Exhibit 10.19
CONTRIBUTION AGREEMENT
BETWEEN
MECHANICAL TECHNOLOGY INCORPORATED,
(a New York corporation)
AND
PLUG POWER, L.L.C.,
(a Delaware limited liability company)
THIS CONTRIBUTION AGREEMENT (this "Agreement") is entered into between
Mechanical Technology Incorporated, a New York corporation, and Plug Power,
L.L.C., a Delaware limited liability company (the "Company"). This Agreement,
the Limited Liability Company Agreement of Plug Power, L.L.C., a Delaware
limited liability company (the "Operating Agreement"), and the Contribution
Agreement between Edison Development Corporation, a Michigan corporation, and
the Company (the "Management Agreement") are entered as of and shall be
effective simultaneously with each other as of the close of business on the
27th day of June, 1997 (the "Contribution Date").
RECITALS
1. MTI conducts a business which is engaged in the research and
development of technology for fuel cells, primarily as a contractor or
subcontractor under government contracts, grants and cooperative agreements
( the "Fuel Cell Business").
2. For the purpose set forth in Section 2.4 of the Operating Agreement,
and as its initial Capital Contribution (as defined in Section 4.1 of the
Operating Agreement), MTI wishes to contribute the Fuel Cell Business (except
the "Excluded Assets", as defined in Section 1.2 of this Agreement) to the
Company and in exchange for MTI's initial Capital Contribution MTI shall
become a Class A Member (as defined in Section 1.12 of the Operating Agreement)
in the Company and shall receive the number of Shares of Class A Membership
Interest in the Company (as set forth on Exhibit A to the Operating Agreement)
(the "MTI Shares").
3. In order to accomplish the foregoing, simultaneously with the
execution of this Agreement and the Operating Agreement, MTI and the Company
shall enter into the agreements identified in Section 4 below (collectively,
the "Other Agreements").
4. The foregoing contribution of assets by MTI and assumption of
liabilities by Company are all subject to the terms and conditions of this
Agreement, the Operating Agreement and the Other Agreements.
In consideration of the foregoing and the mutual representations,
warranties covenants, and agreements contained in this Agreement, MTI and the
Company agree as follows:
1. Contribution of Assets by MTI.
1.1 Contribution of Assets. Subject to the terms and conditions of
this Agreement, on the Contribution Date, MTI hereby assigns, transfers,
and delivers to the Company, as a contribution to the capital of the
Company, free and clear of all Liens, except Permitted Liens, all of the
assets, properties, and business, (excepting the Excluded Assets) of every
kind and description, wherever located, real, personal, or mixed, tangible
or intangible, owned, leased or held by MTI, which are necessary for the
conduct of the Fuel Cell Business by MTI as the same shall exist on the
Contribution Date including all assets and property shown on the
Contributed FCB Balance Sheet (and not disposed of in the ordinary course
of business) and all assets and property thereafter acquired by MTI in
respect of or necessary for the conduct of and used in the Fuel Cell
Business immediately prior to the Contribution Date (collectively, the
"Assets"), and including, without limitation, all right, title, and
interest of MTI in, to, and under:
(a) The machinery, equipment, furniture, vehicles, and other
tangible property (including, without limitation, maintenance and
operating supplies, fuel, and spare parts for such machinery and
equipment) listed and described in Schedule 1.1(a) (the "Equipment");
(b) The raw materials, finished goods, work-in-process, supplies,
and inventories described in Schedule 1.1(b) (the "Inventory");
(c) All rights of MTI (including, but not limited to, any and all
Intellectual Property Rights) in and to the products sold or leased
and in and to any products or other Intellectual Property Rights under
research or development prior to or on the Contribution Date;
(d) All of the rights of MTI under all contracts, arrangements,
leases and other agreements identified on Schedule 1.1(d), including,
without limitation, any right to receive goods and services, pursuant
to such agreements and to assert claims and take other rightful
actions in respect of breaches, defaults and other violations of
such contracts, arrangements, licenses, leases and other agreements
and otherwise;
(e) All credits, prepaid expenses, deferred charges, advance
payments, security deposits and pre-paid items, listed in Schedule
1.1(e);
(f) [Intentionally Omitted]
(g) All Intellectual Property Rights and all rights thereunder
or in respect thereof primarily relating to or used or held for use
in connection with the Fuel Cell Business all of which are listed
on Schedule 1.1(g), including, but not limited to, rights to xxx
for an injunction, damages, and/or other remedies against past,
present and future infringements thereof and to collect and retain
any damages resulting therefrom for its own use and enjoyment, and
rights of priority and protection of interests therein under the
laws of any jurisdiction worldwide and all tangible embodiments
thereof (together with all Intellectual Property rights included
in the other clauses of this Section 1.1, the "Intellectual Property
Assets");
(h) All of MTI's right, title, and interest in, to, and under
each of the Government Contracts and commercial contracts for research
and development of fuel cells listed in Schedule 1.1(h);
(i) All books, records, manuals and other materials (in any form
or medium), including, without limitation, all records and materials
maintained by MTI regarding any of the Assets and, with respect to the
Assets and Fuel Cell Business, all price lists, correspondence,
mailing lists, lists of customers, photographs, production data,
sales and promotional materials and records, purchasing materials
and records, manufacturing and quality control records and
procedures, blueprints, research and development files, records,
data and laboratory books, Intellectual Property disclosures, media
materials and plates, accounting records, all files regarding any
of the Government Contracts transferred hereunder, and litigation
files;
(j) To the extent their transfer is permitted by law, all
Governmental Approvals, including all applications therefor,
required for the conduct of the Fuel Cell Business or the occupancy
or use of the Licensed Premises;
(k) All rights to causes of action, lawsuits, judgments, claims
and demands of any nature available to or being pursued by MTI with
respect to the Fuel Cell Business or the ownership, use, function or
value of any Asset, whether arising by way of counterclaim or
otherwise;
(l) All rights, title, and interest of MTI under any agreement
with past or present employees or independent contractors of MTI
regarding: (i) confidentiality or non-disclosure with respect to
the Assets or Fuel Cell Business; (ii) the obligation of such
employees or contractors to join in the filing of any patent
application as an inventor and/or the obligation to assign to MTI
any patent application on which such employee or contractor is named
as an inventor; (iii) the obligation to assign and transfer any
interest of such employee or contractor in any of the Intellectual
Property Rights; and (iv) any restriction on the right of such
employee or contractor to use any Intellectual Property Rights or
to compete with the Fuel Cell Business. Each such agreement is
listed on Schedule 1.1(l); and
(m) All guarantees, warranties, indemnities and similar rights
in favor of MTI with respect to any Asset.
1.2 Excluded Assets. The Company expressly understands and agrees
that there shall be excluded from the Assets those assets and properties
of MTI which are necessary for and used in the conduct of the Fuel Cell
business as listed on Schedule 1.2.
In addition, the Company expressly understand and agrees that there
shall be excluded from the Assets any assets, properties and businesses
of every kind and description; wherever located; real, personal, or mixed;
tangible or intangible; owned, leased or held; or used in the conduct of
any business of MTI (including, but not limited to, assets, properties and
businesses of MTI's Technology Division) other than the Fuel Cell Business,
as the same shall exist on the Contribution Date; any and all intellectual
property owned, held or primarily used by MTI in any business other than
the Fuel Cell Business (including, but not limited to, use of the name
Mechanical Technology Incorporated and all derivatives thereof); any and
all cash, including xxxxx cash, or receivables of MTI as of the close of
business June 27, 1997, including any reflected on the Contributed FCB
Balance Sheet.
1.3 Conveyance Instruments. In order to consummate MTI's contribution
of the Assets, MTI has, or will hereafter, execute and deliver, or cause to
be executed and delivered, all such documents or instruments of assignment,
transfer, or conveyance, in each case dated the Contribution Date
(collectively, the "Conveyance Instruments"), as EDC and MTI and their
respective counsel shall reasonably deem necessary or appropriate to vest
in, confirm title to and/or record the transfer of (in such form as may be
required by any Governmental Authority) the Assets to the Company.
1.4 Assumed Liabilities. Subject to the terms and conditions of this
Agreement and the Operating Agreement, in reliance on the representations,
warranties, covenants, and agreements of the parties contained herein, the
Company assumes and agrees to pay, discharge, or fulfill the liabilities
and obligations relating to the Fuel Cell Business and listed on Schedule
1.4 (the "Assumed Liabilities").
1.5 Excluded Liabilities.The Company shall not assume any liabilities,
obligations or commitments of MTI relating to or arising out of the
operation of the Fuel Cell Business or the ownership of the Assets prior
to the Contribution Date other than the Assumed Liabilities (the "Excluded
Liabilities").
1.6 Consent of Third Parties. Notwithstanding anything to the
contrary in this Agreement, this Agreement shall not constitute an
agreement to assign or transfer any Governmental Approval, instrument,
contract, lease, permit or other agreement or arrangement or any claim,
right or benefit arising thereunder or resulting therefrom if an
assignment or transfer or an attempt to make such an assignment or
transfer without the consent of a third party would constitute a breach
or violation thereof or affect adversely the rights of the Company or
MTI thereunder; and any transfer or assignment to the Company by MTI of
any interest under any such instrument, contract, lease, permit or other
agreement or arrangement which requires the consent of a third party
shall be made subject to such consent or approval being obtained. In
the event any such consent or approval is not obtained on or prior to the
Contribution Date, MTI shall continue to use all best efforts to obtain
any such approval or consent after the Contribution Date until such time
as such consent or approval has been obtained, and MTI will cooperate
with the Company in any lawful and economically feasible arrangement to
provide that the Company shall receive the interest of MTI in the benefits
under any such instrument, contract, lease or permit or other agreement or
arrangement, including performance by MTI, as agent, if economically
feasible, provided that the Company shall undertake to pay or satisfy the
corresponding liabilities for the enjoyment of such benefit to the extent
such liabilities are described as Assumed Liabilities in Schedule 1.4 and
which the Company would have assumed if such consent or approval had been
obtained. MTI shall cooperate with the Company and shall pay and
discharge, and shall indemnify and hold the Company harmless from and
against, any and all out-of-pocket costs incurred by MTI in seeking to
obtain or obtaining any such consent or approval whether before or after
the Contribution Date. Nothing in this Section 1.6 shall be deemed a
waiver by the Company of its right to have received on or before the
Contribution Date an effective assignment of all of the Assets nor shall
this Section 1.6 be deemed to constitute an agreement to exclude from
the Assets any assets described under Section 1.1.
2. Events Occurring on the Contribution Date.
2.1 Deliveries by MTI. Simultaneously with the execution of this
Agreement, MTI shall execute and agree to be bound by all of the terms and
conditions of the Operating Agreement and shall deliver to the Company the
following:
(a) The Conveyance Instruments to effect the contribution of the
Assets to the Company, such Conveyance Instruments to be those
reasonably deemed necessary by, and to be in form and substance
reasonably satisfactory to counsel for EDC and MTI;
(b) A copy of the resolutions of MTI's Board of Directors,
certified by its Secretary, authorizing or ratifying its execution and
delivery of this Agreement, the Operating Agreement, and the Other
Agreements, and the consummation of the transactions contemplated
hereby and thereby;
(c) All of the Other Agreements to which MTI is a party, duly
executed by it.
(d) A copy of MTI's certificate of incorporation, a certified
copy of its bylaws and other organizational documents;
(e) A certificate from the Secretary of State of New York as to
MTI's good standing in such state certified as of a date within
thirty (30) days of the Contribution Date;
(f) An employment agreement with Xxxxx Xxxxx, and an
employment agreement executed by Manmohian Dhar each of which will be
agreements to be entered into with the Company and in the form and
substance of the agreements attached in Schedule 2.1(f);
(g) The executed counterpart copies of all Consents and Govern-
mental Approvals set forth in Schedule 3.1(c);
(h) The opinion of counsel for MTI, dated the Contribution Date,
in form and substance reasonably satisfactory to EDC's counsel;
(i) All other previously undelivered items required to be
delivered by MTI at or prior to the Contribution Date pursuant to the
terms of this Agreement, the Operating Agreement, and the Other
Agreements.
2.2 Deliveries by the Company.
(a) Copy of filed Certificate of Formation of the Company;
(b) Execution copies of the Limited Liability Company Agreement
of Plug Power, LLC, a Delaware limited liability company, dated the
Contribution Date;
(c) Executed copy of the Contribution Agreement between the
Company and EDC;
(d) Execution copies of the Distribution Agreement between EDC
and the Company; and
(e) A transition services agreement between MTI and the
Company.
2.3 Effect of Contributions. In exchange for its initial Capital
Contribution, as defined in Section 4.1 of the Operating Agreement, (i)
MTI shall become a Class A Member (as defined in Section 1.12 of the
Operating Agreement) in the Company pursuant to the terms of the
Operating Agreement; (ii) MTI will receive the Shares; and (iii) the
Capital Account of MTI will be credited with such amount set forth
beside its name on Exhibit A to the Operating Agreement. Such Class A
Membership Interest and Capital Account shall be subject to adjustment
as provided under Section 4.7 of the Operating Agreement.
3. Representations and Warranties.
3.1 Representations and Warranties of MTI. MTI represents and
warrants to the Company as follows:
(a) Authorization, etc. MTI has the corporate power and
authority to execute and deliver this Agreement and each of the Other
Agreements to which it is a party and to fully perform its obligations
and consummate the transactions contemplated thereby. The execution
and delivery by MTI of this Agreement and the Other Agreements, and
the consummation of the transactions contemplated by this Agreement,
have been duly authorized by all requisite corporate action. This
Agreement, together with all other obligations of MTI hereunder,
constitutes the valid and legally binding obligation of MTI,
enforceable in accordance with its terms.
(b) Corporate Status.
(i) MTI is a corporation duly organized, validly existing
and in good standing under the laws of the State of New York with
full corporate power and authority to carry on the Fuel Cell
Business and to own or lease and operate the properties as and
in the places where such business is conducted and such
properties are owned, leased or operated.
(ii) MTI is duly qualified or licensed to do business and
is in good standing in each of the jurisdictions specified in
Schedule 3.1(b)(ii), which are the only jurisdictions in which
the operation of the Fuel Cell business or the character of the
properties owned, leased or operated by MTI in connection with
the Fuel Cell Business makes such qualification or licensing
necessary.
(iii)MTI has delivered to the Company complete and correct
copies of its certificate of incorporation and by-laws or other
organizational documents, in each case, as amended and in effect
on the date hereof. MTI is not in violation of any of the
provisions of its certificate of incorporation or by-laws or
other organizational documents.
(c) No Conflicts. The execution, delivery and performance by
MTI of this Agreement and the consummation of the transactions
contemplated hereby, do not and will not conflict with or result in
a violation of or a default under (with or without the giving of
notice of the lapse of time or both) (i) any Applicable Law applicable
to MTI or any of the Assets, (ii) the certificate of incorporation
or by-laws or other organizational documents of MTI or (iii) except
as specifically set forth in Schedule 3.1(c) and except for any
conflict which would cause no material adverse affect on the
Company (any conflict which would affect the transfer of the Assets
shall be deemed material), any Contract or other contract, agreement
or other instrument to which MTI or any of its Affiliates is a party
or by which MTI or any of its properties or assets, including, but
not limited to the Assets, may be bound or affected. Except as
specified in Schedule 3.1(c), no Governmental Approval or other
Consent is required to be obtained or made by MTI in connection with
the execution and delivery of this Agreement or the Other Agreements
or the consummation of the transactions contemplated thereby.
(d) Financial Statements. MTI has delivered to the Company a
pro forma balance sheet for the Fuel Cell Business as of May 23, 1997
(the "Preliminary Contributed FCB Balance Sheet"), a copy of which
is attached as Schedule 3.1(d). Within ten (10) days after the
Contribution Date, MTI will deliver to the Company a pro forma
balance sheet for the Fuel Cell Business (excluding the Excluded
Assets and Excluded Liabilities) as of the Contribution Date (the
"Contributed FCB Balance Sheet"); (the Preliminary Contributed FCB
Balance Sheet and the Contributed FCB Balance Sheet are the
"Financial Statements"). The Financial Statements fairly present
the financial condition and results of operations of the Fuel Cell
Business for the period and as of the dates stated therein. The
Total Liabilities reflected on the Contributed FCB Balance Sheet
shall not exceed by more than $25,000 the total amount of the
Assumed Liabilities shown on Schedule 1.4.
(e) Absence of Undisclosed Liabilities. MTI has no Knowledge
of any liabilities or obligations of any nature, absolute, accrued,
contingent or otherwise and whether due or to become due, arising
out of or relating to the Fuel Cell Business, except (a) as set
forth in Schedule 3.1(e), (b) as and to the extent disclosed or
reserved against in the Contributed FCB Balance Sheet and (c) for
liabilities and obligations that (i) individually and in the
aggregate are not material to the Fuel Cell Business and have not
had or resulted in, and will not have or result in, a material
adverse effect on the Fuel Cell Business or Assets.
(f) Taxes.
(i) MTI has duly and timely filed all Tax Returns
affecting the Fuel Cell Business with respect to Taxes
required to be filed on or before the Contribution Date
("Covered Returns"). Except for Taxes set forth on
Schedule 3.1(f)(i), which are being contested in good
faith and by appropriate proceedings, the following Taxes
have been duly and timely paid: (1) all Taxes shown to be
due on the Tax Returns, (2) all deficiencies and assessments
of Taxes of which notice has been received by MTI that are
or may become payable by the Company or chargeable as a
lien upon the Fuel Cell Business, and (3) all other Taxes
due and payable as of the Contribution Date for which
neither filing of Tax Returns nor notice of deficiency or
assessment is required, of which MTI has Knowledge that
may become payable by the Company or chargeable as a lien
upon the Fuel Cell Business. All Taxes required to be
withheld by or on behalf of MTI in connection with amounts
paid or owing to any employee, independent contractor,
creditor or other party with respect to the Fuel Cell
Business ("Withholding Taxes") have been withheld, and
such withheld taxes have either been duly and timely paid
to the proper Governmental Authorities or set aside in
accounts for such purpose.
(ii) Except as set forth on Schedule 3.1(f)(ii), no
agreement or other document extending, or having the effect
of extending, the period of assessment or collection of any
Taxes or Withholding Taxes, and no power of attorney with
respect to any such Taxes, has been filed with the IRS or
any other Governmental Authority.
(iii)Except as set forth on Schedule 3.1(f)(iii), (1)
there are no Taxes or Withholding Taxes asserted in writing
by any Governmental Authority to be due and (2) no issue has
been raised in writing by any Governmental Authority during
the course of any audit with respect to Taxes or Withholding
Taxes. Except as set forth on Schedule 3.1(f)(iii), no Taxes
and no Withholding Taxes are currently under audit by any
Governmental Authority. Except as set forth on Schedule
3.1(f)(iii), neither the IRS nor any other Governmental
Authority is now asserting or, to the best knowledge of MTI,
threatening to assert against MTI any deficiency or claim for
additional Taxes or any adjustment of Taxes that would, if
paid by the Company, have an adverse effect on the Fuel Cell
Business or the Assets, and there is no reasonable basis for
any such assertion of which MTI is or reasonably should be
aware.
(iv) Except as set forth on Schedule 3.1(f)(iv), there
is no litigation or administrative appeal pending or, to the
best knowledge of MTI, threatened against or relating to MTI
in connection with Covered Taxes.
(g) Absence of Changes. Except as set forth in Schedule
3.1(g), since May 23, 1997, MTI has conducted the Fuel Cell
Business only in the ordinary course consistent with prior
practice and has not, on behalf of, in connection with or relating
to the Fuel Cell Business or the Assets:
(i) suffered any adverse effect;
(ii) to MTI's Knowledge incurred any obligation or
liability, absolute, accrued, contingent or otherwise,
whether due or to become due, except current liabilities
for trade or business obligations incurred in connection
with the purchase of goods or services in the ordinary
course of business consistent with prior practice;
(iii)discharged or satisfied any Lien other than those
then required to be discharged or satisfied, or paid any
obligation or liability, absolute, accrued, contingent or
otherwise, whether due or to become due, other than current
liabilities incurred since the date thereof in the ordinary
course of business consistent with prior practice;
(iv) mortgaged, pledged or subjected to Lien, any
property, business or assets, tangible or intangible, held
in connection with the Fuel Cell Business;
(v) sold, transferred, leased to others or otherwise
disposed of any of the Assets (except in the ordinary course
of business), or cancelled or compromised any debt or claim,
or waived or released any right of substantial value;
(vi) received any notice of termination of any
contract, lease or other agreement or suffered any damage,
destruction or loss (whether or not covered by insurance);
(vii)transferred or granted any rights under, or
entered into any settlement regarding the breach or
infringement of, any Intellectual Property, or modified
any existing rights with respect thereto, other than as
set forth in this Agreement;
(viii)made any change in the rate of compensation,
commission, bonus or other direct or indirect remuneration
payable, or paid or agreed or orally promised to pay,
conditionally or otherwise, any bonus, incentive, retention
or other compensation, retirement, welfare, fringe or
severance benefit or vacation pay, to or in respect of any
shareholder, director, officer, employee, salesman,
distributor or agent of MTI relating to the Fuel Cell
Business;
(ix) encountered any labor union organizing activity,
had any actual or threatened employee strikes, work
stoppages, slowdowns or lockouts, or had any material
change in its relations with its employees, agents,
customers or suppliers;
(x) made any purchase commitment in excess of the
normal, ordinary and usual requirements of the Fuel Cell
Business or at any price in excess of the then current
market price or upon terms and conditions more onerous
than those usual and customary in the industry, or made
any change in its selling, pricing, advertising or
personnel practices inconsistent with its prior practice
and prudent business practices prevailing in the industry;
(xi) made any capital expenditures or capital additions
or improvements in excess of an aggregate of $10,000;
(xii)instituted, settled or agreed to settle any litiga-
tion, action or proceeding before any court or governmental
body which may affect the Fuel Cell Business or the Assets
other than in the ordinary course of business consistent with
past practices but not in any case involving amounts in
excess of $10,000;
(xiii)entered into any transaction, contract or
commitment in the ordinary course of business or paid or
agreed to pay any legal, accounting, brokerage, finder's
fee, Taxes or other expenses in connection with, or
incurred any severance pay obligations by reason of this
Agreement or the transactions contemplated hereby, except
as otherwise provided in this Agreement; or
(ix) to MTI's Knowledge, taken any action or omitted
to take any action that would result in the occurrence of
any of the foregoing.
(h) Litigation. Except as set forth on Schedule 3.1(h),
there is no action, claim, demand, suit, proceeding, arbitration,
grievance, citation, summons, subpoena, inquiry or investigation
of any nature, civil, criminal, regulatory or otherwise, in law
or in equity pending or threatened against or relating to the
Assets or the Fuel Cell Business or against or relating to the
transactions contemplated by this Agreement, and MTI does not
have Knowledge of any basis for the same. Except as set forth in
such Schedule 3.1(h), no citations, fines or penalties have been
asserted against MTI with respect to the Division under any
Environmental Law or any federal, state or local law relating
to occupational health or safety.
(i) Compliance with Laws; Governmental Approvals and
Consents; Governmental Contracts.
(i) Except as disclosed in Schedule 3.1(i)(i), MTI
has complied in all material respects with all Applicable
Laws applicable to the Fuel Cell Business or the Assets,
and MTI has not received any notice alleging any such
conflict, violation, breach or default.
(ii) Schedule 3.1(i)(ii) sets forth all Governmental
Approvals and other Consents necessary for, or otherwise
material to, the conduct of the Fuel Cell Business. Except
as set forth in Schedule 3.1(i)(ii), all such Governmental
Approvals and Consents have been duly obtained and are in
full force and effect, and MTI is in compliance with each
of such Governmental Approvals and Consents held by it with
respect to the Assets and the Fuel Cell Business.
(iii)Schedule 3.1(i)(iii) sets forth all Government
Contracts.
(iv) Except as set forth in Schedule 3.1(iv)(iv), to
MTI's Knowledge as of the Contribution Date, there are no
proposed laws, rules, regulations, ordinances, orders, judg-
ments, decrees, governmental takings, condemnations or other
proceedings which would be applicable to the business,
operations or properties of the Fuel Cell Business and
which might adversely affect the properties, assets,
liabilities, operations or prospects of the Fuel Cell
Business, either before or after the Contribution Date.
(j) Operation of the Fuel Cell Business. Except as set
forth in Schedule 3.1(j), (i) MTI has conducted the Fuel Cell
Business only through MTI and not through any direct or indirect
subsidiary or affiliate of MTI and (ii) no part of the Fuel Cell
Business is operated by MTI through any entity other than MTI.
(k) Assets. Except as disclosed in Schedule 3.1(k), MTI
has good title to all the Assets free and clear of any and all
Liens other than Permitted Liens. The Assets, together with the
services and arrangements described in Section 4, comprise all
assets and services necessary for the continued conduct of the
Fuel Cell Business by the Company as now being conducted. The
Assets, taken as a whole, constitute all the properties and
assets relating to or used or held for use in connection with
the Fuel Cell Business during the past twelve months (except
cash disposed of, accounts receivable collected, prepaid expenses
realized, Contracts fully performed, properties or assets
replaced by equivalent or superior properties or assets, in
each case in the ordinary course of business, employees not
hired by the Company, the Excluded Assets, and those services
which the Company has the right to receive from MTI under the
Services Agreement). Except for Excluded Assets, there are no
assets or properties used in the operation of the Fuel Cell
Business and owned by any Person other than MTI that will not
be leased or licensed to the Company under valid, current
leases or license arrangements. The Assets are in all material
respects adequate for the purposes for which such assets are
currently used or are held for use, and are in reasonably good
repair and operating condition (subject to normal wear and tear)
and, to the Knowledge of MTI, there are no facts or conditions
affecting the Fuel Cell Business or the Assets which could,
individually or in the aggregate, interfere in any material
respect with the conduct of the Fuel Cell Business.
(l) Contracts.
(i) Schedule 3.1(l)(i) contains a complete and correct
list of all agreements, contracts, commitments and other
instruments and arrangements (whether written or oral) of the
types described below (1) by which any of the Assets are
bound or affected or (2) to which MTI is a party or by
which it is bound that affects the Fuel Cell Business or
the Assets (the "Contracts"):
(1) licenses, permits, Governmental Approvals,
and other contracts concerning or relating to
the Licensed Premises;
(2) employment, consulting, agency, collective
bargaining or other similar contracts, agreements,
and other instruments and arrangements relating to or
for the benefit of current, future or former employees
or inventors, officers, directors, sales
representatives, distributors, dealers, agents,
independent contractors or consultants;
(3) loan agreements, indentures, letters of
credit, mortgages, security agreements, pledge
agreements, deeds of trust and instruments relating to
the borrowing of money or obtaining of or extension of
credit;
(4) licenses, licensing arrangements and other
contracts providing in whole or in part for the use of,
or limiting the use of, any of the Intellectual Property
Rights;
(5) notifications, requests for bid, proposals,
awards, contracts, and grants under which MTI has or
may have rights to obligations;
(6) joint venture, partnership and similar
contracts involving a sharing of profits or expenses
(including, but not limited to, joint research and de-
velopment and joint marketing contracts);
(7) asset purchase agreements and other
acquisition or divestiture agreements, including, but
not limited to, any agreements relating to the sale,
lease or disposal of any Assets (other than sale of
inventory in the ordinary course of business) or
involving continuing indemnity or other obligations;
(8) orders and other contracts for the purchase
or sale of materials, supplies, products or services,
each of which involves aggregate payments in excess of
$10,000 in the case of purchases or $10,000 in the case
of sales;
(9) contracts with respect to which the
aggregate amount that could reasonably expected to be
paid or received thereunder in the future exceeds
$10,000 per annum or $30,000 in the aggregate;
(10)sales agency, manufacturer's representa-
tive, marketing or distributorship agreements;
(11)contracts, agreements or arrangements
with respect to the representation of the Fuel Cell
Business in foreign countries; and
(12)master lease agreements providing for the
leasing of personal property primarily used in, or held
for use primarily in connection with, the Fuel Cell
Business.
(ii) MTI has delivered to the Company complete and
correct copies of all written Contracts, together with all
amendments thereto, and accurate descriptions of all material
terms of all oral Contracts, set forth or required to be set
forth in Schedule 3.1(l)(i).
(iii)All Contracts are in full force and effect and
enforceable against each party thereto. There does not exist
under any Contract any event of default or event or condition
that, after notice or lapse of time or both, would constitute
a violation, breach or event of default thereunder on the
part of MTI or, to the Knowledge of MTI, any other party
thereto except as set forth in Schedule 3.1(l)(iii).
Except as set forth in Schedule 3.1(l)(iii), no consent of
any third party is required under any Contract as a result
of or in connection with, and the enforceability of any
Contract will not be affected in any manner by, the
execution, delivery and performance of this Agreement or
any of the Other Agreements or the consummation of the
transactions contemplated thereby.
(iv) MTI has no outstanding power of attorney
relating to the Fuel Cell Business.
(m) Territorial Restrictions. Except as set forth in
Schedule 1.1(m), MTI is not restricted by any written agreement
or understanding with any other Person from carrying on the Fuel
Cell Business anywhere in the world. The Company, solely as a
result of its receipt of MTI's contribution of the Fuel Cell
Business pursuant to this Agreement or by its assumption of the
Assumed Liabilities, will not become restricted in carrying on
any business anywhere in the world.
(n) Inventories. All Inventories are of good, usable and
merchantable quality.
(o) Suppliers; Raw Materials. Schedule 3.1(o) sets forth
(i) the names and addresses of all suppliers from which the Fuel
Cell Business ordered raw materials, supplies, merchandise and
other goods and services with an aggregate purchase price for
each such supplier of $100 or more during the twelve month period
ended May 31, 1997 and (ii) the amount for which each such
supplier invoiced the Fuel Cell Business during such period. MTI
has not received any notice or has any reason to believe that
there has been any material adverse change in the price of such
raw materials, supplies, merchandise or other goods or services,
or that any such supplier will not sell raw materials, supplies,
merchandise and other goods to the Company at any time after the
Contribution Date on the terms and conditions similar to those
used in its current sales to the Fuel Cell Business, subject to
general and customary price increases. To the best knowledge of
MTI, no supplier of the Fuel Cell Business described in clause
(i) of the first sentence of this Section 3.1(o) has otherwise
threatened to take any action described in the preceding sentence
as a result of the consummation of the transactions contemplated
by this Agreement or the Other Agreements.
(p) Government Contracts.
(i) Government Contracts. Schedule 3.1(i)(iii)
identifies all contracts, grants, cooperative agreements,
awards, proposals, requests to bid, notification of
opportunity to bid, or other arrangements in which MTI is
either a prime contractor, subcontractor, grantee, awardee,
bidder, or prospective bidder or any such arrangement
between MTI and its subcontractors for any Government
Contract relating to the Fuel Cell Business ("Government
Contracts"). Except for explicit references to
sections of the applicable agency acquisition regulations, or
Federal Acquisition Regulations, none of the Government
Contracts is subject to any "implied" clauses or other
understandings which modify, extend or limit the contract
in any way.
(ii) Patent Rights. MTI has or will, upon the receipt
of the Consents, have the authority and ability to assign to
the Company all patent rights accrued as a result of its
performance under the Government Contracts ("MTI Patent
Rights").
(iii)Exceptions to Patent Rights. Except as noted on
Schedule 3.1(p)(ii), MTI has complied with all applicable
agency policies and contract procedures necessary to secure
in itself the right to file patent applications for the MTI
Patent Rights. MTI shall, within sixty (60) days of the
date of this Agreement, secure in itself the right to file
patent applications for MTI Patent Rights which it has not
yet secured in itself. MTI shall assign such patent rights
solely to the Company within ten (10) days of securing such
rights.
(iv) Third Party and Government Rights. Except in
the case of the Government Contracts set out on Schedule
3.1(p)(iv), no other party has a license, whether express or
implied, to use the MTI Patent Rights. In the case of the
Government Contracts set out on Schedule 3.1(p)(iv), the
parties to each such contract, including the United States
government, have only a non-exclusive, perpetual, non-
assignable, license to use the MTI Patent Rights, as of the
date of this Agreement.
(v) March In Rights. MTI has complied with its
obligations set out in the Government Contracts and otherwise
required by 35 U.S.C. 203, to prevent the relevant Federal
agency from requiring the assignment of the MTI Patent Rights
to any other party, including a signatory to the applicable
Government Contract.
(q) Absence of Certain Fuel Cell Business Practices. To
MTI's Knowledge, neither MTI, nor any officer, employee or agent
of MTI, or any other person acting on MTI's behalf, has, directly
or indirectly, within the past five years given or agreed to give
any gift or similar benefit to any customer, supplier,
governmental employee
or other person who is or may be in a position to help or hinder
the Fuel Cell Business (or assist MTI in connection with any
actual or proposed transaction relating to the Fuel Cell Business)
(i) which subjected or might have subjected MTI to any damage or
penalty in any civil, criminal or governmental litigation or
proceeding, (ii) which if not given in the past, might have had
an adverse effect on the Fuel Cell Business or MTI, (iii) which
if not continued in the future, might have an adverse effect on
the Fuel Cell Business or the Assets or subject the Fuel Cell
Business or the Company to suit or penalty in any private or
governmental litigation or proceeding, (iv) for any of the
purposes described in Section 162(c) of the Code or (v) for the
purpose of establishing or maintaining any concealed fund or
concealed bank account.
(r) Intellectual Property Rights.
(i) MTI owns, or is licensed or otherwise possesses
legally enforceable and sufficient rights to use the
Intellectual Property Rights. Schedule 3.1(r)(i) lists all
current and past (lapsed, expired, abandoned or cancelled)
patents, registered and material unregistered copyrights,
trade marks, service marks, trade names and any applications
therefor that are necessary for the conduct of the Fuel Cell
Business and specifies the jurisdictions in which each such
Intellectual Property Right has been issued or registered or
in which an application for such issuance and registration
has been filed, including the respective registration or
application numbers and the names of all registered owners.
Schedule 3.1(r)(i) lists (1) any requests MTI has received
to make any registration of the type referred to in the
immediately preceding sentence, including the identity of the
requestor and the item requested to be so registered, and the
jurisdiction for which such request has been made; (2) all
licenses, sublicenses and other agreements (written or oral)
as to which MTI is a party and pursuant to which any person
is authorized to use any Intellectual Property Right, or any
trade secret material of the Fuel Cell Business, and includes
the identity of all parties thereof, a description of the
nature and subject matter thereof, the applicable royalty and
the term thereof; and (3) all licenses, sublicenses, and
other agreements (written or oral) as to which MTI is a party
and pursuant to which MTI is authorized to use any
intellectual property rights in MTI's conduct of the Fuel
Cell Business ("Third Party Intellectual Property Rights"),or
other trade secret of a third party in or as to any product,
and includes the identity of all parties thereto, a
description of the nature and subject matter thereof, the
applicable royalty and the term thereof. MTI is not party
to any oral license, sublicense or agreement which, if
reduced to written form, would be required to be listed in
Schedule 3.1(r)(i).
(ii) Except as otherwise provided in this Agreement
or as set forth in Schedule 3.1(r)(ii), MTI is not, nor will
it be as a result of the execution and delivery of this
Agreement or the performance of its obligations hereunder,
in violation of any license, sublicense, or agreement
described in Schedule 3.1(r)(i). No claims with respect
to the Intellectual Property Rights, or Third Party
Intellectual Property Rights, to the extent arising out of
any use, reproduction or distribution of such Third Party
Intellectual Property Rights by or through MTI, are
currently pending or, to the Knowledge of MTI are
threatened by any Person, nor does MTI have Knowledge of
any valid grounds for any such claims that are bona fide
(1) to the effect that the manufacture, sale, licensing or
use of any product as now used, sold or licensed or proposed
for use, sale or license by MTI infringes on any copyright,
patent, trademark, service xxxx or trade secret; (2) against
the use by MTI of any of the Intellectual Property Rights;
(3) challenging the ownership, validity or effectiveness of
any of the Intellectual Property Rights or other trade
secret material to the Fuel Cell Business; or (4) challenging
the license or legally enforceable right to use any of the
Third Party Intellectual Property Rights. To the Knowledge
of MTI, all patents, registered trademarks, trade names
and copyrights held by MTI are valid and subsisting.
Except as set forth in Schedule 3.1(r)(ii), to the
Knowledge of MTI, there is no material unauthorized use,
infringement or misappropriation of any of the Intellectual
Property Rights by any third party, including any employee
or former employee of MTI.
(iii)Except as set forth in Schedule 3.1(r)(iii), MTI
(1) has not been sued, charged in writing, or otherwise
notified of any claim that any of the Intellectual Property
Rights infringe any other Person's trade secrets, patents,
trademarks, service marks, trade names or copyrights and
which has not been finally terminated prior to the date
hereof, nor has MTI been informed or notified by any third
party that MTI's use of any of the Intellectual Property
Rights and/or operation of the Fuel Cell business may
constitute such an infringement and (2) has no Knowledge
of any infringement liability with respect to, or
infringement by MTI in its conduct of the Fuel Cell Business
of any trade secret, patent, trademark, service xxxx, trade
names or copyright of another.
(iv) Employee Restrictions. To MTI's Knowledge
none of MTI's employees (past or present, full or part-time)
involved in MTI's conduct of the Fuel Cell Business is
obligated under any contract or contracts ((including
licenses, agreements, covenants and other commitments of any
nature), or is subject to any order, writ, judgment,
injunction, decree, determination or award of any court,
administrative agency or other tribunal, that restricts
the employee's activities on behalf of MTI's conduct of
the Fuel Cell Business or interferes with the use of such
employee's best efforts to promote the interests of MTI
in the conduct of the Fuel Cell Business.
(v) Confidential Information. MTI has not disclosed
any information of a proprietary or confidential nature
relating to its business, products, technology or financial
condition to any person or entity, except as described in
Schedule 3.1(r)(v).
(s) Insurance. Schedule 3.1(s) contains a complete and
correct list and summary description of all insurance policies
maintained by MTI for the benefit of or in connection with the
Assets or the Fuel Cell Business. MTI has delivered to the
Company complete and correct copies of all such policies together
with all riders and amendments thereto. Such policies are in
full force and effect, and all premiums due thereon have been
paid. MTI has complied in all material respects with the terms
and provisions of such policies. The insurance overage provided
by such policies is adequate and customary for the Fuel Cell
Business. Schedule 3.1(s) sets out all claims made by MTI under
any policy of insurance during the past two years with respect
to the Fuel Cell Business and in the opinion of MTI reasonably
formed and held, there is no basis on which a claim should or
could be made under any such policy with respect to it.
(t) Licensed Premises. MTI is the owner of the real
property in which the Licensed Premises are located (the
"Property"). MTI's license under the Services Agreement to the
Company of the Licensed Premises does not violate or conflict
with any instrument of record or agreement affecting the
Property. MTI has no Knowledge of any eminent domain or
similar proceedings against the Property which could adversely
affect the Company's use or occupancy of the Licensed Premises
during the term of the license. There are no defaults by MTI
under any mortgage on the Property which could give rise to the
mortgagee's foreclosure on the Property or give rights to any
mortgagee to disturb the Company's use or occupancy of the
Licensed Premises during the term of the license.
(u) Environmental Matters.
(i) Permits. All Environmental Permits necessary
for the conduct of the Fuel Cell Business are identified
Schedule 3.1(u)(i), and MTI currently holds all such En-
vironmental Permits, and all such Environmental Permits to
the extent permitted by law shall be validly transferred to
the Company on the Contribution Date. MTI has not been
notified by any relevant Governmental Authority that any
such Environmental Permit will be modified, suspended,
cancelled or revoked, or cannot be renewed in the ordinary
course of business.
(ii) No Violations. MTI has complied in all material
respects with all Environmental Permits and all applicable
Environmental Laws pertaining to the Licensed Premises and
MTI's conduct of the Fuel Cell Business. No Person has
alleged any violation by MTI of any such Environmental
Permits or any applicable Environmental Law relating to MTI's
conduct of the Fuel Cell Business.
(iii)No Actions. Except as set forth in Schedule
3.1(u)(iii), MTI has not caused or taken any action that has
resulted or may result in any liability or obligation
relating to (1) the environmental conditions on, under, or
about the Licensed Premises, the Assets or other properties
or assets owned, leased or used by MTI in connection with
and necessary for the conduct of the Fuel Cell Business, or
(2) the past or present use, management, handling, transport,
treatment, generation, storage or Release of any Hazardous
Substances, except for any such liabilities and obligations
that, individually and in the aggregate, are not material to
the Fuel Cell Business and have not had or resulted in, and
will not have or result in, any material adverse effect on
the Fuel Cell Business.
(iv) Other. Except as set forth in Schedule 3.1(u)(iv):
(1) MTI has not transported or arranged for transportation
(directly or indirectly) of any Hazardous Substances relating
to the Fuel Cell Business to any location that is, listed or
proposed for listing under CERCLA, or on any similar state
list, or the subject of federal, state or local enforcement
actions or investigations or Remedial Action; and (2) no
work, repair, construction or capital expenditure is
required or planned in respect of the Assets or the Licensed
Premises pursuant to or to comply with any Environmental Law,
nor has MTI received any notice of any such requirement,
except for such work, repair, construction or capital
expenditure as is not material to the Fuel Cell Business and
is in the ordinary course of business.
(v) Full Disclosure. MTI has disclosed and made
available to the Company, all information, including, without
limitation, all studies, analyses and test results, in the
possession, custody or control of MTI relating to Hazardous
Substances used, managed, handled, transported, treated,
generated, stored or Released by MTI or any other Person at
any time on the Licensed Premises, or otherwise in connection
with the use or operation of the properties or assets used in
or held for use in connection with the Fuel Cell Business.
(v) Employees, Labor Matters, etc. MTI is not a party to
or bound by any collective bargaining agreement and there are no
labor unions or other organizations representing, purporting to
represent or attempting to represent any employees employed in the
operation of the Fuel Cell Business. Schedule 3.1(v) contains a
list of all employees of MTI that work for or in the Fuel Cell
Business, along with the position and the annual rate of
compensation of each such person. Each such employee, as well as
any other person who was involved in the development or creation
of MTI's Intellectual property Rights, has entered into a
confidentiality and assignment of inventions agreement with MTI,
a copy of which has previously been delivered to the Company.
Except as set forth in Schedule 3.1(v), to the Knowledge of MTI,
no key employee or group of employees employed by MTI in the Fuel
Cell Business has any plans to terminate employment with MTI.
MTI has complied in all material respects with all provisions of
Applicable Law pertaining to the employment of the employees of
the Fuel Cell Business, including, without limitation, all such
Laws relating to labor relations, equal employment, fair
employment practices, entitlements, prohibited discrimination or
other similar employment practices or acts, except for
any failure or failures to comply that, individually or together
with all such other failures, has not and will not result in a
material liability or obligation on the part of the Fuel Cell
Business, and has not had or resulted in, and will not have or
result in, an adverse effect on the Fuel Cell Business.
(w) Employee Benefit Plans. Schedule 3.1(w) lists each
pension, retirement , profit sharing, deferred compensation, bonus
or other incentive plan, or other employee benefit program,
arrangement, agreement or understanding, or medical, vision,
dental or other health plan, or life insurance or disability plan,
or any other employee benefit plan, including, without limitation,
any "employee benefit plan" as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended
("ERISA"), to which MTI contributes or is a party or is bound or
under which it may have liability and under which employees or
former employees of the Fuel Cell Business (or their
beneficiaries) are eligible to participate or derive a benefit
("Employee Benefit Plans'). MTI has delivered to the Company
true, correct and complete copies of all Employee Benefit Plans.
(x) Confidentiality. Except as set forth on Schedule 3.1(x),
MTI has taken all steps necessary to preserve the confidential
nature of all material confidential information (including,
without limitation, any proprietary information) with respect to
the Fuel Cell Business, including, but not limited to, the
manufacturing or marketing of any of the Fuel Cell Business
products or services.
(y) No Guarantees. Except as set forth on Schedule 3.1(y),
none of the obligations or liabilities of the Fuel Cell Business
or of MTI incurred in connection with the operation of the Fuel
Cell Business is guaranteed by or subject to a similar contingent
obligation of any other Person. MTI has not guaranteed or become
subject to a similar contingent obligation in respect of the
obligations or liabilities of any other Person. There are no
outstanding letters of credit, surety bonds or similar
instruments of MTI or any of its Affiliates in connection with
the Fuel Cell Business or the Assets.
(z) Disclosure. No representation or warranty made by
MTI in this Agreement nor any statement or certificate furnished
or to be furnished by MTI to the Company or its representatives
in connection with or pursuant to this Agreement contains or will
contain any untrue statement of a material fact, or omits or will
omit to state any material fact required to make the statements
not misleading. There is no fact (other than matters of a
general economic or political nature which do not affect the
Fuel Cell Business uniquely) known to MTI that has not been
disclosed by MTI to the Company that might reasonably be
expected to have or result in a material adverse effect
on the Fuel Cell Business.
(aa) Contract Payments. MTI has not received any prepay-
ments or advances under any Contract or Government Contract.
4. Related Transactions.
4.1 Other Agreements. Contemporaneously with the execution of this
Agreement and the Operating Agreement, MTI and the Company shall enter
into the following agreements:
(a) A Distribution Agreement in the form attached as Schedule
4.1(a).
(b) A Services Agreement in the form attached as Schedule 4.1(b).
5. Covenants of MTI.
5.1 Information Retention. Other than the books and records of MTI
and the Fuel Cell Business contributed to the Company hereunder, MTI will
retain all books and records relating to the Fuel Cell Business in
accordance with MTI's record retention policies as presently in effect.
During the three (3) year period beginning on the Contribution Date, MTI
shall not dispose of or permit the disposal of any such books and records
not required to be retained under such policies without first giving 60
days' prior written notice to the Company offering to surrender the same
to the Company at the Company's expense.
5.2 [Intentionally Omitted.]
5.3 Liability for Transfer Taxes. MTI shall be responsible for the
timely payment of, and shall indemnify and hold harmless the Company
against, all sales, use, value added, documentary, stamp, gross receipts,
registration, transfer, conveyance, excise, recording, license and other
similar Taxes and fees ("Transfer Taxes"), arising out of or in connection
with or attributable to the transactions effected pursuant to this
Agreement. MTI shall prepare and timely file all Tax Returns required to
be filed in respect of Transfer Taxes, provided that the Company shall be
permitted to prepare any such Tax Returns that are the primary
responsibility of the Company under applicable law. The Company's
preparation of any such Tax Returns shall be subject to MTI's approval,
which approval shall not be withheld unreasonably.
5.4 Certificates of Tax Authorities. MTI shall provide to the
Company copies of certificate from the appropriate taxing authority for
which the Company could have liability to withhold or pay Taxes with
respect to the transfer of the Assets or the Fuel Cell Business within
_______ days following the Contribution Date.
5.5 Confidentiality. MTI will treat and hold as such all of the
Confidential Information, refrain from using any of the Confidential
Information except in connection with this Agreement, and deliver
promptly to the Company or destroy, at the request and option of the
Company, all tangible embodiments (and all copies) of the Confidential
Information which are in its possession. In the event that MTI is
requested or required (by oral question or request for information or
documents in any legal proceeding, interrogatory, subpoena, civil
investigative demand, or similar process) to disclose any Confidential
Information, MTI will notify the Company promptly of the request or
requirement so that the Company may seek an appropriate protective order
or waive compliance with the provisions of this Section 5.5. If in the
absence of a protective order or the receipt of a waiver hereunder, MTI
is, on the advice of counsel, compelled to disclose any Confidential
Information to any tribunal, MTI may disclose the Confidential
Information to the tribunal.
5.6 Covenant Not to Compete. For a period of three (3) years from
and after the Contribution Date, MTI will not engage directly or indirectly
in any business previously or presently (as of the Contribution Date)
conducted by the Fuel Cell Business in the United States; provided,
however, that no owner of less than 5% of the outstanding stock of any
publicly traded corporation shall be deemed to engage solely by reason
thereof in any of such publicly trade company's businesses. If the final
judgment of a court of competent jurisdiction declares that any term or
provision of this Section 5.6 is invalid or unenforceable, the Parties
agree that the court making the determination of invalidity or
unenforceability shall have the power to reduce the scope, duration, or
area of the term or provision, to delete specific words or phrases, or
to replace any invalid or unenforceable term or provision that is valid
and enforceable and that comes closest to expressing the intention of the
invalid or unenforceable term or provision, and this Agreement shall be
enforceable as so modified after the expiration of the time within which
the judgment may be appealed. This covenant shall not prevent MTI from
performance under the Distribution Agreement described in Section 2.2(d)
or conduct of any further research and development under the NYSERDA
contract regarding the hybrid electrical vehicle, an Excluded Asset.
6. Indemnification.
6.1 By MTI.
(a) MTI - Indemnity for Breach of Representations, Warranties,
Covenants and Agreements. MTI agrees to indemnify, defend and hold
harmless the Company from and against all Losses which may be
incurred by the Company arising out of any breach by MTI of any of
MTI's representations warranties, covenants or agreements made in
this Agreement, the Schedules attached hereto or any document or
instrument delivered in connection with the transactions contemplated
hereby. The maximum liability of MTI to the Company under this
Section 6.1 for breaches of MTI's representations and warranties in
Section 3 shall be limited to the total amount of Capital
Contributions made by EDC to the Company under Article 4 of the
Operating Agreement.
(b) MTI - Indemnity for Excluded Liabilities. MTI agrees to
indemnify, defend and hold harmless the Company from and against all
Losses which may be incurred by the Company with respect to or arising
out of any of the Excluded Liabilities. There shall be no limitation
of either time or amount on MTI's obligation to indemnify, defend and
hold harmless the Company under this Section 6.1(b).
6.2 By Company. The Company agrees to indemnify MTI with respect
to any and all claims, losses, liabilities, costs and expenses (including
attorneys' fees and reimbursable expenses) which may be reasonably incurred
by MTI arising out of any breach by the Company of any of its
representations, warranties, covenants or agreements made in this
Agreement, the Schedules hereto or any document or instrument delivered
in connection with the transactions contemplated hereby or arising out
of any of the Assumed Liabilities.
6.3 Notice and Defense of Claims. A party claiming indemnification
under this Section 6 (the "Asserting Party") must promptly notify in
writing the party from which indemnification is sought (the "Defending
Party") of the nature and basis of such claim for indemnification. If
such claim relates to a claim, litigation or other action by a third
party against the Asserting Party, or any fixed or contingent liability
to a third party (a "Third Party Claim"), the Defending Party may elect
to assume the defense of the Third Party claim at its own expense with
counsel selected by the Defending Party. The Defending Party may not
assume the defense if the named parties to the Third Party Claim
(including any impleaded parties) include both the Defending Party and
the Asserting Party and representation of both parties by the same
counsel would be inappropriate due to actual or potential differing
interests between them, in which case the Asserting Party shall have the
right to defend the Third Party Claim and to employ counsel approved by the
Defending Party at the expense of the Defending Party. If the Defending
Party assumes the defense of the Third Party Claim, the Defending Party
shall be liable for any fees and expenses of counsel for the Asserting
party incurred thereafter in connection with the Third Party Claim
(except in the case of actual or potential differing interests, as provided
in the preceding sentence). If the Defending Party does not assume the
defense of the Third Party Claim, the Asserting Party shall have the right
to assume the defense of and settle the Third Party Claim (at the Defending
Party's expense), if such Asserting Party shall notify the Defending Party
of the Asserting Party's intention to settle the Third Party Claim (at the
Defending Party's expense), unless the Defending Party shall notify
Asserting Party in writing within five (5) days after receipt of such
notice of intention to settle of the Defending Party's election to assume
(at its expense) the defense of the Third Party Claim and promptly
thereafter takes appropriate action to implement such defense. The
Asserting Party and the Defending shall use all reasonable efforts to
cooperate fully with respect to the defense of any claim, action or
proceeding covered by this Section 6.
6.4 Remedies. Except as otherwise provided herein, none of the
remedies provided in this Agreement for either party, including specific
performance, are the exclusive remedy of either party for a breach of
this Agreement. Except as otherwise provided herein, the parties shall
have the right to seek any other remedy in law or equity in lieu of or
in addition to any remedies provided in this Agreement, including an
action for damages for breach of contract.
7. Public Announcements. Any and all press releases and other public
announcements or communications concerning this Agreement and the transactions
hereunder shall be made only with the Company's prior written approval or as
otherwise required by law.
8. Brokers.
8.1 For MTI. MTI represents and warrants that it has not engaged any
broker or finder or incurred any liability for brokerage fees, commissions
or finder's fees in connection with the transactions contemplated by this
Agreement. MTI agrees to indemnify and hold harmless the Company against
any claims or liabilities asserted against it by any person acting or
claiming to act as a broker or finder on behalf of MTI.
8.2 For the Company. The Company represents and warrants that it has
not engaged any broker or finder or incurred any liability for brokerage
fees, commissions or finder's fees in connection with the transactions
contemplated by this Agreement. The Company agrees to indemnify and hold
harmless MTI against any claims or liabilities asserted against it by any
person acting or claiming to act as a broker or finder on behalf of the
Company.
9. Definition of Certain Terms.
The terms defined in this Section 9, whenever used in this Agreement
(including in the Schedules), shall have the respective meanings indicated
below for all purposes of this Agreement. All references herein to a Section
or Schedule are to a Section or Schedule of or to this Agreement, unless
otherwise indicated.
"Affiliate" of a Person means a Person that directly or indirectly
through one or more intermediaries, controls, is controlled by, or is
under common control with, the first Person. "Control" (including the
terms "controlled by" and "under common control with") means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management policies of a person, whether through the
ownership of voting securities, by contract or credit arrangement, as
trustee or executor, or otherwise.
"Agreement" means this Contribution Agreement, including the Schedules
hereto.
"Applicable Law" means all applicable provisions of all (i)
constitutions, treaties, statutes, laws (including the common law), rules,
regulations, ordinances, codes or orders of any Governmental Authority,
(ii) Governmental Approvals and (iii) orders, decisions, injunctions,
judgments, awards and decrees of or agreements with any Governmental
Authority.
"Assets" is defined in Section 1.1.
"Assumed Liabilities" is defined in Section 1.4.
"Business Day" shall mean a day other than a Saturday, Sunday or other
day on which commercial banks in Detroit or New York are authorized or
required to close.
"Code" means the Internal Revenue Code of 1986, as amended.
"Confidential Information" means any information concerning the
businesses and affairs of the Fuel Cell Business that is not already
generally available to the public.
"Consent" means any consent, approval, authorization, waiver,
permit, grant, franchise, concession, agreement, license, exemption or
order of, registration, certificate, declaration or filing with, or
report or notice to, any Person, including, but not limited to, any
Governmental Authority.
"Contracts" is defined in Section 3.1(l)(i).
"Contributed FCB Balance Sheet" is defined in Section 3.1(d).
"Contribution Date" is defined in the introductory paragraph of this
Agreement.
"Copyrights" shall mean the copyrights registered with the U.S.
Copyright Office, as further described on Schedule 9 - Copyrights,
attached, which lists all federally registered copyrights now held or at
anytime held by MTI and used in the Fuel Cell Business, together with all
other copyrighted or copyrightable works used in the Fuel Cell Business
(as described on Schedule 9 - Copyrights, the "Works") and any derivative
works of the Works and any "Moral Rights" MTI may have in the Works,
including the Works described in any registered copyrights listed on
Schedule 9 - Copyrights.
"Covered Returns" is defined in Section 3.1(f)(i).
"$ or dollars" means lawful money of the United States.
"EDC" means Edison Development Corporation, a Michigan corporation,
whose address is 0000 Xxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000-0000.
"Environmental Laws" means all Applicable Laws relating to the
protection of the environment, to human health and safety, or to any
emission, discharge, generation, processing, storage, holding, abatement,
existence, Release, threatened Release or transportation of any Hazardous
Substances, including, without limitation, (i) CERCLA, the Resource
Conservation and Recovery Act, and the Occupational Safety and Health Act,
(ii) all other requirements pertaining to reporting, licensing, permitting,
investigation or remediation of emissions, discharges, releases or
threatened releases of Hazardous Materials into the air, surface water,
groundwater or land, or relating to the manufacture, processing,
distribution, use, sale, treatment, receipt, storage, disposal, transport
or handling of Hazardous Substances, and (iii) all other requirements
pertaining to the protection of the health and safety of employees or the
public.
"Environmental Liabilities and Costs" means all Losses, whether direct
or indirect, known or unknown, current or potential, past, present or
future, imposed by, under or pursuant to Environmental Laws, including,
without limitation, all Losses related to Remedial Actions, and all fees,
disbursements and expenses of counsel, experts, personnel and consultants
based on, arising out of or otherwise in respect of: (i) the ownership or
operation of the Fuel Cell Business or the Assets; and (ii) expenditures
necessary to cause the Licensed Premises or any aspect of the Fuel Cell
Business to be in compliance with any and all requirements of Environmental
Laws as of the Contribution Date.
"Environmental Permits" means any federal, state and local permit,
license, registration, consent, order, administrative consent order,
certificate, approval or other authorization with respect to MTI
necessary for the conduct of the Fuel Cell Business as currently
conducted or previously conducted under any Environmental Law.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
"Excluded Assets" is defined in Section 1.2.
"Excluded Liabilities" is defined in Section 1.5.
"Financial Statements" means each of the financial statements required
to be provided by MTI under Section 3.1(d).
"Fuel Cell Business" means the business acquired or to be acquired
by the Company pursuant to this Agreement, consisting of the Assets and
the Assumed Liabilities, but not including the Excluded Assets or
Excluded Liabilities.
"Governmental Approval" means any Consent of, with, from or to any
Governmental Authority.
"Governmental Authority" means any nation or government, any state or
other political subdivision thereof, any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to government, including, without limitation, any government
authority, agency, department, board, commission or instrumentality of
the United States, any State of the United States or any political
subdivision thereof, and any tribunal or arbitrator(s) of competent
jurisdiction, and any self-regulatory organization.
"Hazardous Substances" means any substance that: (i) is or contains
asbestos, urea formaldehyde foam insulation, polychlorinated biphenyls,
petroleum or petroleum derived substances or wastes, radon gas or related
materials; (ii) requires investigation, removal or remediation under any
Environmental Law, or is defined, listed or identified as a "hazardous
waste" or "hazardous substance" thereunder; or (iii) is toxic, explosive,
corrosive, flammable, infectious, radioactive, carcinogenic, mutagenic,
or otherwise hazardous and is regulated by any Governmental Authority
or Environmental Law.
"Intellectual Property Assets" is defined in Section 1.1(h).
"Intellectual Property Rights" shall refer collectively and singularly
to Patent Rights, Copyrights, Trademark Rights, Trade Secrets and Know
How, except to the extent that MTI expressly indicates on the attached
schedules that it has transferred such Intellectual Property Rights.
"Inventories" is defined in Section 3.1(n).
"IRS" means the Internal Revenue Service.
"Know How" shall mean all drawings, prototypes, computer files (in
object and source code) and other such tangible materials.
"Knowledge" means actual knowledge after due inquiry and
investigation.
"Licensed Premises" is [to be provided by MTI].
"Lien" means any mortgage, pledge, hypothecation, right of others,
claim, security interest, encumbrance, lease, sublease, license,
occupancy agreement, adverse claim or interest, easement, covenant,
encroachment, burden, title defect, title retention agreement, voting
trust agreement, interest, equity option, lien, right of first refusal,
charge or other restrictions or limitations of any nature whatsoever,
including, but not limited to, such as may arise under any Contracts.
"Losses" is defined as any and all claims, liabilities, obligations,
losses, fines, costs, royalties, proceedings, deficiencies or damages
(whether absolute, accrued, conditional or otherwise and whether or not
resulting from third party claims), including out-of-pocket expenses and
reasonable attorneys' and accountants' fees incurred in the investigation
or defense of any of the same or in asserting any of their respective
rights.
"MTI" means Mechanical Technology Corporation, a New York corporation.
"Moral Rights" shall mean all rights of paternity or integrity
relating to each Work including, without limitation, all rights to be
identified as the author of the Work(s), to object to the modification
of any of the Work, and any similar rights existing under the judicial
or statutory laws of any country in the world or any treaty, regardless
of whether such right is denominated or generally referred to as
moral rights.
"Other Agreements" means the agreements and other documents and
instruments described in Section 4.
"Patent Rights" shall mean all Letters Patent, together with all
foreign Letters Patent corresponding thereto listed on Schedule 9 - Patent
Rights, further together with, foreign or domestic patent applications
corresponding thereto, excluding those listed on Schedule 9 - Patent Rights
and related thereto; patentable rights, excluding those listed on
Schedule 9 - Patent Rights and related thereto, whether or not such
rights are registered, or applications for registration have been filed
with any Governmental Authority, and all proprietary: drawings, plans;
designs; quality control; machine and mechanical specifications;
engineering data; production techniques; installation data; application
data; flow charts; logic diagrams relating to the Patent, and any other
foreign or domestic patentable rights that may be obtained in respect
thereof; and any foreign or domestic reissues, reexaminations certificates,
extensions, substitutions, confirmations, divisions, and continuations or
continuations-in-part of any of the foregoing.
"Permitted Liens" means (i) Liens for Taxes not yet due and payable or
which are being contested in good faith and by appropriate proceedings if
adequate reserves with respect thereto are maintained on MTI's books in
accordance with GAAP; or (ii) Liens that, individually and in the
aggregate, do not and would not materially detract from the value of any
of the Assets or interfere with the conduct of the Fuel Cell Business by
MTI or the Company or as listed in Schedule 9 - Permitted Liens.
"Person" means any natural person, firm, partnership, association,
corporation, company, trust, business trust, Governmental Authority or
other entity.
"Release" means any releasing, disposing, discharging, injecting,
spilling, leaking, leaching, pumping, dumping, emitting, escaping,
emptying, seeping, dispersal, migration, transporting, placing and the
like, including without limitation, the moving of any materials through,
into or upon, any land, soil, surface water, ground water or air, or
otherwise entering into the environment.
"Remedial Action" means all actions required to (i) clean up, remove,
treat or in any other way remediate any Hazardous Substances; (ii) prevent
the release of Hazardous Substances so that they do not migrate or
endanger or threaten to endanger public health or welfare or the
environment; or (iii) perform studies, investigations and care related to
any such Hazardous Substances.
"Tax" means any federal, state, provincial, local, foreign or other
income, alternative, minimum, accumulated earnings, personal holding
company, franchise, capital stock, net worth, capital, profits, windfall
profits, gross receipts, value added, sales, use, goods and serves, excise,
customs duties, transfer, conveyance, mortgage, registration, stamp,
documentary, recording, premium, severance, environmental (including taxes
under Section 59A of the Code), real property, personal property, ad
valorem, intangibles, rent, occupancy, license, occupational, employment,
unemployment insurance, social security, disability, workers' compensation,
payroll, health care, withholding, estimated or assessment or deficiencies
thereof (including all interest and penalties thereon and additions thereto
whether dispute or not).
"Tax Return" means any return, report, declarations, form, claim for
refund or information return or statement relating to Taxes, including any
schedule or attachment thereto, and including any amendment thereof.
"Trade Secrets" shall mean methods, processes, know how and all other
proprietary data and information relating to MTI's conduct of the Fuel Cell
Business, products and/or services, including customer lists and business
methods.
"Trademark Rights" shall mean the foreign or domestically registered
trademarks described on Schedule 9 - Trademark Rights, which is attached
hereto and made a part hereof and constitutes all of the foreign or
domestically registered trademarks now held or at any time held by MTI and
used in the Fuel Cell Business, any trademark applications (state of
federal), common law trademark rights, and all other trademarks or service
marks now owned or ever owned by MTI and used at any time in connection
with its Fuel Cell Business, including the sale and promotion of its goods
and services, together with the goodwill of the business relating to such
trademarks or service marks.
"Transfer Taxes" is defined in Section 5.3.
"Treasury Regulations" means the regulations prescribed pursuant to
the Code.
"Withholding Taxes" is defined in Section 3.1(f)(i).
10. Miscellaneous.
10.1 Survival of Representations and Warranties, etc. The
representations and warranties contained in this Agreement shall survive
the execution and delivery of this Agreement, any examination by or on
behalf of the parties hereto and the completion of the transactions
contemplated herein, but only to the extent of the time periods specified
below:
(a) Except as set forth in clause (b) below, the representations
and warranties contained in Section 3.1 shall survive until the
earlier of (i) an initial public offering of equity interests in the
Company and in accordance with the requirements of the Securities Act
of 1933 or (ii) for a period of five (5) years following the
Contribution Date.
(b) The representations and warranties of MTI contained in
Section 3.1(f) shall survive as to any Tax covered by such
representations and warranties for so long as any statute of
limitations for such Tax remains open, in whole or in part, including
without limitation by reason of waiver of such statute of
limitations.
All other agreements, covenants and obligations of the parties hereunder
shall survive the execution and delivery of this Agreement and the
completion of the transactions hereunder.
10.2 Expenses. Except as otherwise expressly provided herein, the
Company and MTI shall each pay their own expenses in connection with this
Agreement and the transactions contemplated hereby.
10.3 Severability. If any provision of this Agreement, including any
phrase, sentence, clause, Section or subsection is inoperative or
unenforceable for any reason, such circumstances shall not have the effect
of rendering the provision in question inoperative or unenforceable in any
other case or circumstance, or of rendering any other provision or
provisions herein contained invalid, inoperative, or unenforceable to any
extent whatsoever.
10.4 Notices. All notices, requests, demands, waivers and other
communications required or permitted to be given under this Agreement shall
be in writing and shall be deemed to have been duly given if (a) delivered
personally, (b) mailed by first-class, registered or certified mail, return
receipt requested, postage prepaid, or (c) sent by next-day or overnight
mail or delivery:
(i) if to the Company to,
Xxxx Xxxxxxxxx
000 Xxxxxx-Xxxxxx Xxxx
Xxxxxx, Xxx Xxxx 00000
with a copy to:
Xxxxx Xxxx
0000 Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Xxxxxx X. Xxxxxxxxxxxxxxxxxx
0000 Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Xxxxx Xxxx
Xxxxxxxx Xxxxxxxx & Xxxxx
Xxx Xxxxxxxx Xxxxx
Xxxxxx, Xxx Xxxx 00000
(ii) if to MTI,
Xxxxx Xxxxxxxxx
Mechanical Technology Inc.
000 Xxxxxx-Xxxxxx Xxxx
Xxxxxx, Xxx Xxxx 00000
with a copy to:
Xxxxx Xxxx
Xxxxxxxx Xxxxxxxx & Xxxxx
Xxx Xxxxxxxx Xxxxx
Xxxxxx, Xxx Xxxx 00000
or, in each case, at such other address as may be specified in writing to
the other parties hereto.
Such notices or other communications shall be deemed received (a) on
the date delivered, if delivered personally, (b) three business days after
being deposited with the U.S. Post Office, if sent by registered or
certified mail, or (c) on the next business day, if sent by Federal
Express or similar overnight courier.
10.5 Entire Agreement. This Agreement (including the Schedules) and
the Other Agreements (when executed and delivered) constitute the entire
agreement and supersede all prior agreements and understandings, both
written and oral, between the parties with respect to the subject matter
hereof.
10.6 Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed an original and all of which
shall together constitute one and the same instrument.
10.7 Governing Law, etc. This Agreement shall be governed in all
respects, including as to validity, interpretation and effect, by the
internal laws of the State of Michigan, without giving effect to the
conflict of laws rules thereof. The Company and MTI hereby irrevocably
submit to the jurisdiction of the courts of the State of Michigan and the
Federal courts of the United States of America located in the State of
Michigan in respect of the interpretation and enforcement of the provisions
of this Agreement and of the documents referred to in this Agreement, and
hereby waive, and agree not to assert, as a defense in any action, suit or
proceeding for the interpretation or enforcement hereof or of any such
document, that it is not subject thereto or that such action, suite or
proceeding may not be brought or is not maintainable in said courts or that
the venue thereof or that such action, suit or proceeding may not be
brought or is not maintainable in said courts or that the venue thereof may
not be appropriate or that this Agreement or any of such document may not
be enforced in or by said courts, and the parties hereto irrevocably agree
that all claims with respect to such action or proceeding shall be heard
and determined in such a Michigan or Federal court. The Company and MTI
hereby consent to and grant any such court jurisdiction over the person of
such parties and over the subject matter of any such dispute and agree that
mailing of process or other papers in connection with any such action or
proceeding in the manner provided in Section 8.4 or in such other manner
as may be permitted by law, shall be valid and sufficient service thereof.
10.8 Binding Effect. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respect heirs, successors
and permitted assigns.
10.9 No Third Party Beneficiaries. Nothing in this Agreement shall
confer any rights upon any person or entity other than the parties hereto
and their respective heirs, successors and permitted assigns.
10.10 Amendment; Waivers, etc. No amendment, modification or discharge
of this Agreement, and no waiver hereunder, shall be valid or binding
unless set forth in writing and duly executed by the party against whom
enforcement of the amendment, modification, discharge or waiver is sought.
Any such waiver shall constitute a waiver only with respect to the specific
matter described in such writing and shall in no way impair the rights of
the party granting such waiver in any other respect or at any other time.
Neither the waiver by any of the parties hereto of a breach of or a default
under any of the provisions of this Agreement, nor the failure by any of
the parties, on one or more occasions, to enforce any of the provisions
of this Agreement or to exercise any right or privilege hereunder, shall be
construed as a waiver of any other breach or default of a similar nature,
or as a waiver of any of such provisions, rights or privileges hereunder.
The rights and remedies herein provided are cumulative and are not
exclusive of any rights or remedies that any party may otherwise have at
law or in equity.
10.11 Further Assurances. In addition to MTI's obligations under
Section 1.3, each of the parties shall execute such documents and other
papers and perform such further acts as may be reasonably required or
desireable to carry out the provisions hereof and the transactions
contemplated hereby.
IN WITNESS WHEREOF, the parties hereto have executed the foregoing documents
as of the date and year first above written.
MECHANICAL TECHNOLOGY INCORPORATED
(a New York corporation)
By: /s/ Xxxxxx Xxxxxxxxxxx
__________________________________
Its: President
_________________________________
"MTI"
PLUG POWER, L.L.C.
(a Delaware limited liability company)
By: /s/ Xxxxx Xxxxxxxxxx
__________________________________
Its: Executive Vice-President
_________________________________
"Company"
SCHEDULE 1.1(a) -- Assets
CONFIDENTIAL TREATMENT REQUESTED
SCHEDULE 1.1(b) -- Inventory
CONFIDENTIAL TREATMENT REQUESTED
SCHEDULE 1.1(d) -- Rights of MTI
CONFIDENTIAL TREATMENT REQUESTED
SCHEDULE 1.1(e) - Credits, Prepaid Expenses, Deferred Charges, Advance
Payments, Security Deposits and Pre-Paid Items
None
SCHEDULE 1.1(g) -- Intellectual Property
CONFIDENTIAL TREATMENT REQUESTED
SCHEDULE 1.1(h) -- Interests in Government Contracts
CONFIDENTIAL TREATMENT REQUESTED
SCHEDULE 1.1(l) -- Employee and Independent
CONFIDENTIAL TREATMENT REQUESTED
SCHEDULE 1.2 -- Excluded Assets
CONFIDENTIAL TREATMENT REQUESTED
SCHEDULE 1.4 - Assumed Liabilities
CONFIDENTIAL TREATMENT REQUESTED
SCHEDULE 2.1(f) -- Employment Agreements
CONFIDENTIAL TREATMENT REQUESTED
SCHEDULE 3.1(b)(ii) -- States in Which MTI is Qualified to do Business
Maryland
New York
SCHEDULE 3.1(c) -- Required Consents and Government Approvals
CONFIDENTIAL TREATMENT REQUESTED
SCHEDULE 3.1(d) -- Contributed Business Balance Sheet
Attached is a Contributed Business Balance Sheet as of 6/25/97
Mechanical Technology Inc.
Fuel Cell Activity
Proforma Statement of New Assets at 5/23/97
Total To Plug Power
Assets -------- -------------
Cash $ 0 $ 0
(1) - Accounts Receivable 348,794 0
Inventory 77 77
Property, Plant & Equipment
at Acquisition Cost 463,532 463,532
Accumulated Depreciation (82,600) (82,600)
------- -------
Net Property, Plant, and Equipment 380,932 380,932
------- -------
Total Assets 729,803 381,009
Liabilities
(2) - Accounts Payable 52,191 10,585
Notes Payable 18,384 18,384
Accrued Vacation
Base Vacation 49,141 24,571
Purchased Vacation 2,150 2,150
(3) - Accrued FSA 2,662 2,662
------- -------
Total Liabilities 124,528 58,352
------- -------
Net Assets $ 605,275 $ 322,658
======= =======
(1) - Retained by MTI
(2) - Will transfer payables associated with transferred assets, materials,
and supplies.
For example, per the attached list, laboratory expenditures of $430.7
thousand had been authorized and $389 thousand recorded, as of 5/23/97.
Payables associated with the $389 thousand expenditure will be
transferred. Additional payables, including but not limited to
authorized but unexpended Plan Appropriations, will also transfer.
(3) - Subject to IRS regulations that may inhibit transfer of this liability.
Backlog $ 657,000 $ 657,000
======= =======
SCHEDULE 3.1(e) -- Liabilities Relating to Business
See Schedule 1.4
See Schedule 3.1(g)
SCHEDULE 3.1(f)(i) -- Taxes Contested in Good Faith
MTI pays a variety (sales, use franchise, property, and income, etc.) of
taxes at various and numerous levels of government including, but not
limited to, school, town, county, state, and federal.
In the ordinary course of business MTI is subject to audit by the various
taxing authorities.
MTI is currently involved in settling, in good faith, both New York State
corporation franchise tax and sales and use tax for several open years.
MTI also has contested Property taxes (Town of Colonie) for 1995/96 and
1996/97.
SCHEDULE 3.1(f)(ii) -- Extension of Assessment on Taxes
In connection with both New York State corporation franchise tax and sales
and use tax audits, MTI has consented to extending the period of limitation.
SCHEDULE 3.1(f)(iii) -- Disclosures Regarding Taxes and Withholding Taxes
See Schedule 3.1(f)(i) and Schedule 3.1 (f)(ii)
SCHEDULE 3.1(f)(iv) -- Litigation or Administrative Appeals Pending In
Connection with Covered Taxes
See Schedule 3.1(f)(i) and Schedule 3.1(f)(ii)
SCHEDULE 3.1(g) -- Changes in Conduct of Business Since Audited Balance
Sheet
CONFIDENTIAL TREATMENT REQUESTED
SCHEDULE 3.1(h) -- Litigation, Citations, Fines or Penalties
None
SCHEDULE 3.1(i)(i) -- Violations of Applicable Laws
None
SCHEDULE 3.1(i)(ii) -- Governmental Approval and Consents Required for
Conduct of the Business
1. See Schedule 1.1(h)
2. See Schedule 3.1(c)
3. See Schedule 3.1(u)(i)
4. Received Approvals only form the Chase Manhattan Bank, NYSERDA and
LANL.
SCHEDULE 3.1(i)(iii) -- Contracts with Governmental Authority
CONFIDENTIAL TREATMENT REQUESTED
SCHEDULE 3.1(i)(iv) -- Disclosures Regarding Business
1. The Committee on Appropriations, Subcommittee on Interior and Related
Agencies, has completed a "xxxx-up" of the budget that includes the DOE
Office of Advanced Automobile Technologies Programs, and has moved $10
Million form the fuel cell area to the heavy duty diesel area. This
action would reduce the fuel cell effort form $29.6 Million to $19.6
Million. It is the understanding of many that this action is counter
to DOE plans and results form the interests of the diesel engine
technology community. it is difficult to understand the wisdom of
moving money to the giant diesel engine industry with its mature
technology while depriving the embryonic fuel cell industry with its
potential for break-through commercial technology that can rival the
emergence of the PC industry form the mainframe computer.
2. Phase II of the Ford contract will not be completed within the current
limits of the contract. -- Please the Addendum to Schedule 3.1(g)
SCHEDULE 3.1(j) -- Operation of the Business
MTI has conducted the Business only through MTI. There are no exceptions.
SCHEDULE 3.1(k) -- Permitted Liens
1. All government property as set forth on Schedule 1.1(a), items in
Government owned property room, Ford Phase I material, and Ford Phase
II material is owned exclusively by the Department of Energy and used
by MTI in connection with research and development activities.
2 Air Compressor Engineering lien, as assigned to LCA.
3. Limitations on Intellectual Property Rights, as set forth in Schedules
3.1(p)(iii)-(iv)
SCHEDULE 3.1(l)(i) -- Contracts
CONFIDENTIAL TREATMENT REQUESTED
SCHEDULE 3.1(l)(iii) -- Existing Default Under Contracts
None
SCHEDULE 3.1(m) -- Territorial Restrictions
See Schedule 1.1(h)
SCHEDULE 3.1(o) -- Suppliers to Fuel Cell Business
CONFIDENTIAL TREATMENT REQUESTED
SCHEDULE 3.1(p)(i) -- Government Contracts
CONFIDENTIAL TREATMENT REQUESTED
SCHEDULE 3.1(p)(iii) -- Exceptions to Patent Rights
CONFIDENTIAL TREATMENT REQUESTED
SCHEDULE 3.1(p)(iv) -- Third Party and Government Rights
CONFIDENTIAL TREATMENT REQUESTED
SCHEDULE 3.1(r)(i) -- Intellectual Property Owned by MTI
CONFIDENTIAL TREATMENT REQUESTED
SCHEDULE 3.1(r)(ii) -- Infringement by Third Party of MTI Intellectual
Property Rights
None
SCHEDULE 3.1(r)(ii) -- Infringement of Third Party Intellectual Property
Rights
None
SCHEDULE 3.1(r)(v) -- Confidential Information
CONFIDENTIAL TREATMENT REQUESTED
SCHEDULE 3.1(s) -- Insurance
This Schedule contains a complete list of all insurance policies maintained
by MTI. A summary description of each policy is attached. No claims have
been made by MTI's Fuel Cell Business during the past two years.
Coverage Claims (Past 2 Years)
-------- ---------------------
Directors & Officers Liability None
Excess Directors & Officers Liability None
Property & General Liability None
Air Craft Products Liability None
Workers Compensation None
Commercial Umbrella None
ERISA Bond None
Commercial Crime Policy None
Commercial Auto None
California Tax Bond None
Open Cargo Policy None
SCHEDULE 3.1(u)(iii) -- Disclosure of Information Regarding Environmental
Conditions Relating to the Business, Assets or leased Property
See Attached Phase I (Hard Copy Previously Provided)
SCHEDULE 3.1 (u)(iv) -- Other
None
SCHEDULE 3.1(v) -- Employees of MTI
CONFIDENTIAL TREATMENT REQUESTED
SCHEDULE 3.1(w) -- Employee Benefit Plans
Existing MTI Employee Benefit Plans are listed as follows:
1. 401(k) Savings Plan (Administered by Mass Mutual)
2. Medical Insurance (Four carriers are currently available at the
employees option)
- Capital District Physician's Health Plan (CDPHP)
- Blue Shield of Northeastern New York
- Mohawk Valley Physicians (MVP)
- Community Health Plan (CHP)
3. Dental Insurance (Offered through Phoenix Home Life. Employees with
CHP medical coverage may select CHP Dental)
4. Long Term Disability Insurance (Policy with UNUM)
5. Short Term Disability Insurance (Policy with Phoenix Home Life)
6. Flexible Spending Account (Administered by Xxxxxxxx Healthcare)
7. Life Insurance (Policy with Mass Mutual)
8. Vacation
- Earned Vacation
- Vacation Purchase
9. Short Term Personal Illness
10. Extended Personal Illness
11. Personal Business Time
12. Voluntary Furlough Program
13. Technology Division Profit Sharing Plan
14. Stock Incentive Plan
Profit Sharing Plan
Technology Division
1996 Fiscal Year
Effective: Fiscal Year 1995
Eligibility:
* All full time employees and scheduled employees who work more than
1000 hours. Distributions made on basis of individual salary as a
percentage of total salary.
* New hires may participate on a pro rata share basis at the
discretion of management at the time of hiring.
* Must be on the payroll on 9/30/96 to receive distribution.
* Non-discretionary.
* Based upon earnings before taxes, but after corporate assessment.
Formula:
Earnings < Budget No Distribution
Earnings = Budget 10% Payment to Pool
Earnings > Budget 10% of amount = budget, +
15% of any additional earnings
Impact:
Budget = $200,000 income pre-tax
Earnings Distribution
-------- ------------
$ 200,000 $ 20,000
300,000 35,000
500,000 65,000
Comments:
* Plan is identical to 1995 approved plan
SCHEDULE 3.1(x) -- Confidentiality
None
SCHEDULE 3.1(y) -- Guarantees By Third Parties
Guaranty dated as of October 31, 1995, by MASCO Corporation, a Delaware
corporation, located at 00000 Xxx Xxxx Xxxx, Xxxxxx, Xxxxxxxx 00000, in
favor of Chemical Bank, to secure payment of a $4,000,000 Promissory Note
dated October 31, 1995 by Mechanical Technology Incorporated in favor of
Chemical Bank.
SCHEDULE 9 -- COPYRIGHT, PATENT AND TRADEMARK RIGHTS
See Schedule 1.1(g)
