ASSET PURCHASE AGREEMENT

ASSET PURCHASE AGREEMENT

dated as of August 10, 2009

between

DAEWOO SHIPBUILDING & MARINE ENGINEERING CO., LTD.

and

DEWIND, INC.

and

COMPOSITE TECHNOLOGY CORPORATION

 

ASSET PURCHASE AGREEMENT

ASSET PURCHASE AGREEMENT, dated as of August 10, 2009 (the “ Agreement ”), between Daewoo Shipbuilding & Marine Engineering Co., Ltd., a Korean corporation (“ Buyer ”), DeWind, Inc., a Nevada corporation (“ Seller ”), and Composite Technology Corporation (“ CTC ”).

WHEREAS, Seller is engaged in the business of designing, developing, assembling, manufacturing and selling wind turbines for the production of wind energy and the development and management of “wind farms” for the harnessing and sale of wind energy (the “ Business ”);

WHEREAS, the parties desire that the Seller sell, assign, transfer, convey and deliver to Buyer, and that Buyer purchase and acquire from the Seller, all of the right, title and interest of the Seller in and to the Purchased Assets (as hereinafter defined), and that Buyer assume the Assumed Liabilities (as hereinafter defined), upon the terms and subject to the conditions of this Agreement; and

WHEREAS, to induce Buyer to enter into this Agreement, CTC has agreed to enter into this Agreement and be subject to certain covenants provided hereto.

NOW, THEREFORE, in consideration of the foregoing premises and the respective representations and warranties, covenants and agreements contained herein, the parties hereto agree as follows:

ARTICLE I

DEFINITIONS

1.1               Definitions .  When used in this Agreement, the following terms shall have the meanings assigned to them in this Article I or in the applicable Section of this Agreement to which reference is made in this Article I.

“ Accounts Receivable ” means (a) any Seller trade accounts receivable and other rights to payment from customers of the Business and (b) any other account or note receivable Related to the Business, together with, in each case, the full benefit of any security interest of Seller.

“ Actual Knowledge ” of Seller means, with respect to any fact or matter, the actual knowledge of the directors and executive officers of Seller and Seller Subsidiaries.

“ Adjusted Cash Consideration ” means the amount of the Cash Consideration reduced by the amount of the Deficit Amount or increased by the amount of the Excess Amount, as applicable.

“ Affiliate ” means, with respect to any specified Person, any other Person directly or indirectly controlling, controlled by or under common control with such specified Person.

 

 

“ Ancillary Agreements ” means the Bill of Sale, Share Transfer Agreement, the Assignment and Assumption Agreement, the Intellectual Property Assignments, the Escrow Agreement and the other agreements, instruments and documents delivered at the Closing.

“ Authorization ” means any authorization, approval, consent, certificate, license, permit or franchise of or from any Governmental Entity or pursuant to any Law.

“ Benefit Plan ” means (a) any “employee benefit plan” as defined in ERISA Section 3(3), including, without limitation, any (i) nonqualified deferred compensation or retirement plan or arrangement which is an Employee Pension Benefit Plan (as defined in ERISA Section 3(2)), (ii) qualified defined contribution retirement plan or arrangement which is an Employee Pension Benefit Plan, (iii) qualified defined benefit retirement plan or arrangement which is an Employee Pension Benefit Plan (including any Multiemployer Plan (as defined in ERISA Section 3(37)) and (iv) Employee Welfare Benefit Plan (as defined in ERISA Section 3(1)) or fringe benefit plan or program, or (b) stock purchase, stock option, severance pay, employment, change-in-control, vacation pay, paid time off, relocation, employee assistance, company awards, salary continuation, sick leave, disability, death benefit, worker's compensation, excess benefit, bonus or other incentive compensation, life insurance, or other employee benefit plan, contract, fund, program, policy or other arrangement, whether or not subject to ERISA.

“ Books and Records ” means books of account, general, financial, warranty and shipping records, invoices, supplier lists, product specifications, product formulations, drawings, correspondence, engineering, maintenance, operating and production records, advertising and promotional materials, credit records of customers and other documents, records and files, in each case Related to the Business, including books and records relating to Seller Intellectual Property and the employee and personnel records of the Transferred Employees.

“ Business Day ” means a day other than a Saturday, Sunday or other day on which banks located in Irvine, California are authorized or required by Law to close.

“ Business Employee ” means any individual employed by Seller in or in connection with the Business.

“ Capital Stock ” means (a) in the case of a corporation, its shares of capital stock, (b) in the case of a partnership or limited liability company, its partnership or membership interests or units (whether general or limited), and (c) any other interest that confers on a Person the right to receive a share of the profits and losses of, or distribution of assets, of the issuing entity.

“ Charter Documents ” means, with respect to any entity, the certificate of incorporation, the articles of incorporation, by-laws, articles of organization, limited liability company agreement, partnership agreement, formation agreement, joint venture agreement or other similar organizational documents of such entity (in each case, as amended).

 

 

“ Code ” means the Internal Revenue Code of 1986.

“ Contract ” means any agreement, contract, license, lease, commitment, arrangement or understanding, written or oral, including any sales order or purchase order.

“ Debt Security ” means (a) securities evidencing Indebtedness, and (b) options, warrants, purchase rights, subscription rights, conversion rights, exchange rights or other Contracts that, directly or indirectly, could require the issuer thereof to issue, sell or otherwise cause to become outstanding the securities described in clause (a).

“Environmental Laws” means any applicable statute, ordinance, or regulation of any Governmental Entity relating to (a) the protection, preservation or restoration of the environment (including air, surface water, groundwater, drinking water supply, surface land, subsurface land, plant and animal life or any other natural resource), or (b) the treatment, storage, handling, or disposal of Hazardous Substances, in each case, as amended or in effect on or prior to the Closing Date.

“ Equipment ” means machinery, fixtures, furniture, supplies, accessories, materials, equipment, parts, automobiles, trucks, vehicles, tooling, tools, molds, office equipment, computers, telephones and all other items of tangible personal property, in each case Related to the Business.

“ Equity Security ” means (a) shares of Capital Stock and (b) options, warrants, purchase rights, subscription rights, conversion rights, exchange rights or other Contracts that, directly or indirectly, could require the issuer thereof to issue, sell or otherwise cause to become outstanding shares of Capital Stock.

“ ERISA ” means the Employee Retirement Income Security Act of 1974.

“ ERISA Affiliate ” means any entity which is a member of a “controlled group of corporations” with, under “common control” with or a member of an “affiliated services group” with Seller, as defined in Section 414(b), (c), (m) or (o) of the Code.

“ Escrow Agreement ” means the escrow agreement between the Buyer, Seller and the Escrow Agent relating to the management of the Escrow Fund in the form attached hereto as Exhibit D.

“ GAAP ” means generally accepted accounting principles in the United States.

“ Governmental Entity ” means any entity or body exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to United States federal, state, local, or municipal government, foreign, international, multinational or other government, including any department, commission, board, agency, bureau, subdivision, instrumentality, official or other regulatory, administrative or judicial authority thereof, and any non-governmental regulatory body to the extent that the rules and regulations or orders of such body have the force of Law.

 

 

“ Hazardous Substance ” means any substance or material listed, defined or classified as a pollutant, contaminant, hazardous substance, toxic substance, or hazardous waste under any Environmental Law, including, petroleum, polychlorinated biphenyls, and friable asbestos.

“ Indebtedness ” means any of the following: (a) any indebtedness for borrowed money, (b) any obligations evidenced by bonds, debentures, notes or other similar instruments, (c) any obligations to pay the deferred purchase price of property or services, except trade accounts payable and other current Liabilities arising in the ordinary course of the Business, (d) any obligations as lessee under capitalized leases, (e) any indebtedness created or arising under any conditional sale or other title retention agreement with respect to acquired property, (f) any obligations, contingent or otherwise, under acceptance credit, letters of credit or similar facilities, and (g) any guaranty of any of the foregoing.

“ Indemnitee ” means any Person that is seeking indemnification from an Indemnitor pursuant to the provisions of this Agreement.

“ Indemnitor ” means any party hereto from which any Indemnitee is seeking indemnification pursuant to the provisions of this Agreement.

“ Inventory ” means all raw materials, work-in-process, finished goods, supplies, spare parts and other inventories Related to the Business, including all such items (a) located on the Real Property, (b) in transit from suppliers of the Business, (c) held for delivery or as prepaid inventory by suppliers of the Business, (d) held at warehouses for the benefit of Seller or any Seller Subsidiaries, or (e) held on consignment by third parties.

“ Knowledge ” of Seller means, with respect to any fact or matter, the actual knowledge of the directors and executive officers of Seller and Seller Subsidiaries, together with such knowledge that such directors and executive officers should reasonably be expected to discover after due investigation concerning the existence of the fact or matter in question.

“ Law ” means any statute, law (including common law), constitution, treaty, ordinance, code, order, decree, judgment, rule, regulation and any other binding requirement or determination of any Governmental Entity.

“ Lien ” means, with respect to any property or asset, any mortgage, lien, pledge, charge, security interest, adverse claim or other encumbrance in respect of such property or asset.

“ Material Adverse Effect ” means any change or event that is materially adverse to (i) the Purchased Assets, the Assumed Liabilities, the Business as currently conducted or the operations and condition of Seller and Seller Subsidiaries, except for any such change, event or effect resulting from or arising out of (a) changes in economic conditions generally or in the industries in which the Seller or Seller Subsidiaries operate, whether international, national, regional or local, (b) any change of Law, accounting standards or regulatory policy adopted or approved by any Governmental Entity or proposed by any Person, (c) changes or adverse conditions in the securities markets, including those relating to debt financing, (d) the announcement, execution or delivery of this Agreement or the consummation of the transactions contemplated hereby, and (e) any actions specifically required to be taken or consented to pursuant to or in accordance with this Agreement, or (ii) Seller’s ability to perform its obligations hereunder.

 

 

“ Order ” means any award, injunction, judgment, decree, order, ruling, subpoena or verdict or other decision issued, promulgated or entered by or with any Governmental Entity of competent jurisdiction.

“ Permitted Liens ” means (a) Liens for current real or personal property Taxes not yet due and payable or which are being contested in good faith by Seller or its Affiliates, in either case, with respect to which the Seller maintains adequate reserves, (b) workers’, carriers’ and mechanics’ or other like Liens incurred in the ordinary course of the Business with respect to which payment is not due and that do not impair the conduct of the Business or the present or proposed use of the affected property, (c) any deposits or pledges to secure the payment of worker’s compensation, unemployment insurance or other social security benefits or obligations, or public or statutory obligations of a like general nature incurred in the ordinary course of business, (d) any statutory Liens for utility assessments or other charges or assessments, in each case, arising in the ordinary course of business with respect to a liability that is not yet due or delinquent or which is being contested in good faith by Seller or its Affiliates, (e) any Liens securing bids, tenders, contracts (other than contracts for the payment of money), leases, statutory obligations, surety or appeal bonds, bid or performance bonds or other obligations of a like general nature incurred in the ordinary course of business, (f) any Liens arising out of judgments or awards so long as an appeal or proceeding for review is being prosecuted in good faith and for the payment of which adequate reserves, bonds or other security have been provided or are fully covered by insurance, (g) any security interest, Lien or right in favor of any vendor of tangible personal property (including any tangible personal property financed with purchase money and any capital leases), (h) imperfections or irregularities of title and other Liens that would not, individually or in the aggregate, materially detract from the value of the assets to which they attach, (i) zoning, planning, and other similar limitations and restrictions, all rights of any Governmental Entity to regulate a property, (j) any Lien set forth in any franchise or governing ordinance under which any portion of the Business is conducted, (k) all rights of condemnation, eminent domain or other similar rights of any Person, (l) any Lien to be released on or prior to, or as a result of, Closing, (m) any Lien securing any obligation to pay any Assumed Liability, and (n) any other Lien which does not materially interfere with Seller’s use of the assets used in its Businesses.

“ Person ” means an individual, a corporation, a partnership, a limited liability company, a trust, an unincorporated association, a Governmental Entity or any other entity or body.

 

 

“ Pre-Closing Environmental Liabilities ” means Liabilities arising out of (a) the ownership or operation of the Business at any time on or prior to the Closing or (b) the ownership, operation or condition of the Real Property or any other real property currently or formerly owned, operated or leased by Seller or Seller Subsidiaries Related to the Business at any time on or prior to the Closing, in each case to the extent based upon or arising out of (i) Environmental Law, (ii) a failure to obtain, maintain or comply with any environmental permit required under any Environmental Law by any Governmental Entity, (iii) the release, use, generation, storage, transportation, treatment, sale or other off-site disposal of hazardous substances.

“ Related to the Business ” means used, held for use or acquired or developed for use in the Business or otherwise relating to, or arising out of, the operation or conduct of the Business.

“ Release ” or “ Released ” has the meaning set forth in 42 U.S.C. Section 9601(22).

“ Securities Act ” means the Securities Act of 1933, as amended, together with the rules and regulations promulgated thereunder.

“ Seller Subsidiaries ” means DeWind Purchasing GmbH, DeWind Energy Development Company, LLC, DeWind SWI Wind Farms, LLC, Little Pringle 1, LLC, Little Pringle 2, LLC, Big Pringle LLC and Palo Duro, LLC.

“ Share Transfer Agreement ” means the agreement between Buyer and Seller for the transfer of all Seller Capital Stock in DeWind Purchasing GmbH to Buyer in the form attached hereto as Exhibit E.

“ Subsidiary ” or “ Subsidiaries ” means, with respect to any party, any Person, of which (i) such party or any other Subsidiary of such party is a general partner (excluding partnerships, the general partnership interests of which held by such party or any Subsidiary of such party do not have a majority of the voting interest in such partnership) or (ii) at least a majority of the securities or other interests having by their terms ordinary voting power to elect a majority of the Board of Directors or others performing similar functions with respect to such Person is directly or indirectly owned or controlled by such party and/or by any one or more of its Subsidiaries.

“ Tax ” or “ Taxes ” means any and all federal, state, local, or foreign net or gross income, gross receipts, net proceeds, sales, use, ad valorem, value added, franchise, bank shares, withholding, payroll, employment, excise, property, deed, stamp, alternative or add-on minimum, environmental, profits, windfall profits, transaction, license, lease, service, service use, occupation, severance, energy, unemployment, social security, workers’ compensation, capital, premium, and other taxes, assessments, customs, duties, fees, levies, or other governmental charges of any nature whatever, whether disputed or not, together with any interest, penalties, additions to tax, or additional amounts with respect thereto and including any obligation to indemnify or otherwise assume or succeed to the Tax liability of any other Person.

“ Taxing Authority ” means any Governmental Entity having jurisdiction with respect to any Tax.

“ Volker IP ” means the patents with the following patent file numbers: DE10310639 and EP1457673.

“ WARN Act ” means the Worker Adjustment and Retraining Notification Act of 1988.

 “ $ ” means United States dollars.

1.2               Other Defined Terms .  The following terms have the meanings assigned to such terms in the Sections of the Agreement set forth below:

 

 

 

ARTICLE II

PURCHASE AND SALE

2.1               Purchase and Sale of the Purchased Assets . Upon the terms and subject to the conditions of this Agreement, at the Closing, Seller shall sell, assign, transfer, convey and deliver to Buyer, and Buyer shall purchase, acquire and accept from Seller, free and clear of Liens, except for Permitted Liens, the entire right, title and interest of Seller in, to and under all of the assets, properties and rights of every kind and description, real, personal and mixed, tangible and intangible, wherever situated, that are Related to the Business other than the Excluded Assets (the “ Purchased Assets ”).  The Purchased Assets include, but are not limited to, the following assets, properties and rights:

 

 

(a)           all Inventory, including, but not limited to, the Inventory set forth in Schedule 2.1(a) to the extent each such item of Inventory remains Inventory of Seller as of the Closing Date;

(b)           all Equipment, including, but not limited to, the Equipment set forth in Schedule 2.1(b) to the extent each such item of Equipment remains Equipment of Seller as of the Closing Date;

(c)           all Seller Intellectual Property, including, but not limited to, the Seller Intellectual Property set forth in Schedule 2.1(c);

(d)           all Contracts Related to the Business (including In-Bound Licenses) set forth on Schedule 2.1(d) which shall not include any Benefit Plans or related contracts covering Business Employees in the U.S. (the “ Assigned Contracts ”);

(e)           all Accounts Receivable, including, but not limited to, the receivables for the accounts set forth in Schedule 2.1(e) to the extent each such account remains an Account Receivable as of the Closing Date;

(f)            all Business Authorizations that are permitted to be transferred under applicable Law, including, but not limited to, the authorizations set forth in Schedule 2.1(f);

(g)           all Books and Records, including, but not limited to, the items set forth in Schedule 2.1(g);

(h)           all claims, causes of action, choses in action, rights of recovery and rights under all warranties, representations and guarantees made by suppliers of products, materials or equipment, or components thereof, arising from or relating to the other Purchased Assets or the Assumed Liabilities, including, but not limited to, the items set forth in Schedule 2.1(h) to the extent such claims, etc., remain assets of Seller as of the Closing Date;

(i)            all insurance benefits other than those relating to any Benefit Plans covering Business Employees in the U.S., including rights and proceeds, arising from or relating to the other Purchased Assets or the Assumed Liabilities, including, but not limited to, the insurance benefits set forth in Schedule 2.1(i) (excluding any related to Benefit Plans) to the extent such benefits remain assets of Seller as of the Closing Date;

(j)            all prepaid expenses Related to the Business, including, but not limited to, the expenses set forth in Schedule 2.1(j) to the extent such prepaid expenses remain assets of Seller as of the Closing Date;

 

 

(k)           all security deposits, earnest deposits and all other forms of deposit or security placed with or by Seller for the performance of an Assigned Contract, including, but not limited to, the deposits and securities set forth in Schedule 2.1(k) to the extent such security deposits, earnest deposits and other forms of deposit or security remain assets of Seller as of the Closing Date;

(l)            all of Seller’s equity interest in the Seller Subsidiaries directly owned by Seller; and

(m)          all goodwill of the Business as going concern.

2.2            Excluded Assets . The Purchased Assets do not include, and Seller is not selling, assigning, transferring, conveying or delivering, and Buyer is not purchasing, acquiring or accepting from Seller any of the assets, properties or rights set forth in this Section 2.2 (collectively, the “ Excluded Assets ”):

(a)           subject to Section 2.1(k) of this Agreement, all cash, cash equivalents and bank accounts of Seller;

(b)           all Contracts that are not Assigned Contracts (the “ Excluded Contracts ”), including, but not limited to, the Contracts listed on Schedule 2.2(b) and all Benefit Plans and related contracts covering Business Employees in the U.S.;

(c)           the corporate seals, Charter Documents, minute books, stock books, Tax Returns, books of account or other records having to do with the corporate organization of Seller;

(d)           all Policies and, subject to Section 2.1(i) hereof, all rights and benefits thereunder;

(e)           the assets, properties and rights specifically set forth on Schedule 2.2(e);

(f)            the rights that accrue or will accrue to Seller under this Agreement and the Ancillary Agreements;

(g)           Any Tax refunds for Tax periods ending on or before the Closing Date and for Pre-Closing Tax Periods except for Tax refunds of any Seller Subsidiary to the extent such Tax refunds represent the carry-back of net operating losses arising during the Post-Closing Tax Period; and

(h)           any Assets relating to CTC, CTC’s Subsidiaries or CTC’s Affiliates (other than Seller and Seller Subsidiaries).

2.3               Assumed Liabilities .  Upon the terms and subject to the conditions of this Agreement, Buyer  shall assume effective as of the Closing, and from and after the Closing Buyer shall pay, discharge or perform when due, as appropriate, only the following Liabilities of Seller (the “ Assumed Liabilities ”), and no other Liabilities:

 

 

(a)           all accounts payable to trade creditors of the Business that are unpaid at the Closing Date and that either (i) are reflected on the Interim Balance Sheet or (ii) arose in the ordinary course of the Business between the Interim Balance Sheet Date and the Closing Date;

(b)           all Liabilities that remain unpaid or unperformed in respect of the Assigned Contracts (except to the extent set forth in Section 2.4(c)) except for such Liabilities under the Assigned Contracts listed on Schedule 2.1(d) as “DeWind Ltd. Contracts”;

(c)           all customer turbine advance payments and deposits; and

(d)           the Liabilities set forth in Schedule 2.3(d).

2.4               Excluded Liabilities . Buyer will not assume any Liabilities of Seller (such unassumed Liabilities, the “ Excluded Liabilities ”) other than those specifically set forth in Section 2.3.  Without limiting the generality of the foregoing, in no event shall Buyer assume or incur any Liability in respect of, and Seller shall remain bound by and liable for, and shall pay, discharge or perform when due, the following Liabilities of Seller:

(a)           all Liabilities for (i) Taxes relating to the Business or the Purchased Assets for any Pre-Closing Tax Period and (ii) Taxes of Seller or any Affiliate of Seller (other than Seller Subsidiaries);

(b)           all Liabilities in respect of the Excluded Contracts and other Excluded Assets;

(c)           all product Liability and similar claims for damages or injury to person or property and claims of infringement of Intellectual Property Rights, regardless of when made or asserted, which arise out of or are based upon any events occurring or actions taken or omitted to be taken by Seller, or otherwise arising out of or incurred in connection with the conduct of the Business, on or before the Closing Date;

(d)           all Pre-Closing Environmental Liabilities;

(e)           all Indebtedness of the Business (other than Indebtedness included in the Assumed Liabilities);

(f)            to the extent permitted by Law, all Liabilities relating to any Person who is or was an employee of Seller, including any Person whose employment with the Business was terminated prior to the Closing (current or former) (“ Seller Employees ”) and their dependents;

(g)           all Liabilities relating to current or former Benefit Plans of Seller and its ERISA Affiliates;

 

 

(h)           all Liabilities arising out of or incurred in connection with the negotiation, preparation and execution of this Agreement and the Ancillary Agreements and the consummation of the transactions contemplated hereby and thereby, including Taxes and fees and expenses of counsel, accountants and other experts;

(i)            any Liabilities arising from the consulting relationship with Harrowand S.L., including any accounts payable and any costs, fees or damages associated with any litigation related thereto (as described in Section 4.19(a) of the Seller Disclosure Schedule).

(j)            any Liabilities relating to CTC, CTC’s Subsidiaries or CTC’s Affiliates (other than Seller and Seller Subsidiaries); and

(k)           all other Liabilities not expressly assumed in Section 2.3 hereof.

2.5               Purchase Price .  The consideration to be paid by Buyer to Seller for the Purchased Assets (the “ Purchase Price ”) shall be (i) $46,500,000 (the “ Cash Consideration ”), subject to adjustment as set forth in Section 2.6, and (ii) the assumption of the Assumed Liabilities.

2.6               Purchase Price Adjustment .

(a)           For purposes of this Section 2.6, the following terms shall have the meanings assigned to them in this Section 2.6(a):

(i)           “ Accounting Principles ” means GAAP applied on a basis consistent with its application in the preparation of the Balance Sheet; provided that, for all purposes under this Section 2.6 (including preparation of the Closing Net Assets Statement and the value of Closing Assets), the Intellectual Property that had been transferred from DeWind Ltd. to DeWind, Inc. on September 30, 2008 shall be valued at $6,002,000, notwithstanding GAAP or any other accounting principles and not subject to any adjustments.

(ii)          “ Base Net Assets ” means $25,288,000.

(iii)         “ Closing Assets ” means all assets, net of applicable reserves, of the Business as of the Closing Date that are Purchased Assets, calculated in accordance with the Accounting Principles.

(iv)         “ Closing Liabilities ” mean all Liabilities of the Business as of the Closing Date that are Assumed Liabilities, calculated in accordance with the Accounting Principles.

(v)          “ Closing Net Assets ” means Closing Assets minus Closing Liabilities (without double-counting the amount of any reserves).

 

 

(vi)         “ Closing Net Assets Statement ” means an unaudited statement of Closing Net Assets that is prepared in accordance with the Accounting Principles and that is in the form of, and in no less detail than, Exhibit F.

(vii)        “ Final Net Assets ” means the Closing Net Assets (A) as shown in the Closing Net Assets Statement delivered by Buyer to Seller pursuant to Section 2.6(b), if no Notice of Objection with respect thereto is timely delivered by Seller to Buyer pursuant to Section 2.6(c); or (B) if a Notice of Objection is so delivered, (1) as agreed by Buyer and Seller pursuant to Section 2.6(d) or (2) in the absence of such agreement, as shown in the Independent Expert’s calculation delivered pursuant to Section 2.6(d).

(b)           Within 90 days after the Closing Date, Buyer will prepare, or cause to be prepared, and deliver to Seller the Closing Net Assets Statement which shall set forth Buyer’s calculation of Closing Net Assets.  At Buyer’s option, upon 5 Business Day’s prior written notice to Seller, Buyer may conduct a physical inventory for purposes of preparing the Closing Net Assets Statement, and Seller and its representatives shall have the right to observe the taking of such physical inventory.

(c)           Upon receipt from Buyer, Seller shall have 15 days to review the Closing Net Assets Statement (the “ Review Period ”).  If Seller disagrees with Buyer’s computation of Closing Net Assets, Seller may, on or prior to the last day of the Review Period, deliver a notice to Buyer (the “ Notice of Objection ”), which sets forth its objections to Buyer’s calculation of Closing Net Assets.  Any Notice of Objection shall specify those items or amounts with which Seller disagrees, together with a detailed written explanation of the reasons for disagreement with each such item or amount, and shall set forth Seller’s calculation of Closing Net Assets based on such objections.  To the extent not set forth in the Notice of Objection, Seller shall be deemed to have agreed with Buyer’s calculation of all other items and amounts contained in the Closing Net Assets Statement.

(d)           Unless Seller delivers the Notice of Objection to Buyer within the Review Period, Seller shall be deemed to have accepted Buyer’s calculation of Closing Net Assets and the Closing Net Assets Statement shall be final, conclusive and binding.  If Seller delivers the Notice of Objection to Buyer within the Review Period, Buyer and Seller shall, during the 30 days following such delivery or any mutually agreed extension thereof, use their commercially reasonable efforts to reach agreement on the disputed items and amounts in order to determine the amount of Closing Net Assets.  If, at the end of such period or any mutually agreed extension thereof, Buyer and Seller are unable to resolve their disagreements, they shall jointly retain and refer their disagreements to Joseph R. Rosenbaum, Partner in the San Francisco office of Ernst & Young LLP, or, if such person is not available, another mutually acceptable person employed at Ernst & Young LLP (or, if such firm shall decline or is unable to act, or has a conflict of interest with Buyer or Seller or any of their respective Affiliates, another nationally recognized independent accounting firm mutually acceptable to Buyer and Seller) (the “ Independent Expert ”).  The parties shall instruct the Independent Expert promptly to review this Section 2.6 and to determine solely with respect to the disputed items and amounts so submitted whether and to what extent, if any, the Closing Net Assets set forth in the Closing Net Assets Statement requires adjustment. The Independent Expert shall base its determination solely on written submissions by Buyer and Seller and not on an independent review.  Buyer and Seller shall make available to the Independent Expert all relevant books and records and other items reasonably requested by the Independent Expert. The parties shall request that the Independent Expert deliver to Buyer and Seller, as promptly as practicable but in no event later than 45 days after its retention, a report which sets forth its resolution of the disputed items and amounts and its calculation of Closing Net Assets; provided that in no event shall Closing Net Assets as determined by the Independent Expert be less than Buyer’s calculation of Closing Net Assets set forth in the Closing Net Assets Statement nor more than Seller’s calculation of Closing Net Assets set forth in the Notice of Objection.  The decision of the Independent Expert shall be final, conclusive and binding on the parties. Each of Buyer and Seller shall bear half of all costs and expenses of the Independent Expert.  Each party agrees to execute, if requested by the Independent Expert, a reasonable engagement letter, including customary indemnities in favor of the Independent Expert.

 

 

(e)           Within three (3) Business Days after Final Net Assets has been finally determined pursuant to this Section 2.6,

(i)           if Final Net Assets is less than the Base Net Assets, Seller shall pay to Buyer, as an adjustment to the Purchase Price, in the manner as provided in Section 2.6(f), an amount of cash equal to the difference between the Base Net Assets and Final Net Assets (the “ Deficit Amount ”); or

(ii)          if Final Net Assets exceeds the Base Net Assets, Buyer shall pay to Seller, in the manner as provided in Section 2.6(f), an amount of cash equal to the difference between Final Net Assets and the Base Net Assets (the “ Excess Amount ”).

(f)           Any payment required to be made pursuant to Section 2.6(e) shall be made within three (3) days of such determination by Buyer or Seller, as the case may be, by wire transfer of immediately available funds to an account designated in writing by Buyer, if there is a Deficit Amount, or Seller, if there is an Excess Amount, at least one Business Day prior to such transfer.

(g)           Subject to Section 10.7(e), any rights accruing to a party under this Section 2.6 shall be in addition to and independent of the rights to indemnification under Article X and any payments made to any party under this Section 2.6 shall not be subject to the terms of Article X.

2.7               Allocation .  As soon as reasonably practicable following the Closing, Seller shall deliver to Buyer, after consultation with, and approval of, Buyer, an allocation statement setting forth Seller’s allocation of the Purchase Price for Tax purposes pursuant to Section 1060 of the Code and any other applicable Tax Laws (as the same may be revised pursuant to the following sentence, the “ Allocation Statement ”).  In the event that the Purchase Price is adjusted pursuant to Section 2.6, Seller shall deliver to Buyer a revised Allocation Statement as soon as reasonably practicable following the determination of Final Net Assets.  Except as otherwise required by Law, Buyer and Seller shall file all Tax Returns (such as IRS Form 8594 or any other forms or reports required to be filed pursuant to Section 1060 of the Code or any comparable provisions of Law (“ Section 1060 Forms ”)) in a manner that is consistent with the Allocation Statement and refrain from taking any action inconsistent therewith.  Buyer and Seller shall cooperate in the preparation of Section 1060 Forms and file such Section 1060 Forms timely and in the manner required by applicable Law. Buyer and Seller agree to treat any payments made pursuant to the indemnification provisions of this Agreement as an adjustment to the Purchase Price for Tax purposes.

 

 

2.8               Consents; Assigned Contracts .

(a)           Notwithstanding anything in this Agreement to the contrary, this Agreement shall not constitute an agreement to sell, assign, transfer, convey or deliver any Assigned Contracts or any benefit arising under or resulting from any such Assigned Contract if the sale, assignment, transfer, conveyance or delivery thereof, without the Consent of a third party, (i) would constitute a breach or other contravention of the rights of such third party, (ii) would be ineffective with respect to any party to such Assigned Contract, or (iii) would, upon transfer, in any way adversely affect the rights of Buyer under such Assigned Contract.  If the sale, assignment, transfer, conveyance or delivery by Seller to, or any assumption by, Buyer of any interest in, or Liability under, any Assigned Contract requires the Consent of a third party, then such sale, assignment, transfer, conveyance, delivery or assumption shall be subject to such Consent being obtained.  If such Consent is obtained with respect to such an Assigned Contract, then immediately and automatically upon such obtainment (x) such Assigned Contract shall for all purposes hereunder be deemed to be a Purchased Asset sold, assigned, transferred, conveyed, delivered, and assumed as of the Closing Date, and (y) all Liabilities under such Assigned Contract (except for such Liabilities that would have been Excluded Liabilities if such Assigned Contract had been a Purchased Asset as of the Closing) shall for all purposes hereunder be deemed to be Assumed Liabilities assumed by Buyer as of the Closing Date.  Subject to Section 2.8(b), to the extent any Assigned Contract may not be assigned to Buyer by reason of the absence of any such Consent (“ Restricted Contract ”), Buyer shall not be required to assume any Assumed Liabilities arising under such Restricted Contract.

(b)           To the extent that any Consent in respect of a Restricted Contract shall not have been obtained on or before the Closing Date,  Seller shall use its commercially reasonable efforts to obtain any such Consent after the Closing Date.  Seller shall cooperate with Buyer in any economically feasible arrangement proposed by Buyer to provide that Buyer shall receive the interest of Seller in the benefits under such Restricted Contract; provided that, to the extent that Buyer receives any benefits of or under any Restricted Contract, all Liabilities under such Restricted Contract (except for such Liabilities that would have been Excluded Liabilities if such Restricted Contract had been a Purchased Asset as of the Closing) shall for all purposes hereunder be deemed to be Assumed Liabilities (and shall be the obligation of Buyer) to the fullest extent that performance of such Liabilities is necessary to obtain and maintain such benefits.

 

 

ARTICLE III

CLOSING

3.1               Closing Date . The closing of the transactions contemplated by this Agreement (the “ Closing ”) shall take place at the offices of Milbank, Tweed, Hadley & McCloy LLP, 601 S. Figueroa St., Los Angeles, CA 90017, at 10:00 a.m. on a date to be specified by the parties which shall be no later than five (5) Business Days after satisfaction (or waiver as provided herein) of the conditions set forth in Article VIII (other than those conditions that by their nature will be satisfied at the Closing), unless another time, date and/or place is agreed to in writing by the parties. The date on which the Closing occurs is referred to in this Agreement as the “ Closing Date .”  Each of CTC, Seller and Buyer shall use their commercially reasonable efforts to work expeditiously to cause the Closing to occur as soon as practicable.

3.2               Deliveries by Seller at the Closing .  At the Closing, Seller shall deliver to Buyer the following:

(a)           a Bill of Sale in the form of Exhibit A hereto duly executed by Seller;

(b)           an Assignment and Assumption Agreement in the form of Exhibit B hereto (the “ Assignment and Assumption Agreement ”) duly executed by Seller;

(c)           Intellectual Property Assignments in the form of Exhibit C hereto duly executed by Seller;

(d)           The Escrow Agreement duly executed by Seller;

(e)           with respect to each Lease of Seller, if any, an Assignment and Assumption of Lease in form and substance reasonably satisfactory to Buyer (each, an “ Assignment and Assumption of Lease ”) duly executed by Seller;

(f)            the Power of Attorney contemplated by Section 6.9 duly executed by Seller and the Power of Attorney contemplated by Sections 7.7(c) duly executed by Seller;

(g)           the Seller Closing Certificate;

(h)           a completed certification of non-foreign status pursuant to Section 1.1445-2(b)(2) of the Treasury regulations duly executed by Seller that is selling Purchased Assets to Buyer pursuant hereto;

(i)            a duly executed Share Transfer Agreement; and

(j)            such other good and sufficient instruments of transfer as Buyer reasonably deems necessary and appropriate to vest in Buyer all right, title and interest in, to and under the Purchased Assets.

 

 

3.3               Deliveries by Buyer at the Closing . At the Closing, Buyer shall deliver to Seller the following:

(a)           the Cash Consideration, which Buyer shall deliver as follows: (i) an amount equal to 85% of the Cash Consideration by wire transfer to an account of Seller designated in writing by Seller to Buyer no later than three (3) Business Days prior to the Closing Date, and (ii) an amount equal to 15% of the Cash Consideration to U.S. Bank National Association   as escrow agent (the “ Escrow Agent ”) pursuant to the Escrow Agreement (the “ Escrow Fund ”) to secure indemnification obligations of Seller set forth in this Agreement;

(b)           the Assignment and Assumption Agreement duly executed by Buyer;

(c)           with respect to each Lease, an Assignment and Assumption of Lease duly executed by Buyer;

(d)           the Escrow Agreement duly executed by Buyer;

(e)           the Buyer Closing Certificate; and

(f)            such other good and sufficient instruments as Seller reasonably deems necessary and appropriate to relieve Seller and CTC of their obligations with respect to the Assumed Liabilities (including, with respect to Parent Guarantees, as set forth in Section 7.9).

3.4               Resolution of Qualified Lawsuits .  If as of immediately prior to the Closing, the pendency of the Qualified Lawsuits may cause, in the reasonable judgment of Buyer, either (a) a failure of any condition or conditions set forth in Section 8.2, (b) a material breach of any representation or covenant of Seller contained in this Agreement, or (c) a material impairment on the part of Buyer to take possession of the Purchased Assets or operate the Business following the Closing, then Buyer and Seller shall work together in good faith and use commercially reasonable efforts to avoid any such result.  The parties agree that, depending on the circumstances, such efforts may include agreeing that (notwithstanding clause (i) of Section 3.3(a)) a portion of the Cash Consideration might be paid by Buyer directly to the plaintiff in a Qualified Lawsuit rather than to Seller, provided that (x) such plaintiff provides a full and unconditional release and dismissal with respect to such Qualified Lawsuit, (y) any such payment would have been an Assumed Liability, and (z) such payment would have the effect of decreasing the Closing Liabilities, and therefore increasing the Closing Assets for purposes of the purchase price adjustment set forth in Section 2.6.

 

 

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF SELLER

Seller (and CTC as to Section 4.15 only) represents and warrants to Buyer as of the date hereof and as of the Closing Date that the statements contained in this Article IV are true and correct, except as set forth in the confidential disclosure schedule dated and delivered as of the date hereof by Seller to Buyer (the “ Seller Disclosure Schedule ”), which is designated therein as being the Seller Disclosure Schedule.  Each of the representations and warranties in this Article IV are qualified by the Seller Disclosure Schedule, whether or not the Seller Disclosure Schedule is explicitly referenced therein.  The Seller Disclosure Schedule shall be arranged in paragraphs corresponding to each representation and warranty set forth in this Article IV.  Each exception to a representation and warranty set forth in the Seller Disclosure Schedule shall qualify the specific representation and warranty which is referenced in the applicable paragraph of the Seller Disclosure Schedule, and no other representation or warranty.

4.1               Organization and Good Standing .  Seller and Seller Subsidiaries are each duly formed, validly existing and in good standing under the Laws of the jurisdiction in which it is formed. Seller and Seller Subsidiaries are each duly qualified or licensed to transact business in each jurisdiction in which the properties owned, leased or operated by them or the nature of the business conducted by such company makes such qualification necessary as listed on the Seller Disclosure Schedule.  Neither Seller nor Seller Subsidiaries are in default under its Charter Documents.

4.2               Authority and Enforceability .  Seller has the requisite power and authority to enter into this Agreement and to consummate the transactions contemplated hereby.  The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by all necessary corporate action on the part of Seller.  Seller has duly executed and delivered this Agreement.  Assuming due authorization, execution and delivery by Buyer, this Agreement constitutes the valid and binding obligation of Seller, enforceable against it in accordance with its terms, except as such enforceability may be limited by (i) bankruptcy, insolvency, reorganization, moratorium or other similar Laws affecting or relating to creditors’ rights generally, and (ii) the availability of injunctive relief and other equitable remedies.

4.3               Subsidiaries and Related Entities .  The following is true immediately prior to the Closing:

(a)           Seller owns all of the outstanding shares of DeWind Purchasing GmbH and DeWind Energy Development Company LLC.  Subject to compliance with the securities laws, Seller may freely transfer its Capital Stock in these companies (the “ Subsidiary Stock ”) to Buyer, subject to Permitted Liens.

(b)           Except as set forth in Section 4.3(a) of the Seller Disclosure Schedule, DeWind Energy Development Company LLC owns more than 50% of the Capital Stock of DeWind SW1 Wind Farms, LLC.  DeWind SW1 Wind Farms, LLC wholly owns each of Little Pringle 1 LLC, Little Pringle 2 LLC, Big Pringle LLC and Palo Duro LLC.  No other Seller Subsidiary owns shares in another entity.

 

 

4.4               No Conflicts; Consents .

(a)           The execution and delivery of this Agreement by Seller, the execution and delivery of each Ancillary Agreement by Seller, the performance by Seller of its obligations hereunder and thereunder and the consummation by Seller of the transactions contemplated hereby and thereby (in each case, with or without the giving of notice or lapse of time, or both), will not, directly or indirectly, (i) violate the provisions of any of the Charter Documents of Seller or Seller Subsidiaries, (ii) violate or constitute a default, an event of default or an event creating rights of acceleration, termination, cancellation, imposition of additional obligations or loss of rights under any Assigned Contract (A) to which Seller or one of Seller Subsidiaries is a party, (B) of which Seller or one of Seller Subsidiaries is a beneficiary or (C) by which Seller, any of Seller Subsidiaries or any of their respective assets is bound,  (iii) violate or conflict with any Law, Authorization or Order applicable to Seller or Seller Subsidiaries, or give any Governmental Entity or other Person the right to challenge any of the transactions contemplated by this Agreement or the Ancillary Agreements or to exercise any remedy, obtain any relief under or revoke or otherwise modify any rights held under, any such Law, Authorization or Order, or (iv) result in the creation of any material Liens (other than Permitted Liens) upon any of the Purchased Assets.  Section 4.4(a) of the Seller Disclosure Schedule sets forth all material consents, waivers, assignments and other approvals and actions that are required in connection with the transactions contemplated by this Agreement under any Material Contract to which Seller or one of Seller Subsidiaries is a party (collectively, “ Consents ”) to sell, assign, transfer, convey and deliver to, Buyer all rights and benefits of Seller without any impairment or alteration whatsoever.

(b)           No Authorization or Order of, registration, declaration or filing with, or notice to, any Governmental Entity or other Person, is required by or with respect to Seller or Seller Subsidiaries in connection with the execution and delivery of this Agreement and the Ancillary Agreements to which they are a party and the consummation of the transactions contemplated hereby and thereby, in each case, except for such Authorizations, Orders, registrations, declarations, filings and notices which are not material.

4.5               Financial Statements .

(a)           The Seller Disclosure Schedule contains true and complete copies of the following Seller financial statements (the “ Financial Statements ”):

(i)           the audited consolidated balance sheet of Seller and Seller Subsidiaries as of September 30, 2008, including the related statements of income and retained earnings, stockholders equity and cash flows (the “ Audited Financial Statements ”); and

(ii)          the unaudited consolidated balance sheet of Seller and Seller Subsidiaries as of March 31, 2009, including the related statements of income and retained earnings, stockholders equity and cash flows (the  “ Interim Financial Statements ” and together with the Audited Financial Statements, the “ Financial Statements ”).

 

 

(b)           The Financial Statements are true, complete and correct and have been prepared in accordance with GAAP applied on a consistent basis throughout the periods involved, subject, in the case of the Interim Financial Statements, to normal year-end adjustments (the effect of which will not be materially adverse) and the absence of notes (that, if presented, would not differ materially from those presented in the Audited Financial Statements).  The Financial Statements are based on the books and records of Seller and Seller Subsidiaries, and fairly present the financial condition of the Business as of the respective dates they were prepared and the results of the operations of the Business for the periods indicated. The balance sheet of the Business as of September 30, 2008 is referred to herein as the “ Balance Sheet ” and the date thereof as the “ Balance Sheet Date ” and the balance sheet of the Business as of March 31, 2009 is referred to herein as the “ Interim Balance Sheet ” and the date thereof as the “ Interim Balance Sheet Date .” Seller and Seller Subsidiaries each maintain with respect to the Business a standard system of accounting established and administered in accordance with GAAP.

(c)           During the most recently completed fiscal year of Seller, Seller and the Seller Subsidiaries together did not achieve net sales proceeds exceeding, in aggregate, € 5,000,000 in Germany.

4.6               No Undisclosed Liabilities .  Seller’s Business has no liabilities, obligations or commitments of any nature whatsoever, asserted or unasserted, known or unknown, absolute or contingent, accrued or unaccrued, matured or unmatured or otherwise (“ Liabilities ”), except (a) those which are adequately reflected or reserved against in the Balance Sheet as of the Balance Sheet Date, (b) those that, according to GAAP, are not required to be reflected or reserved against in the Balance Sheet as of the Balance Sheet Date, (c) those which have been incurred in the ordinary course of the Business and consistent with past practice since the Balance Sheet Date and which are not, individually or in the aggregate, material in amount or (d) those set forth in Section 4.6 of the Seller Disclosure Schedule.

4.7               Inventory .

(a)           each item of Inventory is (x) free of any material defect or other deficiency, and not encumbered, (y) of a quality, quantity and condition useable and, as to finished goods, saleable in the ordinary course of the Business in all material respects and (z) properly stated on the Interim Balance Sheet (to the extent existing on the date thereof) and on the books and records of the Business at the lesser of cost or fair market value;

(b)           none of such Inventory is obsolete and no write-down of such Inventory has been made or should have been made in the period since March 31, 2009; and

(c)           the quantities of each item of Inventory are not materially excessive and are reasonable in the present circumstances of the Business.

 

 

4.8               Accounts Receivable .  The Accounts Receivable of the Business as set forth on the Interim Balance Sheet or arising since the date thereof are, to the extent not paid in full by the account debtor prior to the date hereof, (a) valid and genuine, have arisen solely out of bona fide sales and deliveries of goods, performance of services and other business transactions in the ordinary course of the Business consistent with past practice, (b) not subject to valid defenses, set-offs or counterclaims, and (c) collectible within 90 days after billing at the full recorded amount thereof less the recorded allowance for collection losses on the Interim Balance Sheet or, in the case of Accounts Receivable arising since the Interim Balance Sheet Date, the recorded allowance for collection losses shown on the accounting records of the Business.  The allowance for collection losses on the Interim Balance Sheet and, with respect to Accounts Receivable arising since the Interim Balance Sheet Date, the allowance for collection losses shown on the accounting records of the Business, have been determined in accordance with GAAP.

4.9               Taxes .   Except as set forth on Section 4.9 of the Seller Disclosure Schedule, (a) All material Tax Returns required to be filed by Seller and Seller Subsidiaries (or their Affiliates on their behalf) with respect to Tax periods ending on or before the Closing Date  have been or will be filed when due in accordance with all applicable Laws and were or will be true, complete and correct as of the date filed; (b) Seller and Seller Subsidiaries(or their affiliates on their behalf) has paid in full all Taxes with respect to periods covered by such Tax Returns, whether or not shown as due and payable on such Tax Returns; (c) there is no action, suit, proceeding, investigation, audit or claim now pending with respect to any Tax with respect to Seller or Seller Subsidiaries; (d) Seller and Seller Subsidiaries (or their Affiliates on their behalf) have timely and properly collected, withheld and remitted to the Taxing Authority to whom such payment is due all amounts required to be collected or withheld by Seller or Seller Subsidiaries for the payment of Taxes, (e) there are no Liens for Taxes (other than Taxes not yet due and payable) upon any of the assets of the Seller or its Subsidiaries, and (f) there is no material dispute or claim concerning any Tax liability of Seller or any of Seller Subsidiaries either  (A) claimed or raised by any Tax Authority in writing or (B) as to which any of the Seller has Knowledge.  None of the Seller Subsidiaries is bound by any Tax allocation or sharing agreement, none of Seller Subsidiaries has any liability for Taxes of any Person under Treasury Regulation 1.1502-6 (or similar provision of state, local, or foreign law), as transferee or successor, by contract, or otherwise.  None of Seller Subsidiaries will be required to include any item of income in, or exclude any item of deduction from, taxable income for any taxable period (or portion thereof) ending after the Closing Date as a result of any: (i) intercompany transactions or excess loss accounts described in Treasury Regulations under Section 1502 of the Code (or any similar provision of state, local, or foreign Tax Law), (ii) installment sale or open transaction disposition made on or prior to the Closing, (iii) prepaid amount received on or prior to the Closing, or (iv) change in method of accounting for a taxable period ending on or prior to the Closing Date.  The unpaid Taxes of Seller Subsidiaries (A) did not, as of March 31, 2009, exceed the reserve for Tax liability (rather than the reserve for deferred Taxes established to reflect timing differences between book and Tax income) set forth in their respective Interim Balance Sheet (rather than the notes attached thereto) and (B) will not exceed that reserve as adjusted for operations and transactions through the Closing Date in accordance with past custom and practice of Seller Subsidiaries in filing their Tax Returns.  None of Seller Subsidiaries has distributed stock of another Person, or has had its stock distributed by another Person, in a transaction that was purported or intended to be governed in whole or in part by Code Section 355 or Code Section 361.  None of  Seller or any of  Seller Subsidiaries is or has been a party to any “listed transaction” as defined in Code Section 6707A(c)(2) and Treasury Regulation 1.6011-4(b)(2).  DeWind Energy Development Company, LLC is a disregarded entity for US federal tax purposes.

 

 

4.10             Compliance with Law .

(a)           Seller and each of Seller Subsidiaries are conducted, and is conducting, the Business in compliance with all material applicable Laws.

(b)           (i) No event has occurred and no circumstances exist that (with or without the passage of time or the giving of notice) may result in a violation of, conflict with or failure on the part of Seller or Seller Subsidiaries to conduct the Business in compliance with, any material applicable Law, and (ii) neither Seller nor any of Seller Subsidiaries have received notice regarding any violation of, conflict with, or failure to conduct the Business in compliance with, any material applicable Law.

4.11             Business Authorizations .

(a)           Seller and Seller Subsidiaries each own, hold or lawfully use in the operation of the Business all Authorizations which are materially necessary for it to conduct the Business as currently conducted or as proposed by Seller to be conducted or for the ownership and use of the material assets owned or used by Seller or a Seller Subsidiary in the conduct of the Business (the “ Business Authorizations ”) free and clear of all Liens (other than Permitted Liens).  Such Business Authorizations are valid and in full force and effect in all material respects.  All material Business Authorizations are listed in the Seller Disclosure Schedule.

(b)           (i) No event has occurred and no circumstances exist that (with or without the passage of time or the giving of notice) may result in a violation of, conflict with, failure on the part of Seller or Seller Subsidiary to comply with the terms of, or the revocation, withdrawal, termination, cancellation, suspension or modification of any material Business Authorization, and (ii) neither Seller nor any Seller Subsidiary has received notice regarding any violation of, conflict with, failure to comply with the terms of, or any revocation, withdrawal, termination, cancellation, suspension or modification of, any material Business Authorization in all material respects.  Neither Seller nor any Seller Subsidiary is in material default, nor has Seller or such Seller Subsidiary received notice of any claim of material default, with respect to any Business Authorization.

(c)           No Person other than Seller and any Seller Subsidiary owns or has any proprietary, financial or other interest (direct or indirect) in any Business Authorization.

 

 

4.12             Title to Personal Properties; Permitted Liens .

(a)           The Seller Disclosure Schedule sets forth a complete and accurate list of all personal properties and assets (“ Personal Property ”) that are Purchased Assets as of the date of this Agreement, that have a current book value   in excess of $25,000, specifying whether such Personal Property is owned or leased and, in the case of leased assets, indicating the parties to, execution dates of and annual payments under, the lease.

(b)           With respect to Personal Property that it purports to own including all Personal Property reflected as owned on the Interim Balance Sheet (other than inventory sold in the ordinary course of the Business since the date thereof), Seller has (except as set forth in Section 4.12(b) of the Seller Disclosure Schedule) good and transferable title to all such Personal Property, free and clear of all Liens except for Permitted Liens.

(c)           All leases under which Personal Property is leased are in full force and effect and constitute valid and binding obligations of the other party(ies) thereto, and neither Seller nor Seller Subsidiaries nor, to Seller’s Knowledge, any other party thereto, is in breach of any of the terms of any such lease, in each case, except for any failure of the foregoing that would not reasonably be expected to result in a Material Adverse Effect.

(d)           To Seller’s Knowledge, none of the Purchased Assets are subject to any Permitted Liens, except for those set forth in Section 4.12(d) of the Seller Disclosure Schedules.

4.13             Condition of Tangible Assets . All Purchased Assets that are tangible property are structurally sound, are in good operating condition and repair (subject to normal wear and tear given the use and age of such assets), are usable in the ordinary course of the Business and conform to all Laws and Authorizations relating to their construction, use and operation, in all material respects.  There are no facts or conditions affecting such Purchased Assets that could interfere in any material respect with the use or operation thereof as used or operated for the 12 months preceding the date of this Agreement.

4.14             Real Property .

(a)           Neither Seller nor Seller Subsidiaries own any real property.

(b)           The Seller Disclosure Schedule contains a list of all real property and interests in real property leased by Seller or a Seller Subsidiary Related to the Business (the “ Leased Real Property ” or the “ Real Property ”).

(c)           With respect to Leased Real Property, Seller has delivered to Buyer a true and complete copy of every lease and sublease pursuant to which Seller or any Seller Subsidiary is a party or by which it is bound (each, a “ Lease ”). Such party has peaceful, undisturbed and exclusive possession of the Leased Real Property, except for any failure of the foregoing that would not reasonably be expected to result in a Material Adverse Effect.

 

 

(d)           Except for any failure of the following that would not reasonably be expected to result in a Material Adverse Effect, (i) the Real Property and all present uses and operations of the Real Property comply   with all Laws, covenants, conditions, restrictions, easements, disposition agreements and similar matters affecting the Real Property; and (ii) the Real Property and its continued use, occupancy and operation as used, occupied and operated in the conduct of the Business do not constitute a nonconforming use and is not the subject of a special use permit under any Law.

4.15             Intellectual Property .

(a)           As used in this Agreement, “ Intellectual Property ” means: (i) inventions (whether or not patentable), trade secrets, technical data, databases, customer lists, designs, tools, methods, processes, technology, ideas, know-how, source code, product road maps and other proprietary information and materials (“ Proprietary Information ”); (ii) trademarks and service marks (whether or not registered), trade names, logos, trade dress and other proprietary indicia and all goodwill associated therewith; (iii) documentation, advertising copy, marketing materials, web-sites, specifications, mask works, drawings, graphics, databases, recordings and other works of authorship, whether or not protected by Copyright; (iv) computer programs, including any and all software implementations of algorithms, models and methodologies, whether in source code or object code, design documents, flow-charts, user manuals and training materials relating thereto and any translations thereof (collectively, “ Software ”); and (v) all forms of legal rights and protections that may be obtained for, or may pertain to, the Intellectual Property set forth in clauses (i) through (iv) in any country of the world (“ Intellectual Property Rights ”), including all letters patent, patent applications, provisional patents, design patents, PCT filings, invention disclosures and other rights to inventions or designs (“ Patents ”), all registered and unregistered copyrights in both published and unpublished works (“ Copyrights ”), all trademarks, service marks and other proprietary indicia (whether or not registered) (“ Marks ”), trade secret rights, mask works, moral rights or other literary property or authors rights, and all applications, registrations, issuances, divisions, continuations, renewals, reissuances and extensions of the foregoing and the right to sue and recover damages and profits for past, present and future infringement, if any.

(b)           The Seller Disclosure Schedule lists (by name, owner and, where applicable, registration number and jurisdiction of registration, application, certification or filing) all Intellectual Property that is owned by Seller or a Seller Subsidiary and Related to the Business (whether exclusively, jointly with another Person or otherwise)  (“ Seller Owned Intellectual Property ”); provided that the Seller Disclosure Schedule is not required to list items of Seller Owned Intellectual Property which are either (i) immaterial to the Business or (ii) not registered or the subject of an application for registration.  Except as described in the Seller Disclosure Schedule, Seller or a Seller Subsidiary owns the entire right, title and interest to all Seller Owned Intellectual Property free and clear of all Liens (other than Permitted Liens).

 

 

(c)           The Seller Disclosure Schedule lists all material licenses, sublicenses and other agreements (“ In-Bound Licenses ”) pursuant to which a third party authorizes Seller or a Seller Subsidiary to use, practice any rights under, or grant sublicenses with respect to, any Intellectual Property Related to the Business owned by a third party other   than In-Bound Licenses that consist solely of “shrink-wrap” and similar commercially available end-user licenses, including the incorporation of any such Intellectual Property into products of Seller or a Seller Subsidiary and, with respect to each In-Bound License, whether the In-Bound License is exclusive or non-exclusive.

(d)           The Seller Disclosure Schedule lists all material licenses, sublicenses and other agreements (other than turbine sale agreements) (“ Out-Bound Licenses ”) pursuant to which Seller or a Seller Subsidiary authorizes a third party to use, practice any rights under, or grant sublicenses with respect to, any Seller Owned Intellectual Property or pursuant to which Seller or a Seller Subsidiary grants rights to use or practice any rights under any Intellectual Property owned by a third party and, with respect to each Out-Bound License, whether the Out-Bound License is exclusive or non-exclusive.

(e)            Seller and Seller Subsidiaries (i) exclusively owns the entire right, interest and title to each item of Intellectual Property Related to the Business as it is currently conducted free and clear of Liens (other than Permitted Liens) (including the design, manufacture, license and sale of all products currently under development or in production), or (ii) otherwise rightfully uses or otherwise enjoys such Intellectual Property pursuant to the terms of a valid and enforceable In-Bound License that is listed in the Seller Disclosure Schedule, in each case, in all material respects. The Seller Owned Intellectual Property, together with the Seller/Seller Subsidiary rights under the In-Bound Licenses listed in the Seller Disclosure Schedule (collectively, the “ Seller Intellectual Property ”), constitutes all the Intellectual Property necessary for the operation of the Business as and geographically where it is currently conducted by Seller in all material respects.

(f)            All registration, maintenance and renewal fees related to Patents, Marks, Copyrights and any other certifications, filings or registrations that are owned by Seller or a Seller Subsidiary and Related to the Business (“ Seller Registered Items ”) that are currently due have been paid and all documents and certificates related to such Seller Registered Items have been filed with the relevant Governmental Entity or other authorities in the United States or foreign jurisdictions, as the case may be, for the purposes of maintaining such Seller Registered Items.  There are no actions that must be taken by Buyer within 180 days after the date hereof, including the payment of any registration, maintenance or renewal fees or the filing of any documents, applications or certificates for the purposes of maintaining, perfecting or preserving or renewing any Seller Registered Items.  All Seller Registered Items are in good standing, held in compliance with all applicable legal requirements and enforceable by Seller or a Seller Subsidiary in all material respects.  To Seller’s Knowledge, all Patents Related to the Business that have been issued to Seller or Seller Subsidiary are valid.

 

 

(g)           To Seller’s Knowledge, there are no challenges (or any basis therefor) with respect to the validity or enforceability of any material Seller Owned Intellectual Property.  The Seller Disclosure Schedule lists the status of any proceedings or actions before the United States Patent and Trademark Office or any other Governmental Entity anywhere in the world related to any of the Seller Owned Intellectual Property, including the due date for any outstanding response by Seller or a Seller Subsidiary in such proceedings. Neither Seller nor a Seller Subsidiary has taken any action or failed to take any action that could reasonably be expected to result in the abandonment, cancellation, forfeiture, relinquishment, invalidation, waiver or unenforceability of any material Seller Owned Intellectual Property.

(h)           (i) None of the products or services currently or formerly manufactured, sold, distributed, provided, shipped or licensed by Seller or any Seller Subsidiary, in each case Related to the Business, has infringed or infringes upon, or otherwise unlawfully used or uses, the Intellectual Property Rights of any third party within the territories in which such product or service was intended to be used; (ii) neither Seller nor any Seller Subsidiary, by conducting the Business as and geographically where currently conducted, has infringed or infringes upon, or otherwise unlawfully used or uses, any Intellectual Property Rights of a third party within the territories in which the Business is currently conducted; (iii) neither Seller nor any Seller Subsidiary has received any communication alleging that Seller or any Seller Subsidiary has violated or, by conducting the Business as currently conducted, would violate any Intellectual Property Rights of a third party nor, to Seller’s Knowledge, is there any basis therefor; (iv) no Action has been instituted, or, to Seller’s Knowledge, threatened, relating to any Intellectual Property formerly or currently used by Seller or any Seller Subsidiary Related to the Business and none of the Seller Intellectual Property is subject to any outstanding Order; and (v) to Seller’s Knowledge, no Person has infringed or is infringing any Intellectual Property Rights of Seller or any Seller Subsidiary Related to the Business or has otherwise misappropriated or is otherwise misappropriating any Seller Intellectual Property.

(i)            In all material respects, (i) Seller and each Seller Subsidiary has taken commercially reasonable steps to protect and preserve the confidentiality of all confidential Intellectual Property owned by Seller and each Seller Subsidiary Related to the Business that is not covered by an issued Patent or otherwise is not, or has not been placed, in the public domain as a result of Seller’s commercialization activities; and (ii) to Seller’s Knowledge, Seller and each Seller Subsidiary is in compliance with the terms of all Contracts pursuant to which a third party has disclosed to, or authorized Seller or a Seller Subsidiary to use, Intellectual Property Related to the Business owned by such third party.

(j)            To Seller’s Knowledge, no current or former employee, consultant or contractor or any other Person has any material right, claim or interest to any of the Seller Owned Intellectual Property other than as set forth on Section 4.15(j) of the Seller Disclosure Schedule.

(k)            To Seller’s Knowledge, no Transferred Employee, consultant or contractor of Seller or any Seller Subsidiary has been, is or will be performing services for the Business in violation of any term of any employment, invention disclosure or assignment, confidentiality or noncompetition agreement or other restrictive covenant or any Order as a result of such employee’s employment in, or such consultant’s or contractor’s engagement to provide services with respect to, the Business.

 

 

(l)            To Seller’s Knowledge, all Intellectual Property that has been distributed, sold or licensed to a third party by Seller or any Seller Subsidiary Related to the Business that is covered by warranty conformed and conforms in all material respects to, and performed and performs in all material respects in accordance with, the representations and warranties provided with respect to such Intellectual Property by or on behalf of Seller or Seller Subsidiaries for the time period during which such representations and warranties apply.

(m)           The execution and delivery of this Agreement by Seller does not, and the consummation of the transactions contemplated hereby (in each case, with or without the giving of notice or lapse of time, or both), will not, directly or indirectly, result in the loss or impairment of, or give rise to any right of any third party to terminate or reprice or otherwise renegotiate Seller’s or a Seller Subsidiary’s rights to own any of its Intellectual Property or their respective rights under any Out-Bound License or In-Bound License, nor require the consent of any Governmental Entity or other third party in respect of any such Intellectual Property, in all material respects.

(n)           The transfers of the Intellectua