This Stock Purchase Agreement
(“Agreement”) is made as of July 24, 2009, by and
between COGENCO INTERNATIONAL, INC., a Colorado corporation
("Buyer"), and GENESIS ENERGY INVESTMENTS PLC, an Hungarian entity
operating as a public company whose common stock is traded on the
Budapest Stock Exchange ("Seller").
Seller desires to sell, and Buyer
desires to purchase, all of the issued and outstanding shares (the
"Shares") of capital stock of
- Genesis Solar España, S.L.
(“GSE,” the “GSE Shares”), a Spanish entity
that is in the process of planning, financing and building a plant
in Spain to manufacture hi- tech solar panels using thin film
technology which has acquired real estate and is substantially
advanced in the permitting process for the manufacturing plant to
be located near Cádiz, Spain.
- Genesis Solar Singapore Pte. Ltd.
(“GSS,” the “GSS Shares”), a corporation
formed under the laws of Singapore that is also in the process of
planning, financing and building a plant to manufacture high-tech
solar panels using thin film technology in Singapore;
and
- Genesis Solar Hungary Kft (“GSH,”
the “GSH Shares) an entity formed under the laws of
Hungary.
The Seller owns or will own at the
Closing Date as defined below, more than 98% of the GSE Shares that
are currently outstanding, 100% of the GSS Shares that are
currently outstanding, and 100% of the GSH Shares that are
currently outstanding and (in each case) of the GSE Shares, the GSS
Shares, and the GSH Shares that will be outstanding at the Closing
Date. GSE, GSS, and GSH are each referred to as an Acquired Company
and collectively as the Acquired Companies.
The parties, intending to be legally
bound, agree as follows:
ARTICLE 1 . DEFINITIONS.
For purposes of this Agreement, the following terms have the
meanings specified or referred to in this Article 1:
1.1 "Acquired Companies" --
GSE, GSS, and GSH, collectively.
1.2 "Applicable Contract" --
any Contract (a) under which any Acquired Company has or may
acquire any rights, (b) under which any Acquired Company has or may
become subject to any obligation or liability, or (c) by which any
Acquired Company or any of the assets owned or used by it is or may
become bound.subject to any obligation or liability, or (c) by
which any Acquired Company or any of the assets owned or used by it
is or may become bound.
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1.3 "Balance Sheet" -- as
defined in Section 3.4.
1.4 "Best Efforts" -- the
efforts that a prudent Person desirous of achieving a result would
use in similar circumstances to ensure that such result is achieved
as expeditiously as possible; provided, however, that an obligation
to use Best Efforts under this Agreement does not require the
Person subject to that obligation to take actions that would result
in a materially adverse change in the benefits to such Person of
this Agreement and the Contemplated Transactions.
1.5 "Breach" -- a "Breach" of
a representation, warranty, covenant, obligation, or other
provision of this Agreement or any instrument delivered pursuant to
this Agreement will be deemed to have occurred if there is or has
been (a) any inaccuracy in or breach of, or any failure to perform
or comply with, such representation, warranty, covenant,
obligation, or other provision, or (b) any claim (by any Person) or
other occurrence or circumstance that is or was inconsistent with
such representation, warranty, covenant, obligation, or other
provision, and the term "Breach" means any such inaccuracy, breach,
failure, claim, occurrence, or circumstance.
1.6 "Buyer" -- as defined in
the first paragraph of this Agreement.
1.7 "Closing" -- as defined in
Section 2.3.
1.8 "Closing Date" -- the date
and time as of which the Closing actually takes place.
1.9 “Cogenco Series A
Preferred Stock” – a series of preferred stock
consisting of a single share to be created by the Buyer with only
the following rights and preferences:
a. A
right to elect one person to the Board of Directors of the Buyer
provided such person has experience as a director of public
companies with common stock or American depository receipts trading
in the United States, has no family relationship with any other
officer or director of the Buyer, has not been involved in any
legal proceedings of the type required for disclosure under Item
401(f) of SEC Regulation S-K (whether under U.S. law or comparable
actions under the law of any other jurisdiction, even though Item
401(f) refers to U.S. law and the Securities and Exchange
Commission), is “independent” as that term is defined
under the rules of the stock exchange on which the Buyer intends to
list its shares, and is otherwise reasonably acceptable to the
Buyer. Such person will be appointed to the Buyer’s Board of
Directors immediately following the Closing.
b. A
right for the Buyer to redeem the Cogenco Series A Preferred Stock
when the Seller owns directly fewer than 6,000,000 Cogenco Shares
in its own name for a redemption price of $1.00, such redemption
being effective immediately upon notice from the Buyer.
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c. The
holder of Cogenco Series A Preferred Stock will not be
transferable, will not be entitled to vote at any meeting of the
Buyer’s shareholders except to elect the director as
described above, and will have no economic or other rights except
as specifically set forth in this Section.
1.10 "Consent" -- any
approval, consent, ratification, waiver, or other authorization
(including any Governmental Authorization).
1.11 "Contemplated
Transactions" -- all of the transactions contemplated by this
Agreement, including:
a. the sale of the Shares of the
Acquired Companies by Seller to Buyer;
b. the
execution, delivery, and performance of other documents necessary
or appropriate for the completion of the Transaction;
c. the
performance by Buyer and Seller of their respective covenants and
obligations under this Agreement; and
d.
Buyer's acquisition and ownership of the Shares and exercise
of control over the Acquired Companies.
1.12 "Contract" -- any
agreement, contract, obligation, promise, or undertaking (whether
written or oral and whether express or implied) that is legally
binding.
1.13
"Damages" -- as defined in Section 10.2.
1.14 "Disclosure Letter" --
the disclosure letter delivered by Seller to Buyer concurrently
with the execution and delivery of this Agreement or, if not
delivered concurrently with the execution and deliver of this
Agreement, by not later than the Disclosure Letter Delivery
Deadline as defined in Section 11.9(c) and which must then be in
form reasonably satisfactory to Buyer.
1.15 "Employment Agreements"
-- as defined in Section 2.4(a)(iii) .
1.16
"Encumbrance" -- any charge, claim, community property
interest, condition, equitable interest, lien, option, pledge,
security interest, right of first refusal, or restriction of any
kind, including any restriction on use, voting, transfer, receipt
of income, or exercise of any other attribute of ownership.
1.17 "Environment" -- soil,
land surface or subsurface strata, surface waters (including
navigable waters, ocean waters, streams, ponds, drainage basins,
and wetlands), groundwaters, drinking water supply, stream
sediments, ambient air (including indoor air), plant and animal
life, and any other environmental medium or natural resource.
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1.18 "Environmental, Health,
and Safety Liabilities" -- any cost, damages, expense, liability,
obligation, or other responsibility arising from or under
Environmental Law or Occupational Safety and Health Law and
consisting of or relating to:
a. any
environmental, health, or safety matters or conditions (including
on-site or off-site contamination, occupational safety and health,
and regulation of chemical substances or products);
b.
fines, penalties, judgments, awards, settlements, legal or
administrative proceedings, damages, losses, claims, demands and
response, investigative, remedial, or inspection costs and expenses
arising under Environmental Law or Occupational Safety and Health
Law;
c.
financial responsibility under Environmental Law or Occupational
Safety and Health Law for cleanup costs or corrective action,
including any investigation, cleanup, removal, containment, or
other remediation or response actions ("Cleanup") required by
applicable Environmental Law or Occupational Safety and Health Law
(whether or not such Cleanup has been required or requested by any
Governmental Body or any other Person) and for any natural resource
damages; or
d. any
other compliance, corrective, investigative, or remedial measures
required under Environmental Law or Occupational Safety and Health
Law.
The terms "removal," "remedial," and
"response action," include the types of activities covered by the
United States Comprehensive Environmental Response, Compensation,
and Liability Act, 42 U.S.C. § 9601 et seq. , as
amended ("CERCLA") or any similar act under the laws of any other
jurisdiction in which any of the Acquired Companies operate or
which may be applicable to any of the Acquired Companies.
1.19 "Environmental Law" --
any Legal Requirement of the United States, any other country or
Governmental Body that is applicable to any of the Acquired
Companies that requires or relates to:
a.
advising appropriate authorities, employees, and the public of
intended or actual releases of pollutants or hazardous substances
or materials, violations of discharge limits, or other prohibitions
and of the commencements of activities, such as resource extraction
or construction, that could have significant impact on the
Environment;
b.
preventing or reducing to acceptable levels the release of
pollutants or hazardous substances or materials into the
Environment;
c.
reducing the quantities, preventing the release, or
minimizing the hazardous characteristics of wastes that are
generated;
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d. assuring that products are
designed, formulated, packaged, and used so that they do not
present unreasonable risks to human health or the Environment when
used or disposed of;
e.
protecting resources, species, or ecological amenities;
f.
reducing to acceptable levels the risks inherent in the
transportation of hazardous substances, pollutants, oil, or other
potentially harmful substances;
g.
cleaning up pollutants that have been released, preventing the
Threat of Release, or paying the costs of such clean up or
prevention; or
h.
making responsible parties pay private parties, or groups of them,
for damages done to their health or the Environment, or permitting
self-appointed representatives of the public interest to recover
for injuries done to public assets.
1.20
"Escrow Agreement" – means the agreement to be
entered into at the Closing with a financial institution or a law
firm reasonable acceptable to the Buyer and the Seller for the
retention of a portion of the Purchase Price (being 2,600,000
Cogenco Shares) pursuant to the terms and conditions set forth in
Section 10.8(b), together with such other terms and conditions as
are typically found in escrow agreements. The Parties agree to use
their best efforts to name the escrow agent and to negotiate an
appropriate escrow agreement prior to October 31, 2009. The Parties
understand that the escrow agreement may different materially from
that attached hereto as Exhibit 2.4, but Exhibit 2.4 is provided
for information purposes.
1.21
"Facilities" -- any real property, leaseholds, or other
interests currently or formerly owned or operated by any Acquired
Company and any buildings, plants, structures, or equipment
(including motor vehicles, tank cars, and rolling stock) currently
or formerly owned or operated by any Acquired Company.
1.22
"GAAP" -- generally accepted United States accounting
principles, applied on a basis consistent with the basis on which
the Balance Sheet and the other financial statements referred to in
Section 3.4(b) were prepared.
1.23
"Governmental Authorization" -- any approval, consent,
license, permit, waiver, or other authorization issued, granted,
given, or otherwise made available by or under the authority of any
Governmental Body or pursuant to any Legal Requirement.
1.24
"Governmental Body" — whether existing under the
laws of the United States or any other country, any:
a.
nation, state, county, city, town, village, district, or other
jurisdiction of any nature;
b. federal, state, local, municipal,
foreign, or other government;
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c.
governmental or quasi-governmental authority of any nature
(including any governmental agency, branch, department, official,
or entity and any court or other tribunal);
d.
multi-national organization or body; or
e. body
exercising, or entitled to exercise, any administrative, executive,
judicial, legislative, police, regulatory, or taxing authority or
power of any nature.
1.25
"Hazardous Activity" -- the distribution, generation,
handling, importing, management, manufacturing, processing,
production, refinement, Release, storage, transfer, transportation,
treatment, or use (including any withdrawal or other use of
groundwater) of Hazardous Materials in, on, under, about, or from
the Facilities or any part thereof into the Environment, and any
other act, business, operation, or thing that increases the danger,
or risk of danger, or poses an unreasonable risk of harm to persons
or property on or off the Facilities, or that may affect the value
of the Facilities or the Acquired Companies.
1.26 "Hazardous Materials" --
any waste or other substance that is listed, defined, designated,
or classified as, or otherwise determined to be, hazardous,
radioactive, or toxic or a pollutant or a contaminant under or
pursuant to any Environmental Law, including any admixture or
solution thereof, and specifically including petroleum and all
derivatives thereof or synthetic substitutes therefor and asbestos
or asbestos-containing materials.
1.27
"Indemnified Persons" -- as defined in Section 10.2.
1.28
"Intellectual Property Assets" -- as defined in Section
3.22.
1.29
"Interim Balance Sheet" -- as defined in Section
3.4.
1.30
"IRC" -- the Internal Revenue Code of 1986 or any
successor law, and regulations issued by the IRS pursuant to the
Internal Revenue Code or any successor law.
1.31
"IRS" -- the United States Internal Revenue Service or
any successor agency, and, to the extent relevant, the United
States Department of the Treasury.
1.32
"Knowledge" -- an individual will be deemed to have
"Knowledge" of a particular fact or other matter if:
a. such
individual is actually aware of such fact or other matter; or
b. a
prudent individual could be expected to discover or otherwise
become aware of such fact or other matter in the course of
conducting a reasonably comprehensive investigation concerning the
existence of such fact or other matter.
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A Person (other than an individual) will
be deemed to have "Knowledge" of a particular fact or other matter
if any individual who is serving, or who has at any time served, as
a director, officer, partner, executor, or trustee of such Person
(or in any similar capacity) has, or at any time had, Knowledge of
such fact or other matter.
1.33
"Legal Requirement" -- any federal, state, local,
municipal, foreign, international, multinational, or other
administrative order, constitution, law, ordinance, principle of
common law, regulation, statute, or treaty, whether of the United
States or of any other jurisdiction.
1.34
"Noncompetition Agreements" -- as defined in Section
2.4(a)(iv) .
1.35 "Occupational Safety and
Health Law" -- any Legal Requirement designed to provide safe and
healthful working conditions and to reduce occupational safety and
health hazards, and any program, whether governmental or private
(including those promulgated or sponsored by industry associations
and insurance companies), designed to provide safe and healthful
working conditions.
1.36
"Order" -- any award, decision, injunction, judgment,
order, ruling, subpoena, or verdict entered, issued, made, or
rendered by any court, administrative agency, or other Governmental
Body or by any arbitrator.
1.37
"Ordinary Course of Business" -- an action taken by a
Person will be deemed to have been taken in the "Ordinary Course of
Business" only if:
a. such
action is consistent with the past practices of such Person and is
taken in the ordinary course of the normal day-to-day operations of
such Person;
b. such
action is not required to be authorized by the board of directors
of such Person (or by any Person or group of Persons exercising
similar authority) [and is not required to be specifically
authorized by the parent company (if any) of such Person]; and
c. such
action is similar in nature and magnitude to actions customarily
taken, without any authorization by the board of directors (or by
any Person or group of Persons exercising similar authority), in
the ordinary course of the normal day-to-day operations of other
Persons that are in the same line of business as such Person.
1.38 "Organizational
Documents" -- (a) the articles or certificate of incorporation and
the bylaws of a corporation; (b) the partnership agreement and any
statement of partnership of a general partnership; (c) the limited
partnership agreement and the certificate of limited partnership of
a limited partnership; (d) any charter or similar document adopted
or filed in connection with the creation, formation, or
organization of a Person; and (e) any amendment to any of the
foregoing.
1.39 "Person" -- any
individual, corporation (including any non-profit corporation),
general or limited partnership, limited liability company, joint
venture, estate, trust, association, organization, labor union, or
other entity or Governmental Body.
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1.40 "Proceeding" -- any
action, arbitration, audit, hearing, investigation, litigation, or
suit (whether civil, criminal, administrative, investigative, or
informal) commenced, brought, conducted, or heard by or before, or
otherwise involving, any Governmental Body or arbitrator.
1.41
"Related Person" -- with respect to a particular
individual:
a. each
other member of such individual's Family;
b. any
Person that is directly or indirectly controlled by such individual
or one or more members of such individual's Family;
c. any
Person in which such individual or members of such individual's
Family hold (individually or in the aggregate) a Material Interest;
and
d. any
Person with respect to which such individual or one or more members
of such individual's Family serves as a director, officer, partner,
executor, or trustee (or in a similar capacity).
e. With
respect to a specified Person other than an individual;
(i) any Person that directly or
indirectly controls, is directly or indirectly controlled by, or is
directly or indirectly under common control with such specified
Person;
(ii) any Person that holds a
Material Interest in such specified Person;
(iii) each Person that serves as a
director, officer, partner, executor, or trustee of such specified
Person (or in a similar capacity);
(iv) any Person in which such
specified Person holds a Material Interest;
(v) any Person with respect to which
such specified Person serves as a general partner or a trustee (or
in a similar capacity); and
(vi) any Related Person of any
individual described in clause (b) or (c).
f. For
purposes of this definition, (a) the "Family" of an individual
includes (i) the individual, (ii) the individual's spouse [and
former spouses], (iii) any other natural person who is related to
the individual or the individual's spouse within the second degree,
and (iv) any other natural person who resides with such individual,
and (b) "Material Interest" means direct or indirect beneficial
ownership (as defined in Rule 13d-3 under the Securities Exchange
Act of voting securities or other voting interests representing at
least 25% of the outstanding voting power of a Person or equity
securities or other equity interests representing at least 25% of
the outstanding equity securities or equity interests in a
Person.
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1.42 "Release" -- any
spilling, leaking, emitting, discharging, depositing, escaping,
leaching, dumping, or other releasing into the Environment, whether
intentional or unintentional.
1.43
"Representative" -- with respect to a particular Person,
any director, officer, employee, agent, consultant, advisor, or
other representative of such Person, including legal counsel,
accountants, and financial advisors.
1.44
"Securities Act" -- the Securities Act of 1933 as
adopted in the United States, or any successor law, and regulations
and rules issued pursuant to that act or any successor law.
1.45
“Securities Exchange Act” – the
Securities Exchange Act of 1934 as amended, as adopted in the
United States, or any successor law and regulations and rules
issued pursuant to that act or any successor law.
1.46
"Seller" -- as defined in the first paragraph of this
Agreement.
1.47
"Seller’s Releases" -- as defined in Section
2.4.
1.48
"Shares" – as defined in the Recitals of this
Agreement, including the GSE Shares, the GSS Shares, and the GSH
Share, also as defined in the Recitals of this Agreement.
1.49
“Spanish Subsidies Commitment” – as
defined in Section 7.2(c) .
1.50
"Subsidiary" – with respect to any Person (the
"Owner"), any corporation or other Person of which securities or
other interests having the power to elect a majority of that
corporation's or other Person's board of directors or similar
governing body, or otherwise having the power to direct the
business and policies of that corporation or other Person (other
than securities or other interests having such power only upon the
happening of a contingency that has not occurred) are held by the
Owner or one or more of its Subsidiaries; when used without
reference to a particular Person, "Subsidiary" means a Subsidiary
of the Company.
1.51
"Tax" – any tax (including any income tax, capital
gains tax, value-added tax, sales tax, property tax, gift tax, or
estate tax), levy, assessment, tariff, duty (including any customs
duty), deficiency, or other fee, and any related charge or amount
(including any fine, penalty, interest, or addition to tax),
imposed, assessed, or collected by or under the authority of any
Governmental Body or payable pursuant to any tax-sharing agreement
or any other Contract relating to the sharing or payment of any
such tax, levy, assessment, tariff, duty, deficiency, or fee.
1.52
"Tax Return" – any return (including any
information return), report, statement, schedule, notice, form, or
other document or information filed with or submitted to, or
required to be filed with or submitted to, any Governmental Body in
connection with the determination, assessment, collection, or
payment of any Tax or in connection with the administration,
implementation, or enforcement of or compliance with any Legal
Requirement relating to any Tax.
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1.53 "Threat of Release"
– a substantial likelihood of a Release that may require
action in order to prevent or mitigate damage to the Environment
that may result from such Release.
1.54
"Threatened" – a claim, Proceeding, dispute,
action, or other matter will be deemed to have been "Threatened" if
any demand or statement has been made (orally or in writing) or any
notice has been given (orally or in writing), or if any other event
has occurred or any other circumstances exist, that would lead a
prudent Person to conclude that such a claim, Proceeding, dispute,
action, or other matter is likely to be asserted, commenced, taken,
or otherwise pursued in the future.
ARTICLE 2 SALE AND TRANSFER
OF SHARES; CLOSING
2.1
SHARES.
a.
Subject to the terms and conditions of this Agreement, at the
Closing, Seller will sell and transfer the Shares to Buyer, and
Buyer will purchase the Shares from Seller as follows:
(i) a
241,110 business quotas (in Spanish: participationes
sociales ) representing a primary stake (in Spanish: capital
social ) of €
7,247,766.60 constituting the GSE Shares, amounting to no less than
98% of the outstanding GSE Shares, with a book value as reflected
on the Balance Sheets and Interim Balance Sheets and at the Closing
Date of not less than € 7,300,000;
(ii)
10,000 GSS Shares, amounting to no less than 100% of the
outstanding GSS Shares, with a book value as reflected on the
Balance Sheets and Interim Balance Sheets and at the Closing Date
of not less than € 3,000,000; and
(iii) a
single business quota (in Hungarian: üzletrész )
representing a primary stake (in Hungarian:
törzsbetét ) of HUF 273,000,000, constituting
the GSH Share, amounting to no less than 100% of the outstanding
share capital of GSH, with a book value as reflected on the Balance
Sheets and Interim Balance Sheets and at the Closing Date of not
less than HUF 55,000,000.
b.
Subject to the terms and conditions of this Agreement, at and prior
to the Closing, the Seller will use its best efforts to obtain all
GSH Shares, and GSS Shares not owned by Seller plus assist the
Buyer in negotiating for and obtaining all GSE Shares not owned by
Seller,so that, at the Closing Date, Buyer will obtain and own 100%
of the Shares.
2.2
PURCHASE PRICE. Subject to the terms and conditions of
this Agreement, the purchase price (the "Purchase Price") for the
Shares will be 8,700,000 shares of the Buyer’s common stock
(the “Cogenco Shares”), and one share of Cogenco Series
A Preferred Stock.
2.3
CLOSING. The purchase and sale (the "Closing") provided
for in this Agreement will take place at the offices of
Buyer’s counsel at 10:00 a.m. (local time) on the later of
(i) December 15, 2009 or (ii) the date that is two business days
following the termination of the
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applicable waiting period under the HSR
Act (if applicable), or at such other time and place as the parties
may agree. Subject to the provisions of Article 9, failure to
consummate the purchase and sale provided for in this Agreement on
the date and time and at the place determined pursuant to this
Section 2.3 will not result in the termination of this Agreement
and will not relieve any party of any obligation under this
Agreement.
2.4 CLOSING OBLIGATIONS. At
the Closing:
a.
Seller will deliver to Buyer:
(i)
certificates representing the Shares, duly endorsed (or accompanied
by duly executed stock powers), with signatures guaranteed by a
commercial bank or by a member firm of the New York Stock Exchange,
for transfer to Buyer or if Seller represents and warrants to Buyer
that there are no certificates representing certain of the Shares,
an assignment of all of the Seller’s interest in the Acquired
Companies, which assignment shall be guaranteed as set forth
above;
(ii)
releases in the form of Exhibit 2.4(a)(ii) executed by Seller
("Seller’s Releases");
(iii)
employment agreements in the form reasonably acceptable to the
Buyer, executed by persons designated by the Buyer to be material
employees of any of the Acquired Companies (collectively,
"Employment Agreements");
(iv)
noncompetition agreement reasonably acceptable to the Buyer,
executed by certain persons to be designated by the Buyer (the
"Noncompetition Agreement"); and
(v) a
certificate executed by Seller representing and warranting to Buyer
that each of Seller’s representations and warranties in this
Agreement was accurate in all respects as of the date of this
Agreement and is accurate in all respects as of the Closing Date as
if made on the Closing Date (giving full effect to any supplements
to the Disclosure Letter that were delivered by Seller to Buyer
prior to the Closing Date in accordance with Section 5.5) .
b.
Buyer will deliver to Seller:
(i)
6,100,000 of the Cogenco Shares and the remaining 2,600,000 Cogenco
Shares pursuant to the Escrow Agreement, all of which will be
shares of common stock of the Buyer bearing an appropriate legend
under SEC Rule 144 and other appropriate law;
(ii) One share of
Cogenco Series A Preferred Stock; and
(iii) a certificate executed by Buyer
to the effect that, except as otherwise stated in such certificate,
each of Buyer's representations and warranties in this Agreement
was accurate inall respects as of the date of this Agreement and is
accurate in all respects as of the Closing Date as if made on the
Closing Date.
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c. Buyer and Seller will enter into
an escrow agreement in the form of Exhibit 2.4 (the "Escrow
Agreement") with a third party reasonably acceptable to Buyer and
Seller.
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF
SELLER. Seller represents and warrants to Buyer as follows:
3.1 ORGANIZATION AND GOOD
STANDING
a. Part
3.1 of the Disclosure Letter contains a complete and accurate list
for each Acquired Company of its name, its jurisdiction of
incorporation, other jurisdictions in which it is authorized to do
business, and its capitalization (including the identity of each
stockholder and the number of shares held by each). Each Acquired
Company is a corporation duly organized, validly existing, and in
good standing under the laws of its jurisdiction of incorporation,
with full corporate power and authority to conduct its business as
it is now being conducted, to own or use the properties and assets
that it purports to own or use, and to perform all its obligations
under Applicable Contracts. Each Acquired Company is duly qualified
to do business as a foreign corporation and is in good standing
under the laws of each state or other jurisdiction in which either
the ownership or use of the properties owned or used by it, or the
nature of the activities conducted by it, requires such
qualification.
b.
Seller will deliver to Buyer not later than the time that Seller
executes this Agreement copies of the Organizational Documents of
each Acquired Company, as currently in effect.
3.2
AUTHORITY; NO CONFLICT
a. This Agreement constitutes the
legal, valid, and binding obligation of Seller, enforceable against
Seller in accordance with its terms. Upon the execution and
delivery by Seller of the Seller’s Releases and the other
agreements to be delivered by the Seller in connection with the
completion of the Contemplated Transaction (collectively, the
"Seller’s Closing Documents"), the Seller’s Closing
Documents will each constitute the legal, valid, and binding
obligations of Seller, enforceable against Seller in accordance
with their respective terms. Seller has the absolute and
unrestricted right, power, authority, and capacity to execute and
deliver this Agreement and the Seller’s Closing Documents and
to perform their obligations under this Agreement and the
Seller’s Closing Documents.
b. Except as set forth in Part 3.2 of
the Disclosure Letter, neither the execution and delivery of this
Agreement nor the consummation or performance of any of the
Contemplated Transactions will, directly or indirectly (with or
without notice or lapse of time):
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(i)
contravene, conflict with, or result in a violation of (A)
any provision of the Organizational Documents of the Acquired
Companies, or (B) any resolution adopted by the board of directors
or other governing body, or by the stockholders, members or owners
of any Acquired Company;
(ii)
contravene, conflict with, or result in a violation of, or give any
Governmental Body or other Person the right to challenge any of the
Contemplated Transactions or to exercise any remedy or obtain any
relief under, any Legal Requirement or any Order to which any
Acquired Company or either Seller, or any of the assets owned or
used by any Acquired Company, may be subject;
(iii)
contravene, conflict with, or result in a violation of any of the
terms or requirements of, or give any Governmental Body the right
to revoke, withdraw, suspend, cancel, terminate, or modify, any
Governmental Authorization that is held by any Acquired Company or
that otherwise relates to the business of, or any of the assets
owned or used by, any Acquired Company;
(iv)
cause Buyer or any Acquired Company to become subject to, or to
become liable for the payment of, any Tax;
(v)
cause any of the assets owned by any Acquired Company to be
reassessed or revalued by any taxing authority or other
Governmental Body;
(vi)
contravene, conflict with, or result in a violation or breach of
any provision of, or give any Person the right to declare a default
or exercise any remedy under, or to accelerate the maturity or
performance of, or to cancel, terminate, or modify, any Applicable
Contract; or
(vii)
result in the imposition or creation of any Encumbrance upon or
with respect to any of the assets owned or used by any Acquired
Company.
Except as set forth in Part 3.2 of the Disclosure Letter,
neither the Seller nor any Acquired Company is or will be required
to give any notice to or obtain any Consent from any Person in
connection with the execution and delivery of this Agreement or the
consummation or performance of any of the Contemplated
Transactions.
c.
Seller is acquiring the Cogenco Shares for its own account and not
with a view to their distribution within the meaning of §
2(a)(11) of the Securities Act. The Seller is an “accredited
investor” as such term is defined in Rule 501(a) under the
Securities Act and a “non-U.S. Person” as such term is
defined in Regulation S under the Securities Act. Seller has
completed such investigation and due diligence with respect to its
acquisition of the Cogenco Shares as Seller and its legal,
financial, tax, investment, and other advisors have deemed
appropriate or necessary in the circumstances.
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3.3 CAPITALIZATION.
a. The
authorized equity securities of
(i) GSE
consists of a 241,110 business quota (in Spanish:
participationes sociales ) representing a primary stake (in
Spanish: capital social ) of € 7,247,766.60; issued and
outstanding and constituting the Shares of which not less than 98%
is owned by Seller.
(ii)
GSH consists of a single business quota (in Hungarian:
üzletrész )
representing a primary stake (in Hungarian: törzsbetét )
of HUF 273,000,000; issued and outstanding and constituting the
Shares of which not less than 100% is owned by Seller.
(iii)
GSS consists of 10,000 shares of common stock, par value SGD 1 per
share, of which 10,000 shares are issued and outstanding and
constitute the Shares of which not less than 75% is presently owned
by Seller.
b. Part
3.3(b) of the Disclosure Letter sets forth the name, address,
contact information, and number of Shares held by each person who
owns any Shares in any of the Acquired Companies other than
Seller.
c. With
the exception of the Shares owned by the persons who are identified
on Part 3.3(b) of the Disclosure Letter, Seller is and will be on
the Closing Date the record and beneficial owners and holders of
the Shares, free and clear of all Encumbrances.
d. No
legend or other reference to any purported Encumbrance appears upon
any certificate representing equity securities of any Acquired
Company. All of the outstanding equity securities of each Acquired
Company have been duly authorized and validly issued and are fully
paid and nonassessable. There are no Contracts relating to the
issuance, sale, or transfer of any equity securities or other
securities of any Acquired Company. None of the outstanding equity
securities or other securities of any Acquired Company was issued
in violation of the Securities Act or any other Legal Requirement.
No Acquired Company owns, or has any Contract to acquire, any
equity securities or other securities of any Person or any direct
or indirect equity or ownership interest in any other business. The
Seller is not aware of any restrictions, Encumbrances or required
approvals with respect to any Shares not owned by the Seller.
3.4 FINANCIAL STATEMENTS. Not
later than the Disclosure Letter Delivery Deadline, Seller will
deliver to Buyer: (a) audited consolidated balance sheets of each
of the Acquired Companies as at December 31, 2008, in each of the
years 2006 through 2008 including notes thereto (the “Balance
Sheets”), and the related audited consolidated statements of
income, changes in stockholders' equity, and cash flow for each of
the fiscal years then ended, together with the report thereon of
independent certified public accountants reasonably acceptable to
Buyer, and (b) consolidated unaudited balance sheets of the
Acquired Companies as at June 30, 2009 and the related consolidated
statements of income, changes in stockholders' equity, and cash
flow for the fiscal periods then ended (the “Interim Balance
Sheet”) and the related
14
unaudited consolidated statements of
income, changes in stockholders' equity, and cash flow for the
fiscal periods then ended, including in each case the notes
thereto. Such financial statements and notes fairly present the
financial condition and the results of operations, changes in
stockholders' equity, and cash flow of the Acquired Companies as at
the respective dates of and for the periods referred to in such
financial statements, all in accordance with GAAP and all prepared
in US dollars, subject, in the case of interim financial
statements, to normal recurring year-end adjustments (the effect of
which will not, individually or in the aggregate, be materially
adverse) and the absence of notes (that, if presented, would not
differ materially from those included in the Balance Sheet); the
financial statements referred to in this Section 3.4 reflect the
consistent application of such accounting principles throughout the
periods involved, except as disclosed in the notes to such
financial statements. No financial statements of any Person other
than the Acquired Companies are required by GAAP to be included in
the consolidated financial statements of the Company.
3.5 BOOKS AND RECORDS.
a. The
books of account, minute books, stock record books, and other
records of the Acquired Companies, all of which have been made
available to Buyer, are complete and correct and have been
maintained in accordance with sound business practices and the
requirements of § 13(b)(2) of the Securities Exchange Act
(regardless of whether or not the Acquired Companies are subject to
that Section), including the maintenance of an adequate system of
internal controls in a form pursuant to which the Buyer will not
have to report any material weaknesses pursuant to Rules 13a-14 and
13a-15 under the Securities Exchange Act.
b. The
minute books of the Acquired Companies contain accurate and
complete records of all meetings held of, and corporate action
taken by, the stockholders, the Boards of Directors, and committees
of the Boards of Directors of the Acquired Companies, and no
meeting of any such stockholders, Board of Directors, or committee
has been held for which minutes have not been prepared and are not
contained in such minute books.
c. At
the Closing, all of those books and records will be in the
possession of the Acquired Companies and delivered to the
Buyer.
3.6 TITLE TO PROPERTIES;
ENCUMBRANCES. Part 3.6 of the Disclosure Letter contains a complete
and accurate list of all real property, leaseholds, or other
interests therein owned by any Acquired Company.
a.
Seller has delivered or made available to Buyer copies of the deeds
and other instruments (as recorded) by which the Acquired Companies
acquired such real property and interests, and copies of all title
insurance policies, opinions, abstracts, and surveys in the
possession of Seller or the Acquired Companies and relating to such
property or interests.
b. The
Acquired Companies own (with good and marketable title in the case
of real property, subject only to the matters permitted by the
following sentence) all the properties and assets (whether real,
personal, or mixed and whether tangible or intangible) that they
purport to own located in the facilities owned or operated by the
Acquired Companies or
15
reflected as owned in the books and
records of the Acquired Companies, including all of the properties
and assets reflected in the Balance Sheet and the Interim Balance
Sheet (except for assets held under capitalized leases disclosed or
not required to be disclosed in Part 3.6 of the Disclosure Letter
and personal property sold since the date of the Balance Sheet and
the Interim Balance Sheet, as the case may be, in the Ordinary
Course of Business), and all of the properties and assets purchased
or otherwise acquired by the Acquired Companies since the date of
the Balance Sheet (except for personal property acquired and sold
since the date of the Balance Sheet in the Ordinary Course of
Business and consistent with past practice), which subsequently
purchased or acquired properties and assets (other than inventory
and short-term investments) are listed in Part 3.6 of the
Disclosure Letter.
c. All
material properties and assets reflected in the Balance Sheet and
the Interim Balance Sheet are free and clear of all Encumbrances
and are not, in the case of real property, subject to any rights of
way, building use restrictions, exceptions, variances,
reservations, or limitations of any nature except, with respect to
all such properties and assets,
(i) mortgages or security interests
shown on the Balance Sheet or the Interim Balance Sheet as securing
specified liabilities or obligations, with respect to which no
default (or event that, with notice or lapse of time or both, would
constitute a default) exists,
(ii) mortgages or security interests
incurred in connection with the purchase of property or assets
after the date of the Interim Balance Sheet (such mortgages and
security interests being limited to the property or assets so
acquired), with respect to which no default (or event that, with
notice or lapse of time or both, would constitute a default)
exists,
(iii) liens for current taxes not yet
due, and
(iv) with respect to real property,
(A) minor imperfections of title, if any, none of which is
substantial in amount, materially detracts from the value or
impairs the use of the property subject thereto, or impairs the
operations of any Acquired Company, and (B) zoning laws and other
land use restrictions that do not impair the present or anticipated
use of the property subject thereto.
(v) All buildings, plants, and
structures owned by the Acquired Companies lie wholly within the
boundaries of the real property owned by the Acquired Companies and
do not encroach upon the property of, or otherwise conflict with
the property rights of, any other Person.
3.7 CONDITION AND SUFFICIENCY OF
ASSETS. The buildings, plants, structures, and equipment of the
Acquired Companies are structurally sound, are in good operating
condition and repair, and are adequate for the uses to which they
are being put, and none of such buildings, plants, structures, or
equipment is in need of maintenance or repairs except for ordinary,
routine maintenance and repairs that are not material in nature or
cost. The building, plants, structures, and equipment of the
Acquired Companies are sufficient for the continued conduct of the
Acquired Companies’ businesses after the Closing in
substantially the same manner as conducted prior to the
Closing.
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3.8 ACCOUNTS RECEIVABLE. All
accounts receivable of the Acquired Companies that are reflected on
the Balance Sheet or the Interim Balance Sheet or on the accounting
records of the Acquired Companies as of the Closing Date
(collectively, the “Accounts Receivable”) represent or
will represent valid obligations arising from sales actually made
or services actually performed in the Ordinary Course of
Business.
a.
Unless paid prior to the Closing Date, the Accounts Receivable are
or will be as of the Closing Date current and collectible net of
the respective reserves shown on the Balance Sheet or the Interim
Balance Sheet or on the accounting records of the Acquired
Companies as of the Closing Date (which reserves are adequate and
calculated consistent with past practice and, in the case of the
reserve as of the Closing Date, will not represent a greater
percentage of the Accounts Receivable as of the Closing Date than
the reserve reflected in the Interim Balance Sheet represented of
the Accounts Receivable reflected therein and will not represent a
material adverse change in the composition of such Accounts
Receivable in terms of aging).
b.
Subject to such reserves, each of the Accounts Receivable either
has been or will be collected in full, without any set-off, within
ninety days after the day on which it first becomes due and
payable. There is no contest, claim, or right of set-off, other
than returns in the Ordinary Course of Business, under any Contract
with any obligor of an Accounts Receivable relating to the amount
or validity of such Accounts Receivable.
c. Part
3.8 of the Disclosure Letter contains a complete and accurate list
of all Accounts Receivable as of the date of the Interim Balance
Sheet, which list sets forth the aging of such Accounts
Receivable.
3.9 INVENTORY. All inventory
of the Acquired Companies, whether or not reflected in the Balance
Sheet or the Interim Balance Sheet, consists of a quality and
quantity usable and salable in the Ordinary Course of Business,
except for obsolete items and items of below-standard quality, all
of which have been written off or written down to net realizable
value in the Balance Sheet or the Interim Balance Sheet or on the
accounting records of the Acquired Companies as of the Closing
Date, as the case may be. All inventories not written off have been
priced at the lower of cost or net realizable value on a first in,
first out basis. The quantities of each item of inventory (whether
raw materials, work-in-process, or finished goods) are not
excessive, but are reasonable in the present circumstances of the
Acquired Companies.
3.10
NO UNDISCLOSED LIABILITIES. Except as set forth in Part
3.10 of the Disclosure Letter, the Acquired Companies have no
liabilities or obligations of any nature (whether known or unknown
and whether absolute, accrued, contingent, or otherwise) except for
liabilities or obligations reflected or reserved against in the
Balance Sheet or the Interim Balance Sheet and current liabilities
incurred in the Ordinary Course of Business since the respective
dates thereof.
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3.11 TAXES
a. The
Acquired Companies have filed or caused to be filed (on a timely
basis since formation) all Tax Returns that are or were required to
be filed by or with respect to any of them, either separately or as
a member of a group of corporations, pursuant to applicable Legal
Requirements. Seller will, not later than the date that it executes
this Agreement to Buyer copies of, and Part 3.11 of the Disclosure
Letter contains a complete and accurate list of, all such Tax
Returns relating to income or franchise taxes filed since
formation.
b. The
Acquired Companies have each paid, or made provision for the
payment of, all Taxes that have or may have become due pursuant to
those Tax Returns or otherwise, or pursuant to any assessment
received by Seller or any Acquired Company, except such Taxes, if
any, as are listed in Part 3.11 of the Disclosure Letter and are
being contested in good faith and as to which adequate reserves
(determined in accordance with GAAP) have been provided in the
Balance Sheet and the Interim Balance Sheet.
c. The
income Tax Returns of each Acquired Company (whether filed in the
United States or any subdivision thereof, or in any other
jurisdiction) subject to such Taxes have been audited by the
relevant tax authorities or are closed by the applicable statute of
limitations for all taxable years.
(i) Part 3.11 of the Disclosure
Letter contains a complete and accurate list of all audits of all
such Tax Returns, including a reasonably detailed description of
the nature and outcome of each audit.
(ii) All deficiencies proposed as a
result of such audits have been paid, reserved against, settled,
or, as described in Part 3.11 of the Disclosure Letter, are being
contested in good faith by appropriate proceedings. Part 3.11 of
the Disclosure Letter describes all adjustments to the United
States federal income Tax Returns filed by any Acquired Company or
any group of corporations including any Acquired Company for all
taxable years, and the resulting deficiencies proposed by the
applicable Tax authority.
(iii) Except as described in Part
3.11 of the Disclosure Letter, neither Seller nor any Acquired
Company has given or been requested to give waivers or extensions
(or is or would be subject to a waiver or extension given by any
other Person) of any statute of limitations relating to the payment
of Taxes of any Acquired Company or for which any Acquired Company
may be liable.
d. The charges,
accruals, and reserves with respect to Taxes on the respective
books of each Acquired Company are adequate (determined in
accordance with GAAP) and are at least equal to that Acquired
Company’s liability for Taxes. There exists no proposed tax
assessment against any Acquired Company except as disclosed in the
Balance Sheet or in Part 3.11 of the Disclosure Letter. No consent
to the application of § 341(f)(2) of the IRC (or any
comparable section of any Law of any other jurisdiction in the
world) has been filed with respect to any property or assets held,
acquired, or to be acquired by any Acquired Company. All Taxes that
any Acquired Company is or was required by Legal Requirements to
withhold or collect have been duly withheld or collected and, to
the extent required, have been paid to the proper Governmental Body
or other Person.
18
e. All Tax Returns filed by (or that
include on a consolidated basis) any Acquired Company are true,
correct, and complete. There is no tax sharing agreement that will
require any payment by any Acquired Company after the date of this
Agreement.
3.12 NO MATERIAL ADVERSE
CHANGE. Since the date of the Balance Sheet, there has not been any
material adverse change in the business, operations, properties,
prospects, assets, or condition of any Acquired Company, and no
event has occurred or circumstance exists that may result in such a
material adverse change.
3.13
EMPLOYEE BENEFITS
a. The
persons who are employed by and who are retained as contractors by
each Acquired Company are set forth in Part 3.13(a) of the
Disclosure Letter, together with the other information required by
Section 3.20 of this Agreement. In each case, each Acquired Company
is in full compliance with any Laws and regulations issued by any
Governmental Body governing such employment relationship, or any
relationship as an independent contractor or other similar
relationship including (without limitation) the withholding and
proper payment of any Tax obligations and the provision of Benefit
Obligations adopted by, or to which any Acquired Company is
subject. "Other Benefit Obligations" means all obligations,
arrangements, or customary practices, whether or not legally
enforceable, to provide benefits, other than salary, as
compensation for services rendered, to present or former directors,
employees, or agents, other than obligations, arrangements, and
practices that are Plans. Other Benefit Obligations include
consulting agreements under which the compensation paid does not
depend upon the amount of service rendered, sabbatical policies,
severance payment policies, employment manuals, collective
bargaining agreements, all contracts with third party
administrators, actuaries, investment managers, consultants, and
other independent contractors, payroll manuals, and fringe benefits
within the meaning of IRC § 132 or the comparable section of
any other Law applicable to an Acquired Company.
b. Part
3.13(b) of the Disclosure Letter sets forth all employee benefit
plans (including, but not limited to Other Benefit Obligations) to
which an Acquired Company is subject (directly or indirectly,
whether written, statutory, regulatory, or unwritten), and the
Acquired Companies have each delivered (or will within ten days of
the date of this Agreement) deliver copies of all such plans to the
Buyer.
c. Part
3.13(c) of the Disclosure Letter sets forth all reports filed by
any of the Acquired Companies, or by any person with respect to any
employee of or contractor to an Acquired Company with any
Governmental Body.
d.
Except as set forth in Part 3.13(d) of the Disclosure Letter, the
Acquired Companies have each performed all of their respective
obligations under all employee benefit plans and Other Benefit
Obligations. The Acquired Companies have made appropriate entries
in their financial records and statements for all obligations and
liabilities under such plans and
19
Obligations that have accrued but are not
due. Neither the Seller nor any Acquired Company has Knowledge of
any facts or circumstances that may give rise to any liability of
any Seller, any Acquired Company, or Buyer under the Law applicable
to any employee benefit plan or Other Benefit Obligation, whether
described in Part 3.13 of the Disclosure Letter or not so
described.
e. No
payment that is owed or may become due to any director, officer,
employee, or agent of any Acquired Company will be non-deductible
to the Acquired Companies or subject to tax under IRC § 280G
or § 4999 (or the comparable section of any other Law
applicable to an Acquired Company); nor will any Acquired Company
be required to "gross up" or otherwise compensate any such person
because of the imposition of any excise tax on a payment to such
person.
f. The
consummation of the Contemplated Transactions will not result in
the payment, vesting, or acceleration of any benefit or Company
Other Benefit Obligation.
3.14 COMPLIANCE WITH LEGAL
REQUIREMENTS; GOVERNMENTAL AUTHORIZATIONS
a.
Except as set forth in Part 3.14 of the Disclosure Letter:
(i) each Acquired Company is, and at
all times since formation has been, in full compliance with each
Legal Requirement that is or was applicable to it or to the conduct
or operation of its business or the ownership or use of any of its
assets;
(ii) no event has occurred or
circumstance exists that (with or without notice or lapse of time)
(A) may constitute or result in a violation by any Acquired Company
of, or a failure on the part of any Acquired Company to comply
with, any Legal Requirement, or (B) may give rise to any obligation
on the part of any Acquired Company to undertake, or to bear all or
any portion of the cost of, any remedial action of any nature;
and
(iii) no Acquired Company has
received, at any time since formation, any notice or other
communication (whether oral or written) from any Governmental Body
or any other Person regarding (A) any actual, alleged, possible, or
potential violation of, or failure to comply with, any Legal
Requirement, or (B) any actual, alleged, possible, or potential
obligation on the part of any Acquired Company to undertake, or to
bear all or any portion of the cost of, any remedial action of any
nature.
b. Part
3.14 of the Disclosure Letter contains a complete and accurate list
of each Governmental Authorization that is held by any Acquired
Company or that otherwise relates to the business of, or to any of
the assets owned or used by, any Acquired Company. Each
Governmental Authorization listed or required to be listed in Part
3.14 of the Disclosure Letter is valid and in full force and
effect. Except as set forth in Part 3.14 of the Disclosure
Letter:
20
(i) each Acquired
Company is, and at all times since formation has been, in full
compliance with all of the terms and requirements of each
Governmental Authorization identified or required to be identified
in Part 3.14 of the Disclosure Letter;
(ii) no event has occurred or
circumstance exists that may (with or without notice or lapse of
time) (A) constitute or result directly or indirectly in a
violation of or a failure to comply with any term or requirement of
any Governmental Authorization listed or required to be listed in
Part 3.14 of the Disclosure Letter, or (B) result directly or
indirectly in the revocation, withdrawal, suspension, cancellation,
or termination of, or any modification to, any Governmental
Authorization listed or required to be listed in Part 3.14 of the
Disclosure Letter;
(iii) no Acquired Company has
received, at any time since formation, any notice or other
communication (whether oral or written) from any Governmental Body
or any other Person regarding (A) any actual, alleged, possible, or
potential violation of or failure to comply with any term or
requirement of any Governmental Authorization, or (B) any actual,
proposed, possible, or potential revocation, withdrawal,
suspension, cancellation, termination of, or modification to any
Governmental Authorization; and
(iv) all applications required to
have been filed for the renewal of the Governmental Authorizations
listed or required to be listed in Part 3.14 of the Disclosure
Letter have been duly filed on a timely basis with the appropriate
Governmental Bodies, and all other filings required to have been
made with respect to such Governmental Authorizations have been
duly made on a timely basis with the appropriate Governmental
Bodies.
The Governmental Authorizations listed in Part 3.14 of the
Disclosure Letter collectively constitute all of the Governmental
Authorizations necessary to permit the Acquired Companies to
lawfully conduct and operate their businesses in the manner they
currently conduct and operate such businesses and to permit the
Acquired Companies to own and use their assets in the manner in
which they currently own and use such assets.
3.15 LEGAL PROCEEDINGS;
ORDERS
a.
Except as set forth in Part 3.15 of the Disclosure Letter, there is
no pending Proceeding:
(i)
that has been commenced by or against any Acquired Company or
that otherwise relates to or may affect the business of, or any of
the assets owned or used by, any Acquired Company; or
(ii) that challenges, or that may
have the effect of preventing, delaying, making illegal, or
otherwise interfering with, any of the Contemplated
Transactions.
21
To the Knowledge of Seller and the
Acquired Companies, (1) no such Proceeding has been Threatened, and
(2) no event has occurred or circumstance exists that may give rise
to or serve as a basis for the commencement of any such Proceeding.
Seller has delivered to Buyer copies of all pleadings,
correspondence, and other documents relating to each Proceeding
listed in Part 3.15 of the Disclosure Letter. The Proceedings
listed in Part 3.15 of the Disclosure Letter will not have a
material adverse effect on the business, operations, assets,
condition, or prospects of any Acquired Company.
b.
Except as set forth in Part 3.15 of the Disclosure Letter:
(i) there is no Order to which any of
the Acquired Companies, or any of the assets owned or used by any
Acquired Company, is subject;
(ii) neither Seller is subject to any
Order that relates to the business of, or any of the assets owned
or used by, any Acquired Company; and
(iii) to the Knowledge of Seller and
the Acquired Companies, no officer, director, agent, or employee of
any Acquired
