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AMENDED AND RESTATED STOCK EXCHANGE AGREEMENT
 

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Among

SOLAR THIN FILMS, INC.

BUDASOLAR TECHNOLOGIES CO. LTD.

KRAFT ELEKTRONIKAI ZRT
 
NEW PALACE INVESTMENTS LTD.
 
ISTVAN KRAFCSIK
 
and

ATTILA HORVATH

as of April 2, 2008

 
 

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LIST OF EXHIBITS
 

 
Krafcsik Employment Agreement
    A-1  
-
Horvath Employment Agreement
    A-2    
Shareholders Agreement
    B    
Inter-Company Agreement
    C  

 
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AMENDED AND RESTATED STOCK EXCHANGE AGREEMENT
 
THIS AMENDED AND RESTATED STOCK EXCHANGE AGREEMENT (this “Agreement”) is made
and entered into as of 2nd day of April 2009 (the “Effective Date”), by and
among SOLAR THIN FILMS, INC., a Delaware corporation (the “Parent”); KRAFT
ELEKTRONIKAI ZRT, a Hungarian corporation (the “Buyer”); BUDASOLAR TECHNOLOGIES
CO. LTD., a Hungarian corporation (the “Company”); NEW PALACE INVESTMENTS LTD.,
a Cyprus corporation (“New Palace”); ISTVAN KRAFCSIK, an individual (“I.
Krafcsik”); and ATTILA HORVATH, an individual (“A. Horvath”). NPI, I. Krafcsik
and A. Horvath are sometimes individually referred to as a “Company Stockholder”
and collectively, as the “Company Stockholders.”  The Parent, the Buyer, the
Company, and the Company Stockholders are hereinafter sometimes individually
referred to as a “Party” and collectively referred to as the “Parties.”  This
Agreement amends and restates in its entirety a stock exchange agreement dated
as of September 29th 2008 among the Parties (the “Prior Agreement”).
 
Recitals
 
A.            The Company Stockholders currently own of record and beneficially
100% of the outstanding registered capital of the Company (the “Subject Company
Quotas”) as hereinafter defined.
 
B.            The Parent currently owns of record and beneficially 100% of the
outstanding capital stock or share capital of the Buyer (the “Buyer Shares”).
 
C.            Upon the terms and subject to the conditions set forth in this
Agreement, the Buyer desires to acquire from the Company Stockholders the
Subject Company Quotas. Company Stockholders desire to hand over the Subject
Company Quotas for a consideration of receiving 49% of the Buyers Shares on a
fully diluted basis (the “Minority Buyer Equity”).
 
D.            Buyer desires to acquire the Subject Company Quotas, and the
Company desires to hand over such Subject Company Quotas, upon the terms and
subject to the conditions set forth herein.
 
Agreement
 
NOW, THEREFORE, in consideration of the premises and of the mutual covenants
contained herein, the Parties agree as follows:
 
ARTICLE I. – TRANSFER OF SUBJECT COMPANY QUOTAS
 
1.1           Transfer of Subject Company Quotas.
 
(a)     On the terms and subject to the conditions of this Agreement, at the
Closing referred to in Section 3.1 hereof, by signing a Quota Purchase Agreement
with a purchase price of HUF 1.000.000  the Company Stockholders shall convey,
assign, transfer and deliver to Buyer, and Buyer shall  acquire and accept
delivery of the Subject Company Quotas that is the number of quotas of
registered capital of the Company as shall represent one hundred percent (100%)
of the issued and outstanding registered capital of the Company, on a
fully-diluted basis, after giving effect to the exercise of all options,
warrants or other rights to acquire Company registered capital, and all
securities convertible into Company registered capital that is outstanding as of
the Closing Date. The Subject Company Quotas shall be delivered to Buyer by the
Company Stockholders, free and clear of any and all liens, mortgages, adverse
claims, charges, security interests, encumbrances, other restrictions or
limitations, or rights of any third persons whatsoever (collectively, “Liens”).

 
 
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(b)    To effect the transfers contemplated by Section 1.1(a), at the Closing,
the Company Stockholders shall deliver or cause to be delivered to Buyer,
against consideration therefor in accordance with Section 2.2 hereof, evidence
in a form acceptable to Buyer of the transfer from Company Stockholders to Buyer
of the Subject Company Quotas, on the books of the Company.
 
ARTICLE II. EXCHANGE SHARES AND CAPITALIZATION OF BUYER
 
2.1           Exchange Shares.  On the Closing Date, against delivery of
evidence in a form acceptable to Buyer of the transfer from the Company
Stockholders to the Buyer of the Subject Company Quotas on the books of the
Company the Parent shall deliver, transfer and assign to the Company
Stockholders (pro-rata as among each of the Company Stockholders as their
respective interests in the Subject Company Quotas bear to each other, all set
forth on Schedule 2.1 annexed hereto and made a part hereof), that number of
fully paid up shares of capital stock or share capital of the Buyer (the
“Minority Buyer Equity”) as shall represent forty-nine percent (49%) of the
issued and outstanding Buyer’s Shares owned by the Parent, on a fully-diluted
basis, after giving effect to the share capital increase as set forth here below
and the exercise of all options, warrants or other rights to acquire Buyer
capital stock or share capital, and all securities convertible into Buyer
capital stock or share capital that is outstanding as of the Closing Date (the
“Minority Interest).
 
2.2           Capitalization of Parent Loans and Company Stockholder Loans;
Repayment.
 
(a)           Parent Loans.  On or before the Closing Date, the Buyer shall have
a positive stockholders equity or capital of not less than United States One
Thousand Dollars (USD $1,000.00).  In addition, the Parent shall cancel any
outstanding loans and advances made by the Parent to the Buyer prior to the date
of this Agreement (the “Parent Loans”).
 
(b)           Company Stockholder Loans.  On or before the Closing Date, the
Buyer shall takeover and assume the obligation of the repayment of the loans
made by the Company Stockholders or their Affiliates to the Company prior to the
date of this Agreement disclosed by the Company in the Disclosure Letter (the
“Company Stockholder Loans”), so that as at the Closing Date, the Company shall
have either a positive stockholders equity or capital of not less than United
States One Thousand Dollars (USD $1,000.00). Loans shall be evidenced by a five
year note of the Buyer, fully subordinated to all other debt and creditors of
the Buyer and the Company, and bearing interest at an annual rate equal to LIBOR
for twelve month United States dollars interbank deposits as fixed by BBA plus a
margin of three (3) percent (the “Note”). Loans shall be repaid by the Buyer as
follows: (i) on October 1, 2009, the Company shall repay $ 250,000 provided that
there’s a minimum amount of $ 1,600,000 available on the accounts of the
Company. In case such amount is not available on the accounts on October 1,
2009  repayment of this tranche is due whenever the amount is made available on
the accounts; (ii) on January 1, 2010, a further sum of $ 250,000 is repayable
from the available Excess Cash; (iii) the outstanding amount of the Loan is
repayable on January 1, 2011. Parties expressly set forth that the condition of
the repayment of the Loan (or any tranche of the Loan) shall be the availability
of Excess Cash. In case such condition is not met on a due date of repayment as
set forth above the availability of Excess Cash shall be checked quarterly
and  repayment shall take place immediately after such condition met.
 

 
 
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2.3           Increase of Share Capital of Buyer.
 
(a)           In addition to the transactions contemplated by Section 2.2 above,
for no additional consideration, the Parent shall irrevocably increase the
shareholders’ equity and capital of the Buyer prior to Closing (the "Share
Capital Increase") by investing in the Buyer the sum of United States Seven
Hundred Fifty Thousand (USD $750,000) Dollars equivalent in Hungarian Forints
calculated at the then current exchange rate.
 
(i)           Pursuant to the terms of a cooperation agreement, dated as of
September 29, 2008, among the Company, the Parent and the Buyer (the
“Cooperation  Agreement”), the Parent or the Buyer has caused to be paid to the
Company as at the date of this Agreement, the aggregate sum of Seven Hundred and
Fifty Thousand Dollars (USD $750,000).  Such payment shall be deemed to be a
loan by the Buyer to the Company (the “Intercompany Loan”), and shall be repaid
prior to Closing.
 
(b)           On the Closing Date, the Cooperation Agreement shall, by its
terms, terminate and be of no further force or effect.  In addition on the
Closing Date, any debts or other obligations of the Company that are then owed
to the Buyer (other then the above Intercompany Loan) or the Parent shall
terminate.
 
(c)           Notwithstanding anything to the contrary contained herein, in the
event that the Closing shall not have occurred by the close of business (5:00
p.m. New York, New York USA time) on Friday, April 30, 2009, then and in such
event this Agreement shall terminate and the Company shall thereafter continue
to render services to the Buyer under the Interim Agreement until such time as
the aggregate value of the services to be rendered by the Company to the Buyer
(at the rates set forth in the Interim Agreement) shall equal (i) the aggregate
amount of all payments made by the Parent or the Buyer to the Company pursuant
to this Section 2.3 through and including the date of termination of this
Agreement, less (ii) the invoiced value of the services provided by the Company
to the Buyer prior to the termination of this Agreement.

 
 
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ARTICLE III. CLOSING
 
3.1           Closing.  The consummation of the transfer of the Subject Company
Quotas, transfer of the Minority Buyer Equity, consummation of the Investment
and the other transactions contemplated by this Agreement (the “Closing”) will
take place at 10:00 a.m. (local time) on a date to be specified by Buyer, which
shall be no later than the fifth business day after satisfaction or waiver of
the conditions set forth in Article VII of this Agreement (the "Closing Date"),
at the offices of Norr Stiefenhofer Lutz, Budapest, Hungary, counsel to the
Buyer, unless another date, time or place is agreed to in writing by the Parties
hereto.  In no event, however, shall the Closing Date occur after April 30,
2009, unless otherwise mutually agreed upon by the Company Stockholders and the
Buyer or the Parent.
 
3.2           Deliveries by the Company Stockholders.  At or prior to the
Closing, the Company Stockholders shall deliver to Buyer:
 
(i)            Member’s list of the Company representing all, and not less than
all, of the Subject Company Quotas,  with powers, Member’s meeting decisions and
modified Articles of Association appropriate for the transfer of the Subject
Company Quotas attached;
 
(ii)           the minute books of the Company;
 
(iii)          a certificate executed by the Company and the Company
Stockholders to the effect that the conditions set forth in Section 7.1 have
been satisfied;
 
(iv)          possession of all originals and copies of agreements, instruments,
documents, deeds, books, records, files and other data and information within
the possession of the Company and the Company Stockholders or any Affiliate of
the Company Stockholders pertaining to the Company (collectively, the
“Records”); provided, however, that the Company Stockholders may retain (1)
copies of any tax returns and copies of Records relating thereto; (2) copies of
any Records that the Company Stockholders is reasonably likely to need for
complying with requirements of law; and (3) copies of any Records that in the
reasonable opinion of the Company Stockholders will be required in connection
with the performance of their obligations under Article VIII hereof; and
 
(v)           evidence satisfactory to Buyer that Buyer’s designees and the
Company Stockholders shall be the only authorized signatories with respect to
the Company’s various accounts, credit lines, safe deposit boxes or vaults set
forth or required to be set forth in Schedule 4.17.
 
3.3           Deliveries by Buyer and Parent.  At or prior to the Closing, the
Buyer and/or the Parent shall deliver to the Company Stockholders:
 
(i) certificates evidencing the Minority Buyer Equity representing all of the
Minority Interest in the Buyer pursuant to Section 2.1 hereof,

 
 
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(ii)           evidence satisfactory to the Company Stockholders of completion
of the transactions contemplated pursuant to Section 2.2 and 2.3 hereof;
 
(iii)          a certificate executed by an authorized officer of the Buyer or
the Parent, on behalf of the Buyer and the Parent, to the effect that the
conditions set forth in Section 7.2 have been satisfied; and
 
(iv)          modified articles of incorporation of the Buyer in form and
content acceptable to the Parties reflecting the regulations of the Shareholders
Agreement.
 
3.4           Termination in Absence of Closing.
 
(a)   Subject to the provisions of Section 3.4(b) and (c), if the Closing has
not occurred by the close of business on April 30, 2009, then any Party hereto
may thereafter terminate this Agreement by written notice to such effect, to the
other Parties hereto, without liability of or to any Party to this Agreement or
any shareholder, director, officer, employee or representative of such Party
unless the reason for Closing having not occurred is (i) such Party’s willful
breach of the provisions of this Agreement, or (ii) if all of the conditions to
such Party’s obligations set forth in Article VII have been satisfied or waived
in writing by the date scheduled for the Closing pursuant to Section 3.1., the
failure of such Party to perform its obligations under this Article III on such
date; provided, however, that any termination pursuant to this Section 3.4 shall
not relieve any Party hereto who was responsible for Closing having not occurred
as described in clauses (i) or (ii) above of any liability for (x) such Party’s
willful breach of the provisions of this Agreement, or (y) if all of the
conditions to such Party’s obligations set forth in Article VII have been
satisfied or waived in writing by the date scheduled for the Closing pursuant to
Section 3.1, the failure of such Party to perform its obligations under this
Article III on such date.
 
(b)   Notwithstanding the approval of the Board of Directors of Buyer, this
Agreement and the transactions contemplated herein may be terminated and
abandoned at any time on or prior to the Closing Date by the Buyer, if:
 
(i)           any representation or warranty made herein for the benefit of
Buyer, or any certificate, schedule or document furnished to Buyer pursuant to
this Agreement is untrue in any material respect; or
 
(ii)          the Company, the Company Stockholders or any of their Affiliates
shall have defaulted in any material respect in the performance of any material
obligation under this Agreement on their part to be performed.
 
(c)    This Agreement and the transactions contemplated herein may be terminated
and abandoned at any time on or prior to the Closing Date by the Company
Stockholders, if:
 
(i)           any representation or warranty made herein for the benefit of the
Company Stockholders, or any certificate, schedule or document furnished to the
Company Stockholders pursuant to this Agreement is untrue in any material
respect; or

 
 
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(ii)          the Buyer, the Parent or any of their Affiliates shall have
defaulted in any material respect in the performance of any material obligation
under this Agreement on their part to be performed.
 
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
AND THE COMPANY STOCKHOLDERS
 
Each of (A) the Company; and (B) the Company Stockholders do hereby jointly and
severally represent and warrant to the Buyer that:
 
4.1          Corporate Existence and Qualification.  The Company is a
corporation duly organized, validly existing and in good standing under the laws
of Hungary. The Company has the corporate power to own, manage, lease and hold
its Properties and to carry on its business as and where such Properties are
presently located and such business is presently conducted; and the Company is
qualified to do business as a foreign corporation and in good standing in each
jurisdiction in which it is required by law to be so qualified.
 
4.2          Authority, Approval and Enforceability.  This Agreement has been
duly executed and delivered by the Company and the Company Stockholders, and
each of the Company and the Company Stockholders have all requisite power and
legal capacity to execute and deliver this Agreement and all Exhibits executed
and delivered or to be executed and delivered in connection with the
transactions provided for hereby, to consummate the transactions contemplated
hereby and by the Exhibits, and to perform its obligations hereunder and under
the Exhibits.  This Agreement and each Exhibit to which any of the Company
and/or the Company Stockholders is a Party constitutes, or upon execution and
delivery will constitute, the legal, valid and binding obligation of such Party,
enforceable in accordance with its terms, except as such enforcement may be
limited by general equitable principles or by applicable bankruptcy, insolvency,
moratorium, or similar laws and judicial decisions from time to time in effect
which affect creditors’ rights generally.
 
4.3          The Subject Company Quotas and Corporate Records.
 
(a)      The Company’s registered capital is HUF 1.000.000 representing 100% of
the Quota owned by the Company Stockholders in the amounts set forth on Schedule
2.1 annexed hereto and made a part hereof.  The Subject Company Quotas are owned
by the Company Stockholders free and clear of all Liens.  Except for the Subject
Company Quotas, there are no quotas or shares of capital stock or other equity
securities of the Company authorized, issued or outstanding.
 
(b)      All of the outstanding Subject Company Quotas of the Company are duly
authorized, validly issued, fully paid and non-assessable and were not issued in
violation of any: (i) preemptive or other rights of any Person to acquire
securities of the Company, or (ii) applicable securities laws of Hungary, and
the rules and regulations promulgated thereunder (collectively, the “Hungarian
Securities Laws”).  There are no outstanding subscriptions, options, convertible
securities, rights (preemptive or otherwise), warrants, calls or agreements
relating to any of the Subject Company Quotas or other quotas of capital stock
or other securities of the Company.  Upon delivery to Buyer at the Closing of
documents set out in Section 3.2. (i) appropriate to transfer the ownership
of  the Subject Company Quotas,, indicating good and valid title to the Subject
Company Quotas will pass to Buyer, free and clear of all Liens of any kind,
other than those arising from acts of Buyer.

 
 
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(c)      The copies of the Articles of Incorporation and Bylaws of the Company
provided to Buyer are true, accurate, and complete and reflect all amendments
made through the date of this Agreement.  The Company’s minute books and
member’s lists made available to Buyer for review were correct and complete as
of the date of such review, no further entries have been made through the date
of this Agreement, and such minute books contain an accurate record of all
quotaholder and corporate actions of the shareholders and directors (and any
committees thereof) of the Company taken by written consent or at a meeting
since inception.  All corporate actions taken by the Company have been duly
authorized or ratified.  All accounts, books, ledgers and official and other
records of the Company fairly and accurately reflect all of the Company’s
transactions, properties, assets and liabilities.
 
(d)      The Company does not own, directly or indirectly, any outstanding
voting securities of or other interests in any other corporation, partnership,
joint venture or other business entity.
 
4.4          No Defaults or Consents.  Except as otherwise set forth in Schedule
4.4 hereto, the execution and delivery of this Agreement and the Exhibits by
Company Stockholders and the Company and the performance by Company Stockholders
and the Company of their obligations hereunder and there under will not violate
any provision of law or any judgment, award or decree or any indenture,
agreement or other instrument to which the Company Stockholders and/or the
Company is a Party, or by which the properties or assets of the Company
Stockholders or the Company is bound or affected, or conflict with, result in a
breach of or constitute (with due notice or lapse of time or both) a default
under, any such indenture, agreement or other instrument, in each case except to
the extent that such violation, default or breach could not reasonably be
expected to delay or otherwise significantly impair the ability of the Parties
to consummate the transactions contemplated hereby.
 
4.5          No Company Defaults or Consents.  Except as otherwise set forth in
Schedule 4.5 attached hereto, neither the execution and delivery of this
Agreement nor the carrying out of any of the transactions contemplated hereby
will:
 
(i)            violate or conflict with any of the terms, conditions or
provisions of the charter or bylaws of the Company;
 
(ii)           violate any Legal Requirements applicable to the Company;
 
(iii)          violate, conflict with, result in a breach of, constitute a
default under (whether with or without notice or the lapse of time or both), or
accelerate or permit the acceleration of the performance required by, or give
any other Party the right to terminate, any Contract or Permit binding upon or
applicable to the Company;

 
 
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(iv)          result in the creation of any Lien, charge or other encumbrance on
any Properties of the Company; or
 
(v)           require either of the Company Stockholders or the Company to
obtain or make any waiver, consent, action, approval or authorization of, or
registration, declaration, notice or filing with, any private non-governmental
third Party or any Governmental Authority.
 
4.6          No Proceedings.  No suit, action or other proceeding is pending or,
to the Knowledge of the Company and the Company Stockholders, threatened before
any Governmental Authority seeking to restrain the Company or the Company
Stockholders or prohibit their entry into this Agreement or prohibit the
Closing, or seeking damages against the Company or its Properties as a result of
the consummation of this Agreement.
 
4.7          Financial Statements; Liabilities; Accounts Receivable;
Inventories.
 
(a)    The Company has delivered to Buyer true and complete copies of the
unaudited balance sheets of the Company as at December 31, 2007 and as at
December 31, 2008, and the related statements of operations and statements of
cash flows with respect to the Company and its business from the 2007 date of
inception of the Company through December 31, 2007, from January 1, 2008 to
December 31, 2008, and the management prepared balance sheet and statement of
operations as at December 31, 2008 and for the fiscal year then ended
(collectively, the “Financial Statements”).  The said Financial Statements are
attached hereto as Schedule 4.7(a).  All of such Financial Statements present
fairly the financial condition and results of operations of the Company for the
dates or periods indicated thereon.  All of such Financial Statements have been
prepared in accordance with GAAP applied on a consistent basis throughout the
periods indicated.
 
(b)    Except for (i) trade payables and accrued expenses incurred since
inception in the ordinary course of business, none of which are material, (ii)
executory contract obligations under (x) Contracts listed on Schedule 4.12,
and/or (y) Contracts not required to be listed on Schedule 4.12, and (iii) the
liabilities set forth in Schedule 4.7(b) attached hereto, the Company does not
have any liabilities or obligations (whether accrued, absolute, contingent,
known, or otherwise, and whether or not of a nature required to be reflected or
reserved against in a balance sheet in accordance with GAAP).
 
(c)     Except as otherwise set forth in Schedule 4.7(c), the accounts
receivable reflected on the December 31, 2008 balance sheet included in the
Financial Statements referenced in Section 5.8(a) and all of the Company’s
accounts receivable arising since December 31, 2008 (the “Balance Sheet Date”)
arose from bona fide transactions in the ordinary course of business, and the
goods and services involved have been sold, delivered and performed to the
account obligors, and no further filings (with governmental agencies, insurers
or others) are required to be made, no further goods are required to be provided
and no further services are required to be rendered in order to complete the
sales and fully render the services and to entitle the Company to collect the
accounts receivable in full.  Except as set forth in Schedule 4.7(c), no such
account has been assigned or pledged to any other person, firm or corporation,
and no defense or set-off to any such account has been asserted by the account
obligor or exists.

 
 
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(d)      Except as otherwise set forth in Schedule 4.7(d), the Inventory of the
Company as of the Closing Date shall consist of items of a quality, condition
and quantity consistent with normal seasonally-adjusted Inventory levels of the
Company and be usable and saleable in the ordinary and usual course of business
for the purposes for which intended, except to the extent written down or
reserved against on the Closing Date Balance Sheet.  Except as otherwise set
forth in Schedule 4.7(d), the Company’s Inventory is valued on the Company’s
books of account in accordance with GAAP (on an average cost basis) at the lower
of cost or market, and the value of obsolete materials, materials below standard
quality and slow-moving materials have been written down in accordance with
GAAP.
 
(e)      Except as provided under the provisions of the agreements described in
Schedule 4.7(e), the Company has and will have as of the Closing Date legal and
beneficial ownership of its Properties, free and clear of any and all Liens.
 
(f)      By not later than April 30, 2009 or as soon thereafter as is
practicable, the Company Stockholders shall have caused the Company to obtain,
from the independent certified public accountant currently engaged by the Buyer
(i) an audit of the balance sheets of the Company as at December 31, 2007 and
December 31, 2008, and (ii) an audit of the statements of income (loss) and
statement of cash flows of the Company for the following two (2) fiscal periods:
(A) the date of inception through December 31, 2007, and (B) the twelve months
ended December 31, 2008 (collectively, the “Audited Financial
Statements”).  Such Audited Financial Statements shall (i) have been prepared in
accordance with GAAP, (ii) include all footnotes and schedules required under
GAAP, and (ii) be prepared in the same manner as the financial statements of the
Buyer are prepared so as to comply with Regulation S-X, as promulgated under the
United States Securities Act of 1933, as amended.  Unless otherwise agreed to by
the Parties, the auditors regularly engaged to audit the financial statements of
the Buyer shall also prepare and audit the aforesaid Audited Financial
Statements of the Company.
 
4.8          Absence of Certain Changes.
 
(a)           Except as otherwise set forth in Schedule 4.8(a) attached hereto,
since the Balance Sheet Date, there has not been:
 
(i)           any event, circumstance or change that had or might have a
material adverse effect on the business, operations, prospects, Properties,
financial condition or working capital of the Company;
 
(ii)          any damage, destruction or loss (whether or not covered by
insurance) that had or might have a material adverse effect on the business,
operations, prospects, Properties or financial condition of the Company; or

 
 
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(iii)         any material adverse change in the Company’s sales patterns,
pricing policies, accounts receivable or accounts payable.
 
(b)           Except as otherwise set forth in Schedule 4.8(b) attached hereto,
since the Balance Sheet Date, the Company has not done any of the following:
 
(i)           merged into or with or consolidated with, any other corporation or
acquired the business or assets of any Person;
 
(ii)         purchased any securities of any Person;
 
(iii)        created, incurred, assumed, guaranteed or otherwise become liable
or obligated with respect to any indebtedness, or made any loan or advance to,
or any investment in, any person, except in each case in the ordinary course of
business;
 
(iv)        made any change in any existing election, or made any new election,
with respect to any tax law in any jurisdiction which election could have an
effect on the tax treatment of the Company or the Company’s business operations;
 
(v)         entered into, amended or terminated any material agreement;
 
(vi)        sold, transferred, leased, mortgaged, encumbered or otherwise
disposed of, or agreed to sell, transfer, lease, mortgage, encumber or otherwise
dispose of, any Properties except (i) in the ordinary course of business, or
(ii) pursuant to any agreement specified in Schedule 4.12;
 
(vii)       settled any claim or litigation, or filed any motions, orders,
briefs or settlement agreements in any proceeding before any Governmental
Authority or any arbitrator;
 
(viii)      incurred or approved, or entered into any agreement or commitment to
make, any expenditures in excess of USD $25,000 (other than those arising in the
ordinary course of business or those required pursuant to any agreement
specified in Schedule 4.12);
 
(ix)         maintained its books of account other than in the usual, regular
and ordinary manner in accordance with generally accepted accounting principles
and on a basis consistent with prior periods or made any change in any of its
accounting methods or practices that would be required to be disclosed under
generally accepted accounting principles;
 
(x)          adopted any Plan or Benefit Program or Agreement, or granted any
increase in the compensation payable or to become payable to directors, officers
or employees (including, without limitation, any such increase pursuant to any
bonus, profit-sharing or other plan or commitment), other than merit increases
to non-officer employees in the ordinary course of business and consistent with
past practice;

 
 
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(xi)         suffered any extraordinary losses or waived any rights of material
value;
 
(xii)        made any payment to any Affiliate or forgiven any indebtedness due
or owing from any Affiliate to the Company;
 
(xiii)       (A) liquidated Inventory or accepted product returns other than in
the ordinary course, (B) accelerated receivables, (C) delayed payables, or (D)
changed in any material respect the Company’s practices in connection with the
payment of payables and/or the collection of receivables;
 
(xiv)       engaged in any one or more activities or transactions with an
Affiliate or outside the ordinary course of business;
 
(xv)        declared, set aside or paid any dividends, or made any distributions
or other payments in respect of its equity securities, or repurchased, redeemed
or otherwise acquired any such securities;
 
(xvi)       amended its charter or bylaws;
 
(xvii)      issued any capital stock or other securities, or granted, or entered
into any agreement to grant, any options, convertible rights, other rights,
warrants, calls or agreements relating to its capital stock; or
 
(xviii)     committed to do any of the foregoing.
 
4.9         Compliance with Laws.  Except as otherwise set forth in Schedule
4.9, to the best knowledge of the Company the Company is and has been in
compliance in all respects with any and all Legal Requirements applicable to the
Company, other than failures to so comply that would not have an adverse effect
on the business, operations, prospects, Properties or financial condition of the
Company.  Except as otherwise set forth in Schedule 4.9, the Company (x) has not
received or entered into any citations, complaints, consent orders, compliance
schedules, or other similar enforcement orders or received any written notice
from any Governmental Authority or any other written notice that would indicate
that there is not currently compliance with all such Legal Requirements, except
for failures to so comply that would not have an adverse effect on the business,
operations, prospects, Properties or financial condition of the Company, and (y)
to the best knowledge of the Company the Company is not in default under, and no
condition exists (whether covered by insurance or not) that with or without
notice or lapse of time or both would constitute a default under, or breach or
violation of, any Legal Requirement or Permit applicable to the
Company.  Without limiting the generality of the foregoing, the Company has not
received notice of and) to the best knowledge of the Company  there is no basis
for, any claim, action, suit, investigation or proceeding that might result in a
finding that the Company is not or has not been in compliance with Legal
Requirements relating to (a) the development, testing, manufacture, packaging,
distribution and marketing of products, (b) employment, safety and health, (c)
environmental protection, building, zoning and land use and/or (d) the Foreign
Corrupt Practices Act and the rules and regulations promulgated thereunder.

 
 
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4.10        Litigation.  Except as otherwise set forth in Schedule 4.10, there
are no claims, actions, suits, investigations or proceedings against the Company
pending or, to the Knowledge of the Company, threatened in any court or before
or by any Governmental Authority, or before any arbitrator, that might have an
adverse effect (whether covered by insurance or not) on the business,
operations, prospects, Properties or financial condition of the Company and
there is no basis for any such claim, action, suit, investigation or
proceeding.  Schedule 4.10 also includes a true and correct listing of all
material actions, suits, investigations, claims or proceedings that were
pending, settled or adjudicated since inception.
 
4.11        Real Property.
 
(a)  Schedule 4.11(a) sets forth a list of all real property or any interest
therein (including without limitation any option or other right or obligation to
purchase any real property or any interest therein) currently owned, or ever
owned, by the Company, in each case setting forth the street address and legal
description of each property covered thereby (the “Owned Premises”).
 
(b) Schedule 4.11(b) sets forth a list of all leases, licenses or similar
agreements relating to the Company’s use or occupancy of real estate owned by a
third Party (“Leases”), true and correct copies of which have previously been
furnished to Buyer, in each case setting forth (i) the lessor and lessee thereof
and the commencement date, term and renewal rights under each of the Leases, and
(ii) the street address and legal description of each property covered thereby
(the “Leased Premises”).  The Leases and all guaranties with respect thereto,
are in full force and effect and have not been amended in writing or otherwise,
and no Party thereto is in default or breach under any such Lease.  No event has
occurred which, with the passage of time or the giving of notice or both, would
cause a material breach of or default under any of such Leases.  Neither the
Company nor its agents or employees have received written notice of any claimed
abatements, offsets, defenses or other bases for relief or adjustment.
 
(c)  With respect to each Owned Premises and Leased Premises, as
applicable:  (i) the Company has good, marketable and insurable fee simple
interest in the Owned Premises and a valid leasehold interest in the Leased
Premises, free and clear of any Liens, encumbrances, covenants and easements or
title defects that have had or could have an adverse effect on the Company’s use
and occupancy of the Owned Premises and the Leased Premises; (ii) the portions
of the buildings located on the Owned Premises and the Leased Premises that are
used in the business of the Company are each in good repair and condition,
normal wear and tear excepted, and are in the aggregate sufficient to satisfy
the Company’s current and reasonably anticipated normal business activities as
conducted thereon and, to the Knowledge of the Company, there is no latent
material defect in the improvements on any Owned Premises, structural elements
thereof, the mechanical systems (including, without limitation, all heating,
ventilating, air conditioning, plumbing, electrical, utility and sprinkler
systems) therein, the utility system servicing each Owned Premises and the roofs
which have not been disclosed to Buyer in writing prior to the date of this
Agreement; (iii) each of the Owned Premises and the Leased Premises (a) has
direct access to public roads or access to public roads by means of a perpetual
access easement, such access being sufficient to satisfy the current
transportation requirements of the business presently conducted at such parcel;
and (b) is served by all utilities in such quantity and quality as are necessary
and sufficient to satisfy the current normal business activities conducted at
such parcel; and (iv) the Company has not received notice of (a) any
condemnation, eminent domain or similar proceeding affecting any portion of the
Owned Premises or the Leased Premises or any access thereto, and, to the
Knowledge of the Company, no such proceedings are contemplated, (b) any special
assessment or pending improvement liens to be made by any governmental authority
which may affect any of the Owned Premises or the Leased Premises, or  (c) any
violations of building codes and/or zoning ordinances or other governmental
regulations with respect to the Owned Premises or the Leased Premises.

 
 
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4.12        Contracts.
 
(a)    Except as otherwise set forth in Schedule 4.12, the Company is not a
Party to or bound by any of the following, whether written or oral:
 
(i)  any Contract that cannot by its terms be terminated by the Company with 30
days’ or less notice without penalty or whose term continues beyond one year
after the date of this Agreement;
 
(ii)           Contract or commitment for capital expenditures by the Company in
excess of $25,000 per calendar quarter in the aggregate;
 
(iii)           lease or license with respect to any Properties, real or
personal, whether as landlord, tenant, licensor or licensee;
 
(iv)           agreement, Contract, indenture or other instrument relating to
the borrowing of money or the guarantee of any obligation or the deferred
payment of the purchase price of any Properties;
 
(v)           partnership or joint venture agreement;
 
(vi)           Contract or agreement with any Affiliate of the Company
(including the Company Stockholders);
 
(vii)           agreement for the sale of any assets that in the aggregate have
a net book value on the Company’s books of greater than $25,000;
 
(viii)          agreement that purports to limit the Company’s freedom to
compete freely in any line of business or in any geographic area;
 
(ix)           preferential purchase right, right of first refusal, or similar
agreement; or
 
(x)           other Contract that is material to the business of the Company.

 
 
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(b)     All of the Contracts listed or required to be listed in Schedule 4.12
are valid, binding and in full force and effect, and the Company has not been
notified or advised by any Party thereto of such Party’s intention or desire to
terminate or modify any such Contract in any respect, except as disclosed in
Schedule 4.12.  Neither the Company nor, to the Knowledge of the Company, any
other Party is in breach of any of the terms or covenants of any Contract listed
or required to be listed in Schedule 4.12.  Following the Closing, the Company
will continue to be entitled to all of the benefits currently held by the
Company under each Contract listed or required to be listed in Schedule 4.12.
 
(c)     Except as otherwise set forth in Schedule 4.12(c), the Company is not a
Party to or bound by any Contract or Contracts the terms of which were arrived
at by or otherwise reflect less-than-arm’s-length negotiations or bargaining.
 
4.13       Insurance.  Schedule 4.13 hereto is a complete and correct list of
all insurance policies (including, without limitation, fire, liability, product
liability, workers’ compensation and vehicular) presently in effect that relate
to the Company or its Properties, including the amounts of such insurance and
annual premiums with respect thereto, all of which have been in full force and
effect from and after the date(s) set forth on Schedule 4.13. To the Knowledge
of the Company such policies are sufficient for compliance by the Company with
all applicable Legal Requirements and all material Contracts.  None of the
insurance carriers has indicated to the Company an intention to cancel any such
policy or to materially increase any insurance premiums (including, without
limitation, workers’ compensation premiums), or that any insurance required to
be listed on Schedule 4.13 will not be available in the future on substantially
the same terms as currently in effect.  The Company has no claim pending or
anticipated against any of its insurance carriers under any of such policies
and, to the Knowledge of the Company, there has been no actual or alleged
occurrence of any kind which could reasonably be expected to give rise to any
such claim.  During the prior three years, all notices required to have been
given by the Company or the Company Stockholders to any insurance company have
been timely and duly given, and no insurance company has asserted that any claim
is not covered by the applicable policy relating to such claim.

 
 
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4.14       Intangible Rights.  Set forth on Schedule 4.14 is a list and
description of all material foreign and domestic patents, patent rights,
trademarks, service marks, trade names, brands and copyrights (whether or not
registered and, if applicable, including pending applications for registration)
owned, Used, licensed or controlled by the Company and all goodwill associated
therewith.  The Company owns or has the right to use and shall as of the Closing
Date own or have the right to use any and all information, know-how, trade
secrets, patents, copyrights, trademarks, trade names, software, formulae,
methods, processes and other intangible properties that are necessary or
customarily Used by the Company for the ownership, management or operation of
its Properties (“Intangible Rights”) including, but not limited to, the
Intangible Rights listed on Schedule 4.14.  Except as set forth on Schedule
4.14, (i) the Company is the sole and exclusive owner of all right, title and
interest in and to all of the Intangible Rights, and has the exclusive right to
use and license the same, free and clear of any claim or conflict with the
Intangible Rights of others; (ii) no royalties, honorariums or fees are payable
by the Company to any person by reason of the ownership or use of any of the
Intangible Rights; (iii) there have been no claims made against the Company
asserting the invalidity, abuse, misuse, or unenforceability of any of the
Intangible Rights and to the Knowledge of the Company no grounds for any such
claims exist; (iv) the Company has not made any claim of any violation or
infringement by others of any of its Intangible Rights or interests therein and,
to the Knowledge of the Company, no grounds for any such claims exist; (v) the
Company has not received any notice that it is in conflict with or infringing
upon the asserted intellectual property rights of others in connection with the
Intangible Rights, and neither the use of the Intangible Rights nor the
operation of the Company’s businesses is infringing or has infringed upon any
intellectual property rights of others; (vi) the Intangible Rights are
sufficient and include all intellectual property rights necessary for the
Company to lawfully conduct its business as presently being conducted; (vii) no
interest in any of the Company’s Intangible Rights has been assigned,
transferred, licensed or sublicensed by the Company to any person other than the
Buyer pursuant to this Agreement; (viii) to the extent that any item
constituting part of the Intangible Rights has been registered with, filed in or
issued by, any Governmental Authority, such registrations, filings or issuances
are listed on Schedule 4.14 and were duly made and remain in full force and
effect; (ix) to the Knowledge of the Company, there has not been any act or
failure to act by the Company or any of its directors, officers, employees,
attorneys or agents during the prosecution or registration of, or any other
proceeding relating to, any of the Intangible Rights or of any other fact which
could render invalid or unenforceable, or negate the right to issuance of any of
the Intangible Rights; (x) to the extent any of the Intangible Rights
constitutes proprietary or confidential information, the Company has adequately
safeguarded such information from disclosure; and (xi) all of the Company’s
current Intangible Rights will remain in full force and effect following the
Closing without alteration or impairment.
 
4.15       Equipment and Other Tangible Property.  Except as otherwise set forth
on Schedule 4.15, the Company’s equipment, furniture, machinery, vehicles,
structures, fixtures and other tangible property included in the Properties (the
“Tangible Company Properties”), other than Inventory, is suitable for the
purposes for which intended and in good operating condition and repair
consistent with normal industry standards, except for ordinary wear and tear,
and except for such Tangible Company Properties as shall have been taken out of
service on a temporary basis for repairs or replacement consistent with the
Company’s prior practices and normal industry standards.  To the Knowledge of
the Company, the Tangible Company Properties are free of any structural or
engineering defects, and during the past five years there has not been any
significant interruption of the Company’s business due to inadequate maintenance
or obsolescence of the Tangible Company Properties.

 
 
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4.16       Permits; Environmental Matters.
 
(a)     Except as otherwise set forth in Schedule 4.16(a), the Company has all
Permits necessary for the Company to own, operate, use and/or maintain its
Properties and to conduct its business and operations as presently conducted and
as expected to be conducted in the future.  Except as otherwise set forth in
Schedule 4.16(a), all such Permits are in effect, no proceeding is pending or,
to the Knowledge of the Company, threatened to modify, suspend or revoke,
withdraw, terminate, or otherwise limit any such Permits, and no administrative
or governmental actions have been taken or, to the Knowledge of the Company,
threatened in connection with the expiration or renewal of such Permits which
could adversely affect the ability of the Company to own, operate, use or
maintain any of its Properties or to conduct its business and operations as
presently conducted and as expected to be conducted in the future.  Except as
otherwise set forth in Schedule 4.16(a),to the Knowledge of the Company (i) no
violations have occurred that remain uncured, un-waived, or otherwise
unresolved, or are occurring in respect of any such Permits, other than
inconsequential violations, and (ii) no circumstances exist that would prevent
or delay the obtaining of any requisite consent, approval, waiver or other
authorization of the transactions contemplated hereby with respect to such
Permits that by their terms or under applicable law may be obtained only after
Closing.
 
(b)    Except as set forth on Schedule 4.16(b), there are no claims,
liabilities, investigations, litigation, administrative proceedings, whether
pending or, to the Knowledge of the Company, threatened, or judgments or orders
relating to any Hazardous Materials (collectively called “Environmental Claims”)
asserted or threatened against the Company or relating to any real property
currently or formerly owned, leased or otherwise Used by the Company.  Neither
the Company nor, to the Knowledge of the Company, any prior owner, lessee or
operator of said real property, has caused or permitted any Hazardous Material
to be used, generated, reclaimed, transported, released, treated, stored or
disposed of in a manner which could form the basis for an Environmental Claim
against the Company or the Buyer.  Except as set forth on Schedule 4.16(b), the
Company has not assumed any liability of any Person for cleanup, compliance or
required capital expenditures in connection with any Environmental Claim.
 
(c)     Except as set forth on Schedule 4.16(c), to the Knowledge of the Company
no Hazardous Materials are or were stored or otherwise located, and no
underground storage tanks or surface impoundments are or were located, on real
property currently or formerly owned, leased or Used by the Company or, to the
Knowledge of the Company, on adjacent parcels of real property, and no part of
such real property or, to the Knowledge of the Company, any part of such
adjacent parcels of real property, including the groundwater located thereon, is
presently contaminated by Hazardous Materials.
 
(d)     Except as set forth on Schedule 4.16(d), to the Knowledge of the Company
the Company has been and is currently in compliance with all applicable
Environmental Laws, including obtaining and maintaining in effect all Permits
required by applicable Environmental Laws.

 
 
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4.17       Banks.  Schedule 4.17 sets forth (i) the name of each bank, trust
company or other financial institution and stock or other broker with which the
Company has an account, credit line or safe deposit box or vault, (ii) the names
of all persons authorized to draw thereon or to have access to any safe deposit
box or vault, (iii) the purpose of each such account, safe deposit box or vault,
and (iv) the names of all persons authorized by proxies, powers of attorney or
other like instrument to act on behalf of the Company in matters concerning any
of its business or affairs.  Except as otherwise set forth in Schedule 4.17, no
such proxies, powers of attorney or other like instruments are irrevocable.
 
4.18       Suppliers and Customers.  The Company has furnished the Buyer with a
list setting forth (i) the ten principal suppliers of the Company from the date
of its inception through December 31, 2008, together with the dollar amount of
goods purchased by the Company from each such supplier during each such period,
and (ii) the ten principal customers of the Company from the date of its
inception through December 31, 2008, together with the dollar amount of goods
and/or services sold by the Company to each such customer during each such
period.  The Company maintains good relations with all suppliers and customers
as well as with governments, partners, financing sources and other Parties with
whom the Company has significant relations, and no such Party has canceled,
terminated or made any threat to the Company to cancel or otherwise terminate
its relationship with the Company or to materially decrease its services or
supplies to the Company or its direct or indirect purchase or usage of the
products or services of the Company.
 
4.19       Absence of Certain Business Practices.  Neither the Company, the
Company Stockholders nor any other Affiliate or to the Knowledge of the Company
any agent of the Company, or any other person acting on behalf of or associated
with the Company, acting alone or together, has (a) received, directly or
indirectly, any rebates, payments, commissions, promotional allowances or any
other economic benefits  from any customer, supplier, employee or agent of any
customer or supplier which may reasonably effect business decisions; or
(b)  given or agreed to give any money, gift or similar benefit  to any
customer, supplier, employee or agent of any customer or supplier, any official
or employee of any government (domestic or foreign), or any political Party or
candidate for office (domestic or foreign), or other person who was, is or may
be in a position to help or hinder the business of the Company (or assist the
Company in connection with any actual or proposed transaction), in each case
which (i) may subject the Company to any damage or penalty in any civil,
criminal or governmental litigation or proceeding or (ii) if not continued in
the future, may reasonably adversely affect the assets, business, operations or
prospects of the Company.

 
 
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4.20       Products, Services and Authorizations.
 
(a)     Each Product designed, manufactured, repaired or serviced by the Company
has been designed, manufactured, repaired or serviced in accordance with (i) the
specifications under which the Product is normally and has normally been
manufactured, and (ii) to the best Knowledge  of the Company the provisions of
all applicable laws, policies, guidelines and any other governmental
requirements.
 
(b)     Schedule 4.20(b) sets forth (i) a list of all Products which at any time
have been recalled, withdrawn or suspended by the Company, whether voluntarily
or otherwise, including the date recalled, withdrawn or suspended and a brief
description of all completed or pending proceedings seeking the recall,
withdrawal, suspension or seizure of any Product, (ii) a brief description of
all completed or pending proceedings seeking the recall, withdrawal, suspension
or seizure of any Product, and (iii) a list of all regulatory letters received
by the Company or the Company Stockholders or any of its agents relating to the
Company or any of the Products or the Company’s establishments.
 
(c)     There exists no set of facts which could reasonably be expected to
furnish a basis for the recall, withdrawal or suspension of any product
registration, product license, repair or overhaul license, manufacturing
license, wholesale dealers license, export license or other license, approval or
consent of any governmental or regulatory authority with respect to the Company
or any of the Products.
 
(d)     There are no claims existing or to the Knowledge of the Company
threatened under or pursuant to any warranty, whether express or implied, on
products or services sold by the Company.  There are no claims existing and to
the Knowledge of the Company there is no basis for any claim against the Company
for injury to persons, animals or property as a result of the sale, distribution
or manufacture of any product or performance of any service by the Company,
including, but not limited to, claims arising out of the defective or unsafe
nature of its products or services.  The Company has full and adequate insurance
coverage for products liability claims against it.
 
4.21       Transactions With Affiliates.  Except as set forth on Schedule 4.21
and except for normal advances to employees consistent with past practices,
payment of compensation for employment to employees consistent with past
practices, and participation in scheduled Plans or Benefit Programs and
Agreements by employees, the Company has not purchased, acquired or leased any
property or services from, or sold, transferred or leased any property or
services to, or loaned or advanced any money to, or borrowed any money from, or
entered into or been subject to any management, consulting or similar agreement
with, or engaged in any other significant transaction with the Company
Stockholders or any other officer, director or shareholder of the Company or any
of their respective Affiliates.  Except as set forth on Schedule 4.21, neither
the Company Stockholders, nor any other Affiliate of the Company is indebted to
the Company for money borrowed or other loans or advances, and the Company is
not indebted to any such Affiliate.

 
 
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4.22       Other Information.  The information furnished by the Company
Stockholders and the Company to Buyer pursuant to this Agreement (including,
without limitation, information contained in the exhibits hereto, the Schedules
identified herein, the instruments referred to in such Schedules and the
certificates and other documents to be executed or delivered pursuant hereto by
the Company Stockholders and/or the Company at or prior to the Closing) is not,
nor at the Closing will be, false or misleading in any material respect, or
contains, or at the Closing will contain, any misstatement of material fact, or
omits, or at the Closing will omit, to state any material fact required to be
stated in order to make the statements therein not misleading.
 
ARTICLE V. REPRESENTATIONS AND WARRANTIES OF THE PARENT AND
THE BUYER
 
The Parent and the Buyer hereby jointly and severally represents and warrants to
the Company and the Company Stockholders that:
 
5.1         Corporate Existence and Qualification.  The Buyer is a corporation
duly organized, validly existing and in good standing under the laws of Hungary.
The Buyer has the corporate power to own, manage, lease and hold its Properties
and to carry on its business as and where such Properties are presently located
and such business is presently conducted; and the Buyer is qualified to do
business as a foreign corporation and in good standing in each jurisdiction in
which it is required by law to be so qualified.
 
5.2         Authority, Approval and Enforceability.  This Agreement has been
duly executed and delivered by the Parent and the Buyer, and each of the Parent
and the Buyer have all requisite power and legal capacity to execute and deliver
this Agreement and all Exhibits executed and delivered or to be executed and
delivered in connection with the transactions provided for hereby, to consummate
the transactions contemplated hereby and by the Exhibits, and to perform its
obligations hereunder and under the Exhibits.  This Agreement and each Exhibit
to which any of the Parent  and/or the Buyer is a Party constitutes, or upon
execution and delivery will constitute, the legal, valid and binding obligation
of such Party, enforceable in accordance with its terms, except as such
enforcement may be limited by general equitable principles or by applicable
bankruptcy, insolvency, moratorium, or similar laws and judicial decisions from
time to time in effect which affect creditors’ rights generally.

 
 
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5.3         The Buyer Shares and Corporate Records.
 
(a)      The authorized, issued and outstanding shares of capital stock of the
Buyer is set forth on Schedule 5.3 annexed hereto ("the Buyer Shares"). The
Parent is the record and beneficial owner of one hundred (100%) percent of the
issued and outstanding of the Buyer Shares.  The Buyer Shares are owned by the
Parent free and clear of all Liens.  Except for the Buyer Shares, there are no
shares of capital stock or other equity securities of the Buyer authorized,
issued or outstanding.  No ordinary shares of common stock or other capital
shares are held in the Buyer’s treasury.
 
(b)     All of the outstanding Buyer Shares are duly authorized, validly issued,
fully paid and non-assessable and were not issued in violation of any: (i)
preemptive or other rights of any Person to acquire securities of the Buyer, or
(ii) applicable Hungarian Securities Laws.  There are no outstanding
subscriptions, options, convertible securities, rights (preemptive or
otherwise), warrants, calls or agreements relating to any of the Buyer Shares or
other shares of capital stock or other securities of the Buyer.  Upon delivery
to the Company Stockholders at Closing of certificates of Minority Buyer Equity
representing the Minority Interest, accompanied by stock powers duly endorsed in
blank, good and valid title to the Minority Buyer Equity will pass to the
Company Stockholders free and clear of all Liens of any kind, other than those
arising from acts of the Parent or the Buyer.
 
(c)     The copies of the Articles of Incorporation and Bylaws of the Buyer
provided to the Company Stockholders are true, accurate, and complete and
reflect all amendments made through the date of this Agreement.  The Buyer’s
stock and minute books made available to the Company Stockholders for review
were correct and complete as of the date of such review, no further entries have
been made through the date of this Agreement, and such minute books contain an
accurate record of all shareholder and corporate actions of the shareholders and
directors (and any committees thereof) of the Buyer taken by written consent or
at a meeting since inception.  All corporate actions taken by the Buyer have
been duly authorized or ratified.  All accounts, books, ledgers and official and
other records of the Buyer fairly and accurately reflect all of the Buyer’s
transactions, properties, assets and liabilities.
 
(d)     The Buyer does not own, directly or indirectly, any outstanding voting
securities of or other interests in any other corporation, partnership, joint
venture or other business entity.
 
5.4         No Defaults or Consents.  Except as otherwise set forth in Schedule
5.4 hereto, the execution and delivery of this Agreement and the Exhibits by the
Parent and the Buyer and the performance by the Parent and the Buyer of their
obligations hereunder and there under will not violate any provision of law or
any judgment, award or decree or any indenture, agreement or other instrument to
which the Parent and/or the Buyer is a Party, or by which the properties or
assets of the Parent or the Buyer is bound or affected, or conflict with, result
in a breach of or constitute (with due notice or lapse of time or both) a
default under, any such indenture, agreement or other instrument, in each case
except to the extent that such violation, default or breach could not reasonably
be expected to delay or otherwise significantly impair the ability of the
Parties to consummate the transactions contemplated hereby.

 
 
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5.5         No Buyer Defaults or Consents.  Except as otherwise set forth in
Schedule 5.5 attached hereto, neither the execution and delivery of this
Agreement nor the carrying out of any of the transactions contemplated hereby
will:
 
(i)           violate or conflict with any of the terms, conditions or
provisions of the charter or bylaws of the Buyer;
 
(ii)           violate any Legal Requirements applicable to the Buyer;
 
(iii)           violate, conflict with, result in a breach of, constitute a
default under (whether with or without notice or the lapse of time or both), or
accelerate or permit the acceleration of the performance required by, or give
any other Party the right to terminate, any Contract or Permit binding upon or
applicable to the Buyer;
 
(iv)           result in the creation of any Lien, charge or other encumbrance
on any Properties of the Buyer; or
 
(v)           require either of the Parent or the Buyer to obtain or make any
waiver, consent, action, approval or authorization of, or registration,
declaration, notice or filing with, any private non-governmental third Party or
any Governmental Authority.
 
5.6         No Proceedings.  Except as set forth in the Parent’s Public Filings,
no suit, action or other proceeding is pending or, to the Knowledge of the Buyer
and the Parent, threatened before any Governmental Authority seeking to restrain
the Buyer or the Parent or prohibit their entry into this Agreement or prohibit
the Closing, or seeking damages against the Buyer or its Properties as a result
of the consummation of this Agreement.
 
5.7         Financial Statements; Liabilities; Accounts Receivable; Inventories.
 
(a)     Parent has delivered to Company Stockholders (i) the consolidated
audited accounts of the Parent for the fiscal years ended December 31, 2006 and
2007 true and complete copies of the audited balance sheet, statement of
operations and statement of cash flows and (ii) copies of the unaudited balance
sheet, statement of operations and statement of cash flows of the Parent as at
September 30, 2008 and for the nine months then ended (the “Parent Financial
Statements”).
 
(b)     Buyer has delivered to Company Stockholders (i) audited accounts of
Buyer for the fiscal years ended December 31, 2006 and 2007 true and complete
copies of the audited balance sheet, statement of operations and statement of
cash flows and (ii) copies of the unaudited balance sheet, statement of
operations and statement of cash flows of Buyer as at December 31, 2008 and for
the fiscal year period then ended (the “Buyer Financial Statements”) and are
attached hereto as Schedule 5.7(a).  Buyer’s Financial Statements have been
prepared as per U.S. GAAP (as the Parent) and Hungarian accounting standards and
translated to US GAAP applied on a consistent basis throughout the periods
indicated. Such Buyer Financial Statements present fairly the financial
condition and results of operations of the Buyer for the dates or periods
indicated thereon.

 
 
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(c)     Except for (i) security interests and liens on the assets of the Buyer
to secure indebtedness of the Parent and/or the Buyer not to exceed $250,000 in
the aggregate; (ii) trade payables and accrued expenses incurred in the ordinary
course of business, none of which are material, (iii) executory contract
obligations under (x) Contracts listed on Schedule 5.12, and/or (y) Contracts
not required to be listed on Schedule 5.12, (iv) the liabilities set forth in
Schedule 5.7(c) and the (v) the Parent Loan Balance set forth in Schedule 2.2
attached hereto, the Buyer does not have any liabilities or obligations (whether
accrued, absolute, contingent, known or otherwise, and whether or not of a
nature required to be reflected or reserved against in a balance sheet in
accordance with GAAP).  The Parent shall be solely responsible to retire the
aforesaid indebtedness secured by the liens on the assets of the Buyer.
 
(d)     Except as otherwise set forth in Schedule 5.7(d), the accounts
receivable reflected on the December 31, 2008 balance sheet included in the
Buyers Financial Statements referenced in this Section 5.7(a)  and all of the
Buyer’s accounts receivable arising since December 31, 2008 (the “Balance Sheet
Date”) arose from bona fide transactions in the ordinary course of business, and
the goods and services involved have been sold, delivered and performed to the
account obligors, and no further filings (with governmental agencies, insurers
or others) are required to be made, no further goods are required to be provided
and no further services are required to be rendered in order to complete the
sales and fully render the services and to entitle the Buyer to collect the
accounts receivable in full.  Except as set forth in Schedule 5.7(d), no such
account has been assigned or pledged to any other person, firm or corporation,
and no defense or set-off to any such account has been asserted by the account
obligor or exists.
 
(e)     As of the date of Closing the Buyer has either a positive stockholders
equity or capital of not less than United States One Thousand Dollars (USD
$1,000.00) equivalent in Hungarian Forinth calculated at the then current rate
of exchange.
 
(f)     As of the date of Closing the Parent Loan Balance shall (i)
bear  interest calculated at the rate of LIBOR for twelve month United States
dollars interbank deposits as fixed by the BBA plus a margin of 3%, such
interest to be paid annually in arrears (ii) be due and payable as to principal
and any interest accrued on the fifth anniversary of the Closing Date, (iii) not
be convertible into or exchangeable for capital shares of the Buyer, and (iv) be
subject and subordinated to all creditors of the Buyer and its consolidated
Subsidiaries, including the Company.
 
(g)     Except as otherwise set forth in Schedule 5.7(g), the Inventory of the
Buyer as of the Closing Date shall consist of items of a quality, condition and
quantity consistent with normal seasonally-adjusted Inventory levels of the
Buyer and be usable and saleable in the ordinary and usual course of business
for the purposes for which intended, except to the extent written down or
reserved against on the Closing Date Balance Sheet.  Except as otherwise set
forth in Schedule 5.7(g), the Buyer’s Inventory is valued on the Buyer’s books
of account in accordance with GAAP (on an average cost basis) at the lower of
cost or market, and the value of obsolete materials, materials below standard
quality and slow-moving materials have been written down in accordance with
GAAP.

 
 
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(h) Except as provided under the provisions of the agreements described in
Schedule 5.7(h), the Buyer has and will have as of the Closing Date legal and
beneficial ownership of its Properties, free and clear of any and all Liens.
 
5.8         Absence of Certain Changes.
 
(a)    Except as otherwise set forth in Schedule 5.8(a) attached hereto, since
the Balance Sheet Date, there has not been:
 
(i)       any event, circumstance or change that had or might have a material
adverse effect on the business, operations, prospects, Properties, financial
condition or working capital of the Buyer;
 
(ii)      any damage, destruction or loss (whether or not covered by insurance)
that had or might have a material adverse effect on the business, operations,
prospects, Properties or financial condition of the Buyer; or
 
(iii)     any material adverse change in the Buyer’s sales patterns, pricing
policies, accounts receivable or accounts payable.
 
(b) Except as otherwise set forth in Schedule 5.8(b) attached hereto, since the
Balance Sheet Date, the Buyer has not done any of the following:
 
(i)       merged into or with or consolidated with, any other corporation or
acquired the business or assets of any Person;
 
(ii)      purchased any securities of any Person;
 
(iii)     created, incurred, assumed, guaranteed or otherwise become liable or
obligated with respect to any indebtedness, or made any loan or advance to, or
any investment in, any person, except in each case in the ordinary course of
business;
 
(iv)     made any change in any existing election, or made any new election,
with respect to any tax law in any jurisdiction which election could have an
effect on the tax treatment of the Buyer or the Buyer’s business operations;
 
(v)     entered into, amended or terminated any material agreement;
 
(vi)    sold, transferred, leased, mortgaged, encumbered or otherwise disposed
of, or agreed to sell, transfer, lease, mortgage, encumber or otherwise dispose
of, any Properties except (i) in the ordinary course of business, or (ii)
pursuant to any agreement specified in Schedule 5.8(b)(vi);

 
 
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(vii)   settled any claim or litigation, or filed any motions, orders, briefs or
settlement agreements in any proceeding before any court, any Governmental
Authority or any arbitrator;
 
(viii)  incurred or approved, or entered into any agreement or commitment to
make, any expenditures in excess of $5,000 (other than those arising in the
ordinary course of business or those required pursuant to any agreement
specified in Schedule 5.8(b)(viii);
 
(ix)     maintained its books of account other than in the usual, regular and
ordinary manner in accordance with generally accepted accounting principles and
on a basis consistent with prior periods or made any change in any of its
accounting methods or practices that would be required to be disclosed under
generally accepted accounting principles;
 
(x)      adopted any Plan or Benefit Program or Agreement, or granted any
increase in the compensation payable or to become payable to directors, officers
or employees (including, without limitation, any such increase pursuant to any
bonus, profit-sharing or other plan or commitment), other than merit increases
to non-officer employees in the ordinary course of business and consistent with
past practice;
 
(xi)     suffered any extraordinary losses or waived any rights of material
value;
 
(xii)    made any payment to any Affiliate or forgiven any indebtedness due or
owing from any Affiliate to the Buyer;
 
(xiii)   (A) liquidated Inventory or accepted product returns other than in the
ordinary course, (B) accelerated receivables, (C) delayed payables, or (D)
changed in any material respect the Buyer’s practices in connection with the
payment of payables and/or the collection of receivables;
 
(xiv)   engaged in any one or more activities or transactions with an Affiliate
or outside the ordinary course of business;
 
(xv)    declared, set aside or paid any dividends, or made any distributions or
other payments in respect of its equity securities, or repurchased, redeemed or
otherwise acquired any such securities;
 
(xvi)   amended its charter or bylaws;
 
(xvii)  issued any capital stock or other securities, or granted, or entered
into any agreement to grant, any options, convertible rights, other rights,
warrants, calls or agreements relating to its capital stock; or
 
(xviii) committed to do any of the foregoing.

 
 
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5.9         Compliance with Laws.  Except as otherwise set forth in Schedule
5.9, the Parent and the Buyer is and has been in compliance in all respects with
any and all Legal Requirements applicable to the Buyer, other than failures to
so comply that would not have an adverse effect on the business, operations,
prospects, Properties or financial condition of the Buyer.  Except as otherwise
set forth in Schedule 5.9, the Buyer (x) has not received or entered into any
citations, complaints, consent orders, compliance schedules, or other similar
enforcement orders or received any written notice from any Governmental
Authority or any other written notice that would indicate that there is not
currently compliance with all such Legal Requirements, except for failures to so
comply that would not have an adverse effect on the business, operations,
prospects, Properties or financial condition of the Buyer, and (y) is not in
default under, and no condition exists (whether covered by insurance or not)
that with or without notice or lapse of time or both would constitute a default
under, or breach or violation of, any Legal Requirement or Permit applicable to
the Buyer.  Without limiting the generality of the foregoing, the Buyer has not
received notice of and there is no basis for, any claim, action, suit,
investigation or proceeding that might result in a finding that the Buyer is not
or has not been in compliance with Legal Requirements relating to (a) the
development, testing, manufacture, packaging, distribution and marketing of
products, (b) employment, safety and health, (c) environmental protection,
building, zoning and land use and/or (d) the Foreign Corrupt Practices Act and
the rules and regulations promulgated there under.
 
5.10       Litigation.  Except as otherwise set forth in Schedule 5.10, there
are no claims, actions, suits, investigations or proceedings against the Buyer
pending or, to the Knowledge of the Parent and the Buyer, threatened in any
court or before or by any Governmental Authority, or before any arbitrator, that
might have an adverse effect (whether covered by insurance or not) on the
business, operations, prospects, Properties or financial condition of the Parent
and / or the Buyer and there is no basis for any such claim, action, suit,
investigation or proceeding.  Schedule 5.10 also includes a true and correct
listing of all material actions, suits, investigations, claims or proceedings
that were pending, settled or adjudicated during the past three financial years
and up to the date of Closing.
 
5.11       Real Property.
 
(a)           Schedule 5.11(a) sets forth a list of all real property or any
interest therein (including without limitation any option or other right or
obligation to purchase any real property or any interest therein) currently
owned, or ever owned, by the Buyer, in each case setting forth the street
address and legal description of each property covered thereby (the “Owned
Premises”).
 
(b)           Schedule 5.11(b) sets forth a list of all leases, licenses or
similar agreements relating to the Buyer’s use or occupancy of real estate owned
by a third Party (“Leases”), true and correct copies of which have previously
been furnished to Buyer, in each case setting forth (i) the lessor and lessee
thereof and the commencement date, term and renewal rights under each of the
Leases, and (ii) the street address and legal description of each property
covered thereby (the “Leased Premises”).  The Leases and all guaranties with
respect thereto, are in full force and effect and have not been amended in
writing or otherwise, and no Party thereto is in default or breach under any
such Lease.  No event has occurred which, with the passage of time or the giving
of notice or both, would cause a material breach of or default under any of such
Leases.  Neither the Buyer nor its agents or employees have received written
notice of any claimed abatements, offsets, defenses or other bases for relief or
adjustment.

 
 
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(c)           With respect to each Owned Premises and Leased Premises, as
applicable:  (i) the Buyer has good, marketable and insurable free simple
interest in the Owned Premises and a valid leasehold interest in the Leased
Premises, free and clear of any Liens, encumbrances, covenants and easements or
title defects that have had or could have an adverse effect on the Buyer’s use
and occupancy of the Owned Premises and the Leased Premises; (ii) the portions
of the buildings located on the Owned Premises and the Leased Premises that are
used in the business of the Buyer are each in good repair and condition, normal
wear and tear excepted, and are in the aggregate sufficient to satisfy the
Buyer’s current and reasonably anticipated normal business activities as
conducted thereon and, to the Knowledge of the Buyer, there is no latent
material defect in the improvements on any Owned Premises, structural elements
thereof, the mechanical systems (including, without limitation, all heating,
ventilating, air conditioning, plumbing, electrical, utility and sprinkler
systems) therein, the utility system servicing each Owned Premises and the roofs
which have not been disclosed to Buyer in writing prior to the date of this
Agreement; (iii) each of the Owned Premises and the Leased Premises (a) has
direct access to public roads or access to public roads by means of a perpetual
access easement, such access being sufficient to satisfy the current
transportation requirements of the business presently conducted at such parcel;
and (b) is served by all utilities in such quantity and quality as are necessary
and sufficient to satisfy the current normal business activities conducted at
such parcel; and (iv) the Buyer has not received notice of (a) any condemnation,
eminent domain or similar proceeding affecting any portion of the Owned Premises
or the Leased Premises or any access thereto, and, to the Knowledge of the
Buyer, no such proceedings are contemplated, (b) any special assessment or
pending improvement liens to be made by any governmental authority which may
affect any of the Owned Premises or the Leased Premises, or  (c) any violations
of building codes and/or zoning ordinances or other governmental regulations
with respect to the Owned Premises or the Leased Premises.
 
5.12       Contracts.
 
(a)        Except as otherwise set forth in Schedule 5.12, the Buyer is not a
Party to or bound by any of the following, whether written or oral:
 
(i)             any Contract that cannot by its terms be terminated by the Buyer
with 30 days’ or less notice without penalty or whose term continues beyond one
year after the date of this Agreement;
 
(ii)           Contract or commitment for capital expenditures by the Buyer in
excess of $25,000 per calendar quarter in the aggregate;
 
(iii)           lease or license with respect to any Properties, real or
personal, whether as landlord, tenant, licensor or licensee;

 
 
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(iv)           agreement, contract, indenture or other instrument relating to
the borrowing of money or the guarantee of any obligation or the deferred
payment of the purchase price of any Properties;
 
(v)           partnership agreement;
 
(vi)          contract with any Affiliate of the Buyer (including the Parent);
 
(vii)         agreement for the sale of any assets that in the aggregate have a
net book value on the Buyer’s books of greater than $25,000;
 
(viii)        agreement that purports to limit the Buyer’s freedom to compete
freely in any line of business or in any geographic area;
 
(ix)           preferential purchase right, right of first refusal, or similar
agreement; or
 
(x)            other Contract that is material to the business of the Buyer.
 
(b)     All of the Contracts listed or required to be listed in Schedule 5.12
are valid, binding and in full force and effect, and the Buyer has not been
notified or advised by any Party thereto of such Party’s intention or desire to
terminate or modify any such Contract in any respect, except as disclosed in
Schedule 5.12.  Neither the Buyer nor, to the Knowledge of the Buyer, any other
Party is in breach of any of the terms or covenants of any Contract listed or
required to be listed in Schedule 5.12.  Following the Closing, the Buyer will
continue to be entitled to all of the benefits currently held by the Buyer under
each Contract listed or required to be listed in Schedule 5.12.
 
(c)     Except as otherwise set forth in Schedule 5.12(c), the Buyer is not a
Party to or bound by any Contract or Contracts the terms of which were arrived
at by or otherwise reflect less-than-arm’s-length negotiations or bargaining.
 
5.13       Insurance.  Schedule 5.13 hereto is a complete and correct list of
all insurance policies (including, without limitation, fire, liability, product
liability, workers’ compensation and vehicular) presently in effect that relate
to the Buyer or its Properties, including the amounts of such insurance and
annual premiums with respect thereto, all of which have been in full force and
effect from and after the date(s) set forth on Schedule 5.13.  Such policies are
sufficient for compliance by the Buyer with all applicable Legal Requirements
and all material Contracts.  None of the insurance carriers has indicated to the
Buyer an intention to cancel any such policy or to materially increase any
insurance premiums (including, without limitation, workers’ compensation
premiums), or that any insurance required to be listed on Schedule 5.13 will not
be available in the future on substantially the same terms as currently in
effect.  The Buyer has no claim pending or anticipated against any of its
insurance carriers under any of such policies and, to the Knowledge of the
Buyer, there has been no actual or alleged occurrence of any kind which could
reasonably be expected to give rise to any such claim.  During the prior three
years, all notices required to have been given by the Buyer or the Parent to any
insurance Buyer have been timely and duly given, and no insurance Buyer has
asserted that any claim is not covered by the applicable policy relating to such
claim.

 
 
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5.14       Intangible Rights.  Set forth on Schedule 5.14 is a list and
description of all material foreign and domestic patents, patent rights,
trademarks, service marks, trade names, brands and copyrights (whether or not
registered and, if applicable, including pending applications for registration)
owned, Used, licensed or controlled by the Buyer and all goodwill associated
therewith.  The Buyer owns or has the right to use and shall as of the Closing
Date own or have the right to use any and all information, know-how, trade
secrets, patents, copyrights, trademarks, trade names, software, formulae,
methods, processes and other intangible properties that are necessary or
customarily Used by the Buyer for the ownership, management or operation of its
Properties (“Intangible Rights”) including, but not limited to, the Intangible
Rights listed on Schedule 5.14.  Except as set forth on Schedule 5.14(i) the
Buyer is the sole and exclusive owner of all right, title and interest in and to
all of the Intangible Rights, and has the exclusive right to use and license the
same, free and clear of any claim or conflict with the Intangible Rights of
others; (ii) no royalties, honorariums or fees are payable by the Buyer to any
person by reason of the ownership or use of any of the Intangible Rights; (iii)
there have been no claims made against the Buyer asserting the invalidity,
abuse, misuse, or unenforceability of any of the Intangible Rights and no
grounds for any such claims exist; (iv) the Buyer has not made any claim of any
violation or infringement by others of any of its Intangible Rights or interests
therein and, to the Knowledge of the Buyer, no grounds for any such claims
exist; (v) the Buyer has not received any notice that it is in conflict with or
infringing upon the asserted intellectual property rights of others in
connection with the Intangible Rights, and neither the use of the Intangible
Rights nor the operation of the Buyer’s businesses is infringing or has
infringed upon any intellectual property rights of others; (vi) the Intangible
Rights are sufficient and include all intellectual property rights necessary for
the Buyer to lawfully conduct its business as presently being conducted; (vii)
no interest in any of the Buyer’s Intangible Rights has been assigned,
transferred, licensed or sublicensed by the Buyer to any person other than the
Buyer pursuant to this Agreement; (viii) to the extent that any item
constituting part of the Intangible Rights has been registered with, filed in or
issued by, any Governmental Authority, such registrations, filings or issuances
are listed on Schedule 5.14 and were duly made and remain in full force and
effect; (ix) to the Knowledge of the Buyer, there has not been any act or
failure to act by the Buyer or any of its directors, officers, employees,
attorneys or agents during the prosecution or registration of, or any other
proceeding relating to, any of the Intangible Rights or of any other fact which
could render invalid or unenforceable, or negate the right to issuance of any of
the Intangible Rights; (x) to the extent any of the Intangible Rights
constitutes proprietary or confidential information, the Buyer has adequately
safeguarded such information from disclosure; and (xi) all of the Buyer’s
current Intangible Rights will remain in full force and effect following the
Closing without alteration or impairment.
 
5.15              Equipment and Other Tangible Property.  Except as otherwise
set forth on Schedule 5.15, the Buyer’s equipment, furniture, machinery,
vehicles, structures, fixtures and other tangible property included in the
Properties (the “Tangible Buyer Properties”), other than Inventory, is suitable
for the purposes for which intended and in good operating condition and repair
consistent with normal industry standards, except for ordinary wear and tear,
and except for such Tangible Buyer Properties as shall have been taken out of
service on a temporary basis for repairs or replacement consistent with the
Buyer’s prior practices and normal industry standards.  To the Knowledge of the
Buyer, the Tangible Buyer Properties are free of any structural or engineering
defects, and during the past five years there has not been any significant
interruption of the Buyer’s business due to inadequate maintenance or
obsolescence of the Tangible Buyer Properties.

 
 
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5.16        Permits; Environmental Matters.
 
(a)     Except as otherwise set forth in Schedule 5.16(a), the Buyer has all
Permits necessary for the Buyer to own, operate, use and/or maintain its
Properties and to conduct its business and operations as presently conducted and
as expected to be conducted in the future.  Except as otherwise set forth in
Schedule 5.16(a) , all such Permits are in effect, no proceeding is pending or,
to the Knowledge of the Buyer, threatened to modify, suspend or revoke,
withdraw, terminate, or otherwise limit any such Permits, and no administrative
or governmental actions have been taken or, to the Knowledge of the Buyer,
threatened in connection with the expiration or renewal of such Permits which
could adversely affect the ability of the Buyer to own, operate, use or maintain
any of its Properties or to conduct its business and operations as presently
conducted and as expected to be conducted in the future.  Except as otherwise
set forth in Schedule 5.16(a)(i) no violations have occurred that remain
uncured, un-waived, or otherwise unresolved, or are occurring in respect of any
such Permits, other than inconsequential violations, and (ii) no circumstances
exist that would prevent or delay the obtaining of any requisite consent,
approval, waiver or other authorization of the transactions contemplated hereby
with respect to such Permits that by their terms or under applicable law may be
obtained only after Closing.
 
(b)     Except as set forth on Schedule 5.16(b), there are no claims,
liabilities, investigations, litigation, administrative proceedings, whether
pending or, to the Knowledge of the Buyer, threatened, or judgments or orders
relating to any Hazardous Materials (collectively called “Environmental Claims”)
asserted or threatened against the Buyer or relating to any real property
currently or formerly owned, leased or otherwise Used by the Buyer.  Neither the
Buyer nor, to the Knowledge of the Buyer, any prior owner, lessee or operator of
said real property, has caused or permitted any Hazardous Material to be used,
generated, reclaimed, transported, released, treated, stored or disposed of in a
manner which could form the basis for an Environmental Claim against the Buyer
or the Buyer.  Except as set forth on Schedule 5.16(b), the Buyer has not
assumed any liability of any Person for cleanup, compliance or required capital
expenditures in connection with any Environmental Claim.
 
(c)     Except as set forth on Schedule 5.16(c), no Hazardous Materials are or
were stored or otherwise located, and no underground storage tanks or surface
impoundments are or were located, on real property currently or formerly owned,
leased or used by the Buyer or, to the Knowledge of the Buyer, on adjacent
parcels of real property, and no part of such real property or, to the Knowledge
of the Buyer, any part of such adjacent parcels of real property, including the
groundwater located thereon, is presently contaminated by Hazardous Materials.

 
 
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(d)     Except as set forth on Schedule 5.16(d), the Buyer has been and is
currently in compliance with all applicable Environmental Laws, including
obtaining and maintaining in effect all Permits required by applicable
Environmental Laws.
 
5.17       Banks.  Schedule 5.17 sets forth (i) the name of each bank, trust
Buyer or other financial institution and stock or other broker with which the
Buyer has an account, credit line or safe deposit box or vault, (ii) the names
of all persons authorized to draw thereon or to have access to any safe deposit
box or vault, (iii) the purpose of each such account, safe deposit box or vault,
and (iv) the names of all persons authorized by proxies, powers of attorney or
other like instrument to act on behalf of the Buyer in matters concerning any of
its business or affairs.  Except as otherwise set forth in Schedule 5.17, no
such proxies, powers of attorney or other like instruments are irrevocable.
 
5.18       Suppliers and Customers.  Schedule 5.18 sets forth (i) the ten
principal suppliers of the Buyer from in the year 2007 and 2008 through December
31, 2008, together with the dollar amount of goods purchased by the Buyer from
each such supplier during each such period, and (ii) the ten principal customers
of the Buyer in the year 2007 and 2008 through December 31, 2008, together with
the dollar amount of goods and/or services sold by the Buyer to each such
customer during each such period.  Except as otherwise set forth in Schedule
5.18, the Buyer maintains good relations with all suppliers and customers listed
or required to be listed in Schedule 5.18 as well as with governments, partners,
financing sources and other Parties with whom the Buyer has significant
relations, and no such Party has canceled, terminated or made any threat to the
Buyer to cancel or otherwise terminate its relationship with the Buyer or to
materially decrease its services or supplies to the Buyer or its direct or
indirect purchase or usage of the products or services of the Buyer.
 
5.19       Absence of Certain Business Practices.  Neither the Buyer, the Parent
nor any other Affiliate or agent of the Buyer, or any other person acting on
behalf of or associated with the Buyer, acting alone or together, has (a)
received, directly or indirectly, any rebates, payments, commissions,
promotional allowances or any other economic benefits, regardless of their
nature or type, from any customer, supplier, employee or agent of any customer
or supplier; or (b) directly or indirectly given or agreed to give any money,
gift or similar benefit to any customer, supplier, employee or agent of any
customer or supplier, any official or employee of any government (domestic or
foreign), or any political Party or candidate for office (domestic or foreign),
or other person who was, is or may be in a position to help or hinder the
business of the Buyer (or assist the Buyer in connection with any actual or
proposed transaction), in each case which (i) may expose the Buyer to any damage
or penalty in any civil, criminal or governmental litigation or proceeding, (ii)
if not given in the past, may have had an adverse effect on the assets,
business, operations or prospects of the Buyer, or (iii) if not continued in the
future, may adversely affect the assets, business, operations or prospects of
the Buyer.
 
5.20       Products, Services and Authorizations.
 
(a)        Each Product designed, manufactured, repaired or serviced by the
Buyer has been designed, manufactured, repaired or serviced in accordance with
(i) the specifications under which the Product is normally and has normally been
manufactured, and (ii) the provisions of all applicable laws, policies,
guidelines and any other governmental requirements.
 

 
 
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(b)        Schedule 5.20(b) sets forth (i) a list of all Products which at any
time have been recalled, withdrawn or suspended by the Buyer, whether
voluntarily or otherwise, including the date recalled, withdrawn or suspended
and a brief description of all completed or pending proceedings seeking the
recall, withdrawal, suspension or seizure of any Product, (ii) a brief
description of all completed or pending proceedings seeking the recall,
withdrawal, suspension or seizure of any Product, and (iii) a list of all
regulatory letters received by the Buyer or the Parent or any of its agents
relating to the Buyer or any of the Products or the Buyer’s establishments.
 
(c)        There exists no set of facts which could reasonably be expected to
furnish a basis for the recall, withdrawal or suspension of any product
registration, product license, repair or overhaul license, manufacturing
license, wholesale dealers license, export license or other license, approval or
consent of any governmental or regulatory authority with respect to the Buyer or
any of the Products.
 
(d)        There are no claims existing or threatened under or pursuant to any
warranty, whether express or implied, on products or services sold by the
Buyer.  There are no claims existing and there is no basis for any claim against
the Buyer for injury to persons, animals or property as a result of the sale,
distribution or manufacture of any product or performance of any service by the
Buyer, including, but not limited to, claims arising out of the defective or
unsafe nature of its products or services.  The Buyer has full and adequate
insurance coverage for products liability claims against it.
 
5.21        Transactions With Affiliates.  Except as set forth on Schedule 5.21
and except for normal advances to employees consistent with past practices,
payment of compensation for employment to employees consistent with past
practices, and participation in scheduled Plans or Benefit Programs and
Agreements by employees, the Buyer has not purchased, acquired or leased any
property or services from, or sold, transferred or leased any property or
services to, or loaned or advanced any money to, or borrowed any money from, or
entered into or been party to any management, consulting or similar agreement
with, or engaged in any other significant transaction with the Parent or any
other officer, director of the Buyer or any of their respective
Affiliates.  Except as set forth on Schedule 5.21, neither the Parent, nor any
other Affiliate of the Buyer is indebted to the Buyer for money borrowed or
other loans or advances, and the Buyer is not indebted to any such Affiliate.
 
5.22        Other Information.  The information furnished by the Parent and the
Buyer to the Company and the Company Stockholders pursuant to this Agreement
(including, without limitation, information contained in the exhibits hereto,
the Schedules identified herein, the instruments referred to in such Schedules
and the certificates and other documents to be executed or delivered pursuant
hereto by the Parent and/or the Buyer at or prior to the Closing) is not, nor at
the Closing will be, false or misleading in any material respect, or contains,
or at the Closing will contain, any misstatement of material fact, or omits, or
at the Closing will omit, to state any material fact required to be stated in
order to make the statements therein not misleading.

 
 
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Notwithstanding anything to the contrary contained in this Article V, the Parent
and the Buyer shall be deemed to have made adequate disclosure to the Company
and the Company Stockholders with respect to any item required to be listed on a
Schedule set forth in this Article V, if such information is contained in the
Parent Public Filings which have been furnished to the Company Stockholders and
their legal representatives.
 
ARTICLE VI. COVENANTS AND AGREEMENTS OF THE PARTIES
 
A.)          With regard to the Company and the Company Stockholders the Company
and the Company Stockholders hereto do hereby covenant and agree, as follows:
 
6.1          Buyer’s Access to Information and Properties.  The Company
Stockholders and the Company shall permit Buyer and its authorized employees,
agents, accountants, legal counsel and other representatives to have access to
the books, records, employees, counsel, accountants, engineers and other
representatives of the Company at all times reasonably requested by Buyer for
the purpose of conducting an investigation of the Company’s financial condition,
corporate status, operations, prospects, business and Properties.  The Company
shall make available to Buyer for examination and reproduction all documents and
data of every kind and character relating to the Company in possession or
control of, or subject to reasonable access by, the Company and/or the Company
Stockholders, including, without limitation, all files, records, data and
information relating to the Properties (whether stored in paper, magnetic or
other storage media) and all agreements, instruments, contracts, assignments,
certificates, orders, and amendments thereto.  Also, the Company shall allow
Buyer access to, and the right to inspect, the Properties, except to the extent
that such Properties are operated by a third-Party operator, in which case the
Company shall use its best efforts to cause the operator of such Properties to
allow Buyer access to, and the right to inspect, such Properties.
 
6.2          Company’s Conduct of Business and Operations.  The Company
Stockholders shall keep Buyer advised as to all material operations and proposed
material operations relating to the Company.  The Company shall (a) conduct its
business in the ordinary course, (b) keep available the services of present
employees, (c) maintain and operate its Properties in a good and workmanlike
manner, (d) pay or cause to be paid all costs and expenses (including but not
limited to insurance premiums) incurred in connection therewith in a timely
manner, (e) use reasonable efforts to keep all Contracts listed or required to
be listed on Schedule 4.13 in full force and effect, (f) comply with all of the
covenants contained in all such material Contracts, (g) maintain in force until
the Closing Date insurance policies equivalent to those in effect on the date
hereof, and (h) comply in all material respects with all applicable Legal
Requirements.  Except as otherwise contemplated in this Agreement, the Company
will use its best efforts to preserve the present relationships of the Company
with persons having significant business relations therewith.
 
6.3          General Restrictions.  Except as otherwise expressly permitted in
this Agreement, between the date of this Agreement and the Closing Date, without
the prior written consent of Buyer, which consent shall not be unreasonably
withheld, the Company shall not do any of the following, and the Company
Stockholders shall not permit the Company to do any of the following:
 
 

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(i)           declare, set aside or pay any dividends, or make any distributions
or other payments in respect of its equity securities, or repurchase, redeem or
otherwise acquire any such securities;
 
(ii)           merge into or with or consolidate with, any other corporation or
acquire the business or assets of any person;
 
(iii)          purchase any securities of any person;
 
(iv)          amend its charter or bylaws (unless otherwise required by the
present agreement);
 
(v)           issue any capital stock or other securities, or grant, or enter
into any agreement to grant, any options, convertibility rights, other rights,
warrants, calls or agreements relating to its securities;
 
(vi)          create, incur, assume, guarantee or otherwise become liable or
obligated with respect to any indebtedness, or make any loan or advance to, or
any investment in, any person, except in each case in the ordinary course of
business;
 
(vii)         make any change in any existing election, or make any new
election, with respect to any tax law in any jurisdiction which election could
have an effect on the tax treatment of the Company or the Company’s business
operations;
 
(viii)       enter into, amend or terminate any material agreement except in the
ordinary course of business consistent with past business practices;
 
(ix)          sell, transfer, lease, mortgage, encumber or otherwise dispose of,
or agree to sell, transfer, lease, mortgage, encumber or otherwise dispose of,
any Properties except (i) in the ordinary course of business, or (ii) pursuant
to any agreement specified in Schedule 4.13;
 
(x)           settle any material claim or litigation, or file any material
motions, orders, briefs or settlement agreements in any proceeding before any
Governmental Authority or any arbitrator;
 
(xi)          other than in the ordinary course of business consistent with past
practices, incur or approve, or enter into any agreement or commitment to make,
any expenditures in excess of $50,000 (other than those required pursuant to any
agreement specified in Schedule 4.13);
 
(xii)         maintain its books of account other than in the usual, regular and
ordinary manner in accordance with generally accepted accounting principles and
on a basis consistent with prior periods or make any change in any of its
accounting methods or practices;

 
 
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(xiii)        make any change, whether written or oral, to any agreement or
understanding with any of the suppliers or customers listed except in the
ordinary course of business consistent with past business practices; or required
to be listed on Schedule 4.19;
 
(xiv)        accelerate or delay collection of any notes or accounts receivable
in advance of or beyond their regular due dates or the dates when they would
have been collected in the ordinary course of business consistent with past
practices;
 
(xv)         delay or accelerate payment of any accrued expense, trade payable
or other liability beyond or in advance of its due date or the date when such
liability would have been paid in the ordinary course of business consistent
with past practices;
 
(xvi)        allow its levels of inventory to vary in any material respect from
the levels customarily maintained;
 
(xvii)       adopt any Plan or Benefit Program or Agreement or increase the
compensation payable to any employee (including, without limitation, any
increase pursuant to any bonus, profit-sharing or other incentive plan or
commitment);
 
(xviii)      become a Party to or bound by any of the arrangements described in
Section 4.13(a), whether written or oral;
 
(xix)         engage in any one or more activities or transactions outside the
ordinary course of business;
 
(xx)          enter into any transaction or make any commitment which could
result in any of the representations, warranties or covenants of the Company
and/or Company Stockholders contained in this Agreement not being true and
correct after the occurrence of such transaction or event; or
 
(xxi)         commit to do any of the foregoing.
 
6.4          Notice Regarding Changes.  The Company Stockholders shall promptly
inform Buyer in writing of any change in facts and circumstances that could
render any of the representations and warranties made herein by the Company
and/or the Company Stockholders inaccurate or misleading if such representations
and warranties had been made upon the occurrence of the fact or circumstance in
question.  The Buyer shall promptly inform the Company Stockholders in writing
of any change in facts and circumstances that could render any of the
representations and warranties made herein by it inaccurate or misleading if
such representations and warranties had been made upon the occurrence of the
fact or circumstance in question.
 
6.5          Maintenance of Insurance Policies.  The Company shall take all
actions necessary or appropriate to cause any and all insurance coverage
currently carried by or for the benefit of the Company to remain in full force
and effect.

 
 
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6.6          Casualty Loss.  If, between the date of this Agreement and the
Closing, any of the Properties of the Company shall be destroyed or damaged in
whole or in part by fire, earthquake, flood, other casualty or any other cause,
then the Company shall, at Buyer’s election, (i) cause such Properties to be
repaired or replaced prior to the Closing with Properties of substantially the
same condition and function, , or (ii) enter into contractual arrangements
satisfactory to Buyer so that the Company will have at the Closing the same
economic value as if such casualty had not occurred.
 
6.7          Employee Matters.
 
(a)        The Company shall permit Buyer to contact and make arrangements with
the Company’s employees for the purpose of assuring their continued employment
by the Company after the Closing and for the purpose of ensuring the continuity
of the Company’s business, and the Company agrees not to discourage any such
employees from consulting with Buyer.
 
(b)        The Company shall use its best efforts to keep available the services
of its present employees through the Closing Date.
 
(c)         On or before the Closing Date, the Company Stockholders, the Buyer
and the Company shall have established an employee bonus and/or equity incentive
program for key employees of the Company (other than the Company Stockholders)
that shall be acceptable to the Parties hereto.
 
6.8          No Shop.  From the date of this Agreement until the earlier of (i)
the Closing Date, or (ii) the termination of this Agreement, the Company shall
not, and the Company Stockholders shall not cause the Company’s officers,
directors, employees and other agents to, directly or indirectly, take any
action to solicit, initiate or encourage any offer or proposal or indication of
interest in a merger, consolidation or other business combination involving any
equity interest in, or a substantial portion of the assets of the Company, other
than in connection with the transactions contemplated by this Agreement.  The
Company shall immediately advise the Buyer of the terms of any offer, proposal
or indication of interest that it receives or otherwise becomes aware of.
 
6.9          Employment Agreements. On the Closing Date (a) the Buyer shall
enter into an employment agreement with I. Krafcsik, substantially in the form
of Exhibit A-1 annexed hereto and made a part hereof, and (b) the Buyer shall
enter into an employment agreement with A. Horvath, substantially in the form of
Exhibit A-2 annexed hereto and made a part hereof (the “Employment Agreements”).
 
6.10        Legal Opinions.   On the Closing Date, the Company shall furnish to
the Buyer, in form and content satisfactory to Buyer and its counsel, the
favorable legal opinion of Dr. David Aliz, Dessewffy David, Esqs., legal counsel
to the Company and the Company Stockholders, with respect to the matters set
forth in Section 4.1 through Section 4.4 of this Agreement.  In rendering such
opinions, such counsel may rely as to factual matters on certificates of
officers and directors of the Company and on certificates of governmental
officials.

 
 
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6.11        Audited Financial Statements and Company Backlog Requirement.
 
(a)           On or before April 30, 2009 or as soon thereafter as is
practicable, the Company shall deliver to the Buyer and the Parent the Audited
Financial Statements of the Company contemplated by Section 4.7(f) of this
Agreement.
 
(b)           On the Closing Date, the Company shall have a backlog of firm
equipment orders reasonably acceptable to the Buyer of a minimum of 6 Megawatts,
the delivery and installation of which will generate a turnover of US$
12,000,000 and an anticipated profit contribution of USD $3,000,000 during the
twelve month period following the Closing Date.
 
B.)          With regard to the Parent and the Buyer the Parent and the Buyer do
hereto do hereby covenant and agree, as follows:
 
6.12        Company Stockholders' Access to Information and Properties.  The
Parent and the Buyer shall permit the Company Stockholders and its authorized
employees, agents, accountants, legal counsel and other representatives to have
access to the books, records, employees, counsel, accountants, engineers and
other representatives of the Buyer at all times reasonably requested by the
Company Stockholders for the purpose of conducting an investigation of the
Buyers' financial condition, corporate status, operations, prospects, business
and Properties.  The Buyer shall make available to the Company Stockholders for
examination and reproduction all documents and data of every kind and character
relating to the Buyer in possession or control of, or subject to reasonable
access by, the Parent and/or the Buyer, including, without limitation, all
files, records, data and information relating to the Properties (whether stored
in paper, magnetic or other storage media) and all agreements, instruments,
contracts, assignments, certificates, orders, and amendments thereto.  Also, the
Buyer shall allow the Company Stockholders access to, and the right to inspect,
the Properties, except to the extent that such Properties are operated by a
third-Party operator, in which case the Buyer shall use its best efforts to
cause the operator of such Properties to allow the Company Stockholders access
to, and the right to inspect, such Properties.
 
6.13        Buyers’s Conduct of Business and Operations.  The Parent and the
Buyer shall keep the Company Stockholders advised as to all material operations
and proposed material operations relating to the Buyer and shall conduct its
business in the ordinary course consistent with past business practices
 
6.14        General Restrictions.  Except as otherwise expressly permitted in
this Agreement, between the date of this Agreement and the Closing Date, without
the prior written consent of Buyer, which consent shall not be unreasonably
withheld, the Buyer shall not do any of the following, and the Parent shall not
permit the Buyer to do any of the following:
 
(i) declare, set aside or pay any dividends, or make any distributions or other
payments in respect of its equity securities, or repurchase, redeem or otherwise
acquire any such securities;

 
 
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(ii)           merge into or with or consolidate with, any other corporation or
acquire the business or assets of any person;
 
(iii)          purchase any securities of any person;
 
(iv)          amend its charter or bylaws;
 
(v)           issue any capital stock or other securities, or grant, or enter
into any agreement to grant, any options, convertibility rights, other rights,
warrants, calls or agreements relating to its securities;
 
(vi)         create, incur, assume, guarantee or otherwise become liable or
obligated with respect to any indebtedness, or make any loan or advance to, or
any investment in, any person, except in each case in the ordinary course of
business;
 
(vii)         enter into, amend or terminate any material agreement except in
the ordinary course of business;
 
(viii)       sell, transfer, lease, mortgage, encumber or otherwise dispose of,
or agree to sell, transfer, lease, mortgage, encumber or otherwise dispose of,
any Properties except (i) in the ordinary course of business, or (ii) pursuant
to any agreement specified in Schedule 5.13(viii);
 
(ix)          settle any material claim or litigation, or file any material
motions, orders, briefs or settlement agreements in any proceeding before any
Governmental Authority or any arbitrator;
 
(x)           other than in the ordinary course of business consistent with past
practices, incur or approve, or enter into any agreement or commitment to make,
any expenditures in excess of $50,000 (other than those required pursuant to any
agreement specified in Schedule 5.13(x);
 
(xi)          maintain its books of account other than in the usual, regular and
ordinary manner in accordance with generally accepted accounting principles and
on a basis consistent with prior periods or make any change in any of its
accounting methods or practices;
 
(xii)         make any change, whether written or oral, to any agreement or
understanding with any of the suppliers or customers listed or required to be
listed on Schedule 5.19;
 
(xiii)        accelerate or delay collection of any notes or accounts receivable
in advance of or beyond their regular due dates or the dates when they would
have been collected in the ordinary course of business consistent with past
practices;
 
(xiv)        delay or accelerate payment of any accrued expense, trade payable
or other liability beyond or in advance of its due date or the date when such
liability would have been paid in the ordinary course of business consistent
with past practices;

 
 
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(xv)         allow its levels of inventory to vary in any material respect from
the levels customarily maintained;
 
(xvi)        adopt any Plan or Benefit Program or Agreement or increase the
compensation payable to any employee (including, without limitation, any
increase pursuant to any bonus, profit-sharing or other incentive plan or
commitment);
 
(xvii)       become a Party to or bound by any of the arrangements described in
Section 5.13(a) , whether written or oral;
 
(xviii)      engage in any one or more activities or transactions outside the
ordinary course of business;
 
(xix)         enter into any transaction or make any commitment which could
result in any of the representations, warranties or covenants of the Company
and/or Company Stockholders contained in this Agreement not being true and
correct after the occurrence of such transaction or event; or
 
(xx)          commit to do any of the foregoing.
 
6.15        Notice Regarding Changes.  The Buyer shall promptly inform the
Company Stockholders in writing of any change in facts and circumstances that
could render any of the representations and warranties made herein by the Parent
and/or the Buyer inaccurate or misleading if such representations and warranties
had been made upon the occurrence of the fact or circumstance in question.  The
Buyer shall promptly inform the Company Stockholders in writing of any change in
facts and circumstances that could render any of the representations and
warranties made herein by it inaccurate or misleading if such representations
and warranties had been made upon the occurrence of the fact or circumstance in
question.
 
6.16        Maintenance of Insurance Policies.  The Buyer shall take all actions
necessary or appropriate to cause any and all insurance coverage currently
carried by or for the benefit of the Buyer to remain in full force and effect.
 
6.17        Casualty Loss.  If, between the date of this Agreement and the
Closing, any of the Properties of the Buyer shall be destroyed or damaged in
whole or in part by fire, earthquake, flood, other casualty or any other cause,
then the Buyer shall, at Company Stockholders’ election, (i) cause such
Properties to be repaired or replaced prior to the Closing with Properties of
substantially the same condition and function, (ii) deposit in a separate
account an amount sufficient to cause such Properties to be so repaired or
replaced, or (iii) enter into contractual arrangements satisfactory to Company
Stockholders so that the Buyer will have at the Closing the same economic value
as if such casualty had not occurred.
 
6.18        No Shop.  From the date of this Agreement until the earlier of (i)
the Closing Date, or (ii) the termination of this Agreement, the Parent shall
not, and the Parent shall not cause the Buyer and the Buyer shall not and its
officers, directors, employees and other agents to, directly or indirectly,
shall not take any action to solicit, initiate or encourage any offer or
proposal or indication of interest in a merger, consolidation or other business
combination involving any equity interest in, or a substantial portion of the
assets of the Buyer, other than in connection with the transactions contemplated
by this Agreement.  The Parent and the Buyer shall immediately advise the
Company Stockholders of the terms of any offer, proposal or indication of
interest that it receives or otherwise becomes aware of.

 
 
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6.19        Legal Opinions.    On the Closing Date, the Buyer shall furnish to
the Company Stockholders, in form and content satisfactory to the Company
Stockholders and its counsel, the favorable legal opinion of Hodgson Russ LLP
and Norr Stiefenhofer Lutz, legal counsel to the Parent and the Parent and the
Buyer, respectively, with respect to the matters contemplated by Section 7.1(g)
of this Agreement.
 
C.)          All the Parties hereto do hereby covenant and agree, as follows:
 
6.20        Settlement of EPV Solar Agreements.    Unless this condition shall
be waived by mutual agreement of all Parties, on or before the Closing Date, the
Parent or the Buyer shall have terminated the provisions of Article 6 of
agreements between the Buyer and Energy Photovoltaics, Inc. (“EPV Solar”) dated
September 23, 2002 and December 29, 2005 (collectively the “EPV Solar
Agreements”) or shall have entered into such settlement agreement or other
business arrangement with EPV Solar as shall be reasonably acceptable to the
Parties hereto.
 
6.21        Ensure Conditions Met.  Subject to the terms and conditions of this
Agreement, each of the Parties hereto shall use all reasonable commercial
efforts to take or cause to be taken all actions and do or cause to be done all
things required under applicable Legal Requirements in order to consummate the
transactions contemplated hereby, including, without limitation, (i) obtaining
all Permits, authorizations, consents and approvals of any Governmental
Authority or other person which are required for or in connection with the
consummation of the transactions contemplated hereby and by the Exhibits, (ii)
taking any and all reasonable actions necessary to satisfy all of the conditions
to each Party’s obligations hereunder as set forth in Article VI, and (iii)
executing and delivering all agreements and documents required by the terms
hereof to be executed and delivered by such Party on or prior to the Closing.
 
6.22        Payment of Transaction Expenses and Bonuses.    The Company
Stockholders and the Company, the Parent and the Buyer  hereby agree that: (a)
all legal, accounting and other transaction expenses incurred by the Buyer, the
Parent, the Company Stockholders and/or the Company in connection with the
transactions contemplated by this Agreement, including the audit of the Audited
Financial Statements of the Company (collectively, “Transaction Expenses”) shall
be borne by the Buyer  and (b) all Taxes to be incurred by the Company or the
Company Stockholders in connection with the transactions contemplated by this
Agreement, and all bonuses, incentive payments and other remuneration (in excess
of current salaries) payable to the principal executive and any other member of
the management of the Company (the “Bonus Compensation”), paid or payable by the
Company shall be borne solely by the Company Stockholders.  In such connection,
the Parties acknowledge that through February 28, 2009 a total of (U.S.)
$167,696.71 in accrued and unpaid legal fees are invoiced to the Buyer by
Hodgson Russ LLP..  The accepted legal fees shall be paid by the Buyer as
follows: (a) $75,000 on April 15, 2009, and (b) the balance in three equal
monthly installments commencing May 15, 2009.

 
 
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6.23        Corporate Services Agreement.    The Parties hereto do hereby
acknowledge that on the Closing Date, the Buyer and the Company will enter into
a corporate services agreement with the Parent, in the form of Exhibit 2 to the
Shareholders Agreement made a part hereof (the “Corporate Services Agreement”),
pursuant to which the Parent shall be paid the sum of $450,000 per year to cover
certain corporate overhead, executive management and professional advisory
services provided by the Parent to the Buyer and the Company.
 
 6.24       Inter-Company Services Agreement.    The Parties hereto do hereby
acknowledge that on the Closing Date, the Buyer and the Company will enter into
an inter-company services agreement with Solar Thin Power, Inc., a majority
owned subsidiary of the Parent (“Solar Thin Power”), in the form of Exhibit C
annexed hereto and made a part hereof (the “Inter-Company Services Agreement”).
 
ARTICLE VII. CONDITIONS TO PARTIES’ OBLIGATIONS
 
7.1          Conditions to Obligations of the Company and the Company
Stockholders.  The obligations of the Company Stockholders and the Company to
carry out the transactions contemplated by this Agreement are subject, at the
option of the Company Stockholders and the Company, to the satisfaction or
waiver of the following conditions:
 
(a)        Buyer shall have furnished Company Stockholders with a certified copy
of all necessary board of directors and corporate action on its behalf approving
its execution, delivery and performance of this Agreement.
 
(b)        All representations and warranties of Buyer contained in this
Agreement shall be true and correct in all material respects at and as of the
Closing, and Parent and Buyer shall have performed and satisfied in all material
respects all covenants and agreements required by this Agreement to be performed
and satisfied by Buyer at or prior to the Closing.
 
(c)        Except for matters disclosed in Schedule 5.9(a) or Schedule 5.9(b)
attached hereto, since the December 31, 2008 Balance Sheet Date and up to and
including the Closing, there shall not have been any event, circumstance, change
or effect that, individually or in the aggregate, had or might have a material
adverse effect on the Buyer’s business, operations, prospects, Properties or
financial condition.
 
(d)        The Company Stockholders shall have completed its due diligence
investigation, and the results thereof shall not have revealed that any of the
representations of the Buyer or the Parent set forth herein are untrue or
incorrect in any respect or otherwise be unsatisfactory to the Company
Stockholders
 
(e)        All proceedings to be taken by the Buyer in connection with the
transactions contemplated hereby and all documents incident thereto shall be
satisfactory in form and substance to the Company Stockholders and its counsel,
and the Company Stockholders and said counsel shall have received all such
counterpart originals or certified or other copies of such documents as it or
they may reasonably request.

 
 
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(f)         As of the Closing Date, no suit, action or other proceeding
(excluding any such matter initiated by or on behalf of the Company, or Company
Stockholders) shall be pending or threatened before any Governmental Authority
seeking to restrain the Company or prohibit the Closing or seeking Damages
against the Company as a result of the consummation of this Agreement.
 
(g)        The Company Stockholders and the Company shall have received the
opinion(s) of Norr Stiefenhofer Lutz and Hodgson Russ, LLP, counsel to Buyer,
dated as of the Closing Date, in form and substance reasonably satisfactory to
the Company, with respect to the matters set forth in Sections 5.1, 5.2 and
5.3(i).  In rendering such opinion, such legal counsel may rely as to factual
matters on certificates of officers and directors of Buyer and on certificates
of governmental officials, and (i) as to matters of Hungarian law, on the legal
opinion of Norr Stiefenhofer Lutz, and (ii) as to matters of United States law,
on the legal opinion of Hodgson Russ LLP.
 
(h)        The Buyer shall have made the deliveries set forth in Section 3.3
above.
 
(i)         A condition precedent to Closing will be:
 
(A)          The transactions contemplated by Section 2.2 and by Section 2.3. of
this Agreement shall have been completed; and
 
 (B)          Buyer shall have executed and delivered the Employment Agreements
of Istvan Krafcsik and Attila Horvath in the form attached hereto as Exhibit A-1
and Exhibit A-2, respectively.
 
(j)         The Parent, the Buyer shall have executed and delivered to the
Company Stockholders a shareholders agreement between the Parent, the Buyer and
the Company Stockholders, to be executed and delivered on the Closing Date. and
in substantially the form annexed hereto as Exhibit B and made a part hereof
(the “Shareholders Agreement”).
 
(k)         The Parent and the Buyer shall have made the deliveries contemplated
by Section 3.3 of this Agreement.
 
7.2          Conditions to Obligations of the Parent and the Buyer.  The
obligations of the Parent and the Buyer to carry out the transactions
contemplated by this Agreement are subject, at the option of the Parent and the
Buyer, to the satisfaction, or waiver by the Parent and the Buyer, of the
following conditions:
 
(a)         All representations and warranties of the Company and the Company
Stockholders contained in this Agreement shall be true and correct in all
material respects at and as of the Closing, and the Company and the Company
Stockholders shall have performed and satisfied in all material respects all
agreements and covenants required by this Agreement to be performed and
satisfied by them at or prior to the Closing.

 
 
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(b)       As of the Closing Date, no suit, action or other proceeding (excluding
any such matter initiated by or on behalf of the Parent or the Buyer) shall be
pending or threatened before any court or governmental agency seeking to
restrain the Parent or the Buyer or prohibit the Closing or seeking Damages
against the Parent or the Buyer or the Company or its Properties as a result of
the consummation of this Agreement.
 
(c)        Except for matters disclosed in Schedule 4.9(a) or Schedule 4.9(b)
attached hereto, since the Balance Sheet Date and up to and including the
Closing, there shall not have been any event, circumstance, change or effect
that, individually or in the aggregate, had or might have a material adverse
effect on the Company’s business, operations, prospects, Properties or financial
condition.
 
(d)       The Buyer shall have received the opinion of legal counsel to the
Company and the Company Stockholders referred to in Section 6.11 above, dated as
of the Closing Date, addressed to the Buyer and the Parent and in form and
substance reasonably satisfactory to the Buyer and the Parent.
 
(e)       Each of the Company Stockholders and the Company shall have furnished
Buyer with a certified copy of all necessary corporate or other action on its
behalf approving the Company’s execution, delivery and performance of this
Agreement.
 
(f)       All agreements, commitments and understandings between the Company and
any Affiliate thereof shall have been terminated in all respects on terms
satisfactory to Buyer, and all obligations, claims or entitlements thereunder
shall be unconditionally waived and released by such Affiliates and written
evidence thereof satisfactory in form and substance to Buyer shall have been
delivered to Buyer.
 
(g)       The Buyer shall have completed its due diligence investigation, and
the results thereof shall not have revealed that any of the representations of
the Company or the Company Stockholders set forth herein are untrue or incorrect
in any respect or otherwise be unsatisfactory to Buyer.
 
(h)       All proceedings to be taken by the Company in connection with the
transactions contemplated hereby and all documents incident thereto shall be
satisfactory in form and substance to Buyer and its counsel, and Buyer and said
counsel shall have received all such counterpart originals or certified or other
copies of such documents as it or they may reasonably request.
 
(i)       No proceeding in which the Buyer, the Company Stockholders or the
Company shall be a debtor, defendant or Party seeking an order for its own
relief or reorganization shall have been brought or be pending by or against
such person under any United States or state bankruptcy or insolvency law.

 
 
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(j)       The Company shall be free and clear of all debt and liabilities (other
than such debts and liabilities and Funded Indebtedness incurred in the ordinary
course of its business as are acceptable to Buyer based on its due diligence)
and that no dividends or other distributions to NPI or other Company
Stockholders will have been made prior to the Closing Date.
 
(l)       On the Closing Date, I. Krafcsik and A. Horvath shall have each
executed and delivered the Employment Agreements.
 
(m)       On the Closing Date, the Company Stockholders (including I. Krafcsik
and A. Horvath) shall have executed and delivered to the Parent and the Buyer
the Shareholders Agreement .
 
(n)       The Company Stockholders shall have made the deliveries contemplated
by Section 3.2 of this Agreement.
 
(o)       The Company shall have delivered to the Buyer and the Parent the
Audited Financial Statements as contemplated by Section 4.7(f) and Section
6.11(a) of this Agreement.
 
ARTICLE VIII.   POST-CLOSING AGREEMENTS AND OBLIGATIONS
 
8.1          Further Assurances.  Following the Closing, the Company, the
Company Stockholders, the Buyer and the Parent shall execute and deliver such
documents, and take such other action, as shall be reasonably requested by any
other Party hereto to carry out the transactions contemplated by this Agreement.
 
8.2          Publicity.  None of the Parties hereto shall issue or make, or
cause to have issued or made, any public release or announcement concerning this
Agreement or the transactions contemplated hereby, without the advance approval
in writing of the form and substance thereof by each of the other Parties,
except as and to the extent required by law (in which case, so far as possible,
there shall be consultation among the Parties prior to such announcement), and
the Parties shall endeavor jointly to agree on the text of any announcement or
circular so approved or required.
 
8.3          Post-Closing Indemnity
 
8.3.1  From and after the Closing, the Company Stockholders shall indemnify and
hold harmless the Company, the Parent, the Buyer and their Affiliates,
directors, officers and employees from and against any and all Damages in
accordance with and subject to the limitations set forth in Section 10.1 of this
Agreement.
 
8.3.2           From and after the Closing, the Parent shall indemnify and hold
harmless the Company Stockholders, Buyer, the Company and their Affiliates,
directors, officers and employees from and against any and all Damages in
accordance with and subject to the limitations set forth in Section 10.2 of this
Agreement.

 
 
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8.4          Non-Competition, Non-Solicitation and Non-Disclosure.
 
(a)         General.  In order to induce the Buyer to enter into this Agreement
and to consummate the transactions contemplated hereby, the Company Stockholders
do each hereby covenant and agree as follows:
 
(i)      Without the prior written consent of the Buyer, none of the Company
Stockholders or any of their Affiliates shall, for a period of five (5) years
from and after the Closing Date:
 
(A) directly or indirectly acquire or own in any manner any interest in any
person, firm, partnership, corporation, association or other entity which
engages or plans to engage in any facet of the business of the Company or which
competes or plans to compete in any way with the “Business” (as hereinafter
defined) of the Buyer, the Company, the Parent or any of the direct or indirect
subsidiaries or joint venture partners of the Buyer, the Company or the Parent
(collectively, the “STF Companies”), anywhere in the world (the “Territory”);
 
(B) be employed by or serve as an employee, agent, officer, director of, or as a
consultant to, any person, firm, partnership, corporation, association or other
entity which engages or plans to engage in any facet of the Business of the STF
Companies or which competes or plans to compete in any way with Business of the
STF Companies within the Territory, or
 
(C) utilize his special knowledge of the business of the Company and his or its
relationships with customers, suppliers and others to compete with STF Companies
in the Business;
 
provided, however, that nothing herein shall be deemed to prevent the Company
Stockholders from acquiring through market purchases and owning, solely as an
investment, less than three percent (3%) in the aggregate of the equity
securities of any class of any issuer whose shares are registered under §12(b)
or 12(g) of the Securities Exchange Act of 1934, as amended, and are listed or
admitted for trading on any United States national securities exchange or are
quoted on the National Association of Securities Dealers Automated Quotation
System, or any similar system of automated dissemination of quotations of
securities prices in common use, so long as Company Stockholders is not a member
of any “control group” (within the meaning of the rules and regulations of the
United States Securities and Exchange Commission) of any such issuer.
 
As used herein the term “Business” shall mean the manufacture, assembly, sale or
distribution, individually and/or with third Persons, of equipment to
manufacture solar panels or modules of all kinds, (b) the manufacture, assembly
sale or distribution, individually and/or with third Persons, of solar panels or
modules, and (c) the manufacture, assembly, installation and/or operation,
individually and/or with third Persons, of turn-key solar panel manufacturing
facilities.

 
 
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The Company Stockholders acknowledge and agree that the covenants provided for
in this Section 8.4(a) are reasonable and necessary in terms of time, area and
line of business to protect the Company’s Trade Secrets.  The Company
Stockholders further acknowledge and agree that such covenants are reasonable
and necessary in terms of time, area and line of business to protect the
Company’s legitimate business interests, which include its interests in
protecting the Company’s (i) valuable confidential business information, (ii)
substantial relationships with customers throughout the United States, Europe,
Asia and the world, and (iii) customer goodwill associated with the ongoing
business of the Company.  Company Stockholders expressly authorizes the
enforcement of the covenants provided for in this Section 8.4(a) by (A) the
Company and its subsidiaries, (B) the Company’s permitted assigns, and (C) any
successors to the Company’s business.  To the extent that the covenants provided
for in this Section 8.4(a) may later be deemed by a court to be too broad to be
enforced with respect to its duration or with respect to any particular activity
or geographic area, the court making such determination shall have the power to
reduce the duration or scope of the provision, and to add or delete specific
words or phrases to or from the provision.  The provision as modified shall then
be enforced.
 
(ii) Without the prior consent of Buyer, for a period of five (5) years from the
Closing Date, the Company Stockholders shall not directly or indirectly, for
himself or for any other person, firm, corporation, partnership, association or
other entity: (i) attempt to employ or enter into any contractual arrangement
with any employee or former employee of any of the STF Companies, unless such
employee or former employee has not been employed by one or more of the STF
Companies for a period in excess of nine months, and/or (ii) call on or solicit
any of the actual or targeted prospective customers or clients of any of the STF
Companies, nor shall the Company Stockholders make known the names and addresses
of such customers or any information relating in any manner to the STF Companies
business relationships with such customers.
 
(iii) The Company Stockholders shall not at any time divulge, communicate, use
to the detriment of the Company or for the benefit of any other person or
persons, or misuse in any way, any Confidential Information pertaining to the
STF Companies.  Any confidential information or data now known or hereafter
acquired by any of the Company Stockholders with respect to any of the STF
Companies shall be deemed a valuable, special and unique asset of such STF
Companies that is received by the Company Stockholders in confidence and as a
fiduciary, and the Company Stockholders shall remain a fiduciary to each of the
STF Companies with respect to all of such information.
 
(b)           Injunction.     It is recognized and hereby acknowledged by the
Parties hereto that a breach or violation by either the Company Stockholders of
any or all of the covenants and agreements contained in this Section 8.4 may
cause irreparable harm and damage to Buyer in a monetary amount which may be
virtually impossible to ascertain.  As a result, each of the Company
Stockholders recognizes and hereby acknowledges that Buyer or any one or more of
the other STF Companies shall be entitled to an injunction from any court of
competent jurisdiction enjoining and restraining any breach or violation of any
or all of the covenants and agreements contained in this Section 8.4 by either
the Company Stockholders, and/or its or his associates, Affiliates, partners or
agents, either directly or indirectly, and that such right to injunction shall
be cumulative and in addition to whatever other rights or remedies the Buyer or
such STF Companies may possess hereunder, at law or in equity.  Nothing
contained in this Section 8.4 shall be construed to prevent Buyer of any of the
STF Companies from seeking and recovering from the Company Stockholders damages
sustained by it as a result of any breach or violation by the Company
Stockholders of any of the covenants or agreements contained herein.

 
 
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(c)           Termination of Covenants.        Notwithstanding the provisions of
this Section 8.4, the covenants and obligations of the Company Stockholders set
forth in this Section 8.4 shall terminate in the event, and only in the event,
that a court of competent jurisdiction from which no appeal can or shall be
taken shall determine that the Parent or the Buyer has committed (and shall have
failed to cure within 30 days of written notice of such breach) a breach or
violation of one or more of the employer’s covenants and agreements set forth in
the five (5) year Employment Agreements, that involves (i) a material change
without just cause in the nature of such Company Stockholder’s duties under his
Employment Agreement, (ii) the failure by the Company to timely pay the
compensation to which the Company Stockholders is entitled to receive under his
Employment Agreement, or (iii) another act or omission by the Company that is
sufficiently material to have justified the Company Stockholders to unilaterally
terminate such Employment Agreement.
 
ARTICLE IX. TAX MATTERS
 
9.1          Company Representations and Obligations Regarding Taxes.  The
Company represents and warrants to and agree with the Buyer as follows:
 
(a)   The Company has filed all Tax Returns that it was required to file.  All
such Tax Returns were, to the Knowledge of the Company Stockholders, correct and
complete in all respects.  All Taxes owed by the Company (whether or not shown
on any Tax Return and whether or not any Tax Return was required) have been
paid. The Company is not currently the beneficiary of any extension of time
within which to file any Tax Return.  No claim has ever been made by a taxing
authority in a jurisdiction where the Company does not file Tax Returns that it
is or may be subject to taxation by that jurisdiction.  There are no liens on
any of the assets of the Company that arose in connection with any failure (or
alleged failure) to pay any Tax, except for liens for Taxes not yet due.
 
(b)   To the Knowledge of the Company Stockholders, the Company has withheld and
paid all Taxes required to have been withheld and paid in connection with
amounts paid or owing to any employee, independent contractor, creditor,
stockholder or other third Party.
 
(c)    Schedule 9.1(c) sets forth the following information with respect to the
Company as of the most recent practicable date (as well as on an estimated pro
forma basis as of the Closing giving effect to the consummation of the
transactions contemplated hereby):  (i) the basis of the Company in its assets;
and (ii) the amount of any net operating loss, net operating loss carryover, net
capital loss, net capital loss carryover, Tax credit, Tax credit carryover or
excess charitable contribution of the Company.

 
 
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(d)    The Company shall grant to Buyer or its designees access at all
reasonable times to all of the Company’s books and records (including tax work
papers and returns and correspondence with tax authorities), including the right
to take extracts therefrom and make copies thereof, to the extent such books and
records relate to taxable periods ending on or prior to or that include the
Closing Date.  Buyer shall (i) grant to Company Stockholders access at all
reasonable times to all of the Company’s books and records (including tax work
papers and returns and correspondence with tax authorities), including the right
to take extracts therefrom and make copies thereof, to the extent that such
books and records relate to the operations of the Company during taxable periods
ending on or prior to or that include the Closing Date, and (ii) otherwise
cooperate with Company Stockholders in connection with any audit of Taxes that
relate to the business of the Company prior to Closing.
 
(e)    The transfer of the Subject Shares to Buyer pursuant to the terms of this
Agreement will not result in any Tax liability to the Company or result in a
reduction of the amount of any net operating loss, net operating loss carryover,
net capital loss, net capital loss carryover, Tax credit, Tax credit carryover,
excess charitable contribution or basis of property that otherwise would be
available to the Company by reason or as a result of deferred intercompany
transactions, excess loss accounts, or otherwise.
 
(f)    Buyer shall be responsible for preparing and filing, or causing the
Company to prepare and file, all Tax Returns of the Company required to be filed
after the Closing Date.  Company Stockholders shall pay to Buyer within five (5)
days after the date on which Taxes are paid with respect to periods beginning
before the Closing Date and ending on or after the Closing Date an amount equal
to the portion of those Taxes that relates to the portion of the taxable period
ending on the Closing Date.  For purposes of this Agreement, in the case of any
period that begins before the Closing Date and ends after the Closing Date, any
tax based directly or indirectly on gross or net income or receipts or imposed
in respect of specific transactions, and any credits available with respect to
any Tax, shall be allocated by assuming that the taxable period ended on the
Closing Date, and any other tax shall be allocated based on the number of days
in the taxable period ending on the Closing Date divided by the total number of
days in the taxable period.
 
9.2          Company Stockholders Indemnification for Taxes.
 
(a)    The Company Stockholders hereby agrees to indemnify, jointly and
severally, Buyer and each of its Subsidiaries, including, after the Closing, the
Company (each herein sometimes referred to as an “Indemnified Taxpayer”)
against, and agrees to protect, save and hold harmless each Indemnified Taxpayer
from, any and all claims, damages, deficiencies and losses and all expenses,
including, without limitation, attorneys’, accountants’ and experts’ fees and
disbursements (all herein referred to as “Losses”) resulting from:
 
(i)    A claim by any taxing authority for (A) any Taxes of the Company
allocable to any period ending on or prior to the Closing Date or allocable to
any period that begins before and ends after the Closing Date, and (B) any Taxes
of the Company or any corporation that is or was a member of an Affiliated Group
of which the Company was or is a member;

 
 
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(ii)           Any misrepresentation or breach of any representation, warranty
or obligation set forth in this Article IX.
 
(b)       Subject to the resolution of any Tax contest pursuant to Section
9.2(c), upon notice from Buyer to the Company Stockholders that an Indemnified
Taxpayer is entitled to an indemnification payment for a Loss pursuant to
Section 9.2(a), the Company Stockholders shall thereupon pay to the Indemnified
Taxpayer an amount that, net of any Taxes imposed on the Indemnified Taxpayer
with respect to such payment, will indemnify and hold the Indemnified Taxpayer
harmless from such Loss.
 
(c)       (i)        If a claim shall be made by any taxing authority that, if
successful, would result in the indemnification of an Indemnified Taxpayer, the
Indemnified Taxpayer shall promptly notify the Company Stockholders in writing
of such fact; provided, however, that any failure to give such notice will not
waive any rights of the Indemnified Taxpayer except to the extent the rights of
the indemnifying Party are actually materially prejudiced.
 
(ii)       The Company Stockholders shall have the right to defend the
Indemnified Taxpayer against such claim with counsel of its choice satisfactory
to the Indemnified Taxpayer so long as (A) the Company Stockholders notifies the
Indemnified Taxpayer in writing within 15 days after the Indemnified Taxpayer
has given notice of such claim that the Company Stockholders will indemnify the
Indemnified Taxpayer from and against the entirety of any Losses the Indemnified
Taxpayer may suffer resulting from, arising out of, relating to, in the nature
of, or caused by the claim, (B) the Company Stockholders provides the
Indemnified Taxpayer with evidence acceptable to the Indemnified Taxpayer that
the Company Stockholders will have the financial resources to defend against the
claim and fulfill his indemnification obligations hereunder, (C) if requested by
the Indemnified Taxpayer, the Company Stockholders provides to the Indemnified
Taxpayer an opinion, in form and substance  reasonably satisfactory to the
Indemnified Taxpayer, of counsel satisfactory to the Indemnified Taxpayer, that
there exists a reasonable basis for the Company to prevail in that contest,
(D)  if the Indemnified Taxpayer is requested to pay the Tax claimed and sue for
a refund, the Company Stockholders shall have advanced to the Indemnified
Taxpayer, on an interest free basis, the full amount the Indemnified Taxpayer is
required to pay, and (E) the Company Stockholders conducts the defense of the
claim actively and diligently.
 
    (iii)           Subject to the provisions of paragraph (ii) above, Company
Stockholders shall be entitled to prosecute such contest to a determination in a
court of initial jurisdiction, and if Company Stockholders shall reasonably
request, to a determination in an appellate court provided that, if requested by
the Indemnified Taxpayer, Company Stockholders shall provide to the Indemnified
Taxpayer an opinion, in form and substance satisfactory to the Indemnified
Taxpayer, of counsel satisfactory to the Indemnified Taxpayer, that there exists
a reasonable basis for the Company to prevail on that appeal.

 
 
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(iv)         The Company Stockholders shall not be entitled to settle or to
contest any claim relating to Taxes if the settlement of, or an adverse judgment
with respect to, the claim would be likely, in the good faith judgment of the
Indemnified Taxpayer, to cause the liability for any Tax of the Indemnified
Taxpayer or of any Affiliate of the Indemnified Taxpayer for any taxable period
ending after the Closing Date to increase (including, without limitation, by
making any election or taking any action having the effect of making any
election, by deferring the inclusion of any amount in income or by accelerating
the deduction of any amount or the claiming of any credit) or to take a position
that, if applied to any taxable period ending after the Closing Date, would be
adverse to the interest of the Indemnified Taxpayer or any Affiliate of the
Indemnified Taxpayer.
 
(v)           If, after actual receipt by the Indemnified Taxpayer of an amount
advanced by Company Stockholders pursuant to paragraph (ii)(D) above, the extent
of the liability of the Indemnified Taxpayer with respect to the indemnified
matter shall be established by the judgment or decree of a court that has become
final or a binding settlement with an administrative agency having jurisdiction
thereof that has become final, the Indemnified Taxpayer shall promptly pay to
Company Stockholders any refund received by or credited to the Indemnified
Taxpayer with respect to the indemnified matter (together with any interest paid
or credited thereon by the taxing authority and any recovery of legal fees from
such taxing authority); provided, however, that the Indemnified Taxpayer shall
have been indemnified and held harmless from all Losses by reason of any
indemnification payments retained by the Indemnified Taxpayer net of any Taxes
imposed on the Indemnified Taxpayers with respect to indemnification payments
received by the Indemnified Taxpayer or with respect to the receipt of any
payment from the taxing authority.  Notwithstanding the foregoing, the
Indemnified Taxpayer shall not be required to make any payment hereunder before
such time as Company Stockholders shall have made all payments or indemnities
then due with respect to Indemnified Taxpayer pursuant to this Article IX.
 
(vi)          If any of the conditions in Section 9.2(c)(ii) above are or become
unsatisfied, (A) the Indemnified Taxpayer may defend against, and consent to the
entry of any judgment or enter into any settlement with respect to, the claim in
any manner it may deem appropriate (and the Indemnified Taxpayer need not
consult with, or obtain any consent from, Company Stockholders in connection
therewith), (B) Company Stockholders will reimburse the Indemnified Taxpayer
promptly and periodically for the costs of defending against the claim
(including, without limitation, attorneys’, accountants’ and experts’ fees and
disbursements) and (C) Company Stockholders will remain responsible for any
Losses the Indemnified Taxpayer may suffer to the fullest extent provided in
this Section 9.2.
 
(d)      Anything to the contrary in this Agreement notwithstanding, the
indemnification obligations of the Company Stockholders under this Article IX
shall survive the Closing until the end of the applicable statutes of
limitations.  With respect to any indemnification obligation for any Tax for
which a taxing authority asserts a claim within 90 days before the end of the
applicable statute of limitations, an Indemnified Taxpayer shall be treated as
having provided timely notice to Company Stockholders by providing written
notice to Company Stockholders on or before the 90th day after the Indemnified
Taxpayer’s receipt of a written assertion of the claim by the taxing authority.

 
 
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9.3          Buyer Representations and Obligations Regarding Taxes.  The Parent
and the Buyer represent and warrant to and agree with the Company Stockholders
as follows:
 
(a)     The Buyer has filed all Tax Returns that it was required to file.  All
such Tax Returns were correct and complete in all respects.  All Taxes owed by
the Buyer (whether or not shown on any Tax Return and whether or not any Tax
Return was required) have been paid. The Buyer is not currently the beneficiary
of any extension of time within which to file any Tax Return.  No claim has ever
been made by a taxing authority in a jurisdiction where the Buyer does not file
Tax Returns that it is or may be subject to taxation by that
jurisdiction.  There are no liens on any of the assets of the Buyer that arose
in connection with any failure (or alleged failure) to pay any Tax, except for
liens for Taxes not yet due.
 
(b)     The Buyer has withheld and paid all Taxes required to have been withheld
and paid in connection with amounts paid or owing to any employee, independent
contractor, creditor, stockholder or other third Party.
 
(c)     Schedule 9.3(c) sets forth the following information with respect to the
Buyer as of the most recent practicable date (as well as on an estimated pro
forma basis as of the Closing giving effect to the consummation of the
transactions contemplated hereby):  (i) the basis of the Buyer in its assets;
and (ii) the amount of any net operating loss, net operating loss carryover, net
capital loss, net capital loss carryover, Tax credit, Tax credit carryover or
excess charitable contribution of the Buyer.
 
(d)     The Buyer shall grant to the Company Stockholders or its designees
access at all reasonable times to all of the Buyer’s books and records
(including tax work papers and returns and correspondence with tax authorities),
including the right to take extracts there from and make copies thereof, to the
extent such books and records relate to taxable periods ending on or prior to or
that include the Closing Date.  Buyer shall (i) grant to Company Stockholders
access at all reasonable times to all of the Buyer’s books and records
(including tax work papers and returns and correspondence with tax authorities),
including the right to take extracts there from and make copies thereof, to the
extent that such books and records relate to the operations of the Buyer during
taxable periods ending on or prior to or that include the Closing Date. The
transfer of the Minority Buyer Equity to the Company Stockholders pursuant to
the terms of this Agreement will not result in any Tax liability to the Buyer or
result in a reduction of the amount of any net operating loss, net operating
loss carryover, net capital loss, net capital loss carryover, Tax credit, Tax
credit carryover, excess charitable contribution or basis of property that
otherwise would be available to the Buyer by reason or as a result of deferred
inter-company transactions, excess loss accounts, or otherwise.
 
(e)     Parent shall be responsible for preparing and filing, or causing the
Buyer to prepare and file, all Tax Returns of the Buyer required to be filed
after the Closing Date.  The Parent shall pay to Buyer within five (5) days
after the date on which Taxes are paid with respect to periods beginning before
the Closing Date and ending on or after the Closing Date an amount equal to the
portion of those Taxes that relates to the portion of the taxable period ending
on the Closing Date.  For purposes of this Agreement, in the case of any period
that begins before the Closing Date and ends after the Closing Date, any tax
based directly or indirectly on gross or net income or receipts or imposed in
respect of specific transactions, and any credits available with respect to any
Tax, shall be allocated by assuming that the taxable period ended on the Closing
Date, and any other tax shall be allocated based on the number of days in the
taxable period ending on the Closing Date divided by the total number of days in
the taxable period.
 

 
 
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9.4          Parent Indemnification for Taxes.
 
(a)     The Parent hereby agree to indemnify the Company Stockholders and the
Buyer (herein collectively or individually referred to as an “Indemnified
Taxpayer”) against, and agrees to protect, save and hold harmless each
Indemnified Taxpayer from, any and all claims, damages, deficiencies and losses
and all expenses, including, without limitation, attorneys’, accountants’ and
experts’ fees and disbursements (all herein referred to as “Losses”) resulting
from:
 
(i)   A claim by any taxing authority for (A) any Taxes of the Buyer allocable
to any period ending on or prior to the Closing Date or allocable to any period
that begins before and ends after the Closing Date, and (B) any Taxes of the
Buyer or any corporation that is or was a member of an Affiliated Group of which
the Buyer was or is a member;
 
(ii)     Any misrepresentation or breach of any representation, warranty or
obligation set forth in this Article IX.
 
(b)     Subject to the resolution of any Tax contest pursuant to Section 9.4(c),
upon notice from Buyer to the Company Stockholders that an Indemnified Taxpayer
is entitled to an indemnification payment for a Loss pursuant to Section 9.4(a),
the Parent  shall thereupon pay to the Indemnified Taxpayer an amount that, net
of any Taxes imposed on the Indemnified Taxpayer with respect to such payment,
will indemnify and hold the Indemnified Taxpayer harmless from such Loss.
 
(c)     (i)           If a claim shall be made by any taxing authority that, if
successful, would result in the indemnification of an Indemnified Taxpayer, the
Indemnified Taxpayer shall promptly notify the Buyer and the Parent in writing
of such fact; provided, however, that any failure to give such notice will not
waive any rights of the Indemnified Taxpayer except to the extent the rights of
the indemnifying Party are actually materially prejudiced.
 
(ii)           The Buyer – upon the decision of the Parent - shall have the
right to defend the Indemnified Taxpayer against such claim with counsel of its
choice satisfactory to the Indemnified Taxpayer so long as (A) the Buyer
notifies the Indemnified Taxpayer in writing within 15 days after the
Indemnified Taxpayer has given notice of such claim that the Parent will
indemnify the Indemnified Taxpayer from and against the entirety of any Losses
the Indemnified Taxpayer may suffer resulting from, arising out of, relating to,
in the nature of, or caused by the claim, (B) the Parent provides the
Indemnified Taxpayer with evidence acceptable to the Indemnified Taxpayer that
the Buyer – on the cost of the Parent - will have the financial resources to
defend against the claim and fulfill his indemnification obligations hereunder,
(C) if requested by the Indemnified Taxpayer, the Parent provides to the
Indemnified Taxpayer an opinion, in form and substance satisfactory to the
Indemnified Taxpayer, of counsel satisfactory to the Indemnified Taxpayer, that
there exists a reasonable basis for the Buyer to prevail in that contest,
(D)  if the Indemnified Taxpayer is requested to pay the Tax claimed and sue for
a refund, the Buyer shall have advanced to the Indemnified Taxpayer, on an
interest free basis, the full amount the Indemnified Taxpayer is required to
pay, and (E) the Buyer and the Parent conducts the defense of the claim actively
and diligently.

 
 
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(iii)           Subject to the provisions of paragraph (ii) above, the Buyer
shall be entitled to prosecute such contest to a determination in a court of
initial jurisdiction, and if Buyer shall reasonably request, to a determination
in an appellate court provided that, if requested by the Indemnified Taxpayer,
Parent shall provide to the Indemnified Taxpayer an opinion, in form and
substance satisfactory to the Indemnified Taxpayer, of counsel satisfactory to
the Indemnified Taxpayer, that there exists a reasonable basis for the Buyer to
prevail on that appeal.
 
(iv)           Buyer shall not be entitled to settle or to contest any claim
relating to Taxes if the settlement of, or an adverse judgment with respect to,
the claim would be likely, in the good faith judgment of the Indemnified
Taxpayer, to cause the liability for any Tax of the Indemnified Taxpayer or of
any Affiliate of the Indemnified Taxpayer for any taxable period ending after
the Closing Date to increase (including, without limitation, by making any
election or taking any action having the effect of making any election, by
deferring the inclusion of any amount in income or by accelerating the deduction
of any amount or the claiming of any credit) or to take a position that, if
applied to any taxable period ending after the Closing Date, would be adverse to
the interest of the Indemnified Taxpayer or any Affiliate of the Indemnified
Taxpayer.
 
(v)           If, after actual receipt by the Indemnified Taxpayer of an amount
advanced by Parent pursuant to paragraph (ii)(D) above, the extent of the
liability of the Indemnified Taxpayer with respect to the indemnified matter
shall be established by the judgment or decree of a court that has become final
or a binding settlement with an administrative agency having jurisdiction
thereof that has become final, the Indemnified Taxpayer shall promptly pay to
Parent any refund received by or credited to the Indemnified Taxpayer with
respect to the indemnified matter (together with any interest paid or credited
thereon by the taxing authority and any recovery of legal fees from such taxing
authority); provided, however, that the Indemnified Taxpayer shall have been
indemnified and held harmless from all Losses by reason of any indemnification
payments retained by the Indemnified Taxpayer net of any Taxes imposed on the
Indemnified Taxpayers with respect to indemnification payments received by the
Indemnified Taxpayer or with respect to the receipt of any payment from the
taxing authority.  Notwithstanding the foregoing, the Indemnified Taxpayer shall
not be required to make any payment hereunder before such time as Buyer shall
have made all payments or indemnities then due with respect to Indemnified
Taxpayer pursuant to this Article IX.
 
(vi)           If any of the conditions in Section 9.4(c)(ii) above are or
become unsatisfied, (A) the Indemnified Taxpayer may defend against, and consent
to the entry of any judgment or enter into any settlement with respect to, the
claim in any manner it may deem appropriate (and the Indemnified Taxpayer need
not consult with, or obtain any consent from, Buyer in connection therewith),
(B) Parent will reimburse the Indemnified Taxpayer promptly and periodically for
the costs of defending against the claim (including, without limitation,
attorneys’, accountants’ and experts’ fees and disbursements) and (C) Parent
will remain responsible for any Losses the Indemnified Taxpayer may suffer to
the fullest extent provided in this Section 9.4.

 
 
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(d)       Anything to the contrary in this Agreement notwithstanding, the
indemnification obligations of the Buyer and the Parent under this Article IX
shall survive the Closing until the end of the applicable statutes of
limitations.  With respect to any indemnification obligation for any Tax for
which a taxing authority asserts a claim within 90 days before the end of the
applicable statute of limitations, an Indemnified Taxpayer shall be treated as
having provided timely notice to Buyer by providing written notice to Buyer on
or before the 90th day after the Indemnified Taxpayer’s receipt of a written
assertion of the claim by the taxing authority.
 
(e)       All transfer, documentary, sales, use, stamp, registration and other
such Taxes and fees (including any penalties and interest) incurred in
connection with this Agreement shall be paid by the Party the Tax was imposed on
by the relevant laws and Authorities, and such Party shall, at its own expense,
file all necessary Tax Returns and other documentation with respect to all such
transfer, documentary, sales, use, stamp, registration and other Taxes and fees,
and, if required by applicable law, any other Party will, and will cause its
Affiliates to, join in the execution of any such Tax Returns and other
documentation.
 
ARTICLE X.   MISCELLANEOUS
 
10.1        Indemnification of Parent and/or Buyer .
 
(a)           Survival       The representations, warranties, agreements, and
indemnities of the Company and the Company Stockholders set forth in this
Agreement or in connection with the transactions contemplated hereby shall
survive the Closing except as expressly provided in Section 10.1(b).  The
Post-Closing Agreements and Covenants of the Parties set forth in Article VIII,
including those set forth in Sections 8.4 of this Agreement, shall survive the
Closing Date and the Closing indefinitely.
 
(b)           Indemnification and Business Indemnity Period.       In addition
to the Tax indemnification provisions set forth in Article IX of this Agreement
but subject at all times to the limitations set forth in this Section 10.1, the
Company Stockholders shall jointly and severally indemnify, defend and hold
harmless the Company, the Buyer and the Parent from any and all Damages incurred
by the Company, the Buyer or the Parent that arise from
 
(i)           the breach of any of the representations and warranties of the
Company Stockholders set forth in this Agreement,
 
(ii)           the failure by the Company Stockholders to perform or satisfy in
any material respect their covenants and agreements set forth in this Agreement
or in any Exhibit hereto or document or certificate delivered by the Company
Stockholders or the Company on the Closing Date, or

 
 
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(iii)           any claims asserted against any of the Parties to this Agreement
by Energo Equipment Manufacturing Kft, or any of its Affiliates, including
Perola Ltd.
 
Notwithstanding the foregoing, the Company Stockholders shall have any liability
under this Agreement to indemnify under either (A) clause (iii) of Section
8.3.1, or (B) clause (i) of Section 8.3.1 against breaches of the provisions of
Sections 4.5 (clauses (ii), (iii), (iv) and (v)), Section 4.6, and Section 4.7
through Section 4.23 (collectively the “Business Indemnities”), in each case
unless the indemnifying Party receives notice in writing from Buyer of Buyer’s
claim under said indemnity on or before that date which shall be eighteen (18)
months following the Closing Date (the “Business Indemnity Period”).  Said
limitations shall not apply to any breaches of or obligations to comply with any
of the other provisions of this Agreement, regardless of whether such breach or
obligation also constitutes a breach or obligation under any of the provisions
specifically listed in this Section 10.1(b).
 
(c)           Limitations on Liability.       The Company Stockholders shall be
obligated to indemnify as and to the extent set forth in this Section 10.1 only
if the aggregate of all of their liability under such indemnity obligations
exceeds $50,000, it being understood that such $50,000 figure is to serve as a
“trigger” for the indemnification and not as a “deductible” (for example, if the
indemnity claims for which the Company Stockholders would, but for the
provisions of this paragraph (c), be liable aggregate $51,000, the Company
Stockholders would then be liable for the full $51,000, and not just
$1,000).  The maximum amount for which the Company Stockholders shall be liable
to indemnify the Buyer and the Parent pursuant to this Section 10.1 shall be the
product of multiplying the Minority Buyer Equity and Minority Interest in the
Buyer by 50% of the Call Option Price set forth in Section 8.6(b) above.
 
(d)           Payment of Damages.       In the event that the Company
Stockholders shall become liable under this Agreement to indemnify the Buyer or
the Parent for any Damages, the Company Stockholders shall pay such Damages to
the Parent or the Buyer, at the option of the Company Stockholders, either (i)
in cash, or (ii) by returning to the Buyer an applicable portion of the Minority
Buyer Equity and the Minority Interest in the Buyer, valued at the Call Option
Price set forth in Section 8.6(b) above.
 
10.2        Indemnification of Company Stockholders .
 
(a)           Survival       The representations, warranties, agreements, and
indemnities of the Parent and the Buyer set forth in this Agreement or in
connection with the transactions contemplated hereby shall survive the Closing
except as expressly provided in Section 10.2(b). The Post-Closing Agreements and
Covenants of the Parties set forth in Article VIII, of this Agreement, shall
survive the Closing Date and the Closing indefinitely.
 
(b)           Indemnification and Business Indemnity Period.       In addition
to the Tax indemnification provisions set forth in Article IX of this Agreement
but subject at all times to the limitations set forth in this Section 10.2, the
Parent shall indemnify, defend and hold harmless the Company Stockholders, the
Buyer and the Company from any and all Damages incurred by the Company
Stockholders, the Buyer or the Company that arise from

 
 
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(i)           the breach of any of the representations and warranties of the
Parent or the Buyer forth in this Agreement, or

(ii)          the failure by the Parent or the Buyer to perform or satisfy in
any material respect their covenants and agreements set forth in this Agreement
or in any Exhibit hereto or document or certificate delivered by the Parent or
the Buyer on the Closing Date.

Notwithstanding the foregoing, neither the Parent nor the Buyer shall have any
liability under this Agreement to indemnify under either (A) clause (iii) of
Section 8.3.2, or (B) clause (i) of Section 8.3.2 against breaches of the
provisions of Section 5.5 (clauses (ii), (iii), (iv) and (v)), of Section 5.6,
and Section 5.7 through Section 5.23 (collectively the “Business Indemnities”),
in each case unless the indemnifying Party receives notice in writing from
Company Stockholders of Company Stockholders' claim under said indemnity on or
before that date which shall be eighteen (18) months following the Closing Date
(the “Business Indemnity Period”).  Said limitations shall not apply to any
breaches of or obligations to comply with any of the other provisions of this
Agreement, regardless of whether such breach or obligation also constitutes a
breach or obligation under any of the provisions specifically listed in this
Section 10.2(b).

(c)           Limitations on Liability.  The Parent and the Buyer shall be
obligated to indemnify as and to the extent set forth in Section 10.3 of this
Agreement only if the aggregate of all of their liability under such indemnity
obligations exceeds $50,000, it being understood that such $50,000 figure is to
serve as a “trigger” for the indemnification and not as a “deductible” (for
example, if the indemnity claims for which the Parent and the Buyer would, but
for the provisions of this paragraph (c), be liable aggregate $51,000, the
Parent and the Buyer would then be liable for the full $51,000, and not just
$1,000).

(d)          Payment of Damages.  In the event that the Parent and/or the Buyer
shall become liable under this Agreement to indemnify the Company Stockholders
or the Buyer, as applicable, for Damages, the Parent shall pay such Damages to
the Company Stockholders or the Buyer, as applicable, in cash.

10.3        Indemnified Party and Indemnifying Party.  For purposes of this
Section 10.3, a Party making a claim for indemnity under Section 10.1 or Section
10.2 is hereinafter referred to as an “Indemnified Party” and the Party against
whom such claim is asserted is hereinafter referred to as the “Indemnifying
Party.”  All claims by any Indemnified Party shall be asserted and resolved in
accordance with the following provisions.  If any claim or demand for which an
Indemnifying Party would be liable to an Indemnified Party is asserted against
or sought to be collected from such Indemnified Party by such third Party, said
Indemnified Party shall with reasonable promptness notify in writing the
Indemnifying Party of such claim or demand stating with reasonable specificity
the circumstances of the Indemnified Party’s claim for indemnification;
provided, however, that any failure to give such notice will not waive any
rights of the Indemnified Party except to the extent the rights of the
Indemnifying Party are actually prejudiced or to the extent that any applicable
period set forth in Section 10.1 and Section 10.2(b) has expired without such
notice being given.  After receipt by the Indemnifying Party of such notice,
then upon reasonable notice from the Indemnifying Party to the Indemnified
Party, or upon the request of the Indemnified Party, the Indemnifying Party
shall defend, manage and conduct any proceedings, negotiations or communications
involving any claimant whose claim is the subject of the Indemnified Party’s
notice to the Indemnifying Party as set forth above, and shall take all actions
necessary, including but not limited to the posting of such bond or other
security as may be required by any Governmental Authority, so as to enable the
claim to be defended against or resolved without expense or other action by the
Indemnified Party.  Upon request of the Indemnifying Party, the Indemnified
Party shall, to the extent it may legally do so and to the extent that it is
compensated in advance by the Indemnifying Party for any costs and expenses
thereby incurred,
 
 

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(i)   take such action as the Indemnifying Party may reasonably request in
connection with such action,

(ii)  allow the Indemnifying Party to dispute such action in the name of the
Indemnified Party and to conduct a defense to such action on behalf of the
Indemnified Party, and

(iii)          render to the Indemnifying Party all such assistance as the
Indemnifying Party may reasonably request in connection with such dispute and
defense.

10.4        Resolution of Disputes.

(a)           All disputes, claims or controversies arising out of or relating
to this Agreement, or any agreement executed and delivered pursuant hereto, or
the negotiation, breach, validity or performance hereof, or the transactions
contemplated hereby which cannot be resolved by good faith negotiations, shall
be exclusively submitted to final and binding arbitration in London England
before a panel of three arbitrators appointed by the International Chamber of
Commerce; provided, that if any Party has no adequate remedy at law he or it may
seek emergency injunctive relief or specific performance before any court of
competent jurisdiction in Hungary or the United States.  The decision and award
of the arbitrators shall be enforceable in any court of competent jurisdiction
in the United States and Hungary.

(b)           Subject to the availability of the arbitration panel, the
arbitration shall commence within ninety (90) days of the date on which a
written demand for arbitration is filed by any Party hereto.  In connection with
the arbitration proceeding, the arbitrators shall have the power to order the
production of documents by each Party and any third-Party witnesses.  In
connection with any arbitration, each Party shall provide to the other, no later
than seven (7) business days before the date of the arbitration, the identity of
all persons that may testify at the arbitration and a copy of all documents that
may be introduced at the arbitration or considered or used by a Party’s witness
or expert.  The arbitrators’ decision and award shall be made and delivered
within ninety (90) days of the commencement of the arbitration.  The
arbitrators’ decision shall set forth a reasoned basis for any award of damages
or finding of liability.  The arbitrators shall not have power to award damages
in excess of actual compensatory damages and shall not multiply actual damages
or award punitive damages or any other damages that are specifically excluded
under this Agreement, and each Party hereby irrevocably waives any claim to such
damages.
 
 

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(c)           The Parties covenant and agree that they will participate in the
arbitration in good faith and that they will, except as provided below, (A) bear
their own attorneys’ fees, costs and expenses in connection with the
arbitration, and (B) share equally in the fees and expenses of the arbitration,
including forum fees, the fees of the arbitrators and the cost of the official
transcript of the proceedings.  The arbitrators may in their discretion assess
costs and expenses (including the reasonable legal fees and expenses of the
prevailing Party) against any Party to the proceeding.  Any Party unsuccessfully
refusing to comply with an order of the arbitrators shall be liable for costs
and expenses, including attorneys’ fees, incurred by the other Party in
enforcing the award.  This Section 10.4 applies equally to requests for
temporary, preliminary or permanent injunctive relief, except that in the case
of temporary or preliminary injunctive relief any Party may proceed in court
without prior arbitration for the purpose of avoiding immediate and irreparable
harm or to enforce its rights under any non-competition covenants.

10.5.  Confidentiality.

(a)               Prior to the Closing, Buyer shall, and shall cause its
Affiliates and its and their employees, agents, accountants, legal counsel and
other representatives and advisers to, hold in strict confidence all, and not
divulge or disclose any, information of any kind concerning the Company and its
business; provided, however, that the foregoing obligation of confidence shall
not apply to (i) information that is or becomes generally available to the
public other than as a result of a disclosure by Buyer or its Affiliates or any
of its or their employees, agents, accountants, legal counsel or other
representatives or advisers, (ii) information that is or becomes available to
Buyer or its Affiliates or any of its or their employees, agents, accountants,
legal counsel or other representatives or advisers on a non-confidential basis
prior to its disclosure by Buyer or its Affiliates or any of its or their
employees, agents, accountants, legal counsel or other representatives or
advisers and (iii) information that is required to be disclosed by Buyer or its
Affiliates or any of its or their employees, agents, accountants, legal counsel
or other representatives or advisers as a result of any applicable law, rule or
regulation of any Governmental Authority; and provided further that Buyer
promptly shall notify the Company of any disclosure pursuant to clause (iii) of
this Section 10.5.(a); and, provided, further, that the foregoing obligation of
confidence shall not apply to the furnishing of information by Buyer in bona
fide discussions or negotiations with prospective lenders.

(b)              The Company and the Company Stockholders shall, and shall cause
its or his Affiliates and their respective employees, agents, accountants, legal
counsel and other representatives and advisers to, hold in strict confidence
all, and not divulge or disclose any, information of any kind concerning the
transactions contemplated by this Agreement, the Company, the Company
Stockholders or their respective businesses; provided, however, that the
foregoing obligation of confidence shall not apply to (i) information that is or
becomes generally available to the public other than as a result of a disclosure
by the Company, the Company Stockholders or its or his Affiliates or any of
their respective employees, agents, accountants, legal counsel or other
representatives or advisers, (ii) information that is or becomes available to
the Company, the Company Stockholders or its or his Affiliates or any of their
respective employees, agents, accountants, legal counsel or other
representatives or advisers after the Closing on a non-confidential basis prior
to its disclosure by the Company, the Company Stockholders or its or his
Affiliates or any of their respective employees, agents, accountants, legal
counsel or other representatives or advisers and (iii) information that is
required to be disclosed by the Company, the Company Stockholders or its or his
Affiliates or any of their respective employees, agents, accountants, legal
counsel or other representatives or advisers as a result of any applicable law,
rule or regulation of any Governmental Authority; and provided further that the
Company shall promptly shall notify Buyer of any disclosure pursuant to clause
(iii) of this Section 10.3(b).
 
 

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10.6.       Brokers.  Regardless of whether the Closing shall occur, (i) the
Company Stockholders and the Company shall indemnify and hold harmless Buyer
from and against any and all liability for any brokers or finders’ fees arising
with respect to brokers or finders retained or engaged by the Company or the
Company Stockholders in respect of the transactions contemplated by this
Agreement, and (ii) Buyer shall indemnify and hold harmless the Company
Stockholders from and against any and all liability for any brokers’ or finders’
fees arising with respect to brokers or finders retained or engaged by Buyer in
respect of the transactions contemplated by this Agreement.

10.7        Costs and Expenses.  Each of the Parties to this Agreement shall
bear his or its own expenses incurred in connection with the negotiation,
preparation, execution and closing of this Agreement, however, Buyer shall be
responsible for and shall discharge all Transaction Expenses by and on behalf of
the Company Stockholders and or/the Company pursuant to Section 6.20.

10.8        Notices.  Any notice, request, instruction, correspondence or other
document to be given hereunder by any Party hereto to another (herein
collectively called “Notice”) shall be in writing and delivered personally or
mailed by registered or certified mail, postage prepaid and return receipt
requested, or by facsimile, as follows:

IF TO BUYER:     Solar Thin Films, Inc.
25 Highland Boulevard, Dix Hills, New York 11746

Attn:  Bob Rubin, Chairman of the Board
email: bob.rubin@solarthinfilms.com
 
With copies to:
     
Hodgson Russ, LLP
Norr Stiefenhofer Lutz
1540 Broadway, 24th Floor
Fő u 14-18
New York, New York  10036
H-1011 Budapest, Hungary
Attention:  Stephen A. Weiss, Esq.
Attention:  Dr. Jeno Kimmel
Fax No. 212-751-0928
Fax No. ++36-1-224-0495
email:  sweiss@hodgsonruss.com
email: jenoe.kimmel@noerr.com

 
 

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IF TO THE COMPANY, AND/OR

THE COMPANY STOCKHOLDERS:
 
Istvan Krafcsik
H-1021 Budapest, Kuruclesiu 40. Hungary

Fax No.  +361 392 2617
 
With a copy to:

Dessewffy David

H-1061

Budapest, Andrassy ut.43

Hungary
Attn:  Dr. David Aliz

Fax No. +36 1-413-3340

email: david@dessewffy.com
 
Each of the above addresses for notice purposes may be changed by providing
appropriate notice hereunder.  Notice given by personal delivery or registered
mail shall be effective upon actual receipt.  Notice given by telecopier shall
be effective upon actual receipt if received during the recipient’s normal
business hours, or at the beginning of the recipient’s next normal business day
after receipt if not received during the recipient’s normal business hours.  All
Notices by telecopier shall be confirmed by the sender thereof promptly after
transmission in writing by registered mail or personal delivery.  Anything to
the contrary contained herein notwithstanding, notices to any Party hereto shall
not be deemed effective with respect to such Party until such Notice would, but
for this sentence, be effective both as to such Party and as to all other
persons to whom copies are provided above to be given.
 
10.9        Governing Law.  The provisions of this agreement and the documents
delivered pursuant hereto shall be governed by and construed in accordance with
the laws of the State of New York (excluding any conflict of law rule or
principle that would refer to the laws of another
jurisdiction).  Notwithstanding the foregoing, the laws of Hungary shall govern
the Share Capital Increase and the Employment Agreements.

10.10.     Entire Agreement; Amendments and Waivers.  This Agreement, together
with all exhibits and schedules attached hereto, constitutes the entire
agreement between and among the Parties hereto pertaining to the subject matter
hereof and supersedes all prior agreements, understandings, negotiations and
discussions, whether oral or written, of the Parties, including, without
limitation, the Prior Agreement, and there are no warranties, representations or
other agreements between the Parties in connection with the subject matter
hereof except as set forth specifically herein or contemplated hereby.  No
supplement, modification or waiver of this Agreement shall be binding unless
executed in writing by the Party to be bound thereby.  No waiver of any of the
provisions of this Agreement shall be deemed or shall constitute a waiver of any
other provision hereof (regardless of whether similar), nor shall any such
waiver constitute a continuing waiver unless otherwise expressly provided.
 
 

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10.11.     Binding Effect and Assignment.  This Agreement shall be binding upon
and inure to the benefit of the Parties hereto and their respective permitted
successors and assigns; but neither this Agreement nor any of the rights,
benefits or obligations hereunder shall be assigned, by operation of law or
otherwise, by any Party hereto without the prior written consent of the other
Party; provided, however, that the Buyer may assign its rights hereunder to any
lender to the Buyer or the Parent.  Nothing in this Agreement, express or
implied, is intended to confer upon any person or entity other than the Parties
hereto and their respective permitted successors and assigns, any rights,
benefits or obligations hereunder.

10.12      Remedies.  The rights and remedies provided by this Agreement are
cumulative, and the use of any one right or remedy by any Party hereto shall not
preclude or constitute a waiver of its right to use any or all other
remedies.  Such rights and remedies are given in addition to any other rights
and remedies a Party may have by law, statute or otherwise.

10.13      Exhibits and Schedules.  The exhibits and Schedules referred to
herein are attached hereto and incorporated herein by this
reference.  Disclosure of a specific item in any one Schedule shall be deemed
restricted only to the Section to which such disclosure specifically relates
except where (i) there is an explicit cross-reference to another Schedule, and
(ii) Buyer could reasonably be expected to ascertain the scope of the
modification to a representation intended by such cross-reference.

10.14      Multiple Counterparts.  This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

10.15      References and Construction.

(a)         Whenever required by the context, and is used in this Agreement, the
singular number shall include the plural and pronouns and any variations thereof
shall be deemed to refer to the masculine, feminine, neuter, singular or plural,
as the identification the person may require.  References to monetary amounts,
specific named statutes and generally accepted accounting principles are
intended to be and shall be construed as references to United States dollars,
statutes of the United States of the stated name and United States generally
accepted accounting principles, respectively, unless the context otherwise
requires.

(b)         The provisions of this Agreement shall be construed according to
their fair meaning and neither for nor against any Party hereto irrespective of
which Party caused such provisions to be drafted.  Each of the Parties
acknowledge that it has been represented by an attorney in connection with the
preparation and execution of this Agreement.

10.16      Survival.  Any provision of this Agreement which contemplates
performance or the existence of obligations after the Closing Date, and any and
all representations and warranties set forth in this Agreement, shall not be
deemed to be merged into or waived by the execution and delivery of the
instruments executed at the Closing, but shall expressly survive Closing and
shall be binding upon the Party or Parties obligated thereby in accordance with
the terms of this Agreement, subject to any limitations expressly set forth in
this Agreement.
 
 

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10.17      Attorneys’ Fees.  In the event any suit or other legal proceeding is
brought for the enforcement of any of the provisions of this Agreement, the
Parties hereto agree that the prevailing Party or Parties shall be entitled to
recover from the other Party or Parties upon final judgment on the merits
reasonable attorneys’ fees (and sales taxes thereon, if any), including
attorneys’ fees for any appeal, and costs incurred in bringing such suit or
proceeding.

10.18      Risk of Loss.  Prior to the Closing, the risk of loss of damage to,
or destruction of, any and all of a Party’s assets, including without limitation
the Properties, shall remain with such party, and the legal doctrine known as
the “Doctrine of Equitable Conversion” shall not be applicable to this Agreement
or to any of the transactions contemplated hereby.

ARTICLE XI. DEFINITIONS

Capitalized terms used in this Agreement are used as defined in this Article XI
or elsewhere in this Agreement.
 
11.1        Affiliate. The term “Affiliate” means with respect to any Person,
any other Person directly or indirectly controlling (including, but not limited
to, all directors and officers of such Person), controlled by, or under direct
or indirect common control with, such Person.  A Person shall be deemed to
control another Person if such Person possesses, directly or indirectly, the
power to direct or cause the direction of the management and policies of such
other Person, whether through the ownership of voting securities, by contract or
otherwise.

11.2        Buyer Liquidity Event.  The term “Buyer Liquidity Event” shall mean
any one of the following events:

 (a)         a Change of Control of the Buyer, for consideration payable in
whole or in part in cash, or

 (b)         an initial public offering of the share capital of the Buyer, or

 (c)         the merger of the Buyer with or into an inactive corporation that
is publicly traded on a United States or European securities exchange (a “Shell
Corporation”) or the exchange of 100% of the share capital of the Buyer for a
controlling interest in a Shell Corporation, in either case, coupled with a
simultaneous cash financing of not less than United States Five Million Dollars
(USD $5,000,000), or

 (d)         the distribution or dividend of 100% of the share capital of the
Buyer owned by the Parent to the stockholders of the Parent, as a result of
which the Buyer shall become a corporation that is publicly traded on a United
States securities exchange, coupled with a simultaneous cash financing for the
Buyer of not less than United States Five Million Dollars (USD $5,000,000).
 
 

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11.3        Exhibits.  The term “Exhibits” shall mean any or all of the exhibits
to this Agreement and any and all other agreements, instruments or documents
required or expressly provided under this Agreement to be executed and delivered
in connection with the transactions contemplated by this Agreement.

11.4        Subject Company Quotas. The term "Subject Company Quotas" shall have
the meaning of hundred percent of the quota in the capital stock of the Company

11.5        Confidential Information.  The term “Confidential Information” shall
mean confidential data and confidential information relating to the business of
the Company (which does not rise to the status of a Trade Secret under
applicable law) which is or has been disclosed to Company Stockholders or of
which Company Stockholders became aware as a consequence of or through his
employment with the Company and which has value to the Company and is not
generally known to the competitors of the Company.  Confidential Information
shall not include any data or information that (i) has been voluntarily
disclosed to the general public by the Company or its Affiliates, (ii) has been
independently developed and disclosed to the general public by others, or (iii)
otherwise enters the public domain through lawful means.

11.6        Change of Control.  The term “Change of Control” shall mean the sale
of Buyer and its consolidated Subsidiaries (including the Company), pursuant to
a sale of the Buyer Shares or the assets and properties of Buyer and its
consolidated Subsidiaries (including the Company) to any Person who is not an
Affiliate of the Parent or its Affiliates (each an “Unaffiliated Third Party”).

11.7        Contracts. The term “Contracts,” when described as being those of or
applicable to any person, shall mean any and all contracts, agreements,
franchises, understandings, arrangements, leases, licenses, registrations,
authorizations, easements, servitudes, rights of way, mortgages, bonds, notes,
guaranties, liens, indebtedness, approvals or other instruments or undertakings
to which such person is a Party or to which or by which such person or the
property of such person is subject or bound, excluding any Permits.

11.8        Damages.  The term “Damages” shall mean any and all damages,
liabilities, obligations, penalties, fines, judgments, claims, deficiencies,
losses, costs, expenses and assessments (including without limitation income and
other taxes, interest, penalties and attorneys’ and accountants’ fees and
disbursements).

11.9        "Excess Cash" The term “Excess Cash” means, at the end of any
financial year of the Buyer and its Subsidiaries, the aggregate amount of cash
and marketable securities that are retained by the Buyer and its Subsidiaries
which is in excess of the aggregate amount of funds required for the working
capital needs of the Buyer and its Subsidiaries, the purchase or lease of
capital equipment and other related expenditures that are anticipated in good
faith by the Board of Directors of the Buyer to be required by the Buyer and its
Subsidiaries for the next succeeding financial year.
 
 

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11.10      Financial Statements.  The term “Financial Statements” shall mean any
or all of the financial statements, including balance sheets and related
statements of income and statements of changes in financial position and the
accompanying notes thereto, of the company’s business prepared in accordance
with generally accepted accounting principles consistently applied, except as
may be otherwise provided herein.

11.11      “Funded Indebtedness.  “Funded Indebtedness” shall mean the aggregate
amount (including the current portions thereof) of all (i) indebtedness of a
company for money borrowed from others, capital lease obligations, dividends
payable to a company’s Stockholders, bonus payables to employees, and purchase
money indebtedness of a company, (ii) indebtedness of the type described in
clause (i) above guaranteed, directly or indirectly, in any manner by the
company, or in effect guaranteed, directly or indirectly, in any manner by the
company, through an agreement, contingent or otherwise, to supply funds to, or
in any other manner invest in, the debtor, or to purchase indebtedness, or to
purchase and pay for property if not delivered or to pay for services if not
performed, primarily for the purpose of enabling the company to make payment of
the indebtedness or to assure the owners of the indebtedness against loss, but
excluding endorsements of checks and other instruments in the ordinary course,
(iii) indebtedness of the type described in clause (i) above secured by any Lien
upon property owned by the company, even though the company has not in any
manner become liable for the payment of such indebtedness and (iv) interest
expense accrued but unpaid, and all prepayment premiums, on or relating to any
of such indebtedness. . Contracts evidencing its Funded Indebtedness are set
forth on Schedule 11.7 hereto

11.12      GAAP  The term “GAAP” means U.S. generally accepted accounting
principles.

11.13      Governmental Authorities.  The term “Governmental Authorities” shall
mean any nation or country (including but not limited to the United States) and
any commonwealth, territory or possession thereof and any political subdivision
of any of the foregoing, including but not limited to courts, departments,
commissions, boards, bureaus, agencies, ministries or other instrumentalities.

11.14      Hazardous Material.  The term “Hazardous Material” shall mean all or
any of the following: (a) substances that are defined or listed in, or otherwise
classified pursuant to, any applicable laws or regulations as “hazardous
substances,” “hazardous materials,” “Hazardous wastes,” “toxic substances” or
any other formulation intended to define, list or classify substances by reason
of deleterious properties such as ignitability, corrosivity, reactivity,
carcinogenicity, reproductive toxicity or “EP toxicity”; (b) oil, petroleum or
petroleum derived substances, natural gas, natural gas liquids or synthetic gas
and drilling fluids, produced waters and other wastes associated with the
exploration, development or production of crude oil, natural gas or geothermal
resources; (c) any flammable substances or explosives or any radioactive
materials; and (d) asbestos in any form or electrical equipment which contains
any oil or dielectric fluid containing levels of polychlorinated biphenyls in
excess of fifty parts per million.
 
 

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11.15      Inventory.  The term “Inventory” shall mean all goods, merchandise
and other personal property owned and held for sale, and all raw materials,
works-in-process, materials and supplies of every nature which contribute to the
finished products of a company in the ordinary course of its business,
specifically excluding, however, damaged, defective or otherwise unsaleable
items.

11.16      Knowledge of a company.  The term “Knowledge of the company” shall
mean the actual knowledge of any of the directors, officers or managerial
personnel of the company with respect to the matter in question, and such
knowledge of the directors, officers or managerial personnel of the company
reasonably should have obtained upon diligent investigation and inquiry into the
matter in question.

11.17      Legal Requirements.  The term “Legal Requirements,” when described as
being applicable to any person, shall mean any and all laws (statutory, judicial
or otherwise), ordinances, regulations, judgments, orders, directives,
injunctions, writs, decrees or awards of, and any Contracts with, any
Governmental Authority, in each case as and to the extent applicable to such
person or such person’s business, operations or properties.

11.18      Minority.  The term “Minority” means and includes all of the Company
Stockholders and their Permitted Transferees (as that term is defined in the
Shareholders Agreement).

11.19      Parent Public Filings   The term “Parent Public Filings” means and
includes all of the filings by the Parent with the United States Securities and
Exchange Commission under the United States Securities Act of 1933, as amended
(the “33 Act”), and the United States Securities Exchange Act of 1934, as
amended (the “34 Act”), for all periods from and after January 1, 2005,
including, without limitation, all (a) registration statements on Form S-1 or
other forms for registering securities under the 33 Act, (b) all Form 10KSB
Annual Reports, Form 8-K Interim Report, Form 10-Q Quarterly Report, and all
proxy statements on Form 14A and other filings under the 34 Act.

11.20      Parent Qualified Equity Financing.  The term Parent Qualified Equity
Financing” shall mean one or more public or private sales and issuances by the
Parent of its Common Stock, convertible notes or convertible preferred stock, as
a result of which the Parent shall receive aggregate gross proceeds of United
States Ten Million Dollars (USD $10,000,000) or more.

11.21      Permits. The term “Permits” shall mean any and all permits, rights,
approvals, licenses, authorizations, legal status, orders or Contracts under any
Legal Requirement or otherwise granted by any Governmental Authority.

11.22      Person.  The term “Person” shall mean any individual, partnership,
joint venture, firm, corporation, association, limited liability company, trust
or other enterprise or any governmental or political subdivision or any agency,
department or instrumentality thereof.
 
 

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11.23      Product.  The term “Product” shall mean each product, repair process
or service under development, developed, manufactured, licensed, distributed or
sold by the Party and any other products in which the Party has any proprietary
rights or beneficial interest.

11.24      Properties.  The term “Properties” shall mean any and all properties
and assets (real, personal or mixed, tangible or intangible) owned or Used by
the Party.

11.25      Real Property.  The term “Real Property” shall mean the real property
Used by the Party in the conduct of its business.

11.26      Regulations.  The term “Regulations” shall mean any and all
regulations promulgated by the Department of the Treasury pursuant to the
Internal Revenue Code.

11.27      Subsidiary.  The term “Subsidiary” shall mean any Person of which a
majority of the outstanding voting securities or other voting equity interests
are owned, directly or indirectly, by the Company.

11.28      Trade Secrets.  The term “Trade Secrets” shall mean information of a
company including, but not limited to, technical or nontechnical data, formulas,
patterns, compilations, programs, financial data, financial plans, product or
service plans or lists of actual or potential customers or suppliers which (i)
derives economic value, actual or potential, from not being generally known to,
and not being readily ascertainable by proper means by, other persons who can
obtain economic value from its disclosure or use, and (ii) is the subject of
efforts that are reasonable under the circumstances to maintain its secrecy.

11.29      Used.  The term “Used” shall mean, with respect to the Properties,
Contracts or Permits of a company, those owned, leased, licensed or otherwise
held by such company which were acquired for use or held for use by the company
in connection with the company’s business and operations, whether or not
reflected on the company’s books of account.

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IN WITNESS WHEREOF, the Parties hereto have executed this Stock Exchange
Agreement as of the date first written above.
 
PARENT:
 
SOLAR THIN FILMS, INC.
 
By:
/s/ Robert M. Rubin
Name: Bob Rubin, Chairman of the Board
 
BUYER:
 
KRAFT ELEKTRONIKAI ZRT
 
By:
/s/ Sandor Kupecz
Sándor Kupecz, CEO
 
COMPANY:
 
BUDASOLAR TECHNOLOGIES CO. LTD.

By: 
/s/ Istvan Krafcsik
          Istvan Krafcsik, President

COMPANY STOCKHOLDERS:
 
NEW PALACE INVESTMENTS LTD.

By:  
/s/ Istvan Krafcsik
          Istvan Krafcsik, President

/s/ Istvan Krafcsik
ISTVAN KRAFCSIK
 
/s/ Attila Horvath
ATTILA HORVATH

 
 

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