EXHIBIT 10.44
FOUNDATION AGREEMENT
--------------------
THIS FOUNDATION AGREEMENT ("Agreement"), dated as of this 17th day of
March, 2000, is made between United Solar Systems Corp. ("United Solar"), a
Delaware corporation, with its principal office at 0000 Xxxx Xxxxx Xxxx, Xxxx,
Xxxxxxxx 00000, and Bekaert Corporation ("Bekaert"), a Delaware corporation,
with its principal office at 0000 Xxxx Xxxxxx Xxxxxx, Xxxxx 000, Xxxxx, Xxxx
00000, and Energy Conversion Devices, Inc. ("ECD"), a Delaware corporation, with
its principal office at 0000 Xxxx Xxxxx Xxxx, Xxxx, Xxxxxxxx 00000.
RECITALS:
--------
A. United Solar is in the business of designing, manufacturing, marketing
and selling Strip Cells, PV Products and PV Systems, and is owned 49.998% by
ECD, 49.998% by Canon, Inc. ("Canon") and 0.004% by the Haru X. Xxxxxxxxxx Trust
dated April 23, 1990 (the "Reischauer Trust").
B. The Bekaert Group, the ultimate parent company of which is N.V. Bekaert
S.A., a Belgian corporation with its registered office at Xxxxxxxxxxxxx 0, 0000
Xxxxxxxx, Xxxxxxx ("NVB"), and corporations with core technologies of metal
transformation and coatings, including advanced material technology for thin
metal fibers, innovative thin sputtered coatings and glass-reinforced plastic
products.
C. ECD is a company engaged in the synthesis of new families of disordered
materials and the development of advanced production technology and innovative
products, with particular expertise in the development and commercialization of
thin film photovoltaic solar cells using proprietary materials, designs,
processes and production equipment.
D. United Solar owns 99.9 % of the shares of United Solar Systems de
Mexico, S.A. de C.V., a Mexican corporation, with its principal office at Xx.
Xx Xxx Xx. 00000, Xxxxxx Industrial Pacifico, Xxxxxxx, Xxxx Xxxxxxxxxx, X.X.
00000, Xxxxxx ("United Solar Mexico"), which is engaged in assembly of PV
Products and PV Systems for United Solar.
E. United Solar and Bekaert desire to form a joint venture structured as a
limited liability company organized under the laws of the State of Delaware to
be known as Bekaert ECD Solar Systems, LLC (the "Company"), which, together with
United Solar, will engage in the business of developing, designing,
manufacturing, marketing and selling PV Products and PV Systems.
F. As a necessary condition to the joint venture, all of the
capital stock in United Solar owned beneficially or of record by Canon will be
bought by ECD.
NOW, THEREFORE, in consideration of the promises and payments
hereinafter set forth, and for other good and valuable consideration, the mutual
receipt and sufficiency of which is hereby acknowledged, the parties hereby
agree as follows:
1. OVERVIEW
--------
1.1 At the Closing. At or prior to the Closing the following
transactions will occur:
(a) Bekaert and United Solar will form a Delaware limited liability
company as set forth in Sections 2 and 3;
(b) Bekaert will purchase a 19% ownership interest in United
Solar as set forth in Section 4;
(c) United Solar Mexico will become a 99.9% subsidiary of the
Company through its contribution to the Company by United Solar;
(d) ECD will purchase all of the capital stock held beneficially or
of record by Canon in United Solar; and
(e) United Solar will purchase all of the capital stock held
beneficially or of record by the Reischauer Trust in United Solar.
1.2 Post Closing. After the Closing, at the option of Bekaert, ECD will
transfer all of its right, title and interest in and to Suryovonics and Sovlux
PV to United Solar, without additional remuneration to ECD.
1.3 Products. The Company will design, manufacture (excluding Strip
Cells), market and sell PV Products and PV Systems. The Company will enter into
technology and patent license contracts with each of United Solar, ECD and Canon
and will lease certain equipment to United Solar for the production of Strip
Cells or parts of Strip Cells. United Solar will use such technology and such
equipment to manufacture Strip Cells or parts of Strip Cells and will
exclusively supply its output to the Company pursuant to an exclusive supply
agreement.
2. FORMATION, NATURE AND PURPOSES OF JOINT VENTURE
-----------------------------------------------
2.1 Formation of the Company. On the Closing Date (the "Formation Date"),
United Solar and Bekaert shall cause the Company to be formed by executing and
filing a Certificate of Formation with the Delaware Secretary of State in
accordance with applicable provisions of Sections 18-201 et seq. of the Act, in
the form attached hereto as Exhibit 2.1A. Bekaert and United Solar shall on the
Formation Date execute and deliver a Limited Liability Company
2
Agreement of Bekaert ECD Solar Systems LLC (the "LLC Agreement"), in the form
attached hereto as Exhibit 2.1B, and consistent with the provisions of the Act.
The Company's principal place of business shall be 0000 Xxxx Xxxxx Xxxx, Xxxx,
Xxxxxxxx 00000. On and after the Formation Date, the parties shall cause to be
filed all documents as may be required by this Agreement or by Law in connection
with the formation and operation of the Company and shall make, execute, and
file and shall cause the Company to make, execute and file all additional
charter documents, certificates, agreements and other instruments as may
reasonably be necessary or appropriate for the conduct of the business of the
Company.
3. MEMBER CONTRIBUTIONS
--------------------
3.1 Contributions. United Solar and Bekaert shall each contribute cash
and/or property to the Company, as more fully set forth below, in exchange for a
40% and 60% interest, respectively in the Company. All cash payments to be made
under this Section 3 shall be payable by wire transfer to a bank account to be
designated by the payee, in U.S. currency at the dates specified below.
3.2 United Solar's Contributions. At Closing, in return for a 40%
interest in the Company, United Solar shall contribute to the Company the
following, which is valued at Twenty-Eight Million US Dollars (US$28,000,000)
in the aggregate:
(a) Twenty-Eight Million Fifty-Six Thousand US Dollars
(US$28,056,000), payable as follows:
(i) at Closing, cash in the amount of Twenty-Three Million
Fifty-Six Thousand US Dollars (US$23,056,000);
(ii) the balance of Five Million US Dollars (US$5,000,000) shall
be paid on an as needed basis as determined by the
Management Committee of the Company but in any event no
later than the third (3rd) anniversary of the Closing Date;
and
(b) all of United Solar's shares of capital stock in United Solar
Mexico shall be transferred and assigned to the Company.
(collectively, the "United Solar Contributed Assets").
3.3 Bekaert's Contribution. In return for a 60% interest in the Company,
Bekaert shall contribute to the Company cash in the amount of Forty-Two Million
US Dollars (US$42,000,000), payable as follows:
(a) at Closing, cash in the amount of Twelve Million US Dollars
3
(US$12,000,000);
(b) the balance of Thirty Million US Dollars (US$30,000,000) shall
be paid on an as needed basis as determined by the Management
Committee of the Company.
3.4 Retained Liabilities. Except for running royalty payments pursuant to
the Sohio Partnership Termination Agreement of June 2, 1986, the Company shall
not assume or be obligated to satisfy or perform any liability, obligation or
commitment of United Solar or Bekaert of whatever nature, whether known or
unknown, fixed or contingent.
3.5 Conveyance of Title. The conveyance of title to the United Solar
Contributed Assets shall be effected by the execution and delivery of such bills
of sale, certificates of title, assignments, deeds, endorsements, and other
documents of conveyance as shall be deemed reasonably suitable to convey good
and marketable title to the United Solar Contributed Assets to the Company. The
documents of title delivered hereunder shall covenant that good and marketable
title to the United Solar Contributed Assets shall be conveyed to the Company,
free and clear of all Liens except as otherwise expressly provided in this
Agreement.
3.6 ECD's and United Solar's Required Actions. On or prior to the
Closing, ECD shall cause the following to occur:
(a) ECD shall purchase all of the capital stock held
beneficially or of record by Canon in United Solar; and
(b) United Solar shall purchase all of the capital stock held
beneficially or of record by the Reischauer Trust in United
Solar.
3.7 Post-Closing Transfer of Assets and Liabilities. Certain assets,
liabilities and contracts of United Solar will be transferred from United Solar
to the Company at a later date as agreed to in the Business Plan as approved by
the Management Committee of the Company.
4. PURCHASE AND SALE OF UNITED SOLAR SHARES; CONTROL.
-------------------------------------------------
4.1 Purchase of Shares. On the Closing Date, United Solar shall sell,
transfer and deliver to Bekaert, and Bekaert hereby subscribes to and purchases
1,372,015 shares of common stock of United Solar (the "Shares") representing 19%
of the issued and outstanding shares of United Solar as of the Closing Date.
4.2 Purchase Price. The aggregate purchase price for the Shares shall be
Thirty Million US Dollars (US$30,000,000), payable on the Closing Date via wire
transfer of immediately available funds to an account designated by United Solar
at least two (2) Business
4
Days prior to the Closing Date.
4.3 Control of United Solar. ECD acknowledges that after Closing ECD has
sole control in United Solar and that Bekaert has no significant influence,
directly or indirectly, in United Solar until Unification.
5. TRANSACTION AGREEMENTS.
-----------------------
On the Closing Date, Bekaert, United Solar, the Company and/or ECD shall
enter into the following, as indicated (collectively, herein the "Transaction
Agreements"):
5.1 Limited Liability Company Agreement. Bekaert and United Solar will
enter into a LLC Agreement which will govern the operation of the Company, in
the form of Exhibit 2.1(B) attached hereto.
5.2 Shareholders' Agreement. Bekaert and United Solar will enter into a
Close Corporation Shareholder Agreement which shall contain voting rights and
buy-sell rights regarding United Solar, in the form of Exhibit 5.2 attached
hereto (the "Close Corporation Shareholder Agreement").
5.3 Supply Agreement. The Company will enter into an Exclusive Supply
Agreement with United Solar, pursuant to which United Solar will supply the
Company with Strip Cells or parts of Strip Cells, in the form of Exhibit 5.3
attached hereto (the "Exclusive Supply Agreement").
5.4 Equipment.
(a) The Company will enter into an Equipment Fabrication Services
Agreement with ECD, pursuant to which the Company shall
purchase certain 25 MW equipment for the manufacture of Strip
Cells and PV Products, in the form of Exhibit 5.4(a) attached
hereto (the "Equipment Fabrication Services Agreement").
(b) The Company will enter into an Equipment Lease Agreement with
United Solar, pursuant to which the Company will lease certain
equipment to United Solar, in the form of Exhibit 5.4(b)
attached hereto (the "Equipment Lease").
5.5 Technology.
(a) ECD and the Company will enter into an ECD/Bekaert ECD Solar
Systems LLC License Agreement, pursuant to which ECD and the
5
Company will grant each other certain intellectual property
rights, in the form of Exhibit 5.5 (a) attached hereto (the
"ECD-XXXX Agreement").
(b) NVB and United Solar will enter into an NVB/United Solar
Systems Corp. License Agreement, pursuant to which NVB and
United Solar will grant each other certain intellectual
property rights, in the form of Exhibit 5.5(b) (the
"NVB-United Solar Agreement").
(c) United Solar and the Company will enter into a United Solar
Systems Corp.-Bekaert ECD Solar Systems LLC License Agreement,
pursuant to which United Solar and the Company will grant each
other certain intellectual property rights, in the form of
Exhibit 5.5(c) attached hereto (the "United Solar-XXXX
Agreement").
(d) United Solar and the Company will enter into a Research and
Development Agreement, in the form of Exhibit 5.5(d) (the "R&D
Agreement").
5.6 Services Agreement. The Company will enter into a Services
Agreement with United Solar, in the form of Exhibit 5.6 (the "Services
Agreement").
5.7 Employee Lease Agreements.
-------------------------
(a) The Company will enter into an Employee Lease Agreement with
United Solar, in the form of Exhibit 5.7(a) (the "United Solar
Employee Lease Agreement").
(b) The Company will enter into an Employee Lease Agreement with
Bekaert, in the form of Exhibit 5.7(b) (the "Bekaert Employee
Lease Agreement").
5.8 Bekaert/XXXX Subscription Agreement. Bekaert, United Solar and the
Company will enter into a Subscription Agreement pursuant to which Bekaert will
purchase an additional Membership Interest in the Company upon the events
described therein, in the form of Exhibit 5.8 (the "Bekaert/XXXX Subscription
Agreement").
5.9 Unification Agreement. Bekaert and United Solar will enter into a
Unification Agreement pursuant to which Bekaert will agree to contribute its
interest in the Company to United Solar in return for an additional interest in
United Solar, in the form of Exhibit 5.9 (the "Unification Agreement").
5.10 Noncompetition Agreement. ECD, Bekaert and NVB will enter into a
Noncompetition Agreement, in the form of Exhibit 5.10 (the "Noncompetition
Agreement").
6
5.11 Additional Interest Agreement. Bekaert, United Solar and ECD will
enter into an Additional Interest Agreement, in the form of Exhibit 5.11 (the
"Additional Interest Agreement").
6. REPRESENTATIONS AND WARRANTIES OF ECD
--------------------------------------
ECD represents and warrants to Bekaert that the following statements
contained in this Section 6 are true, complete and correct each of which are
independently material and may be relied upon without regard to any
investigation by Bekaert:
6.1 Organization; Authorization. United Solar is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. United Solar has all requisite corporate power and authority to
execute, deliver and perform this Agreement and each other agreement, instrument
and document to be executed and delivered by or on behalf of United Solar in
connection herewith. The execution and delivery of this Agreement and each other
agreement, instrument and document to be executed by United Solar hereunder have
been duly and validly authorized and approved by United Solar's board of
directors, and no other corporate proceedings on the part of United Solar are
necessary to authorize the execution and delivery by United Solar of this
Agreement and the related documents. This Agreement and each agreement, document
and instrument executed and delivered by United Solar pursuant to this Agreement
constitutes, or when executed and delivered will constitute, valid and binding
obligations of United Solar enforceable in accordance with their terms.
ECD has all requisite corporate power and authority to execute, deliver
and perform this Agreement and each other agreement, instrument and document to
be executed and delivered by or on behalf of ECD in connection herewith. The
execution and delivery of this Agreement and each other agreement, instrument
and document to be executed by ECD hereunder have been duly and validly
authorized and approved by ECD's board of directors, and no other corporate
proceedings on the part of ECD are necessary to authorize the execution and
delivery by ECD of this Agreement and the related documents. This Agreement and
each agreement, document and instrument executed and delivered by ECD pursuant
to this Agreement constitutes, or when executed and delivered will constitute,
valid and binding obligations of ECD enforceable in accordance with their terms.
6.2 Qualification. United Solar is duly qualified or licensed to do
business as a foreign corporation in, and is in good standing in, each
jurisdiction in which the nature of its business or the ownership of its
properties requires it to be so qualified or licensed, where its failure to be
so qualified or licensed would not have a material adverse effect.
6.3 Capital Stock; Beneficial Ownership.
-----------------------------------
7
(a) Capital Stock. The authorized capital stock of United Solar
consists of 6,300,500 shares, of which 6,000,500 shares are Common Stock, par
value one cent ($.01) per share, and 300,000 shares of Convertible Common Stock,
par value one cent ($.01) per share. The Common Stock is divided into three
series, consisting of 3,000,000 shares of Series A Common Stock, 3,000,000
shares of Series B Common Stock and 500 shares of Series C Common Stock. The
parties shown on Schedule 6.3(a) are the record and beneficial owners of the
United Solar shares shown on such schedule. All of the issued and outstanding
United Solar shares have been duly authorized and validly issued, are fully paid
and non-assessable, and have been issued in compliance with (and since issuance,
have not been transferred except in compliance with) all applicable federal and
state securities laws and any preemptive rights, rights of first refusal, or
similar rights. Except as set forth on Schedule 6.3(a), there does not exist nor
is there outstanding any right or security granted or issued to any person or
entity to cause United Solar to issue or sell any shares of capital stock of
United Solar to any person or entity (including, without limitation, any stock
option, warrants, rights, commitments, convertible debt obligation, subscription
for stock or securities convertible into stock of United Solar, or any other
similar right, security, instrument or agreement). There are no voting trusts,
voting agreements, proxies or other agreements, instruments or undertakings with
respect to the voting of the United Solar shares.
(b) Ownership. ECD owns beneficially and of record its shares in
United Solar free and clear of any Liens. Upon consummation of the transactions
contemplated hereby, ECD will own beneficially and of record 81% of the issued
and outstanding shares in United Solar and Bekaert will own 19% of such shares.
6.4 Subsidiaries. Schedule 6.4 sets forth for each of United Solar's
subsidiaries (the "Subsidiary" or collectively, the "Subsidiaries"): (a) the
number and class of authorized shares of capital stock or membership interest,
(b) the number of issued and outstanding shares of capital stock, the names of
the holders thereof, and the number of shares of capital stock held by each such
holder, and (c) the directors and officers of each Subsidiary. Each Subsidiary
is a corporation duly organized, validly existing and in good standing under the
laws of the state of incorporation. Each Subsidiary is duly qualified or
licensed to do business as a foreign corporation in, and is in good standing in,
each jurisdiction in which the nature of its business or the ownership of its
properties requires it to be so qualified or licensed, where its failure to be
so qualified or licensed would not have a material adverse effect. All of the
issued and outstanding shares of capital stock of each Subsidiary have been duly
authorized and are validly issued, fully paid and non-assessable. The
Subsidiaries are owned of record and beneficially as indicated on Schedule 6.4
hereto, free and clear of any taxes, Liens, options, warrants, purchase rights,
conversion rights, exchange rights, or other contracts or commitments that could
require the stockholder to sell, transfer, or otherwise dispose of shares of
capital stock of any Subsidiary or that could require any Subsidiary to issue,
sell, or otherwise cause to become outstanding any of its shares of capital
stock. There are no outstanding equity appreciation, profit participation, or
similar rights with respect to the Subsidiaries. There are no voting trusts,
proxies, or other
8
agreements or understandings with respect to the voting of any shares of capital
stock of the Subsidiaries.
6.5 Governmental Authorities; Consents. Except for the applicable
requirements of the HSR Act, neither United Solar, ECD nor any Subsidiary is
required to submit any notice, report or other filing with any Governmental
Authority in connection with its execution, delivery or performance of this
Agreement or any other document, instrument or agreement to be executed and
delivered by it in connection herewith and the consummation of the transaction
contemplated hereby, and such execution, delivery and performance: (a) will not
violate any Law by which United Solar, ECD or any Subsidiary is bound, or any
agreement or Approval to which United Solar, ECD or any Subsidiary is a party,
(b) will not violate any provision of the Certificate of Incorporation or the
By-Laws of United Solar, ECD or any Subsidiary, and (c) will not result in a
breach or violation of, or constitute a default under, or give rise to a right
of any party to accelerate, modify or terminate, any contract, agreement,
instrument or indenture to which United Solar, ECD or any Subsidiary is a party.
No consent, approval or authorization of any Governmental Authority or any other
person is required to be obtained by United Solar, ECD or any Subsidiary in
connection with its execution, delivery and performance of this Agreement or any
other document, instrument, or agreement to be executed and delivered by United
Solar, ECD or any Subsidiary in connection herewith.
6.6 Real and Personal Property.
--------------------------
(a) Real Property. (i) Schedule 6.6(a) identifies (A) all of the real
property presently owned by United Solar and/or the Subsidiaries (collectively,
the "Owned Real Property"), and (B) all real property presently demised or
proposed to be demised by a lease or sublease (collectively, the "Leases") to
United Solar or the Subsidiaries or otherwise occupied by United Solar or the
Subsidiaries (collectively, the "Leased Real Property," and together with the
Owned Real Property, the "Real Property").
(ii) Each Lease is in full force and effect, and United Solar or
the Subsidiaries hold a valid and existing leasehold interest under each of the
Leases to which it is a party for the terms set forth therein, respectively.
Neither United Solar nor any Subsidiary is in default under any Lease, and, no
events have occurred and no circumstances exist which, if unremedied, and
whether with or without notice or the passage of time or both, would result in
such a default. United Solar and ECD have made available to Bekaert a complete
and accurate copy of each of the Leases, including all amendments thereto.
(iii) United Solar and the Subsidiaries own with good title, each
parcel of Owned Real Property identified on Schedule 6.6(a), free and clear of
all Liens.
9
(iv) All buildings located on the Real Property are in good
condition, suitable for the operation of the business and for the specific
purposes for which they are intended to be used.
(v) The Real Property is presently zoned to permit the current
use of the Real Property, and said zoning is pursuant to statute or ordinance,
not pursuant to any variance or conditional permit granted with respect to the
Real Property, and does not require any further approval nor any other action by
United Solar or the Subsidiaries. There are no contemplated or pending zoning
changes that would affect the Real Property.
(vi) The Real Property, and the use, operation, and maintenance
thereof, are not in violation of any restrictive covenant, agreement or permit
applicable thereto, or of any building code, ordinance, statute, regulation or
requirement of any Governmental Authority having jurisdiction thereof, and
neither United Solar nor any Subsidiary have received any notice regarding any
such violation.
(b) Personal Property. Except as set forth on Schedule 6.6(b)(1),
United Solar and the Subsidiaries have good, marketable and indefeasible title
to all of their assets, free and clear of all Liens or sale agreements
whatsoever. The United Solar Contributed Assets: (i) include all assets and
properties (including leasehold interests) (x) used or held for use by United
Solar to conduct its PV Products and PV Systems business as currently
conducted, and (y) necessary to operate the Company's PV Products and PV
Systems business as contemplated by this Agreement, (ii) are in good repair,
have been well maintained, are in good operating condition, are fit for
continued use in the Company's business after the Closing Date without
interruption and do not require any material modifications or repairs, and
(iii) comply in all material respects with all applicable laws, ordinances and
regulations. Except for the United Solar Contributed Assets, the assets of
United Solar and the Subsidiaries: (i) include all assets and properties
(including leasehold interests) (x) used or held for use by United Solar and
the Subsidiaries to conduct their business as currently conducted, and (y)
necessary to operate United Solar's and the Subsidiaries' business after the
Closing of this Agreement, (ii) are in good repair, have been well maintained,
are in good operating condition, are fit for continued use in United Solar's
and the Subsidiaries' business after the Closing Date without interruption and
do not require any material modifications or repairs, and (iii) comply in all
material respects with all applicable laws, ordinances and regulations.
Schedule 6.6(b)(2) sets forth the fixed assets and the inventory on hand of
United Solar and of each Subsidiary.
6.7 Financial Statements.
--------------------
(a) United Solar has delivered to Bekaert the following financial
statements, copies of which are attached hereto as Schedule 6.7:
10
(i) Audited balance sheets of United Solar and its
consolidated Subsidiaries for fiscal years ending on December 31, 1998 and
1997 and statements of income, retained earnings and cash flows for the
years then ended.
(ii) A balance sheet of United Solar and its consolidated
Subsidiaries for the fiscal year ending December 31, 1999 (the "Interim
Balance Sheet") and statements of income, retained earnings and cash flows
for the period then ended.
Said financial statements have been prepared in accordance with generally
accepted accounting principles applied consistently during the periods covered
thereby, are complete and correct and present fairly the financial condition of
United Solar and each Subsidiary at the dates of said statements and the results
of its operations for the periods covered thereby.
(b) As of the date of the Interim Balance Sheet, neither United
Solar nor the Subsidiaries had liabilities of any nature, whether accrued,
absolute, contingent or otherwise, asserted or unasserted, known or unknown
(including without limitation, liabilities as guarantor or otherwise with
respect to obligations of others, liabilities for taxes due or then accrued or
to become due, or contingent or potential liabilities relating to activities of
United Solar or the Subsidiaries or the conduct of its business prior to the
date of the Interim Balance Sheet regardless of whether claims in respect
thereof had been asserted as of such date), except liabilities stated or
adequately reserved against on the Interim Balance Sheet.
(c) As of the Closing Date, neither United Solar nor the
Subsidiaries have liabilities of any nature, whether accrued, absolute,
contingent or otherwise, asserted or unasserted, known or unknown (including
without limitation, liabilities as guarantor or otherwise with respect to
obligations of others, or liabilities for taxes due or then accrued or to become
due or contingent or potential liabilities relating to activities of United
Solar or the Subsidiaries or the conduct of their business prior to the Closing
Date, as the case may be, regardless of whether claims in respect thereof had
been asserted as of such date), except liabilities (i) stated or adequately
reserved against on the Interim Balance Sheet or the notes thereto and (ii)
relating to bona fide accounts payable to third party trade creditors which are
not more than thirty (30) days past due and which have been incurred after the
date of the Interim Balance Sheet in the ordinary course of business of United
Solar or the Subsidiaries consistent with the terms of this Agreement.
6.8 Taxes.
-----
(a) United Solar and each Subsidiary has paid or caused to be paid
all federal, state, local, foreign, and other taxes, including without
limitation, income taxes, estimated taxes, alternative minimum taxes, excise
taxes, sales taxes, use taxes, value-added taxes, gross receipts taxes,
franchise taxes, capital stock taxes, employment and payroll-related taxes,
withholding taxes, stamp taxes, transfer taxes, windfall profit taxes,
environmental taxes and property taxes,
11
whether or not measured in whole or in part by net income, and all deficiencies,
or other additions to tax, interest, fines and penalties owed by it
(collectively, "Taxes"), owed or required to be paid by it through the date
hereof whether disputed or not. United Solar and each Subsidiary has in
accordance with applicable law filed all federal, state, local and foreign tax
returns required to be filed by it through the date hereof, and all such returns
correctly and accurately set forth the amount of any Taxes relating to the
applicable period.
(b) There has not been any audit of any tax return filed by United
Solar or a Subsidiary, no such audit is in progress, and United Solar and the
Subsidiaries have not been notified by any tax authority that any such audit is
contemplated or pending. No extension of time with respect to any date on which
a tax return was or is to be filed by United Solar or a Subsidiary is in force,
and no waiver or agreement by United Solar or a Subsidiary is in force for the
extension of time for the assessment or payment of any Taxes.
(c) United Solar has never been (or has ever had any liability for
unpaid Taxes because it once was) a member of an "affiliated group" (as defined
in Section 1504(a) of the Code). United Solar has never filed, and has never
been required to file, a consolidated, combined or unitary tax return with any
other entity. Neither United Solar nor the Subsidiaries owns or has ever owned a
direct or indirect interest in any trust, partnership, corporation or other
entity, other than United Solar's ownership of the Subsidiaries. United Solar is
not a party to any tax sharing agreement.
6.9 Accounts Receivable. Schedule 6.9 attached hereto lists all of the
accounts receivable of United Solar and each Subsidiary as of February 23, 2000,
and all of the accounts receivable shown or reflected thereon are bona fide,
valid and enforceable claims, fully collectible and subject to no setoff or
counterclaim. All accounts receivable contained in the United Solar Contributed
Assets are collectable in full without any set-off within sixty (60) days after
the Closing Date.
6.10 Ordinary Course. Since the date of the Interim Balance Sheet, United
Solar and the Subsidiaries have conducted their business only in the ordinary
course and consistently with their prior practices, including, without
limitation, the collection of accounts receivable and the payment of accounts
payable within periods consistent with past practices.
6.11 Intellectual Property.
---------------------
(a) Subject to the existing agreements listed in Schedule 6.11(e)
hereof, United Solar and each Subsidiary have exclusive ownership of, or valid
license to use, all patents, copyrights, trade secrets, trademarks, know how,
computer software, licenses, service marks, trade or product names, company
names, logos, customer lists, mailing lists, sales and advertising materials,
engineering information, technology, development rights, drawings and designs,
files and shop notes, customer specifications, supplier information,
manufacturing or
12
other processes, systems, data compilations, research results or other
proprietary rights used by United Solar and the Subsidiaries in the PV
field (collectively, "Intellectual Property"). All of the rights of United
Solar, ECD and the Subsidiaries in the Intellectual Property may be freely
licensed or sublicensed subject to the rights of third parties set forth in the
existing agreements listed in Schedule 6.11(e). United Solar, ECD and the
Subsidiaries have not been notified of any claims or demands by any other person
pertaining to any of the Intellectual Property, and no proceedings have been
instituted, or to ECD's Knowledge are threatened, which challenge the rights of
United Solar, ECD or the Subsidiaries in respect thereof. No proceeding charging
United Solar, ECD or a Subsidiary with infringement has been filed or to ECD's
Knowledge is threatened to be filed relating to the Intellectual Property.
(b) All patents, patent applications, trademark registrations,
trademark applications and registered copyrights included in the Intellectual
Property are identified on Schedule 6.11(b) and have been duly registered in,
filed in or issued by the United States Patent and Trademark Office, the United
States Register of Copyrights, or the corresponding offices of other
jurisdictions and have been properly maintained and renewed in accordance with
all applicable provisions of law and administrative regulations of the United
States and each such jurisdiction.
(c) All licenses or other agreements under which ECD, United Solar
and/or the Subsidiaries are granted rights in any Intellectual Property are
listed in Schedule 6.11(c). The only obligation of United Solar to pay royalties
to third parties resides in the Sohio Partnership Termination Agreement of June
2, 1986. Any and all royalties received by United Solar as a result of
sub-licensing any Intellectual Property may be retained by United Solar without
any payment to ECD. All said licenses or other agreements are in full force and
effect, and there is no material default by any party thereto.
(d) All licenses or other agreements under which United Solar, the
Subsidiaries and/or the Company has granted rights to others in any Intellectual
Property and the royalties thereunder are listed in Schedule 6.11(d).
(e) All licenses or other agreements under which ECD has granted
intellectual property rights to others applicable in the PV field (other than
routine march-in rights included in government contracts) are listed in Schedule
6.11(e).
6.12 Litigation. There is no litigation or governmental or administrative
proceeding or investigation pending or, to ECD's Knowledge, threatened against
United Solar or the Subsidiaries which adversely effect United Solar's or the
Subsidiaries' prospects, financial condition, assets or business, or would
prevent or hinder the consummation of the transactions contemplated by this
Agreement or the transactions contemplated hereby. There is no state of facts or
event which could reasonably be expected to form the basis for such a claim,
litigation, investigation or proceeding. There is no arbitration award,
judgment, order, decree or similar
13
restriction outstanding against United Solar or the Subsidiaries relating to the
business, properties or assets of United Solar or the Subsidiaries. There is no
litigation or governmental or administrative proceeding or investigations
pending or, to ECD's Knowledge, threatened against United Solar or the
Subsidiaries regarding customs, tariff or non-tariff regulations.
6.13 Contracts. Schedule 6.13 contains a complete and accurate list of:
(a) each Contract to which United Solar or any Subsidiary is a
party or by which it is bound, involving amounts in excess of Twenty-Five
Thousand US Dollars (US$25,000) or which cannot be canceled without penalty by
United Solar or any Subsidiary on less than sixty (60) days' notice;
(b) all loan, financing, security, credit or other Contracts
evidencing or relating to indebtedness, guarantees, or Liens of United Solar and
any Subsidiary in excess of Twenty-Five Thousand US Dollars (US$25,000) in each
case;
(c) all Contracts with distributors, dealers or sales
representatives of United Solar and any Subsidiary;
(d) all management, employment, or agency Contracts and
collective bargaining Contracts of United Solar and any Subsidiary;
(e) all Contracts providing employee benefits not listed
in Schedule 6.19 of United Solar and any Subsidiary;
(f) all Contracts which contain an obligation of
confidentiality with respect to information furnished by United Solar or any
Subsidiary to a third party or received by United Solar or any Subsidiary from a
third party;
(g) all Contracts containing covenants limiting the freedom of
United Solar or any Subsidiary to compete in any line of business or with any
Person or in any geographic area or market and not already disclosed in another
Schedule to this Agreement;
(h) all Contracts relating to patents, trademarks, trade names
or copyrights or applications for any thereof, inventions, trade secrets or
other proprietary information of United Solar and any Subsidiary not already
disclosed on Schedule 6.11;
(i) all Contracts for the past or present disposal of waste of
United Solar and any Subsidiary involving amounts in excess of Twenty-Five
Thousand US Dollars (US$25,000) in each case;
14
(j) all Contracts between ECD and United Solar or their
respective Affiliates, officers, directors, consultants or employees (or
relatives of any of the foregoing);
(k) all other Contracts entered into other than in the
ordinary course of business consistent with past practices, including, but not
limited to, Contracts (i) with suppliers for the purchase of goods or services
in excess of normal requirements or at prices in excess of the current market
price, (ii) for the sale by United Solar or any Subsidiary of goods or services
at prices not reasonably calculated to produce gross profit margins consistent
with those achieved by United Solar or any Subsidiary during its three prior
fiscal years, or (iii) which contain terms or conditions which United Solar or
any Subsidiary cannot reasonably expect to fulfill in their entirety;
(l) All Contracts between and among Canon and/or any of its
subsidiaries, on the one hand, and United Solar and/or any of the Subsidiaries
on the other hand, whether or not also with any other Person; and
(m) Agreements and understandings with Sovlux PV (the ECD-
KVANT (USSR) Joint Venture) and Suryovonics (the ECD-Indian Joint Venture) are
as follows:
(i) ECD-KVANT (USSR) License Agreement ("USSR
Agreement"), January 11, 1990. This USSR Agreement
was executed concurrently with an agreement between
ECD and KVANT establishing a joint venture ("Sovlux")
in the (now former) USSR. Pursuant to this USSR
Agreement, ECD granted to the joint venture an
exclusive, royalty-bearing license under ECD's
present and future patents and technology
to make photovoltaic products ("Licensed
Products") in the USSR and sell worldwide except
in Japan, India and in the United States only
through ECD. Licensed Products under this
Agreement were defined as materials, devices,
and apparatus employing one or more
photovoltaic cells.
(ii) Revised Memorandum of Understanding ("MOU"),
September 13, 1988. This MOU follows an earlier
Memorandum of Understanding in 1986 in which ECD
and an Indian investment group expressed their
intent to establish an Indian joint venture with
40% of the equity held by ECD and 60% by the
investment group. Under the MOU, ECD agreed to
grant to the joint venture an exclusive license to
15
manufacture in India and sell worldwide under ECD's
present and future photovoltaic patents.
United Solar and the Subsidiaries have delivered to Bekaert accurate and
complete copies of each such written Contract, and an accurate and complete
written description of each such oral Contract, in each case with all
modifications and amendments thereto. Since December 31, 1998, there has been no
modification or termination of any Contract under circumstances which could
reasonably be expected to have a material adverse effect on United Solar's or
the Subsidiaries' business as conducted as of the Closing Date.
6.14 Compliance with Contracts. Except as set forth on Schedule 6.14, with
respect to the Contracts to which United Solar or the Subsidiaries are a party
or by which they are bound which are required to be disclosed on any Schedule to
this Agreement:
(a) neither United Solar, nor any Subsidiary is in default under or
in violation of any thereof; and
(b) no event has occurred which, with notice or lapse of time
or both, would constitute such a default or violation.
Neither United Solar, ECD nor any Subsidiary has received written notice of a
breach or claimed breach by United Solar or any Subsidiary or termination of any
of the foregoing. To ECD's Knowledge, there is no default under or any violation
of any of the foregoing by any other party thereto.
6.15 Compliance with Laws. United Solar and the Subsidiaries are in
compliance with all applicable statutes, ordinances, orders, judgments, decrees,
rules and regulations promulgated by any federal, state, municipal entity,
agency, court or other governmental authority which apply to United Solar or the
Subsidiaries or to the conduct of their business, and neither United Solar nor
the Subsidiaries have received notice of a violation or alleged violation of any
such statute, ordinance, order, rule or regulation.
6.16 Insurance. There are in full force and effect all liability and
casualty insurance policies, necessary to properly insure the physical
properties and assets of United Solar and the Subsidiaries, all as set forth in
Schedule 6.16 attached hereto. Said insurance policies and arrangements are in
full force and effect, all premiums with respect thereto are currently paid, and
United Solar and the Subsidiaries are in compliance in all material respects
with the terms thereof. Said insurance is adequate and customary for the
business engaged in by United Solar and the Subsidiaries and are sufficient for
compliance by United Solar and the Subsidiaries with all requirements of law and
all agreements and leases to which United Solar and the Subsidiaries are a
party.
16
6.17 Warranty or Other Claims. There are no existing or threatened product
liability, warranty or other similar claims, or any facts upon which a claim of
such nature could be based, against United Solar or the Subsidiaries for
products or services which are defective or fail to meet any product or service
warranties.
6.18 Permits. United Solar and the Subsidiaries have obtained all permits,
registrations, licenses, franchises, certifications, authorizations, registries
and other approvals (collectively, the "Approvals") required from Governmental
Authorities in order for United Solar and the Subsidiaries to conduct their
business, which Approvals are valid and in full force and effect, and United
Solar and the Subsidiaries are operating in compliance therewith. All requests
for renewals of the Approvals have been timely filed.
6.19 Employee Benefit Programs.
-------------------------
(a) Schedule 6.19 lists every Employee Program (as defined below)
that has been maintained (as defined below) by United Solar or the Subsidiaries
at any time during the six-year period ending on the Closing Date.
(b) Each Employee Program which has ever been maintained by United
Solar or the Subsidiaries and which has at any time been intended to qualify
under Section 401(a) or 501(c)(9) of the Code has received a favorable
determination or approval letter from the Internal Revenue Service ("IRS")
regarding its qualification under such section and has, in fact, been qualified
under the applicable section of the Code from the effective date of such
Employee Program through and including the Closing Date (or, if earlier, the
date that all of such Employee Program's assets were distributed). No event or
omission has occurred which would cause any such Employee Program to lose its
qualification or otherwise fail to satisfy the relevant requirements to provide
tax-favored benefits under the applicable Code section (including, without
limitation Code Sections 105, 125, 401(a) and 501(c)(9)). Each asset held under
any such Employee Program may be liquidated or terminated without the imposition
of any redemption fee, surrender charge or comparable liability. No partial
termination (within the meaning of Section 411(d)(3) of the Code) has occurred
with respect to any Employee Program.
(c) Neither United Solar nor any Subsidiary knows, nor should any of
them have reason to know, of any failure of any party to comply with any laws
applicable to the Employee Programs that have been maintained by United Solar or
the Subsidiaries. With respect to any Employee Program ever maintained by United
Solar or the Subsidiaries, there has occurred no (i) "prohibited transaction,"
as defined in Section 406 of the Employee Retirement Income Security Act of
1974, as amended ("ERISA") or Section 4975 of the Code, or breach of any duty
under ERISA or other applicable law (including, without limitation, any health
care continuation requirements or any other tax law requirements, or conditions
to favorable tax treatment, applicable to such plan), which could result,
directly or indirectly, in any taxes, penalties or other liability to United
Solar, the Subsidiaries or the Company, (ii) failure to
17
comply with any provision of ERISA, other applicable law, or any agreement, or
(iii) non-deductible contribution, which in the case of (i), (ii) or (iii),
could subject United Solar or the Subsidiaries to liability either directly or
indirectly (including, without limitation, through any obligation of
indemnification or contribution) for any damages, penalties or taxes, or any
other loss or expense. No litigation, arbitration, or governmental
administrative proceeding (or investigation) or other proceeding (other than
those relating to routine claims for benefits) is pending or threatened with
respect to any such Employee Program. All payments and/or contributions required
to have been made (under the provisions of any agreements or other governing
documents or applicable law) with respect to all Employee Programs ever
maintained by United Solar or the Subsidiaries, for all periods prior to the
Closing Date, either have been made or have been accrued.
(d) Neither United Solar, nor any Subsidiary (i) has ever maintained
any Employee Program which has been subject to title IV of ERISA or Code Section
412 or ERISA Section 302 (including, but not limited to, any Multiemployer Plan)
or (ii) has ever provided health care or any other non-pension benefits to any
employees after their employment is terminated (other than as required by part 6
of subtitle B of title I of ERISA) or has ever promised to provide such
post-termination benefits.
(e) With respect to each Employee Program maintained by United Solar
or the Subsidiaries within the six years preceding the Closing Date, complete
and correct copies of the following documents (if applicable to such Employee
Program) have previously been delivered to Bekaert: (i) all documents embodying
or governing such Employee Program, and any funding medium for the Employee
Program (including, without limitation, trust agreements) as they may have been
amended; (ii) the most recent IRS determination or approval letter with respect
to such Employee Program under Code Sections 401(a) or 501(c)(9), and any
applications for determination or approval subsequently filed with the IRS;
(iii) the six most recently filed IRS Forms 5500, with all applicable schedules
and accountants' opinions attached thereto; (iv) the summary plan description
for such Employee Program (or other descriptions of such Employee Program
provided to employees) and all modifications thereto; (v) any insurance policy
(including any fiduciary liability insurance policy) related to such Employee
Program; (vi) any registration statement or other filing made pursuant to any
federal or state securities law; (vii) all correspondence to and from any state
or federal agency within the last six years with respect to such Employee
Program; (viii) any documents evidencing any loan to an Employee Program that is
a leveraged employee stock ownership plan; (ix) the six most recent actuarial
valuation reports completed with respect to each such Employee Program; and (x)
all other materials reasonably necessary for the Company to perform any of its
responsibilities with respect to any Employee Program subsequent to the Closing
(including, without limitation, health care continuation requirements).
(f) Each Employee Program required to be listed on Schedule 6.19 may
be amended, terminated, or otherwise modified by United Solar or the
Subsidiaries to the greatest
18
extent permitted by applicable law, including the elimination of any and all
future benefit accruals under any Employee Program and no employee
communications or provision of any Employee Program document has failed to
effectively reserve the right of United Solar or the Subsidiary to so amend,
terminate or otherwise modify such Employee Program.
(g) Each Employee Program ever maintained by United Solar and the
Subsidiaries (including each non-qualified deferred compensation arrangement)
has been maintained in compliance with all applicable requirements or federal
and state securities laws including, without limitation, the requirements that
the offering of interests in such Employee Program be registered under the
Securities Act of 1933 and/or state "Blue Sky" laws.
(h) Each Employee Program ever maintained by United Solar and the
Subsidiaries has complied with the applicable notification and other applicable
requirements of the Consolidated Omnibus Budget Reconciliation Act of 1985
("COBRA"), Health Insurance Portability and Accountability Act of 1996, the
Newborns' and Mothers' Health Protection Act of 1996, and the Mental Health
Parity Xxx 0000.
(i) For purposes of this Section:
(1) "Employee Program" means (A) all employee benefit plans
within the meaning of ERISA Section 3(3), including, but
not limited to, multiple employer welfare arrangements
(within the meaning of ERISA Section 3(40)), plans to
which more than one unaffiliated employer contributes
and employee benefit plans (such as foreign or excess
benefit plans) which are not subject to ERISA; and (B)
all stock option plans, stock purchase plans, bonus or
incentive award plans (including training loans),
severance pay policies or agreements, deferred
compensation agreements, supplemental income
arrangements, vacation plans, and all other employee
benefit plans, agreements, and arrangements not
described in (A) above, including without limitation,
any arrangement intended to comply with Code Section
120, 125, 127, 129 or 137; and (C) all plans or
arrangements providing compensation to employee and
non-employee directors. In the case of an Employee
Program funded through a trust described in Code Section
401(a) or an organization described in Code Section
501(c)(9), each reference to such Employee Program shall
include a reference to such trust, organization or other
vehicle.
(2) An entity "maintains" an Employee Program if such entity
sponsors, contributes to, or provides (or has promised
to provide) benefits under or through such Employee
Program, or has any
19
obligation (by agreement or under applicable law) to
contribute to or provide benefits under or through such
Employee Program, or if such Employee Program provides
benefits to or otherwise covers employees of such
entity, or their spouses, dependents, or beneficiaries.
6.20 Environmental Liability. Except as set forth in Schedule 6.20:
(a) The businesses of United Solar and its Subsidiaries have been and
are operated in compliance with all foreign, federal, state and local
environmental protection, health and safety or similar laws, statutes,
ordinances, authorizations, certifications, registrations, approvals,
certificates of compliance, restrictions, licenses, rules, regulations, permit
conditions and legal requirements, including without limitation the Federal
Clean Water Act, Safe Drinking Water Act, Resource Conservation & Recovery Act,
Clean Air Act, Comprehensive Environmental Response, Compensation and Liability
Act, Toxic Substance Control Act, Rivers and Harbors Act, and Emergency Planning
and Community Right to Know, each as amended and currently in effect (together,
"Environmental, Health and Safety Laws").
(b) Neither United Solar nor any of its Subsidiaries has caused,
permitted or allowed the generation, treatment, manufacture, processing,
distribution, use, storage, discharge, release, disposal, transport or handling
of any chemicals, pollutants, contaminants, wastes, toxic substances, hazardous
substances, petroleum, petroleum products or any substance listed, described or
defined in, governed by, or regulated under any Environmental, Health and Safety
Law ("Hazardous Substances") at, or into or under any properties adjoining or
adjacent to, any of their properties or facilities in violation of any
Environmental, Health and Safety Law, and, no generation, manufacture,
processing, distribution, use, treatment, handling, storage, discharge, release,
disposal, transport or handling of any Hazardous Substances has occurred at any
property or facility owned, leased or operated by United Solar or any of its
Subsidiaries in violation of any Environmental, Health and Safety Law or which
would require assessment, investigation or removal or remedial action under any
Environmental, Health and Safety Law.
(c) No surface or ground water, surface or subsurface soils or strata,
or sediment at or under any facility or premises, currently or formerly owned,
operated or leased by United Solar or any of its Subsidiaries has been
contaminated by any generation, manufacture, processing, distribution, use,
treatment, storage, discharge, release, disposal, transport or handling of any
Hazardous Substances.
(d) Neither United Solar nor any of its Subsidiaries has received any
written notice from any Governmental Authority, any employee, agent or
representative of any Governmental Authority, or any other third party, or, to
ECD's Knowledge, any other communication alleging or concerning any request for
information, costs, damages, expenses, penalties or violation by United Solar or
any of its Subsidiaries of, or responsibility or liability of United Solar or
any of
20
its Subsidiaries under, any Environmental, Health and Safety Law. There are
no pending, or to ECD's Knowledge, threatened claims, suits, actions,
proceedings or investigations with respect to the businesses or operations of
United Solar or any of its Subsidiaries alleging or concerning any violation of
or responsibility or liability under any Environmental, Health and Safety Law,
nor is there any fact or condition that could give rise to such a claim, suit,
action, proceeding or investigation.
(e) United Solar and its Subsidiaries are in possession of all
material approvals, permits, licenses, certificates, registrations and similar
type authorizations from all Governmental Authorities under all Environmental,
Health and Safety Laws with respect to the operation of the businesses of
United Solar and its Subsidiaries; there are no pending or, to ECD's Knowledge,
threatened, actions, proceedings or investigations seeking to modify, revoke or
deny renewal of any of such approvals, permits, licenses, certificates,
registrations and authorizations; and there is not any fact or condition that
could give rise to any action, proceeding or investigation to modify, revoke or
deny renewal of any of such approvals, permits, licenses, certificates,
registrations and authorizations;
(f) Without in any way limiting the generality of the foregoing:
(i) all off-site locations where United Solar or any of its
Subsidiaries has transported, released, discharged, stored,
disposed or arranged for the disposal of pollutants,
contaminants, hazardous wastes or toxic substances required
by law to be disposed at a licensed disposal site are
identified in Schedule 6.20;
(ii) all current and former underground storage tanks, septic
tanks, and cesspools and the operating status, capacity and
contents of such tanks and cesspools, located or formerly
located on any property owned, leased or operated by United
Solar or any of its Subsidiaries are identified in Schedule
6.20;
(iii) there is no asbestos contained in or forming part of any
building, building component, structure or office space
owned or leased by United Solar or the Subsidiaries; and
(iv) no polychlorinated biphenyls ("PCBs") or PCB-containing
items are used, stored, or located at any property owned,
leased or operated by United Solar or any of its
Subsidiaries.
6.21 Employees; Labor Matters. Schedule 6.21 sets forth the total number
of full-time employees and part-time employees for United Solar and each of its
Subsidiaries. United Solar and the Subsidiaries are not delinquent in payments
to any of their employees for any wages,
21
salaries, commissions, bonuses or other direct compensation for any services
performed for them to the date hereof or amounts required to be reimbursed to
such employees. Upon termination of the employment of any of said employees,
neither United Solar, nor the Subsidiaries will by reason of the transactions
contemplated under this Agreement or anything done prior to the Closing, be
liable to any of said employees for so-called "severance pay" or any other
payments. United Solar and the Subsidiaries do not have any formal policy,
practice, plan or program of paying severance pay or any form of severance
compensation in connection with the termination of employment. United Solar and
its Subsidiaries are in compliance with all applicable laws and regulations
respecting labor, employment, fair employment practices, work place safety and
health, terms and conditions of employment, and wages and hours. There are no
charges of employment discrimination or unfair labor practices, nor are there
any strikes, slowdowns, stoppages of work, or any other concerted interference
with normal operations which are existing, pending or threatened against or
involving United Solar or the Subsidiaries. There are no grievances, complaints
or charges that have been filed against the Company under any dispute
resolution procedure (including, but not limited to, any proceedings under any
dispute resolution procedure under any collective bargaining agreement) that
might have an adverse effect on United Solar or the Subsidiaries or the conduct
of their business, and there is no arbitration or similar proceeding pending and
no claim therefor has been asserted. No collective bargaining agreement is in
effect or is currently being or is about to be negotiated by United Solar or the
Subsidiaries. Neither United Solar, nor its Subsidiaries has received any
information indicating that any of its employment policies or practices is
currently being audited or investigated by any federal, state or local
government agency. As of the Closing Date, there were no existing claims
(whether asserted or unasserted) against United Solar or the Subsidiaries for,
and United Solar or the Subsidiaries have no liabilities in connection with, any
workmen's compensation claims and/or COBRA claims or benefits.
6.22 Additional Mexican Subsidiary's Representations. Except as
set forth on Schedule 6.22:
(a) United Solar Mexico does not have a supply agreement with any
Mexican company.
(b) United Solar Mexico has a service agreement with lawyers that
was established in 1992, and the agreements with the auditors
is made for specific service, such as audits, transference
price study, tax review, the kind of services are provided for
event and not by previous agreement.
(c) United Solar Mexico has no relationship with any other Mexican
companies, other than the submaquila carried by Sierra Powder
Coating S.A. de C.V. (company with a Temporary Import Program
for Exports), under an official communication issued by the
Commerce Department of Mexico.
22
(d) United Solar Mexico does not have any PAMA (Administrative
Procedure in Custom Matters) or products kept as guarantees
for any Governmental Authority.
(e) United Solar Mexico's maquila agreement has not been amended
to change its purpose. Since 1998, United Solar Mexico has
been using the same maquila program in accordance with the
amendments implemented by the Ministry of Commerce, and no
authorization from Governmental Authorizations to change its
maquila program has been requested by United Solar Mexico, so
that there have not been any amendments to the maquiladora
authorization.
(f) All products produced by United Solar Mexico are exported to the
United States.
(g) United Solar Mexico has only the powers of attorney contained
in notarial deeds numbers 2201, 4709 and 6338 before Notary
Public number 11 and notarial deed number 5617 before Notary
Public number 7.
(h) The only utilities used by United Solar Mexico are city water,
electricity, telephone service, water disposal and scrap
disposal (the "Utilities"), and the agreements for the
Utilities have the same conditions as provided to any other
Person in Mexico.
(i) The basic salary declared for the payments of contributions to
the Social Security and the Housing Institute (INFONAVIT) has
always included all benefits which according to the respective
applicable laws must be considered.
6.23 Disclosure. The representations, warranties and statements contained
in this Agreement and in the related agreements and in the certificates,
exhibits and schedules delivered by United Solar or ECD pursuant to this
Agreement to Bekaert do not contain any untrue statement of a material fact,
and, when taken together, do not omit to state a material fact required to be
stated therein or necessary in order to make such representations, warranties or
statements not misleading in light of the circumstances under which they were
made. There are no facts which presently or may in the future have a material
adverse effect on the business, properties, prospects, operations or condition
of United Solar or the Subsidiaries which have not been specifically disclosed
herein or in a Schedule furnished herewith. There is no event or circumstance
which ECD or United Solar has not disclosed to Bekaert in writing which would or
could reasonably be expected to have a material adverse effect on United Solar's
or ECD's ability to perform this Agreement.
23
7. REPRESENTATIONS AND WARRANTIES OF BEKAERT
-----------------------------------------
Bekaert represents and warrants to ECD that the following statements
contained in this Section 7 are true, complete and correct:
7.1 Organization; Authorization. Bekaert is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
Bekaert has all requisite corporate power and authority to execute, deliver and
perform this Agreement and each other agreement, instrument and document to be
executed and delivered by or on behalf of Bekaert in connection herewith. The
execution and delivery of this Agreement and each other agreement, instrument
and document to be executed by Bekaert hereunder have been duly and validly
authorized and approved by Bekaert's board of directors, and no other corporate
proceedings on the part of Bekaert are necessary to authorize the execution and
delivery by Bekaert of this Agreement and the related documents. This Agreement
and each agreement, document and instrument executed and delivered by Bekaert
pursuant to this Agreement constitutes, or when executed and delivered will
constitute, valid and binding obligations of Bekaert enforceable in accordance
with their terms.
7.2 Governmental Authorities; Consents. Except for the applicable
requirements of the HSR Act, Bekaert is not required to submit any notice,
report or other filing with any Governmental Authority in connection with
Bekaert's execution, delivery or performance of this Agreement or any other
document, instrument or agreement to be executed and delivered by Bekaert in
connection herewith and the consummation of the transaction contemplated hereby,
and such execution, delivery and performance: (a) will not violate any law by
which Bekaert is bound, or any agreement to which Bekaert is a party, (b) will
not violate any provision of the Certificate of Incorporation or the By-Laws of
Bekaert, and (c) will not result in a breach or violation of, or constitute a
default under, or give rise to a right of any party to accelerate, modify or
terminate, any contract, agreement, instrument or indenture to which Bekaert is
a party. No consent, approval or authorization of any Governmental Authority or
any other Person is required to be obtained by Bekaert in connection with
Bekaert's execution, delivery and performance of this Agreement or any other
document, instrument, or agreement to be executed and delivered by Bekaert in
connection herewith.
7.3 Litigation. There is no litigation or governmental or administrative
proceeding or investigation pending or, to the knowledge of Bekaert, threatened
against Bekaert which would prevent or hinder the consummation of the
transactions contemplated by this Agreement or the transactions contemplated
hereby. To Bekaert's knowledge, there is no state of facts or event which could
reasonably be expected to form the basis for such a claim, litigation,
investigation or proceeding.
7.4 Investment. Bekaert (a) understands that the Shares have not been,
and will not
24
be, registered under the Securities Act, or under any state securities
laws, and are being offered and sold in reliance upon federal and state
exemptions for transactions not involving any public offering, (b) is acquiring
the Shares solely for its own account for investment purposes, not as a nominee
or agent, and not with a view to the distribution thereof, (c) is able to bear
the economic risk and lack of liquidity inherent in holding the Shares, and (d)
is an Accredited Investor as defined in Rule 501 of Regulation D of the
Securities Act.
7.5 Full Disclosure. The representations, warranties and statements
contained in this Agreement and in the related agreements and in the
certificates, exhibits and schedules delivered by Bekaert pursuant to this
Agreement to United Solar do not contain any untrue statement of a material
fact, and, when taken together, do not omit to state a material fact required to
be stated therein or necessary in order to make such representations, warranties
or statements not misleading in light of the circumstances under which they were
made. To Bekaert's knowledge, there is no event or circumstance which Bekaert
has not disclosed to ECD and United Solar in writing which would or could
reasonably be expected to have a material adverse effect on Bekaert's ability to
perform this Agreement.
8. COVENANTS OF UNITED SOLAR AND ECD.
----------------------------------
Unless Bekaert otherwise agrees in writing, United Solar and ECD covenant
as follows:
8.1 Consents of Third Parties. United Solar and ECD shall use reasonable
commercial efforts to obtain any third party consents required to consummate the
transactions contemplated hereunder in accordance with the terms hereof.
8.2 Conduct of Business. Subject to Section 8.3, from the date hereof
until the Closing Date, United Solar shall conduct its business prudently and in
the ordinary course consistent with past practice.
8.3 Forbearance by United Solar. From the date hereof until the
Closing Date, United Solar and the Subsidiaries shall not without the consent
of Bekaert:
(a) incur any liability other than in the ordinary course of
business or pay any liability other than current liabilities
and current maturities of existing long term debt;
(b) incur any indebtedness for borrowed money or assume,
guarantee or otherwise become responsible for the obligations
of any other person;
(c) mortgage, pledge, or otherwise encumber any of its assets;
(d) sell or transfer any of its assets other than sales of
inventory in the
25
ordinary course of business;
(e) sell any of the inventory of United Solar or the Subsidiaries
other than in the ordinary course of business;
(f) cancel, release, or assign any obligations owed to United
Solar or the Subsidiaries;
(g) enter into any leases or contracts except for sales or
purchases entered into in the ordinary course of business;
(h) terminate any leases or contracts or make any material
changes therein;
(i) adopt any new method of accounting;
(j) engage in any transactions with ECD or its Affiliates, except
in the ordinary course of business;
(k) Agree to do any of the foregoing.
8.4 Satisfaction of Conditions. Without limiting the generality or effect
of any provision of Section 10, prior to the Closing Date, United Solar will use
reasonable efforts with due diligence and in good faith to satisfy promptly all
conditions required hereby to be satisfied by United Solar in order to
consummate the transactions contemplated hereby.
9. COVENANTS OF BEKAERT
--------------------
Unless United Solar and ECD otherwise agree in writing, Bekaert covenants
as follows:
9.1 Consents of Third Parties. Bekaert shall use reasonable commercial
efforts to obtain any third party consents required to consummate the
transactions contemplated hereunder in accordance with the terms hereof.
9.2 Satisfaction of Conditions. Without limiting the generality or effect
of any provision of Section 10, prior to the Closing Date, Bekaert will use
reasonable efforts with due diligence and in good faith to satisfy promptly all
conditions required hereby to be satisfied by Bekaert in order to consummate the
transactions contemplated hereby.
10. CLOSING
-------
10.1 Conditions to United Solar's and ECD's Obligations. The obligations
of United Solar and ECD to be performed hereunder on the Closing Date are
subject to satisfaction of the
26
following conditions on or before the Closing Date (or their waiver by United
Solar and ECD):
(a) Representations and Warranties True and Accurate as of
Closing. The representations and warranties of Bekaert
contained herein were true and correct as of the date of this
Agreement and continue to be true and correct as of the
Closing Date with the same force and effect as though made at
such time; provided however, that if events subsequent
to the date of this Agreement cause any representation or
warranty to be incorrect as of the Closing Date, this
condition shall nevertheless be deemed to be satisfied if (i)
Bekaert delivers updated schedules to United Solar and ECD,
and (ii) all such updated schedules remain reasonably
satisfactory to United Solar and ECD;
(b) Performance of Obligations of Bekaert. Bekaert shall have
completely performed in all respects all of its covenants and
other conditions hereunder;
(c) Form of Documents. All certificates, assignments, documents of
title and other documents to be delivered by Bekaert
hereunder shall be in form and substance reasonably
satisfactory to United Solar and ECD;
(d) Bekaert Certificate. United Solar and ECD shall have
received an officer's certificate, in substantially the form
of Exhibit 10.1(d) signed by Bekaert;
(e) Good Standing. United Solar and ECD shall have received a
good standing certificate of Bekaert dated no more than ten
(10) days prior to the Closing Date from Bekaert's state of
incorporation;
(f) Legal Action. There shall be no pending or threatened legal
action or inquiry which challenges the validity or legality
of or seeks or could reasonably be expected to prevent, delay
or impose conditions on the consummation of any of the
transactions contemplated by this Agreement;
(g) Consents. The Company shall have received all material
consents, approvals, permits, licenses and registrations of
all Persons and Governmental Authorities necessary for United
Solar, ECD and Bekaert to execute, deliver and perform this
Agreement and all other documents, instruments and agreements
contemplated herein;
(h) Xxxx-Xxxxx-Xxxxxx. Any applicable waiting period under the
HSR Act, if applicable, relating to the transactions
contemplated by this Agreement
27
shall have expired or been terminated; and
(i) Other. United Solar and ECD shall have received each other
document and obligation required to be delivered or performed
by Bekaert under the terms of this Agreement as set forth in
Section 5.
10.2 Conditions to Bekaert's Obligations. The obligations of Bekaert to be
performed hereunder on the Closing Date are subject to satisfaction of the
following conditions on or before the Closing Date (or their waiver by Bekaert):
(a) Representations and Warranties True and Accurate as of
Closing. The representations and warranties of ECD contained
herein were true and correct as of the date of this Agreement
and continue to be true and correct as of the Closing Date
with the same force and effect as though made at such time;
provided however, that if events subsequent to the date of
this Agreement cause any representation or warranty to be
incorrect as of the Closing Date, this condition shall
nevertheless be deemed to be satisfied if (i) ECD delivers
updated schedules to Bekaert, and (ii) all such updated
schedules remain reasonably satisfactory to Bekaert;
(b) Performance of Obligations of United Solar and ECD. United
Solar and ECD shall have completely performed in all respects
all of their covenants and other conditions hereunder;
(c) Material Adverse Facts. There shall not have occurred after
the date hereof, any events, facts, or circumstances which
reflect in any material adverse way on the financial
condition, assets, liabilities, business, or prospects of
United Solar and ECD;
(d) Form of Documents. All certificates, assignments, documents of
title and other documents to be delivered by United Solar and
ECD or their Affiliates hereunder shall be in form and
substance satisfactory to Bekaert;
(e) United Solar and ECD Certificate. Bekaert shall have received
officer's certificates from United Solar and ECD, in
substantially the form of Exhibit 10.2(e);
(f) Good Standing. Bekaert shall have received good standing
certificates of United Solar and ECD dated no more than ten
(10) days prior to the Closing Date from United Solar's and
ECD's state of incorporation;
(g) Legal Action. There shall be no pending or threatened legal
action or
28
inquiry which challenges the validity or legality of or seeks
or could reasonably be expected to prevent, delay or impose
conditions on the consummation of any of the transactions
contemplated by this Agreement;
(h) Consents. The Company shall have received all material
consents, approvals, permits, licenses and registrations of
all Persons and Governmental Authorities necessary for United
Solar, ECD and Bekaert to execute, deliver and perform this
Agreement and all other documents, instruments and agreements
contemplated herein;
(i) Reischauer Purchase. United Solar shall have purchased all
of the capital stock held by the Reischauer Trust in United
Solar pursuant to a valid Reischauer Agreement and evidence of
cancellation of the stock certificates;
(j) Xxxx-Xxxxx-Xxxxxx. Any applicable waiting period under the
HSR Act, if applicable, relating to the transactions
contemplated by this Agreement shall have expired or been
terminated;
(k) Xxxxxx Xxxxxxxx Opinion. Bekaert shall have received an
opinion of Xxxxxx Xxxxxxxx satisfactory to Bekaert in its
sole discretion regarding the matters contemplated by this
Agreement; and
(l) Other. Bekaert shall have received each other document and
obligation required to be delivered or performed by United
Solar and ECD under the terms of this Agreement as set forth
in Section 5.
10.3 Mutual Conditions to Obligations of United Solar, ECD and Bekaert.
The obligations of each of United Solar, ECD and Bekaert to be performed
hereunder on the Closing Date are subject to each of the following conditions
having been satisfied, or waived by them, on or prior to the Closing Date:
(a) Governmental Consents. All licenses, permits, authorizations,
orders and approvals required by a Governmental Authority for
the execution of this Agreement and the related documents and
agreements to be signed in connection herewith and the
consummation of the transactions contemplated hereby and
thereby shall have been obtained and any applicable waiting
periods under pertinent statutes and the rules and regulations
thereunder shall have expired or terminated and no condition
with respect to the transactions contemplated by this
Agreement and the related documents and agreements shall have
been imposed by any Governmental Authorities;
29
(b) Other Deliveries. On or before the Closing Date, there shall
have been delivered the following:
(i) The Certificate of Formation of the Company in the State
of Delaware;
(ii) General bills of sale, assignment and assumption
agreements (collectively, the "Bills of Sale");
(iii) Fully executed copies of the Transaction Agreements;
(iv) The share certificates of United Solar in United Solar
Mexico, duly endorsed in blank or accompanied by stock
powers duly executed in blank, in proper form for
transfer to the Company;
(v) The share certificates in United Solar for the shares
purchased in accordance with Section 4.1 issued to
Bekaert and the Canon Agreements shall have been
executed and delivered by the respective parties
thereto.
(c) Canon Closing. The contemplated purchase of Canon's ownership
interest in United Solar shall have occurred, and be in form
and content acceptable to ECD and Bekaert.
10.4 Closing. If the conditions to the parties' obligations enumerated in
Section 10 are satisfied, consummation of the transactions contemplated hereby
(the "Closing") shall take place on April 6, 2000, at the offices of Xxxxxx
XxXxxxxx, Cleveland, Ohio or by the exchange of documents by courier and
facsimile, or on such other date as the parties may agree (the "Closing Date").
The transfers and deliveries described in this Section 10 shall be mutually
interdependent and regarded as occurring simultaneously; and no such transfer or
delivery shall become effective until all such other transfers and deliveries
have also been consummated.
11. COVENANTS; TERMINATIONS
-----------------------
11.1 Aperature Warranty.
------------------
(a) ECD hereby represents and warrants to Bekaert, which
representation and warranty shall survive the Closing and
indefinitely thereafter that a stable aperture-area efficiency
of 7.5% will be demonstrated for modules all fabricated by
United Solar with the 25MW Equipment. In determining whether
such efficiency is demonstrated, measurements will be carried
30
out, on representative samples, at 25(Degree)C under AMI.5
illumination. The modules (typically 4 sq. ft in area) will
be light-soaked for 600 hours under one-sun condition at
50(Degree)C prior to the efficiency measurement. ECD further
represents and warrants, based on the foregoing efficiency
value, United Solar and the Company's products will have a
rated power output depending on the aperture area of the
product; provided that any reduction in such rated power
output is not caused by poor workmanship and/or use of
improper material or processes by United Solar or the Company.
(b) Based on the above efficiency value, United Solar and the
Company's products will have a rated power output depending
on the aperture area of the product. If either, (i) an
evaluation of performance as described above and feedback from
long term field test data, or (ii) a deficiency in the
stabilized module efficiency of the products manufactured,
such as by way of example and not limitation, product returns
in excess of five percent (5%) of sales per quarter, causes
the business of United Solar and the Company to not be viable
or materially impaired (e.g., sales, as a result of such
product performance, have declined for four consecutive
quarters, or product returns exceed twenty percent (20%) of
sales per year); then the future of United Solar and the
Company will be addressed in the following stages:
(i) A first stage in which the problem i identified and a
solution is sought; in this case, all costs associated
therewith will be reimbursed by ECD through a preferred
distribution by United Solar in accordance with the
provisions of Section 1(d) of the Unification Agreement,
if such damages are incurred prior to Unification, or
in accordance with the provisions of Section 2.5 of
the Close Corporation Shareholder Agreement, if such
damages are incurred after Unification;
(ii) A second stage if the problems persist for a prolonged
period of time (two (2) additional consecutive quarters)
and significant expenses (e.g. greater than Two Million
Five Hundred Thousand US Dollars (US$2,500,000) are
incurred; in this case, there will be a compensation by
ECD (pursuant to the preferred distribution procedure in
(i) above) for all costs associated with identifying the
problem and seeking a solution as well as to make up for
the loss of revenue or, at Bekaert's option to acquire
an additional percentage membership interest in the
Company (if prior to Unification) or United Solar (if
after Unification) to compensate
31
for such loss of revenue for the period until the
problem is solved and the solution is implemented, said
additional percentage interest to be determined as
follows:
A. If prior to Unification, Bekaert shall receive,
as compensation for such loss of revenue, an
additional percentage membership interest in the
Company equal to the percentage interest which
Bekaert would have received in United Solar,
as determined under (B) below, if Unification
would have already occurred (i.e., United Solar
will be valued for this purpose as if the
operations of the Company and United Solar were
combined at such time) multiplied by 1.83.
B. If after Unification, Bekaert shall receive, as
compensation for such loss of revenue, additional
shares in United Solar which shall equate to,
immediately after such issuance, a percentage
interest in United Solar equal to the amount which
Bekaert is entitled to be compensated divided by
the fair market value of United Solar at such
time;
(iii) A third stage if the problem cannot be fixed; in this
case, Bekaert will at its option, either (i) receive
title to all the equipment of United Solar and the
Company and ECD will enter into an R&D agreement at a
reduced rate (i.e. at ECD's cost) until such equipment
is made operational for other purposes than PV
manufacturing or (ii) liquidate the Company and/or
United Solar in which case ECD and Bekaert will each
receive an undivided 50% joint interest in and to all
intellectual property and thereafter Bekaert will
receive as preferential liquidating distributions, prior
to any amounts being distributed to ECD, an aggregate
amount up to Forty-Two Million US Dollars
(US$42,000,000) with any liquidating amounts being
distributed thereafter being in accordance with the
parties' ownership percentages at such time.
(c) All current modules manufactured and sold by United Solar are
warranted to have a certain rated power.
(d) The representations and warranties of Section 11.1 shall
survive the Closing and indefinitely thereafter. The
provisions of Section 12 shall not apply to the provision of
this Section 11.1. In the enforcement of Section 11.1 Bekaert
will be permitted to recover reasonable attorney's fees.
32
11.2 Post-Closing Covenants. ECD and United Solar make the following
covenants:
(a) ECD Subsidiaries. After the Closing, at the option of Bekaert,
ECD shall transfer and assign all of its right, title and
interest in and to Suryovonics and Sovlux PV to United Solar
at no additional payment to ECD, in a form of a transfer
agreement acceptable to Bekaert. The foregoing interests will
be transferred free and clear of all Liens and encumbrances.
(b) Retained ECD Rights. Notwithstanding anything contained in
this Agreement or the Transaction Agreements, United Solar and
the Company agree that ECD retains the exclusive rights to
manufacture Photovoltaic Equipment for United Solar, the
Company and their respective subsidiaries and sublicensees
provided that such Photovoltaic Equipment can be provided by
ECD at a cost, quality, and on a delivery schedule competitive
with that available from third party manufacturers or
otherwise agreed upon by the Management Committee. ECD shall
use the manufacturing expertise of Bekaert and its Affiliates
in the manufacture of sputtering machines for United Solar,
the Company and their Affiliates and sublicensees and shall
award a contract to Bekaert and/or any of its Affiliates if
such machines can be provided by Bekaert or such Affiliate
at a cost, quality and on delivery schedule competitive with
that available from third party manufacturers or otherwise
agreed upon by the Management Committee. If any future
contract is awarded to Bekaert and/or any of its Affiliates,
ECD shall not xxxx-up the price it charges United Solar.
11.3 Miscellaneous Covenants.
-----------------------
(a) Consents. United Solar, ECD and Bekaert shall cooperate with
each other in preparing, filing and taking any other actions
necessary with respect to any application, request or actions
which are or may be necessary to obtain the consent of any
government or third party to the transactions contemplated by
this Agreement or which are or may be necessary or helpful in
order to accomplish such transactions.
(b) Expenses. Except to the extent otherwise specifically
provided herein, Bekaert shall pay all of the expenses
incident to the transactions contemplated by this Agreement
which are incurred by Bekaert, its Affiliates, or its
representatives, and United Solar shall pay all of the
expenses incident to the transactions contemplated by this
Agreement
33
which are incurred by United Solar, its Affiliates or its
representatives, and ECD shall pay all of the expenses
incident to the transactions contemplated by this Agreement
which are incurred by ECD, its Affiliates or its
representatives.
(c) Assignment of Contracts, Rights. Except as set forth in
Sections 10.1(g) and 10.2(h), anything contained in this
Agreement or the Bills of Sale to the contrary
notwithstanding, this Agreement and the Bills of Sale shall
not constitute an agreement to assign any United Solar
Contract or any claim or any right or benefit arising
thereunder or resulting therefrom if an attempted assignment
thereof, without the consent of a third party thereto, would
constitute a breach thereof or in any way affect the rights
of the Company hereunder. United Solar shall use commercially
reasonable efforts to obtain the consent of the other party
to any of the foregoing to the assignment thereof to the
Company in all cases in which such consent is required for
assignment or transfer. If such consent is not obtained,
the parties agree to cooperate with each other in any
reasonable arrangement designed to provide for the Company
the benefits thereunder, including, but not limited to,
having (i) the Company act as agent for United Solar, and
(ii) United Solar enforce for the benefit of the Company any
and all rights of United Solar against the other party
thereto arising out of the cancellation by such other party
or otherwise.
11.4 Notice under Canon Agreements. ECD shall promptly deliver to
Bekaert a copy of any notice received or sent by ECD under the Canon Agreements.
11.5 Termination of Bridge Loan. ECD hereby agrees and acknowledges that
effective the Closing Date, Four Million US Dollars (US$4,000,000) of
indebtedness loaned from ECD to United Solar shall be deemed to be, fully paid
and satisfied, discharged and fulfilled.
11.6 Termination of Conversion Rights. ECD hereby agrees and acknowledges
that all of its right, title and interest in and to conversion of debt payments
into shares of United Solar in accordance with the letter from United Solar to
ECD and Canon dated March 19, 1999, are hereby terminated and waived, and the
letter shall be of no further force and effect.
11.7 Consolidation Covenant. ECD covenants to Bekaert that, following the
Closing Date, ECD shall include in its consolidated financial statements the
financial statements of United Solar so long as such consolidation is permitted
under Generally Accepted Accounting Principles ("GAAP") as practiced in the
United States. Based on the ownership, operating agreements and all other
relevant facts, ECD has concluded, as of the Closing Date, that consolidation of
United Solar into ECD is appropriate under GAAP as practiced in the United
States.
34
12. INDEMNIFICATION
---------------
12.1 Survival of Representations and Warranties. The representations and
warranties of ECD in Section 6 and Bekaert in Section 7 shall survive the
Closing and continue to be binding thereafter for a period of two (2) years
after the Closing Date, except that the representations and warranties contained
in Section 6.8 (Taxes) and Section 6.19 (Employee Benefit Programs) shall
survive the Closing and continue to be binding thereafter for the period of the
statute of limitations; and the representations and warranties contained in
Section 6.20 (Environmental Liability) shall survive the Closing and continue to
be binding thereafter for a period of five (5) years after the Closing Date; and
the representations and warranties contained in Sections 6.1 (Organization;
Authorization), Section 6.2 (Qualification), Section 6.3 (Capital Stock;
Beneficial Ownership), Section 6.4 (Subsidiaries), Section 6.5 (Governmental
Authorities; Consents); Section 6.6 (Real and Personal Property) and Section 6.7
(Financial Statements) shall survive the Closing and continue to be binding
thereafter indefinitely.
12.2 Indemnification by ECD. Subject to the limitations and manner of
indemnification set forth in Section 12.3 below, ECD shall defend, indemnify and
hold harmless Bekaert and its Affiliates (excluding United Solar and the
Company) and their respective directors, officers, partners, employees, agents
and representatives (the "Bekaert Indemnified Parties"), from and against all
Bekaert Damages in any way arising out of or relating to, regardless of any
investigation performed by Bekaert:
(a) Representations.
---------------
(i) Any inaccuracy in or breach of any representation or
warranty by ECD herein; provided that for purposes of
determining an inaccuracy or a breach under this Section
12.2(a)(i), ECD makes the representations and warranties
contained in Sections 6.8 through 6.23 to ECD's
Knowledge; and
(ii) Any inaccuracy in or breach of any representation or
warranty by ECD herein; and
(b) Covenants. Any breach or nonperformance of any covenant or
obligation made or incurred by United Solar or ECD herein or
in any other agreement or document delivered by or on behalf
of United Solar or ECD in connection herewith.
12.3 Limitations; Manner of Indemnification by ECD.
---------------------------------------------
35
(a) Basket. For Bekaert Damages incurred under Section 12.2(a),
the Bekaert Indemnified Parties shall not be entitled to
indemnification until the aggregate amount of all Bekaert
Damages exceeds Seven Hundred Fifty Thousand US Dollars
(US$750,000) at which time the Bekaert Indemnified Parties
shall be entitled to indemnification of all Bekaert Damages
and not just the Bekaert Damages in excess of such amount.
(b) Maximum Amount. Subject to the manner of indemnification set
forth in Section 12.3(c) below, the maximum indemnification
amount to which the Bekaert Indemnified Parties are entitled
for Bekaert Damages incurred under Section 12.2(a) shall be
equal to Five Million US Dollars (US$5,000,000) (the "Maximum
Amount").
(c) Manner of Indemnification. The manner in which the Bekaert
Indemnified Parties will be indemnified for Bekaert Damages
will be determined as follows:
(i) Subject to the Maximum Amount, if there are Bekaert
Damages arising under Section 12.2(a)(i), ECD shall
indemnify the Bekaert Indemnified Parties in the amount
of the Bekaert Damages up to an aggregate maximum
amount of Three Million US Dollars (US$3,000,000)
"Cash Indemnification") and the remainder of any Bekaert
Damages ("Excess Indemnification") shall be paid
through a preferred distribution by United Solar in
accordance with the provisions of Section 1(d) of the
Unification Agreement if such damages are incurred
prior to Unification or in accordance with the
provisions of Section 2.5 of the Close Corporation
Shareholder Agreement if such damages are incurred
after Unification.
(ii) Subject to the Maximum Amount, if there are Bekaert
Damages arising under Section 12.2(a)(ii), ECD shall
indemnify the Bekaert Indemnified Parties in the amount
of the Bekaert Damages through a preferred distribution
by United Solar in accordance with the provisions of
Section 1(d) of the Unification Agreement if such
damages are incurred prior to Unification or in
accordance with the provisions of Section 2.5 of the
Close Corporation Shareholder Agreement if such damages
are incurred after Unification.
The parties understand and agree that the manner of
indemnification set forth in Sections 12.3(c)(i) and
12.3(c)(ii) are mutually exclusive of each other but are in
the aggregate subject to the Maximum Amount and the
36
Bekaert Indemnified Parties shall only be permitted to be
reimbursed for Bekaert Damages from either Section 12.3(c)(i)
or Section 12.3(c)(ii) for each Claim.
12.4 Indemnification by Bekaert. Bekaert shall defend, indemnify and hold
harmless ECD and its Affiliates (excluding United Solar and the Company) and
their respective directors, officers, partners, employees, agents and
representatives (the "ECD Indemnified Parties") from and against any claim,
Liability, loss, damage, cost fee, penalty and expense (including attorneys'
fees) suffered or incurred directly by the ECD Indemnified Parties in any way
arising out of or relating to:
(a) Representations. Any inaccuracy in or breach of any
representation or warranty by Bekaert herein; and
(b) Covenants. Any breach or nonperformance of any covenant or
obligation made or incurred by Bekaert herein.
12.5 Third Party Claims. If any legal proceedings shall be instituted or
any claim is asserted by any third party in respect of which the Company, ECD
Indemnified Parties or the Bekaert Indemnified Parties may be entitled to
indemnity hereunder, the party asserting such right to indemnity shall give the
party from whom indemnity is sought written notice thereof. A delay in giving
notice shall only relieve the recipient of liability to the extent the recipient
suffers actual prejudice because of the delay. The party from whom indemnity is
sought shall have the right, at its option and expense, to participate in the
defense of such a proceeding or claim, but not to control the defense,
negotiation or settlement thereof, which control shall at all times rest with
the party asserting such right to indemnity, unless the proceeding or claim
involves only money damages, not an injunction or other equitable relief, and
unless the party from whom indemnity is sought:
(a) irrevocably acknowledges in writing complete responsibility
for and agrees to indemnify the party asserting such right
to indemnity, and
(b) furnishes satisfactory evidence of its financial ability to
indemnify the party asserting such right to indemnity,
in which case the party from whom indemnity is sought may assume such control
through counsel of its choice and at its expense, but the party asserting such
right to indemnity shall continue to have the right to be represented, at its
own expense, by counsel of its choice in connection with the defense of such a
proceeding or claim. If the party from whom indemnity is sought does not assume
control of the defense of such a proceeding or claim, the entire defense of the
proceeding or claim by the party asserting such right to indemnity, any
settlement made by the party asserting such right to indemnity, and any judgment
entered in the proceeding or claim
37
shall be deemed to have been consented to by, and shall be binding on, the
party from whom indemnity is sought as fully as though it alone had assumed the
defense thereof and a judgment had been entered in the proceeding or claim in
the amount of such settlement or judgment, except that the right of the party
from whom indemnity is sought to contest the right of the other to
indemnification under this Agreement with respect to the proceeding or claim
shall not be extinguished. If the party from whom indemnity is sought does
assume control of the defense of such a proceeding or claim, it will not,
without the prior written consent of the party asserting such right to
indemnity, settle the proceeding or claim or consent to entry of any judgment
relating thereto which does not include as an unconditional term thereof the
giving by the claimant to the party asserting such right to indemnity a release
from all Liability in respect of the proceeding or claim. The parties hereto
agree to cooperate fully with each other in connection with the defense,
negotiation or settlement of any such proceeding or claim.
13. DEFINITIONS
-----------
13.1 Definitions. Accounting terms used herein and not otherwise defined
herein shall have the meanings attributed to them under U.S. generally accepted
accounting principles. When used in this Agreement, the following terms in all
of their tenses and cases shall have the meanings assigned to them below or
elsewhere in this Agreement as indicated below:
"AAA" shall have the meaning set forth in Article 1 of Appendix A.
"Act" means the Delaware Revised Limited Liability Company Act, as
the same may be amended from time to time.
"Additional Interest Agreement" shall have the meaning set forth in
Section 5.11.
"Affiliate" of any Person shall mean any individual, partnership,
corporation, trust or other entity or association, directly or indirectly,
through one or more intermediaries, controlling, controlled by, or under common
control with such Person. The term "control," as used in the immediately
preceding sentence, means, with respect to a corporation or limited liability
company the right to exercise, directly or indirectly, more than fifty percent
(50%) of the voting rights attributable to the controlled corporation or limited
liability company, and, with respect to any individual, partnership, trust,
other entity or association, the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of the
controlled entity. However, such individual, partnership, corporation, trust or
other entity or association shall be deemed to be an Affiliate only as long as
such control exists.
"Agreement" shall mean this Foundation Agreement.
"Approvals" shall have the meaning set forth in Section 6.18.
38
"Arbitration Notice" shall have the meaning set forth in Article 1
of Appendix A.
"Arbitrator" shall have the meaning set forth in Article 1 of
Appendix A.
"Bekaert" shall mean Bekaert Corporation, a Delaware corporation.
"Bekaert Damages" shall mean (i) one hundred percent (100%) of any
claim, Liability, loss, damage (including any diminution in value), cost, fee,
penalty and expense (including attorneys' fees) (collectively, "Claim") suffered
or incurred directly (as compared to indirectly through its equity ownership in
United Solar and the Company) by Bekaert Indemnified Parties, and (ii) fifty
percent (50%) of any Claim suffered or incurred directly by United Solar and/or
the Company.
"Bekaert Group" shall have the meaning set forth in Recital B of
this Agreement.
"Bekaert/XXXX Subscription Agreement" shall have the meaning set
forth in Section 5.8.
"Bekaert Employee Lease Agreement" shall have the meaning set forth
in Section 5.7(b).
"Bekaert Indemnified Parties" shall have the meaning set forth in
Section 12.2.
"Bills of Sale" shall have the meaning set forth in Section
10.3(b)(ii).
"Business Day" shall mean Monday through Friday, except for a legal
or bank holiday.
"Business Plan" shall have the meaning set forth in Section 4.1 of
the LLC Agreement.
"Canon" shall mean Canon Inc., a Japanese corporation.
"Canon Agreements" shall mean the Transaction Documents identified
in the Stock Purchase Agreement, dated the Closing Date, between ECD, United
Solar and Canon.
"Cash Indemnification" shall have the meaning set forth in Section
12.3(c)(i).
"Certificate of Formation" shall have the meaning set forth in
Section 2.1.
"Claim" shall mean any claim, Liability, loss, damage (including any
diminution in value), cost, fee, penalty and expense (including attorneys'
fees).
39
"Close Corporation Shareholder Agreement" shall have the meaning set
forth in Section 5.2.
"Closing Date" or "Closing" shall have the meaning set forth in
Section 10.4.
"COBRA" shall mean the Consolidated Omnibus Budget Reconciliation
Act of 1985.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Company" shall mean Bekaert ECD Solar Systems LLC, a Delaware
limited liability company.
"Contract" means any commitment, understanding, instrument, lease,
pledge, mortgage, indenture, note, license, agreement, purchase or sale order,
contract, promise, or similar arrangement evidencing or creating any obligation,
whether written or oral.
"Dispute" shall have the meaning set forth in Article 1 of
Appendix A.
"Disputing Party" shall have the meaning set forth in Article 1 of
Appendix A.
"ECD" shall mean Energy Conversion Devices, Inc., a Delaware
corporation.
"ECD-XXXX Agreement" shall have the meaning set forth in Section
5.5(a).
"ECD Indemnified Parties" shall have the meaning set forth in
Section 12.4.
"Employee Program" shall have the meaning set forth in Section
6.19(i)(i).
"Environmental, Health and Safety Laws" shall have the meaning
set forth in Section 6.20(a).
"Equipment Fabrication Services Agreement" shall have the meaning
set forth in Section 5.4(a).
"Equipment Lease" shall have the meaning set forth in Section
5.4(b).
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"Excess Indemnification" shall have the meaning set forth in Section
12.3(c)(i).
40
"Exclusive Supply Agreement" shall have the meaning set forth in
Section 5.3.
"Formation Date" shall have the meaning set forth in Section 2.1.
"GAAP" shall have the meaning set forth in Section 11.7.
"Governmental Authority" means any foreign, federal, state, regional
or local authority, agency, body, court or instrumentality, regulatory or
otherwise, which, in whole or in part, was formed by or operates under the
auspices of any foreign, federal, state, regional or local government.
"Hazardous Substances" shall have the meaning set forth in Section
6.20(b).
"HSR Act" shall mean the Xxxx-Xxxxx-Xxxxxx Act.
"Interim Balance Sheet" shall have the meaning set forth in Section
6.7(a)(ii).
"Intellectual Property" shall have the meaning set forth in Section
6.11.
"IRS" shall mean the Internal Revenue Service.
"Knowledge" means the knowledge of the corporate officers of United
Solar and ECD, after due and adequate inquiry of the appropriate management
personnel.
"LLC Agreement" shall have the meaning set forth in Section 2.1.
"Law" shall mean any national, regional or local law, statute,
regulation, decree, ordinance, rule or order, whether existing previously or as
of the date hereof.
"Leased Real Property" shall have the meaning set forth in Section
6.6(a).
"Leases" shall have the meaning set forth in Section 6.6(a).
"Liability" or "Liabilities" means responsibilities, obligations,
duties, commitments, claims, and liabilities of any and every kind, whether
known or unknown, accrued, absolute, contingent or otherwise.
"Licensed Products" shall have the meaning set forth in Section
6.13(m)(i).
"Lien" means any lien, charge, covenant, condition, easement,
adverse claim, demand, encumbrance, limitation, security interest, option,
mortgage, charge, pledge, or any other title defect or restriction of any kind.
41
"Management Committee" shall have the meaning set forth in Section 6
of the LLC Agreement.
"Maximum Amount" shall have the meaning set forth in Section
12.3(b).
"Membership Interest" shall mean an interest as a member in the
Company with such rights and obligations as set forth in the LLC Agreement.
"MOU" shall have the meaning set forth in Section 6.13(m)(ii).
"NVB" shall have the meaning set forth in Recital B of this
Agreement.
"NVB-United Solar Agreement" shall have the meaning set forth in
Section 5.5(b).
"Noncompetition Agreement" shall have the meaning set forth in
Section 5.10.
"Owned Real Property" shall have the meaning set forth in Section
6.6(a).
"PCBs" shall have the meaning set forth in Section 6.20(f)(iv).
"Person" means any individual, corporation, partnership, association
or any other entity or organization.
"Photovoltaic Equipment" means all custom equipment capable of
manufacturing and processing Strip Cells and PV Products, specifically including
amorphous silicon deposition equipment.
"PV" shall mean photovoltaic.
"PV Products" shall mean a Strip Cell or an interconnection of Strip
Cells for PV electrical power whether laminated or not.
"PV Systems" shall mean any system integrating one or more PV
Products, if such system has one or more functionalities, one of which is the
production of PV electrical power.
"R&D Agreement" shall have the meaning set forth in Section 5.5(d).
"Real Property" shall have the meaning set forth in Section 6.6(a).
42
"Reischauer Agreement" shall mean the Stock Purchase Agreement
between United Solar and the Reischauer Trust.
"Reischauer Trust" shall have the meaning set forth in Recital A of
this Agreement.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Services Agreement" shall have the meaning set forth in Section
5.6.
"Shares" shall have the meaning set forth in Section 4.1.
"Sovlux" shall have the meaning set forth in Section 6.13(m)(i).
"Strip Cells" shall mean a device for PV electrical power comprising
single or multiple PIN structures, a grid pattern, contacts and a coating, and
intermediates thereof.
"Subsidiary" or "Subsidiaries" shall have the meaning set forth in
Section 6.4.
"Taxes" shall have the meaning set forth in Section 6.8.
"Transaction Agreements" shall have the meaning set forth in Section
5.
"25 MW Equipment" shall have the meaning set forth in Section 1.01
of the Equipment Fabrication Services Agreement.
"Unification" shall mean the purchase by Bekaert of additional
shares in United Solar in accordance with the Unification Agreement.
"Unification Agreement" shall have the meaning set forth in Section
5.9.
"United Solar" shall mean United Solar Systems Corp., a Delaware
corporation.
"United Solar-XXXX Agreement" shall have the meaning set forth in
Section 5.5(c).
"United Solar Contributed Assets" shall have the meaning set forth
in Section 3.2.
"United Solar Employee Lease Agreement" shall have the meaning set
forth in Section 5.7(a).
"United Solar Mexico" shall have the meaning set forth in Recital D
of this
43
Agreement.
"USSR Agreement" shall have the meaning set forth in Section 6.13
(m)(i).
"Utilities" shall have the meaning set forth in Section 6.22(h).
14. OTHER PROVISIONS
----------------
14.1 Other Provisions. The terms of Appendix A and any Addenda are
hereby incorporated herein by reference as if fully rewritten herein.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
44
INTENDING TO BE LEGALLY BOUND, the parties hereto have caused this Agreement to
be duly executed as of the date and year first above written.
BEKAERT CORPORATION
By: ______________________________
Title: ______________________________
By: ______________________________
Title: ______________________________
UNITED SOLAR SYSTEMS CORP.
By: ______________________________
Title: ______________________________
ENERGY CONVERSION DEVICES, INC.
By: ______________________________
Title: ______________________________
