<PAGE>
Exhibit 10.17
CONFIDENTIAL TREATMENT REQUESTED: Certain portions of this document
have been
omitted pursuant to a request for confidential treatment and, where
applicable,
have been marked with an asterisk ("[****]") to denote where
omissions have been
made. The confidential material has been filed separately with the
Securities
and Exchange Commission.
MASTER JOINT VENTURE AGREEMENT
BY AND AMONG
EVERGREEN SOLAR, INC.
Q - CELLS AG
RENEWABLE ENERGY CORPORATION
AND
EVERQ GMBH
<PAGE>
TABLE OF CONTENTS
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ARTICLE I.
Relation to Existing Agreements; Interpretation, Relation
to Articles, Participation of EverQ........................
4
1.1
Relation to Existing Agreements.........................
4
1.2
Definitions.............................................
4
1.3
Headings and Other Interpretation.......................
11
1.4
Relation to Articles of Association.....................
11
1.5
German Legal Terms......................................
11
1.6
Participation of EverQ..................................
11
ARTICLE II.
Purpose of EverQ, Share Sale and Transfer..................
12
2.1
Purpose of EverQ........................................
12
2.2
Share Transfer in EverQ.................................
12
ARTICLE III.
Management and Operation of EverQ..........................
13
3.1
Management and Supervision of EverQ.....................
13
3.2
Accounting Matters; Basic Financial Inspection Rights...
13
3.3
Other Financial Matters.................................
14
3.4
Second REC Supply Agreement and REC Option..............
14
3.5
Capacity Expansion and Additional Financing.............
15
3.6
Directors...............................................
19
3.7
Indemnification.........................................
19
ARTICLE IV.
Restrictions on Transfer; Right of First Refusal for Sale
of Shares..................................................
20
4.1
Restrictions on Transfer; Exceptions....................
20
4.2
Right to Notice.........................................
20
4.3
Exercise of Right of First Refusal......................
20
4.4
Right to Sell to Third Party............................
21
4.5
Reinstatement of Right of First Refusal.................
21
4.6
Change of Control.......................................
21
4.7
Co-Selling Rights.......................................
21
4.8
Adherence by Third Party................................
21
4.9
Relation to Articles of Association.....................
21
ARTICLE V.
Term and Termination.......................................
22
5.1
Term....................................................
22
5.2
Termination by mutual consent...........................
22
5.3
Expulsion for Breach....................................
22
5.4
Termination after [****]................................
26
5.5
Termination in Case of Sale and Transfer................
26
5.6
Post-Termination Covenants..............................
26
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ARTICLE VI.
Closing Conditions.........................................
27
6.1
Conditions to Obligations of REC........................
27
6.2
Conditions to the Obligations of E and Q................
27
ARTICLE VII.
Warranties.................................................
27
7.1
Warranties of Q.........................................
27
7.2
Warranties of E.........................................
29
7.3
Warranties of REC.......................................
31
7.4
Additional Representations and Warranties by EVERQ......
33
7.5
Additional Representations and Warranties by E and Q
pertaining to EverQ.....................................
35
ARTICLE VIII. Liability and Limitations of
Liability..................... 36
8.1
Liability...............................................
36
8.2
Definitions.............................................
37
8.3
Determination of the Amount of Damage...................
37
8.4
Limitations of Liability for Breach of Warranties.......
37
8.5
GENERAL LIMITATION OF LIABILITY.........................
38
ARTICLE IX.
Additional Agreements......................................
38
9.1
Marketing...............................................
38
9.2
Q Manufacturing Right of First Refusal..................
38
9.3
REC Manufacturing Right of First Refusal................
39
9.4
Relation of Sections 9.2 and 9.3........................
40
9.5
[****]..................................................
41
9.6
Cooperation to Pursue Tax Efficiencies..................
42
9.7
Confidentiality.........................................
42
9.8
Reasonable Efforts......................................
44
9.9
Standstill..............................................
44
9.10
Employee Matters........................................
45
9.11
Covenant Regarding REC Services Agreement...............
45
ARTICLE X.
Miscellaneous..............................................
45
10.1
Expenses................................................
45
10.2
Further Assurances......................................
46
10.3
Notices.................................................
46
10.4
Governing Law and Dispute Resolution....................
47
10.5
Binding Effect..........................................
47
10.6
Assignment..............................................
48
10.7
No Third Party Beneficiaries............................
48
10.8
Foreign Corrupt Practices Act...........................
48
10.9
Sarbanes-Oxley and Nasdaq Covenant......................
48
10.10
Amendment, Waivers......................................
49
10.11
Entire Agreement........................................
49
10.12
No Joint Venture or Partnership.........................
49
10.13
Language for Joint Venture and this Agreement...........
49
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10.14
Voting and other rights.................................
49
10.15
Severability............................................
50
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EXHIBITS
Exhibit A
Articles of Association
Exhibit A-1
German Translation of Articles of Association
Exhibit 7.4 (a)
EverQ Balance sheet as of September 30, 2005
Exhibit 7.4 (e)
List of EverQ personnel and pensions
Exhibit 7.4 (f)
Material Agreements
Exhibit 7.4 (h)
EverQ Insurance
SCHEDULES
Schedule 3.4
Second REC Supply Agreement
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<PAGE>
MASTER JOINT VENTURE AGREEMENT
This
Master Joint Venture Agreement (the "AGREEMENT") is made and
entered
into as of the 4th day of November, 2005, by and between
Evergreen Solar, Inc., a Delaware corporation with its principal
executive
offices located at 138 Bartlett Street, Marlboro, Massachusetts,
USA
("EVERGREEN" or "E"),
Q-Cells AG, a stock corporation organized under the laws of Germany
with
its principal executive offices located at Guardianstr. 16, 06766
Thalheim,
Germany (,,Q-CELLS" or "Q"),
Renewable Energy Corporation, a stock corporation organized under
the laws
of Norway with its principal executive offices located at
Veritasveien 14,
N-1323 Hovik, NORWAY ("REC")
and
EverQ GmbH, a limited liability company organized under the laws of
Germany
with its principal offices located at Guardianstr. 16, 06766
Thalheim, Germany
(,,EVERQ").
Capitalized terms used herein shall have the meaning ascribed to
them in
SECTION 1.2.
RECITALS
WHEREAS:
The
Parties are each engaged in the manufacture and distribution of
solar
products.
A. Evergreen
Solar
Evergreen has unique and proprietary String Ribbon wafer
manufacturing
technology which, when fully developed, may have a very low cost
potential.
Evergreen has an active research program to continue to develop
its
advanced string ribbon technology and, assuming the successful
growth of
EverQ, intends to channel its main future growth through EverQ.
<PAGE>
B. EverQ
EverQ is a recently created joint venture between Q-Cells and
Evergreen to
manufacture String Ribbon wafers, photovoltaic cells and
modules
incorporating such wafers based on the combination of their
respective
technologies and expertise. Construction of the first 30 MW factory
has
started in Thalheim, Germany, which is expected to commence
production in
March[****]. Assuming the factory achieves its objectives, Q-Cells
and
Evergreen plan on expanding the EverQ joint venture in Thalheim to
120 MW
as
soon as practicable, and to look to establish factories in
other
locations worldwide.
C. REC
REC
is, via its subsidiary Solar Grade Silicon Holding, Inc. with
production at Moses Lake, Washington, USA and Butte, Montana USA
("SGS"),
the
world leader in the production of solar grade silicon. REC is
currently
performing large scale technology tests with the objective of
producing
commercial quantities of the granular form factor of silicon
feedstock that
is
needed by Evergreen for its wafer manufacturing process. REC is
also the
world's largest suppliers of high quality silicon wafers for
photovoltaic
applications. At present REC produces silicon wafers through its
unique and
proprietary casting and slicing processes.
D. Q-Cells
Q-Cells is the largest independent manufacturer of crystalline
silicon
solar cells in the world. Q-Cells is in the midst of a capacity
expansion
that
will provide them with 350 MW of solar cell manufacturing
capacity.
Q-Cells has active programs to increase the efficiency and reduce
the cost
to
convert wafers into solar cells.
E. Benefits to
Parties
The
Parties believe that it is in their mutual best interest to have
REC
become a shareholder of EverQ and provide additional support via
the REC
Supply Agreements and the REC License Agreement, as well as
establish a
close collaboration with Evergreen on technology sharing and
potentially
String Ribbon wafer production. The Parties further believe that
combining
their respective technologies and capabilities would have a number
of
benefits including:
(1)
REC
(a) Access to String
Ribbon wafer technology through EverQ
[****]
(b) Technology
transfer/sharing with Evergreen
(c) Equity
participation in EverQ
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(d) Secure high value
customer for scaling of granular silicon
(e) [****]
(2)
Evergreen
(a) Technology
transfer/sharing with REC
(b) Secure silicon
supply at attractive market related pricing
(c) Accelerated
development and proliferation of String Ribbon
technology
(d) Initial
substantial majority ownership of EverQ
(3)
EverQ
(a) Secure silicon
supply at attractive market related pricing
(b) Accelerated String
Ribbon technology development (Evergreen
responsibility)
(c) Accelerated
technology and manufacturing systems development
(4)
Q-Cells
(a) Improved cost
position through EverQ
(b) Low-cost supply of
String Ribbon wafers
(c) Reduced capital
commitment
F. Existing
Agreements
On
14 January 2005, E and Q have entered in to the following
agreements
regarding EverQ:
(a) Master Joint Venture Agreement (notarial deed nr. 7 / 2005 of
the
Berlin notary public Dr. Rudolf von Hanstein) (the "EXISTING
MJVA"),
(b) E License Agreement (notarial deed nr. 5 / 2005 of the
Berlin
notary public Dr. Rudolf von Hanstein) (the "E LICENSE
AGREEMENT"),
(c) Q License Agreement (notarial deed nr. 6 / 2005 of the
Berlin
notary public Dr. Rudolf von Hanstein) (the "Q LICENSE
AGREEMENT")
(jointly the "EXISTING AGREEMENTS").
The
Existing MJVA will be replaced by this Agreement. Certified Copies
of
the
Existing Agreements have been provided to all Parties who waive
reading
and
attaching of the Existing Agreements to this Agreement.
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<PAGE>
NOW, THEREFORE, in consideration of the mutual promises,
covenants,
representations, warranties and indemnities made herein and of the
mutual
benefits to be derived herefrom, and for other good and valuable
consideration
(the receipt and adequacy of which are hereby acknowledged), the
Parties hereto
agree as follows:
ARTICLE I.
Relation to Existing Agreements; Interpretation, Relation to
Articles,
Participation of EverQ
1.1
Relation to Existing
Agreements. The Existing MJVA is hereby replaced
by this Agreement as of the Signing Date. The other Existing
Agreements have in
the meantime been amended by the Parties; such amended versions
shall remain in
full force and effect.
1.2
Definitions. For the purposes of this Agreement, capitalized
terms
used herein shall have the respective meanings assigned thereto in
this SECTION
1.2.
"ACQUISITION PROPOSAL" has the meaning assigned in SECTION 4.2.
"ACQUISITION PROPOSAL NOTICE" has the meaning assigned in SECTION
4.2.
"ACT" has the meaning assigned in SECTION 10.8.
"ACTION" means any claim, action, suit or arbitration, as well as
any
inquiry, proceeding or investigation by or before any Governmental
Authority.
"ADDITIONAL CAPITAL CONTRIBUTIONS" has the meaning set forth in
SECTION 2.3.
"AFFILIATE" means any Person directly or indirectly controlling
or
controlled by, or under direct or indirect common control with, a
Party at the
relevant time. For the purposes of this definition, "control" means
the
beneficial ownership of more than fifty percent (50%) of the voting
rights.
"AGGREGATE EQUITY FUNDING" means [****], as adjusted to reflect
additional capital contributions after the Closing of this
Agreement.
[****]
"ALTERNATIVE VENTURE" means a [****]
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<PAGE>
[****]
[****]
"ANNUAL PLAN" shall mean an annual business and operations plan
as
determined by the Supervisory Board.
"ARBITRATOR" has the meaning assigned in SECTION 5.3
(C)(II)(3).
"ARTICLES OF ASSOCIATION" means the Articles of Association
(Gesellschaftsvertrag) of EverQ set forth as EXHIBIT A attached
hereto (a German
translation is attached hereto as EXHIBIT A-1), together with any
amendments
thereto approved by the Parties. Should there be a discrepancy
between the
German and the English versions of the Articles, the English
version shall
prevail and the Parties shall amend the German version of the
Articles to
reflect the meaning of the English version.
"BANKRUPTCY EVENT" means with regard to any Party:
a) such Party commencing a voluntary case or other
proceeding, or an involuntary case or other proceeding being
commenced against
such Party and remaining undismissed and unstayed for a period of
[****], in
either case seeking liquidation, reorganization or other relief
with respect to
such Party or its debts under any applicable bankruptcy,
reorganization,
composition, insolvency or other similar law now or hereafter in
effect or
seeking the appointment of a trustee, receiver, liquidator,
custodian or other
similar official of such Party or any substantial part of its
property;
b) such Party consenting to any such relief or to the
appointment of or taking possession by any such official in an
involuntary case
or other proceeding commenced against it; or
c) such Party admitting in writing its inability to pay its
debts generally as they become due or generally failing to pay such
debts as
they become due or becoming subject to disposition of a
clearing-house to
suspend transactions.
"BREACHING PARTY" has the meaning assigned in SECTION 5.3.
"BUSINESS DAY" means any day on which financial institutions
are
generally open and available for business, and which is not
otherwise a holiday,
in all of the German state of Saxony-Anhalt, the US state of
Massachusetts and
Oslo, Norway.
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<PAGE>
"BUSINESS YEAR" means the period of time which, according to
EverQ's
Articles of Association, or relevant legislation, shall be the
annual period
used for accounting and public reporting obligations of EverQ.
"CAPACITY EXPANSION" has the meaning assigned in SECTION 3.5
(A).
"CELL" means a crystalline silicon material substrate that has
been
processed to provide electrical output from incident sunlight.
"CHANGE OF CONTROL" means with respect to any entity, the
acquisition
of such entity by another Person by means of any transaction or
series of
related transactions (including, without limitation, any share
acquisition, sale
of all or substantially all of the assets, reorganization, merger
or
consolidation, but excluding any sale of shares for capital raising
purposes)
other than a transaction or series of transactions in which the
holders of the
voting securities of such entity outstanding immediately prior to
such
transaction continue to retain (either by such voting securities
remaining
outstanding or by such voting securities being converted into
voting securities
of the surviving entity), as a result of shares in such entity held
by such
holders prior to such transaction, more than 50% of the total
voting power
represented by the voting securities of such entity or such
surviving entity
outstanding immediately after such transaction or series of
transactions.
"CLOSING CONDITIONS" has the meaning assigned in SECTION 6.1 AND
6.2.
"CLOSING DATE" means the day on which fulfillment or waiver of
all
Closing conditions has occurred (and which the Parties agree is the
Signing
Date).
"CONCURRENT AGREEMENTS" means the Services Agreements, the
License
Agreements, the REC Supply Agreements and the Evergreen Supply
Agreement.
"CONFIDENTIAL INFORMATION" has the meaning assigned in SECTION
9.7.
"DIRECTOR" means a member of the Supervisory Board
(Aufsichtsratsmitglied) of EverQ.
"DISCLOSING PARTY" has the meaning assigned in SECTION 9.7(A).
"DISTRIBUTION" means the transfer of cash or other property whether
by
way of dividend or otherwise to one or more of the Shareholders, or
the purchase
or redemption of Shares for cash or other property.
"EU" means European Union.
"E FIRST REFUSAL NOTICE" has the meaning assigned in SECTION
9.2(B).
"ELECTION NOTICE" has the meaning assigned in SECTION 4.3.
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<PAGE>
"E LICENSE AGREEMENT" has the meaning assigned in the RECITALS
(F).
"E SERVICES AGREEMENT" has the meaning assigned in the RECITALS
(F).
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"EXISTING AGREEMENTS" has the Meaning assigned in the RECITALS
(F).
"EXISTING MJVA" has the Meaning assigned in the RECITALS (F).
"FAIR MARKET PRICE" has the meaning assigned in SECTION 3.5(D).
"FAIR MARKET VALUE" has the meaning assigned in SECTION 5.3(C).
"EVERGREEN SUPPLY AGREEMENT" means a supply agreement between SGS
and
Evergreen entered into on November 22, 2005
"FIRST REC SUPPLY AGREEMENT" means the supply agreement between
SGS
and EverQ attached hereto as EXHIBIT C.
"FREE CASH" means, as of any date of determination, the amount
of
liquid net assets held in cash and other liquid, short-term
investment
instruments in excess of the amount which is sufficient to fund the
operations
and investments of EverQ for the following [****] according to
EverQ's
then-current budget projections.
"GOVERNMENT INVESTMENT GRANT" means GA-grants (GA-Mittel; Mittel
aus
dem Programm "Gemeinschaftsaufgabe Aufbau Neue Laender")
"GOVERNMENTAL AUTHORITY" means any US, German or Norwegian,
federal,
national, supranational, state, provincial, municipal, local, or
similar
government, governmental, regulatory or administrative authority,
agency or
commission or any court, tribunal, or judicial or arbitral
body.
"GOVERNMENTAL ORDER" means any order, writ, judgment,
injunction,
decree, stipulation, determination or award entered by or with any
Governmental
Authority.
"GRANT IMPUNITY NOTICE" has the meaning assigned in SECTION 3.5
(C)(I).
"IFRS" means International Financial Reporting Standards.
"INDEMNIFIABLE CLAIMS" has the meaning assigned in SECTION 8.2.
"INDEMNIFIED PARTY" has the meaning assigned in SECTION 8.2.
"INDEMNIFYING PARTY" has the meaning assigned in SECTION 8.1.
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<PAGE>
"INITIAL CAPACITY" has the meaning assigned in SECTION 3.5(A).
"KNOWLEDGE" shall mean, with respect to a Party, the actual
knowledge
of its officers and the members of the Board of Directors or
Supervisory Board
of such Party, provided that such persons shall have made
reasonable inquiry of
those employees and consultants, as the case may be, whom such
officers or
members of the Board of Directors or the Supervisory Board
reasonably believe
would have actual knowledge of the matters represented.
"LAW" means any US, German or Norwegian, federal, national,
supranational, state, provincial, municipal, local or similar
statute, law,
ordinance, regulation, rule, code, order, requirement or rule of
law.
"LIABILITIES" means any and all indebtedness or other liabilities
and
obligations, whether accrued or fixed, absolute or contingent,
matured or
unmatured or determined or determinable, including those arising
under any Law,
Action, Governmental Order and those arising under any contract,
agreement,
arrangement, commitment or undertaking.
"LICENSE AGREEMENTS" means the E License Agreement, the Q
License
Agreement and the REC License Agreement.
"MANAGEMENT BOARD" shall mean the Management Board of Directors
(Geschaeftsfuerung) of EverQ.
"MATERIAL AGREEMENT" means agreements entered into by EverQ with
an
annual value above Euro 500,000.
"MATERIAL BREACH" has the meaning assigned in SECTION 5.3.
"MODULE" means an assembly of multiple, electrically connected
Cells.
"NEGOTIATION PERIOD" has the meaning assigned in SECTION 4.3.
"NON-SELLING PARTIES" has the meaning assigned in SECTION 4.2.
"PARTIES" means the parties to this Agreement, from time to time,
and
a "PARTY" shall mean either E, Q or REC, as applicable.
"PERCENTAGE INTERESTS" means the percentage interests of the
Parties
in EverQ.
"PERSON" means any natural person, firm, partnership,
association,
corporation, company, trust, business trust, governmental authority
or other
entity.
"Q CONFIRMATION NOTICE" has the meaning assigned in SECTION
9.2(B).
-8-
<PAGE>
"Q LICENSE AGREEMENT" means the License & Technology
Transfer
Agreement between Q and EverQ attached hereto as EXHIBIT C.
"Q
PREFERENTIAL OFFER" has the meaning assigned in SECTION 3.5(C).
[****]
"Q SERVICES AGREEMENT" has the meaning assigned in the
RECITALS(F)..
"REC LICENSE AGREEMENT" means the License & Technology
Transfer
Agreement between REC and EverQ attached hereto as EXHIBIT B.
"REC OPTION" has the meaning assigned in SECTION 3.4(B).
"REC OPTION EXERCISE LETTER" has the meaning assigned in
SECTION
3.4(B).
"REC OFFER DATE" has the meaning assigned in SECTION 3.4(C).
"REC SUPPLY AGREEMENTS" means the First REC Supply Agreement and
the
Second REC Supply Agreement.
"RECAPITALIZATION" means any stock dividend, stock split,
combination
of shares, reorganization, recapitalization, reclassification or
other similar
event.
"RECEIVING PARTY" has the meaning assigned in SECTION 9.7(A).
[****]
"RIBBON TECHNOLOGY" means a technique in which a thin sheet of
silicon, typically polycrystalline silicon, is grown directly from
molten
silicon. The sheet is generally grown in a vertical orientation
without the use
of foreign substrate on which the silicon is formed, although some
processes
grow the silicon in a horizontal direction and can use a substrate
on which the
silicon is formed.
[****]
"SALE PERIOD" has the meaning assigned in SECTION 4.4.
"SECOND REC SUPPLY AGREEMENT" has the meaning assigned in SECTION
3.4
(A).
"SECURITIES ACT" means the Securities Act of 1934, as amended.
"SELLING PARTY" has the meaning assigned in SECTION 4.2.
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<PAGE>
"SERVICES AGREEMENTS" means the E Services Agreement, the Q
Services
Agreement and the REC Services Agreement.
"SGS" has the meaning assigned in the recitals.
"SHAREHOLDER" means each of E, Q and REC and their respective
Affiliates.
"SHARES" means shares of EverQ equity securities or securities
convertible or exchangeable into EverQ equity securities.
"SIGNING DATE" means the date hereof.
"STRING RIBBON TECHNOLOGY" means [****].
"SUBJECT SHARES" has the meaning assigned in SECTION 4.2.
"SUPERVISORY BOARD" means the Supervisory Board of Directors
(Aufsichtsrat) of EverQ.
"TAX" or, collectively, "TAXES" means any and all German,
United
States, provincial, state, local and other taxes, assessments and
other
governmental charges, duties, impositions and liabilities,
including taxes based
upon or measured by gross receipts, income, profits, sales, use and
occupation,
and value added, ad valorem, transfer, franchise, withholding,
payroll,
recapture, employment, excise and property taxes, together with all
interest,
penalties and additions imposed with respect to such amounts, and
any
obligations with respect to such amounts arising as a result of
being a member
of an affiliated, consolidated, combined or unitary group for any
period or
under any agreements or arrangements with any other Person and
including any
liability for taxes of a predecessor or transferor entity.
"TERMINATING PARTY" has the meanings assigned in ARTICLE 5, as
applicable.
"TERMINATION CALL RIGHT" has the meanings assigned in SECTION
5.3(D)
AND SECTION 5.4 (B), as applicable.
"TERMINATION SECURITIES" has the meaning assigned in SECTION
5.3(C).
"THIRD PARTY" means a Person who is neither a Party nor an
Affiliate
of a Party.
"TRANSFER" has the meaning assigned in SECTION 4.1.
"US GAAP" means the generally accepted accounting principles in
the
United States.
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"EVERQ" has the meaning assigned in the RECITALS.
"WAFER" means a crystalline silicon material substrate that is
intended to but has not yet been made into a Cell.
1.3
Headings and Other Interpretation. In this Agreement (a) headings
are
for convenience of reference only and shall not affect the
interpretation of the
provisions of this Agreement except to the extent that the context
otherwise
requires; (b) words importing the singular shall include the plural
and vice
versa; (c) words denoting individuals shall include any form of
entity and vice
versa; (d) words denoting any gender shall include all genders; (e)
where any
act, matter or thing is required by this Agreement to be performed
or carried
out on a certain day and that day is not a Business Day then that
act, matter or
thing shall be carried out or performed on the next following
Business Day; (f)
unless specified otherwise, any reference herein to any Article,
Section,
clause, sub-article, sub-clause, Appendix or Exhibit shall be
deemed to be a
reference to an Article, Section, clause, sub-article, sub-clause,
Appendix or
Exhibit of this Agreement; (g) any reference to any agreement,
document or
instrument shall refer to such agreement, document or instrument as
amended,
modified, supplemented, or novated; and (h) the words "include,"
"including" and
the derivations thereof shall not be limiting.
1.4
Relation to Articles of Association. In the event that this
Agreement
and the Articles of Association of EverQ should differ in one or
several
aspects, in the internal relation between E, Q and REC this
Agreement shall
supersede the Articles of Association as far as this is legally
permissible. E,
Q and REC hereby undertake that they shall cooperate with respect
to the
adjustment of EverQ's Articles of Association in accordance with
this Agreement.
The Parties shall whenever necessary exercise all voting and other
rights and
powers available to them to procure the alteration of the Articles
of
Association to the extent necessary to permit EverQ and its affairs
to be
carried out as provided in this Agreement. For the avoidance of
doubt, the
Articles of Association of EverQ do not conflict and are not to be
treated as
conflicting with any provision of this Agreement by which the
Parties agree to
procure that anything be or be not done. Subject as aforesaid, the
Parties
hereby undertake to each other to observe and perform the
provisions of the
Articles of Association of the Company.
1.5
German Legal Terms. In case of doubt of the meaning of German
legal
terms, the German words written in brackets and italics shall be
definitive.
1.6
Participation of EverQ. EverQ shall have no rights under this
Agreement
and shall not be bound by any obligation hereunder with the
exception of the
rights and obligations resulting from the representations and
warranties under
ARTICLE VII and ARTICLE VIII.
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ARTICLE II.
Purpose of EverQ, Share Sale and Transfer
2.1
Purpose of EverQ. The purpose of EverQ shall be the manufacturing
and
marketing of String Ribbon based photovoltaic products. EverQ shall
be a
manufacturing company designed to exploit the combined strengths of
E, Q and
REC. The parties intend that EverQ shall:
(a) manufacture Wafers using E's String Ribbon Technology;
(b) process such Wafers into Cells using a fabrication process
that
combines each Party's Cell manufacturing technologies;
(c) assemble Cells into Modules;
(d) conduct specific manufacturing and product
technology-oriented
development work required to optimize its activities;
(e) conduct all other activities necessary to the manufacture,
test
and sale of such solar products with an initial focus on the
manufacture, sale
and distribution of Modules; and
(f) in connection with the foregoing activities, subcontract or
outsource to E, Q and/or REC those functions that E, Q and/or REC
is able to
perform more efficiently than EverQ.
2.2
Share Transfer in EverQ. On the Signing Date, E and Q shall
immediately
after the signing of this Agreement split and transfer to REC their
shares in
EverQ as follows:
(a) E shall sell and transfer a split share of 11.1% in EverQ to
REC,
and
(b) Q shall sell and transfer a split share of 3.9% in EverQ to
REC.
(c) The purchase price per 1% in EverQ shall be calculated as
follows:
1% of the Aggregate Equity Funding, plus [****], i.e., the purchase
price per 1%
in EverQ shall be [****] In addition, REC shall compensate E and Q
for any
adverse tax consequences directly resulting from such transfer.
(d) The Parties shall enter into separate notarial deeds
effecting
such sales and transfers.
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ARTICLE III.
Management and Operation of EverQ
3.1
Management and Supervision of EverQ . The Parties shall cause EverQ
to
be managed and supervised in accordance with the provisions of the
Articles of
Association. In particular, unless otherwise specifically agreed to
by the
Parties, the Parties shall cause specific duties and powers of the
Supervisory
Board to be as set forth in Articles of Association. Subject to
Section 1.4, the
Parties shall not take any action in contravention of the Articles
of
Association.
3.2
Accounting Matters; Basic Financial Inspection Rights.
(a) Basic Accounting Matters. (i) The Parties shall cause EverQ to
(i)
establish its annual accounts and report its annual results in
accordance with
the applicable corporate laws of the Federal Republic of Germany,
aiming at the
optimization of tax benefits of the Shareholders and (ii) make
adjustments to
its accounts to reflect its financial position and results of
operations in
accordance with U.S. GAAP.
(ii) The Parties shall cause EverQ to keep books and records
reflecting all its respective transactions, complete and accurate
in all
material respects.
(iii) The Parties shall cause the fiscal year of EverQ to
commence on January 1 and end on December 31.
(b) Basic Financial Information. The Parties shall cause EverQ
to
furnish the following reports to each of E, Q and REC:
(i) As soon as practicable after the end of each fiscal year of
EverQ, and in any event within forty (40) days after the end of
each fiscal year
of EverQ, an audited consolidated balance sheet of EverQ as at the
end of such
fiscal year, and consolidated statements of income and cash flows
of EverQ for
such year, prepared in accordance with German GAAP (HGB), IFRS and
US GAAP
consistently applied.
(ii) As soon as practicable after the end of the first, second
and third quarterly accounting periods in each fiscal year of
EverQ, and in any
event within twenty-five (25) days after the end of the first,
second, and third
quarterly accounting periods in each fiscal year of EverQ, an
unaudited
consolidated balance sheet of EverQ as of the end of each such
quarterly period,
and unaudited consolidated statements of income and cash flows of
EverQ for such
period, prepared in accordance with German GAAP (HGB), IFRS and US
GAAP
consistently applied, subject to changes resulting from normal
year-end audit
adjustments.
(iii) Monthly profit and loss statements as soon as reasonably
practicable.
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<PAGE>
(iv) Such other information relating to the financial
condition,
business, prospects or corporate affairs of EverQ as E, Q or REC
may from time
to time reasonably request.
(c) Basic Financial Inspection Rights. During the regular office
hours
of EverQ, and upon twenty-four (24) hours' notice to EverQ, E, Q
and REC shall
have (i) full access to all properties, books of account and
records of EverQ,
and (ii) the right to make copies from such books and records at
their own
expense. Notwithstanding the foregoing, each Party will be entitled
to any
inspection rights granted under German law.
3.3
Other Financial
Matters.
(a) Annual Plan. The Parties shall cause the Management Board of
EverQ
to prepare, and the Supervisory Board to consider and approve, an
Annual Plan
with respect to each fiscal year of EverQ no later than thirty (30)
days prior
to the commencement of each fiscal year.
(b) Dividend Policy. The shareholders' meeting may declare and
pay
Distributions with the approval of a majority of the votes;
provided, however,
the Parties shall take all actions necessary to cause EverQ to
require unanimous
approval of the shareholders prior to any Distribution (i) declared
at any time
that Free Cash does not exist, (ii) if such Distribution shall
cause Free Cash
not to exist immediately following such Distribution, or (iii)
other than in a
manner proportionate to the respective ownership interests of the
equity
securities of EverQ regardless of whether Free Cash exists.
3.4
Second REC Supply
Agreement and REC Option.
(a) Second REC Supply Agreement. REC shall use its best endeavours
to
increase the production facilities of SGS so that SGS is in a
position to offer
to EverQ a second silicon feedstock supply agreement prior to
[****], containing
the volumes and other principles and terms as laid down in SCHEDULE
3.4 and to
be sold to EverQ at [****] (the "SECOND REC SUPPLY AGREEMENT).
(b) Subject to the condition precedent that prior to [****] either
(i)
SGS and EverQ have signed the Second REC Supply Agreement (and the
obligations
thereunder shall be binding in all respects without condition) or
(ii) SGS has
offered (which offer remains open and available for [****]) to
EverQ to enter
into the Second REC Supply Agreement, REC shall be entitled to
increase its
shareholding in EverQ from 15 % to 21 % (the "REC OPTION"). To
exercise the REC
Option, REC shall inform both E and Q in writing of its intention
(the "REC
OPTION EXERCISE LETTER"). In order to be binding, the REC Option
Exercise Letter
must be received by E and Q not later than [****] following the
date on which
REC first offers the Second REC Supply Agreement to EverQ. Upon
timely receipt
of the REC Option Exercise Letter, E shall sell and transfer one
share
representing 6 % of the EverQ share capital to REC by way of
notarial deed. To
prepare such
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sale and transfer, E shall split its shares in EverQ
correspondingly. The
purchase price of such 6% share shall be the Aggregate Equity
Funding times 6%,
[****], calculated from the Signing Date, pro rated on a daily
basis for partial
years assuming a 360-day year and 30-day months.
(c) If SGS has not offered the Second REC Supply Agreement to EverQ
by
[****], REC shall still be bound to procure that SGS offers to
EverQ the Second
REC Supply Agreement at the earliest date by which the production
capacity in
SGS allows such an offers. The date such offer is received by EverQ
is the "REC
OFFER DATE". The obligation of REC to make such an offer for the
Second REC
Supply Agreement in conjunction with future capacity increases and
the REC
Option shall both expire on [****].
(i) If by the REC Offer Date EverQ has already entered into one
or more alternative supply agreements that are similar in terms of
volume and
duration with one or more third parties, the REC Option shall
become void. In
addition, REC will be excluded from participating in future capital
increases in
EverQ. REC hereby waives its corresponding subscription rights. In
such a case,
all future capital increases shall be conducted [****]. The three
preceding
sentences shall not apply to the extent the Q Prefential Offer
according to
SECTION 3.5(C) is accepted; in such a case, REC shall be offered
shares under
SECTION 3.5(C)(VI) to avoid dilution. If by the REC Offer Date
EverQ has already
entered into one or more alternate supply agreements that are
similar in terms
of volume and duration with one or more third parties, the REC
obligation to
offer the Second REC Supply Agreement shall expire.
(ii) If by the REC Offer Date EverQ has not yet entered into
corresponding supply agreements with a third party, the REC Option
shall remain
in place provided, however, that in addition to the purchase price
for the 6%
share REC shall pay to EverQ an additional amount of [****] for the
[****] of
delay (such amount to be pro rated for any fraction of such month)
and [****]
for each [****] (such amount to be pro rated for any fraction of a
month),
provided however that total purchase price payable by REC,
including any
additional delay amounts, shall in no case be higher then the Fair
Market Value
as defined in Article 5.3 (c). The REC subscription rights in
future capital
increases shall remain untouched.
3.5
Capacity Expansion and
Additional Financing.
(a) It is the intent of the Parties that EverQ shall have an
initial
capacity to manufacture 30 MW per year (the "INITIAL CAPACITY").
The Parties
shall use reasonable best efforts to cause EverQ to achieve the
Initial Capacity
as soon as practicable. It is also the intent of the Parties that
EverQ shall in
the short-term, if economically viable, expand its manufacturing
capacity to 120
MW (the "CAPACITY EXPANSION"). Without limiting the foregoing, each
of the
Parties shall, and shall cause EverQ to, approve the Capacity
Expansion, if
economically viable, and commence substantial activities in
furtherance of the
Capacity Expansion within [****].
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<PAGE>
(b) A majority of the Supervisory Board which includes at least
one
Director designated by each of not less than two of the Parties to
this
Agreement shall have the ability to approve a Capacity Expansion
following a
determination by such majority of the Supervisory Board that the
Capacity
Expansion is in the best interest of EverQ.
(c) Additional Financing. If, be it in relation to a Capacity
Expansion or otherwise, EverQ requests in writing from E, Q and REC
additional
financing in addition to the funding as agreed by this Agreement
(an "ADDITIONAL
FINANCING"), and the Shareholders approve the corresponding capital
increase in
accordance with the Articles of Association (an "ADDITIONAL
FINANCING REQUEST"),
the following shall apply:
(i) Subject to REC's rights set forth in paragraph (vii) below,
Q
shall be offered in writing to provide such amount of an Additional
Financing to
enable it to increase its ownership interest in EverQ to a level
equal to (but
not in excess of) the percentage then held by E (the "Q
PREFERENTIAL OFFER").
Unless otherwise agreed to by the Parties, the price per 1 % of
EverQ equity
share (Stammeinlage) purchased by Q in any financing transaction to
be completed
in accordance with the terms of this SECTION 3.5(C)(I) shall be
[****]
(1) [****]
(2) [****]
(ii) Within [****] of receipt of the Grant Impunity Notice and
the Q Preferential Offer, Q shall be entitled to accept the Q
Preferential Offer
by subscribing, in the form required by German law, to such number
of shares in
EverQ [****] as is needed for Q to obtain an ownership interest
equal to E in
EverQ. If, within [****] of receipt of the Grant Impunity Notice
and the Q
Preferential Offer, Q has not accepted the Q Preferential Offer,
then Q's right
to increase its ownership in EverQ to a level equal to the
percentage then held
by E and [****] shall terminate.
(iii) Any capital increase of EverQ [****] shall be offered to
the Parties pro rata to their shareholdings. If one of the Parties
does not
exercise the corresponding subscription rights in full within
[****] of the date
that such subscription rights were offered to such Party, the
remainder of the
subscription rights shall be offered to the other Party. Should the
Parties
(together), not fully subscribe to the full amount of the capital
increase, the
subscription rights to the remainder of the capital increase shall
then be
offered to third party financial investors, but not to competitors
of either
Party (in the reasonable good-faith determination by the Parties).
The
Percentage Interests shall be appropriately and correspondingly
adjusted in
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<PAGE>
connection with any subscription by a Party of EverQ equity
securities pursuant
to this SECTION 3.5(C)(III).
(iv) Without limiting the foregoing, if the Additional
Financing
is of an amount that is insufficient to enable Q to increase its
ownership in
EverQ to a level equal to E, as provided herein, and Q participates
in such
Additional Financing to the full extent possible , then in
connection with any
subsequent Additional Financing the Parties shall cause Q to be
offered, in
writing, to provide such amount of the Additional Financing to
enable Q to
increase its ownership in EverQ to a level equal to E (in
accordance with the
terms herein) until such time as Q's ownership in EverQ reaches a
level equal to
E.
(v) Except as otherwise specifically set forth in this
Agreement,
the nature and material terms of any and all financing activities
by EverQ
(including the selection of lenders, if any) shall be determined by
the
Supervisory Board and/or pursuant to a resolution adopted at a
shareholder
meeting, as applicable under German law.
(vi) Whenever a Q Preferential Offer is made by issuance of new
shares , REC shall be offered to purchase such number of new shares
in EverQ
required in order to maintain its percentage interest in EverQ at
that time in
order to avoid dilution of REC. The share price shall be the same
as the [****].
(d) REC
increase to (up to) 33.33%. If an Additional Financing takes
place and subject to the condition precedent that either (i) SGS
and EverQ have
signed the Second REC Supply Agreement or (ii) SGS has offered
(which offer
remains open and available for at least [****]) to EverQ to enter
into the
Second REC Supply Agreement, REC shall be entitled to increase its
shareholding
in EverQ to up to 33.33 % through one or more transactions. With
the exception
of the subscription price, SECTION 3.5 (B) (including SECTION 3.5
(B) (VI) in
favor of Q and on the basis of the [****]) shall apply mutatis
mutandis. Unless
otherwise agreed to by the Parties, the price per [****] of EverQ
equity share
(Stammeinlage) purchased by REC in any financing transaction to be
completed in
accordance with the terms of this SECTION 3.5(B) shall be the
higher of:
(i) [****] of the Aggregate Equity Funding, plus [****] per
annum, calculated from the Closing Date, pro rated on a daily basis
for partial
years assuming a 360-day year and 30-day months; and
(ii) [****]
(1) [****]
(2) [****]
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<PAGE>
(3) [****]
(e) Relation between Sections 3.5(c) and 3.5(d), compensation
clause. To the extent that REC exercises its rights under Section
3.5 (d), Q's
rights under Section 3.5 (c) shall be limited to 50 % of the share
capital in
EverQ not subscribed to by REC. If the resulting capital increases
result in
other percentage interests of any Party than intended by Sections
3.5 (c)
through 3.5 (e), the Parties shall agree to sell and transfer split
shares in
EverQ in amounts required to achieve the desired result. For the
avoidance of
doubt, subject to the exercise of each Party's respective rights
under Article
IV and Article V, neither Q nor REC shall be entitled to acquire or
maintain a
equity position in EverQ that is in excess of the percentage of the
outstanding
equity of EverQ held by E without the prior consent of E, and any
holdings in
excess of such amount limitation will be subject to repurchase by E
pursuant to
the purchase rights set forth in Section 5.3 hereof.
(f) Compensation for Grant Repayment Obligations. If EverQ is
required
to repay part of the Government Investment Grant, the following
will occur:
(i) E, Q and REC will loan EverQ the amount to be repaid and
EverQ will repay the part of the Government Investment Grant to the
appropriate
government authorities.
(ii) The loan will be at [****].
(iii) The loan will be made in proportion to the cost of
capital
ownership of the parents as follows: REC will make a loan in
proportion to their
ownership percentage in EverQ and the remainder of the loan will be
evenly split
between E and Q.
(iv) [****]
(g) EverQ Debt. E and Q have provided or will provide guarantees
to
the EverQ banks. REC will be expected to provide corresponding
guarantees. If
such guarantees are executed by the respective banks, the Parties
shall share
the burden pro rata to their shareholding in EverQ at the time of
such
execution.
(h) No Additional Obligation. No Party shall be required to
provide
loan financing, equity contributions or any form of guarantee or
credit support
for repayment for any
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<PAGE>
funding obtained by EverQ, above their respective Additional
Capital
Contribution and the obligations described in SECTION 3.5 (F) AND
3.5 (G). For
the avoidance of doubt, the rules laid down in SECTION 3.5 (C) AND
(D) do not
oblige the Parties to provide additional funding to EverQ.
(i) Special expansion scenario. If there is no Capacity
Expansion
[****], Q and REC shall each have the right to require a capital
increase
sufficient to individually pass the 30 % shareholding threshold for
appointing
two board members according to SECTION 3.6, provided that the
necessary
requirements of merger regulations for passing that threshold are
observed. The
parties will cooperate to exchange information and if necessary to
do the
filings in order to accomplish this right. The share prices for Q
and E shall be
as laid down in SECTION 3.5 (C)(I) for Q and SECTIONS 3.5 (C)(VI)
and 3.5 (D)
for REC.
3.6
Directors. The Parties shall take all actions necessary to
establish
the initial number of Directors designated to the Supervisory Board
of EverQ at
four (4) and cause E to have the right to nominate and appoint two
(2) Directors
including the chairman and Q and REC to have the right to each
nominate and
appoint one (1) Director, provided, however, that Q and REC each
hold not less
than [****] of the shares in EverQ. In cases of a split Supervisory
Board, and
in such cases only, the chairman of the Supervisory Board shall
have a deciding
vote. Each Party shall cause each Director appointed by it to
perform his duties
as a Director fully in compliance with the terms of this Agreement
and the
Articles of Association. None of the Parties shall be excused from
the
performance of this Agreement on account of the failure to control
such Director
nominated and appointed by it.
In
any event of a change of the size or composition of the
Supervisory
Board, the Parties shall take all actions necessary, including any
amendments of
the Articles of Association, as far as legally admissible, to
ensure that E
retains the right to appoint and revoke [****] of the members of
the Supervisory
Board including the chairman for as long as E holds more than
[****] of the
shares of EverQ.
Notwithstanding the foregoing, any Party holding an ownership
interest of
more than [****] in EverQ shall have the right to appoint two (2)
directors. If
this applies to all three Parties, all six Directors shall
unanimously agree on
one (1) seventh Director which shall then be elected by all
Parties. All Parties
shall take all actions necessary, including an amendment of the
Articles of
Association, to establish the number of Directors of EverQ
accordingly.
3.7
Indemnification. To the fullest extent permitted by German law, E,
Q
and REC shall cause EverQ to indemnify and hold harmless each
Director
designated to the Supervisory Board nominated by E, Q and REC from
all losses,
liabilities, costs and expenses arising out of or relating to such
Director's
actions in connection with any action taken within their authority
and in their
capacity as a Director, except to the extent that
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<PAGE>
such losses, liabilities, costs or expenses are caused by such
Director's fraud,
bad faith or willful misconduct, and except to the extent that such
Director's
actions comprised or caused breach of this Agreement by the Party
who appointed
that Director.
ARTICLE IV.
Restrictions on Transfer; Right of First Refusal for Sale of
Shares
4.1
Restrictions on Transfer; Exceptions. Each of the Parties agrees
that
it shall not, either directly or indirectly, sell, transfer or
dispose of
("TRANSFER") any Shares during the term of this Agreement, without
complying
with the terms of this ARTICLE 4; provided, however, that the
foregoing
restrictions shall not apply to Transfers of shares or other equity
interests of
EverQ (i) in accordance with SECTIONS 3.4 OR 3.5 or (ii) by any
Party to any
Affiliate of such Party or (iii) from any Affiliate of such Party
to such Party
or to any Affiliate of such Party, provided always that the
transferring Party
remains, and the transferee of such transferred Shares or equity
interests
agrees in the appropriate form to be, bound by the terms of this
Agreement to
the same extent that the original Parties are bound thereby. For
the avoidance
of doubt, a Change of Control in a Party does not trigger the other
Party's
right of first refusal under this SECTION 4.1.
4.2
Right to Notice. Other than those Transfers excepted under SECTION
4.1,
prior to any Party proposing to Transfer any portion of the Shares
held by such
Party (the "SUBJECT SHARES") to a Third Party (an "ACQUISITION
PROPOSAL"), the
proposed transferring Party (the "SELLING PARTY") shall provide to
the other
Parties (the "NON-SELLING PARTIES") written notice of the
Acquisition Proposal,
which notice shall include a reasonable description of all material
terms and
conditions of or related to the Acquisition Proposal (the
"ACQUISITION PROPOSAL
NOTICE").
4.3
Exercise of Right of First Refusal. Following receipt of the
Acquisition Proposal Notice by the Non-Selling Parties, each of the
Non-Selling
Parties shall have [****] to provide written notice to the Selling
Party (the
"ELECTION NOTICE") that it intends to elect to exercise its right
of first
refusal. After delivery of the Election Notice to the Selling
Party, the Parties
agree to negotiate in good faith the terms and conditions under
which the
Non-Selling Party or Parties would acquire [****], all (but not
less than all)
of the Subject Shares at issue, and the Non-Selling Parties shall
have a right
of first refusal to purchase all (but not less than all) of the
Subject Shares
on terms that:
(i) are reasonably equivalent to the terms set forth in the in
the Acquisition Proposal Notice, provided that the Non-Selling
Parties shall not
have any obligation to agree to any terms which are unique to such
Third Party,
or
(ii) are reasonably acceptable to the Selling Party.
The Parties agree that such good-faith negotiations will continue
until the
earlier of (i) [****] from the date of delivery of the Election
Notice or (ii)
such negotiations are
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terminated earlier by agreement between the Parties (the
"NEGOTIATION PERIOD"),
during which period appropriate representatives of each Party
shall, in good
faith, make themselves available to meet. During the Negotiation
Period, the
Non-Selling Parti
