those of the Trustee,
the Management Stockholders and Company and the consummation of the transactions
contemplated hereby will not (i) conflict with or result in a violation of
any
provision of the Company Articles of Association, or (ii), to the knowledge
of
the Management Stockholders, violate or conflict with, or result in a breach
of
any provision of, or constitute a default (or an event which with notice or
lapse of time or both could become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation of, any agreement
or instrument to which the Company, Trend Capital KG or Solar Invest is a Party
or is otherwise bound or is a beneficiary, or (iii) to the knowledge of the
Management Stockholders, result in a violation of any law, rule, regulation,
order, judgment or decree (including federal, state and foreign securities
laws
and regulations and regulations of any self-regulatory organizations to which
Company, Trend Capital KG or Solar Invest or their its securities are subject)
applicable to Company, Trend Capital KG or Solar Invest or by which any property
or asset of any of Company, Trend Capital KG or Solar Invest is bound or
affected (except for such conflicts, defaults, terminations, amendments,
accelerations, cancellations and violations as would not, individually or in
the
aggregate, have a Material Adverse Effect). None of Company, Trend Capital
KG or
Solar Invest is in violation of its articles of association and, to the
knowledge of the Management Stockholders, none of them is in default (and no
event has occurred which with notice or lapse of time or both could put the
any
of them in default) under, and, to the knowledge of the Management Stockholders,
none of Company, Trend Capital KG and Solar Invest have taken any action or
failed to take any action that would give to others any rights of termination,
amendment, acceleration or cancellation of, any agreement, indenture or
instrument to which any of them is a Party or by which any property or assets
of
any of them is bound or affected, except for possible defaults as would not,
individually or in the aggregate, have a Material Adverse Effect. To the
knowledge of the Management Stockholders, the businesses of Company, Trend
Capital KG and Solar Invest are not being conducted in violation of any law,
ordinance or regulation of any governmental entity material to the business
of
such entity, except where violation thereof would not reasonably be expected
to
have a Material Adverse Effect. Except as specifically contemplated by this
Agreement and as required under any applicable laws of the Federal Republic
of
Germany, none of the Trustee, the Management Stockholders, Company or Solar
Invest is required to obtain any consent, authorization or order of, or make
any
filing or registration with, any court, governmental agency, regulatory agency,
self regulatory organization or stock market, in order for the execution,
delivery or performance of any of its obligations under this Agreement in
accordance with the terms hereof.
4.7 Accuracy
of Recital Representations and Warranties. As
of the
Signing Date (subject to the transactions contemplated in the Share Purchase
Agreement), the statements in the Recitals under paragraphs A and C through
G
are true and correct.
4.8 Financial
Information.
Prior to
the Signing Date, STF has been furnished with (i) the balance sheets and
statements of operations of (y) Trend Capital KG as at December 31, 2006, and
December 31, 2007, and (z) Solar Invest as at December 31, 2006, and for the
respective fiscal years then ended (the “Audited
Financial Statements”)
and
(ii) (y) an interim balance sheet and statements of operations of Trend Capital
KG (the headings of which erroneously refer to Algatec) as at June 30, 2008
and
for the six month period then ended and (z) earnings statements (betriebswirtschaftliche
Auswertungen)
of
Solar Invest and Trend Capital KG as at September 30, 2008, and for the nine
month period then ended (the “Unaudited
Financial Statements”
and
together with the Audited Financial Statements, the “Financial
Statements”)
which
are attached hereto as Exhibit
4.8 The
Audited Financial Statements and, to the knowledge of the Management
Stockholders, the Unaudited Financial Statements fairly represent in all
material respects the financial position of the respective entity as at such
dates and the results of its operations for the periods then ended. The Audited
Financial Statements and, to the knowledge of the Management Stockholders,
the
Unaudited Financial Statements were prepared in all material respects, in
accordance with German GAAP applied on a consistent basis with prior periods,
except that the Unaudited Financial Statements may not include all notes
normally included under such generally accepted accounting principles. To the
knowledge of the Management Stockholders, the
books
of account and other financial records of the Company,
Solar
Invest and Trend Capital KG are
complete and correct in all material respects and are maintained in accordance
with good business and accounting practices.
4.9 Absence
of Certain Changes.
Since
September 30, 2008 and unless otherwise disclosed by the Management Stockholders
to STF prior to the Closing Date, there has been no material adverse change
and
no
material adverse development in the assets, liabilities, business, properties,
operations, financial condition, results of operations or prospects of the
Algatec Group, when taken as a consolidated whole, provided, however, that
none
of the following shall be deemed a material adverse change: (i) events or
changes in general economic conditions and in particular the development of
the
financial and credit markets, (ii) events or changes generally affecting
companies in the industries in which the Algatec Group operates, (iii) changes
in legislation and the regulatory environment, and (iv) developments, changes
or
disruptions attributable (wholly or in part) to the announcement of this
Agreement or the transactions contemplated hereby or to any action by AEP or
STF.
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4.10 Absence
of Litigation.
Except
as set forth in Exhibit
4.10,
unless
otherwise disclosed by the Management Stockholders prior to the Second Closing
Date there is no action, suit, claim, proceeding, inquiry or investigation
before or by any Government Agency, self-regulatory organization or body pending
or, to the knowledge of the Management Stockholders, threatened against or
affecting any of the Company, Solar Invest or Trend Capital KG, or affecting
their respective officers or directors in their capacity as such, that is
reasonably to be expected to result in a Material Adverse Effect. None of the
Management Stockholders has knowledge of any facts or circumstances which would
reasonably be expected to give rise to any of the foregoing.
4.11 Patents,
Copyrights, Trademarks.
The
Algatec Group, when taken as a consolidated whole, owns or possesses the
requisite licenses or rights to use all material patents, patent applications,
patent rights, inventions, know-how, trade secrets, trademarks, trademark
applications, service marks, service names, trade names and copyrights
(“Intellectual
Property”)
necessary to enable it to conduct its business as now operated in all material
respects; there is, as of the Signing Date, no claim or action by any Person
pertaining to, or proceeding pending, or to the knowledge of any of the
Management Stockholders threatened, which challenges the right of the Algatec
Group with respect to any Intellectual Property necessary to enable it to
conduct its business as now operated (and, to the knowledge of the Management
Stockholders, as presently contemplated to be operated in the future); to the
knowledge of the Management Stockholders, neither the current and intended
products, services and processes of the Algatec Group infringe on any
Intellectual Property or other rights held by any Person; and none of the
Company Stockholders has knowledge of any facts or circumstances which might
give rise to any of the foregoing.
4.12 Tax
Status.
Each of
the Company, Solar Invest and Trend Capital KG have made or filed all federal,
state and foreign income and all other tax returns, reports and declarations
required by any jurisdiction to which it is subject when due and has paid all
taxes and other governmental assessments and charges that are material in
amount, shown or determined to be due on such returns, reports and declarations,
when due, except those being contested in good faith and has set aside on its
Financial Statements provisions reasonably adequate for the payment of all
taxes
for periods subsequent to the periods to which such returns, reports or
declarations apply. There are no unpaid taxes in any material amount claimed
to
be due by the taxing authority of any jurisdiction. None of the Algatec Group
have executed a waiver with respect to the statute of limitations relating
to
the assessment or collection of any tax. None of the Corporation’s tax returns
is presently being audited by any taxing authority.
4.13 Permits;
Compliance.
Each of
the Company, Solar Invest and Trend Capital KG are in possession of all
franchises, grants, authorizations, licenses, permits, consents, certificates,
approvals and orders necessary to own, lease and operate its properties and
to
carry on its business as it is now being conducted (collectively, the
“Permits”),
except where the absence of a Permit would not reasonably be expected to result
in a Material Adverse Effect, and there is, as of the Signing Date, no action
pending or, to the knowledge of the Management Stockholders, threatened
regarding suspension or cancellation of any of the Permits, except where such
suspension or cancellation would not reasonably be expected to result in a
Material Adverse Effect. To the knowledge of the Company Stockholders, none
of
the Company, Solar Invest and Trend Capital KG is in material conflict with,
or
in material default or violation of, any of the Permits, except for any such
conflicts, defaults or violations which, individually or in the aggregate,
would
not reasonably be expected to have a Material Adverse Effect. Since September
30, 2008, none of the Company, Solar Invest and Trend Capital KG have received
any notification with respect to possible violations of applicable laws, except
for notices relating to possible violations, which would not reasonably be
expected to have a Material Adverse Effect.
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4.14 Environmental
Matters.
To the
knowledge of the Management Stockholders, there are, with respect to the
Company, Solar Invest and Trend Capital KG, no past or present violations of
Environmental Laws (as defined below), releases of any material into the
environment, actions, activities, circumstances, conditions, events, incidents,
or contractual obligations which may give rise to any liability under any
Environmental Laws of Germany or of other countries in which the Company, Solar
Invest and Trend Capital KG conduct business, and none of them has received
any
notice with respect to any of the foregoing, nor is, as of the Signing Date,
any
action pending or, to the knowledge of the Management Stockholders, threatened
in connection with any of the foregoing. The term “Environmental
Laws”
means
all laws relating to pollution or protection of human health or the environment
(including, without limitation, ambient air, surface water, groundwater, land
surface or subsurface strata), including, without limitation, laws relating
to
emissions, discharges, releases or threatened releases of chemicals, pollutants
contaminants, or toxic or hazardous substances or wastes (collectively,
“Hazardous
Materials”)
into
the environment, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Materials, as well as all authorizations, codes, decrees, demands
or
demand letters, injunctions, judgments, licenses, notices or notice letters,
orders, permits, plans or regulations issued, entered, promulgated or approved
thereunder. Other than those that are or were stored, used or disposed of in
compliance with applicable law, to the knowledge of the Management Stockholders,
no Hazardous Materials are contained on or about any real property currently
owned, leased or used by any of the Algatec Group, and no Hazardous Materials
were released on or about any real property previously owned, leased or used
the
Company, Solar Invest and Trend Capital KG during the period the property was
owned, leased or used by such entity, except in the normal course of their
businesses. There are no underground storage tanks on or under any real property
owned, leased or used by the Company, Solar Invest and Trend Capital KG that
are
not in compliance with applicable law.
4.15 Title
to Property.
The
Algatec Group, when taken as a consolidated whole, has good and marketable
title
to all real property
or holds
under valid leases or other rights to use all real property, plants, machinery
and equipment necessary for the conduct of its business as presently
conducted,
and has
good and marketable title to all personal property owned by it which is material
to its business, in each case free and clear of all Liens and defects except
such as would not have a Material Adverse Effect. Any real property and
facilities held under lease by the Company, Solar Invest or Trend Capital KG
are
held by them under valid, subsisting and enforceable leases with such exceptions
as would not have a Material Adverse Effect.
4.16 Insurance.
The
Company, Solar Invest or Trend Capital KG are insured by insurers of recognized
financial responsibility against such losses and risks, including casualty
and
liability insurance, and in such amounts as the Company Stockholders believe
to
be prudent and customary in the Algatec Business. None of the Company
Stockholders have any reason to believe that the Algatec Group will not be
able
to renew its existing insurance coverage as and when such coverage expires
or to
obtain similar coverage from similar insurers as may be necessary to continue
such businesses at a cost that would not have a Material Adverse
Effect.
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4.17 Material
Contracts.
The
Company has furnished to STF or its representatives true and complete copies
of
all of the material contracts, agreements and purchase orders to which the
Company, Solar Invest or Trend Capital KG is a party as of the Signing Date
(except for such contracts which are verbal contracts), all of which are listed
on Schedule
4.17
hereto
(collectively, the “Algatec
Material Contracts”).
Unless otherwise disclosed by the Management Stockholders prior to the Closing
Date, all such Algatec Material Contracts, including without limitation, the
Q-Cells Agreement and the Komax Purchase Order, are in full force and effect
and
no event has occurred, which with the passage of time, the giving of notice
or
both, would constitute a default or event of default by the Company, Solar
Invest or Trend Capital KG thereunder, or to the knowledge of the Management
Stockholders, the other parties thereto. None of the Management Stockholders
has
been advised (orally or in writing) or has any reason to believe that Q-Cells
Solar AG will not renew the Q-Cells Agreement for the calendar year ending
December 31, 2010.
4.18 Product
Warranties.
Except
as
would not reasonably be expected to result in a Material Adverse Effect, since
September 30, 2008 no claims have been alleged or to the knowledge of the
Management Stockholder threatened under or pursuant to any warranty, whether
express or implied, on products or services sold by the Company. Except as
would
not reasonably be expected to result in a Material Adverse Effect, since
September 30, 2008 no claims have been alleged and to the knowledge of the
Management Stockholders there is no basis for any claim against the Company
for
injury to persons, animals or property as a result of the sale, distribution
or
manufacture of any product or performance of any service by the Company,
including, but not limited to, claims arising out of the defective or unsafe
nature of its products or services.
4.19 Transactions
With Affiliates.
Except
as set forth on Schedule
4.19
and
except for normal advances to employees consistent with past practices, payment
of compensation for employment to employees, and participation in scheduled
pension or related benefit plans or programs by employees, the Algatec Group
is
not engaged in any significant transaction with any of the Management
Stockholders of their Affiliates. Except as set forth on Schedule
4.19,
neither
the Management Stockholders, nor any of their Affiliates is indebted to the
Algatec Group for money borrowed or other loans or advances, and the Algatec
Group is not indebted to any such Affiliate.
4.20 Budgets
and Forecasts.
Although
the Management Stockholders (while not making any representation or warranty
in
this respect) believe that the budgets and forecasts submitted to STF with
respect to potential revenues and earnings for fiscal 2008, 2009 and 2010 are
reasonable and achievable (subject to consummation of the Algatec Financing
by
the end of 0000), XXX recognizes that budgets and forecasts are subject to
changes or adverse events affecting the Algatec Business, some of which may
be
beyond the control of Algatec and the Management Stockholders. Accordingly,
subject only to the representations warranties, covenants and indemnities of
the
Management Stockholders expressly contained in this Agreement, STF confirms
that
in deciding on the acquisition of the Company Shares in exchange for the
Exchange Shares it has not relied on nor will it make any claim against the
Management Stockholders the Trustee, Algatec, Solar Invest or Trend Capital
KG
or any other person in respect of (i) any budget, forecast, estimate or other
projection of any nature (in particular of projections of future revenues,
future results of operations, future cash flows, future financial condition
or
the future business operations (or any underlying components thereof), or (ii)
any other information with respect to the Algatec Business (in particular the
Due Diligence Information) made available to the Partnership or its advisers
prior to the Signing Date.
ARTICLE
V. REPRESENTATIONS
AND WARRANTIES OF STF
For
the
purposes of this Agreement, “to the knowledge of STF” means the actual knowledge
(positive
Kenntnis),
of any
one or more of the Chief Executive Officer, Chairman and Chief Financial Officer
of STF. STF hereby represents and warrants to the Company and the Company
Stockholders that:
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5.1 Corporate
Existence and Qualification.
STF is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware. STF has the corporate power to own, manage,
lease
and hold its Properties and to carry on its business as and where such
Properties are presently located and such business is presently conducted;
and
STF is qualified to do business as a foreign corporation and in good standing
in
each jurisdiction in which it is required by law to be so qualified or in good
standing.
5.2 Authority,
Approval and Enforceability.
This
Agreement has been duly executed and delivered by STF, and each of STF have
all
requisite power and legal capacity to execute and deliver this Agreement and
all
Exhibits executed and delivered or to be executed and delivered in connection
with the transactions provided for hereby, to consummate the transactions
contemplated hereby and by the Exhibits, and to perform their obligations
hereunder and under the Exhibits. This Agreement and each Exhibit to which
STF
is a Party constitutes, or upon execution and delivery will constitute, the
legal, valid and binding obligation of STF, enforceable in accordance with
its
terms, except as such enforcement may be limited by general equitable principles
or by applicable bankruptcy, insolvency, moratorium, or similar laws and
judicial decisions from time to time in effect which affect creditors’ rights
generally.
5.3 No
Conflicts.
The
execution, delivery and performance of this Agreement by STF and the
consummation of the transactions contemplated hereby and thereby will not (i)
conflict with or result in a violation of any provision of the organizational
documents of STF, or (ii), to the knowledge of the STF, violate or conflict
with, or result in a breach of any provision of, or constitute a default (or
an
event which with notice or lapse of time or both could become a default) under,
or give to others any rights of termination, amendment, acceleration or
cancellation of, any agreement or instrument to which STF or its Subsidiaries
is
a Party or is otherwise bound or is a beneficiary, or (iii) result in a
violation of any law, rule, regulation, order, judgment or decree (including
federal, state and foreign securities laws and regulations and regulations
of
any self-regulatory organizations to which the STF or its Subsidiaries or their
securities are subject) applicable to STF or its Subsidiaries or by which any
property or asset of any of STF or its Subsidiaries is bound or affected (except
for such conflicts, defaults, terminations, amendments, accelerations,
cancellations and violations as would not, individually or in the aggregate,
have a Material Adverse Effect). None of STF or its Subsidiaries is in violation
of its articles of association and, to the knowledge of STF, none of them is
in
default (and no event has occurred which with notice or lapse of time or both
could put the any of them in default) under, and, to the knowledge of STF,
none
of STF and its Subsidiaries have taken any action or failed to take any action
that would give to others any rights of termination, amendment, acceleration
or
cancellation of, any Contract to which any of them is a party or by which any
property or assets of any of them is bound or affected, except for possible
defaults as would not, individually or in the aggregate, have a Material Adverse
Effect. To the knowledge of STF, the business of STF and its Subsidiaries is
not
being conducted in violation of any law, ordinance or regulation of any
governmental entity material to the business of such entity, except where
violation thereof would not reasonably be expected to have a Material Adverse
Effect. Except as specifically contemplated by this Agreement and as required
under any applicable laws (and disclosed on Schedule
5.3
hereto),
STF is not required to obtain any consent, authorization or order of, or make
any filing or registration with, any Governmental Agency, self regulatory
organization or stock market, in order for the execution, delivery or
performance of any of its obligations under this Agreement in accordance with
the terms hereof or thereof.
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5.4 The
STF Shares and Corporate Records.
(a) The
authorized, issued and outstanding shares of capital stock of STF are set forth
in paragraph H of the Recitals hereto. The STF Shares are free and clear of
all
Liens. Except as set forth in paragraph H of the Recitals hereto, there are
no
shares of capital stock or other equity securities of STF authorized, issued
or
outstanding. No shares of common stock or other capital shares or equity
securities are held in STF’s treasury.
(b) All
of
the outstanding STF Shares are duly authorized, validly issued, fully paid
and
non-assessable and were not issued in violation of any: (i) preemptive or other
rights of any Person to acquire securities of STF, or (ii) applicable United
States securities laws. Except as set forth in the STF Public Filings, there
are
no outstanding subscriptions, options, convertible securities, rights
(preemptive or otherwise), warrants, calls or agreements relating to any of
the
STF Shares or other shares of capital stock or other securities of STF. The
Exchange Shares and the STF Conversion Shares to be issued pursuant to this
Agreement and the Certificate of Designations will be duly authorized, validly
issued, fully paid and non-assessable and will not be subject to preemptive
rights created by statute, STF’s organizational documents or any agreement to
which STF is a party or by which it is bound and will be free and clear of
all
Liens other than those arising from acts of the Company Stockholders.
(c) The
copies of the Certificate of Incorporation and Bylaws of STF provided to the
Company Stockholders are true, accurate, and complete and reflect all amendments
made through the Signing Date. STF’s stock and minute books made available to
the Company Stockholders for review were correct and complete as of the date
of
such review, no further entries have been made through the date of this
Agreement, and such minute books contain an accurate record of all shareholder
and corporate actions of the shareholders and directors (and any committees
thereof) of STF taken by written consent or at a meeting since inception. All
corporate actions taken by STF have been duly authorized or ratified. All
accounts, books, ledgers and official and other records of STF fairly and
accurately reflect all of STF’s transactions, Properties, assets and
liabilities.
(d) STF
does
not own, directly or indirectly, any outstanding voting securities of or other
interests in any other Person.
(e) Other
than (i) the outstanding Common Stock and the STF Series B Preferred Stock,
as
set forth in paragraph H of the Recitals hereto, (ii) outstanding warrants
to
purchase up to 12,000,000 shares of Common Stock at exercise prices ranging
from
$2.20 to $3.30 per share, (iii) such other securities issued and outstanding
as
disclosed on STF’s Form 10-Q Quarterly Report for the fiscal quarter ended June
30, 2008 (a true and complete copy of which has been furnished to the Management
Stockholders), and (iv) as set forth on Schedule
5.4
hereto,
(A) there are no securities outstanding which give the holder or any other
Person a right to convert such security into, or otherwise receive STF Common
Stock Shares; and (B) STF is not a party to any Contract under which any Person
has a right to receive STF Common Stock.
5.5 No
Defaults.
Except
as otherwise set forth in the STF Public Filings or on Schedule
5.5
hereto,
STF nor any of its Subsidiaries are in violation of any provision of law or
any
judgment, award or decree or any indenture, agreement or other instrument to
which STFand/or any of its Subsidiaries is a Party, or by which the properties
or assets of STF or any of its Subsidiaries are bound or affected, or in
conflict with, or breach of or default under, any such indenture, agreement
or
other instrument, in each case except to the extent that such violation, default
or breach would not reasonably be expected to delay or otherwise significantly
impair the ability of the Parties to consummate the transactions contemplated
hereby.
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5.6 No
Defaults or Consents.
Except
as otherwise set forth in the STF Public Filings or on Schedule
5.6
attached
hereto, neither the execution and delivery of this Agreement or the Exhibits
by
STF nor the carrying out of any of the transactions contemplated hereby or
thereby by STF will, to the knowledge of STF:
(i) violate
or conflict with any of the terms, conditions or provisions of the
organizational documents of STF;
(ii) violate
any Legal Requirements applicable to STF;
(iii) violate,
conflict with, result in a breach of, constitute a default under (whether with
or without notice or the lapse of time or both), or accelerate or permit the
acceleration of the performance required by, or give any other Party the right
to terminate, any Contract or Permit binding upon or applicable to
STF;
(iv) result
in
the creation of any Lien on any Properties of STF; or
(v) require
either of STF to obtain or make any waiver, consent, action, approval or
authorization of, or registration, declaration, notice or filing with, any
private non-governmental third Party or any Governmental Authority.
5.7 No
Proceedings.
Except
as set forth in STF’s Public Filings, no suit, action or other proceeding is
pending or, to the knowledge of STF, threatened by or before any Governmental
Authority (i) that would be material to the business of STF, or (ii) seeking
to
restrain STF or prohibit their entry into this Agreement or prohibit the
Closing, or seeking damages against STF or its Properties as a result of the
consummation of this Agreement.
5.8 Financial
Statements; Liabilities; Accounts Receivable;
Inventories.
(a) Prior
to
the Signing Date, pursuant to the STF Public Filings, the Company Stockholders
have been furnished with the balance sheets and statements of operations of
STF
as at December 31, 2006 and December 31, 2007 and for the respective fiscal
year
then ended (the “STF
Audited Financial Statements”)
and
balance sheets and statements of operations of STF as at June 30, 2008, and
for
the six month period then ended (the “STF
Unaudited Financial Statements”
and
together with the STF Audited Financial Statements,” the “STF
Financial Statements”);
all
of which are set forth in the STF Public Filings. The
STF
Financial Statements fairly represent in all material respects the financial
position of the respective entity as at such dates and the results of its
operations for the periods then ended. The
STF
Financial Statements were prepared in all material respects, in accordance
with
United
States generally accepted accounting principles (“GAAP”)
applied on a consistent basis throughout the periods indicated (except as may
be
indicated in the notes thereto), each presented, or will present, fairly the
consolidated financial position, results of operations and cash flows of STF
and
the consolidated subsidiaries of STF as of the respective dates thereof and
for
the respective periods indicated therein (subject, in the case of unaudited
statements, to normal year-end adjustments which are not material in amount
or
kind) and each complied, or will comply, as to form in all material respects
with applicable accounting requirements and the published rules and regulations
of the SEC with respect thereto. Except to the extent set forth in the STF
Public Filings, no report of auditors in such STF Public Filings has been
withdrawn or modified.
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(b) Since
January 1, 2005, STF has duly and timely filed with or furnished to the U.S.
Securities and Exchange Commission (the “SEC”)
all
STF Public Filings. Except as disclosed therein, each of the STF Public Filings,
at the time of its filing or furnishing and, to the extent applicable, its
effective date or, in the case of a proxy or information statement, its mailing
date, complied in all material respects, and each STF Public Filing to be filed
or furnished after the date hereof, shall comply in all material respects with
the requirements of the 33 Act, the 34 Act and the Xxxxxxxx-Xxxxx Act of 2002
and the rules and regulations of the SEC promulgated thereunder and other
federal, state and local laws, rules and regulations applicable to such
documents, and did not, at the time filed or furnished, and, to the extent
applicable, its effective date or, in the case of a proxy or information
statement, its mailing date, and will not, if filed or furnished subsequent
to
the date hereof, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order
to
make the statements therein, in light of the circumstances under which they
were
made, not misleading. As of the date hereof, there are no outstanding or
unresolved comments in the comment letters received from the staff of the SEC
with respect to the STF Public Filings. None of STF’s subsidiaries is required
to file periodic reports with the SEC pursuant to the 34 Act.
(c) STF
and
its subsidiaries have implemented and maintain a system of internal accounting
controls sufficient to provide reasonable assurances regarding the reliability
of financial reporting and the preparation of financial statements in accordance
with GAAP. STF (i) has implemented and maintains disclosure controls and
procedures (as defined in Rule 13a-15(e) of the 34 Act) to ensure that material
information relating to STF, including its consolidated subsidiaries, is made
known to the Chief Executive Officer and the Chief Financial Officer of STF
by
others within those entities, and (ii) has disclosed, based on its most recent
evaluation prior to the date of this Agreement, to STF’s outside auditors and
the audit committee of STF’s Board of Directors (A) any significant deficiencies
and material weaknesses in the design or operation of internal controls over
financial reporting (as defined in Rule 13a-15(f) of the 34 Act) that would
be
reasonably likely to materially and adversely affect STF’s ability to record,
process, summarize and report financial information and (B) any fraud, whether
or not material, that involves management or other employees who have a
significant role in STF’s internal controls over financial reporting. A true,
correct and complete summary of any such disclosures made by management to
STF’s
auditors and audit committee have been made available to the Company
Stockholders.
(d) Except
for (i) trade payables and accrued expenses incurred in the ordinary course
of
business, none of which are material, (ii) executory contract obligations under
Contracts listed on Schedule
5.12,
and
(iii) the liabilities set forth in the STF Public Filings or on Schedule
5.8,
STF
does not have any liabilities or obligations (whether accrued, absolute,
contingent, known or otherwise, and whether or not of a nature required to
be
reflected or reserved against in a balance sheet in accordance with GAAP).
(e) Except
as
otherwise set forth in the STF Public Filings or on Schedule
5.8,
the
accounts receivable reflected on the September 30, 2008 balance sheet included
in the STF Financial Statements referenced in Section 5.8(b) and all of STF’s
accounts receivable arising since June 30, 2008 (the “Balance
Sheet Date”)
arose
from bona fide transactions in the ordinary course of business, and the goods
and services involved have been sold, delivered and performed to the account
obligors, and no further filings (with governmental agencies, insurers or
others) are required to be made, no further goods are required to be provided
and no further services are required to be rendered in order to complete the
sales and fully render the services and to entitle STF to collect the accounts
receivable in full. Except as set forth in the STF Public Filings or on
Schedule
5.8,
no such
account has been assigned or pledged to any other Person, and no defense or
set-off to any such account has been asserted by the account obligor or exists.
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(f) Except
as
otherwise set forth in the STF Public Filings or on Schedule
5.8,
the
Inventory of STF as of the Signing Date consists and as of the Closing Date
consists of items of a quality, condition and quantity consistent with normal
seasonally-adjusted Inventory levels of STF are and shall be usable and saleable
in the ordinary and usual course of business for the purposes for which
intended. Except as otherwise set forth in the STF Public Filings or on
Schedule
5.8,
STF’s
Inventory is valued on STF’s books of account in accordance with GAAP (on an
average cost basis) at the lower of cost or market, and the value of obsolete
materials, materials below standard quality and slow-moving materials have
been
written down in accordance with GAAP.
(g) Except
as
provided under the provisions of the agreements described in the STF Public
Filings or on Schedule
5.8,
STF has
and will have as of the Closing Date legal and beneficial ownership of its
Properties, free and clear of any and all Liens and such Properties are
sufficient for STF to conduct its business.
5.9 Absence
of Certain Changes.
(a) Except
as
otherwise set forth in the STF Public Filings or on Schedule
5.9(a)
attached
hereto, since the Balance Sheet Date, to the knowledge of STF, there has not
been:
(i) any
event, circumstance or change that had or might have a material adverse effect
on the business, operations, prospects, Properties, financial condition or
working capital of STF;
(ii) any
damage, destruction or loss (whether or not covered by insurance) that had
or
might have a material adverse effect on the business, operations, prospects,
Properties or financial condition of STF; or
(iii) any
material adverse change in STF’s sales patterns, pricing policies, accounts
receivable or accounts payable.
(b) Except
as
otherwise set forth in Schedule
5.9(b)
attached
hereto, since the Balance Sheet Date, STF has not done any of the
following:
(i) merged
into or with or consolidated with, any other Person or acquired the business
or
assets of any Person;
(ii) purchased
any securities of any Person;
(iii) created,
incurred, assumed, guaranteed or otherwise become liable or obligated with
respect to any indebtedness, or made any loan or advance to, or any investment
in, any Person, except in each case in the ordinary course of
business;
(iv) made
any
change in any existing election, or made any new election, with respect to
any
tax law in any jurisdiction which election could have an effect on the tax
treatment of STF or STF’s business operations;
(v) entered
into, amended or terminated any material agreement;
(vi) sold,
transferred, leased, mortgaged, encumbered or otherwise disposed of, or agreed
to sell, transfer, lease, mortgage, encumber or otherwise dispose of, any
Properties except (i) in the ordinary course of business, or (ii) pursuant
to
any agreement specified in the STF Public Filings or on Schedule
5.9(b)(vi);
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17
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(vii) settled
any claim or litigation, or filed any motions, orders, briefs or settlement
agreements in any proceeding before any Governmental Authority or any
arbitrator;
(viii) incurred
or approved, or entered into any agreement or commitment to make, any
expenditures in excess of $5,000 (other than those arising in the ordinary
course of business or those required pursuant to any agreement specified in
the
STF Public Filings or on Schedule
5.9(b)(viii);
(ix) maintained
its books of account other than in the usual, regular and ordinary manner in
accordance with GAAP and on a basis consistent with prior periods or made any
change in any of its accounting methods or practices that would be required
to
be disclosed under GAAP;
(x) adopted
any Benefit Program, or granted any increase in the compensation payable or
to
become payable to directors, officers or employees (including, without
limitation, any such increase pursuant to any bonus, profit-sharing or other
plan or commitment), other than merit increases to non-officer employees in
the
ordinary course of business and consistent with past practice;
(xi) suffered
any extraordinary losses or waived any rights of material value;
(xii) made
any
payment to any Affiliate or forgiven any indebtedness due or owing from any
Affiliate to STF;
(xiii) (A)
liquidated Inventory or accepted product returns other than in the ordinary
course, (B) accelerated receivables, (C) delayed payables, or (D) changed in
any
material respect STF’s practices in connection with the payment of payables
and/or the collection of receivables;
(xiv) engaged
in any one or more activities or transactions with an Affiliate or outside
the
ordinary course of business;
(xv) declared,
set aside or paid any dividends, or made any distributions or other payments
in
respect of its equity securities, or repurchased, redeemed or otherwise acquired
any such securities;
(xvi) amended
its charter or bylaws;
(xvii) issued
any capital stock or other securities, or granted, or entered into any agreement
to grant, any options, convertible rights, other rights, warrants, calls or
agreements relating to its capital stock; or
(xviii) committed
to do any of the foregoing.
5.10 Insurance.
The
insurance policies taken out by STF are sufficient for compliance by STF with
all applicable Legal Requirements and all material Contracts. None of the
insurance carriers has indicated to STF an intention to cancel any such policy
or to materially increase any insurance premiums (including, without limitation,
workers’ compensation premiums), or that any insurance required to be listed on
Schedule
5.10
will not
be available in the future on substantially the same terms as currently in
effect. STF has no claim pending or anticipated against any of its insurance
carriers under any of such policies and, to the knowledge of STF, there has
been
no actual or alleged occurrence of any kind which could reasonably be expected
to give rise to any such claim. During the prior three years, all notices
required to have been given by STF to any insurance STF have been timely and
duly given, and no insurance STF has asserted that any claim is not covered
by
the applicable policy relating to such claim.
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5.11 Compliance
with Laws.
Except
as otherwise set forth in the STF Public Filings or on Schedule
5.11,
to the
knowledge of STF, it is and has been in compliance in all respects with any
and
all Legal Requirements applicable to STF, other than failures to so comply
that
would not have a Material Adverse Effect. Except as otherwise set forth in
the
STF Public Filings or on Schedule
5.11,
STF (x)
has not received or entered into any citations, complaints, consent orders,
compliance schedules, or other similar enforcement orders or received any
written notice from any Governmental Authority or any other written notice
that
would indicate that there is not currently compliance with all such Legal
Requirements, except for failures to so comply that would not have a Material
Adverse Effect, and (y) is not in default under, and no condition exists
(whether covered by insurance or not) that with or without notice or lapse
of
time or both would constitute a default under, or breach or violation of, any
Legal Requirement or Permit applicable to STF, which default would have a
Material Adverse Effect. Without limiting the generality of the foregoing,
STF
has not received notice of and there is no basis for, any claim, action, suit,
investigation or proceeding that might result in a finding that STF is not
or
has not been in compliance with Legal Requirements relating to (a) the
development, testing, manufacture, packaging, distribution and marketing of
products, (b) employment, safety and health, (c) environmental protection,
building, zoning and land use and/or (d) the Foreign Corrupt Practices Act
and
the rules and regulations promulgated thereunder.
5.12 Litigation.
Except
as otherwise set forth in the STF Public Filings, there are no claims, actions,
suits, investigations or proceedings against STF pending or, to the knowledge
of
STF, threatened in any court or before or by any Governmental Authority, or
before any arbitrator, that might have an adverse effect (whether covered by
insurance or not) on the business, operations, prospects, Properties or
financial condition of STF and/or AEP and there is no basis for any such claim,
action, suit, investigation or proceeding. Schedule
5.12
or such
STF Public Filings also includes a true and correct listing of all material
actions, suits, investigations, claims or proceedings that were pending, settled
or adjudicated during the past three financial years and up to the date of
Closing.
5.13 Real
Property.
(a) The
STF
Public Filings sets forth a list of all real property or any interest therein
(including without limitation any option or other right or obligation to
purchase any real property or any interest therein) currently owned, or ever
owned, by STF, in each case setting forth the street address and legal
description of each property covered thereby (the “Owned
Premises”).
(b) The
STF
Public Filings sets forth a list of all leases, licenses or similar agreements
relating to STF’s use or occupancy of real estate owned by a third Party
(“Leases”).
The
Leases and all guaranties with respect thereto, are in full force and effect
and
have not been amended in writing or otherwise, and no STF is not, and to its
knowledge the other Party is not in default or breach under any such Lease.
No
event has occurred which, with the passage of time or the giving of notice
or
both, would cause a material breach of or default under any of such Leases.
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(c) With
respect to each Owned Premises and Leased Premises, as applicable: (i) STF
has
good, marketable and insurable free simple interest in the Owned Premises and
a
valid leasehold interest in the Leased Premises, free and clear of any Liens,
encumbrances, covenants and easements or title defects that have had or could
have an adverse effect on STF’s use and occupancy of the Owned Premises and the
Leased Premises; (ii) the portions of the buildings located on the Owned
Premises and the Leased Premises that are used in the business of STF are each
in good repair and condition, normal wear and tear excepted, and are in the
aggregate sufficient to satisfy STF’s current and reasonably anticipated normal
business activities as conducted thereon and, to the knowledge of STF, there
is
no latent material defect in the improvements on any Owned Premises, structural
elements thereof, the mechanical systems (including, without limitation, all
heating, ventilating, air conditioning, plumbing, electrical, utility and
sprinkler systems) therein, the utility system servicing each Owned Premises
and
the roofs which have not been disclosed to STF in writing prior to the date
of
this Agreement; (iii) each of the Owned Premises and the Leased Premises (a)
has
direct access to public roads or access to public roads by means of a perpetual
access easement, such access being sufficient to satisfy the current
transportation requirements of the business presently conducted at such parcel;
and (b) is served by all utilities in such quantity and quality as are necessary
and sufficient to satisfy the current normal business activities conducted
at
such parcel; and (iv) STF has not received notice of (a) any condemnation,
eminent domain or similar proceeding affecting any portion of the Owned Premises
or the Leased Premises or any access thereto, and, to the knowledge of STF,
no
such proceedings are contemplated, (b) any special assessment or pending
improvement liens to be made by any governmental authority which may affect
any
of the Owned Premises or the Leased Premises, or (c) any violations of building
codes and/or zoning ordinances or other governmental regulations with respect
to
the Owned Premises or the Leased Premises.
5.14 Material
Contracts.
(a) Except
as
otherwise set forth in the STF Public Filings or on Schedule
5.14,
STF is
not a party to or bound by any of the following, whether written or oral (each
a
“Material
Contract”):
(i) any
Contract that cannot by its terms be terminated by STF with 30 days’ or less
notice without penalty or whose term continues beyond one year after the date
of
this Agreement;
(ii) any
Contract or commitment for capital expenditures by STF in excess of $100,000
per
calendar quarter in the aggregate;
(iii) lease
or
license with respect to any Properties, real or personal, whether as landlord,
tenant, licensor or licensee;
(iv) Contract
or other instrument relating to the borrowing of money or the guarantee of
any
obligation or the deferred payment of the purchase price of any
Properties;
(v) partnership
or joint venture agreement;
(vi) Contract
with any Affiliate of STF (including AEP);
(vii) Contract
for the sale of any assets that in the aggregate have a net book value on STF’s
books of greater than $100,000;
(viii) Contracts
that purports to limit STF’s or its Affiliates’ freedom to compete freely in any
line of business or in any geographic area;
(ix) preferential
purchase right, right of first refusal, or similar agreement; or
(x) other
Contract that is material to the business of STF.
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(b) All
of
the Material Contracts listed or required to be listed in the STF Public Filings
or on Schedule
5.13
are
valid, binding and in full force and effect and are enforceable against the
parties thereto, and STF has not been notified or advised by any party thereto
of such party’s intention or desire to terminate or modify any such Contract in
any respect, except as disclosed in the STF Public Filings or on Schedule
5.14.
Neither
STF nor, to the knowledge of STF, any other party is in breach of any of the
terms or covenants of any Material Contract listed or required to be listed
in
the STF Public Filings or on Schedule
5.14.
Following the Closing, STF will continue to be entitled to all of the benefits
currently held by STF under each Material Contract listed or required to be
listed in the STF Public Filings or on Schedule
5.14.
(c) Except
as
otherwise set forth in the STF Public Filings or on Schedule
5.14(c),
STF is
not a party to or bound by any Material Contract or Contracts the terms of
which
were arrived at by or otherwise reflect less-than-arm’s-length negotiations or
bargaining.
(d) STF
has
made available to each of the Company Stockholders copies of all Material
Contracts.
5.15 Intangible
Rights.
The STF
Public Filings or Schedule
5.15
contains
a list and description of all material foreign and domestic patents, patent
rights, trademarks, service marks, trade names, brands and copyrights (whether
or not registered and, if applicable, including pending applications for
registration) owned, Used, licensed or controlled by STF and all goodwill
associated therewith. STF owns or has the right to use and shall as of the
Closing Date own or have the right to use any and all information, know-how,
trade secrets, patents, copyrights, trademarks, trade names, software, formulae,
methods, processes and other intangible rights that are necessary or customarily
Used by STF for the ownership, management or operation of its Properties
(“Intangible
Rights”)
including, but not limited to, the Intangible Rights listed in the STF Public
Filings or on Schedule
5.15.
Except
as set forth in the STF Public Filings or on Schedule
5.15(i),
to the
knowledge of STF, (i) it is the sole and exclusive owner of all right, title
and
interest in and to all of the Intangible Rights, and has the exclusive right
to
use and license the same, free and clear of any claim or conflict with the
Intangible Rights of others; (ii) no royalties, honorariums or fees are payable
by STF to any person by reason of the ownership or use of any of the Intangible
Rights; (iii) there have been no claims made against STF asserting the
invalidity, abuse, misuse, or unenforceability of any of the Intangible Rights
and no grounds for any such claims exist; (iv) STF has not made any claim of
any
violation or infringement by others of any of its Intangible Rights or interests
therein and, to the knowledge of STF, no grounds for any such claims exist;
(v)
STF has not received any notice that it is in conflict with or infringing upon
the asserted intellectual property rights of others in connection with the
Intangible Rights, and neither the use of the Intangible Rights nor the
operation of STF’s businesses is infringing or has infringed upon any
intellectual property rights of others; (vi) the Intangible Rights are
sufficient and include all intellectual property rights necessary for STF to
lawfully conduct its business as presently being conducted; (vii) no interest
in
any of STF’s Intangible Rights has been assigned, transferred, licensed or
sublicensed by STF to any Person other than the Company; (viii) to the extent
that any item constituting part of the Intangible Rights has been registered
with, filed in or issued by, any Governmental Authority, such registrations,
filings or issuances are listed in the STF Public Filings or on Schedule
5.15
and were
duly made and remain in full force and effect; (ix) to the knowledge of STF,
there has not been any act or failure to act by STF or any of its directors,
officers, employees, attorneys or agents during the prosecution or registration
of, or any other proceeding relating to, any of the Intangible Rights or of
any
other fact which could render invalid or unenforceable, or negate the right
to
issuance of any of the Intangible Rights; (x) to the extent any of the
Intangible Rights constitutes proprietary or confidential information, STF
has
adequately safeguarded such information from disclosure; and (xi) all of STF’s
current Intangible Rights will remain in full force and effect following the
Closing without alteration or impairment.
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5.16 Equipment
and Other Tangible Property.
Except
as otherwise set forth in the STF Public Filings or on Schedule
5.16,
STF’s
equipment, furniture, machinery, vehicles, structures, fixtures and other
tangible property included in the Properties (the “Tangible
STF Properties”),
other
than Inventory, is suitable for the purposes for which intended and in good
operating condition and repair consistent with normal industry standards, except
for ordinary wear and tear, and except for such Tangible STF Properties as
shall
have been taken out of service on a temporary basis for repairs or replacement
consistent with STF’s prior practices and normal industry standards. To the
knowledge of STF, the Tangible STF Properties are free of any structural or
engineering defects, and during the past five years there has not been any
significant interruption of STF’s business due to inadequate maintenance or
obsolescence of the Tangible STF Properties.
5.17 Permits;
Environmental Matters.
To the
knowledge of STF:
(a) Except
as
otherwise set forth in the STF Public Filings or on Schedule
5.17(a),
STF has
all Permits necessary for STF to own, operate, use and/or maintain its
Properties and to conduct its business and operations as presently conducted
and
as expected to be conducted in the future. Except as otherwise set forth in
the
STF Public Filings or on Schedule
5.17(a) ,
all
such Permits are in effect, no proceeding is pending or, to the knowledge of
STF, threatened to modify, suspend or revoke, withdraw, terminate, or otherwise
limit any such Permits, and no administrative or governmental actions have
been
taken or threatened in connection with the expiration or renewal of such Permits
which could adversely affect the ability of STF to own, operate, use or maintain
any of its Properties or to conduct its business and operations as presently
conducted and as expected to be conducted in the future. Except as otherwise
set
forth in the STF Public Filings or on Schedule
5.17(a),
(i) no
violations have occurred that remain uncured, un-waived, or otherwise
unresolved, or are occurring in respect of any such Permits, other than
inconsequential violations, and (ii) no circumstances exist that would prevent
or delay the obtaining of any requisite consent, approval, waiver or other
authorization of the transactions contemplated hereby with respect to such
Permits that by their terms or under applicable law may be obtained only after
Closing.
(b) Except
as
set forth in the STF Public Filings or on Schedule
5.17(b),
there
are no claims, liabilities, investigations, litigation, administrative
proceedings, whether pending or threatened, or judgments or orders relating
to
any Hazardous Materials (collectively called “Environmental
Claims”)
asserted or threatened against STF or relating to any real property currently
or
formerly owned, leased or otherwise Used by STF. Neither STF nor, to the
knowledge of STF, any prior owner, lessee or operator of said real property,
has
caused or permitted any Hazardous Material to be used, generated, reclaimed,
transported, released, treated, stored or disposed of in a manner which could
form the basis for an Environmental Claim against STF or the Company. Except
as
set forth in the STF Public Filings or on Schedule
5.17(b),
STF has
not assumed any liability of any Person for cleanup, compliance or required
capital expenditures in connection with any Environmental Claim.
(c) Except
as
set forth in the STF Public Filings or on Schedule
5.17(c),
no
Hazardous Materials are or were stored or otherwise located, and no underground
storage tanks or surface impoundments are or were located, on real property
currently or formerly owned, leased or used by STF or, to the knowledge of
STF,
on adjacent parcels of real property, and no part of such real property or,
to
the knowledge of STF, any part of such adjacent parcels of real property,
including the groundwater located thereon, is presently contaminated by
Hazardous Materials.
(d) Except
as
set forth on Schedule
5.17(d),
STF has
been and is currently in compliance with all applicable Environmental Laws,
including obtaining and maintaining in effect all Permits required by applicable
Environmental Laws.
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5.18 Product
Warranties.
Except
as
would not reasonably be expected to result in a Material Adverse Effect, since
September 30, 2008 no claims have been alleged or to the knowledge of STF
threatened under or pursuant to any warranty, whether express or implied, on
products or services sold by STF. Except as would not reasonably be expected
to
result in a Material Adverse Effect, since September 30, 2008 no claims have
been alleged and to the knowledge of STF there is no basis for any claim against
STF for injury to persons, animals or property as a result of the sale,
distribution or manufacture of any product or performance of any service by
STF,
including, but not limited to, claims arising out of the defective or unsafe
nature of its products or services.
5.19 Absence
of Certain Business Practices.
Neither
STF, AEP nor any other Affiliate or agent of STF, or any other Person acting
on
behalf of or associated with STF, acting alone or together, has (a) received,
directly or indirectly, any rebates, payments, commissions, promotional
allowances or any other economic benefits, regardless of their nature or type,
from any customer, supplier, employee or agent of any customer or supplier;
or
(b) directly or indirectly given or agreed to give any money, gift or similar
benefit to any customer, supplier, employee or agent of any customer or
supplier, any official or employee of any government (domestic or foreign),
or
any political party or candidate for office (domestic or foreign), or other
person who was, is or may be in a position to help or hinder the business of
STF
(or assist STF in connection with any actual or proposed transaction), in each
case which (i) violates Legal Requirements or may expose STF to any damage
or
penalty in any civil, criminal or governmental litigation or proceeding, (ii)
if
not given in the past, may have had an adverse effect on the assets, business,
operations or prospects of STF, or (iii) if not continued in the future, may
adversely affect the assets, business, operations or prospects of
STF.
5.20 No
Vote Required.
No vote
of the holders of any class or series of the capital stock of STF is currently
necessary to approve the issuance of the Exchange Shares or the STF Conversion
Shares pursuant to this Agreement and the Certificate of Designations;
provided,
that in
the event that the shares of STF Common Stock are approved for listing on the
American Stock Exchange Inc. or the NASDAQ Stock Exchange prior to the Closing
Date, STF shall be required to obtain the approval of the transactions
contemplated by this Agreement from the holders of a majority of its outstanding
Common Stock at the STF Stockholders Meeting.
5.21 Board
Approval.
The
Board of Directors of STF (i) has determined that the issuance of the
Exchange Shares, the filing of the Certificate of Designations and the adoption
of the Amended Charter are fair and advisable to, and in the best interests
of,
STF and its stockholders, (ii) has approved this Agreement, the Exhibits
and the transactions contemplated hereby and thereby (including the issuance
of
the Exchange Shares, the filing of the Certificate of Designations and the
adoption of the Amended Charter), (iii) irrevocably taken all necessary steps
to
render Section 203 of the Delaware General Corporation Law inapplicable to
the
execution and delivery of this Agreement and the transactions contemplated
hereby, and (iv) irrevocably resolved to elect, to the extent permitted by
law,
for STF not to be subject to any “moratorium,” “control share acquisition,”
“business combination,” “fair price” or other form of anti-takeover laws or
regulations (collectively, “Takeover
Laws”)
of any
jurisdiction that may purport to be applicable to this Agreement or the
transactions contemplated hereby. No Takeover Law is applicable to the
execution, delivery or performance of this Agreement or the consummation of
the
transactions contemplated by this Agreement.
5.22 Other
Information.
The
information furnished by STF to the Company and the Company Stockholders
pursuant to this Agreement (including, without limitation, information contained
in the STF Public Filings and the Exhibits, the Schedules identified herein,
the
instruments referred to in such Schedules and the certificates and other
documents to be executed or delivered pursuant hereto by STF at or prior to
the
Closing) is not, nor at the Closing will be, false or misleading in any material
respect, or contains, or at the Closing will contain, any misstatement of
material fact, or omits, or at the Closing will omit, to state any material
fact
required to be stated in order to make the statements therein not
misleading.
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Notwithstanding
anything to the contrary contained in this Article V, STF shall be deemed to
have made adequate disclosure to the Company and the Company Stockholders with
respect to any item required to be listed on a Schedule set forth in this
Article V, if such information is contained in STF Public Filings publicly
available prior to the date of this Agreement and only as and to the extent
disclosed therein (other than disclosures in any exhibits or schedules thereto
or in any documents incorporated by reference therein and other than any forward
looking disclosures set forth in any risk factor section, any disclosures in
any
section relating to forward looking statements and any other disclosures
included therein to the extent they are primarily predictive or forward-looking
in nature) which have been furnished to the Company Stockholders and their
legal
representatives.
ARTICLE
VI. COVENANTS
AND AGREEMENTS OF THE PARTIES
|
A.)
|
With
regard to the Company and the Company
Stockholders
|
The
Company and the Company Stockholders hereto do hereby covenant and agree, as
follows:
6.1 STF’s
Access to Information and Properties.
The
Company shall, and the Company Stockholders, prior to Closing, shall use their
best efforts to ensure that the Company will, permit STF and its authorized
employees, agents, accountants, legal counsel and other representatives, to
the
extent legally permissible, to have access to the books, records, employees,
counsel, accountants, engineers and other representatives of the Company at
all
times reasonably requested by STF for the purpose of conducting an investigation
of the Company’s financial condition, corporate status, operations, prospects,
business and Properties. To the extent legally permissible, the Company shall
make available to STF for examination all documents and data of every kind
and
character relating to the Company in possession or control of, or subject to
reasonable access by, the Company and/or the Company Stockholders, including,
without limitation, all files, records, data and information relating to the
Properties (whether stored in paper, magnetic or other storage media) and all
Contracts, assignments, certificates, orders, and amendments thereto. Also,
the
Company shall allow STF access to, and the right to inspect, the Properties,
except to the extent that such Properties are operated by a third-Party
operator, in which case the Company shall use its reasonable best efforts to
cause the operator of such Properties to allow STF access to, and the right
to
inspect, such Properties.
6.2 Company’s
Conduct of Business and Operations.
The
Company shall, and the Company Stockholders, prior to Closing, shall use their
best efforts to ensure that the Company will, keep STF advised as to all
material operations and proposed material operations relating to the Company
and
its Subsidiaries. The Company and each of its Subsidiaries shall, and the
Company Stockholders, prior to Closing, shall use their reasonable best efforts
to ensure that the Company and each of its Subsidiaries will, (a) conduct its
business in the ordinary course, (b) keep available the services of present
employees, (c) maintain and operate its Properties in a good and workmanlike
manner, (d) pay or cause to be paid all costs and expenses (including but not
limited to insurance premiums) incurred in connection therewith in a timely
manner, (e) use reasonable efforts to keep all material Contracts and other
contracts with its customers in full force and effect, (f) comply with all
of
the covenants contained in all such material Contracts, (g) maintain in force
until the Closing Date insurance policies equivalent to those in effect on
the
date hereof, and (h) comply in all material respects with all applicable Legal
Requirements, including timely filing with the commercial register of
appointments of management. Except as otherwise contemplated in this Agreement,
the Company and the Company Stockholders will use their reasonable best efforts
to preserve the present relationships of the Company with Persons having
significant business relations therewith.
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6.3 General
Restrictions.
Except
as otherwise expressly permitted in this Agreement, as required by Legal
Requirements or as set forth in Schedule
6.3,
between
the date of this Agreement and the Closing Date, without the prior written
consent of STF, neither the Company nor any of its Subsidiaries shall do any
of
the following, and the Company Stockholders shall not permit the Company or
any
of its Subsidiaries to do any of the following:
(i) declare,
set aside or pay any dividends, or make any distributions or other payments
in
respect of its equity securities, or repurchase, redeem or otherwise acquire
any
such securities;
(ii) merge
into or with or consolidate with, any other Person or acquire the business
or
assets of any Person;
(iii) purchase
any securities of any Person;
(iv) amend
its
charter or bylaws (unless otherwise required by this Agreement or the Share
Purchase Agreement);
(v) issue
any
capital stock or other securities, or grant, or enter into any agreement to
grant, any options, convertibility rights, other rights, warrants, calls or
agreements relating to its securities;
(vi) create,
incur, assume, guarantee or otherwise become liable or obligated with respect
to
any indebtedness, or make any loan or advance to, or any investment in, any
Person, except in each case in the ordinary course of business, unless
reasonably required to consummate the transactions contemplated by the Share
Purchase Agreement, the Komax Purchase Order, the Equipment Additions or the
Plant Addition;
(vii) make
any
change in any existing election, or make any new election, with respect to
any
tax law in any jurisdiction which election could have a material effect on
the
tax treatment of the Company or the Company’s business operations;
(viii) enter
into, amend or terminate any material agreement except in the ordinary course
of
business consistent with past business practices;
(ix) sell,
transfer, lease, mortgage, encumber or otherwise dispose of, or agree to sell,
transfer, lease, mortgage, encumber or otherwise dispose of, any Properties
except (i) in the ordinary course of business, or (ii) pursuant to any Material
Contract specified in Schedule
4.17;
(x) settle
any material claim or litigation, or file any material motions, orders, briefs
or settlement agreements in any proceeding before any Governmental Authority
or
any arbitrator;
(xi) other
than in the ordinary course of business consistent with past practices, incur
or
approve, or enter into any agreement or commitment to make, any expenditures
in
excess of $50,000 (other than those required pursuant to any Material Contract
specified in Schedule
4.17);
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25
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(xii) maintain
its books of account other than in the usual, regular and ordinary manner in
accordance with German GAAP and on a basis consistent with prior periods or
make
any change in any of its accounting methods or practices;
(xiii) make
any
change, whether written or oral, to any agreement or understanding with any
of
the suppliers or customers listed or required to be listed on Schedule
4.17
except
in the ordinary course of business consistent with past business
practices;
(xiv) accelerate
or delay collection of any material notes or accounts receivable in advance
of
or beyond their regular due dates or the dates when they would have been
collected in the ordinary course of business consistent with past
practices;
(xv) delay
or
accelerate payment of any material accrued expense, trade payable or other
material liability beyond or in advance of its due date or the date when such
liability would have been paid in the ordinary course of business consistent
with past practices;
(xvi) allow
its
levels of inventory to vary in any material respect from the levels customarily
maintained;
(xvii) adopt
any
Plan or Benefit Program or Agreement or increase the compensation payable to
any
employee (including, without limitation, any increase pursuant to any bonus,
profit-sharing or other incentive plan or commitment), other than increases
to
non-officer employees in the ordinary course of business and consistent with
past practice;
(xviii) commit
to
do any of the foregoing.
6.4 Notice
Regarding Changes.
The
Company Stockholders shall promptly inform STF in writing of any change in
facts
and circumstances that would reasonably be expected to render any of the
representations and warranties made herein by the Company Stockholders
inaccurate or misleading if such representations and warranties had been made
upon the occurrence of the fact or circumstance in question.
6.5 Maintenance
of Insurance Policies.
The
Company shall take all reasonable actions necessary or appropriate to cause
any
and all insurance coverage currently carried by or for the benefit of the
Company to remain in full force and effect.
6.6 Employee
Matters.
(a) The
Company shall permit STF in coordination with the Company to contact and make
arrangements with the Company’s employees for the purpose of assuring their
continued employment by the Company after the Closing and for the purpose of
ensuring the continuity of the Company’s business, and the Company agrees not to
discourage any such employees from consulting with STF.
The
Company shall use its reasonable best efforts to keep available the services
of
its present employees through the Closing Date.
6.7 No
Shop.
From
the date of this Agreement until the earlier of (i) the Closing Date, or (ii)
the termination of this Agreement, the Company Stockholders shall not cause
the
Company’s officers, directors, employees and other agents to, directly or
indirectly, take any action to solicit, initiate or encourage any offer or
proposal or indication of interest in a merger, consolidation or other business
combination involving any equity interest in, or a substantial portion of the
assets of the Company, other than in connection with the transactions
contemplated by this Agreement. The Company shall immediately advise STF of
the
terms of any offer, proposal or indication of interest that it receives or
otherwise becomes aware of.
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26
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6.8 Employment
Agreements. On
the
Closing Date (a) the Company shall maintain in full force and effect (a) a
five
(5) year employment agreement with R. Ruscke, substantially in the form of
Exhibit
6.8A
annexed
hereto and made a part hereof, (b) a five (5) year employment agreement with
X.
Xxxx, substantially in the form of Exhibit
6.8B
annexed
hereto and made a part hereof, (c) a five (5) year employment agreement with
X.
Xxxxx, substantially in the form of Exhibit
6.8C
annexed
hereto and made a part hereof, and (d) a five (5) year employment agreement
with
X. Xxxxx, substantially in the form of Exhibit
6.8D
annexed
hereto and made a part hereof (collectively the “Employment
Agreements”).
6.9 Audited
Financial Statements.
On or
before February 28, 2009, the Company shall deliver to STF the Audited Financial
Statements of the Company, Solar Invest and Trend Capital KG for the three
fiscal years ending December 31, 2008.
|
B.)
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With
regard to STF.
|
STF
does
hereby covenant and agree, as follows:
6.10 Company
Stockholders' Access to Information and Properties.
STF
shall permit the Company, the Company Stockholders and their authorized
employees, agents, accountants, legal counsel and other representatives to
have
access to the books, records, employees, counsel, accountants, engineers and
other representatives of STF at all times reasonably requested by the Company
Stockholders for the purpose of conducting an investigation of STF's financial
condition, corporate status, operations, prospects, business and Properties.
STF
shall make available to the Company Stockholders for examination all documents
and data of every kind and character relating to STF in possession or control
of, or subject to reasonable access by, STF, including, without limitation,
all
files, records, data and information relating to the Properties (whether stored
in paper, magnetic or other storage media) and all Contracts, assignments,
certificates, orders, and amendments thereto. Also, STF shall allow the Company
and the Company Stockholders access to, and the right to inspect, the
Properties, except to the extent that such Properties are operated by a
third-Party operator, in which case STF shall use its reasonable best efforts
to
cause the operator of such Properties to allow the Company Stockholders access
to, and the right to inspect, such Properties.
6.11 STF’s
Conduct of Business and Operations.
STF
shall keep the Company and the Company Stockholders advised as to all material
operations and proposed material operations relating to STF and its
Subsidiaries. STF and each of its Subsidiaries shall (a) conduct its business
in
the ordinary course, (b) keep available the services of present employees,
(c)
maintain and operate its Properties in a good and workmanlike manner, (d) pay
or
cause to be paid all costs and expenses (including but not limited to insurance
premiums) incurred in connection therewith in a timely manner, (e) use
reasonable efforts to keep all material Contracts and other contracts with
its
customers in full force and effect, (f) comply with all of the covenants
contained in all such material Contracts, (g) maintain in force until the
Closing Date insurance policies equivalent to those in effect on the date
hereof, and (h) comply in all material respects with all applicable Legal
Requirements. Except as otherwise contemplated in this Agreement, STF will
use
their reasonable best efforts to preserve the present relationships of STF
with
Persons having significant business relations therewith.
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27
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6.12 General
Restrictions.
Except
as otherwise expressly permitted in this Agreement, between the date of this
Agreement and the Closing Date, without the prior written consent of the
Management Stockholders, which consent shall not be unreasonably withheld,
STF
shall not do any of the following, and STF shall not permit its subsidiaries
to
do any of the following:
(i) declare,
set aside or pay any dividends, or make any distributions or other payments
in
respect of its equity securities, or repurchase, redeem or otherwise acquire
any
such securities;
(ii) merge
into or with or consolidate with, any other Person or acquire the business
or
assets of any Person;
(iii) purchase
any securities of any Person;
(iv) amend
its
charter or bylaws or similar organizational documents;
(v) issue
or
amend the terms of any capital stock or other securities, or grant, enter into
or amend any agreement to grant, any options, convertibility rights, other
rights, warrants, calls or agreements relating to its securities;
(vi) list
any
of its equity securities on a stock exchange;
(vii) create,
incur, assume, guarantee or otherwise become liable or obligated with respect
to
any indebtedness, or make any loan or advance to, or any investment in, any
Person, except in each case in the ordinary course of business;
(viii) enter
into, amend or terminate any material agreement;
(ix) sell,
transfer, lease, mortgage, encumber or otherwise dispose of, or agree to sell,
transfer, lease, mortgage, encumber or otherwise dispose of, any Properties
except (i) in the ordinary course of business, or (ii) pursuant to any agreement
specified in Schedule
5.13;
(x) settle
any material claim or litigation, or file any material motions, orders, briefs
or settlement agreements in any proceeding before any Governmental Authority
or
any arbitrator;
(xi) other
than in the ordinary course of business consistent with past practices, incur
or
approve, or enter into any agreement or commitment to make, any expenditures
in
excess of $100,000 (other than those required pursuant to any agreement
specified in Schedule
5.13;
(xii) maintain
its books of account other than in the usual, regular and ordinary manner in
accordance with GAAP and on a basis consistent with prior periods or make any
change in any of its accounting methods or practices;
(xiii) accelerate
or delay collection of any notes or accounts receivable in advance of or beyond
their regular due dates or the dates when they would have been collected in
the
ordinary course of business consistent with past practices;
(xiv) delay
or
accelerate payment of any accrued expense, trade payable or other liability
beyond or in advance of its due date or the date when such liability would
have
been paid in the ordinary course of business consistent with past
practices;
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28
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(xv) allow
its
levels of inventory to vary in any material respect from the levels customarily
maintained;
(xvi) adopt
any
plan or benefit program or Agreement or increase the compensation payable to
any
employee (including, without limitation, any increase pursuant to any bonus,
profit-sharing or other incentive plan or commitment);
(xvii) become
a
party to or bound by any of the arrangements described in Section
5.13(a),
whether
written or oral; or
(xviii) commit
to
do any of the foregoing.
6.13 Notice
Regarding Changes.
STF
shall promptly inform the Company Stockholders in writing of any change in
facts
and circumstances that would reasonably be expected to render any of the
representations and warranties made herein by STF and/or AEP inaccurate or
misleading if such representations and warranties had been made upon the
occurrence of the fact or circumstance in question.
6.14 Maintenance
of Insurance Policies; Increase of D&O Insurance
Coverage.
STF
shall take all reasonable actions necessary or appropriate to cause any and
all
insurance coverage currently carried by or for the benefit of STF to remain
in
full force and effect. In addition, on a date that shall be not later than
90
days following the Closing Date, STF shall increase the coverage under its
existing directors and officers’ liability insurance policy to US
$5,000,000.
6.15 No
Shop.
From
the date of this Agreement until the earlier of (i) the Closing Date, or (ii)
the termination of this Agreement, STF shall not, and STF shall not cause its
officers, directors, employees and other agents to, directly or indirectly,
take
any action to solicit, initiate or encourage any offer or proposal or indication
of interest in a merger, consolidation or other business combination involving
any equity interest in, or a substantial portion of the assets of STF, other
than in connection with the transactions contemplated by this Agreement. STF
shall immediately advise the Company Stockholders of the terms of any offer,
proposal or indication of interest that it receives or otherwise becomes aware
of.
6.16 Fairness
Opinion. On
or
before the Closing Date, STF shall furnish to the Company Stockholders, a
fairness opinion from a reputable United States investment banking firm,
addressed to the board of directors of STF and dated prior to the Closing Date,
to the effect that the transactions contemplated by this Agreement are fair
to
the stockholders of STF from a financial point of view (the “Fairness
Opinion”).
6.17 SEC
Filing. Within
four Business Days of the Signing Date, STF shall prepare and file with the
Securities and Exchange Commission (the “SEC”),
under
the 34 Act, a Form 8-K Interim Report (such interim report together with any
amendments or supplements thereto, the “Form
8-K”)
relating to the Company, this Agreement and the transactions contemplated
hereby. STF will cause the Form 8-K to comply as to form in all material
respects with the applicable provisions of the Exchange Act and the rules and
regulations promulgated thereunder.
6.18 Expansion
of STF Board of Directors and Appointment of Company Management to the
Board. On
or
before the Closing Date, the Board of Directors of STF shall be expanded to
seven persons, of which (a) three (3) members of STF’s Board of Directors shall
be represented by the Company’s senior management, R. Ruscke, X. Xxxxx and X.
Xxxxx (the “Shareholder
Directors”);
(b)
two (2) members of STF’s Board of Directors shall be Xxxxxx X. Xxxxx and another
person designated by him; and (c) two (2) members of STF’s Board of Directors
shall be independent directors (within the meaning of the Sarbanes Oxley Act
of
2002), mutually acceptable to the Parties.
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29
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6.19 Equal
Treatment of Company Stockholders. Unless
this Agreement provides for a differentiation, all Company Stockholders shall
be
treated equally with respect to their pro-rata entitlement to the Exchange
Shares and any other consideration provided herein.
6.20 Takeover
Laws.
STF
shall, upon the request of the Company Stockholders, take all reasonable steps
to exclude the applicability of, or to assist in any challenge to the validity
or applicability to the transactions contemplated by this Agreement of, any
Takeover Laws.
6.21 Stockholders’
Approval; Stockholder Communications Document.
Notwithstanding anything to the contrary, express or implied, contained in
this
Agreement, the provisions of this Section 6.21 shall apply, if and only if,
STF
shall be required, pursuant to the rules of any stock exchange on which its
Common Stock is then trading, is advised by legal counsel that shareholder
approval is legally required, to obtain, prior to the Closing Date, approval
of
this Agreement and the transactions contemplated hereby from the holders of
a
majority of the issued and outstanding shares of STF Common Stock (the
“STF
Stockholder Approval”).
In
the event that STF shall be required or shall elect to seek STF Stockholder
Approval, then and in either such event:
(a) STF,
acting through the Board of Directors of STF, shall: (i) duly call and give
notice of a special meeting of its stockholders (the “Stockholders’
Meeting”)
for
the purpose of voting on and obtaining the STF Stockholder Approval;
(ii) convene and hold the STF Stockholders’ Meeting as promptly as
practicable following the date either a Stockholder Communications Document
under rule 14A of the U.S. Securities Exchange Act of 1934, as amended, or
an
Information Statement under Rule 14C of the U.S. Securities Exchange Act of
1934, as amended (each and any amendments or supplements thereto, a
“Stockholder
Communication Document”),
is
approved by the SEC, and (iii) recommend to its stockholders the approval
of the transactions contemplated hereby that require the approval of such STF
stockholders, including approval of the Shareholder Directors to the Board
of
Directors of STF (the “STF
Recommendation”)
and
take all lawful action and use its best efforts to solicit and obtain such
approval, not withdraw or adversely modify the STF Recommendation, and include
the STF Recommendation in the Stockholder Communication Document;
(b) STF
shall
use its best efforts to, as promptly as practicable after the execution of
this
Agreement, prepare and file a Stockholder Communication Document with the SEC
with respect to the Stockholders’ Meeting. STF will promptly notify the Company
Stockholders of the receipt of any oral or written comments from the SEC or
its
staff and of any request by the SEC or its staff for amendments or supplements
to the Stockholder Communications Document or for additional information and
will supply the Company Stockholders with copies of all correspondence between
STF, on the one hand, and the SEC or its staff, on the other hand, with respect
to the Stockholder Communications Document;
(c)
STF
shall give the Company Stockholders and their counsel a reasonable opportunity
to review and comment on the draft of the Stockholder Communications Document
prior to it being filed with the SEC and shall give the Company Stockholders
and
their counsel the opportunity to review and comment on all amendments and
supplements to the Stockholder Communications Document and all responses to
requests for additional information and replies to comments prior to their
being
filed with, or sent to, the SEC. The Company Stockholders shall furnish all
information concerning them and the Company as STF may reasonably request in
connection with such actions and the preparation of the Stockholder
Communications Document; and
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30
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(d)
STF
agrees to use its best efforts, after consultation with the Company
Stockholders, to respond promptly to all such comments of and requests by the
SEC. As promptly as practicable after the Stockholder Communications Document
shall have been approved by the SEC, STF shall mail the Stockholder
Communications Document to its stockholders; and
(e)
if at
any time prior to obtaining Stockholders’ Approval there shall occur any event
which must be set forth in an amendment or supplement to the Stockholder
Communications Document, STF will prepare and mail to its stockholders such
an
amendment or supplement. No filing of an amendment or supplement to the
Stockholder Communications Document shall be made without the prior written
consent of the Company Stockholders, such consent not to be unreasonably
withheld.
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C.)
|
All
the Parties hereto do hereby covenant and agree, as
follows:
|
6.22 Voting
Agreement.
On or
immediately prior to the Closing Date, the Company Stockholders and STF hereby
agree to enter into a voting agreement in form and content mutually satisfactory
to the Company Stockholder and STF, pursuant to which all of the Company
Stockholders shall agree that, for so long as each of them owns 20% or more
of
their shares of STF Series B-5 Preferred Stock and/or 20% or more of all of
the
STF Conversion Shares issuable upon conversion of their Exchange Shares, to
vote
all of their shares of STF Series B-5 Preferred Stock and all STF Conversion
Shares in favor of the elect of three of the Management Stockholders to the
Board of Directors of STF and two Persons acceptable to Xxxxxx X. Xxxxx for
election to the Board of Directors of STF.
6.23 Registration
Rights Agreement.
The STF
Conversion Shares issuable to the Company Stockholders pursuant to the
Certificate of Designations shall be registered for resale under the Securiteise
Act of 1933, as amended, in accordance with the terms and conditions of a
Registration Rights Agreement, to be entered into on or before the Closing
Date
and in form and content acceptable to the Management Stockholders and the
General Partner of AEP (the “Registration
Rights Agreement”),
which
shall provide, inter alia, for STF to file a registration statement with the
SEC
no later than within 90 days from Closing and to use its reasonable best efforts
to obtain effectiveness of such registration statement within 180 days from
Closing.
6.24 Ensure
Conditions Met.
Subject
to the terms and conditions of this Agreement, each of the Parties hereto shall
use its reasonable best efforts to take or cause to be taken all actions and
do
or cause to be done all things required under applicable Legal Requirements
in
order to consummate the transactions contemplated hereby, including, without
limitation, (i) obtaining all Permits, authorizations, consents and approvals
of
any Governmental Authority or other Person which are required for or in
connection with the consummation of the transactions contemplated hereby and
by
the Exhibits, (ii) taking any and all reasonable actions necessary to satisfy
all of the conditions to each Party’s obligations hereunder as set forth in
Article VII, and (iii) executing and delivering all agreements and documents
required by the terms hereof to be executed and delivered by such Party on
or
prior to the Closing.
ARTICLE
VII. CONDITIONS
TO PARTIES’ OBLIGATIONS
7.1 Conditions
to Obligations of the Company and the Company
Stockholders.
The
obligations of the Company Stockholders and the Company to carry out the
transactions contemplated by this Agreement are subject, at the option of the
Management Stockholders and the Company, to the satisfaction or waiver by the
Management Stockholders of the following conditions:
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31
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(a) STF
shall
have furnished the Company Stockholders with a certified copy of all necessary
board of directors and corporate action on its behalf approving its execution,
delivery and performance of this Agreement and the Exhibits and
Schedules.
(b) All
representations and warranties of STF contained in this Agreement shall be
true
and correct (without giving effect to any materiality or material adverse effect
qualification therein) in all material respects at and as of the Closing, and
STF shall have performed and satisfied in all material respects all covenants
and agreements required by this Agreement to be performed and satisfied by
STF
at or prior to the Closing.
(c) There
shall not have occurred any Material Adverse Effect with respect to
STF.
(d) STF
and/or the Company shall have consummated one or more senior secured debt or
equity financings on terms and conditions that are reasonable acceptable to
each
of STF, AEP, and the Management Stockholders, pursuant to which up to
€36,500,000 (USD $50,000,000) shall be made available to the Company (the
“Algatec
Financing”).
The
proceeds of such Algatec Financing shall be used to (i) construct the Plant
Addition, and (ii) purchase the Equipment Additions. As used in this Agreement,
the term “Plant
Addition”
shall
mean the construction of a proposed 100,000 square foot plant facility on the
real estate in Xxxxxx, Germany currently owned by the Company that is adjacent
to the existing plant facility As used in this Agreement, the term “Equipment
Additions”
shall
mean the reference to the metallurgical crystalline silicon cell threading
equipment manufactured by The Komax Group AG (“Komax”),
solar
module laminating equipment and other fixed assets to be purchased by the
Company for installation in the Plant Addition and having an estimated cost
of
€34,600,000 (USD $47,400,000).
(e) All
proceedings to be taken by STF in connection with the transactions contemplated
hereby and all documents incident thereto shall be reasonably satisfactory
in
form and substance to the Company Stockholders and their counsel, and the
Company Stockholders and said counsel shall have received all such counterpart
originals or certified or other copies of such documents as it or they may
reasonably request.
(f) As
of the
Closing Date, no suit, action or other proceeding (excluding any such matter
initiated by or on behalf of the Company or the Company Stockholders) shall
be
pending or threatened before any Governmental Authority seeking to prohibit
the
Closing or seeking Damages against the Company or STF as a result of the
consummation of this Agreement.
(g) STF
shall
have made the deliveries set forth in Section 3.3 above.
(h) The
transactions contemplated by Section 2.2 and by Section 2.3. of this Agreement
shall have been completed; and
(i) STF
shall
have delivered to the Company Stockholders the Fairness Opinion.
(j) No
proceeding in which STF shall be a debtor, defendant or party seeking an order
for its own relief or reorganization shall have been brought or be pending
by or
against such Person under any United States or state bankruptcy or insolvency
law.
(k) The
Voting Agreement and the Registration Rights Agreement shall have been executed
and delivered by STF.
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7.2 Conditions
to Obligations of STF.
The
obligations of STF to carry out the transactions contemplated by this Agreement
are subject, at the option of the STF, to the satisfaction, or waiver by STF,
of
the following conditions:
(a) If
and to
the extent Stockholder Approval shall be sought by STF, such Stockholders
Approval shall have been obtained.
(b) All
representations and warranties of the Company Stockholders contained in this
Agreement shall be true and correct (without giving effect to any materiality
or
material adverse effect qualification therin) in all material respects at and
as
of the Closing, and the Company and the Company Stockholders shall have
performed and satisfied in all material respects all agreements and covenants
required by this Agreement to be performed and satisfied by them at or prior
to
the Closing.
(c) As
of the
Closing Date, no suit, action or other proceeding (excluding any such matter
initiated by or on behalf of STF) shall be pending or before any Governmental
Agency seeking to prohibit the Closing or seeking Damages against STF or the
Company as a result of the consummation of this Agreement.
(d) Since
the
Signing Date and up to and including the Closing, there shall not have been
any
Material Adverse Effect on the Algatec Group or the Management
Stockholders.
(e) STF
or
the Company shall have consummated the Algatec Financing on terms and conditions
reasonably satisfactory to STF and the Company Stockholders.
(f) Each
of
the Company Stockholders and the Company shall have furnished STF with a
certified copy of all necessary corporate or other action on its behalf
approving the Company’s execution, delivery and performance of this
Agreement.
(g) Except
for the Management Stockholders Employment Agreements or as otherwise expressly
contemplated by this Agreement, the post-closing covenants and agreements of
AEP
and the Management Stockholders under the Share Purchase Agreement and all
other
agreements, commitments and understandings between the Company and any Affiliate
thereof (including any of the Company Stockholders) shall have been terminated
or modified in all respects on terms reasonably satisfactory to STF, and all
obligations, claims or entitlements thereunder shall be unconditionally waived
and released by such Affiliates (including any of the Company Stockholders)
and
written evidence thereof reasonably satisfactory in form and substance to STF
shall have been delivered to STF.
(h) No
proceeding in which the Company shall be a debtor, defendant or party seeking
an
order for its own relief or reorganization shall have been brought or be pending
by or against such Person under any United States or state bankruptcy or
insolvency law.
(i) The
Company Stockholders shall have made the deliveries contemplated by this
Agreement.
(j) The
Company shall have delivered to STF the Audited Financial Statements as
contemplated by this Agreement and an audited balance sheet, statement of income
and statement of cash flows of Trend Capital KG as at October 31, 2008 and
for
the ten months then ended, together with all footnotes thereto as audited in
accordance with GAAP by an independent auditor reasonably acceptable to STF
(the
“2008
Audited Financial Statements”)
and
(if required under Regulation S-X, as promulgated by the United States
Securities and Exchange Commission) an audited balance sheet, statement of
income and statement of cash flows of the Company as at November 30, 2008 and
for the one month then ended or as at December 31, 2008 and for the two months
then ended (the “Company
Audit”
and
with the Audited Financial Statements and the 2008 Audited Financial Statements,
the “Closing
Audited Financial Statements”).
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ARTICLE
VIII. POST-CLOSING
AGREEMENTS AND OBLIGATIONS
8.1 Further
Assurances.
Following the Closing, the Company, the Company Stockholders and STF shall
execute and deliver such documents, and take such other action, as shall be
reasonably requested by any other Party hereto to carry out the transactions
contemplated by this Agreement.
8.2 Publicity.
None of
the Parties hereto shall issue or make, or cause to have issued or made, any
public release or announcement concerning this Agreement or the transactions
contemplated hereby, without the advance approval in writing of the form and
substance thereof by each of the other Parties, except as and to the extent
required by law (in which case, so far as possible, there shall be consultation
among the Parties prior to such announcement), and the Parties shall endeavor
jointly to agree on the text of any announcement or circular so approved or
required.
8.3 Post-Closing
Indemnity
8.3.1 From
and
after the Closing, the Company Stockholders shall indemnify and hold harmless
STF and its Affiliates, directors, officers and employees from and against
any
and all Damages in accordance with and subject to the limitations set forth
in
Section
9.1
of this
Agreement.
8.3.2 From
and
after the Closing, STF shall indemnify and hold harmless the Company
Stockholders and their Affiliates, directors, officers and employees from and
against any and all Damages in accordance with and subject to the limitations
set forth in Section
9.2
of this
Agreement.
8.4 Non-Competition,
Non-Solicitation and Non-Disclosure.
(a) General.
In order to induce STF to enter into this Agreement and to consummate the
transactions contemplated hereby, the Company Stockholders do each hereby
covenant and agree as follows:
(i) Without
the prior written consent of STF, none of the Company Stockholders or any of
their Affiliates shall, for a period of five (5) years from and after the
Closing Date:
(A) directly
or indirectly acquire or own in any manner any interest in any person, firm,
partnership, corporation, association or other entity which engages or plans
to
engage in any facet of the business of the Company or which competes or plans
to
compete in any way with the “Business” (as hereinafter defined) of STF, the
Company, or any of the direct or indirect subsidiaries or joint venture partners
of STF or the Company (collectively, the “STF
Group”),
anywhere in the world (the “Territory”);
(B) be
employed by or serve as an employee, agent, officer, director of, or as a
consultant to, any person, firm, partnership, corporation, association or other
entity which engages or plans to engage in any facet of the Business of the
STF
Group or which competes or plans to compete in any way with Business of the
STF
Group within the Territory, or
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(C) utilize
his special knowledge of the business of the Company and his or its
relationships with customers, suppliers and others to compete with STF Group
in
the Business;
provided,
however,
that
nothing herein shall be deemed to prevent the Company Stockholders and their
Affiliates from acquiring through market purchases and owning, solely as an
investment, less than three percent (3%) in the aggregate of the equity
securities of any class of any issuer whose shares are registered under §12(b)
or 12(g) of the 34 Act, and are listed or admitted for trading on any United
States national securities exchange or are quoted on the National Association
of
Securities Dealers Automated Quotation System, or any similar system of
automated dissemination of quotations of securities prices in common use, or
on
any “regulated market” within the definition of Article 1 (13) of EU
Directive 93/22/EEC so long as the relevant Company Stockholder is not a member
of any “control group” (within the meaning of the rules and regulations of the
United States Securities and Exchange Commission) of any such
issuer.
As
used
herein the term “Business”
shall
mean any of the following activities: (a) the manufacture, assembly, sale or
distribution, individually and/or with third Persons, of equipment to
manufacture solar panels or modules of all types and descriptions, (b) the
manufacture, assembly sale or distribution, individually and/or with third
Persons, of solar panels or modules, (c) the manufacture, assembly, installation
and/or operation, individually and/or with third Persons, of turn-key solar
panel manufacturing facilities, or (d) the ownership or operation of solar
power
projects or solar farms generating electricity for any user(s).
The
Company Stockholders acknowledge and agree that the covenants provided for
in
this Section
8.4(a)
are
reasonable and necessary in terms of time, area and line of business to protect
the Company’s Trade Secrets. The Company Stockholders further acknowledge and
agree that such covenants are reasonable and necessary in terms of time, area
and line of business to protect the Company’s legitimate business interests,
which include its interests in protecting the Company’s (i) valuable
confidential business information, (ii) substantial relationships with customers
throughout the United States, Europe, Asia and the world, and (iii) customer
goodwill associated with the ongoing business of the Company. The Company
Stockholders expressly authorize the enforcement of the covenants provided
for
in this Section
8.4(a)
by (A)
the Company and its subsidiaries, (B) the Company’s permitted assigns, and (C)
any successors to the Company’s business. To the extent that the covenants
provided for in this Section
8.4(a)
may
later be deemed by a court to be too broad to be enforced with respect to its
duration or with respect to any particular activity or geographic area, the
court making such determination shall have the power to reduce the duration
or
scope of the provision, and to add or delete specific words or phrases to or
from the provision. The provision as modified shall then be
enforced.
(ii) Without
the prior consent of STF, for a period of five (5) years from the Closing Date,
the Company Stockholders shall not directly or indirectly, for themselves or
for
any other person, firm, corporation, partnership, association or other entity:
(i) attempt to employ or enter into any contractual arrangement with any
employee or former employee of any of the STF Group, unless such employee or
former employee has not been employed by one or more of the STF Group for a
period in excess of nine months, and/or (ii) call on or solicit any of the
actual or targeted prospective customers or clients of any of the STF Group,
nor
shall the Company Stockholders make known the names and addresses of such
customers or any information relating in any manner to the STF Group business
relationships with such customers.
(iii) The
Company Stockholders shall not at any time divulge, communicate, use to the
detriment of the Company or for the benefit of any other person or persons,
or
misuse in any way, any Confidential Information pertaining to the STF Group.
Any
confidential information or data now known or hereafter acquired by any of
the
Company Stockholders with respect to any of the STF Group shall be deemed a
valuable, special and unique asset of such STF Group that is received by the
Company Stockholders in confidence and as a fiduciary, and the Company
Stockholders shall remain a fiduciary to each of the STF Group with respect
to
all of such information.
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(b) Injunction. It
is
recognized and hereby acknowledged by the Parties hereto that a breach or
violation by either the Company Stockholders of any or all of the covenants
and
agreements contained in this Section
8.4
may
cause irreparable harm and damage to STF in a monetary amount which may be
virtually impossible to ascertain. As a result, each of the Company Stockholders
recognizes and hereby acknowledges that STF or any one or more of the other
STF
Group shall be entitled to an injunction from any court of competent
jurisdiction enjoining and restraining any breach or violation of any or all
of
the covenants and agreements contained in this Section 8.4 by either the Company
Stockholders, and/or their Affiliates, either directly or indirectly, and that
such right to injunction shall be cumulative and in addition to whatever other
rights or remedies STF or such STF Group may possess hereunder, at law or in
equity. Nothing contained in this Section
8.4 shall
be
construed to prevent STF of any of the STF Group from seeking and recovering
from the Company Stockholders damages sustained by it as a result of any breach
or violation by the Company Stockholders of any of the covenants or agreements
contained in this Section
8.4.
ARTICLE
IX. MISCELLANEOUS
9.1 Indemnification
of STF.
(a) Survival Except
for (i) the provisions of Article IVA of this Agreement (as to AEP), (ii) the
provisions of Section
4.4
and
Section
4.5
of
Article IVC of this Agreement as to the Management Stockholders, or (iii) acts
or omissions of any of the Company Stockholders that would constitute common
law
fraud or fraud in the inducement, all of the other representations and
warranties of the Company Stockholders set forth in Article IV of this Agreement
shall terminate on the Closing Date. The covenants, agreements, and indemnities
of the Company and all of the Company Stockholders set forth in this Agreement
or in connection with the transactions contemplated hereby shall survive the
Closing, and the Post-Closing Agreements and Covenants of the Company
Stockholders set forth in Article VIII, including those set forth in
Section
8.4
of this
Agreement, shall survive the Closing Date and the Closing as set forth
therein.
(b) Indemnification. Subject
at all times to the limitations set forth in this Section
9.1,
(i) the
Company Stockholders shall severally (not jointly and severally) indemnify,
defend and hold harmless the STF Group from any and all Damages incurred by
the
STF Group, or any of them, as a result of (A) the breach by AEP of any of his
or
its representations and warranties set forth in Article IVA of this Agreement,
(B) the breach of any of the Management Stockholders of any of his or its
representations and warranties set forth in Section
4.3
and
Section
4.4
of
Article IVC of this Agreement, or (C) or any acts or omissions of the any of
the
Company Stockholders that would constitute common law fraud or fraud in the
inducement by such Company Stockholders, or
(ii) each
Company Stockholder shall severally (not jointly and severally) indemnify,
defend and hold harmless the STF Group from any and all Damages incurred by
the
STF Group, or any of them, from the failure by any Company Stockholder to
perform or satisfy in any material respect his or its covenants and agreements
set forth in this Agreement or in any Exhibit hereto or document or certificate
delivered by such Company Stockholder on the Closing Date.
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36
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(c) Limitations
on Liability. Each
Management Stockholder shall only be liable to the extent that Damages shall
exceed €100,000 (and thereafter from €100,001 and more), and, absent any actions
or omissions constituting common law fraud or fraud in the inducement by any
one
or more Management Stockholder, the maximum liability of each Management
Stockholder shall not exceed €250,000 for each of Ruscke and Xxxxx and €150,000
for each of Malik and Freud. AEP shall only be liable to the extent that Damages
shall exceed €100,000 (and thereafter from €100,001 and more), and, absent any
actions or omissions constituting common law fraud or fraud in the inducement
by
AEP, the maximum liability of AEP shall not exceed for €250,000. In the absence
of acts or omissions of any Company Stockholders that would constitute common
law fraud or fraud in the inducement (which acts or omissions shall create
a
liability of such Company Stockholder committing such act or omission), each
Company Stockholder, shall be liable for a share of Damages in excess of
€ 100,000 corresponding to the number of Company Shares transferred by such
Company Stockholder under this Agreement in relation to the total number of
Company Shares, in each case up to the maximum liability defined in the
preceding sentence.
(d) Payment
of Damages. In
the
event that the Company Stockholders shall become liable under this Agreement
to
indemnify STF for any Damages, the applicable Company Stockholder(s) shall
pay
such Damages to STF, at the option of each Company Stockholder, either (i)
in
cash, or (ii) by returning to STF an applicable portion of the Exchange Shares.
If such Company Stockholder shall elect to make payment of Damages in Exchange
Shares (or if converted into STF Conversion Shares, in Common Stock), the number
and percentage of Exchange Shares or STF Conversion Shares to be determined
shall be equal in value to the applicable amount of Damages incurred by STF.
The
aggregate number of Exchange Shares or STF Conversion Share to be returned
to
STF shall equal the result of dividing (A) the amount of Damages, by (B) the
Per
Share Value (as defined below). The “Per
Share Value”
shall
be, (x) for STF Conversion Shares the per share closing price of the STF
Conversion Shares as at the date that the liability of the Company Stockholders
and the applicable amount of Damages shall have been determined, and (y) for
Exchange Shares the per share closing price of such STF Conversion Shares as
at
the date that the liability of the Company Stockholders and the applicable
amount of Damages shall have been determined multiplied by the number of STF
Conversion Shares issuable or issued upon full conversion of a Exchange Shares.
9.2 Indemnification
of Company Stockholders.
(a) Survival The
representations, warranties, agreements, and indemnities of STF set forth in
this Agreement or in connection with the transactions contemplated hereby shall
survive the Closing for the period provided in Section
9.2(b).
The
Post-Closing Agreements and Covenants of STF set forth in Article VIII, of
this
Agreement, shall survive the Closing Date and the Closing
indefinitely.
(b) Indemnification
and Business Indemnity Period. Subject
at all times to the limitations set forth in this Section
9.2,
STF
shall indemnify, defend and hold harmless the Company Stockholders and the
Company from any and all Damages incurred by the Company Stockholders or the
Company that arise from
(i) the
breach of any of the representations and warranties of STF forth in this
Agreement, or
(ii) the
failure by STF to perform or satisfy in any material respect their covenants
and
agreements set forth in this Agreement or in any Exhibit hereto or document
or
certificate delivered by STF on the Closing Date.
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37
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Notwithstanding
the foregoing, STF shall not have any liability under this Agreement to
indemnify for breaches of any representations and warranties contemplated under
Section
9.2(b)(i)
above
unless STF receives notice in writing from one or more Company Stockholders
of a
claim under said indemnity on or before that date which shall be twelve (12)
months following the Closing Date (the “STF
Indemnity Period”).
Said
limitations shall not apply to any breaches of or obligations to comply with
any
of the other provisions of this Agreement, regardless of whether such breach
or
obligation also constitutes a breach or obligation under any of the provisions
specifically listed in this Section
9.2(b).
(c) Limitations
on Liability. STF
shall
only be liable to the extent that Damages shall exceed €100,000 (and thereafter
from €100,001 and more), and, absent any actions or omissions constituting
common law fraud or fraud in the inducement by STF, the maximum liability of
STF
shall not exceed €500,000
(d) Payment
of Damages. With
respect to any Damages for which STF is obligated to indemnify any Company
Stockholder pursuant to this Section 9.2, STF shall, at the option of the
relevant Company Stockholder (i) pay such Damages to the relevant Company
Stockholder in cash and shall issue to such Company Stockholder newly issued
shares of Common Stock with a value equal to the amount of such Damages
multiplied by the Relative Percentage, or (ii) shall issue to such Company
Stockholder newly issued shares of Common Stock with a value equal to the
aggregate of (x) the amount such Damages and (y) the amount of such Damages
multiplied by the Relative Percentage.
9.3 Indemnified
Party and Indemnifying Party. For
purposes of this Section
9.3,
a Party
making a claim for indemnity under Section
9.1
or
Section
9.2
is
hereinafter referred to as an “Indemnified
Party”
and
the
Party against whom such claim is asserted is hereinafter referred to as the
“Indemnifying
Party.”
All
claims by any Indemnified Party shall be asserted and resolved in accordance
with the following provisions. If any claim or demand for which an Indemnifying
Party would be liable to an Indemnified Party is asserted against or sought
to
be collected from such Indemnified Party by a third party, said Indemnified
Party shall with reasonable promptness notify in writing the Indemnifying Party
of such claim or demand stating with reasonable specificity the circumstances
of
the Indemnified Party’s claim for indemnification; provided, however, that any
failure to give such notice will not waive any rights of the Indemnified Party
except to the extent the rights of the Indemnifying Party are actually
prejudiced or to the extent that any applicable period set forth in Section
9.1
and
Section
9.2(b)
has
expired without such notice being given. After receipt by the Indemnifying
Party
of such notice, then upon reasonable notice from the Indemnifying Party to
the
Indemnified Party, or upon the request of the Indemnified Party, the
Indemnifying Party shall defend, manage and conduct any proceedings,
negotiations or communications involving any claimant whose claim is the subject
of the Indemnified Party’s notice to the Indemnifying Party as set forth above,
and shall take all actions necessary, including but not limited to the posting
of such bond or other security as may be required by any Governmental Authority,
so as to enable the claim to be defended against or resolved without expense
or
other action by the Indemnified Party. Upon request of the Indemnifying Party,
the Indemnified Party shall, to the extent it may legally do so and to the
extent that it is compensated in advance by the Indemnifying Party for any
costs
and expenses thereby incurred,
(i) take
such
action as the Indemnifying Party may reasonably request in connection with
such
action,
(ii) allow
the
Indemnifying Party to dispute such action in the name of the Indemnified Party
and to conduct a defense to such action on behalf of the Indemnified Party,
and
(iii) render
to
the Indemnifying Party all such assistance as the Indemnifying Party may
reasonably request in connection with such dispute and defense.
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9.4 Substitution The
Management Stockholders shall have the right, prior to Closing, to transfer
the
Company Shares owned by them to a holding company (the “Management
Holding Company”),
as
long as (i) the Management Holding Company is wholly owned by the Management
Stockholders or the Company Stockholders, (ii) the Management Holding Company
accedes to this Agreement and assumes all obligations of its shareholders
hereunder, and (iii) the Management Stockholders (or, if the Management Holding
Company owned by the Company Stockholders, the Company Stockholders) guarantee
all obligations and liabilities of the Management Holding Company under this
Agreement.
9.5 Resolution
of Disputes.
(a) All
disputes, claims or controversies arising out of or relating to this Agreement,
or any agreement executed and delivered pursuant hereto, or the negotiation,
breach, validity or performance hereof, or the transactions contemplated hereby
which cannot be resolved by good faith negotiations, shall be exclusively
submitted to final and binding arbitration in London England before a panel
of
three arbitrators appointed by the International Chamber of Commerce;
provided,
that
if any
Party has no adequate remedy at law he or it may seek emergency injunctive
relief or specific performance before any court of competent jurisdiction in
Germany or the United States. The decision and award of the arbitrators shall
be
enforceable in any court of competent jurisdiction in the United States and
Germany.
(b) The
Parties covenant and agree that the arbitration shall commence within ninety
(90) days of the date on which a written demand for arbitration is filed by
any
Party hereto. In connection with the arbitration proceeding, the arbitrators
shall have the power to order the production of documents by each Party and
any
third-Party witnesses. In connection with any arbitration, each Party shall
provide to the other, no later than seven (7) business days before the date
of
the arbitration, the identity of all persons that may testify at the arbitration
and a copy of all documents that may be introduced at the arbitration or
considered or used by a Party’s witness or expert. The arbitrators’ decision and
award shall be made and delivered within six (6) months of the selection of
the
arbitrators. The arbitrators’ decision shall set forth a reasoned basis for any
award of damages or finding of liability. The arbitrators shall not have power
to award damages in excess of actual compensatory damages and shall not multiply
actual damages or award punitive damages or any other damages that are
specifically excluded under this Agreement, and each Party hereby irrevocably
waives any claim to such damages.
(c) The
Parties covenant and agree that they will participate in the arbitration in
good
faith and that they will, except as provided below, (A) bear their own
attorneys’ fees, costs and expenses in connection with the arbitration, and
(B) share equally in the fees and expenses charged by the arbitrators. The
arbitrators may in their discretion assess costs and expenses (including the
reasonable legal fees and expenses of the prevailing Party) against any Party
to
the proceeding. Any Party unsuccessfully refusing to comply with an order of
the
arbitrators shall be liable for costs and expenses, including attorneys’ fees,
incurred by the other Party in enforcing the award. This Section 9.4. applies
equally to requests for temporary, preliminary or permanent injunctive relief,
except that in the case of temporary or preliminary injunctive relief any Party
may proceed in court without prior arbitration for the purpose of avoiding
immediate and irreparable harm or to enforce its rights under any
non-competition covenants.
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9.6 Confidentiality.
(a) Prior
to
the Closing, STF shall, and shall cause its Affiliates and its and their
employees, agents, accountants, legal counsel and other representatives and
advisers to, hold in strict confidence all, and not divulge or disclose any,
information of any kind concerning the transactions contemplated by this
Agreement, the Company and the Algatec Business; provided, however, that the
foregoing obligation of confidence shall not apply to (i) information that
is or
becomes generally available to the public other than as a result of a disclosure
to STF or its Affiliates or any of its or their employees, agents, accountants,
legal counsel or other representatives or advisers by the Company or the Company
Stockholders, (ii) information that is or becomes available to STF or its
Affiliates or any of its or their employees, agents, accountants, legal counsel
or other representatives or advisers on a non-confidential basis prior to its
disclosure to STF or its Affiliates or any of its or their employees, agents,
accountants, legal counsel or other representatives or advisers and (iii)
information that is required to be disclosed by STF or its Affiliates or any
of
its or their employees, agents, accountants, legal counsel or other
representatives or advisers as a result of any applicable law, rule or
regulation of any Governmental Authority; and provided further that STF promptly
shall notify the Company of any disclosure pursuant to clause (iii) of this
Section 9.5.(a); and, provided, further, that the foregoing obligation of
confidence shall not apply to the furnishing of information by STF in bona
fide
discussions or negotiations with prospective lenders provided that such lenders
agree to be bound by this Section
9.5 (a).
(b) The
Company and the Company Stockholders shall, and shall cause its or his
Affiliates and their respective employees, agents, accountants, legal counsel
and other representatives and advisers to, hold in strict confidence all, and
not divulge or disclose any, information of any kind concerning the transactions
contemplated by this Agreement, the Company, the Company Stockholders or their
respective businesses; provided, however, that the foregoing obligation of
confidence shall not apply to (i) information that is or becomes generally
available to the public other than as a result of a disclosure by the Company,
the Company Stockholders or its or their Affiliates or any of their respective
employees, agents, accountants, legal counsel or other representatives or
advisers, (ii) information that is or becomes available to the Company, the
Company Stockholders or its or their Affiliates or any of their respective
employees, agents, accountants, legal counsel or other representatives or
advisers after the Closing on a non-confidential basis prior to its disclosure
to the Company, the Company Stockholders or its or their Affiliates or any
of
their respective employees, agents, accountants, legal counsel or other
representatives or advisers by STF and (iii) information that is required to
be
disclosed by the Company, the Company Stockholders or its or their Affiliates
or
any of their respective employees, agents, accountants, legal counsel or other
representatives or advisers as a result of any applicable law, rule or
regulation of any Governmental Authority; and provided further that the Company
or the Company Stockholders shall promptly shall notify STF of any disclosure
pursuant to clause (iii) of this Section 9.3(b).
9.7 Brokers.
Regardless of whether the Closing shall occur, (i) the Company Stockholders
and
the Company shall indemnify and hold harmless STF from and against any and
all
liability for any brokers or finders’ fees arising with respect to brokers or
finders retained or engaged by the Company or the Company Stockholders in
respect of the transactions contemplated by this Agreement, and (ii) STF shall
indemnify and hold harmless the Company Stockholders and the Company from and
against any and all liability for any brokers’ or finders’ fees arising with
respect to brokers or finders retained or engaged by STF in respect of the
transactions contemplated by this Agreement.
9.8 Costs
and Expenses.
Each of
the Parties to this Agreement shall bear his or its own expenses incurred in
connection with the negotiation, preparation, execution and closing of this
Agreement, other than the costs of the adoption of GAAP at the Company and
its
Subsidiaries for purposes of the STF group reporting with the SEC, which shall
be paid only by STF.
9.9 Notices.
Any
notice, request, instruction, correspondence or other document to be given
hereunder by any Party hereto to another (herein collectively called
“Notice”)
shall
be in writing and delivered personally or mailed by registered or certified
mail, postage prepaid and return receipt requested, or by facsimile or e-mail,
as follows:
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IF
TO STF:
Solar
Thin Films, Inc.
000
Xxxxx
Xxxxxx
Xxxxxxxxxxx,
Xxx Xxxxxx 00000
Attn:
Xxxxx X. Xxxxx, President
Fax
No.
email:
xxxxx.xxxxx@xxxxxxxxxxxxxx.xxx
With
a
copy to:
Xxxxxxx
Xxxx, LLP
0000
Xxxxxxxx, 00xx
Xxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Attention:
Xxxxxxx X. Xxxxx, Esq.
Fax
No.
000-000-0000
email:
xxxxxx@xxxxxxxxxxx.xxx
IF
TO THE COMPANY, AND/OR
THE
COMPANY STOCKHOLDERS:
If
to the
Company and/or any of the Management Stockholders:
Algatec
Solar AG
Xxxxxxxxxx
Xxx 0
00000
Xxxxxxxxxx/XX Xxxxxx, Germany
Attn:
Rainer Ruscke, Chief Executive Officer
Office:
011.49.(0)
00 00-00 00 0
Fax:
011.49.(0)
00 00-00 00
Email:
xxxxxxx@xxxxxxx.xxx
with
copies to:
Xx.
Xxxxxx Xxxxx
Tegernseer
Beratungs-Service and
Rechenzentrum
GmbH
Xxxxxxxx
Xxxxxxxxxxxx 00
00000
Xxxxxxx-Xxxxx
Xxxxxxx
Office:
011.49.(0)
0000.0000.00
Fax:
011.49.(0)
0000.0000.00
Email:
x.xxxxx@xxx.xx
-
00
-
Xxxxxx
Xxxxx, Xxxxxxx
Xxxxxx
& Xxxxxxx LLP
Xxxxxxxxxxx
Xxxxx
Xxxxxxxxx
00
00000
Xxxxxxxxx xx Xxxx
Tel.:
+49-69-6062 6517
Fax:
+49-69-6062 6700
E-Mail:
Xxxxxx.Xxxxx@xx.xxx
If
to
AEP:
Algatec
Equity Partners, L.P.
c/o
Algatec Management LLC
c/o
Xxxxxx X. Xxxxx, Manager
00
Xxxxxxxx Xxxxxxxxx
Xxx
Xxxxx, Xxx Xxxx 00000
Office:
000.000.0000
Cell:
000.000.0000
Fax:
000.000.0000
Email:
xxx00@xxxxxxxxx.xxx
Each
of
the above addresses for notice purposes may be changed by providing appropriate
notice hereunder. Notice given by personal delivery or registered mail shall
be
effective upon actual receipt. Notice given by telecopier or e-mail shall be
effective upon actual receipt if received during the recipient’s normal business
hours, or at the beginning of the recipient’s next normal business day after
receipt if not received during the recipient’s normal business hours. All
Notices by telecopier or e-mail shall be confirmed by the sender thereof
promptly after transmission in writing by registered mail or personal delivery.
Anything to the contrary contained herein notwithstanding, Notices to any Party
hereto shall not be deemed effective with respect to such Party until such
Notice would, but for this sentence, be effective both as to such Party and
as
to all other Persons to whom copies are provided above to be given.
9.10 Governing
Law.
The
provisions of this Agreement shall be governed by and construed in accordance
with the laws of the State of New York (excluding any conflict of law rule
or
principle that would refer to the laws of another jurisdiction). Notwithstanding
the foregoing, the laws of Germany shall govern the Employment Agreements and
the provisions of Section
8.4
of this
Agreement.
9.11 Entire
Agreement; Amendments and Waivers.
This
Agreement, together with all Exhibits and Schedules attached hereto, constitutes
the entire agreement between and among the Parties hereto pertaining to the
subject matter hereof and supersedes all prior agreements, understandings,
negotiations and discussions, whether oral or written, of the Parties, and
there
are no warranties, representations or other agreements between the Parties
in
connection with the subject matter hereof except as set forth specifically
herein or contemplated hereby. No supplement, modification or waiver of this
Agreement shall be binding unless executed in writing by the Party to be bound
thereby. No waiver of any of the provisions of this Agreement shall be deemed
or
shall constitute a waiver of any other provision hereof (regardless of whether
similar), nor shall any such waiver constitute a continuing waiver unless
otherwise expressly provided.
9.12 Binding
Effect and Assignment.
This
Agreement shall be binding upon and inure to the benefit of the Parties hereto
and their respective permitted successors and assigns; but neither this
Agreement nor any of the rights, benefits or obligations hereunder shall be
assigned, by operation of law or otherwise, by any Party hereto without the
prior written consent of the other Party; provided, however, that STF may assign
its rights hereunder to any lender to STF as collateral. Nothing in this
Agreement, express or implied, is intended to confer upon any Person other
than
the Parties hereto and their respective permitted successors and assigns, any
rights, benefits or obligations hereunder.
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9.13 Remedies.
The
rights and remedies provided by this Agreement are cumulative, and the use
of
any one right or remedy by any Party hereto shall not preclude or constitute
a
waiver of its right to use any or all other remedies. Such rights and remedies
are given in addition to any other rights and remedies a Party may have by
law,
statute or otherwise.
9.14 Exhibits
and Schedules.
The
Exhibits and Schedules referred to herein are attached hereto and incorporated
herein by this reference. Disclosure of a specific item in any one Schedule
shall be deemed restricted only to the Section to which such disclosure
specifically relates except where (i) there is an explicit cross-reference
to
another Schedule, and (ii) the Parties would reasonably be expected to ascertain
the scope of the modification to a representation intended by such
cross-reference.
9.15 Multiple
Counterparts.
This
Agreement may be executed in one or more counterparts, each of which shall
be
deemed an original, but all of which together shall constitute one and the
same
instrument.
9.16 References
and Construction.
(a) Whenever
required by the context, and is used in this Agreement, the singular number
shall include the plural and pronouns and any variations thereof shall be deemed
to refer to the masculine, feminine, neuter, singular or plural, as the
identification the person may require. References to monetary amounts, specific
named statutes and generally accepted accounting principles are intended to
be
and shall be construed as references to United States dollars, statutes of
the
United States of the stated name and United States generally accepted accounting
principles, respectively, unless the context otherwise requires.
(b) The
provisions of this Agreement shall be construed according to their fair meaning
and neither for nor against any Party hereto irrespective of which Party caused
such provisions to be drafted. Each of the Parties acknowledge that it has
been
represented by an attorney in connection with the preparation and execution
of
this Agreement.
9.17 Attorneys’
Fees.
In the
event any suit or other legal proceeding is brought for the enforcement of
any
of the provisions of this Agreement, the Parties hereto agree that the
prevailing Party or Parties shall be entitled to recover from the other Party
or
Parties upon final judgment on the merits reasonable attorneys’ fees (and sales
taxes thereon, if any), including attorneys’ fees for any appeal, and costs
incurred in bringing such suit or proceeding.
ARTICLE
X. DEFINITIONS
Capitalized
terms used in this Agreement are used as defined in this Article X or elsewhere
in this Agreement.
10.1 2008
Financial Statements.
Shall
have the meaning set forth in Section 7.2(j).
10.2 AEP.
Shall
have the meaning as defined in the introduction.
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10.3 Affiliate.
means
with respect to any Person, any other Person directly or indirectly controlling
(including, but not limited to, all directors and officers of such Person),
controlled by, or under direct or indirect common control with, such Person.
A
Person shall be deemed to control another Person if such Person possesses,
directly or indirectly, the power to direct or cause the direction of the
management and policies of such other Person, whether through the ownership
of
voting securities, by contract or otherwise.
10.4 X.
Xxxxx.
Shall
have the meaning as defined in the introduction.
10.5 Agreement.
Shall
have the meaning as defined in the introduction.
10.6 Algatec.
Shall
have the meaning as defined in the introduction.
10.7 Algatec
Business.
Shall
have the meaning as defined in paragraph E of the Recitals.
10.8 Algatec
Financing.
Shall
have the meaning as defined in Section 7.1 (d).
10.9 Algatec
Group.
“Algatec Group” means the collective reference to the Company, Solar Invest and
Trend Capital KG.
10.10 Algatec
Material Contracts.
Shall
have the meaning as defined in Section 4.17.
10.11 Algatec
Termination Event. Shall
have the meaning as defined in Section 3.4 (c).
10.12 Audited
Financial Statements.
Shall
have the meaning as defined in Section 4.8.
10.13 Balance
Sheet Date.
Shall
have the meaning as defined in Section 5.8 (e).
10.14 Business.
Shall
have the meaning as defined in Section 8.4 (C).
10.15 Business
Day.
The
term “Business Day” means any day, on which banks in Xxx Xxxx Xxxx, XX, XXX xxx
Xxxxxxxxx, Xxxxxxx are open for business.
10.16 Certificate
of Designations.
Shall
have the meaning as defined in Section 2.2.
10.17 Closing.
Shall
have the meaning as defined in Section 3.1.
10.18 Closing
Audited Financial Statements.
Shall
have the meaning as defined in Section 7.2(j).
10.19 Closing
Date.
Shall
have the meaning as defined in Section 3.1.
10.20 Common
Stock.
The
term Common Stock shall have the meaning defined in paragraph H of the
Recitals.
10.21 Company.
Shall
have the meaning as defined in the introduction.
10.22 Company
Articles of Association.
Shall
have the meaning as defined in paragraph A of the Recitals.
10.23 Company
Audit.
Shall
have the meaning as defined in Section 7.2(j).
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10.24 Company
Share/Company Shares.
Shall
have the meaning as defined in paragraph A of the Recitals.
10.25 Company
Stockholder.
Shall
have the meaning as defined in the introduction.
10.26 Company
Stockholders.
Shall
have the meaning as defined in the introduction.
10.27 Confidential
Information.
The
term “Confidential Information” shall mean confidential data and confidential
information relating to the business of the Company (which does not rise to
the
status of a Trade Secret under applicable law) which is or has been disclosed
to
Company Stockholders or of which Company Stockholders became aware as a
consequence of or through his employment with the Company and which has value
to
the Company and is not generally known to the competitors of the Company.
Confidential Information shall not include any data or information that (i)
has
been voluntarily disclosed to the general public by the Company or its
Affiliates, (ii) has been independently developed and disclosed to the general
public by others, or (iii) otherwise enters the public domain through lawful
means.
10.28 Contracts.
The
term “Contract” or “Contracts,” when described as being those of or applicable
to any Person, shall mean any and all contracts, agreements, franchises,
understandings, arrangements, leases, licenses, registrations, authorizations,
easements, servitudes, rights of way, mortgages, bonds, notes, guaranties,
liens, indebtedness, approvals or other instruments or undertakings to which
such Person is a Party or to which or by which such Person or the property
of
such Person is subject or bound, excluding any Permits.
10.29 Damages.
The
term “Damages” shall mean any and all damages, liabilities, obligations,
penalties, fines, judgments, claims, deficiencies, losses, costs, expenses
and
assessments (including without limitation income and other taxes, interest,
penalties and reasonable attorneys’ and accountants’ fees and
disbursements).
10.30 Employment
Agreements.
Shall
have the meaning as defined in Section 6.8.
10.31 Environmental
Claims.
Shall
have the meaning as defined in Section 5.17 (b).
10.32 Environmental
Laws.
Shall
have the meaning as defined in Section 4.14.
10.33 Equipment
Additions.
Shall
have the meaning as defined in Section 7.1 (d).
10.34 Exchange
Shares.
Shall
have the meaning as defined in paragraph J of the Recitals.
10.35 Exhibits.
The
term “Exhibits” shall mean any or all of the exhibits to this Agreement and any
and all other agreements, instruments or documents required or expressly
provided under this Agreement to be executed and delivered in connection with
the transactions contemplated by this Agreement.
10.36 Fairness
Opinion.
Shall
have the meaning as defined in Section 6.16.
10.37 Financial
Statements.
Shall
have the meaning as defined in Section 4.8.
10.38 Form
8-K.
Shall
have the meaning as defined in Section 6.17.
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10.39 GAAP.
Shall
have the meaning as defined in Section 5.8 (a).
10.40 Governmental
Authorities.
The
term “Governmental Authorities” shall mean any nation or country (including but
not limited to Germany and the United States) and any commonwealth, territory
or
possession thereof and any political subdivision of any of the foregoing,
including but not limited to courts, departments, commissions, boards, bureaus,
agencies, ministries or other instrumentalities.
10.41 Hazardous
Material.
The
term “Hazardous Material” shall mean all or any of the following: (a) substances
that are defined or listed in, or otherwise classified pursuant to, any
applicable laws or regulations as “hazardous substances,” “hazardous materials,”
“Hazardous wastes,” “toxic substances” or any other formulation intended to
define, list or classify substances by reason of deleterious properties such
as
ignitability, corrosivity, reactivity, carcinogenicity, reproductive toxicity
or
“EP toxicity”; (b) oil, petroleum or petroleum derived substances, natural gas,
natural gas liquids or synthetic gas and drilling fluids, produced waters and
other wastes associated with the exploration, development or production of
crude
oil, natural gas or geothermal resources; (c) any flammable substances or
explosives or any radioactive materials; and (d) asbestos in any form or
electrical equipment which contains any oil or dielectric fluid containing
levels of polychlorinated biphenyls in excess of fifty parts per
million.
10.42 Indemnified
Party.
Shall
have the meaning as defined in Section 9.3.
10.43 Indemnifying
Party.
Shall
have the meaning as defined in Section 9.3.
10.44 Intangible
Rights.
Shall
have the meaning as defined in Section 5.15.
10.45 Intellectual
Property.
Shall
have the meaning as defined in Section 4.11.
10.46 Inventory.
The
term “Inventory” shall mean all goods, merchandise and other personal property
owned and held for sale, and all raw materials, works-in-process, materials
and
supplies of every nature which contribute to the finished products of the
Company or STF and its Subsidiaries in the ordinary course of its business,
specifically excluding, however, damaged, defective or otherwise unsaleable
items.
10.47 Knowledge.
The
term “knowledge” shall mean the actual knowledge of any of the directors,
officers or managerial personnel of a Party with respect to the matter in
question, and such knowledge of the directors, officers or managerial personnel
of a Party reasonably should have obtained upon diligent investigation and
inquiry into the matter in question.
10.48 Komax.
Shall
have the meaning as defined in paragraph G of the Recitals and in Section 7.1
(d).
10.49 Komax
Purchase Order.
Shall
have the meaning as defined in paragraph G of the Recitals.
10.50 Leases.
Shall
have the meaning as defined in Section 5.13 (b).
10.51 Legal
Requirements.
The
term “Legal Requirements,” when described as being applicable to any Person,
shall mean any and all laws (statutory, judicial or otherwise), ordinances,
regulations, judgments, orders, directives, injunctions, writs, decrees or
awards of, and any Contracts with, any Governmental Authority, in each case
as
and to the extent applicable to such Person or such Person’s business,
operations or properties.
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10.52 Liens.
Shall
have the meaning as defined in Section 1.1 (c).
10.53 Management
Holding Company. Shall have the meaning as defined in Section 9.4
10.54 Management
Stockholder/Management Stockholders.
Shall
have the meaning as defined in the introduction.
10.55 Material
Adverse Effect. The
term
“Material Adverse Effect” shall mean:
(a) with
respect to STF, any event, circumstance, change or effect that, individually
or
in the aggregate, had or might reasonably be expected to have a material adverse
effect on the business, operations, prospects, Properties or financial condition
of STF and its consolidated Subsidiaries, when taken as a consolidated whole;
(b) with
respect to the Algatec Group, (i) any event, circumstance, change or effect
that, individually or in the aggregate, had or might reasonably be expected
to
have a material adverse effect on the business, operations, prospects,
Properties or financial condition of the Algatec Group, when taken as a
consolidated whole, or (ii) the failure or refusal of Q-Cells in January 2009
to
renew the Q-Cells Agreement for a minimum of one year following December 31,
2009; and
(c) with
respect to the Management Group, the death or permanent disability (defined
as
the inability for more than 90 consecutive days to render full-time services
to
the Algatec Group) of Xxxxxx Xxxxxxx or Xxxxxxx Xxxx.
10.56 Material
Contract.
Shall
have the meaning as defined in Section 5.14 (a).
10.57 Notice.
Shall
have the meaning as defined in Section 9.9.
10.58 Owned
Premises.
Shall
have the meaning as defined in Section 5.13 (a).
10.59 Party/Parties.
Shall
have the meaning as defined in the introduction.
10.60 Per
Share Value.
The
term “Per Share Value” shall have the meaning as defined in Section
9.1(d).
10.61 Permits.
The
term “Permits” shall mean any and all permits, rights, approvals, licenses,
authorizations, legal status, orders or Contracts under any Legal Requirement
or
otherwise granted by any Governmental Authority.
10.62 Person.
The
term “Person” shall mean any individual, partnership, joint venture, firm,
corporation, association, limited liability company, trust or other enterprise
or any governmental or political subdivision or any agency, department or
instrumentality thereof.
10.63 Plant
Addition.
Shall
have the meaning as defined in Section 7.1 (d).
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10.64 Product.
The
term “Product” shall mean each product, repair process or service under
development, developed, manufactured, licensed, distributed or sold by the
Party
and any other products in which the Party has any proprietary rights or
beneficial interest.
10.65 Xxxxxx
Real Estate.
Shall
have the meaning as defined in paragraph F of the Recitals.
10.66 Properties.
The
term “Properties” shall mean any and all properties and assets (real, personal
or mixed, tangible or intangible) owned or Used by the Party.
10.67 Q-Cells.
Shall
have the meaning as defined in paragraph G of the Recitals.
10.68 Q-Cells
Agreement.
Shall
have the meaning as defined in paragraph G of the Recitals.
10.69 Real
Property.
The
term “Real Property” shall mean the real property Used by the Party in the
conduct of its business.
10.70 Records.
Shall
have the meaning as defined in Section 3.2 (v).
10.71 Registration
Rights Agreement.
Shall
have the meaning as defined in Section 6.23.
10.72 Regulations.
The
term “Regulations” shall mean any and all regulations promulgated by the
Department of the Treasury pursuant to the Internal Revenue Code.
10.73 Relative
Percentage.
The
term “Relative Percentage” shall mean for any shareholder of STF the percentage
obtained by dividing the percentage interest of such shareholder in STF by
the
aggregate percentage interest of all other shareholders of STF, in each case,
to
the extent applicable, on an “as converted” basis.
10.74 X.
Xxxxxxx.
Shall
have the meaning as defined in the introduction.
10.75 Schedule.
The
term “Schedule” shall mean any schedule to this Agreement nd any and all other
agreements, instruments or documents required or expressly provided under this
Agreement to be executed and delivered in connection with the transactions
contemplated by this Agreement.
10.76 SEC.
Shall
have the meaning as defined in Section 5.8 (b) and Article VI, B.),
6.17
10.77 Series
A Preferred Stock.
Shall
have the meaning as defined in paragraph H (ii) of the Recitals.
10.78 Series
B Preferred Stock. Shall
have the meaning as defined in paragraph H (iii) of the Recitals.
10.79 Shareholder
Directors.
Shall
have the meaning as defined in Section 6.18.
10.80 Share
Purchase Agreement.
Shall
have the meaning as defined in paragraph C of the Recitals.
10.81 Signing
Date.
shall
have the meaning as defined in the introduction.
10.82 X.
Xxxxx.
Shall
have the meaning as defined in the introduction.
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10.83 Solar
Invest.
Shall
have the meaning as defined in paragraph E of the Recitals.
10.84 Stockholder
Communication Document.
Shall
have the meaning as defined in Section 6.20 (a).
10.85 Stockholders’
Meeting.
Shall
have the meaning as defined in Section 6.21 (a).
10.86 STF.
Shall
have the meaning as defined in the introduction.
10.87 STF
Audited Financial Statements.
Shall
have the meaning as defined in Section 5.8 (a).
10.88 STF
Financial Statements.
Shall
have the meaning as defined in Section 5.8 (a).
10.89 STF
Group.
Shall
have the meaning as defined in Section 8.4 (A).
10.90 STF
Indemnity Period.
Shall
have the meaning as defined in Section 9.2 (b)(ii).
10.91 STF
Public Filings The
term
“STF Public Filings” means and includes all of the filings reports, statements,
forms, schedules, registration statements, prospectuses, proxy statements,
and
other documents required to be filed or furnished by STF with the SEC under
the
United States Securities Act of 1933, as amended (the “33
Act”),
and
the United States Securities Exchange Act of 1934, as amended (the “34
Act”),
for
all periods from and after January 1, 2005, including, without limitation,
all
(a) registration statements on Form S-1 or other forms for registering
securities under the 33 Act, (b) all Form 10KSB Annual Reports, Form 8-K Interim
Report, Form 10-Q Quarterly Report, and (c) all proxy statements on Form 14A
or
information statements on Form 14C and other filings under the 34
Act.
10.92 STF
Recommendation.
Shall
have the meaning as defined in Section 6.21 (a).
10.93 STF
Series B-5 Preferred Stock. Shall
have the meaning as defined in Section 2.1.
10.94 STF
Stockholder Approval.
Shall
have the meaning as defined in Section 6.21.
10.95 STF
Stockholders’ Meeting.
Shall
have the meaning as defined in Section 3.4 (c)(iv).
10.96 STF
Termination Event.
Shall
have the meaning as defined in Section 3.4 (b).
10.97 STF
Unaudited Financial Statements.
Shall
have the meaning as defined in Section 5.8 (a).
10.98 Subsidiary.
The
term “Subsidiary” shall mean any Person of which a majority of the outstanding
voting securities or other voting equity interests are owned, directly or
indirectly, by the Company.
10.99 Takeover
Laws.
Shall
have the meaning as defined in Section 5.21.
10.100 Tangible
STF Properties.
Shall
have the meaning as defined in Section 5.16.
10.101 Territory.
Shall
have the meaning as defined in Section 8.4 (A).
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10.102 To
the
knowledge of the Management Stockholders.
Shall
have the meaning as defined in Article IV.
10.103 Trade
Secrets.
The
term “Trade Secrets” shall mean information of the Company including, but not
limited to, technical or nontechnical data, formulas, patterns, compilations,
programs, financial data, financial plans, product or service plans or lists
of
actual or potential customers or suppliers which (i) derives economic value,
actual or potential, from not being generally known to, and not being readily
ascertainable by proper means by, other persons who can obtain economic value
from its disclosure or use, and (ii) is the subject of efforts that are
reasonable under the circumstances to maintain its secrecy.
10.104 Trend
Capital KG.
Shall
have the meaning as defined in paragraph D of the Recitals.
10.105 Trend
Capital Business Transfer.
Shall
have the meaning as defined in paragraph D of the Recitals.
10.106 X.
Xxxx.
Shall
have the meaning as defined in the introduction.
10.107 Unaudited
Financial Statements.
Shall
have the meaning as defined in Section 4.8.
10.108 Used.
The
term “Used” shall mean, with respect to the Properties, Contracts or Permits of
the Company or STF, those owned, leased, licensed or otherwise held by the
Company or STF which were acquired for use or held for use by the Company or
STF
in connection with their respective business and operations.
balance
of this page intentionally left blank - signature page
follows
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IN
WITNESS WHEREOF, the Parties hereto have executed this Stock Exchange Agreement
as of the date first written above.
|
STF:
|
|
|
By:
|
/s/
Xxxxxx X. Xxxxx
|
|
Name:
Xxxxxx X. Xxxxx,
|
|
|
Title:
Chairman and Chief Financial Officer
|
|
|
COMPANY:
|
|
|
ALGATEC
SOLAR AG
|
|
|
By:
|
/s/
Xxxxxx Xxxxxxx
|
|
Name:
Xxxxxx Xxxxxxx
|
|
|
Title:
Chief Executive Officer and President
|
|
|
COMPANY
STOCKHOLDERS:
|
|
|
ALGATEC
EQUITY PARTNERS, L.P.
|
|
|
By:
Algatec Management LLC, General Partner
|
|
|
By:
|
/s/
Xxxxx Xxxxxxxxx
|
|
Name:
Xxxxx Xxxxxxxxx
|
|
|
Title:
Manager and Member
|
|
|
/s/
Xxxxxx Xxxxxxx
|
|
|
XXXXXX
XXXXXXX
|
|
|
/s/
Xxxxxxx Xxxx
|
|
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XXXXXXX
XXXX
|
|
|
/s/
Xx. Xxxxxx Xxxxx
|
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XX.
XXXXXX XXXXX
|
|
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/s/
Xxxxx Xxxxx
|
|
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XXXXX
XXXXX
|
|
|
THE
TRUSTEE:
|
|
|
Name:
Xxxxxx Xxxxxxx, Esquire
|
|
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