Exhibit 10.2

 

EXHIBIT A

 

Final APA

 

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ASSET PURCHASE AGREEMENT

 

by and among

 

BEACON POWER CORPORATION

 

and

 

STEPHENTOWN REGULATION SERVICES LLC

 

as Sellers

 

and

 

RC BEACON ACQUISITION, LLC

 

and

 

SPINDLE GRID REGULATION, LLC

 

as Purchasers

 

Dated as of February 3, 2012

 

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TABLE OF CONTENTS

 

 

 

 

Page

 

 

 

 

ARTICLE I DEFINITIONS

 

2

 

 

 

 

Section 1.1.

Recitals

 

2

Section 1.2.

Definitions

 

2

Section 1.3.

Other Terms

 

2

Section 1.4.

Interpretation

 

2

Section 1.5.

Time

 

3

 

 

 

 

ARTICLE II  AGREEMENT OF PURCHASE AND SALE

 

3

 

 

 

 

Section 2.1.

Purchase and Sale of Assets

 

3

Section 2.2.

Excluded Assets

 

5

Section 2.3.

Condition of Conveyance

 

8

Section 2.4.

Purchase Price

 

8

Section 2.5.

Assumption of Liabilities

 

9

Section 2.6.

Excluded Liabilities

 

10

Section 2.7.

Procedures for Assumption of Agreements

 

11

Section 2.8.

Purchase Price Deposit

 

13

Section 2.9.

Purchase Price Allocation

 

13

Section 2.10.

Other Agreements

 

13

 

 

 

 

ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLERS

 

13

 

 

 

 

Section 3.1.

Company Status

 

13

Section 3.2.

Power and Authority

 

14

Section 3.3.

Conflicts Under Constituent Documents or Laws

 

14

Section 3.4.

Consents

 

14

Section 3.5.

Included Assets

 

14

Section 3.6.

Material Contracts

 

15

Section 3.7.

Real Property

 

15

Section 3.8.

Intellectual Property Rights

 

16

Section 3.9.

Compliance with Laws and Orders

 

17

Section 3.10.

Permits

 

17

Section 3.11.

Litigation

 

17

Section 3.12.

Environmental Matters

 

17

Section 3.13.

Regulatory Matters

 

18

Section 3.14.

Labor Matters

 

18

Section 3.15.

No Misleading Statements

 

18

Section 3.16.

Brokers

 

18

 

 

 

 

ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PURCHASER

 

19

 

 

 

 

Section 4.1.

Corporate Status

 

19

Section 4.2.

Validity

 

19

Section 4.3.

Consents

 

19

Section 4.4.

Broker Fees

 

19

 

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Section 4.5.

Resources

 

19

Section 4.6.

Investigation

 

19

 

 

 

 

ARTICLE V COVENANTS

 

20

 

 

 

 

Section 5.1.

Conduct of the Businesses

 

20

Section 5.2.

Matters Requiring Notice

 

20

Section 5.3.

Supplement to Disclosure Schedules

 

21

Section 5.4.

Access to Information/Confidentiality/Preservation of Books and Records

 

21

Section 5.5.

Disclaimer of Additional Warranties

 

22

Section 5.6.

Required Approvals

 

23

Section 5.7.

Publicity

 

23

Section 5.8.

Accounts Receivable

 

23

Section 5.9.

Operation and Funding of the Businesses Between the Bring-Down Date and the
Closing Date

 

23

Section 5.10.

Employees and Employee Benefit Matters

 

24

 

 

 

 

ARTICLE VI CONDITIONS TO CLOSING

 

25

 

 

 

Section 6.1.

Conditions for Purchasers

 

25

Section 6.2.

Conditions for Sellers

 

26

Section 6.3.

Consent by Secured Party

 

27

 

 

 

 

ARTICLE VII CLOSING

 

27

 

 

 

Section 7.1.

Closing Arrangements

 

27

Section 7.2.

Sellers’ Deliveries

 

27

Section 7.3.

Purchaser’s Deliveries

 

28

Section 7.4.

Tax Matters

 

29

 

 

 

 

ARTICLE VIII BANKRUPTCY COURT APPROVAL

 

30

 

 

 

Section 8.1.

Sale Process

 

30

Section 8.2.

Certain Bankruptcy Undertakings

 

30

Section 8.3.

Break-Up Fee

 

31

Section 8.4.

Alternative Transaction

 

31

 

 

 

 

ARTICLE IX TERMINATION OF AGREEMENT

 

31

 

 

 

Section 9.1.

Termination

 

31

Section 9.2.

Consent by Secured Party

 

32

Section 9.3.

Purchase Price Deposit

 

32

Section 9.4.

Certain Effects of Termination

 

33

Section 9.5.

Remedies

 

33

 

 

 

 

ARTICLE X MISCELLANEOUS

 

34

 

 

 

Section 10.1.

Survival

 

34

Section 10.2.

Relationship of the Parties

 

34

Section 10.3.

Amendment of Agreement

 

34

Section 10.4.

Notices

 

34

Section 10.5.

Fees and Expenses

 

37

 

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Section 10.6.

Governing Law; Jurisdiction; Service of Process

 

37

Section 10.7.

WAIVER OF RIGHT TO TRIAL BY JURY

 

38

Section 10.8.

Further Assurances

 

38

Section 10.9.

Entire Agreement

 

38

Section 10.10.

Waiver

 

38

Section 10.11.

Assignment

 

38

Section 10.12.

Successors and Assigns

 

38

Section 10.13.

No Third Party Beneficiaries

 

39

Section 10.14.

Severability of Provisions

 

39

Section 10.15.

Counterparts

 

39

 

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ASSET PURCHASE AGREEMENT

 

This Asset Purchase Agreement (this “Agreement”), dated as of February 3, 2012
(the “Execution Date”), is by and among Beacon Power Corporation, a Delaware
corporation (“Beacon Seller”), Stephentown Regulation Services LLC, a Delaware
limited liability company (“SRS Seller” and, together with Beacon, “Sellers” and
each, individually, a “Seller”), RC Beacon Acquisition, LLC, a Delaware limited
liability company (the “Beacon Purchaser”), and Spindle Grid Regulation, LLC, a
Delaware limited liability company (the “SRS Purchaser” and, together with the
Beacon Purchaser, “Purchasers” and each, individually, a “Purchaser”).  In this
Agreement, Sellers and Purchaser are hereinafter collectively referred to as the
“Parties” and each, individually, a “Party.”

 

RECITALS

 

A.            Beacon Seller is engaged in the business of developing, producing
and implementing a range of energy-related technologies and particularly with
respect to flywheel devices that store and recycle energy and related businesses
(the “Beacon Business”).

 

B.            SRS Seller is engaged in the business of owning and operating a
flywheel-based frequency regulation facility in Stephentown, New York (the “SRS
Business” and, together with the Beacon Business, the “Businesses” and each,
individually, a “Business”).

 

C.            On October 30, 2011, Beacon Seller and its subsidiaries, SRS
Seller and Stephentown Holding LLC (collectively, the “Debtors”), each filed a
voluntary petition for relief under chapter 11 of the Bankruptcy Code, with the
jointly administered cases (collectively, the “Chapter 11 Cases” and each,
individually, a “Chapter 11 Case”) pending before the Bankruptcy Court for the
District of Delaware (the “Bankruptcy Court”).

 

D.            In connection with the Chapter 11 Cases, on February 3, 2012, the
Debtors intend to hold an auction (the “Auction”) for substantially all of
Beacon Seller’s assets and for substantially all of SRS Seller’s assets.

 

E.             Upon the terms and subject to the conditions contained in this
Agreement, (i) Beacon Seller wishes to sell to Beacon Purchaser, and Beacon
Purchaser wishes to purchase and acquire from Beacon Seller, subject and
pursuant to sections 105, 363 and 365 of the Bankruptcy Code, all of Beacon
Seller’s right, title and interest in and to the Beacon Included Assets and to
assume from Beacon Seller the Beacon Assumed Liabilities, and (ii) SRS Seller
wishes to sell to SRS Purchaser, and SRS Purchaser wishes to purchase and
acquire from SRS Seller, subject and pursuant to sections 105, 363 and 365 of
the Bankruptcy Code, all of SRS Seller’s right, title and interest in and to the
SRS Included Assets and to assume from SRS Seller the SRS Assumed Liabilities,
all in accordance with and pursuant to the terms in this Agreement and the Sale
Order.

 

F.             Simultaneously with the execution of this Agreement, Purchasers,
Sellers and the Escrow Holder shall enter into an Escrow Agreement in the form
attached hereto as Exhibit E (the “Escrow Agreement”).

 

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AGREEMENT

 

In consideration of the foregoing and the representations, warranties, covenants
and agreements contained in this Agreement and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
Parties hereto agree as follows:

 

ARTICLE I
DEFINITIONS

 

Section 1.1.            Recitals.  The recitals set forth above are incorporated
by reference and are expressly made part of this Agreement.

 

Section 1.2.            Definitions.  The definitions set forth on Schedule 1.2
shall apply to and constitute part of this Agreement, the Schedules and all
Exhibits attached hereto.

 

Section 1.3.            Other Terms.  As used in this Agreement, any reference
to any federal, state, local, or foreign law, including any applicable Law, will
be deemed also to refer to all rules and regulations promulgated thereunder,
unless the context requires otherwise. The words “include,” “includes,” and
“including” will be deemed to be followed by “without limitation.”  Pronouns in
masculine, feminine, or neuter genders will be construed to include any other
gender, and words in the singular form will be construed to include the plural
and vice versa, unless the context otherwise requires. References to “this
Agreement” shall include all Exhibits, Schedules and other agreements,
instruments or other documents attached hereto. The words “herein,” “hereof,”
“hereby,” “hereunder,” and words of similar import refer to this Agreement as a
whole and not to any particular subdivision unless expressly so limited.
References in this Agreement to Articles, Sections, Schedules or Exhibits are to
Articles or Sections of, Schedules or Exhibits to, this Agreement, except to the
extent otherwise specified herein. All terms defined in this Agreement shall
have the defined meanings when used in any certificate or other document made or
delivered pursuant hereto unless otherwise defined therein. Any agreement,
instrument or statute defined or referred to herein means such agreement,
instrument or statute as from time to time amended, modified or supplemented,
including (in the case of agreements or instruments) by waiver or consent and
(in the case of statutes) by succession of comparable successor statutes and
references to all attachments thereto and instruments incorporated therein. The
headings of the Sections, paragraphs and subsections of this Agreement are
inserted for convenience only and are not part of this Agreement and do not in
any way limit or modify the provisions of this Agreement and shall not affect
the interpretation hereof. Unless otherwise specified herein, payments that are
required to be made under this Agreement shall be paid by wire transfer of
immediately available funds to an account designated in advance by the Party
entitled to receive such payment. All references to “dollars” or “$” or “US$” in
this Agreement means U.S. dollars.

 

Section 1.4.            Interpretation.  The Parties have participated jointly
in the negotiation and drafting of this Agreement. If an ambiguity or question
of intent or interpretation arises, this Agreement will be construed as if
drafted jointly by the Parties hereto and no presumption or burden of proof will
arise favoring or disfavoring any Party hereto because of the authorship of any
provision of this Agreement.

 

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Section 1.5.            Time.  Except as expressly set out in this Agreement,
the computation of any period of time referred to in this Agreement shall
exclude the first day and include the last day of such period. If the time
limited for the performance or completion of any matter under this Agreement
expires or falls on a day that is not a Business Day, the time so limited shall
extend to the next following Business Day. The time limited for performing or
completing any matter under this Agreement may be extended or abridged by an
agreement in writing by the Parties. All references herein to time are
references to prevailing Eastern time, unless otherwise specified herein.

 

ARTICLE II
AGREEMENT OF PURCHASE AND SALE

 

Section 2.1.            Purchase and Sale of Assets.

 

(a)         Upon the terms and subject to the conditions of this Agreement, on
the Closing Date, Beacon Seller shall sell, transfer, assign, convey and deliver
to Beacon Purchaser, and Beacon Purchaser shall purchase and acquire from Beacon
Seller, free and clear of Encumbrances (other than Permitted Encumbrances and
Beacon Assumed Liabilities), all right, title and interest in, to and under all
of the assets, properties, rights and claims of Beacon Seller Related to the
Beacon Business (other than the Beacon Excluded Assets), whether real or
personal, tangible or intangible, vested or unvested, contingent or otherwise,
wherever located, and all goodwill associated therewith (the “Beacon Included
Assets”), including:

 

(i)          all Contracts identified on Schedule 2.1(a)(i) to the extent such
Contracts may be assumed and assigned under section 365 of the Bankruptcy Code
(such Contracts, subject to additions or removals pursuant to Section 2.7, the
“Beacon Assumed Contracts”);

 

(ii)         all Systems and any other Equipment, including those described on
Schedule 2.1(a)(ii);

 

(iii)        all Software owned or licensed by Beacon Seller, including the
Software described on Schedule 2.1(a)(iii);

 

(iv)        all Intellectual Property Rights owned or licensed by Beacon Seller;

 

(v)         all Books and Records of Beacon Seller (provided that such right
shall be subject to Section 5.4 and that Beacon Seller may, in its discretion
and at its sole expense, retain one copy of the Books and Records, for the sole
purpose of the Chapter 11 Cases or winding down its operations);

 

(vi)        all goodwill associated with the Beacon Business;

 

(vii)       all supplies, goods, materials, work in progress, properties, rights
and other assets Related to the Beacon Business;

 

(viii)      all tangible personal property Related to the Beacon Business;

 

3

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(ix)         all Permits Related to the Beacon Business to the extent
transferable after giving effect to the Sale Order;

 

(x)          all guaranties, warranties, indemnities and similar rights in favor
of Beacon Seller and any of its Affiliates to the extent related to any Beacon
Included Assets;

 

(xi)         all insurance benefits, including rights and proceeds, arising from
or relating to the Beacon Included Assets or Beacon Assumed Liabilities prior to
the Closing;

 

(xii)        all of Beacon Seller’s rights, title and interest in any
litigation, claims, causes of action whether known or unknown, asserted or
unasserted, for any action, conduct, or omissions arising prior to the Closing
with Respect to the Beacon Business;

 

(xiii)       the Tyngsboro Lease, including the Deposit of Beacon Seller
thereunder; and

 

(xiv)      all other assets Related to the Beacon Business that are not Beacon
Excluded Assets.

 

(b)         Upon the terms and subject to the conditions of this Agreement, on
the Closing Date, SRS Seller shall sell, transfer, assign, convey and deliver to
SRS Purchaser, and SRS Purchaser shall purchase and acquire from SRS Seller,
free and clear of Encumbrances (other than Permitted Encumbrances and SRS
Assumed Liabilities), all right, title and interest in, to and under all of the
assets, properties, rights and claims of SRS Seller Related to the SRS Business
(other than the SRS Excluded Assets) and of Beacon Seller (to the extent
enumerated below), whether real or personal, tangible or intangible, vested or
unvested, contingent or otherwise, wherever located, and all goodwill associated
therewith (the “SRS Included Assets” and, together with the Beacon Included
Assets, the “Included Assets”), including:

 

(i)          all Contracts identified on Schedule 2.1(b)(i) to the extent such
Contracts may be assumed and assigned under section 365 of the Bankruptcy Code
(such Contracts, subject to additions or removals pursuant to Section 2.7, the
“SRS Assumed Contracts”);

 

(ii)         all Systems and any other Equipment, including those described on
Schedule 2.1(b)(ii);

 

(iii)        all Software owned or licensed by SRS Seller, including the
Software described on Schedule 2.1(b)(iii);

 

(iv)        all Intellectual Property Rights owned or licensed by SRS Seller;

 

(v)         all Hazle Assets;

 

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(vi)        all Books and Records of SRS Seller (provided that such right shall
be subject to Section 4 and that SRS Seller may, in its discretion and at its
sole expense, retain one copy of the Books and Records, for the sole purpose of
the Chapter 11 Cases or winding down its operations);

 

(vii)       all goodwill associated with the SRS Business;

 

(viii)      all supplies, goods, materials, work in progress, properties, rights
and other assets Related to the SRS Business;

 

(ix)         all tangible personal property Related to the SRS Business;

 

(x)          all Permits Related to the SRS Business to the extent transferable
after giving effect to the Sale Order;

 

(xi)         all guaranties, warranties, indemnities and similar rights in favor
of SRS Seller and any of its Affiliates to the extent related to any SRS
Included Assets;

 

(xii)        all insurance benefits, including rights and proceeds, arising from
or relating to the SRS Included Assets or SRS Assumed Liabilities prior to the
Closing;

 

(xiii)       all of SRS Seller’s rights, title and interest in any litigation,
claims, causes of action whether known or unknown, asserted or unasserted, for
any action, conduct, or omissions arising prior to the Closing with Respect to
the SRS Business;

 

(xiv)      the Owned Real Property; and

 

(xv)       all other assets Related to the SRS Business that are not SRS
Excluded Assets.

 

Section 2.2.            Excluded Assets.

 

(a)         Nothing herein contained shall be deemed to sell, transfer, assign,
convey or deliver the Beacon Excluded Assets to Beacon Purchaser, and Beacon
Seller or an Affiliate thereof, as applicable, shall retain all right, title and
interest to, in and under the Beacon Excluded Assets, and neither Beacon
Purchaser nor any Affiliate of Beacon Purchaser shall have any Liability
therefor.  “Beacon Excluded Assets” shall mean the following assets, properties
and rights of Beacon Seller:

 

(i)          any and all rights of Beacon Seller under this Agreement or any
agreement related hereto;

 

(ii)         all Accounts Receivable of Beacon Seller;

 

(iii)        all Avoidance Actions of Beacon Seller;

 

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(iv)        all Deposits by Beacon Seller other than the deposit under the
Tyngsboro Lease;

 

(v)         all rights to refunds, credits, deposits or prepayments or the
equivalent owing to Beacon Seller from any taxing authority related to periods
on or before the Closing Date;

 

(vi)        all insurance benefits, including rights and proceeds, arising from
or relating to the directors and officers insurance of the Beacon Seller;

 

(vii)       all of Beacon Seller’s rights, title and interest in any litigation,
claims, causes of action whether known or unknown, asserted or unasserted, for
any action, conduct, or omissions arising prior to the Closing against any
former or current officer, director, employee, shareholder, creditor,
representative advisor, counsel or professional of Beacon Seller or relating to
commercial tort claims;

 

(viii)      the Beacon Excluded Contracts and any and all rights thereunder;

 

(ix)         the SRS Included Assets;

 

(x)          the Retained Books and Records of Beacon Seller; provided, that
prior and subsequent to the Closing Date, Beacon Purchaser shall have the right
to make copies of any portions of the Retained Books and Records to the extent
that such portions relate to, are relevant to, or were used prior to the Closing
Date in connection with the operation of, the Beacon Business or any of the
Beacon Included Assets;

 

(xi)         any cash or cash equivalents and all bank accounts of Beacon Seller
(including, for this purpose, all collected funds (including checks), at or
prior to 12:01 a.m., prevailing Eastern time on the Closing Date received by
Beacon Seller (including in any lockbox of Beacon Seller) and all prepayments
made to Beacon Seller);

 

(xii)        all deposits held by Beacon Seller under this Agreement, any Beacon
Excluded Contract or for worker’s compensation collateral;

 

(xiii)       all assets of Beacon Seller related to or under any Employee
Benefit Plans;

 

(xiv)      insurance proceeds, claims and causes of action with respect to or
arising in connection with (A) any Contract which is not included within the
Beacon Included Assets, (B) any item of tangible or intangible property not
included within the Beacon Included Assets, or (C) any Beacon Excluded
Liability;

 

(xv)       any equity interest held by Beacon Seller in any Person;

 

(xvi)      the assets, properties and rights set forth on Schedule 2.2(a)(xvi);

 

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(xvii)     any and all assets of Beacon Seller’s Affiliates, except to the
extent specifically transferred by this Agreement as a Beacon Included Asset or
otherwise;

 

(xviii)    all Liabilities with respect to employees of Beacon Seller or any of
its Affiliates; and

 

(xix)       any intercompany obligations owing to Beacon Seller, other than any
such intercompany obligations that are an Included Asset or an Assumed
Liability.

 

(b)         Nothing herein contained shall be deemed to sell, transfer, assign,
convey or deliver the SRS Excluded Assets to SRS Purchaser, and SRS Seller or an
Affiliate thereof, as applicable, shall retain all right, title and interest to,
in and under the SRS Excluded Assets, and neither SRS Purchaser nor any
Affiliate of SRS Purchaser shall have any Liability therefor.  “SRS Excluded
Assets” shall mean the following assets, properties and rights of SRS Seller:

 

(i)          any and all rights of SRS Seller under this Agreement or any
agreement related hereto;

 

(ii)         all Accounts Receivable of SRS Seller;

 

(iii)        all Avoidance Actions of SRS Seller;

 

(iv)        all Deposits by SRS Seller;

 

(v)         all insurance benefits, including rights and proceeds, arising from
or relating to the directors and officers insurance of the SRS Seller;

 

(vi)        all of SRS Seller’s rights, title and interest in any litigation,
claims, causes of action whether known or unknown, asserted or unasserted, for
any action, conduct, or omissions arising prior to the Closing against any
former or current officer, director, employee, shareholder, creditor,
representative advisor, counsel or professional of SRS Seller or relating to
commercial tort claims;

 

(vii)       all rights to refunds, credits, deposits or prepayments or the
equivalent owing to SRS Seller from any taxing authority related to periods on
or before the Closing Date;

 

(viii)      the SRS Excluded Contracts and any and all rights thereunder;

 

(ix)         the Retained Books and Records of SRS Seller; provided, that prior
and subsequent to the Closing Date, SRS Purchaser shall have the right to make
copies of any portions of the Retained Books and Records to the extent that such
portions relate to, are relevant to, or were used prior to the Closing Date in
connection with the operation of, the SRS Business or any of the SRS Included
Assets;

 

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(x)          any cash or cash equivalents and all bank accounts of SRS Seller
(including, for this purpose, all collected funds (including checks), at or
prior to 12:01 a.m., prevailing Eastern time on the Closing Date received by SRS
Seller (including in any lockbox of SRS Seller));

 

(xi)         all deposits held by SRS Seller under this Agreement or any SRS
Excluded Contract;

 

(xii)        the Beacon Included Assets;

 

(xiii)       all assets of SRS Seller related to or under any Employee Benefit
Plans;

 

(xiv)      insurance proceeds, claims and causes of action with respect to or
arising in connection with (A) any Contract which is not included within the SRS
Included Assets, (B) any item of tangible or intangible property not included
within the SRS Included Assets, or (C) any SRS Excluded Liability;

 

(xv)       any equity interest held by SRS Seller in any Person;

 

(xvi)      the assets, properties and rights set forth on Schedule 2.2(b)(xvi);

 

(xvii)     any and all assets of SRS Seller’s Affiliates, except to the extent
specifically transferred by this Agreement as an SRS Included Asset or
otherwise;

 

(xviii)    all Liabilities with respect to employees of SRS Seller or any of its
Affiliates; and

 

(xix)       any intercompany obligations owing to SRS Seller, other than any
such intercompany obligations that are an Included Asset or an Assumed
Liability.

 

Section 2.3.            Condition of Conveyance.  Without limiting the
provisions of this Agreement relating to the Closing, the sale, transfer,
assignment, conveyance or delivery of the Included Assets shall be effected (a)
by appropriate instruments of transfer, bills of sale, endorsements, assignments
and deeds, in recordable form as appropriate and (b) free and clear of any and
all Encumbrances other than Permitted Encumbrances and Assumed Liabilities.

 

Section 2.4.            Purchase Price.  The purchase price for the Included
Assets (the “Purchase Price”) shall consist of (a) cash to the Beacon Seller in
an amount equal to $4,700,000 (such cash amount, the “Beacon Cash Purchase
Price”), of which $750,000 shall be paid to the Massachusetts Development
Finance Agency in full satisfaction of its secured claim against the Beacon
Seller, (b) cash to the SRS Seller in an amount equal to $800,000 (such cash
amount, the “SRS Cash Purchase Price”), (c) a promissory note payable to the SRS
Seller in the principal amount of $25,000,000, on the terms set forth in the
term sheet attached as Exhibit F hereto (the “Note”) (and the Parties agree that
such Note constitutes proceeds of the Secured Party’s collateral and,
accordingly, shall be endorsed by the SRS Seller to the Secured Party unless the
Bankruptcy Court directs otherwise), and (d) other Assumed Liabilities set forth
in Section 2.5.

 

8

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Section 2.5.            Assumption of Liabilities.

 

(a)         On the Closing Date, on the terms and subject to the conditions
hereof, Beacon Purchaser shall assume and agree to pay, perform and discharge
when due, the Beacon Assumed Liabilities, but only to the extent not paid,
performed or discharged by Beacon Seller on or prior to the Closing Date.  For
purposes of this Agreement, “Beacon Assumed Liabilities” shall mean the
following Liabilities only (to the extent not paid at or prior to the Closing)
relating to and arising on or after the Closing Date:

 

(i)          all liabilities and obligations of Beacon Seller under the (A)
Beacon Assumed Contracts and (B) Permits that constitute Beacon Included Assets;

 

(ii)         all Cure Costs under the Beacon Assumed Contracts;

 

(iii)        the liabilities and obligations of Beacon Seller under the
Tyngsboro Lease, as amended as provided herein;

 

(iv)        all liabilities and obligations relating to and arising from the
Beacon Included Assets or the operation of the Beacon Business, but only to the
extent relating to and arising after the period commencing on or after the
Closing Date;

 

(v)         all liabilities and obligations for warranty liabilities, repairs,
replacements, returns, allowances and rebates with respect to the Beacon
Business, but only to the extent relating to and arising from activities
occurring after the period commencing on or after the Closing Date; and

 

(vi)        Taxes relating to the Beacon Included Assets arising after the
period commencing on the day after the Closing Date.

 

(b)         On the Closing Date, on the terms and subject to the conditions
hereof, SRS Purchaser shall assume and agree to pay, perform and discharge when
due, the SRS Assumed Liabilities, but only to the extent not paid, performed or
discharged by SRS Seller on or prior to the Closing Date.  For purposes of this
Agreement, “SRS Assumed Liabilities” shall mean the following Liabilities only
(to the extent not paid at or prior to the Closing) relating to and arising on
or after the Closing Date:

 

(i)          all liabilities and obligations of SRS Seller under the (A) SRS
Assumed Contracts and (B) Permits that constitute SRS Included Assets;

 

(ii)         all Cure Costs under the SRS Assumed Contracts;

 

(iii)        all liabilities and obligations relating to and arising from the
SRS Included Assets or the operation of the SRS Business, but only to the extent
relating to and arising after the period commencing on or after the Closing
Date;

 

(iv)        all liabilities and obligations for warranty liabilities, repairs,
replacements, returns, allowances and rebates with respect to the SRS Business,
but only to the

 

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extent relating to and arising from activities occurring after the period
commencing on or after the Closing Date; and

 

(v)         Taxes relating to the SRS Included Assets arising after the period
commencing on the day after the Closing Date.

 

Section 2.6.            Excluded Liabilities.

 

(a)         Notwithstanding anything contained in this Agreement to the
contrary, neither Beacon Purchaser nor any of its Affiliates will assume or
agree or undertake to pay, satisfy, discharge or perform in respect of, and will
not be deemed by virtue of the execution and delivery of this Agreement or any
document delivered at the Closing pursuant to this Agreement, or as a result of
the consummation of the Transaction, to have assumed, or to have agreed to pay,
satisfy, discharge or perform in respect of, any Liability, obligation,
indebtedness, Taxes (other than Transfer Taxes Beacon Purchaser has agreed to
pay pursuant to Section 7.4(a) of this Agreement), or Liability related to any
Employee Benefit Plan of Beacon Seller or its Affiliates or of any other Person
or in any way relating to the Beacon Business, the Beacon Included Assets,
Beacon Excluded Assets or otherwise (whether primary or secondary, direct or
indirect, known or unknown, absolute or contingent, matured or unmatured, or
otherwise) (such liabilities and obligations retained by Beacon Seller or any
Affiliate of Beacon Seller or of any other Person or as otherwise excluded
hereunder, including all liabilities and obligations with respect to the Beacon
Excluded Assets, being referred to herein as the “Beacon Excluded Liabilities”)
other than and limited to the Beacon Assumed Liabilities, and Beacon Seller and
its Affiliates shall expressly retain all such Beacon Excluded Liabilities.

 

(b)         Notwithstanding anything contained in this Agreement to the
contrary, neither SRS Purchaser nor any of its Affiliates will assume or agree
or undertake to pay, satisfy, discharge or perform in respect of, and will not
be deemed by virtue of the execution and delivery of this Agreement or any
document delivered at the Closing pursuant to this Agreement, or as a result of
the consummation of the Transaction, to have assumed, or to have agreed to pay,
satisfy, discharge or perform in respect of, any Liability, obligation,
indebtedness, Taxes (other than Transfer Taxes SRS Purchaser has agreed to pay
pursuant to Section 7.4(a) of this Agreement), or Liability related to any
Employee Benefit Plan of SRS Seller or its Affiliates or of any other Person or
in any way relating to the SRS Business, the SRS Included Assets, SRS Excluded
Assets or otherwise (whether primary or secondary, direct or indirect, known or
unknown, absolute or contingent, matured or unmatured, or otherwise) (such
liabilities and obligations retained by SRS Seller or any Affiliate of SRS
Seller or of any other Person or as otherwise excluded hereunder, including all
liabilities and obligations with respect to the SRS Excluded Assets, being
referred to herein as the “SRS Excluded Liabilities”) other than and limited to
the SRS Assumed Liabilities, and SRS Seller and its Affiliates shall expressly
retain all such SRS Excluded Liabilities.

 

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Section 2.7.            Procedures for Assumption of Agreements.

 

(a)         On or prior to the date hereof, the applicable Seller shall have
delivered to the applicable Purchaser a list of (i) all Material Contracts to
which such Seller is a party and (ii) the amount of Cure Costs associated with
each Material Contract.  Such list shall also contain a list of all other
Contracts to which each Seller is a party or which are related to or used in
connection with operation of its respective Business, other than such Contracts
that are immaterial to such Business.  Each Seller shall cooperate with and
provide such additional information to the applicable Purchaser in order to
identify and provide to such Purchaser as promptly as practicable all Material
Contracts related to such Seller’s Business (and the related Cure Costs), as
well as Cure Costs of non-Material Contracts, subject to assumption or rejection
hereunder.

 

(b)         Any motions filed by a Seller with, and any proposed orders
submitted by a Seller to, the Bankruptcy Court seeking authorization after the
date hereof to assume or reject any Contracts shall be satisfactory in form and
substance to the applicable Purchaser in its reasonable discretion.  By no later
than the Sale Hearing, each Seller shall cause notice to be provided to all
counterparties to the Contracts regarding the (i) procedures for the assumption
and assignment to the applicable Purchaser of their Contracts, except for any
such Contracts which such Purchaser previously has advised such Seller in
writing that it does not wish to assume (and such Seller shall thereupon be
under no obligation to seek assumption and assignment to the applicable
Purchaser of any such Contracts), and (ii) fixing of the Cure Costs associated
with each Contract as of the Closing (or as of such later date reasonably
acceptable to the applicable Purchaser and such Seller).  Each Seller shall
consult with, and give due consideration to the views and concerns of, the
applicable Purchaser prior to compromising or commencing any Legal Proceeding
with respect to any material payment required to be made under the Bankruptcy
Code to effectuate the assumption of any such Contract, including using
commercially reasonable efforts to provide five (5) days’ notice of any such
compromise or Legal Proceeding to such Purchaser.

 

(c)         After the Auction, for the purpose of determining whether a Contract
of a Seller shall be included as an Assumed Contract or an Excluded Asset, each
Contract of a Seller shall not be purchased by the applicable Purchaser and
shall be included in Excluded Assets, unless such Purchaser notifies such Seller
in writing of its desire to purchase such Contract no later than seven (7) days
after entry of the Sale Order, in which case such Contract shall be designated
to be assumed by such Seller and assigned to such Purchaser on the Closing Date,
with such Purchaser responsible for all Cure Costs associated therewith;
provided, however, each such Contract identified in Schedules 2.1(a)(i) and
2.1(b)(i) shall be designated to be assumed and assigned to such Purchaser, with
such Purchaser responsible for all Cure Costs associated therewith, unless (a)
otherwise specifically noted on such Schedules or (b) such designation is
changed by such Purchaser notifying such Seller in writing of its desire to
change such designation no later than seven (7) days after entry of the Sale
Order, in which case each such Contract shall be deemed rejected and shall not
be purchased by such Purchaser as an Assumed Contract.

 

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(d)         Any Contract designated to be assumed and assigned hereunder shall
be accompanied by such information or documentation related to “adequate
assurance of future performance” as shall be reasonably required in connection
with the assumption and assignment of such Contract, and upon Bankruptcy Court
approval for the assumption and assignment thereof to the applicable Purchaser,
shall constitute an Included Asset hereunder.  Any Contract that is not assumed
as provided above shall be an Excluded Asset, and shall not constitute an
Included Asset hereunder.  Notwithstanding anything to the contrary set forth in
this Agreement, to the extent that, prior to Closing, any Assumed Contract is
not subject to an Order of the Bankruptcy Court with respect to the assumption
and assignment of such Assumed Contract, any liabilities of a Seller related to
such Assumed Contract shall be the responsibility of such Seller until such
Assumed Contract is assumed by such Seller and assigned to the applicable
Purchaser.

 

(e)         At Closing, to the extent not previously paid, (i) Beacon Purchaser
shall pay or cause to be paid (and shall reimburse or cause to be reimbursed to
Beacon Seller any amounts paid after the date hereof in respect of) any and all
Cure Costs in respect of all Contracts that are Beacon Assumed Contracts, and
(ii) SRS Purchaser shall pay or cause to be paid (and shall reimburse or cause
to be reimbursed to SRS Seller any amounts paid after the date hereof in respect
of) any and all Cure Costs in respect of all Contracts that are SRS Assumed
Contracts.

 

(f)          Notwithstanding any other provision of this Agreement to the
contrary, this Agreement shall not constitute an agreement to assign or transfer
and shall not affect the assignment or transfer of any Included Asset if (a) an
attempted assignment thereof, without the approval, authorization or consent of,
or granting or issuance of any license or permit by, any third party thereto
(each such action, a “Necessary Consent”), would constitute a breach thereof or
in any way adversely affect the ability of a Purchaser to assume rights
thereunder and (b) the Bankruptcy Court shall not have entered an Order
providing that such Necessary Consent is not required under applicable Law.  In
such event, the applicable Seller and the applicable Purchaser will use their
commercially reasonable efforts to obtain as expeditiously as possible the
Necessary Consents with respect to any such Included Asset or any claim or right
or any benefit arising thereunder for the assignment thereof to the applicable
Purchaser as such Purchaser may reasonably request.  Once Consent for the sale,
transfer, assignment, conveyance or delivery of any such asset not sold,
transferred, assigned, conveyed or delivered at the Closing is obtained, such
Seller shall promptly transfer, assign, convey and deliver such asset to such
Purchaser at no additional cost.  Unless and until any such Necessary Consent is
obtained, such Seller and such Purchaser shall cooperate to establish an
arrangement reasonably satisfactory to such Purchaser under which such Purchaser
would obtain the claims, rights and benefits and assume the corresponding
liabilities and obligations thereunder (including by means of any
subcontracting, sublicensing or subleasing arrangement) or under which such
Seller would enforce for the benefit of such Purchaser, with such Purchaser
assuming and agreeing to pay such Seller’s obligations (other than any related
Cure Costs), any and all claims, rights and benefits of such Seller against a
third party thereto.  In such event, (i) such Seller will hold in trust

 

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for and promptly pay to such Purchaser, when received, all moneys received by
them under any such Contract or any claim, right or benefit arising thereunder
and (ii) such Purchaser will promptly pay, perform or discharge, when due, any
and all obligations and liabilities arising thereunder (other than any related
Cure Costs), other than those being contested in good faith.  Nothing in this
paragraph shall be deemed a waiver of a Purchaser’s right to receive an
effective assignment of all of the Included Assets at Closing nor shall any
Contracts covered by this paragraph be deemed to constitute Excluded Assets
solely by virtue of this paragraph.  Each Seller’s obligations under this
paragraph shall terminate on the date that is three (3) months after the Closing
Date.

 

Section 2.8.            Purchase Price Deposit.  On or prior to the date hereof,
Purchasers have deposited with the Escrow Holder, by wire transfer of
immediately available funds, as an earnest good-faith money deposit and security
for the performance of Purchasers’ obligations under this Agreement, an amount
equal to $800,000 (the “Purchase Price Deposit”).  At the Closing, the Purchase
Price Deposit (and interest thereon accrued, if any) shall be applied toward the
Cash Purchase Price.

 

Section 2.9.            Purchase Price Allocation.

 

(a)         For the purposes of the Bidding Procedures Order, the Purchase Price
will be allocated among the Included Assets as set forth on Schedule 2.9(a).

 

(b)         Following the Closing, Purchasers shall allocate the Purchase Price
(as determined for applicable Tax purposes) for Tax purposes (the “Tax
Allocation”) among the Included Assets in accordance with IRC Section 1060 as
prepared by Purchasers.  The Parties shall report, act and file Tax Returns
(including, but not limited to Internal Revenue Service Form 8594) in all
respects and for all purposes consistent with the agreed upon Tax Allocation. 
No Party shall take any position (whether in audits, Tax Returns or otherwise)
that is inconsistent with the Tax Allocation unless required to do so by
applicable Law.

 

Section 2.10.          Other Agreements. (a) As of or prior to the Closing Date,
Beacon Purchaser and GFI Tyngsboro shall enter into the Tyngsboro Lease
Amendment.

 

ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLERS

 

Each Purchaser hereby acknowledges and agrees that, except as otherwise
expressly provided herein, each Seller makes no representations or warranties
whatsoever, express or implied, with respect to any matter relating to the
Included Assets.  As of the date hereof, as of the Bring-Down Date, and, with
respect to Sections 3.1, 3.2, 3.3, 3.4, 3.15 and 3.16, as of the Closing Date,
Beacon Seller, with respect to itself only and not jointly, represents and
warrants to Beacon Purchaser, and SRS Seller, with respect to itself only and
not jointly, represents and warrants to SRS Purchaser, as follows:

 

Section 3.1.            Company Status.  Such Seller is duly organized and
validly existing under the laws of its jurisdiction of organization.  Such
Seller has all requisite corporate or limited

 

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liability company power and authority to own, lease, develop and operate the
Included Assets and to carry on its respective Business as now being conducted
(subject to the provisions of the Bankruptcy Code).

 

Section 3.2.            Power and Authority.  Subject, in the case of the
obligation to carry out the Transaction, to the entry of the Sale Order, each
Seller has all requisite corporate or limited liability company power and
authority to execute and deliver this Agreement and the agreements related
hereto and to perform its obligations hereunder and thereunder.  Subject to the
entry of the Sale Order, the execution, delivery and performance by each Seller
of this Agreement and the consummation of the Transaction have been duly and
validly authorized by all requisite corporate or limited liability company
action on the part of such Seller and no other proceeding on the part of such
Seller is necessary to authorize this Agreement and to consummate the
Transaction.  Assuming entry of the Sale Order, this Agreement and each document
delivered in connection herewith has been duly and validly executed and
delivered by each Seller and (assuming the due authorization, execution and
delivery by all parties hereto and thereto other than such Seller) constitutes
(or will constitute) valid and binding obligations of each Seller, enforceable
in accordance with its terms, except as limited by laws affecting the
enforcement of creditors’ rights generally or by general equitable principles.

 

Section 3.3.            Conflicts Under Constituent Documents or Laws.  Neither
the execution and delivery of this Agreement by each Seller, nor the
consummation by each Seller of the Transaction, will conflict with, contravene,
result in a violation or breach of or default under (with or without the giving
of notice or the lapse of time or both), except for breaches and defaults of the
type referred to in section 365(b)(2) of the Bankruptcy Code, cause or permit
the termination, modification, acceleration or vesting of any right or
obligation or the loss of any benefit to which such Seller is entitled or result
in the creation or imposition of any Encumbrance upon any of the Included
Assets, except for Permitted Encumbrances, Assumed Liabilities or Encumbrances
that will be released at or prior to Closing, under, (a) such Seller’s
certificate of incorporation or bylaws or formation or operating agreement, or
(b) any applicable Law, in each case, subject to the effect of applicable
bankruptcy law and the Sale Order.

 

Section 3.4.            Consents.  Except as set forth on Schedule 3.4, the
execution, delivery and performance by each Seller of this Agreement does not,
and the consummation by each Seller of the Transaction will not require such
Seller to make any filing with or give notice to, or obtain any Consent from,
any Governmental Authority or other third party, other than the Sale Order and
such Consents and filings as are required by FERC.

 

Section 3.5.            Included Assets.

 

(a)         Except as disclosed in Schedule 3.5(a), each Seller has good, valid
and marketable title to the Included Assets, free and clear of all Encumbrances,
except for Permitted Encumbrances and those Encumbrances that will be removed,
released or otherwise rendered unenforceable on or prior to the Closing Date.
 Upon the sale of the Included Assets on the Closing Date, each applicable
Purchaser, or its assignee, pursuant to the Sale Order, shall be the owner
thereof and hold good, valid and marketable title thereto, free and clear of all
Encumbrances (other than Permitted Encumbrances), to the

 

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maximum extent permitted under sections 105 and 363 of the Bankruptcy Code and
other applicable Law.

 

(b)         The Included Assets constitute all of the assets required for the
continued conduct of the Beacon Business and the SRS Business.  Except for low
rate initial production assets, the plants, buildings, structures, material
equipment and other material tangible personal property included in the Beacon
Included Assets are in good repair, working order and operating condition,
subject only to ordinary wear and tear, and are adequate and suitable for the
purposes for which they are presently being used or held for use.  To the
Knowledge of Sellers, there are no facts or conditions affecting any Beacon
Included Assets that would reasonably be expected, individually or in the
aggregate, to interfere in any material respect with the current use, occupancy
or operation of such Included Assets.

 

Section 3.6.            Material Contracts.  To the Knowledge of Sellers, all
material Contracts (the “Material Contracts”) have been made available to
Purchasers in the Sellers’ electronic data room.

 

Section 3.7.            Real Property.

 

(a)         The Owned Real Property constitutes all of the real property owned
by SRS Seller.  Beacon Seller does not own any real property.

 

(b)         Except for the Tyngsboro Lease, Sellers do not lease any real
property pursuant to any Real Property Lease.  Beacon Seller has delivered to
Beacon Purchaser a true, correct and complete copy of the Tyngsboro Lease,
including all amendments or modifications thereto, and, except as provided on
Schedule 3.7(b), the Tyngsboro Lease is unmodified and in full force and effect
as of the Execution Date.   Beacon Seller is not a sublessor or grantor under
any sublease or other instrument granting to another Person any right to the
possession, lease, occupancy or enjoyment of the Leased Real Property.  With
respect to the Tyngsboro Lease:

 

(i)          the Tyngsboro Lease is in full force and effect and is valid,
binding and enforceable in accordance with its terms;

 

(ii)         as of the Bring-Down Date only, no amount payable under the
Tyngsboro Lease is past due;

 

(iii)        Beacon Seller is in compliance in all material respects with all
commitments and obligations on its part to be performed or observed under the
Tyngsboro Lease;

 

(iv)        Beacon Seller has not assigned, subleased, sublicensed, mortgaged,
pledged or otherwise encumbered or transferred its interest, if any, under the
Tyngsboro Lease; and

 

(c)         Beacon Seller has exercised within the time prescribed in the
Tyngsboro Lease any option provided therein to extend or renew the term thereof.

 

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(d)         Except as disclosed in Schedule 3.7(d), to the Knowledge of Sellers
(i) there are no pending or threatened condemnation proceedings by or before any
Governmental Authority with respect to the Real Property and (ii) Beacon Seller
has not received any written notice from any city, village, county or state or
other Governmental Authority of any zoning, ordinance, building fire, health or
safety code or other legal violation in respect of the Tyngsboro Lease.

 

(e)         The Hazle Option Agreement is in full force and effect.

 

Section 3.8.            Intellectual Property Rights.

 

(a)         Schedule 3.8(a) contains a complete and accurate description and
list of all  patented or registered Intellectual Property Rights (or
applications therefor) owned or held by, or filed in the name of, each Seller or
any Affiliate of such Seller (indicating for each, the applicable jurisdiction,
registration number (or application number) and date issued or, if not issued,
date filed and the applicable Seller or Affiliate).

 

(b)         Schedule 3.8(b) contains a complete and accurate list of all
licenses and other rights granted to or by a Seller or any Affiliate of a Seller
with respect to any Intellectual Property Rights (collectively, the
“Intellectual Property Licenses”) (indicating for each, the applicable Seller or
Affiliate and the applicable Business).

 

(c)         To the Knowledge of Sellers, the conduct of each Business as
currently conducted by the applicable Seller does not, infringe any Intellectual
Property Rights of any other Person.  To the Knowledge of Sellers, no Seller has
received any demand, claim, notice, or inquiry from any other Person claiming
infringement, misappropriation or dilution of any Intellectual Property Rights
or unfair competition or unfair trade practices under the laws of any
jurisdiction, and no Seller knows of no basis for any such allegation.  With
respect solely to the Patents relating to Sellers’ flywheel technology, to the
Knowledge of Sellers, none of the Intellectual Property Rights listed on
Schedule 3.9(a) has been or is currently being infringed, misappropriated or
diluted by any third parties.  With respect solely to the Patents relating to
Sellers’ flywheel technology, the Beacon Seller has used all reasonable efforts
to protect the Intellectual Property Rights listed on Schedule 3.9(a) Related to
such Seller’s Business against any and all infringement, misappropriation or
dilution by third parties and to secure and preserve all right, title and
interest therein and thereto.

 

(d)         All granted Patents, listed on Schedule 3.9(a) are valid,
subsisting, and in full force.  All applications for any Patents, listed on
Schedule 3.9(a) have been prosecuted in good faith, as required by law and as
reasonably prudent and diligent, and are in good standing.  To the Knowledge of
Sellers, none of the Intellectual Property Rights listed on Schedule 3.9(a) is
involved in any interference, reissue, re-examination, or opposition proceeding,
and there has been no written notice received by a Seller that any such
proceeding will hereafter be commenced.  To the Knowledge of Sellers, none of
the Intellectual Property Rights listed on Schedule 3.9(a) is subject to any
Legal Proceeding or Order currently restricting in any manner the use, transfer,
or licensing

 

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thereof, or that may affect the validity, use, or enforceability of such
Intellectual Property Rights.

 

Section 3.9.            Compliance with Laws and Orders.  Each Seller’s
ownership and operation of its respective Business and the applicable Included
Assets has been and is in compliance in all material respects with applicable
Law and does not violate in any material respect any Law of any Governmental
Authority.

 

Section 3.10.          Permits.  Each Seller has all material Permits required
to permit such Seller to lawfully conduct and operate its Business (other than
the Business relating to the Hazle Assets), and to own and use the applicable
Included Assets (other than the Hazle Assets), in the manner consistent with the
past practices of such Seller, except for such failures as would not,
individually or in the aggregate, reasonably be expected to be material.  To the
Knowledge of Sellers, except for breaches and defaults of the type referred to
in section 365(b)(2) of the Bankruptcy Code, (i) each such Permit is valid and
in full force and effect,(ii) each Seller is in compliance with the terms and
requirements of each such Permit, except for such failures as would not
reasonably be expected to be material and (iii) none of the Permits are
undergoing any form of review, proceeding, whether requested or imposed, whose
outcome may be to revoke, restrict, fail to renew, or materially modify such
Permit.

 

Section 3.11.          Litigation.  Except for the matters that will be
discharged or that are reasonably expected to be discharged pursuant to the Sale
Order and all matters relating to or arising out of the Chapter 11 Cases, as of
the date hereof, there is no Legal Proceeding pending against, or to the
Knowledge of Sellers, threatened against or affecting, a Seller, its Business,
or the applicable Included Assets before any court or arbitrator or any
Governmental Authority which would reasonably be expected to be material or
which in any manner challenges or seeks to prevent, enjoin, alter or materially
delay the Transaction.

 

Section 3.12.          Environmental Matters.  Except as disclosed on Schedule
3.12:

 

(a)         To the Knowledge of Sellers, the ownership, use and operation by a
Seller of its Business, the Real Property, the Included Assets or the Systems of
such Seller have been, are and will be on the Closing Date in material
compliance with all applicable Environmental Laws, and no Environmental
Liability has been asserted, filed, commenced, or in writing threatened against
such Seller, the Systems, the Included Assets, the Real Property or the Business
of such Seller.  To the Knowledge of Sellers, there are no facts or
circumstances now or formerly in existence in relation to a Business, the Real
Property, the Included Assets or the Systems that would be reasonably likely to
result in Environmental Liabilities.

 

(b)         To the Knowledge of Sellers, each Seller has obtained all
Environmental Permits necessary for the ownership and operation of the Systems,
the Included Assets and the Real Property of such Seller, and the conduct of its
Business in material compliance with Environmental Laws, and the Included Assets
and the Systems of such Seller are sufficient to conduct such Seller’s Business
in compliance with and to the full extent of such Environmental Permits.  To the
Knowledge of Sellers, all such

 

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Environmental Permits are valid and in full force and effect, and none is
undergoing any form of review or proceeding, whether requested or imposed, .

 

(c)         To the Knowledge of Sellers, no Seller has received written notice
from any Governmental Authority of any violation of, or failure to comply with,
any Environmental Laws with respect to its Business, the Real Property, the
Included Assets or the Systems of such Seller which remains uncorrected and any
obligation to respond to the presence or release of Hazardous Substances
pursuant to applicable Environmental Laws with respect to such Seller’s
Business, the Real Property, the Included Assets or the Systems that remains
unperformed.

 

(d)         To the Knowledge of Sellers, no Release or threatened Release has
occurred or is occurring at or from any property owned, operated, leased or used
by a Business or a Seller for which Environmental Law requires (i) notice to any
public or private entity or person, (ii) further investigation, or (iii) any
form or response action.  To the Knowledge of Sellers, no condition or
circumstance existed or exists at, on, in or under any such property for which
Environmental Law requires (i) notice to any public or private entity or person,
(ii) further investigation, or (iii) any form or response action.

 

(e)         Each Seller has identified and made available to each applicable
Purchaser every material environmental investigation, study, audit, test and
other analysis conducted by or for or in the possession of such Seller or its
Business in relation to such Business, the Real Property, the Included Assets or
the Systems of such Seller.

 

Section 3.13.          Regulatory Matters.  SRS was determined by FERC to be an
exempt wholesale generator within the meaning of Section 32 of the Public
Utility Holding Company Act of 1935 by order dated September 13, 2010, in Docket
No. EG10-41.  SRS (i) is authorized by FERC to make wholesale sales of electric
energy, capacity and ancillary services at market-based rates pursuant to
Section 205 of the Federal Power Act, (ii) has obtained the blanket
authorizations and waivers that are customarily granted by FERC to parties
authorized to sell electric power at market-based rates, and (iii) is in
compliance with FERC’s regulations applicable to market-based rate sellers.  SRS
has complied with all applicable FERC rules, filings and reporting obligations.

 

Section 3.14.          Labor Matters.  No Seller is a party to or bound by any
collective bargaining agreement and there are no labor unions representing any
employees employed by a Seller.

 

Section 3.15.          No Misleading Statements.  The representations and
warranties made by a Seller in this Agreement, including the Exhibits and
Schedules hereto, do not include any untrue statement of a material fact or omit
to state any material fact necessary to make the statements herein not
misleading.

 

Section 3.16.          Brokers.  No person has acted as a broker on behalf of a
Seller in connection with the consummation of the Transaction, and no Seller has
incurred or become liable for any broker’s commission or finder’s fee which
would or may become payable by a Purchaser relating to or in connection with the
Transaction.

 

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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER

 

As of the date hereof, as of the Bring-Down Date, and as of the Closing Date,
Beacon Purchaser, with respect to itself only and not jointly, represents and
warrants to Beacon Seller, and SRS Purchaser, with respect to itself only and
not jointly, represents and warrants to SRS Seller, as follows:

 

Section 4.1.            Corporate Status.  Such Purchaser is duly organized,
validly existing and in good standing under the laws of its jurisdiction of
organization and has all requisite limited liability company  power and
authority to own, lease and operate its properties and to carry on its business
as now being conducted.

 

Section 4.2.            Validity.  Such Purchaser has all requisite limited
liability company power and authority to execute and deliver this Agreement and
the agreements related hereto and to perform its obligations hereunder and
thereunder (subject, in the case of the obligation to carry out the Transaction,
to the entry of the Sale Order).  The execution, delivery and performance by
Purchaser of this Agreement and the consummation of the Transaction have been
duly and validly authorized by all requisite limited liability company action on
the part of such Purchaser, and no other limited liability company proceeding on
the part of such Purchaser is necessary to authorize this Agreement and to
consummate the Transaction.  Assuming entry of the Sale Order, this Agreement
and any document delivered in connection herewith has been duly and validly
executed and delivered by such Purchaser and (assuming the due authorization,
execution and delivery by all parties hereto and thereto other than such
Purchaser) constitutes (or will constitute) valid and binding obligations of
such Purchaser, enforceable in accordance with its terms, except as limited by
laws affecting the enforcement of creditors’ rights generally or by general
equitable principles.

 

Section 4.3.            Consents.  The execution, delivery and performance by
each Purchaser of this Agreement does not, and the consummation by such
Purchaser of the Transaction, will not require such Purchaser to make any filing
with or give notice to, or obtain any Consent from, any Governmental Authority,
other than the Sale Order and such Consents and filings as are required by FERC.

 

Section 4.4.            Broker Fees.  No Purchaser has incurred any Liability
for brokerage or finders’ fees or agents’ commissions or other similar payment
in connection with the Transaction that would be payable by a Seller.

 

Section 4.5.            Resources.  At the Closing, each Purchaser will have
sufficient funds available to pay its applicable portion of the Cash Purchase
Price, the Cure Costs, if any, and to satisfy any Assumed Liabilities to the
extent due and payable at the Closing.

 

Section 4.6.            Investigation.  Each Purchaser acknowledges and affirms
that it has completed its own independent investigation, analysis and evaluation
of the applicable Included Assets, that it has made such reviews and inspections
of the applicable Included Assets as it deems commercially reasonable, necessary
and appropriate, and that in making its decision to enter into this Agreement
and consummate the Transaction, it has relied on its own investigation,

 

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analysis, and evaluation with respect to all matters without reliance upon any
express or implied representations or warranties other than those expressly set
forth in this Agreement, upon which it has relied.

 

ARTICLE V
COVENANTS

 

Section 5.1.            Conduct of the Businesses.  Except as may be required by
the Bankruptcy Court, and except as may be required or contemplated by this
Agreement, from the date hereof until the Closing Date, each Seller shall use
its commercially reasonable efforts to conduct its Business in the Ordinary
Course and consistent with past practices, including meeting all post-petition
obligations relating to such Business as they become due and preserving intact
their relationships with third parties (including suppliers and customers);
provided, that, following the Bring-Down Date, each Seller shall be subject to
the Budget described in Section 5.9 hereof.  Without limiting the generality of
the foregoing, from the date hereof until the Closing Date, except as otherwise
expressly contemplated by this Agreement or with the prior written consent of
the applicable Purchaser, a Seller will not, and will cause its Affiliates not
to:

 

(a)         with respect to its Business, acquire a material amount of assets
from any other Person;

 

(b)         sell, lease, license or otherwise dispose of any Included Assets;

 

(c)         acquire or agree to acquire by merging or consolidating with, or by
purchasing a substantial equity interest in or a substantial portion of the
assets of, or by any other manner, any business of another Person;

 

(d)         incur any indebtedness for borrowed money;

 

(e)         other than in accordance with Section 2.7 hereof, assume or reject
or amend, restate, supplement, modify, waive or terminate any Material Contract,
material Permit or unexpired Lease or enter into any settlement of any claim
that (i) is outside the Ordinary Course of Business, (ii) delays the Closing,
(iii) relates to a Material Contract or (iv) subjects a Seller to any material
non-compete or other similar material restriction on the conduct of a Business
that would be binding following the Closing; or

 

(f)          agree or commit to do any of the foregoing.

 

Section 5.2.            Matters Requiring Notice.  Sellers, on the one hand, and
Purchasers, on the other hand, shall, prior to the Closing:

 

(a)         promptly following receipt or sending, as applicable, notify the
other of any written notice or other written communication received by or sent
by a Seller, in the case of Sellers, or a Purchaser, in the case of Purchasers,
from or to any Person regarding any Consent required for the Transaction
(including, but not limited to, any communications from FERC), or alleging that
the Consent of such Person is or may be required in connection with the
Transaction;

 

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(b)         promptly upon becoming aware of any such inaccuracy, notify the
other Party of any inaccuracy of any representation or warranty of such Party
contained in this Agreement at any time that would make such representation or
warranty false in any material respect; and

 

(c)         promptly upon becoming aware of any such breach, notify the other
Parties of any breach of any covenant or agreement of such Party(ies) contained
in this Agreement at any time.

 

(d)         Notwithstanding anything to the contrary in this Agreement, delivery
of any notice pursuant to this Section 5.2 and any access to or provision of
information (including pursuant to Section 5.4) shall not modify any of the
representations, warranties, covenants or agreements of the Parties (or rights
or remedies with respect thereto) or the conditions to the obligations of the
Parties under this Agreement.

 

Section 5.3.            Supplement to Disclosure Schedules.  From time to time
prior to the Closing Date, a Seller shall have the right (but not the
obligation) to provide to the applicable Purchaser any supplement or amendment
to the Disclosure Schedules hereto with respect to any matter hereafter arising
or of which it becomes aware after the date hereof (each, a “Schedule
Supplement”).  Without the written consent of Purchasers, no Schedule Supplement
shall be taken into account in determining whether the conditions set forth in
Sections 6.1 and 6.2 have been satisfied or limit or otherwise affect the
representations and warranties of such Seller herein or any remedies hereunder
available to such Purchaser.

 

Section 5.4.            Access to Information/Confidentiality/Preservation of
Books and Records.

 

(a)         From the Execution Date until the earlier of (i) termination of this
Agreement and (ii) the Closing, each Purchaser shall be entitled, through its
representatives (including its legal advisors and accountants), to make such
investigation of Sellers, the Included Assets and the Assumed Liabilities and
such examination of the Books and Records as it reasonably requests and to make
extracts and copies of such Books and Records.  Any such investigation and
examination shall be conducted during regular business hours upon reasonable
advance notice in a manner that minimizes disruption to the business, operations
and activities of a Seller.  Each Seller shall use its reasonable best efforts
to cause its representatives to cooperate with a Purchaser and its
representatives in connection with such investigation and examination. 
Notwithstanding anything to the contrary contained herein, a Purchaser shall not
be entitled to access or examine any information which a Seller reasonably
determine (i) is protected by attorney-client privilege, work-product or any
other similar privilege or doctrine or (ii) the disclosure of which is
prohibited pursuant to any Contract or applicable Law.

 

(b)         From and after the Closing and for so long as the Chapter 11 Cases
are pending or twelve (12) months after Closing, whichever period is shorter,
each Purchaser agrees to provide the applicable Seller with reasonable access to
Books and Records (and allow such Seller to make extracts and copies of such
Books and Records during such access) solely in connection with the wind down of
the applicable Chapter 11 Case or any other proceeding or action relating
thereto at such Seller’s sole cost and

 

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expense.  Any such access shall be during regular business hours upon reasonable
advance notice and in a manner that minimizes disruption to the business,
operations and activities of a Purchaser, including a Purchaser’s operation of
its Business.  Notwithstanding anything to the contrary contained herein, a
Seller shall not be entitled to access or examine any information which a
Purchaser reasonably determines (i) includes trade secrets or other proprietary
information, (ii) is protected by attorney-client privilege, work-product or any
other similar privilege or doctrine, (iii) the disclosure of which is prohibited
pursuant to any Contract or applicable Law, or (iv) includes customer names or
pricing information.

 

(c)         Unless and until the Closing has been consummated, each Purchaser
shall hold, and shall cause its Affiliates, counsel, independent certified
public accountants and appraisers to hold in confidence any confidential data or
information made available to such Purchaser in connection with this Agreement
pursuant to the terms of the Confidentiality Agreement.

 

Section 5.5.            Disclaimer of Additional Warranties.  Each Purchaser
hereby acknowledges and agrees that, except as set forth in Article III, no
Seller makes any representations or warranties whatsoever, express or implied,
with respect to any matter relating to the Included Assets (including, without
limitation, income to be derived or expenses to be incurred in connection with
the Included Assets, the physical condition of any real or personal property
comprising a part of the Included Assets or which is the subject of any Assumed
Contract, the environmental condition or other matter relating to the collection
of income, physical condition of any real property or improvements which are
owned by a Seller or the subject of any Lease to be assumed by a Purchaser at
the Closing or any other real property or improvements comprising a part of the
Included Assets, the zoning of any such real property or improvements, the value
of the Included Assets (or any portion thereof), the transferability of Included
Assets, the terms, amount, validity, collectability or enforceability of any
Claim, Assumed Contract, the validity or enforceability of any Intellectual
Property Rights, the noninfringement of third party Intellectual Property
Rights, the title to the Included Assets (or any portion thereof), or any other
matter or thing relating to the Included Assets or any portion thereof). 
Without in any way limiting the foregoing, except as set forth in Article III,
each Seller hereby disclaims any warranty (express or implied) of
merchantability or fitness for any particular purpose as to any portion of the
applicable Included Assets.  Each Purchaser further acknowledges that such
Purchaser has conducted an independent inspection and investigation of the
physical condition of all portions of the Real Property and all such other
matters relating to or affecting the Included Assets as such Purchaser deemed
commercially reasonable, necessary and appropriate and that in proceeding with
its acquisition of such, such Purchaser is doing so based solely upon such
independent inspections and investigations.  Accordingly, except only for the
representations and warranties set forth in Article III (which do not survive
the Closing Date), each Purchaser will accept the applicable Included Assets at
the Closing “AS IS,” “WHERE IS,” and “WITH ALL FAULTS.”  Without limiting the
generality of the immediately foregoing, except for the representations and
warranties specifically contained in Article III, each Seller hereby expressly
disclaims and negates any representation or warranty, express or implied, at
common law, by statute, or otherwise, relating to the condition of the assets of
such Seller; it being the intention of the

 

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Parties that the Included Assets are to be accepted by a Purchaser in their
present condition and state of repair.

 

Section 5.6.            Required Approvals.  Prior to the Closing, upon the
terms and subject to the conditions of this Agreement, the Parties shall use
commercially reasonable efforts to cooperate and take, or cause to be taken, all
actions, and to do, or cause to be done all things necessary, proper or
advisable (subject to any applicable Law) to consummate the Closing and the
Transaction as promptly as practicable including, but not limited to, the
preparation and filing of all forms, registrations and notices required pursuant
to any applicable Law to be filed to consummate the Closing and the Transaction
and the taking of such actions as are necessary to obtain any requisite
approvals, authorizations, Consents, releases, Orders, licenses, Permits,
qualifications, exemptions or waivers by any third party or Governmental
Authority.  SRS Purchaser further agrees to use its commercially reasonable
efforts to obtain, as soon as practicable after the date hereof, any and all
Consents and approvals of FERC required to consummate the Transaction
contemplated by this Agreement.  Each of Sellers and Purchasers agrees to
execute and deliver such other documents, certificates, agreements and other
writings and to take such other actions as may be necessary in order to vest in
Beacon Purchaser good title to the Beacon Included Assets and in SRS Purchaser
good title to the SRS Included Assets and to evidence the assumption by Beacon
Purchaser of the Beacon Assumed Liabilities and by SRS Purchaser of the SRS
Assumed Liabilities.

 

Section 5.7.            Publicity.  Except as required by applicable Law,
including any Order by the Bankruptcy Court in connection with any filings by
Sellers in any proceedings before the Bankruptcy Court or in connection with the
Auction, no Seller shall (and shall cause their representatives not to) issue
any press release concerning this Agreement or the Transaction without having
provided Purchasers at least twenty-four hours to review and comment on such
release.

 

Section 5.8.            Accounts Receivable.  If, following the Closing Date, a
Purchaser collects any Accounts Receivable of each Seller, such receipts shall
be deemed to be held by such Purchaser in trust for such Seller, such Purchaser
shall remit such collected amounts to such Seller as promptly as practicable
upon receipt.  Upon a Seller’s reasonable request, such Seller shall have the
right to inspect the Books and Records of the applicable Purchaser during normal
business hours (at such Seller’s sole costs and expenses and upon reasonable
notice to such Purchaser) for the purpose of auditing the remittance of such
Accounts Receivable.

 

Section 5.9.            Operation and Funding of the Businesses Between the
Bring-Down Date and the Closing Date.  During the Interim Term:

 

(a)         On or before the Bring-Down Date, the Purchasers and Sellers shall
agree on a budget for the Interim Term (the “Budget”).  The Budget may be
amended with the written consent of Purchasers and Sellers, which consent shall
not be unreasonably withheld or delayed.  Purchasers shall fund, and Seller
shall use, the amounts set forth in the Budget solely for the uses and purposes,
and at the times set forth in the Budget.

 

(b)         Sellers shall, on or before the second business day of each week of
the Interim Term, provide to Purchasers a funding request for a cash advance in
accordance

 

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with the Budget.  Purchasers shall remit such amount to Sellers on the next
business day.   For purposes of this Section, “in accordance with the Budget”
shall mean compliance with the Budget such that there shall not occur an adverse
variance of the disbursements of more than 10% on a cumulative basis.  Any
request for funds in addition to those permitted hereunder shall be at the
discretion of Purchasers.

 

(c)         On each Wednesday of each week during the Interim Term, Sellers
shall deliver to Purchasers a report setting forth the variances from the Budget
for that weekly period,

 

Section 5.10.          in Employees and Employee Benefit Matters.

 

(a)         Listed on Schedule 5.10(a) are the employees of each Seller whose
employment is related to the maintenance and operation of such Seller’s Business
and the applicable Included Assets (with respect to each Seller, such Seller’s
“Employees”).  During the period of time beginning on the date of this Agreement
and ending on the Closing Date, the Parties agree that a Purchaser or an
Affiliate of a Purchaser shall be entitled to make an offer of employment to the
Employees it wishes to employ under the terms and conditions as determined by
such Purchaser in its sole discretion; provided that the hiring of any Employee
by such Purchaser shall be conditioned upon the Closing, such Purchaser’s
successful completion of the Employee’s background check, drug screen test and
any other testing policies and procedures of such Purchaser and the Employee’s
timely acceptance of the offer in accordance with its terms and conditions.  No
Purchaser assumes any obligation to employ any of the Employees beyond those to
whom a Purchaser has made an offer of employment as of the Closing Date (the
“Offered Employees”).  Employment with a Purchaser will be considered new
employment, and such Purchaser will not assume any obligations relating to the
Offered Employees that accrue prior to an Offered Employee beginning employment
with such Purchaser.  No Purchaser makes any representation with respect to the
comparability of such Purchaser’s employee benefits to those provided by the
applicable Seller.  Each Purchaser specifically disclaims any obligation to
remunerate the Offered Employees who accept employment with such Purchaser at
levels comparable to the aggregate remuneration provided during their employment
by the applicable Seller.  Offered Employees who accept employment with a
Purchaser under the new terms of employment will be deemed to have resigned
their employment with the applicable Seller and will cease active participation
in such Seller’s Employee Benefit Plans.

 

(b)         Upon a Purchaser’s request, the applicable Seller shall provide to
such Purchaser, for each Employee, his or her title or position, employment
status, current rate of compensation (including any bonus and contingent or
deferred compensation) and date of hire and period of service recognized by
each, and in the case of any Employee paid an hourly wage, the average number of
hours such Employee was regularly scheduled to work each week in the twelve (12)
month period prior to the date of this Agreement, and the number of hours such
Employee is regularly scheduled to work each week as of the date of this
Agreement.

 

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(c)         As of the Closing Date, no Purchaser shall assume any Liabilities
related to any Employees, except where required to do so by Law.  A Purchaser
shall be solely responsible for any Liabilities related to the Offered Employees
who accept employment with such Purchaser on the offered terms and that arise
out of facts that occur after the Closing Date.

 

(d)         Nothing herein express or implied by this Agreement shall (a) confer
upon any Person, including any Employee, or any other current or former employee
of a Seller, or any beneficiary or legal representative thereof, other than the
Parties and their respective permitted successors and assigns, any rights or
remedies, including any right to employment or benefits for any specified
period, of any nature or kind whatsoever, under or by reason of this Agreement,
or (b) be deemed to amend any employee benefit plan of a Purchaser or any of its
Affiliates.

 

(e)         No Purchaser shall be responsible for any Liabilities, which may
result from the termination of employment by a Seller of any Employees;
provided, however, that a Purchaser will be responsible for and shall assume any
and all Liabilities directly related to the termination by such Purchaser of any
Offered Employee who accepts employment with such Purchaser on or after the
Closing Date solely to the extent that such Liabilities relate directly to the
period beginning with the hiring of such Offered Employees by such Purchaser and
ending with such termination by such Purchaser.  No Purchaser shall assume any
responsibility for accrued, but unused, vacation of Offered Employees as Assumed
Liabilities.   Offered Employees will be considered new employees of the
applicable Purchaser as of their first day of work for such Purchaser and will
be subject to such Purchaser’s policies on the accrual of vacation, and in
accordance with any applicable Laws going forward.

 

ARTICLE VI
CONDITIONS TO CLOSING

 

Section 6.1.            Conditions for Purchasers.  The obligation of Purchasers
to consummate the Closing is subject to the satisfaction or waiver in writing by
the applicable Purchaser, at or before the Closing, of each of the following
conditions:

 

(a)         All of the covenants and agreements of this Agreement to be complied
with or performed by each Seller on or before the Closing Date shall have been
complied with and performed in all material respects.

 

(b)         The representations and warranties of each Seller (i) set forth in
Article III shall be true and correct in all respects (in the case of any
representation or warranty containing any materiality qualification) or in all
material respects (in the case of any representation or warranty without any
materiality qualification) as of the date hereof, (ii) set forth in Article III
shall be true and correct in all respects (in the case of any representation or
warranty containing any materiality qualification) or in all material respects
(in the case of any representation or warranty without any materiality
qualification) as of the Bring-Down Date with the same effect as though made on
such date (except for such representations and warranties that are made as of a
specific date,

 

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which shall speak only as of such date)., and (iii) set forth in Sections 3.1,
3.2, 3.3, 3.4, 3.15 and 3.16 shall be true and correct in all respects (in the
case of any representation or warranty containing any materiality qualification)
or in all material respects (in the case of any representation or warranty
without any materiality qualification) as of the Closing Date with the same
effect as though made on such date (except for such representations and
warranties that are made as of a specific date, which shall speak only as of
such date).

 

(c)         No Governmental Authority of competent jurisdiction shall have
enacted, issued, promulgated, enforced or entered any applicable Law (including
any Order) which is in effect and has the effect of making the Transaction
illegal or otherwise restraining or prohibiting consummation of the Transaction
and which is not satisfied or resolved or preempted by the Sale Order.

 

(d)         The Bankruptcy Court shall have entered the Sale Order and the Sale
Order shall not have been stayed.

 

(e)         FERC shall have issued an Order authorizing the Transaction..

 

(f)          The deliveries described in Section 7.2 shall have been made.

 

(g)         The Escrow Holder shall have released the Seller Escrowed Closing
Documents in accordance with the Escrow Agreement.

 

(h)         Beacon Purchaser and GFI Tyngsboro shall have entered into the
Tyngsboro Lease Amendment, and the Tyngsboro Lease Amendment shall continue to
remain in full force and effect.

 

Section 6.2.            Conditions for Sellers.  The obligations of Sellers to
consummate the Closing are subject to the satisfaction or waiver in writing by
the applicable Seller, at or before the Closing, of each of the following
conditions:

 

(a)         All of the covenants and agreements in this Agreement to be complied
with or performed by each Purchaser on or before the Closing Date shall have
been complied with and performed in all material respects.

 

(b)         The representations and warranties of each Purchaser set forth in
Article IV (i) shall be true and correct in all respects (in the case of any
representation or warranty containing any materiality qualification) or in all
material respects (in the case of any representation or warranty without any
materiality qualification) as of the date hereof, (ii) shall be true and correct
in all respects (in the case of any representation or warranty containing any
materiality qualification) or in all material respects (in the case of any
representation or warranty without any materiality qualification) as of the
Bring-Down Date with the same effect as though made on such date (except for
such representations and warranties that are made as of a specific date, which
shall speak only as of such date) and (iii) shall be true and correct in all
respects (in the case of any representation or warranty containing any
materiality qualification) or in all material

 

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respects (in the case of any representation or warranty without any materiality
qualification) as of the Closing Date with the same effect as though made on
such date (except for such representations and warranties that are made as of a
specific date, which shall speak only as of such date).

 

(c)         No Governmental Authority of competent jurisdiction shall have
enacted, issued, promulgated, enforced or entered any applicable Law (including
any Order) which is in effect and has the effect of making the Transaction
illegal or otherwise restraining or prohibiting consummation of the Transaction
and which is not satisfied or resolved or preempted by the Sale Order.

 

(d)         The Bankruptcy Court shall have entered the Sale Order and the Sale
Order shall not have been stayed.

 

(e)         FERC shall have issued an Order authorizing the Transaction, .

 

(f)          The deliveries described in Section 7.3 shall have been made.

 

(g)         The Escrow Holder shall have released the Purchaser Escrowed Closing
Documents in accordance with the Escrow Agreement.

 

Section 6.3.            Consent by Secured Party.  Notwithstanding anything
herein to the contrary, SRS Seller shall not waive or otherwise amend the
conditions set forth in Sections 6.2(c), (d), (e) or (f) (with respect to 6.2(f)
only, solely as it relates to Section 7.3(c)(i)) without the consent of the
Secured Party, which consent shall not be unreasonably withheld or delayed.  In
the event that the Secured Party withholds its consent to any such waiver,
Secured Party and SRS Seller consent to the exclusive jurisdiction of the
Bankruptcy Court, upon notice adequate in the circumstances and a hearing, to
resolve any disagreement as to the reasonableness of Secured Party’s withholding
of such consent and any other related issues.

 

ARTICLE VII
CLOSING

 

Section 7.1.            Closing Arrangements.  The consummation of the
Transaction (the “Closing”) shall take place at 10:00 a.m. within two (2)
Business Days following the date on which all of the conditions set forth in
Article VI have been satisfied or waived (other than any conditions that can
only be satisfied as of the Closing, but subject to the satisfaction and waiver
of such conditions; provided that the Closing shall not be earlier than the
Bring-Down Date (the “Closing Date”)), at the offices of Brown Rudnick LLP, at
One Financial Center, Boston, MA, or at such other time or place as may be
mutually agreed to by the Parties.

 

Section 7.2.            Sellers’ Deliveries.

 

(a)         On or prior to the Bring-Down Date, each Seller shall deliver or
cause to be delivered the following items and documents to the applicable
Purchaser, each to be effective as of the Bring-Down Date:

 

(i)          the Escrow Agreement, duly executed by such Seller.

 

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(b)         On or prior to the Bring-Down Date, each Seller (to the extent
applicable) shall deliver or cause to be delivered the following items and
documents to the Escrow Holder (the “Seller Escrowed Closing Documents”), each
to be effective on the Closing Date:

 

(i)          the Deed, undated, duly executed by SRS Seller;

 

(ii)         the Bill of Sale, undated, duly executed by such Seller;

 

(iii)        the Assignment of Patents, Marks and Names, undated, duly executed
by such Seller; and

 

(iv)        the Assignment and Assumption Agreement, undated, duly executed by
such Seller.

 

(c)         On or prior to the Closing Date, each Seller (to the extent
applicable) shall deliver or cause to be delivered the following items and
documents to the applicable Purchaser:

 

(i)          a certified copy of the Sale Order;

 

(ii)         a certificate, dated as of the Closing Date, representing and
certifying that the conditions set forth in Section 6.1 have been fulfilled,
duly executed by such Seller;

 

(iii)        right to possession of the applicable Included Assets including
keys, locks, safe combinations, passwords, access codes and otherwise required
to obtain immediate control of such Included Assets;

 

(iv)        if required by the Escrow Agreement, escrow instructions,
instructing insertion of the Closing Date by the Escrow Holder on the Seller
Escrowed Closing Documents and disbursement of the Seller Escrowed Closing
Documents; and

 

(v)         a certificate dated as of the Closing Date, duly executed by such
Seller or by the first direct or indirect owner of such Seller that is not a
disregarded entity, in the form specified by Treasury Regulations Section
1.1445-2(b)(2), certifying that such Seller is a not “foreign person” within the
meaning of Section 1445 of the IRC and the Treasury Regulations thereunder.

 

Section 7.3.            Purchaser’s Deliveries.

 

(a)         On or prior to the Bring-Down Date, each Purchaser shall deliver or
cause to be delivered the following items and documents to the applicable
Seller, each to be effective as of the Bring-Down Date:

 

(i)          the Escrow Agreement, duly executed by such Purchaser.

 

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(b)         On or before the Bring-Down Date, each Purchaser (to the extent
applicable) shall deliver or cause to be delivered the following items and
documents to Escrow Holder (the “Purchaser Escrowed Closing Documents”), each to
be effective on the Closing Date:

 

(i)          the Assignment and Assumption Agreement, undated, duly executed by
such Purchaser;

 

(ii)         an incumbency and specimen signature certificate, undated, with
respect to the officers of such Purchaser executing this Agreement and the other
documents to be executed in connection with the Transaction; and

 

(iii)        copies of the written consent of the parent entity of such
Purchaser authorizing the execution, delivery and performance hereof by such
Purchaser, certified by an authorized officer of such Purchaser as of the
Closing Date.

 

(c)         On or before the Closing Date, each Purchaser (to the extent
applicable) shall deliver or cause to be delivered the following items and
documents to the applicable Seller:

 

(i)          a certificate, dated as of the Closing Date, representing and
certifying that the conditions set forth in Section 6.2 have been fulfilled,
duly executed by such Purchaser;

 

(ii)         the Purchase Price, less the Purchase Price Deposit, by wire
transfer of immediately available funds; and

 

(iii)        if required by the Escrow Agreement, escrow instructions,
instructing insertion of the Closing Date by the Escrow Holder on the Purchaser
Escrowed Closing Documents and disbursement of the Purchaser Escrowed Closing
Documents.

 

Section 7.4.            Tax Matters.

 

(a)         In accordance with section 1146(a) of the Bankruptcy Code, the
making or delivery of any instrument or transfer, including the filing of any
deed or other document of transfer to evidence, effectuate or perfect the right,
title and interest contemplated by this Agreement, shall be in contemplation of
a plan of reorganization to be confirmed in the Chapter 11 Cases, and such shall
be free and clear of any and all Transfer Taxes.  Such instrument, Order and
Contract transferring the Beacon Included Assets to Beacon Purchaser and the SRS
Included Assets to SRS Purchaser, shall contain the following endorsement:

 

“Because this instrument has been authorized pursuant to an order of the United
States Bankruptcy Court for the District of Delaware, in contemplation of a plan
of reorganization of the Debtors, it is exempt from transfer taxes, stamp taxes
or similar taxes pursuant to 11 U.S.C. §1146(a).”

 

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Notwithstanding the foregoing, in the event any Transfer Tax or similar taxes
are payable hereunder to a U.S. Governmental Authority, such Transfer Taxes
shall be borne by Purchasers.

 

(b)         Each of Purchasers and Sellers shall furnish or cause to be
furnished to each other, as promptly as reasonably practicable, such information
in their possession and assistance relating to the applicable Included Assets
and the applicable Assumed Liabilities as is reasonably necessary for the
preparation and filing of any Tax Return, Claim for refund or other filings
relating to Tax matters, or in connection with any Tax audit or other Tax
proceeding.

 

ARTICLE VIII
BANKRUPTCY COURT APPROVAL

 

Section 8.1.            Sale Process.  Within seven (7) days after the Auction,
Sellers shall use their reasonable best efforts to obtain entry by the
Bankruptcy Court of an order, in a form reasonably acceptable to Purchaser and
Sellers approving the Transaction and authorizing Closing as of the Closing Date
(the “Sale Order”).

 

Section 8.2.            Certain Bankruptcy Undertakings.(a) Without limiting the
other obligations of the Parties hereunder, each of Sellers and Purchasers
agrees to use its reasonable best efforts to do such further acts and things and
to execute and deliver such additional agreements and instruments as may
reasonably be required to consummate, evidence, confirm or obtain Bankruptcy
Court approval of the sale of the Included Assets or any other agreement
contemplated hereby and to consummate the Transaction.  In the event the Sale
Order or any other Orders of the Bankruptcy Court relating to this Agreement
shall be appealed by any party (or a petition for certiorari or motion for
reconsideration, amendment, clarification, modification, vacation, stay,
rehearing or reargument shall be filed with respect to any such Order), Sellers
shall diligently defend against such appeal, petition or motion and shall use
their reasonable best efforts to obtain an expedited resolution of any such
appeal, petition or motion; provided that Sellers consult with Purchasers at
Purchasers’ reasonable request regarding the status of any such Legal
Proceeding.(b)  Sellers and Purchasers agree to cooperate, assist and consult
with each other to obtain the issuance and entry of the Sale Order, including
furnishing affidavits, declarations or other documents or information for filing
with the Bankruptcy Court.  Sellers shall use commercially reasonable efforts to
consult with Purchasers and their representatives concerning any other Orders of
the Bankruptcy Court and the bankruptcy proceedings in connection therewith and
provide Purchaser with copies of requested applications, pleadings, notices,
proposed Orders and other documents relating to this Agreement, the Transaction,
the Businesses, the Included Assets and the Assumed Liabilities as soon as
reasonably practicable prior to any submission thereof to the Bankruptcy
Court.(c) Each Seller further covenants and agrees that, after the Closing, the
terms of any reorganization plan it submits to the Bankruptcy Court for
confirmation or sanction shall not conflict with, supersede, abrogate, nullify
or restrict the terms of this Agreement, or in any way prevent or interfere with
the consummation or performance of the Transaction, including, without
limitation, any transaction contemplated by or approved pursuant to the Sale
Order.

 

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Section 8.3.            Break-Up Fee.  Subject to approval of the Bankruptcy
Court, the Break-Up Fee and the terms and conditions for the payment thereof, in
consideration for Purchasers having expended considerable time and expense in
connection with this Agreement and the negotiation thereof and the
identification and quantification of the assets of Sellers, in the event that
Sellers consummate an Alternative Transaction (and Purchasers are not in
material breach of this Agreement), Sellers shall pay and Purchasers shall
receive, in addition to the refund of its Purchase Price Deposit, a breakup fee
to compensate Purchasers as a stalking-horse bidder (the “Break-Up Fee”), as
further specified below.  The Break-Up Fee shall be equal to $250,000.  Subject
to approval of the Bankruptcy Court, the Break-Up Fee shall be paid by the
earlier of (i) the Closing of an Alternative Transaction from the proceeds of
such transaction and (ii) 90 days from the date of entry of the Sale Order from
any deposit made in the Alternative Transaction, or, in the event that the
Sellers are not, at such time, authorized to retain such deposit, from funds in
the Sellers’ Chapter 11 Cases.

 

Section 8.4.            Alternative Transaction.  This Agreement is subject to
approval by the Bankruptcy Court, the Bidding Procedures Order and the
consideration by Sellers of higher and better competing bids (each a “Competing
Bid”) in accordance with the Bidding Procedures Order.  If one or more Competing
Bids is received for the sale of the Included Assets in accordance with the
Bidding Procedures Order and such Competing Bid is a Qualified Bid (as defined
in the Bidding Procedures Order), then Sellers shall conduct an Auction of the
Included Assets. Should there be an Auction and should overbidding take place,
Purchasers shall have the right, but not the obligation, to participate in the
Auction in accordance with the Bidding Procedures Order and be approved as the
successful overbidder at the Sale Hearing (as defined in the Bidding Procedures
Order) based upon any such overbid.

 

ARTICLE IX
TERMINATION OF AGREEMENT

 

Section 9.1.            Termination.  This Agreement may be terminated at any
time prior to the Closing:

 

(a)         by mutual written Consent of Sellers and Purchasers;

 

(b)         by Sellers or Purchasers if a Governmental Authority of competent
jurisdiction shall have issued an Order or taken any Legal Proceeding, in each
case, having the effect of permanently making the Transaction illegal or
otherwise permanently restraining or prohibiting consummation of the
Transaction;

 

(c)         by Sellers or Purchasers if the Closing has not occurred on or prior
to the Outside Date, provided that the failure of the Closing to occur on or
prior to the Outside Date is not the cause or a result of the terminating
party’s breach of this Agreement;

 

(d)         by SRS Seller or SRS Purchaser if FERC has denied its Consent to the
Transaction;

 

(e)         by Sellers, in the event of any inaccuracy in any of Purchasers’
representations or warranties contained in this Agreement or any breach of any
of

 

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Purchasers’ covenants or agreements contained in this Agreement which,
individually or in the aggregate with all other such inaccuracies and breaches,
(i) would result in a failure of a condition set forth in Section 6.2, and (ii)
is either incapable of being cured or, if capable of being cured, is not cured
in all material respects within five (5) calendar days after written notice
thereof;

 

(f)          by Purchasers, in the event of any inaccuracy in any of Sellers’
representations or warranties contained in this Agreement or any breach of any
of Sellers’ covenants or agreements contained in this Agreement which,
individually or in the aggregate with all other such inaccuracies and breaches,
(i) would result in a failure of a condition set forth in Section 6.1, and (ii)
is either incapable of being cured or, if capable of being cured, is not cured
in all material respects within five (5) calendar days after written notice
thereof;

 

(g)         by Sellers or Purchasers if any of the Chapter 11 Cases shall be
converted into a case under Chapter 7 of the Bankruptcy Code or dismissed or a
trustee or examiner with expanded powers is appointed or the automatic stay is
lifted with respect to a material portion of the Included Assets;

 

(h)         by Purchasers if the Sale Order is not entered seven (7) days after
the Auction or if such Order is modified without the consent of Purchasers (such
consent not to be unreasonably withheld);

 

(i)          by Seller or Purchaser, if Seller shall file a plan of
reorganization or liquidation or enter into a Contract with respect to an
Alternative Transaction; or

 

(j)          automatically, if Seller closes an Alternative Transaction.

 

Section 9.2.            Consent by Secured Party.  Notwithstanding anything
herein to the contrary, SRS Seller shall not consent to the amendment of
Sections 9.1(a), (c), (d) or (g) hereof or the termination of this Agreement
pursuant to Section 9.1(a), (c), (d) or (g) hereof without the consent of the
Secured Party, which consent shall not be unreasonably withheld or delayed.  In
the event that the Secured Party withholds its consent, Secured Party and SRS
Seller consent to the exclusive jurisdiction of the Bankruptcy Court, upon
notice adequate in the circumstances and a hearing, to resolve any disagreement
as to the reasonableness of Secured Party’s withholding of such consent and any
other related issues.

 

Section 9.3.            Purchase Price Deposit.

 

(a)         If this Agreement is terminated pursuant to (i) Section 9.1(a), (b),
(c), (g), (i) or (j) and no Purchaser is in material breach of this Agreement at
the time of termination or (ii) Section 9.1(d) and SRS Seller has materially
breached its obligations under Section 5.6 with respect to obtaining the
approval of FERC, then the amount of the Purchase Price Deposit as of the date
of termination shall be returned to Purchasers within two (2) Business Days of
such termination.

 

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(b)         If this Agreement is terminated (i) pursuant to Section 9.1(d) (and
SRS Seller has not materially breached its obligations under Section 5.6 with
respect to obtaining the approval of FERC) or (e) or (ii) otherwise pursuant to
Section 9.1 and a Purchaser is in material breach of this Agreement at the time
of termination, then, the Purchase Price Deposit shall be disbursed to Sellers
within two (2) Business Days of such termination.

 

(c)         If this Agreement is terminated by a Purchaser pursuant to Section
9.1(f) or (h), Sellers shall return the Purchase Price Deposit to Purchasers
within two (2) Business Days of such termination.

 

(d)         Purchasers and Sellers hereby acknowledge that the terms of this
Agreement pertaining to the Purchase Price Deposit shall survive the termination
of this Agreement.

 

Section 9.4.            Certain Effects of Termination.  In the event of the
termination of this Agreement by a Seller or a Purchaser as provided in Section
9.1: (a) a Party, if so requested by the other Party(ies), will return promptly
every document furnished to it by the requesting Party or its representatives in
connection with the Transaction, whether so obtained before or after the
execution of this Agreement, and any copies thereof (except for copies of
documents publicly available) which may have been made, and will cause its
representatives and any representatives of financial institutions and investors
and others to whom such documents were furnished promptly to return such
documents and any copies thereof any of them may have made; and (b) the
Confidentiality Agreement shall remain in effect.

 

Section 9.5.            Remedies.

 

(a)         Notwithstanding any termination right granted in Section 9.1, in the
event of the non-fulfillment of any condition by any Party of its Closing
obligations, the other Parties may elect to do the following:

 

(i)            proceed to Closing despite the non-fulfillment of any Closing
condition (to the extent legally permissible), it being understood that
consummation of the Closing by each Party shall be deemed a waiver of each
breach of any representation, warranty or covenant of the other Parties and of
such Party’s rights and remedies with respect thereto;

 

(ii)           decline to close, terminate this Agreement as permitted by
Section 9.1 above, receive the Purchase Price Deposit (to the extent set forth
in Section 9.3), and thereafter seek any other legal or equitable right or
remedy, including monetary damages, and such Party shall also be entitled to
recover its costs and expenses which are incurred in pursuing its rights and
remedies (including reasonable attorneys’ fees); or

 

(iii)          seek specific performance by the other Party(ies) of its or their
obligations hereunder which it has failed to perform so that the Closing may
proceed (it being acknowledged and agreed that any Party would be damaged
irreparably, the

 

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remedies available at law to any Party would be inadequate, and the performance
of the other Party(ies)’s obligations under this Agreement may be specifically
enforced).

 

(b)         SRS Seller shall provide at least two (2) Business Days prior notice
to the Secured Party prior to electing to exercise any remedy hereunder.

 

ARTICLE X
MISCELLANEOUS

 

Section 10.1.          Survival.  The representations and warranties of the
Parties in this Agreement shall not survive the Closing.  Except as otherwise
expressly provided in this Agreement, the agreements and covenants of the
Parties shall survive the Closing and remain in full force and effect without
time limit in accordance with the terms thereof.

 

Accordingly, for clarification purposes, it is acknowledged, understood and
agreed by the Parties that no Seller shall have any liability or other
obligation following the Closing with respect to any breach by such Seller or
claimed breach by such Seller of (a) any representations or warranties contained
in this Agreement or any of the documents or instruments delivered or entered
into by such Seller in connection with this Agreement or (b) such Seller’s
covenants and agreements contained in this Agreement or any of the documents or
instruments delivered or entered into by such Seller in connection with this
Agreement that do not by their terms extend beyond the Closing.  Notwithstanding
anything expressed or implied herein to the contrary, the Parties acknowledge
and agree that (1) Beacon Purchaser shall be solely responsible for the
ownership of the Beacon Included Assets from and after the Closing Date, the
operation of the Beacon Business from and after the Closing Date, and acts or
omissions of Beacon Purchaser with respect thereto, (2) SRS Purchaser shall be
solely responsible for the ownership of the SRS Included Assets, the operation
of the SRS Business from and after the Closing Date, and acts or omissions of
SRS Purchaser with respect thereto, and (3) no Seller shall have any
responsibility or obligation with respect to, or arising out of, any of the
foregoing.

 

Section 10.2.          Relationship of the Parties.  Nothing in this Agreement
shall be construed so as to make a Purchaser or any Affiliate of a Purchaser a
partner of a Seller or any Affiliate of a Seller.

 

Section 10.3.          Amendment of Agreement.  This Agreement may not be
supplemented, modified or amended except by a written agreement executed by each
Party.  Notwithstanding anything herein to the contrary, none of Section 6.3,
Section 9.2, Section 9.5(c), the second sentence of this Section 10.3, or
Section 10.4(e) hereof may be amended without the prior written consent of the
Secured Party.

 

Section 10.4.          Notices.  Any Notice shall be in writing and shall be
deemed to have been duly given or made when personally delivered, sent by
facsimile or electronic mail or when mailed by overnight courier or registered
or certified mail, postage prepaid, return receipt requested, addressed or
directed as follows, or as may be furnished hereafter by notice, in writing, to
the other Parties on at least three Business Days’ prior notice, to the
following Parties:

 

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(a)        If to Beacon Purchaser, to:

 

RC Beacon Acquisition, LLC

c/o Rockland Capital, LLC

24 Waterway, Suite 800

The Woodlands, TX  77380

Attention:

Scott Harlan

 

Cameron Baynard

Facsimile:

(281) 863-9051

 

(281) 863-9066

E-Mail:

scott.harlan@rocklandcapital.com

 

cameron.baynard@rocklandcapital.com

 

with a copy (which shall not constitute notice) given in like manner to:

 

Bracewell & Giuliani LLP

1251 Avenue of the Americas

48th Floor

New York, NY  10020

Attention:

Jonathan Gill, Esq.

Jennifer Feldsher, Esq.

Facsimile:

(212) 938-3810

 

(212) 938-6137

E-Mail:

jonathan.gill@bgllp.com

 

jennifer.feldsher@bgllp.com

 

(b)        If to SRS Purchaser, to:

 

Spindle Grid Regulation, LLC

c/o Rockland Capital, LLC

24 Waterway, Suite 800

The Woodlands, TX  77380

Attention:

Scott Harlan

 

Cameron Baynard

Facsimile:

(281) 863-9051

 

(281) 863-9066

E-Mail:

scott.harlan@rocklandcapital.com

 

cameron.baynard@rocklandcapital.com

 

with a copy (which shall not constitute notice) given in like manner to:

 

Bracewell & Giuliani LLP

1251 Avenue of the Americas

48th Floor

New York, NY  10020

Attention:  Jonathan Gill, Esq.

Jennifer Feldsher, Esq.

 

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Facsimile:

(212) 938-3810

 

(212) 938-6137

E-Mail:

jonathan.gill@bgllp.com

 

jennifer.feldsher@bgllp.com

 

(c)        If to SRS Seller, to:

 

Stephentown Regulation Services LLC
c/o Beacon Power Corporation

65 Middlesex Road

Tyngsboro, MA  01879

Attention:  President

 

with a copy (which shall not constitute notice) given in like manner to:

 

Brown Rudnick LLP
One Financial Center
Boston, MA  02111
Attention: William R. Baldiga, Esq.
Facsimile: (617) 856-8201
E-Mail: wbaldiga@brownrudnick.com

 

(d)        If to Beacon Seller, to:

 

Beacon Power Corporation

65 Middlesex Road

Tyngsboro, MA  01879

Attention:  President

 

with a copy (which shall not constitute notice) given in like manner to:

 

Brown Rudnick LLP
One Financial Center
Boston, MA  02111
Attention: William R. Baldiga, Esq.
Facsimile: (617) 856-8201
E-Mail:  wbaldiga@brownrudnick.com

 

(e)        If to Secured Party, to:

 

U.S. Department of Justice

P.O. Box 875

Ben Franklin Station

Washington, DC  20044

Attention:  Matthew J. Troy, Attorney, Civil Division

 

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with a copy (which shall not constitute notice) given in like manner to:

 

Clifford Chance US LLP
31 West 52nd Street
New York, NY  10019
Attention:  Andrew Brozman and Sarah Campbell
Facsimile: (212) 878-8375
E-Mail: andrew.brozman@cliffordchance.com and sarah.campbell@cliffordchance.com

 

(f)          The Parties shall provide a copy of any notice delivered hereunder
to the Secured Party; provided that any failure to so deliver such notice as
provided herein shall not constitute a material breach hereunder.

 

Any Notice which is delivered or is sent by facsimile or email shall be deemed
to have been validly and effectively given and received on the date it is
delivered or sent, unless it is delivered or sent after 5:00 p.m. on any given
day or on a day which is not a Business Day, in which case it shall be deemed to
have been validly and effectively given and received on the Business Day next
following the day it was delivered or sent, provided that, in the case of a
Notice sent by facsimile, it shall not be deemed to have been sent unless there
has been confirmation of transmission.

 

Section 10.5.          Fees and Expenses.  The Parties agree that, except as
otherwise expressly provided in this Agreement, each Party shall bear and pay
all costs, fees and expenses that it incurs, or which may be incurred on its
behalf, in connection with this Agreement and the Transaction.

 

Section 10.6.          Governing Law; Jurisdiction; Service of Process.  This
Agreement shall be governed by and construed in accordance with federal
bankruptcy law, to the extent applicable, and, where state law is implicated,
the internal laws of the State of New York, without giving effect to any
principles of conflicts of law.  Without limiting any Party’s right to appeal
any Order of the Bankruptcy Court, the Parties agree that if any dispute arises
out of or in connection with this Agreement or any of the documents executed
hereunder or in connection herewith, the Bankruptcy Court shall have exclusive
personal and subject matter jurisdiction and shall be the exclusive venue to
resolve any and all disputes among Sellers and Purchasers relating to the
Transaction.  Such court shall have sole jurisdiction over such matters and the
Parties affected thereby and each of Purchasers and Sellers hereby Consents and
submits to such jurisdiction; provided, however, that if the Chapter 11 Cases
have closed and cannot be reopened, the Parties agree to unconditionally and
irrevocably submit to the exclusive jurisdiction of the United States District
Court for the district in which the Bankruptcy Court is located and any
appellate court thereof, for the resolution of any such Claim or dispute.  The
Parties hereby irrevocably waive, to the fullest extent permitted by applicable
Law, any objection which they may now or hereafter have to the laying of venue
of any such dispute brought in such court or any defense of inconvenient forum
for the maintenance of such dispute.  Each of the Parties hereto agrees that a
judgment in any such dispute may be enforced in other jurisdictions by suit on
the judgment or in any other manner provided by law.  In the event any such
action, suit or proceeding is commenced, the Parties hereby agree and Consent
that service of process may be made, and

 

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personal jurisdiction over any Party hereto in any such action, suit or
proceeding may be obtained, by service of a copy of the summons, complaint and
other pleadings required to commence such action, suit or proceeding upon the
Party at the address of such Party set forth in Section 10.4 hereof, unless
another address has been designated by such Party in a notice given to the other
Parties in accordance with the provisions of Section 10.4 hereof.

 

Section 10.7.          WAIVER OF RIGHT TO TRIAL BY JURY.  EACH PARTY HEREBY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY AND ALL RIGHTS
IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LEGAL PROCEEDING OR
COUNTERCLAIM (WHETHER BASED UPON CONTRACT, TORT OR OTHERWISE) RELATING TO THIS
AGREEMENT OR THE TRANSACTION CONTEMPLATED HEREBY.

 

Section 10.8.          Further Assurances.  Subject to the other provisions of
this Agreement and to applicable Law, each of the Parties hereto agrees to
execute, acknowledge, deliver, file and record such further certificates,
amendments, instruments and documents, and to do all such other acts and things,
as may be reasonably requested by any other Party in order to carry out the
intent and purpose of this Agreement, without additional consideration.  Sellers
shall use their commercially reasonable efforts, at Purchasers’ expense, to
accomplish the approval of transfer of, or the reissuance of, such Permits as
cannot be transferred without the consent or action of a third party, including
a governmental entity.  Each Seller hereby acknowledges and agrees that, from
the date hereof until the Closing Date, the applicable Purchaser has the right,
at its sole cost and expense, to obtain a title commitment and/or survey
covering any portion of the Real Property.  Each Seller hereby covenants to
cooperate with the applicable Purchaser in good faith as reasonably necessary to
obtain such title commitment and/or survey, provided that no Seller shall be
required to incur any material out-of-pocket expenses in doing so.

 

Section 10.9.         Entire Agreement.  Except as set forth herein, this
Agreement and the documents executed in connection herewith, constitute the full
and entire agreement between the Parties hereto pertaining to the Transaction
and supersedes all prior agreements, understandings, negotiations and
discussions, whether oral or written, with respect thereto made by any Party.

 

Section 10.10.        Waiver.  No waiver of any of the provisions of this
Agreement shall be deemed or shall constitute a waiver of any other provision
(whether or not similar) nor shall any waiver constitute a continuing waiver
unless otherwise expressed or provided.  All waivers hereunder must be in
writing to be effective.

 

Section 10.11.        Assignment.  Neither the rights nor the obligation of any
Party under this Agreement may be assigned or delegated, whether by operation of
Law or otherwise, without the prior written Consent of the other Parties;
provided that a Purchaser may, without the consent of the other Parties hereto,
assign any of its rights, interests and obligations under this Agreement or any
portion thereof to one or more Affiliate(s) of such Purchaser.

 

Section 10.12.        Successors and Assigns.  This Agreement shall bind and
inure to the benefit of the Parties hereto and their respective successors and
permitted assigns.

 

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Section 10.13.        No Third Party Beneficiaries.  Nothing in this Agreement
is intended to, or shall, confer any third party beneficiary or other rights or
remedies upon any Person other than the Parties hereto; provided that Secured
Party shall be a third party beneficiary for purposes of enforcing its rights
under Sections 6.3, 9.2, 9.5(b), 10.3 and 10.4 hereof.

 

Section 10.14.        Severability of Provisions.  Any provision of this
Agreement which is determined by a court of competent jurisdiction to be invalid
or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining provisions of this Agreement or
affecting the validity or enforceability of any of the provisions of this
Agreement in any other jurisdiction, and if any provision of this Agreement is
determined to be so broad as to be unenforceable, such provision shall be
interpreted to be only so broad as is enforceable, provided in all cases that
neither the economic nor legal substance of this Agreement is affected by the
operation of this sentence in any manner materially adverse to any Parties. Upon
any such determination that any provision of this Agreement is invalid or
unenforceable, the Parties shall negotiate in good faith in an effort to agree
upon a suitable and equitable substitute provision to affect the original intent
of the Parties.

 

Section 10.15.        Counterparts.  This Agreement may be executed in multiple
counterparts (including by facsimile, .pdf or other electronic transmission),
each of which shall be deemed an original hereof, and all of which shall
constitute a single agreement effective as of the Execution Date.  Any delivery
of an executed counterpart of this Agreement by facsimile or electronic mail
shall be as effective as delivery of a manually executed counterpart of this
Agreement.

 

[SIGNATURE PAGE FOLLOWS]

 

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IN WITNESS WHEREOF, the Parties hereto have caused this Asset Purchase Agreement
to be executed as of the day and year first above written.

 

 

SELLERS:

 

BEACON POWER CORPORATION

a Delaware corporation

 

 

By:

/s/ William Capp

 

Name:

William Capp

 

Title:

President

 

 

 

 

 

STEPHENTOWN REGULATION SERVICES LLC a Delaware limited liability company

 

 

 

 

 

By:

/s/ William Capp

 

Name:

William Capp

 

Title:

President

 

 

 

PURCHASERS

 

 

 

RC BEACON ACQUISITION, LLC

a Delaware limited liability company

 

 

 

 

 

By:

/s/ W. Scott Harlan

 

Name:

W. Scott Harlan

 

Title:

President

 

 

 

 

 

 

 

SPINDLE GRID REGULATION, LLC

a Delaware limited liability company

 

 

 

 

 

By:

/s/ W. Scott Harlan

 

Name:

W. Scott Harlan

 

Title:

President

 

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ATTACHMENTS

 

EXHIBITS

 

Exhibit A — Assignment and Assumption Agreement

Exhibit B — Assignment of Patents, Marks and Names

Exhibit C — Bill of Sale

Exhibit D — Deed

Exhibit E — Escrow Agreement

Exhibit F — Note Term Sheet

Exhibit G— Tyngsboro Lease Amendment Term Sheet

 

SCHEDULES

 

Schedule 1.2 - Definitions

Schedule 2.1(a)(i) — Beacon Assumed Contracts

Schedule 2.1(a)(ii) — Beacon Systems and Equipment

Schedule 2.1(a)(iii) — Beacon Software

Schedule 2.1(b)(i) — SRS Assumed Contracts

Schedule 2.1(b)(ii) — SRS Systems and Equipment

Schedule 2.1(b)(iii) — SRS Software

Schedule 2.2(a)(xvi) — Additional Excluded Assets for Beacon

Schedule 2.2(b)(xvi) — Additional Excluded Assets for SRS

Schedule 2.9(a) — Purchase Price Allocation

Schedule 3.4 — Consents

Schedule 3.5(a) — Included Assets Title Issues

Schedule 3.7 (b) — Leased Real Property

Schedule 3.7(d) — Condemnation Proceedings

Schedule 3.8(a) — Registered Intellectual Property

Schedule 3.8(b) - Licenses

Schedule 3.12 — Environmental Matters

Schedule 5.10(a) — Employees

 

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ANY EXHIBITS AND SCHEDULES NOT
ATTACHED HERETO ARE AVAILABLE UPON REQUEST

 

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EXHIBIT F

 

NOTE TERM SHEET

 

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Term Sheet Regarding the Note Capitalized terms not otherwise defined herein
shall have the meanings assigned thereto in the Common Agreement, dated as of
August 6, 2010, as amended, among Stephentown Regulation Services LLC (“SRS”),
as Borrower, U.S. Department of Energy as Credit Party and Loan Servicer and
Midland Loan Services, Inc., as Administrative Agent and Collateral Agent, and
the related agreements thereto.

 

Lender:

 

DOE or its designee

 

 

 

Borrower:

 

“Spindle Grid Regulation, LLC,” a newly formed limited liability company
wholly-owned and funded by Rockland Power Partners, LP (“RPP”) .

 

 

 

Facility:

 

$25,000,000 term loan, which shall be deemed fully drawn and outstanding on the
Closing Date. No future Advances shall be permitted under the Facility.

 

 

 

Closing Date:

 

Simultaneously with the closing of the acquisition by Borrower of the flywheel
power plant located in Stephentown, NY (the “Project”).

 

 

 

Maturity:

 

June 15, 2030.

 

 

 

Interest:

 

3.54%

 

 

 

 

 

Interest shall be payable on each Quarterly Payment Date in arrears; provided,
however, that at Borrower’s option, interest shall accrue but not be payable
from the Closing Date until June 15, 2013 (such accrued interest amount, the
“Accrued Payment”), which Accrued Payment (including interest on interest) shall
be capitalized on the principal amount outstanding, which aggregate principal
shall be payable in accordance with the amortization schedule.

 

 

 

Fees:

 

Same as Common Agreement.

 

 

 

Expenses:

 

Lender, Administrative Agent and Collateral Agent each shall pay all of their
respective fees and expenses in connection with the BPC (as defined below) and
SRS bankruptcy proceedings including, without limitation, all fees and expenses
(including reasonable fees and expenses of counsel and financial advisors)
incurred by them to acquire the SRS assets.

 

 

 

Amortization:

 

No amortization from the Closing Date until June 15, 2013.

 

 

 

Guaranty:

 

RPP shall provide to Lender for the benefit of Borrower a primary direct
guaranty in the amount equal to $1,500,000 and RC Beacon Acquisition,

 

--------------------------------------------------------------------------------

 

 

 

LLC, an affiliate of Borrower (“RC Beacon”), will provide a $3,000,000 corporate
guaranty secured by all assets of RC Beacon (other than the Microgrid IP and
Solar IP), (such guarantees together, the “Guarantees”. The Guarantees shall be
drawable in the event and to the extent that (i) at any time prior to
December 31, 2013, there is a need to fund amounts required to achieve Physical
Completion or (ii) Borrower fails to make any payment required under the
Facility. In the event that the reserve accounts under the Facility are fully
funded at any time (the fully funded level of debt service reserve is 1 year of
principal and interest), the Guarantees shall be released and terminated. Prior
to any sale of all or substantially all of the assets of RC Beacon, RC Beacon
shall procure that either (a) the RPP Guarantee shall be increased to $3,000,000
or (b) all reserve accounts under the Facility shall be fully funded (and, in
either case, the RC Beacon Guarantee shall be released and terminated). In the
event that all or substantially all assets of Borrower are sold, Borrower shall
procure that (a) Lender reasonably approves such purchaser, (b) all reserve
accounts under the Facility are fully funded or (c) the Lender is the
beneficiary of a letter of credit in the amount of $3,000,000, drawable and
terminable on like terms to the RC Beacon Guarantee, issued by a nationally
recognized financial institution; provided that the RPP Guarantee shall be
released and terminated.

 

 

 

Voluntary Prepayment:

 

Same as Common Agreement.

 

 

 

Mandatory Prepayments:

 

Same as Common Agreement except for Section 3.4.3(a)(v), which shall be deleted
in its entirety to eliminate mandatory prepayments that would otherwise be made
in connection with amounts distributed from the Distribution Suspense Account.

 

 

 

Representations And Warranties:

 

Same as Common Agreement with revisions to the representations and warranty
provisions only to the extent required to be accurate with respect to the new
Borrower and the negotiation of necessary and desired transactions with
Affiliates for a new O&M Agreement and perpetual IP licenses with an Affiliate
of the Borrower, a newly formed wholly-owned subsidiary of RPP (such entity, “RC
Beacon Acquisition, LLC”), and not otherwise limit such provisions.

 

 

 

Covenants:

 

Same as Common Agreement except for:

 

 

 

 

 

 

 

(i)

 

Section 6.33(a)(ii) which shall be deleted to remove the quarterly Leverage
Ratio covenant;

 

2

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(ii)

 

Section 6.35 which shall be amended to allow the Borrower to contract with
independent contractors possessing substantial experience and expertise in the
substantive areas described therein;

 

 

 

 

 

 

 

(iii)

 

allow Borrower to use up to [10] of the existing used flywheel assemblies owned
by BPC (“BPC Flywheels”) to satisfy the Physical Completion requirement to have
202 flywheels;

 

 

 

 

 

 

 

(iv)

 

revisions to the covenants only to the extent required to be appropriate to the
new Borrower, and not otherwise limit such provisions;

 

 

 

 

 

 

 

(v)

 

expressly permitting the future reasonable negotiation between the Borrower and
the Lender of an O&M Agreement and perpetual IP license agreements with RC
Beacon Acquisition, LLC and its successors and assigns;

 

 

 

 

 

 

 

(vi)

 

Section 7.8 (Mergers) shall be amended to permit the sale of equity in the
Borrower to a Permitted Holder (defined below) and/or the assets of the Borrower
to an entity controlled by a Permitted Holder;

 

 

 

 

 

 

 

(vii)

 

Section 7.10 (Restricted Payments) which shall be amended by adding the
following proviso to clause (iv) of the definition of “Distribution
Preconditions” as used in Section 7.10(a)(iv): “provided, however, that during
the continuation of a Deficiency Event, the rolling 12-month Debt Service
Coverage Ratio shall be not less than 2.0x as of the last day of the preceding
fiscal quarter” (forward looking test to be included in the final
documentation), as the same may be amended (and which definition shall be
amended to clarify that such project documents are between the Borrower and RC
Beacon Acquisition, LLC (and its successors and assigns)).

 

 

 

 

 

 

 

 

 

The definition of “Deficiency Event” shall be added and shall mean the
Borrower’s failure to operate at a level of at least 17 megawatts for any reason
for a period of 60 or more consecutive days; and

 

 

 

 

 

 

 

(viii)

 

The Parties shall use their respective commercially reasonable efforts to agree
as soon as practicable following the Closing Date regarding the punch list of
items required to be completed by Borrower to achieve Physical Completion.

 

 

 

 

 

 

 

(ix)

 

On the Closing Date, or as soon as reasonably practicable thereafter, RPP shall
contribute $2,100,000 of cash to Borrower to

 

3

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be used to achieve Physical Completion of the Project and to fund anticipated
2012 operating losses and working capital needs.

 

 

 

 

 

Events of Default:

 

Same as Common Agreement with the following revisions:

 

 

 

 

 

 

 

(i)

 

Section 8.1(k) shall be revised to remove the requirement in clause (i) that
Holdings ceases to be the sole Equity Owner of Borrower and revise the
definition of “Change of Control” which shall be deemed to have occurred if any
“person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the
Exchange Act), other than one or more Permitted Holders, becomes the “beneficial
owner” (as defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or
indirectly, of more than 50% of the total outstanding equity of Borrower on a
fully diluted basis.

 

 

 

 

 

 

 

 

 

“Permitted Holder” shall be Rockland Power Partners, any of its Affiliates and
or, as determined by Lender acting reasonably, any company controlled by
established and reputable investors in, or experienced operators of, electric
power production or regulation assets.

 

 

 

 

 

 

 

(ii)

 

Section 8.1(h) shall be deleted in its entirety to remove cross-acceleration to
any Affiliate indebtedness;

 

 

 

 

 

 

 

(iii)

 

Section 8.1(s) Suspension of Operation, shall be deleted in its entirety to
eliminate any Event of Default related to the Borrower’s failure to operate at
less than 17 MW for any period of 60 or more consecutive days.

 

 

 

 

 

 

 

(iv)

 

Section 8.1(t)(i) Failure of Physical Completion shall be revised so that is
shall be an Event of Default if Physical Completion shall not have occurred
eighteen (18) months after the Anticipated Physical Completion Date (increased
from 6 months).

 

Assignments:

 

Same as Common Agreement with respect to Borrower except, Section 13.13(b) shall
be amended to permit the assignment of all obligations under the Facility
without the consent of the Loan Servicer or the DOE in connection with any
transaction in which the assets of the Borrower are transferred to an entity
controlled by Permitted Holders; provided, that such assignment is in whole and
that the assignee consents to the continuation of liens in favor of the Loan
Servicer on the Borrower’s assets so transferred.

 

4

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Common Agreement:

 

Except as set forth in this term sheet, the provisions of the Common Agreement
and the security agreements shall remain substantially the same.

 

The terms and conditions of the above Facility are not limited to the above
terms and conditions. Those matters which are not covered by or made clear in
the above outline are subject to mutual agreement of the parties.

 

5

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EXHIBIT G
TYNGSBORO LEASE AMENDMENT TERM SHEET

 

--------------------------------------------------------------------------------

 

Term Sheet Regarding the Proposed Amendment of the Lease, dated as of July 23,
2007 among GFI Tyngsboro, LLC (“GFI Tyngsboro”), as Landlord, and Beacon Power
Corporation, as Tenant (the “Lease”). Capitalized terms not otherwise defined
herein shall have the meanings assigned thereto in the Lease.

 

THIS DRAFT TERM SHEET IS PROVIDED FOR DISCUSSION PURPOSES ONLY AND DOES NOT
CONSTITUTE AN OFFER, AGREEMENT OR COMMITMENT TO ENTER INTO THE TERM SHEET,
ANOTHER BUSINESS TRANSACTION OR A RELATIONSHIP. NOTHING IN THIS DRAFT TERM SHEET
IS INTENDED TO REPRESENT A COMMITMENT ON THE PART OF ROCKLAND CAPITAL OR ANY OF
ITS AFFILIATES TO ENTER INTO THE TERM SHEET OR ANY OTHER DEFINITIVE AGREEMENT
WITH ANY PERSON.

 

Lease Term:

 

Section 1.08 of the Lease shall be modified so that the Lease Term continues
through February 15, 2013, and thereafter; provided that Tenant shall be
entitled to terminate the lease on 90 days prior written notice, mutually
terminable by Tenant upon 90 days prior written notice, through September 30,
2014, unless Tenant exercises its Extension Option(s); provide that, any new
tenancy commencing within 90 days of termination shall be subject to a right of
first refusal for Tenant.

 

 

 

Base Rent:

 

Exhibit B of the Lease shall be modified so that the current Base Rent will be
discounted by 50%. Section 3.05 of the Lease shall be modified to provide that
Base Rent for the Extension Period shall mean the current Base Rent in effect
immediately prior to the commencement of the Extension Period discounted by 20%.

 

 

 

Environmental Indemnity:

 

Landlord shall agree to indemnify, defend, and hold Tenant harmless from and
against any and all liabilities, judgments, losses, damages, costs or expenses
of any nature, including reasonable attorneys’ and consultants’ fees and costs
and costs of any environmental audit, investigation or remediation, actions
(including, without limitation, administrative actions), petitions, orders,
demands, claims, suits, charges, complaints, request for information,
grievances, investigations, legal proceedings (whether at law or in equity) or
arbitration made, resulting from or related to the presence or any release of
Hazardous Materials that existed or occurred in, on or under, or migrated from,
the Premises on or prior to the date of the amended Lease.

 

--------------------------------------------------------------------------------

 

No Release of Tenant:

 

Section 13.02 shall be modified to change the Section heading to “No Waiver” and
delete the following language:

 

 

 

 

 

“No assignment or transfer shall release Tenant or change Tenant’s primary
liability to pay the Rent and to perform all other obligations of Tenant under
this Lease. If Tenant’s assignee or transferee shall default under this Lease,
Landlord may proceed directly against Tenant without pursuing remedies against
the assignee or transferee. Landlord may consent to subsequent assignments or
modification of this Lease by Tenant’s transferee without notifying Tenant or
obtaining its consent, and such action shall not release Tenant from any of its
obligations or liabilities under this Lease as so assigned or modified.”

 

 

 

Permitted Transfers:

 

Section 13.03 shall be modified to (i) allow for affiliate transfers without
qualification or limitation and (ii) in the event of an assignment or transfer,
release Tenant of all future obligations and liabilities under the Lease.

 

 

 

Books and Records;

 

 

Audit Rights:

 

Section 4.02 shall be modified to include that (i) GFI Tyngsboro will maintain
accurate books and records in connection with the amount of Additional Rent
payable by Tenant under the Lease and (ii) Tenant shall have the right, at its
expense and upon reasonable notice and during normal business hours, to audit
GFI Tyngsboro’s books and records.

 

 

 

Property Taxes:

 

Section 5.01 of the Lease shall be modified to provide that Landlord covenants
and agrees to cooperate with Tenant in good faith as reasonably necessary to
apply for any abatement of or contest Real Property Taxes.

 

The terms and conditions of the above Proposed Amendment of the Lease are not
limited to the above terms and conditions. Those matters which are not covered
by or made clear in the above outline are subject to mutual agreement of the
parties.

 

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SCHEDULE 1.2

 

DEFINITIONS

 

“Accounts Receivable” means any and all accounts receivable, notes receivable,
checks, similar instruments and other amounts receivable, billed or unbilled
owed to a Seller for services rendered, including frequency regulation revenue,
in the operation of such Seller’s Business, together with all security or other
collateral therefor and any interest for unpaid financing charges accrued
thereon, in each case as of the Closing Date.

 

“Affiliate” means, with respect to any Person, any other Person that directly,
or indirectly through one or more intermediaries, controls, is controlled by or
is under common control with, such Person. For purposes of this definition,
“control” (including, with correlative meaning, the terms “controlling” and
“controlled”) means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of such Person,
whether through ownership of voting securities, by contract or otherwise.

 

“Agreement” has the meaning set forth in the preamble.

 

“Alternative Transaction” means any agreement or transaction involving the sale
(in a single transaction or a series of transactions) of all or substantially
all of the Included Assets (whether as a liquidation or a going concern), the
confirmation of a plan of reorganization or liquidation, or the issuance or
sale, directly or indirectly, (in a single transaction or a series of
transactions) of all or substantially all of the equity interests of Sellers or
any of their successors, to any Person other than a Purchasers or a designee of
Purchasers. “Alternative Transaction” shall not include the confirmation of a
plan of reorganization or liquidation following the Closing with a Purchaser.

 

“Assignment and Assumption Agreement” means an agreement providing for (i) the
assignment by Beacon Seller of its right, title and interest in and to the
Beacon Included Assets, and the assumption by Beacon Purchaser of the Beacon
Assumed Liabilities, and (ii) assignment by SRS Seller of its right, title and
interest in and to the SRS Included Assets, and the assumption by SRS Purchaser
of the SRS Assumed Liabilities, substantially in the form attached hereto as
Exhibit A.

 

“Assignment of Patents, Marks and Names” means an assignment of Patents, Marks,
including Domain Names, by each Seller, substantially in the form attached
hereto as Exhibit B.

 

“Assumed Contracts” means, collectively, the Beacon Assumed Contracts and the
SRS Assumed Contracts.

 

“Assumed Liabilities” means, collectively, the Beacon Assumed Liabilities and
the SRS Assumed Liabilities.

 

“Auction” has the meaning set forth in the recitals.

 

--------------------------------------------------------------------------------

 

“Avoidance Actions” means all avoidance Legal Proceedings or Claims available to
a Seller under chapter 5 of title 11 of the Bankruptcy Code, including any such
Claims and actions arising under Sections 544, 545, 547, 548, 549, 550 and 553
of the Bankruptcy Code.

 

“Bankruptcy Code” means title 11 of the United States Code.

 

“Bankruptcy Court” has the meaning set forth in the recitals.

 

“Beacon Assumed Contracts” has the meaning set forth in Section 2.1(a)(i).

 

“Beacon Assumed Liabilities” has the meaning set forth in Section 2.5(a).

 

“Beacon Cash Purchase Price” has the meaning set forth in Section 2.4.

 

“Beacon Excluded Assets” has the meaning set forth in Section 2.2(a).

 

“Beacon Excluded Contracts” means any Contract to which Beacon Seller is a party
which is not a Beacon Assumed Contract.

 

“Beacon Excluded Liabilities” has the meaning set forth in Section 2.6(a).

 

“Beacon Included Assets” has the meaning set forth in Section 2.1(a).

 

“Bidding Procedures Order” means that certain Order (i) Approving Bidding
Procedures; (ii) Establishing Certain Related Deadlines; and (iii) Granting
Related Relief, dated December 27, 2011 Docket No. 176.

 

“Bill of Sale” means a bill of sale substantially in the form attached hereto as
Exhibit C.

 

“Books and Records” means all documents used by a Seller in connection with, or
relating to, the Included Assets or the Assumed Liabilities of such Seller, or
the operations of such Seller’s Business, including all files, data, reports,
plans, mailing lists, supplier lists, customer lists, price lists, marketing
information and procedures, advertising and promotional materials, equipment
records, warranty information, records of operations, standard forms of
documents, manuals of operations or business procedures and other similar
procedures (including all discs, tapes and other media-storage data containing
such information), which, for the avoidance of doubt, shall exclude the Retained
Books and Records.

 

“Break Up Fee” has the meaning set forth in Section 8.3.

 

“Bring-Down Date” shall mean the date which is fourteen (14) days following
entry of the Sale Order by the Bankruptcy Court or such earlier date as the
Parties agree in writing.

 

“Budget” has the meaning set forth in Section 5.9(a).

 

“Business” or “Businesses” has the meaning set forth in the recitals.

 

2

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“Business Day” means any day other than a Saturday, Sunday or other day on which
commercial banks in New York, New York are authorized or obligated to close
under applicable Law.

 

“Chapter 11 Cases” has the meaning set forth in the recitals.

 

“Claim” shall have the meaning set forth in section 101(5) of the Bankruptcy
Code and shall include, any claims, cause of action, chose in action, right to
sue, right of recovery, right of set-off, right of recoupment, right of refund
or reimbursement, right under warranty, guaranty or contract (express, implied
or otherwise), right to receive a credit (by reason of prepayment, deposit,
refund or otherwise), or similar right of any kind and nature, known and
unknown, matured and unmatured, accrued or contingent, regardless of whether
such rights are currently exercisable.

 

“Closing” has the meaning set forth in Section 7.1.

 

“Closing Date” has the meaning set forth in Section 7.1.

 

“Closing Documents” means any agreements, instruments and other documents to be
delivered at the Closing pursuant to Section 7.2 or Section 7.3.

 

“Competing Bid” has the meaning set forth in Section 8.4.

 

“Confidentiality Agreement” means that certain Mutual Confidentiality and
Nondisclosure Agreement between Beacon Power Corporation and Rockland Capital,
LLC, dated November 16, 2011.

 

“Consent” means any consent, approval, concession, grant, waiver, grant,
exemption, license, entitlement, suitability determination, franchise,
development right, certificate, variance, registration, permit, order or other
authorization of or notice of any Person.

 

“Contract” means any contract, agreement, understanding, undertaking,
commitment, lease, license or other arrangement (whether oral or written)
affecting a Business or Related to a Business or any of the Included Assets,
real or personal, entered into by a Seller or any of its Affiliates.

 

“Copyrights” has the meaning set forth in the definition of Intellectual
Property Rights on this Schedule 1.2.

 

“Cure Costs” means all cash amounts that, pursuant to section 365 of the
Bankruptcy Code, will be required to be paid as of the Closing Date to cure any
monetary defaults on the part of a Seller under the Assumed Contracts as a
prerequisite to the assumption of such Assumed Contract; provided that in the
case of any Contract, such Contract is executory and, in the case of any lease,
such lease is unexpired.

 

“Deed” means the Deed for the transfer of the real property of SRS Seller,
substantially in the form attached hereto as Exhibit D.

 

3

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“Deposit” means any security, vendor, utility, or other similar deposits by a
Seller and any prepaid expenses, advances, advance payments or prepayments made
by a Seller.

 

“Disclosure Schedules” means the Disclosure Schedules to this Agreement, dated
as of the Execution Date, delivered by Sellers to Purchasers hereunder.

 

“Domain Names” means Internet domain names held or used by a Seller.

 

“Employee Benefit Plans” means each employee or director benefit plan,
arrangement or agreement, whether or not written, including without limitation
any employee welfare benefit plan within the meaning of Section 3(1) of ERISA,
any employee pension benefit plan within the meaning of Section 3(2) of ERISA
(whether or not such plan is subject to ERISA) and any bonus, incentive,
deferred compensation, vacation, stock purchase, stock option, severance,
employment, change of control or fringe benefit plan, program or agreement that
is or has been sponsored, maintained or contributed to by a Seller or by any
trade or business, whether or not incorporated, which is a member of a
controlled group of organizations, entities or trade or business within the
meaning of IRC Section 414 of which a Seller is a member.

 

“Employees” has the meaning set forth in Section 5.10(a).

 

“Encumbrances” means all mortgages, pledges, charges, liens, debentures, trust
deeds, Claims, assignments by way of security or otherwise, security interests,
conditional sales contracts or other title retention agreements, rights of first
refusal or similar interests or instruments charging, or creating a security
interest in the Included Assets or any part thereof or interest therein, and any
agreements, leases, licenses, occupancy agreements, options, easements, rights
of way, restrictions, encroachments, servitudes, consents, voting rights,
executions or other encumbrances (including notices or other registrations in
respect of any of the foregoing) of any and every kind, nature and description
affecting title to the Included Assets or any part thereof or interest therein.

 

“Environmental Laws” means all federal, state, and local administrative, civil
and criminal laws, permits, regulations, rules, ordinances, codes, decrees,
judgments, injunctions, directives, or judicial or administrative orders
relating to, and all common law theories (at law or in equity) relating to,
pollution, preservation, remediation or protection of the environment, natural
resources or human health and safety, including, without limitation, those
relating to Releases or threatened Releases (including Releases to ambient air,
surface water, groundwater, land, surface and subsurface strata) or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
transport, disposal, recycling, reclamation, replacement or handling of
Hazardous Substances.

 

“Environmental Liabilities” means any direct, indirect, pending or threatened
indebtedness, liability, claim, loss, damage, fine, penalty, cost, expense,
deficiency, obligation or responsibility, whether known or unknown, (including
any court costs, fees and expenses of expert witnesses, investigative expenses,
and attorneys’ fees) of a Seller or of any past owners or operators of the
Systems that (i) relates to ownership or operation of the Systems, (ii) arises
under or relates to Environmental Laws, and (iii) arises from events occurring
on or prior to the Closing Date.

 

4

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“Environmental Permits” means all licenses, consents, approvals, authorizations,
permit, plans, variances, exemptions, and agreements required, issued or granted
by any public or private entity or person pursuant to or in relation to
Environmental Law or Releases of Hazardous Substances.

 

“Equipment” means all tangible personal property, including desks, chairs,
tables, cabinets, cubicles, furniture, fixtures, furnishings, work equipment,
machinery, motor vehicles, spare parts, tools, computers, servers, network and
Internet- and information technology systems-related equipment, computer
hardware, photocopiers, telephone lines, facsimile machines and other business
equipment and devices (including data processing hardware and related
telecommunications equipment, media, and tools), advertising, marketing and
promotional materials and all other printed or written materials used or held
for use in connection with a Business and owned by a Seller, tools, racking,
molds, forms, dies and tooling and miscellaneous items, miscellaneous office
furnishings and supplies, maintenance equipment, signs, signage, and other
tangible personal property.

 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.
“Escrow Agreement” has the meaning set forth in the recitals hereto.

 

“Escrow Holder” means Brown Rudnick LLP.

 

“Excluded Assets” means, collectively, the Beacon Excluded Assets and the SRS
Excluded Assets.

 

“Excluded Liabilities” means, collectively, the Beacon Excluded Liabilities and
the SRS Excluded Liabilities.

 

“Execution Date” has the meaning set forth in the preamble.

 

“FERC” means the U.S. Federal Energy Regulatory Commission, and any successor
agency thereto.

 

“Final Order” means any order, ruling or judgment of the Bankruptcy Court or any
other court of competent jurisdiction, as to which the time to file an appeal, a
motion for rehearing or a petition for writ of certiorari has expired and no
such appeal, motion or petition is pending.

 

“GAAP” means United States generally accepted accounting principles in effect
from time to time.

 

“GFI Tyngsboro” means GFI Tyngsboro, LLC.

 

“Governmental Authority” means any domestic, foreign, federal, state, provincial
or local authority, legislative body, court, government, regulatory agency,
self-regulatory organization (including any securities exchange), commission,
board, arbitral or other tribunal, or any political or other subdivision,
department or branch of any of the foregoing.

 

5

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“Grant” means any grant, assistance or cooperation Contract with any
Governmental Authority for the provision of stimulus or other funding.

 

“Hazardous Substances” means any pollutant, contaminant, petroleum or petroleum
product, dangerous or toxic substance, hazardous or extremely hazardous
substance or chemical, or otherwise hazardous material or waste regulated under
Environmental Laws.

 

“Hazle Assets” means any and all of Beacon Seller’s right, title and interest
to, to and under all assets, properties, rights and claims relating to the Hazle
Facility, including:

 

(i)            all Contracts;

 

(ii)           all Permits;

 

(iii)          all Grants, including the Hazle Grants; and

 

(iv)          the Hazle Option Agreement.

 

“Hazle Facility” means the 20MW flywheel frequency regulation plant proposed or
intended to be developed or constructed by Beacon Seller in Hazle Township,
Pennsylvania.

 

“Hazle Grants” means any and all grant or cooperation Contracts with any
Governmental Authority with respect to the development and/or construction of
the Hazle Facility, including (i) the Assistance Agreement, dated November 15,
2010, between Beacon Seller and the U.S. Department of Energy, and (ii) the
grant approval letter, dated August 8, 2011, issued by the Commonwealth of
Pennsylvania to Beacon Seller.

 

“Hazle Option Agreement” means that certain Option Agreement dated May 1, 2010
between Hazleton Community Area Development Organization, Inc. and Beacon
Seller.

 

“Improvements” means all plants, buildings, improvements, structures, streets,
roads and fixtures located, placed, constructed or installed on or under the
Real Property, and all fixtures, machinery, apparatus or equipment affixed,
attached or appurtenant thereto.

 

“Included Assets” means, collectively, the Beacon Included Assets and the SRS
Included Assets.

 

“Intellectual Property Rights” means any and all forms of technology and
intellectual property including any or all of the following as they exist in any
jurisdictions:

 

(i)                                     inventions (whether or not patentable),
discoveries, improvements, business methods, and processes, including patents,
patent applications, and other patent rights (including any divisions,
continuations, continuations-in-part, renewals, reexaminations, substitutions,
reissues or extensions thereof, whether or not patents are issued on any such
applications and whether or not any such applications are amended modified,
withdrawn or refiled) (“Patents”);

 

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(ii)                                  words, names, symbols, designs and other
designations to identify or distinguish a business, good, group, product, or
service, including trademarks, service marks, trade dress, trade names, brand
names, telephone or facsimile numbers, email addresses, directory listings (in
any media), Domain Names, designs or logos or corporate names (including, in
each case, the goodwill associated therewith), whether registered or
unregistered, and all registrations and applications for registration thereof
(“Marks”);

 

(iii)                               published and unpublished works of
authorship (whether or not registered or registrable) including audiovisual
works, websites and web pages, collective works, data and databases,
documentation, compilations, literary works, sound recordings, derivative works,
moral rights, including copyrights, including all renewals and extensions
thereof, copyright registrations and applications for registration thereof, and
non-registered copyrights (“Copyrights”);

 

(iv)                              trade secrets, confidential business
information, information that is not generally known or otherwise readily
ascertainable through proper means, and other proprietary information, customer
information, blue prints, drawings, designs, research and development
information, technical information, specifications, operating and maintenance
manuals, methods, engineering drawings, know-how, data, databases and other
collections of data, mask works, industrial designs, and other proprietary
rights (whether or not patentable or subject to copyright, mask work, or trade
secret protection) (“Trade Secrets”);

 

(v)           Software;

 

(vi)                              all licenses, sublicenses, and other
agreements or permissions related to the property described in clauses (i) to
(v) of this definition; and

 

(vii)                           claims, demands and causes of action of any kind
with respect to, and any other rights relating to the enforcement of, any of the
foregoing, including any past, present or future infringement, misappropriation
or other violation of any of them.

 

“Interim Term” means the period commencing on the Bring-Down Date and ending on
the earlier of the date of the termination of this Agreement and the Closing
Date.

 

“IRC” means the Internal Revenue Code of 1986, as amended.

 

“Knowledge of Sellers” or any other similar knowledge qualification in this
Agreement means the actual knowledge of William Capp regarding the item or
matter and, solely with respect to Section 3.8 hereof, the actual knowledge of
Richard Hockney regarding the item or matter.

 

“Law” means all federal, state, local, municipal, foreign, international,
multinational or other statutes, laws (including principles of common law),
regulations, rules, ordinances, codes, decrees, constitutions, ordinances,
treaties, Orders and other requirements of, administered or enforced by or on
behalf of, any Governmental Authority.

 

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“Lease” means any lease, sublease, license or similar contract (whether oral or
written) or affecting a Business or Related to a Business or any of the Included
Assets, real or personal, entered into by a Seller, including all options to
renew, purchase, expand or lease (including any leasehold improvements to any
facilities or appurtenances to such improvements (including, without limitation,
buildings, structures, storage areas, driveways, walkways and parking areas),
rights of first refusal, first negotiation and first offer), all credit for the
prepaid rent associated therewith, and all Deposits made in connection with such
Leases.

 

“Leased Real Property” means all that certain real property commonly known as 65
Middlesex Road, Tyngsboro, Middlesex County, Massachusetts and the buildings and
improvements situate thereon leased by Beacon Seller pursuant to the Tyngsboro
Lease.

 

“Legal Proceeding” means any action, complaint, claim, suit, litigation,
arbitration, mediation, appeal, petition, charge, prosecution, indictment,
audit, hearing, inquiry, investigation or proceeding (whether civil, criminal,
administrative, investigative, or informal) commenced, brought or asserted by
any Person or group of Persons or Governmental Authority or conducted or heard
by or before any Governmental Authority or any arbitration tribunal.

 

“Liability” means any debt, liability, loss, claims, damage, commitment or other
obligation of any nature (whether direct or indirect, known or unknown, absolute
or contingent, accrued or unaccrued, liquidated or unliquidated, or due or not
yet due) and including all costs, fees and expenses relating thereto.

 

“Marks” has the meaning set forth in the definition of Intellectual Property
Rights on this Schedule 1.2.

 

“Material Adverse Effect” means any change, effect, event, occurrence, state of
facts or development that, individually or in the aggregate, has been or would
be reasonably likely to be material and adverse to the Business, the Included
Assets, the Assumed Liabilities or the results of operations or condition
(financial or otherwise) of the Business, taken as a whole; provided, however,
that none of the following shall be taken into account in determining whether
there has been or would be, a Material Adverse Effect: (A) changes in general
economic or financial market conditions, (B) the outbreak or escalation of
hostilities, the declaration of war, the occurrence of any calamity or natural
disaster, or acts of terrorism, (C) changes in any Law or GAAP or interpretation
thereof after the Execution Date, (D) any event as to which Purchaser has
provided its express prior written consent hereunder, (E) any announcement of
this Agreement and the Transaction, or (F) any action taken by Purchaser or any
of its Affiliates or representatives.

 

“Material Contract” and “Material Contracts” have the meaning set forth in
Section 3.6.

 

“Necessary Consent” has the meaning set forth in Section 2.7(f).

 

“Note” has the meaning set forth in Section 2.4.

 

“Notice” means any notice, request, Consent, acceptance, waiver or other
communication required or permitted to be given pursuant to this Agreement.

 

“Offered Employees” has the meaning set forth in Section 5.10(a).

 

“Order” means any order, writ, judgment, injunction, decree, stipulation,
determination, decision, verdict, ruling, subpoena, or award entered, issued,
made or rendered by or with any Governmental Authority (whether temporary,
preliminary or permanent).

 

“Ordinary Course” or “Ordinary Course of Business” means the conduct of a
Business in accordance with the applicable Seller’s normal day-to-day customs,
practices and procedures, consistent with past practice prior to the
commencement of the Chapter 11 Cases.

 

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“Outside Date” shall mean the date which is ninety (90) days following the
Execution Date.

 

“Owned Real Property” means all that certain real property situated in the Town
of Stephentown, Rensselaer County, State of New York, and the fixtures,
buildings and improvements situate thereon (the “Premises ”), together with all
the rights and appurtenances pertaining to the Premises, including any right,
title and interest of Seller (if any) in and to all adjacent streets and
rights-of-way, appurtenant easements, tenements, hereditaments, privileges,
minerals and mineral rights, water and water rights, and utility capacity

 

“Party” or “Parties” has the meaning set forth in the preamble.

 

“Patents” has the meaning set forth in the definition of Intellectual Property
Rights on this Schedule 1.2.

 

“Permits” means all permits, licenses, authorizations, approvals, entitlements,
accreditations, certifications, franchises, Consents, Orders and registrations
of all Governmental Authorities as are necessary for a Seller to own, lease,
manage or operate such Seller’s Included Assets or Business.

 

“Permitted Encumbrances” means, solely with respect to Included Assets:
(a) mechanics’, materialmen’s, warehouseman’s and similar liens for labor,
materials or supplies that relate to Assumed Liabilities; and (b) zoning,
building codes and other land use Law regulating the use or occupancy of the
Real Property or the activities conducted thereon which are imposed by any
Governmental Authority having jurisdiction over such Real Property which are not
violated by (i) the current use or occupancy of the Real Property or (ii) the
operation of the Business.

 

“Person” means an individual, partnership, limited liability company,
corporation, trust, joint venture, association, joint stock company,
unincorporated organization, Governmental Authority or other entity, and the
successors and assigns thereof or the heirs, executors, administrators or other
legal representatives of an individual.

 

“Personal Property Lease” means any Lease of tangible personal property.

 

“Premises” has the meaning set forth in the definition of Owned Real Property on
this Schedule 1.2.

 

“Purchase Price” has the meaning set forth in Section 2.4.

 

“Purchase Price Deposit” has the meaning set forth in Section 2.8.

 

“Purchaser” has the meaning set forth in the preamble.

 

“Purchaser Escrowed Closing Documents” has the meaning set forth in
Section 7.3(b). “Real Property” means the Owned Real Property and the Leased
Real Property.

 

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“Real Property Lease” means any Lease or license of real property.

 

“Related to a Business” means required for, arising out of, or used or held for
use in connection with a Business as conducted by the applicable Seller before
the commencement of the Chapter 11 Cases.

 

“Release” means any discharge, emission, spilling, leaking, pumping, pouring,
injecting, dumping, burying, leaching, migrating, abandoning or disposing into
or through the environment of any Hazardous Substances including the abandonment
or discarding of barrels, containers and other closed receptacles containing any
Hazardous Substances.

 

“Retained Books and Records” means (A) any documents (including books and
records) that a Seller is prohibited (or reasonably believe to be prohibited) by
applicable Law to sell and transfer, (B) corporate seals, minute books, charter
documents, corporate stock record books, original Tax and financial records and
such other books and records as pertain to the organization, existence, actions
or share capitalization of a Seller, (C) any books and records or information
related exclusively to any of the Excluded Assets or Excluded Liabilities.

 

“Sale Hearing” means the hearing scheduled by the Bankruptcy Court to approve
the Transaction.

 

“Sale Order” has the meaning set forth in Section 8.1.

 

“Schedule Supplement” has the meaning set forth in Section 5.3.

 

“Secured Party” means the U.S. Department of Energy.

 

“Seller” or “Sellers” has the meaning set forth in the preamble.

 

“Seller Escrowed Closing Documents” has the meaning set forth in Section 7.2(b).

 

“Software” means any and all (a) computer programs, including any and all
implementations of algorithms, models, protocols, schematics, designs,
configurations, settings, controls, techniques and methodologies, whether in
software, firmware, source code, object code, micro code, or any other form
(including code pertaining to micro controllers, digital signal processors and
field programmable gate arrays), (b) databases and compilations, including any
and all data and collections of data, whether machine readable or otherwise,
(c) descriptions, files, flow-charts and other work product used to design,
plan, organize and develop any of the foregoing, and (d) all documentation,
including user manuals and training documentation, relating to any of the
foregoing, in each case developed by or for, or licensed to, a Seller and
Related to such Seller’s Business.

 

“SRS Assumed Contracts” has the meaning set forth in Section 2.1(b)(i).

 

“SRS Assumed Liabilities” has the meaning set forth in Section 2.5(b).

 

“Beacon Cash Purchase Price” has the meaning set forth in Section 2.4.

 

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“SRS Excluded Assets” has the meaning set forth in Section 2.2(b).

 

“SRS Excluded Contracts” means any Contract to which SRS Seller is a party which
is not an SRS Assumed Contract.

 

“SRS Excluded Liabilities” has the meaning set forth in Section 2.6(b).

 

“SRS Included Assets” has the meaning set forth in Section 2.1(b).

 

“Systems” means all servers, systems, sites, circuits, networks and other
computer assets and computer equipment owned, licensed or owned by a Seller and
Related to such Seller’s Business.

 

“Tax” or “Taxes” means (i) any federal, state, local or foreign net income,
gross income, gross receipts, windfall profit, severance, property, production,
sales, use, license, excise, franchise, employment, unemployment, payroll,
withholding, alternative or add on minimum, ad valorem, value added, transfer,
stamp, or environmental tax, escheat payments or any other tax, custom, duty,
impost, levy, governmental fee or other like assessment or charge (together with
any and all interest, penalties, additions to tax and additional amounts imposed
with respect thereto) and (ii) liability for items in (i) of any other Person by
contract, operation of Law (including Treasury Regulations Section 1.1502-6) or
otherwise.

 

“Tax Allocation” has the meaning set forth in Section 2.9(b).

 

“Tax Return” or “Tax Returns” means all returns, declarations of estimated tax
payments, reports, estimates, information returns and statements, including any
related or supporting information with respect to any of the foregoing, filed or
required to be filed with any taxing authority.

 

“Third Party” means any person other than a Party to this Agreement or an
Affiliate of a Party to this Agreement.

 

“Trade Secrets” has the meaning set forth in the definition of Intellectual
Property Rights on this Schedule 1.2.

 

“Transaction” means the transactions contemplated herein to be consummated at
the Closing, including the purchase and sale of the Included Assets and the
assumption of the Assumed Liabilities provided for in this Agreement.

 

“Transfer Taxes” means any sales, use, value added, transfer, stamp, excise,
registration, documentary, mortgage or recording or other similar taxes payable
solely as a result of and in connection with the consummation of the Included
Assets or the assumption of any Assumed Liability.

 

“Treasury Regulations” means the regulations promulgated under the IRC.

 

“Tyngsboro Lease” means that certain Lease dated July 23, 2007 between GFI
Tyngsboro and Beacon Seller.

 

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“Tyngsboro Lease Amendment” means the Lease Amendment, to be entered into
between Beacon Purchaser and GFI Tyngsboro as of the Closing, which is on the
terms and conditions set forth in the term sheet attached hereto as Exhibit G
and otherwise acceptable to Beacon Purchaser in its sole discretion.

 

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SCHEDULE 2.9(a)

 

PURCHASE PRICE ALLOCATION FOR
PURPOSES OF THE BIDDING PROCEDURES ORDER

 

Included Asset (by Seller)

 

Allocation of the Purchase Price

 

SRS Seller

 

 

 

·     All SRS Included Assets

 

$

25,800,000

 

Beacon Seller

 

 

 

·     All Beacon Assets

 

$

4,700,000

 

 

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