Document:

ex10-1.htm

Exhibit 10.1

Godo Kaisha (“G.K.”) interest sale and purchase agreement

 

 

 

 

By and between

 

SPI Solar Japan G.K.,

As Purchaser,

 

 

And

 

RE Capital Pte. Ltd,

As Seller,

 

 

 

 

 

 

Date as of

 

15th April, 2015

 

 

 

1

 

 

Godo Kaisha (“G.K.”) interest sale and purchase agreement

 

 

RE Capital Pte. Ltd., a company incorporated under a laws of Singapore having its official address at 133 New Bridge Road #25-08, Chinatown point, Singapore (hereinafter called seller), 

 

And, 

 

SPI Solar Japan GK, a company incorporated under the laws of Japan having its official address at Room 1003, 1-18-6, Nishishinbashi, Minato-Ku, Tokyo, Japan (hereinafter called purchaser), 

 

Hereinafter referred to individually as “Party” or collectively as the “Parties” 

 

RECITALS

 

WHEAEAS seller would like to sell its entire Godo Kaisha (“G.K.”) interest of projects as described at Annex (“Projects”). 

 

WHEAEAS purchaser has interest to acquire the entire G.K. interests of the projects from seller at its current status. 

 

Detailed descriptions of the projects are as referred to Annex. 

 

 

ARTICLE 1
DEFINITIONS

 

Section 1.1     Certain Defined Terms. Unless stated otherwise, the terms when used in this Agreement with initial letters capitalized have the meanings set forth below:

 

“Affiliate” of a specified person means any other person that directly or indirectly, through one or more intermediaries, controls, is controlled by or is under common control with the specified person. For the purposes of this definition, “control”, when used with respect to any specified person, means the possession of the power to direct the management or policies of the specified person, directly or indirectly, whether through the ownership of voting securities or partnership or limited liability company interests, by contract or otherwise.

 

 

 

2

 

 

“Agreement” is defined in the preamble of this Agreement.

 

“Applicable Laws” means treaties, laws, government ordinances, ministry codes, regulations of local government, Cabinet Office regulations, rules, other administrative directions, guidelines, other policies, court decisions, judgments and orders and arbitration decisions that legally bind the Parties, including those after the execution date of this agreement.

 

“Balance Sheet Date” is defined in Section 3.3(j).

 

“Bouryokudan Members” is defined in Section 3.3(s).

 

“Business” means the business and operations of the Company.

 

“Business Day” means a day other than any Saturday, Sunday or any other day on which banks are required or authorized to be closed for business in Japan.

 

“Claim” means any claim, suit, judgment, order, ruling, proceeding, hearing or investigation, whether pending or threatened.

 

“Closing” is defined in Section 2.3.

 

“Closing Date” is defined in Section 2.3.

 

“Commencement of Construction Date” means the delivery, in accordance with the terms of an engineering, procurement & construction (“EPC”) contract entered into by the Company with respect to the construction of the Project, of a full notice to proceed with all material construction activities by the Company to the EPC contractor for the Project.

 

“Commercial Operation Date” or “COD” means that date on which the Project achieves commercial operation under the PPA and the 20 year FIT period under the PPA commences.

 

“Company” is defined in the Recitals to this Agreement.

 

“Company IP” is defined in Section 3.3(f).

 

“Consent Letter” means a consent letter regarding the transfer of the Membership Interests substantially in the form of Exhibit A hereto completed and executed by the Company bearing a confirmed date stamp of a notary public.

 

“Encumbrances” means any and all mortgages, pledges, claims, security interests, options, purchase rights, conditional and installment sales agreements, easements, usufructs, charges, activity and use restrictions and limitations, covenants, encroachments, exceptions, rights-of-way, deed restrictions, defects or imperfections of title, encumbrances and charges of any kind, and any restrictions on rights to receive income or voting rights.

 

 

 

3

 

 

“Environmental Claim” means any claim, action, suit, judgment, demand, proceeding, investigation, or written notice by any person alleging liability (including potential liability for investigatory costs, cleanup costs, governmental response costs, natural resources damages, property damages, personal injuries, or penalties) arising out of, based on or relating to (a) the presence, or Release into the environment, of any Hazardous Substance at the site of the Project or (b) the violation, or alleged violation, of any Environmental Law or Permit.

 

“Environmental Laws” means all Applicable Laws pertaining to pollution or the protection of the environment, protected animals and plants, natural resources or human health and safety (with respect to exposure to Hazardous Substances), including Laws relating to Releases or threatened Releases of Hazardous Substances (including Releases to ambient air, surface water, groundwater, land, surface and subsurface strata) or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, Release, transport, disposal or handling of Hazardous Substances, including the Soil Contamination Countermeasures Act (Act No. 53 of 2002, as amended) and the Waste Management and the Public Cleansing Act (Act No. 137 of 1970, as amended).

 

“FIT” means the “feed-in tariff” as defined in the FIT Act.

 

“FIT Act” means The Act on Purchase of Renewable Energy Sourced Electricity by Electric Utilities (Act No. 108 of 2011, as amended) of Japan.

 

“GAAP” means the generally accepted accounting principles of Japan as in effect from time to time.

 

“Godo Kaisha” (“G.K.”) means Japanese enterprise registered and governed by the law of Japan. 

 

“Permits” means all material permits, approvals, registrations, notifications, licenses, consents and other permits that are or were necessary or required for the ownership, development, construction, operation or maintenance of the Project and to generate and sell electric energy, capacity and related products and to conduct the Business and to consummate the Transactions. 

 

“Authority” means (a) any government, (b) any governmental, regulatory or administrative agency, commission, body or other authority exercising or entitled to exercise any administrative, executive, judicial, legislative, police, regulatory or custodial authority or power and (c) any court or governmental tribunal.

 

 

 

4

 

 

“Hazardous Substances” means any chemical, material or substance in any form, whether solid, liquid, gaseous, semisolid, or any combination thereof, whether waste material, raw material, chemical, finished product, byproduct, or any other material or article, that is regulated under applicable Environmental Laws as a “pollutant”, “hazardous material”, “hazardous” or “toxic” substance or waste, or as a “contaminant”, or is otherwise designated, listed or regulated, or for which liability could be imposed, under applicable Environmental Laws because it poses a hazard to human health or the environment, including petroleum products, asbestos, urea formaldehyde foam insulation, radioactive materials and lead-containing paints or coatings.

 

“Intellectual Property” means all patents and industrial designs (including any continuations, divisionals, continuations-in-part, renewals, reissues, and applications for any of the foregoing); copyrights; trademarks, trade names, service marks, logos, internet domain names; confidential or proprietary technology, know-how, processes, trade secrets, inventions, designs, proprietary rights, proprietary data, formulae, research and development data, databases, computer software programs and other intellectual property as provided by Applicable Law, and any registrations or applications for the same and all goodwill associated therewith.

 

“Knowledge” or “Known” with respect to a Party means the actual knowledge, information and belief of the Party so long as it can demonstrate that it has reviewed all relevant records and made due inquiries regarding the relevant matter of all relevant directors, officers and employees (if any) of the Party and its Subsidiaries, and, if the Party cannot so demonstrate, any reference to the knowledge of such Party means the actual and constructive knowledge that such Party would have had after reviewing such records and making such inquiries.

 

“Land agreement” means land purchase and sale contract and land lease contract of projects. 

 

“Loss” means any demands, suits, penalties, fines, Encumbrances, judgments, obligations, damages, claims, losses, taxes, liabilities, payments, costs and expenses, including reasonable legal, accounting and other expenses in connection therewith.

 

“Material Adverse Effect” means any change, circumstance or event that, individually or in the aggregate, (A) materially adversely affects the business, assets or properties, liabilities, results of operation or financial condition of the Company, other than changes, circumstances or events due to or resulting from (a) general economic or market conditions that do not affect the Company in a disproportionate manner, (b) conditions generally affecting the industries in which the Company operates that do not affect the Company in a disproportionate manner, (c) any actions required to be taken pursuant to this Agreement or the transactions contemplated hereby, (d) geopolitical conditions or any outbreak or escalation of hostilities or acts of terrorism or war, or any effects of weather, geological or meteorological events including any hurricane, tornado, flood, earthquake or other natural disaster, (e) changes in (or proposals to change) Tax or accounting rules or principles or the interpretation thereof or (f) strikes, work stoppages or other labor disturbances or (B) is reasonably expected to materially impair or materially delay the ability of Seller to consummate the Transactions.

 

 

 

5

 

 

“Membership Interests” means all of the membership interests (shain mochibun) in the Company, constituting the entire membership interests of the Company.

 

“Organizational Documents” means articles of incorporation, member determination, certificate of full payment, application for incorporation, seal application and seal certificate of representative member and other documents necessary for incorporation.

 

“Party” and “Parties” have the meanings set forth in the preamble of this Agreement.

 

“Permitted Encumbrances” means any of the following Encumbrances: (a) any Encumbrance for Taxes not yet due or delinquent; (b) any Encumbrance arising in the ordinary course of business by operation of Applicable Law with respect to a liability that is not yet due or delinquent; (c) imperfections or irregularities of title and other Encumbrances that do not, individually or in the aggregate, materially detract from the value of the affected property or materially detract from the suitability of the affected property for development of the Project; (d) zoning, planning, and other similar limitations and restrictions, and all rights of any Authority to regulate any property that do not, individually or in the aggregate, materially detract from the value of the affected property or materially detract from the suitability of the affected property for development of the Project; (e) Encumbrances in favor of carriers, warehousemen, mechanics and materialmen, and Encumbrances to secure claims for labor, materials or supplies with respect to a liability that is not yet due or delinquent; and (f) any Encumbrances created by or through Purchaser.

 

“PPA” means the power purchase agreement (tokutei keiyaku) and the interconnection agreement to be entered into between the Company and the Utility in relation to the Project in accordance with FIT Act.

 

“Project” is defined in the Recitals of this Agreement.

 

“Project Assets” means all of the assets, properties and rights constituting the Project.

 

 

 

6

 

 

“Purchase Price” means the payments described in Section 2.2,

 

“Purchase Price Payment” is defined in Section 2.3, 2.4, 2.5, 2.6 and 2.7.,

 

“Buyer” is defined in the preamble to this Agreement.

 

“Real Property” is the lands listed in Schedule 1.1.

 

“Records” means, unless determined or deemed to be privileged and confidential or otherwise subject to attorney-client privilege or is attorney work product, books, records, documents, contracts, data or information, whether in electronic or physical form, to the extent reasonably relating to the Company in the possession of Seller, the Company or their Affiliates as of the Closing.

 

“Release” means any spilling, leaking, discharging, disposing, pumping, pouring, emitting, emptying, injecting, leaching or dumping of any Hazardous Substance.

 

“Remediation” means any action required by a Authority to address a Release or threatened Release or the presence of Hazardous Substances on or in the soil, surface water or groundwater.

 

“Representatives” means representing member, officers, directors, executive officers or equivalent persons who execute business.

 

“Seller” is defined in the preamble of this Agreement.

 

“Seller Bank Account” means the following account: the general account with account number 033087099895, in the name of Re capital Pte. Ltd., at the Branch of Cathay United Bank.

 

“Subsidiary” means, with respect to any person, any person of which more than 50% of the total voting equity interests (including partnership and joint venture interests) entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof (or other similar persons) or the ability to elect a majority of the directors, managers or trustees thereof (or other similar persons) is at the time owned or controlled, directly or indirectly by, such person.

 

“Tax” or “Taxes” means any tax, fee, tariff, impost and other charge of any kind imposed by any Taxing Authority based upon, measured by or calculated with respect to income, profits, receipts, windfall, real or personal property, sales, use, payroll, employment, social security, workers’ compensation, unemployment compensation, or net worth, together with any interest, penalties or additions attributable to such tax, whether disputed or not.

 

“Taxing Authority” means any government, agency, or political subdivision of any such government having jurisdiction over the assessment, determination, collection, imposition or administration of any Tax.

 

“Tax Return” means any return, report, claim for refund, declaration, statement, certificate, bill, schedule or other document, together with all amendments, attachments and supplements thereto, required to be filed with any Taxing Authority.

 

 

 

7

 

 

“Third Party” means a person that is not included among Parties.

 

“Third Party Claim” means a claim by a Third Party, including any claim for the costs of conducting Remediation, or seeking an order or demanding that a person undertake Remediation.

 

“Transaction Documents” means this Agreement and any certificates delivered pursuant to this Agreement or any such other agreements or documents contemplated hereby or thereby.

 

“Transactions” means the purchase and sale of the Membership Interests, at the Closing pursuant to this Agreement and all other transactions contemplated hereby or thereby.

 

“Utility” means Tokyo and Tohoku Electric Power Company, Inc..

 

“Yen” or “¥” means the lawful currency of Japan.

 

“USD” or “$” means the lawful currency of United States of America. 

 

Section 1.2     Certain Interpretive Matters. In this Agreement, unless the context otherwise requires:

 

(a)     except as expressly provided otherwise, reference to any Article, Section, Schedule or Exhibit means such Article, Section, Schedule or Exhibit of or to this Agreement, and references in any Article, Section, Schedule, Exhibit or definition to any clause means such clause of such Article, Section, Schedule, Exhibit or definition;

 

(b)     any accounting term used and not otherwise defined in this Agreement has the meaning assigned to such term in accordance with GAAP;

 

(c)     “hereunder”, “hereof”, and “hereto” are references to this Agreement as a whole and not to any particular Section or other provision in this Agreement;

 

(d)     “including” (and with correlative meaning “include”) means including without limiting the generality of any description preceding or succeeding such term;

 

(e)     any agreement, instrument, insurance policy or Law defined or referred to herein or in any agreement or instrument that is referred to herein means such agreement, instrument, insurance policy or Law as from time to time amended, modified, or supplemented as of the date hereof, including (in the case of agreements or instruments) by waiver or consent and (in the case of Laws) by succession of comparable successor Laws and references to all attachments thereto and instruments incorporated therein.

 

 

 

8

 

 

ARTICLE 2

Purchase and sale; Closing

The parties have reached the following agreement: 

 

1. The projects are currently housed in separate G.K.s, which are directly owned by seller. 

 

2. Total sales price of entire G.K. interest shall be at USD 8,800,000 (United States dollar Eight million eight hundred thousand). Purchaser also agrees to pay the cost and expenses described in Article 2, Clause 8 of this Agreement. 

 

3. Purchaser shall pay USD 3,300,000 (United States dollar three million three hundred) by cash and will pay USD 5,500,000 (United Status dollar five million five hundred) by equivalent value of shares owned by Solar Power Inc. (OTCBB: SOPW) to seller. The amount of share against USD 5,500,000 may be determined as average price between 9th April and 15th April 2015 before 1830 o’clock Beijing time accounting by working days. 

 

4. The agreement is deemed valid when a total of USD 1,760,000 (One Million Five Thousand United States Dollar) deposit is made to seller’s designated account mentioned below by 20th April.2015. 

 

Payee’s name;                 RE Capital Pte. Ltd. 

Payee’s bank;                  Cathay United Bank 

Bank address;                  3/F, No.65, Kuan-Chien Road, Taipei, Taiwan ROC 

Bank account Number;   033087099895

SWIFT code;                    UWCBTWTP033

 

5. Purchaser shall pay USD 3,520,000 (Three Million Five Hundred and Twenty Thousand United States dollar) of total sales price to seller by cash and share by 30th April 2015. 

 

6. Purchaser shall pay USD 3,520,000 (Three Million Five Hundred and Twenty Thousand United States dollar) of total sales price to seller by share by 15th May 2015. 

 

 

 

9

 

 

7. For each and every project and G.K. transfer, parties agreed to sign the “Mutual Development and Project hand over Contract”, as the annex of this contract, before by 20th April 2015. 

 

8. Seller already paid costs and expenses for project which will be described by “Mutual development and project handover contract” for each GK. Purchaser will pay exact amount of those costs and expenses with invoices issued by RE Capital K.K. to Purchaser upon the date of the project and G.K. transfer. 

 

 

9. Seller undertakes to guarantee seller that upon receiving full payment, the ownership (i.e. GK interest) of the projects will be duly and fully transferred to buyer who will then have the right to reappointment the directors of GKs. Provided always that such entities are legitimate and the transfer is legally permissible. 

 

10. Seller shall guarantee its rights and its performance legally and technically up to its completion. Purchaser will reserve its right to claim to return partially or entire amount of payment from Seller in case of failure or defects caused. 

 

Article 3

Representations and warranties of seller

 

Section 3.1.     Representations and Warranties regarding Seller. Seller represents and warrants to Purchaser that the following items are true and accurate on as of the dates hereof, the date of this agreement and as of the dates of each price payment. 

 

(a) Seller has all requisite power and authority to own its assets and has full authority and right to execute and fulfill the terms of this agreement. Seller has not received a judgement for commencement of guardianship, curatorship or assistance, and no arbitrary guardian has been assigned to seller. 

 

(b) Seller is not unable to make payments and has not suspended payments, and no petition has been filed with respect to seller for commencement of bankruptcy, civil rehabilitation or other insolvency proceedings, not does any cause for such proceedings exist. The execution or performance of this agreement or the transaction document will not cause seller to become insolvent or to not make or suspend payments, and to the knowledge or seller, there is no risk that such events will occur. 

 

 

 

10

 

 

(c)     Authorization of Transactions. Seller has all requisite power and authority to execute and deliver, and to perform its obligations under, the Transaction Documents to which it is a party. Assuming the due authorization, execution and delivery of the Transaction Documents by each party thereto other than Seller, the Transaction Documents to which Seller is a party constitute valid and legally binding obligations of Seller, enforceable against Seller, in accordance with their terms, except as may be limited by bankruptcy, insolvency, moratorium and similar Laws affecting enforcement of creditors’ rights and remedies generally.

 

(d)     Non-Contravention. The execution and delivery by Seller of the Transaction Documents to which it is a party do not, and the consummation of the Transactions will not: (i) result in a default (or give rise to any right of termination, cancellation or acceleration) under, or conflict with any of the terms, conditions or provisions of, any material contract to which Seller is a party that relates to the Business or the Project; (ii) violate, contravene or conflict with, or result in a breach of, any Permit or any Applicable Laws, applicable to Seller, the Business or the Project; or (iii) require that Seller obtain the consent or approval of, make any filing with, or provide notice to any person, which, if not obtained, individually or in the aggregate, results in, or would reasonably be expected to result in, a Material Adverse Effect.

 

Section 3.2     General Representation and Warranties regarding the Company. Seller represents and warrants to Purchaser that the following items are true and accurate as of the date hereof, the Closing Date and as of the date of each Purchases Price Payment.

 

(a)     Authority. The Company is duly organized and validly existing godo kaisha (G.K.) under the Laws of Japan, and has all requisite power and authority to own, lease and operate the properties and to carry on the business as they are now being conducted.

 

(b)     Organizational Documents. Seller has delivered to Purchaser true, complete and correct copies of the Organizational Documents of the Company (as amended through the date of delivery). All of such Organizational Documents are in full force and effect, and have not been amended or terminated after the date of delivery to Purchaser, except for such amendments to or terminations of any such Organizational Documents as are approved in writing by Purchaser as of the date hereof or as of the Closing Date, as applicable.

 

 

 

11

 

 

(c)     Bank Accounts. Schedule 3.2 contains a true and complete list of (i) the names of all banks and other financial institutions with which the Company has an account, deposit or safe deposit box, along with the account numbers and the names of all persons holding check signing or withdrawal power or other authority with respect thereto, and (ii) the managers and officers of the Company.

 

(d)     Insolvency. Company is not insolvent, is not unable to make payments and has not suspended payments, and no petition has been filed with respect to the Company for commencement of bankruptcy, civil rehabilitation or other insolvency proceedings, nor does any cause for such proceedings exist. The execution or performance of this Agreement or the Transaction Documents will not cause the Company to become insolvent or to not make or suspend payments, and to the Knowledge of Seller, there is no risk that such events would occur.

 

(e)     Authorization of Transactions. The Company has all requisite power and authority to execute and deliver, and to perform its obligations under, the Transaction Documents to which it is a party. Assuming the due authorization, execution and delivery of the Transaction Documents by each party thereto other the Company, the Transaction Documents to which the Company is a party constitute valid and legally binding obligations of the Company, enforceable against the Company, as applicable, in accordance with their terms, except as may be limited by bankruptcy, insolvency, moratorium and similar Laws affecting enforcement of creditors’ rights and remedies generally.

 

(f)     Non-Contravention. The execution and delivery by the Company of the Transaction Documents to which it is a party do not, and the consummation of the Transactions will not: (i) violate, conflict with or result in a breach of any provisions of the Organizational Documents of the Company; (ii) result in a default (or give rise to any right of termination, cancellation or acceleration) under, or conflict with any of the terms, conditions or provisions of, any contract to which either the Company is a party or by which its respective assets are bound; (iii) violate, contravene or conflict with, or result in a breach of, any Permit or any Applicable Laws, applicable to the Company, the Business or the Project; or (iv) require that the Company obtain the consent or approval of, make any filing with, or provide notice to any person, which, if not obtained, individually or in the aggregate, results in, or would reasonably be expected to result in, a Material Adverse Effect.

 

 

 

12

 

 

Section 3.3     Other Representation and Warranties regarding the Company and Seller. Seller further represents and warrants to Purchaser as of the date hereof and shall further represent and warrant to Purchaser that the following items are true and accurate on as of the date hereof, on and as of the Closing Date, and as of the date of each Purchases Price Payment.

 

(a)     The Membership Interests.

 

(i)     The Seller is the sole and absolute owner of all rights in the Membership Interests and has perfected all rights therein. Only the Seller has the right to dispose of the Membership Interests.

 

(ii)     There are no defense grounds which would interfere with the formation, continued existence or exercise of the Membership Interests, and there are no laws or regulations which would interfere with the transfer of the Membership Interests to anyone. 

 

(iii)     There has been no transfer to third parties of, and no security interests or other rights of use have been created with respect to, the Membership Interests, and there are no dispositions of the Membership Interests which harm or could harm the rights of the Purchaser, and there are no Encumbrances (any lien, pledge, collateral assignment, attachment, provisional attachment, preservative attachment, provisional disposition, third party acquisition right or other similar proceedings regardless of form). Seller has not incurred any obligation to dispose of the Membership Interests to a third party (regardless of whether such obligation is incurred orally, in writing, as a result of the existence or non-existence of a registration or as a result of any other process or circumstance). In addition, the execution of and entry into this Agreement and the performance of the transaction contemplated hereby will not result in any such obligation being incurred. 

 

(iv)     The formation, continued existence, exercise or ownership of the Membership Interests is not subject to any litigation, arbitration, mediation or other dispute resolution proceeding (whether instituted by public institutions or not) or administrative proceeding, and, to Seller’s knowledge (after due inquiry), there is no concrete risk of the same. 

 

(v)     There is no ruling, decision, order or court-imposed settlement with respect to the Membership Interests or any of their related rights, and there is no litigation, or other legal proceeding (including, without limitation, a petition by a third party for attachment, provisional disposition, provisional attachment, compulsory sale or auction), dispute resolution proceeding or administrative proceeding before any court, dispute resolution organization or other administrative body with respect to the Membership Interests or any of their related rights, and, to the Seller’s knowledge (after due inquiry), there is no concrete risk of the same.

 

 

 

13

 

 

(vi)     The Membership Interests have been subscribed have not been redeemed and are fully paid. To the Seller’s knowledge (after due inquiry), the subscription is effective and legal.

 

(vii)     The transfer of the Membership Interests pursuant to this Agreement is intended by the Seller to be a true transfer. The Seller, in entering into this Agreement, does not have the intent to hide or fraudulently convey assets, or otherwise harm creditors, and, the entry into this Agreement by the Seller will not harm any of the Seller’s creditors and does not constitute an illegal or dishonest transaction.

 

(b)     Litigation. There is no Claim, to the Knowledge of Seller, threatened against or relating to Seller or the Company by any person before any Authority or arbitrator, which, individually or in the aggregate, has resulted in or would reasonably be expected to result in a Material Adverse Effect.

 

(c)     Compliance With Laws. There is no continuing, and to the Knowledge of Seller, there has been no prior violation by the Company or the Business of any Applicable Laws applicable to the Company, the Business or the Project.

 

(d)     Permits. Schedule 3.3(d) sets forth a list of the Permits in accordance with Applicable Law, including Environmental Laws and the FIT Act. The Company has obtained all of the Permits set forth therein and all such Permits are final, in full force and effect and non-appealable. The Company is, and at all times has been, in compliance in all material respects with all applicable Permits. Neither Seller nor the Company has received written notice from any person that Seller, the Company or the Business is in violation or may be in violation of any Permit or Applicable Law or that any Permit is or may be subject to any legal proceeding or to any unsatisfied condition.

 

(e)     Real Property.

 

(i)     Schedule 1.1 contains complete and accurate descriptions of Real Property .

 

(ii)     The Company has good, valid and marketable title to all of its properties and assets, including, as applicable, the Project Assets and its properties and assets reflected in any of its financial statements, and has good, valid interests in the Real Property, in each case subject to no Encumbrances, other than Permitted Encumbrances, and there are no options, purchase rights, rights of first refusal or similar rights that would confer on the holder thereof the right to acquire any of the Company’s properties or assets, including any of the Real Property.

 

 

 

14

 

 

(iii)     Seller has delivered to Purchaser a correct and complete copy of the Land agreement (as amended to date). With respect to the Land agreement : (A) the Company has performed its obligations thereunder in all material respects and is not in default thereunder; (B) no defaults are currently alleged in writing thereunder, by the Company against any other party or parties thereto, nor, to the Knowledge of Seller, by any other party or parties thereto against the Company, and no event has occurred or failed to occur or circumstance exists which, with the delivery of notice, the passage of time or both, would constitute such a breach or default by the Company, or permit the termination, modification or acceleration of purchase price or other payment or amount under such Land agreement by the other party or parties thereto or to the Knowledge of Seller, would constitute such a breach or default by the other party or parties thereto, or permit the termination, modification or acceleration of purchase price or other payment or amount under such Land agreement by the Company; and (C) such Land agreement is a valid and binding obligation of the Company, as applicable, and to the Knowledge of Seller is a valid and binding obligation of each other party thereto, and is in full force and effect.

 

(iv)     To the Knowledge of Seller, all of the Real Property and other properties owned, leased or used by the Company that collectively comprise the Project Assets are in good operating condition and repair subject to normal wear and tear.

 

(v)     To the Knowledge of Seller, each parcel of Real Property complies in all respects with all real property Laws. There is no pending or, to the Knowledge of Seller, contemplated, expropriations, re-plotting or urban renewals of any Real Property.

 

(vi)     There are no pending or, to the Knowledge of Seller, threatened proceedings to (A) condemn, take or demolish the Real Property or any part thereof, (B) declare the Real Property or any part of it a nuisance or (C) exercise the power of eminent domain or a similar power with respect to all or any part of the Real Property. The Real Property is sufficient to enable the Company to conduct its operations in accordance with all Governmental Approvals, Permits and the relevant Transaction Documents and all other existing contracts, including providing adequate ingress and egress for any reasonable purpose, in connection with the operation and routine maintenance of the Project for at least 20 years from the Commercial Operation Date.

 

(f)     Intellectual Property.

 

All material Intellectual Property of the Company (the “Company IP”), whether owned, licensed or deemed to be licensed. The Company IP owned by the Company is in good standing and, to the Knowledge of Seller, is valid and enforceable and constitutes all material Intellectual Property necessary to own, develop, construct, operate and maintain the Project. The Company owns or licenses and possesses all right, title and interest in and to, or possesses the valid right to use, all of the Company IP free and clear of any Encumbrances. Neither Seller nor any of its Affiliates has received any notice of infringement or misappropriation from any third party with respect to any Company IP. To the Knowledge of Seller, the use by the Company of any Company IP does not violate, infringe or misappropriate any intellectual property rights of any third party, and no third party is infringing or misappropriating any of the Company IP owned by the Company. The Company has not assigned or licensed the Company IP to any third party.

 

 

 

15

 

 

(g)     Environmental Matters.

 

(i)     (A) Seller and the Company are and at all times have been in compliance with all Environmental Laws, other than any failures to comply that would reasonably be expected not to have a Material Adverse Effect and (B) in siting, constructing and developing the Project, Seller and the Company have implemented as of the date hereof and Seller will have implemented as of the Commercial Operation Date the best management and mitigation practices set forth in any letters from Governmental Authorities.

 

(ii)     Seller has furnished or made available to Purchaser true and correct copies of all reports, surveys, studies, analyses, tests, monitoring, assessments, sampling results and audits with respect to plants, birds, bats and other wildlife and environmental matters relating to the Real Property either performed by or on behalf of either Seller or its Affiliates in connection with the assessment, development, planning, engineering, procurement, development, construction, operation or maintenance of the Project or which, to the Knowledge of Seller, ever have been produced. Seller has furnished or made available to Purchaser true and correct copies of all correspondence, excluding routine email correspondence, with Governmental Authorities with respect to environmental matters relating to the Project and the Real Property, including documents, if any, relating to Permits, site conditions, jurisdictional waters and wetlands, wildlife, cultural resources and wildlife, avian and bat impacts, and post-construction monitoring or other issues arising under Environmental Laws.

 

(iii)     Schedule 3.3(g) discloses all matters Known or ought to have been known to Seller or the Company relating to the Project that could reasonably be expected to result in an Environmental Claim or have a Material Adverse Effect under Environmental Laws.

 

 

 

16

 

 

(h)     Tax Matters.

 

(i)     All Tax Returns required to be filed for, by, on behalf of, or with respect to the Company have been timely filed and copies thereof have been provided by Seller to Purchaser. All such Tax Returns are true and correct in all material respects and were prepared in substantial compliance with all Applicable Laws. All Taxes due and owing by the Company have been paid. The Company is not currently the beneficiary of an extension of time within which to file any Tax Return. There are no Encumbrances for Taxes (other than Taxes which are not yet due and payable) upon the Project Assets. All Taxes required to have been withheld and paid by the Company have been withheld and timely paid, and all filings required to be filed with respect thereto have been properly completed and timely filed. There are no tax audits of the Company, Seller or any Affiliate thereof pending or, to the Knowledge of Seller, threatened, that relate in any way to the Project or the Project Assets, and the Company has not agreed to any extension of a statute of limitations for Tax assessments. No power of attorney relating to Taxes is in effect with respect to the Company or the Project Assets. No ruling requests have been submitted to any tax authority in connection with the Company, the Project or the Project Assets.

 

(ii)     All examination reports and statements of deficiencies issued to or with respect to the Company, the Project or the Project Assets, including any such reports and statements issued to Seller or any Affiliate thereof, have been provided to Purchaser.

 

(iii)     The Company is not a party to any Tax allocation or sharing agreement. The Company has no liability for Taxes of any person as a transferee or successor, by contract or otherwise.

 

(i)     Financial Statements. Seller has delivered to Purchaser the unaudited balance sheet as of 31st March , 2015 (such date, the “Balance Sheet Date”) and statements of operations, statement of changes in members and notes to specific items. The financial statements were prepared in accordance with GAAP, and present fairly in all material respects the financial position of the Company as of the date thereof and the results of operations for the period then ended, subject to normal year-end audit adjustments.

 

(j)     Undisclosed Liabilities; Absence of Certain Financial Changes or Events.

 

(i)     The Company has no liability or obligation, secured or unsecured, of a nature that would be required by GAAP to be reflected in the financial statements, that is not accrued, reserved against or reflected in the financial statements or disclosed in the notes thereto other than current liabilities incurred in the ordinary course of business since the Balance Sheet Date.

 

 

 

17

 

 

(ii)     Since the Balance Sheet Date, there has not been any event or occurrence that, individually or in the aggregate, resulted in, or would reasonably be expected to result in, a Material Adverse Effect.

 

(iii)     Except as specifically contemplated by this Agreement, the Company has carried on the Business in all material respects in the ordinary course of business.

 

(k)     Limited Purpose Entity; No Employees. The Company at all times has engaged only in business related to the Project and has not engaged in any other business. The Company does not have and never has had any employees, nor maintained, sponsored, administered or participated in any employee benefit plan or arrangement. The Company has no liability to any past or present employee, officer, director, manager or agent of Seller or any Affiliate of Seller.

 

(l)     FIT. The Company has secured a procurement price of 36 Japanese yen per kwh (exclusive of consumption tax) and there is no reason that the Company will be rendered unable to receive such full benefit for the 20 year period after the Commercial Operation Date.

 

(m)     Affiliates. No Affiliate of Seller (other than the Company) (i) owns any property or right, tangible or intangible, which will be used in the Project, (ii) has any claim or cause of action against the Company or (iii) owes any money to, or is owed any money by, the Company. There are no existing contracts between the Company, on the one hand, and any (i) Affiliate of Seller or the Company (other than the Company), on the other hand, or (ii) (A) any officer, manager or director of the Company or (B) any Affiliate of any such officer, manager or director, on the other hand.

 

(n)     Books and Records. The minutes of the Company and the Records accurately reflect in all material respects the godo kaisha’s proceedings and the Business since the Company’s inception. Seller has made available to Purchaser a true, complete and correct copy of the Records of the Company. The Records have been kept and maintained in all material respects as required by Applicable Laws.

 

(o)     Project Development. All material written agreements, studies and reports in Seller’s or the Company’s possession are listed on Schedule 3.3(o). Other than as disclosed in Schedule 3.3(o), neither the Company nor any of its Affiliates has received written notice (or, to the Knowledge of Seller, any oral notice) from the Utility, that the Utility has taken or has determined to take any action with respect to termination of such queue positions or rights under any agreements set forth on Schedule 3.3(o). The interconnection study fee and other payments required the Utility in relation to the Project have been made, and all reports and other information, required in order to maintain such interconnection listed on Schedule 3.3(o) have been filed.

 

 

 

18

 

 

(p)     Solar Data. Seller and the Company have furnished or made available to Purchaser true and correct copies of all reports, studies, analyses, tests, monitoring and assessments with respect to solar data measured or recorded at the site of the Project performed by or on behalf of Seller, the Company or their respective Affiliates in connection with the engineering, procurement, development, construction and operation of the Project or the Project Assets or which to the Knowledge of Seller ever have been produced .

 

(q)     Other Consultant Reports. Seller and the Company have furnished or made available to Purchaser true and correct copies and results of all of the material reports, studies, analyses, tests, monitoring and assessments obtained by or on behalf of Seller, the Company or their respective Affiliates relating to the Project or the Project Assets.

 

(r)     Utilities. As of the Closing Date, all utility services reasonably necessary for the development, construction or operation of the Project are available or can reasonably be expected to be available as and when required.

 

(s)     Anti-Social Forces. None of Seller or the Company or any of their representatives constitutes, or is engaged in anti-social activities directly or through third parties, with persons that are:  (i) bouryokudan organized crime groups (“bouryokudan” as defined under Article 2(ii) of the Act on Prevention of Unjust Acts by Organized Crime Group Members (Act No. 77 of 1991, including subsequent revisions)); (ii) members of bouryokudan (“bouryokudan in” as defined under Article 2(vi) of the same act) or former bouryokudan members with less than five (5) years having passed since separation; (iii) associate members of bouryokudan; (iv) companies affiliated with bouryokudan; (v) soukaiya racketeer groups; (vi) groups conducting criminal activities under the pretext of social campaigns; (vii) crime groups specialized in intellectual crimes; (viii) other entities equivalent to items (i) through (vii); (ix) companies whose management is influenced by a person to which any of items (i) through (viii) apply (“Bouryokudan Members”); (x) companies whose management substantially involves Bouryokudan Members; (xi) persons who wrongfully engage Bouryokudan Members for the purpose of gaining unjust profit for themselves, their company or a third party or for the purpose of harming a third party; (xii) persons who provide funds or assistance to or are otherwise involved with Bouryokudan Members; and (xiii) directors or other persons substantially involved in management who have socially unacceptable relationships with Bouryokudan Members.

 

 

 

19

 

 

(t)     Disclosures Complete. (i) The written responses provided by Seller or its Affiliates to the written questions from Purchaser during the course of due diligence, (ii) the written information provided by Seller or its Affiliates to any third party consultant for purposes of the preparation of any reports delivered by such third party consultant on the Closing Date and (iii) the written information provided by Seller or its Affiliates to Purchaser or its Affiliates have been prepared and provided in good faith, and there has been no intentional exclusion of any material information in the assembly of any written materials made available to Purchaser or its Affiliates. No representation or warranty made by Seller in this Agreement, contains any untrue statement of material fact or omits to state a material fact necessary to make the statements in this Agreement, in light of the circumstances in which they were made, not misleading.

 

(u)     Schedule Update. Seller shall immediately notify to Purchaser, including the manner of updating the Schedules, on or prior to the Closing, any update of the Schedules in relation to this Article containing any matters arising or discovered after the date hereof. Upon written consent by Purchaser, applicable Schedule will be updated or replaced by such updates of the Schedule.

 

Article 4
REPRESENTATIONS AND WARRANTIES OF PURCHASER

 

Section 4.1     Representations and Warranties regarding Purchaser. Purchaser represents and warrants to Seller that the following items are true and accurate on as of the date hereof, the Closing Date and as of the date of each Purchases Price Payment

 

(a)     Organization and Existence. Purchaser is duly organized, validly existing and, to the extent applicable, in good standing under the Laws of Japan and has all requisite power and authority to own, lease and operate its properties and to carry on its business as is now being conducted.

 

(b)     Authorization of Transactions. Purchaser has all requisite corporate or other power and authority to execute and deliver, and to perform its obligations under, the Transaction Documents to which it is a party. The execution, delivery and performance by Purchaser of the Transaction Documents to which it is a party and the consummation of the Transactions have been duly and validly authorized by all necessary corporate or other action required on the part of Purchaser, and no other corporate or other proceedings on the part of Purchaser are required to authorize the Transaction Documents to which it is a party or to consummate the Transactions. Assuming the due authorization, execution and delivery of the Transaction Documents by each party thereto other than Purchaser, the Transaction Documents to which Purchaser is a party constitute the valid and legally binding obligations of Purchaser, enforceable against Purchaser in accordance with their terms, except as may be limited by bankruptcy, insolvency, reorganization, moratorium and similar Laws affecting enforcement of creditors’ rights and remedies generally.

 

 

 

20

 

 

(c)    Non-Contravention. Neither the execution and delivery by Purchaser of the Transaction Documents to which it is a party, nor the consummation of the Transactions by Purchaser, will: (i) violate, conflict with or result in a breach of, any provisions of the Organizational Documents of Purchaser; (ii) result in a default (or give rise to any right of termination, cancellation or acceleration) under, or conflict with any of the terms, conditions or provisions of, any agreement or other instrument or obligation to which Purchaser is a party or by which Purchaser is bound, except for such defaults (or rights of termination or acceleration) as to which requisite waivers or consents have been obtained and disclosed to Seller in writing; (iii) violate, contravene or conflict with, or result in a breach of, any Applicable Laws applicable to Purchaser; or (iv) require that Purchaser obtain the consent or approval of, make any filing with or provide notice to any person which, if not obtained, would prevent Purchaser from performing its obligations under this Agreement.

 

(d)     Litigation. There is no Claim relating to Purchaser or its Affiliates before any Authority or arbitrator, which, individually or in the aggregate, has resulted in or would reasonably be expected to result in a material adverse effect on Purchaser’s ability to consummate the Transactions.

 

(e)     Consents and Approvals. No consent, approval, authorization or permit of, or filing with or notification to, any person is required for or in connection with the execution and delivery of the Transaction Documents by Purchaser or for or in connection with the consummation of the Transactions and performance of the terms and conditions contemplated by the Transaction Documents by Purchaser, except for consents, approvals, authorizations, permits, filings or notices that, if not obtained or made, have not resulted in, and would not reasonably be expected to result in, a material adverse effect on Purchaser’s ability to consummate the Transactions.

 

 

 

21

 

 

ARTICLE 5
COVENANTS OF THE PARTIES

 

Section 5.1     Development Cooperation. Seller shall cooperate with and assist Purchaser and the Company to develop the Project, obtain all Permits and Governmental Approvals required in connection therewith and to perform all other necessary acts and services to ensure that the Project achieves the state of Ready for Construction.

 

Section 5.2     Obtaining and Delivery of Document. Seller shall, as requested by Purchaser, obtain and deliver documents submitted to Ministry of Economy, Trade and Industry, the Utility or the Authority etc. and other documents in relation to the Project reasonably requested by Purchaser to Purchaser.

 

Section 5.3     Post Closing – Further Assurances. At any time or from time to time after the Closing, each Party will, upon the reasonable request and expense of the other Party, execute and deliver any further instruments or documents, and exercise commercially reasonable efforts to take such further actions (collectively, the “Further Actions”) as may reasonably be required (including amendments to the Organizational Documents of the Company and filing of the registry of the Company in connection with change in the holders of membership interests and directors of the Company), to evidence and give effect to the purchase and sale of the Membership Interests hereunder. If a party is liable for the Further Actions, expenses for such Further Actions shall be borne by such liable party.

 

Section 5.4     Change of the Articles of Incorporation. On the Closing Date and as otherwise necessary, Seller shall cause the Company to amend its Organizational Documents with respect to a change in the holders of Membership Interests of the Company and Purchaser shall reasonably cooperate with Seller in connection with such change. 

 

ARTICLE 6
ACCESS and Confidential Information

 

Section 6.1     General Access. Seller shall permit Purchaser and its respective representatives to have reasonable access, during normal business hours, upon reasonable prior notice and in a manner so as not to disrupt or interfere unduly with the business operations of Seller, to the materials and Records of Seller relating to the Project.

 

Section 6.2     Confidential Information. Seller and Purchaser agree to refrain from disclosing to third parties all information acquired as a result of, or collected in connection with, this Agreement (with the exception of information known or publicly available at the time of its receipt, information made public after execution of this Agreement without violation of this section by Seller or Purchaser, and information legally obtained from a third party not bound to confidentiality obligations), except when required by applicable laws or government agencies, or to execute obligations under this Agreement, or to disclose information to attorneys, tax accountants, certified public accountants or other expert advisors bound by confidentiality obligations, or to disclose information to related parties, after imposing confidentiality obligations, to achieve the purposes of this Agreement or related agreements, or if otherwise previously agreed in writing, and to refrain from using such information for purposes other than those of this Agreement and related agreements. Notwithstanding the preceding paragraph, Seller agrees that Purchaser shall have the right to freely disclose the contents of this Agreement and any information acquired as a result of, or collected in connection with, this Agreement to any third parties related to the Project (including, but not limited to, affiliated companies of Purchaser and third party investors and arrangers and their advisors).

 

 

 

22

 

 

ARTICLE 7
COMPENSATION FOR DAMAGES

 

Section 7.1     Compensation for Damages. In the event that either of the Parties (“Liable Party”), in relation to this Agreement or the Real Property, inflicts any damage or injury to the Real Property, the other Party or a third party intentionally or through negligence, the Liable Party shall notify the other Party and (i) when such damage or injury is incurred by the other Party, promptly compensate such damage or injury by restoring the Real Property to its original state or by other measures according to the request of the other Party, and (ii) when such damage or injury is incurred by a third party, shall promptly compensate such damage or injury upon consultation with the other Party.

 

Section 7.2     Third Party Dispute.     If a dispute arises with a third party in the case of the above paragraph, the Liable Party shall be responsible for handling and resolving such dispute at its own expense. The Liable Party shall not burden the other Party with any damages, and any damages incurred by the other Party shall be compensated by the Liable Party.

 

Section 7.3     Prior Execution Items. The Seller undertakes to indemnify and hold the Purchaser harmless against claims, requests, penalties and any other liabilities arising from violation of Applicable Laws existing on the Real Property prior to the date hereof (including violation of environmental regulations and those discovered after the date hereof, same shall apply hereinafter). The Seller shall handle and resolve any division of expenses at its own charge and expense and shall promptly compensate the Purchaser for any damages incurred. The Seller shall also be accountable for any damages or other expenses required to eliminate limits that the Purchaser should suffer as a result of limitations on the full availability of the Real Property (whether temporary or permanent and regardless of the degree of limitation) arising from violation of Applicable Laws existing on the Real Property prior to the date hereof.

 

 

 

23

 

  

ARTICLE 8
Purchaser’s Conditions to Closing

 

The obligation of Purchaser to consummate the transactions contemplated hereby shall be subject to the satisfaction at or prior to the Closing of the following conditions, except for any such condition the satisfaction of which Purchaser expressly waives in writing:

 

Section 8.1     The Receipt of Deliveries by Seller. Purchaser shall have received all of the documents required to be delivered by Seller to Purchaser on or prior to Closing under this Agreement (including the documents provided in Section 2.3(a)).

 

Section 8.2     Compliance with Provisions and Fulfillment of Conditions. Seller shall have performed or complied in all material respects with all covenants and agreements contained in the Transaction Documents as required to be performed or complied with on its part at or prior to the Closing and there shall be no default or breach by Seller thereunder, and all conditions (including conditions under Sections 2.2(b) and 2.2(c)) under the Transaction Documents are fulfilled. 

 

Section 8.3     Representations and Warranties. The representations and warranties of Seller and the Company set forth in the Transaction Documents that are qualified with respect to materiality (whether by reference to Material Adverse Effect or otherwise) shall be true and correct in all respects, and the representations and warranties of Seller and the Company set forth in the Transaction Documents that are not so qualified shall be true and correct in all material respects, on and as of the Closing Date, in each case as though made on and as of the Closing Date (except for such representations and warranties that relate to a specific date, which shall be true and correct or true and correct in all material respects, as applicable, as of such date).

 

Section 8.4     No Material Adverse Effect. There shall not have occurred any event or circumstance having a Material Adverse Effect that is continuing.

 

 

 

24

 

 

Section 8.5     No Restraint. There shall be no:

 

(a)     injunction or restraining order by any Authority of competent jurisdiction over the Parties that directs that the Transactions or any other obligation under the Transaction Documents shall not be consummated as herein provided;

 

(b)     suit, action or other proceeding by any Authority of competent jurisdiction over the Parties pending, wherein such complainant seeks the restraint or prohibition of the consummation of the Transactions or any other obligation under the Transaction Documents; or

 

(c)     action taken, or Law enacted, promulgated or deemed applicable to the Transactions, by any Authority of competent jurisdiction over the Parties that would render the purchase and sale of the Company Membership Interests illegal;

 

Section 8.6     Due Diligence. Purchaser shall be satisfied with the results of all due diligence performed by Purchaser as of the Closing in its sole discretion.

 

ARTICLE 9
Seller’s Conditions to Closing

 

The obligation of Seller to consummate the transactions contemplated hereby shall be subject to the satisfaction at or prior to the Closing of the following conditions, except for any such condition the satisfaction of which Seller waives in writing:

 

Section 9.1     The Receipt of Deliveries by Purchaser. Seller shall have received all of the documents required to be delivered by Purchaser to Seller on or prior to Closing under this Agreement (including the documents provided in Section 2.3(b)).

 

Section 9.2     Compliance with Provisions. Purchaser shall have performed or complied in all material respects with all covenants and agreements contained in the Transaction Documents on its part as required to be performed or complied with at or prior to the Closing and there shall be no default or breach by Purchaser thereunder.

 

Section 9.3     Representations and Warranties. The representations and warranties of Purchaser set forth in the Transaction Documents that are qualified with respect to materiality (whether by reference to material adverse effect or otherwise) shall be true and correct in all respects, and the representations and warranties of Purchaser set forth in the Transaction Documents that are not so qualified shall be true and correct in all material respects, on and as of the Closing Date, in each case as though made on and as of the Closing Date (except for such representations and warranties that relate to a specific date, which shall be true and correct or true and correct in all material respects, as applicable, as of such date).

 

 

 

25

 

 

ARTICLE 10

GENERAL PROVISIONS

 

Section 10.1     Expenses. Whether or not the Transactions are consummated, except as otherwise specifically provided in any other provision of this Agreement, all costs and expenses (including attorneys’, accountants’, financial advisors’ and other consultants’ and advisors’ fees, costs and expenses) incurred in connection with the negotiation, execution and delivery of this Agreement shall be paid by the Party incurring such expense.

 

Section 10.2     Entire Document; Modification or Amendment. The Transaction Documents (including the Exhibits and Schedules hereto or thereto) contain the entire agreement between the Parties with respect to the Transactions, and supersede all negotiations, representations, warranties, commitments, offers, contracts and writings prior to the execution date of this Agreement, written or oral. No modification or amendment of any provision of the Transaction Documents shall be effective unless made in writing and duly signed by each of the Parties referring specifically to the Transaction Documents to be so amended or modified.

 

Section 10.3     Schedules and Exhibits. All Schedules and Exhibits hereto that are referred to herein are hereby made a part hereof and incorporated herein by such reference. 

 

Section 10.4     Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

 

Section 10.5     Severability. Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be valid, binding and enforceable under Applicable Laws, but if any provision of this Agreement is held to be invalid, void or unenforceable under Applicable Laws, such provision shall be ineffective only to the extent held to be invalid, void or unenforceable, without affecting the remainder of such provision or the remaining provisions of this Agreement. Upon such determination that any term or other provision is invalid, or incapable of being enforced, the Parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible in an acceptable manner to the end that the Transactions are fulfilled to the extent possible.

 

Section 10.6     Assignability. The rights under this Agreement shall not be assignable or transferable nor the obligations delegable by any Party without the prior written consent of each of the other Parties, which consent may be granted or withheld in each such other Party’s sole discretion; provided, that, Purchaser may assign or transfer, without the prior written consent of Seller, in whole or in part, its rights under this Agreement to any of its Affiliates. Any assignment of any rights in contravention of this provision shall be null and void.

 

 

 

26

 

 

Section 10.7     Captions. The captions of the various Articles, Sections, Exhibits and Schedules of this Agreement have been inserted only for convenience of reference and do not modify, explain, enlarge or restrict any of the provisions of this Agreement.

 

Section 10.8     Governing Law and Forum.

 

(a)     This Agreement shall be governed by and interpreted according to the laws of Japan.

 

(b)     Any dispute arising under this Agreement may be referred by either Party for final determination through arbitration by providing written notification of the dispute to the other Party within sixty (60) days after such dispute arises. Such arbitration shall be held in Tokyo in accordance with the Commercial Arbitration Rules of the Japan Commercial Arbitration Association. Counterclaims in connection with such arbitration may be asserted in the same arbitration by any disputing Party. The arbitration shall be conducted in the Japanese language. The award rendered in connection with such arbitration shall be final and binding upon both Parties involved in the arbitration. The prevailing Party, as determined by the arbitrator, shall be entitled to reimbursement of its attorneys’ fees and costs incurred in connection with such arbitration.

 

Section 10.9     Notices. All notices, requests, demands and other communications under this Agreement must be in writing and must be delivered in person or sent by certified mail, postage prepaid, by overnight delivery, or by facsimile and properly addressed as follows:

 

 

This agreement shall be governed by and interpreted in accordance with the law of Japan. Any amendments to this agreement shall be made in writing and signed by the parties. 

 

 

 

27

 

 

The parties have caused this agreement to be executed on the date first written above. 

 

 

	
For and on behalf of 
	
For and behalf of 

	
 
	
 

	 	 
	
SPI Solar Japan GK
	
RE Capital Pte. Ltd. 

	 	 
	 	 
	/s/ Akira Asai                          	/s/ Li Jun                           
	Name: Akira Asai	Name: Li Jun
	Title: Authorized Signatory	Title: Authorized Signatory

 

 

28ex10-2.htm

Exhibit 10.2

 

SECURITIES PURCHASE AGREEMENT

 

This Securities Purchase Agreement (this “Agreement”) is dated as of April 17, 2015, by and between ZBB Energy Corporation, a Wisconsin corporation (the “Company”), and Solar Power, Inc., a California corporation (the “Purchaser”).

 

WHEREAS, subject to the terms and conditions set forth in this Agreement and pursuant to an exemption from the registration requirements of Section 5 of the Securities Act, contained in Section 4(a)(2) thereof and/or Regulation D thereunder, the Company desires to issue and sell to the Purchaser, and the Purchaser desires to purchase from the Company, unregistered securities of the Company as more fully described in this Agreement; and

 

WHEREAS, in connection with the Closing, Company and Purchaser shall enter into that certain Supply Agreement in substantially the form attached hereto as Exhibit A (the “Supply Agreement”);

 

NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement, and for other good and valuable consideration the receipt and adequacy of which are hereby acknowledged, the Company and the Purchaser agree as follows:

 

ARTICLE I.
DEFINITIONS

 

1.1      Definitions. In addition to the terms defined elsewhere in this Agreement, for all purposes of this Agreement, the following terms have the meanings set forth in this Section 1.1:

 

“Acquisition Proposal” means any offer, proposal or indication of interest from any Third Party relating to any transaction or series of related transactions involving (i) any acquisition or purchase by any Person, directly or indirectly, of 15% or more of any class of outstanding voting or equity securities of Company, or any tender offer or exchange offer that, if consummated, would result in any Person beneficially owning 15% or more of any class of outstanding voting or equity securities of Company, (ii) any acquisition or purchase by any Person, directly or indirectly, of a majority of any class of outstanding voting or equity securities of one or more Subsidiaries of Company the business of which contributes 15% or more of the consolidated revenues, net income or assets (based on fair market value) of Company and its Subsidiaries taken as a whole (for, or as of the end of, as applicable, the twelve (12) month period ended June 30, 2014), (iii) any merger, reorganization, amalgamation, consolidation, share exchange, business combination, joint venture or other similar transaction involving Company or any of its Subsidiaries whose business contributes 15% or more of the consolidated net revenues, net income or assets (based on fair market value) of Company and its Subsidiaries taken as a whole (for, or as of the end of, as applicable, the twelve (12) month period ended June 30, 2014), (iv) any sale, lease, license, exchange, transfer or disposition of 15% or more of the consolidated assets of Company and its Subsidiaries (based on the fair market value thereof as of June 30, 2014), but excluding in all cases any sales of inventory to customers, (v) any liquidation, dissolution, recapitalization, or similar transaction involving Company or (vi) any other transaction proposed in writing to the board of directors of the Company (or special committee thereof) by a Person unaffiliated with the Company the consummation of which would reasonably be expected to prevent or materially delay the transactions contemplated hereby.

 

 

 

1

 

 

“Action” shall have the meaning ascribed to such term in Section 3.1(j).

 

“Adverse Recommendation Change” shall have the meaning ascribed to such term in Section 4.8(d).

 

“Affiliate” means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a Person as such terms are used in and construed under Rule 405 under the Securities Act. 

 

“Board of Directors” means the board of directors of the Company.

 

“Business Day” means any day except any Saturday, any Sunday, any day which is a federal legal holiday in the United States or any day on which banking institutions in the State of Wisconsin are authorized or required by applicable Law to close.

 

“Certificate of Designation” means the Certificate of Designation of Preferences, Rights and Limitations of Series C Convertible Preferred Stock to be filed prior to the Closing by the Company with the Wisconsin Department of Financial Institutions, in the form of Exhibit B attached hereto.

 

“Closing” means the closing of the purchase and sale of the Securities pursuant to Section 2.1.

 

“Closing Date” means the Trading Day on which all of the Transaction Documents have been executed and delivered by the applicable parties thereto, and all conditions precedent to (i) the Purchaser’s obligations to pay the Purchase Price and (ii) the Company’s obligations to deliver the Securities, in each case, have been satisfied or waived.

 

“Code” means the Internal Revenue Code of 1986, as amended from time to time. References to the Code also include the Regulations promulgated thereunder.

 

“Commission” means the United States Securities and Exchange Commission.

 

“Common Stock” means the common stock of the Company, par value $0.01 per share, and any other class of securities into which such securities may hereafter be reclassified or changed. 

 

“Common Stock Equivalents” means any securities of the Company or the Subsidiaries which would entitle the holder thereof to acquire at any time Common Stock, including, without limitation, any debt, preferred stock, rights, options, warrants or other instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock.

 

“Company Counsel” means K&L Gates LLP, with offices located at 214 N. Tryon Street, 47th Floor, Charlotte, NC 28202. 

 

 

 

2

 

 

“Company Environmental Liability” means any Environmental Liability of the Company relating to or arising out of (i) any Releases of Hazardous Materials occurring prior to or on the Closing Date at any location; (ii) any exposure to Hazardous Materials occurring prior to, on or after the Closing Date to the extent such Hazardous Materials were Released prior to or on the Closing Date or were included in any product sent or distributed by the Company or any Subsidiary prior to or on the Closing Date; (iii) any violation of or noncompliance with any Environmental Law occurring prior to or on the Closing Date; (iv) any claims, suits, proceedings, legal actions, orders, judgments or notices relating to any Environmental Law to the extent based upon any pre-Closing Date violation, noncompliance, fact, circumstance or condition.

 

“Company Recommendation” shall have the meaning ascribed to such term in Section 4.8(a).

 

“Conversion Shares” means the shares of Common Stock issuable upon the conversion or redemption of the Subscribed Preferred Shares.

 

“Disclosure Schedules” means the Disclosure Schedules of the Company delivered concurrently herewith. 

 

“Environment” means soil, land surface, or subsurface strata, surface waters, groundwater, drinking water supply, stream sediments, ambient air (including indoor air), plant and animal life or as otherwise defined under any Environmental Law.

 

“Environmental Law” means any Law pertaining to the Environment and human health and safety, including any relating to the generation, manufacture, treatment, storage, disposal, use, transportation, handling, or Release of, or exposure to, any Hazardous Materials.

 

“Environmental Liabilities” means any liabilities, losses, costs, expenses, harm, obligations, contingencies or damages relating to Environmental Laws, including any relating to noncompliance with Environmental Laws, the actual or alleged Releases of Hazardous Materials, any exposure to Hazardous Materials, and any investigation or remediation of Hazardous Materials.

 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended and the rules and regulations promulgated thereunder.

 

“ERISA Affiliate” means, with respect to a Person in question, any other Person that is (i) a member of a controlled group with such Person in question for purposes of Section 414(b) of the Code or (ii) under common control with such Person in question for purposes of Section 414(c) of the Code. 

 

“Evaluation Date” shall have the meaning ascribed to such term in Section 3.1(s). 

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

 

“GAAP” shall have the meaning ascribed to such term in Section 3.1(h).

 

 

 

3

 

 

“Governance Agreement” means a governance agreement between the Company and the Purchaser in substantially the form attached hereto as Exhibit C.

 

“Hazardous Materials” means any materials, substances, wastes, pollutants, contaminants or chemicals that are regulated, or with respect to which any liability or obligation may be imposed, under applicable Environmental Laws, including any toxic, hazardous or petroleum hydrocarbon substances or wastes.

 

“Intellectual Property Rights” shall have the meaning ascribed to such term in Section 3.1(p).

 

“Law” means any federal, state, local or foreign Order, writ, injunction, judgment, settlement, award, decree, statute, law, rule or regulation, including common law.

 

“Liens” means a lien, charge, security interest, encumbrance, right of first refusal, preemptive right or other restriction.

 

“Losses” shall have the meaning ascribed to such term in Section 4.4.

 

“Material Adverse Effect” shall have the meaning assigned to such term in Section 3.1(c).

 

“Material Permits” shall have the meaning ascribed to such term in Section 3.1(n).

 

“NYSE Clearance” shall have the meaning ascribed to such term in Section 2.3(a)(iii). 

 

“Order” means any decree, decision, injunction, judgment, order, ruling or verdict entered, issued, made or rendered by any court, arbitrator, governmental or administrative agency or regulatory authority (federal, state, county, local or foreign), in each case, having applicable jurisdiction.

 

“Outside Date” shall have the meaning ascribed to such term in Section 5.1(b).

 

“Person” means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.

 

“Preferred Stock” means the Company’s Series C Convertible Preferred Stock issued hereunder, having the rights, preferences and privileges set forth in the Certificate of Designation.

 

“Proceeding” means an action, claim, suit, investigation or proceeding (including, without limitation, an informal investigation or partial proceeding, such as a deposition), whether commenced or threatened.

 

“Proxy Statement” means the proxy statement, including any amendment or supplement thereto, to be sent to the holders of the Common Stock in connection with the Shareholder Meeting.

 

 

 

4

 

 

“Purchase Price” means $33,390,000. 

 

“Purchaser Party” shall have the meaning ascribed to such term in Section 4.5.

 

“Regulations” means the Treasury Regulations (including Temporary Regulations) promulgated by the United States Department of Treasury with respect to the Code or other federal tax statutes.

 

“Release” means any releasing, disposing, discharging, injecting, spilling, leaking, leaching, dumping, emitting, escaping, emptying, seeping, migrating, placing and the like into or upon soil, water or air or otherwise entering into the Environment.

 

“Required Approvals” shall have the meaning ascribed to such term in Section 3.1(e).

 

“Rule 144” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same effect as such Rule. 

 

“SEC Reports” shall have the meaning ascribed to such term in Section 3.1(c).

 

“Securities” means the Subscribed Shares, the Warrant, the Conversion Shares and the Warrant Shares. 

 

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

 

“Service Provider” means each of the officers, employees, directors and independent contractors of the Company and each Subsidiary.

 

“Short Sales” means all “short sales” as defined in Rule 200 of Regulation SHO under the Exchange Act (but shall not be deemed to include the location and/or reservation of borrowable shares of Common Stock). 

 

“Shareholder Approval” means the approval of this Agreement and, to the extent required by applicable Law, the other Transaction Documents and the transactions contemplated hereby and thereby required of the shareholders of the Company pursuant to applicable Laws and listing requirements. 

 

“Shareholder Meeting” means a meeting of the Company’s shareholders following the mailing of the definitive Proxy Statement to the Company’s shareholders for the purpose of considering the Shareholder Approval.

 

“Subscribed Common Shares” shall have the meaning ascribed to such term in Section 2.1.

 

“Subscribed Preferred Shares” shall have the meaning ascribed to such term in Section 2.1.

 

 

 

5

 

 

“Subscribed Shares” shall have the meaning ascribed to such term in Section 2.1.

 

“Subsidiary” means any subsidiary of the Company as set forth on Schedule 3.1(a), and shall, where applicable, also include any direct or indirect subsidiary of the Company formed or acquired after the date hereof.

 

“Superior Proposal” means a bona fide written Acquisition Proposal that the Company’s Board of Directors determines in its reasonable judgment is more favorable to the Company’s shareholders from a financial point of view than the terms of this Agreement (including any adjustment to the terms proposed by Purchaser in response to such proposal); provided, that for purposes of the definition of “Superior Proposal,” the references to “15%” in the definition of Acquisition Proposal shall be deemed to be references to “50.1%.”

 

“Supply Agreement” shall have the meaning ascribe to such term in the Recitals.

 

“Taxes” means any and all taxes, fees, levies, duties, tariffs, imposts, and other charges of any kind (together with any and all interest, penalties, additions to tax and additional amounts imposed with respect thereto) imposed by any government or taxing authority, including taxes or other charges on or with respect to income, franchises, windfall or other profits, gross receipts, property, sales, use, capital stock, payroll, employment, social security, workers’ compensation, unemployment compensation, or net worth; taxes or other charges in the nature of excise, withholding, ad valorem, stamp, transfer, value added, or gains taxes; license, registration and documentation fees; and customs’ duties, tariffs, and similar charges. 

 

“Termination Fee” means $600,000. 

 

“Third Party” means any Person or “group” (as defined under Section 13(d) of the Exchange Act) of Persons, other than Purchaser or any of its Affiliates or representatives.

 

“Trading Day” means a day on which the principal Trading Market is open for trading.

 

“Trading Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: the NYSE MKT, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New York Stock Exchange or the OTC Bulletin Board (or any successors to any of the foregoing).

 

“Transaction Documents” means this Agreement, the Certificate of Designation, the Supply Agreement, the Warrants, the Governance Agreement and any other documents, certificates or agreements executed in connection with the transactions contemplated hereunder.

 

“Transfer Agent” means Computershare, the current transfer agent of the Company, with a mailing address of 2 North LaSalle Street, Chicago, IL 60602 and a facsimile number of 312-601-4348, and any successor transfer agent of the Company.

 

“Warrant” means the Common Stock purchase warrant to purchase 50,000,000 shares of Common Stock, which Warrant shall be in the form of Exhibit D attached hereto.

 

 

 

6

 

 

“Warrant Shares” means the shares of Common Stock issuable upon exercise of the Warrant.

 

“WBCL” shall have the meaning ascribed to such term in Section 3.1(z).

 

ARTICLE II.
PURCHASE AND SALE

 

2.1     Closing. On the Closing Date, upon the terms and subject to the conditions set forth herein, substantially concurrent with the execution and delivery of this Agreement by the parties hereto, the Company agrees to sell, and the Purchaser agrees to purchase, for a purchase price equal to the Purchase Price, (i) 8,000,000 shares of Common Stock (the “Subscribed Common Shares”), (ii) 28,048 [NTD: SPI to confirm.] shares of Preferred Stock (the “Subscribed Preferred Shares”), which Subscribed Preferred Shares shall be, subject to the terms and conditions of the Certificate of Designations, convertible into an aggregate of 42,000,000 shares of Common Stock at no additional cost to the Purchaser (the Subscribed Preferred Shares together with the Subscribed Common Shares, the “Subscribed Shares”) and (iii) the Warrant. The Purchaser shall deliver to the Company, via wire transfer of immediately available funds equal to the Purchase Price and the Company shall deliver to the Purchaser the Subscribed Shares and the Warrant, and the Company and the Purchaser shall deliver the other items set forth in Section 2.2 deliverable at the Closing. Upon satisfaction of the covenants and conditions set forth in Sections 2.2 and 2.3, the Closing shall occur at the offices of Company Counsel or such other location as the parties shall mutually agree. 

 

2.2     Deliveries.

 

(a)     On or prior to the Closing Date, the Company shall deliver or cause to be delivered to the Purchaser the following:

 

(i)     a copy of the Certificate of Designation certified by the Wisconsin Department of Financial Institutions;

 

(ii)     certificates evidencing the Subscribed Shares registered in the name of the Purchaser; 

 

(iii)     the Warrant registered in the name of the Purchaser; 

 

(iv)     the Supply Agreement duly executed by the Company; 

 

(v)     the Governance Agreement duly executed by the Company; 

 

(vi)     a certificate of the Company, dated as of the Closing Date, signed by the chief executive officer of the Company to evidence satisfaction of the conditions set forth in Section 2.3(b)(i), (ii) and (iv); and 

 

(vii)     a certificate of the Company in form reasonably acceptable to the Purchaser for purposes of satisfying the Purchaser’s obligations under Sections 1.1445-2(c)(3)(i) of the Regulations and a notice to the IRS in accordance with Section 1.897-2(h)(2) of the Regulations.

 

 

 

7

 

 

(b)     On or prior to the Closing Date, the Purchaser shall deliver or cause to be delivered to the Company the following:

 

(i)     the Purchase Price by wire transfer to the account in accordance with the wiring instructions attached hereto as Exhibit E attached hereto; 

 

(ii)     the Supply Agreement duly executed by the Purchaser; and

 

(iii)     the Governance Agreement duly executed by the Purchaser; 

 

(iv)     a certificate of the Purchaser, dated as of the Closing Date, signed by the chief executive officer of the Purchaser to evidence satisfaction of the conditions set forth in Section 2.3(a)(i) and (ii). 

 

2.3     Closing Conditions. 

 

(a)     The obligations of the Company hereunder in connection with the Closing are subject to the following conditions being met:

 

(i)     the accuracy in all material respects on the Closing Date of the representations and warranties of the Purchaser contained herein (unless as of a specific date therein, disregarding for this purpose any “materiality” or “material adverse effect” qualifications in the applicable representation or warranty), provided that the representations and warranties of the Purchaser contained in Section 3.2(a) and (g) shall be true and accurate in all respects as of the Closing Date (unless made as of a specific date other than the Closing Date); 

 

(ii)     all obligations, covenants and agreements of the Purchaser required to be performed at or prior to the Closing Date shall have been performed; 

 

(iii)     the Company shall have received clearance from NYSE MKT for the issuance of the shares of Common Stock included in the Subscribed Shares, the Conversion Shares and the Warrant Shares (the “NYSE Clearance”);

 

(iv)     the Shareholder Approval shall have been obtained at the Shareholder Meeting (including any adjournment thereof);

 

(v)     there shall not be in effect any Order (whether temporary, preliminary or permanent) restraining, enjoining or otherwise prohibiting the consummation of the transactions contemplated hereby, and there shall be no applicable Law in effect that makes consummation of the transactions contemplated hereby illegal or otherwise prohibited under applicable Law; and

 

(vi)     the delivery by the Purchaser of the items set forth in Section 2.2(b) of this Agreement.

 

 

 

8

 

 

(b)     The obligations of the Purchaser hereunder in connection with the Closing are subject to the following conditions being met: 

 

(i)     (x) the accuracy in all respects, other than de minimis inaccuracies when made and on the Closing Date of the representations and warranties in Sections 3.1(b), (c), (d), (f), (g), (t), (y) and (bb); and (y) the accuracy in all material respects when made and on the Closing Date of the other representations and warranties of the Company contained herein (unless as of a specific date therein, disregarding for this purpose any “materiality” or “Material Adverse Effect” qualifications in the applicable representation or warranty); 

 

(ii)     all obligations, covenants and agreements of the Company required to be performed at or prior to the Closing Date shall have been performed; 

 

(iii)     the delivery by the Company of the items set forth in Section 2.2(a) of this Agreement; 

 

(iv)     there shall have been no Material Adverse Effect with respect to the Company since the date hereof;

 

(v)     the Company shall have received the NYSE Clearance and promptly provided a copy thereof to the Purchaser; 

 

(vi)     the Company shall have received the consent of Wisconsin Small Business Administration, in form and substance reasonably acceptable to the Purchaser; 

 

(vii)     the Company shall have received the consent of GAS Technology Institute, in form and substance reasonably acceptable to the Company; 

 

(viii)     the Shareholder Approval shall have been obtained at the Shareholder Meeting (including any adjournment thereof);

 

(ix)     the Company having received, and promptly provided Purchaser a copy of, the written opinion of Craig-Hallum Capital Group LLC, dated on or after the date of this Agreement and prior to the Closing Date, subject to the limitations, qualifications and assumptions set forth therein, to the effect that, as of such date, the Purchase Price is fair, from a financial point of view, to the Company; 

 

(x)     there shall not be in effect any Order (whether temporary, preliminary or permanent) restraining, enjoining or otherwise prohibiting the consummation of the transactions contemplated hereby, and there shall be no applicable Law in effect that makes consummation of the transactions contemplated hereby illegal or otherwise prohibited under applicable Law; 

 

(xi)     from the date hereof to the Closing Date, trading in the Common Stock shall not have been suspended by the Commission or the Company’s principal Trading Market, and, at any time prior to the Closing Date, trading in securities generally as reported by Bloomberg L.P. shall not have been suspended or limited, or minimum prices shall not have been established on securities whose trades are reported by such service, or on any Trading Market, nor shall a banking moratorium have been declared either by the United States or New York State authorities nor shall there have occurred any material outbreak or escalation of hostilities or other national or international calamity of such magnitude in its effect on, or any material adverse change in, any financial market which, in each case, in the reasonable judgment of the Purchaser, makes it impracticable or inadvisable to purchase the Subscribed Shares and the Warrant at the Closing; and 

 

 

 

9

 

 

(xii)     if the Purchaser in good faith, upon consultation with the Company, determined within fifteen (15) Business Days following the date hereof that it is advisable to make a voluntary filing with the Committee on Foreign Investment in the United States (“CFIUS”) and has complied with Section 4.13, the parties having received a written notice from CFIUS in response to the filing of a joint voluntary notice with CFIUS by the Parties regarding the transaction to the effect that either (i) the transaction is not subject to Section 721 of the Defense Production Act of 1950 (50 U.S.C. App. §2170), or (ii) any review or investigation (as the case may be) of the transaction has been concluded, and CFIUS has determined that there are no unresolved issues of national security of the United States sufficient to warrant further review or investigation under Section 721 of the Defense Production Act of 1950 (50 U.S.C. App. §2170) (the “CFIUS Approval”).

 

ARTICLE III.
REPRESENTATIONS AND WARRANTIES

 

3.1     Representations and Warranties of the Company. Except as otherwise disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2014, any Company Quarterly Report on Form 10-Q filed since the filing date of such Annual Report, or any of the Company’s Current Reports on Form 8-K filed since the filing date of such Annual Report (including any exhibit thereto and document incorporated by reference therein), in each case prior to the date hereof and excluding any risk factor disclosures, including those under the heading “Risk Factors” and included in any “forward-looking statements” disclaimer, and except as set forth in the corresponding section of the Disclosure Schedules, which sections of the Disclosure Schedules shall be deemed a part of the corresponding sections hereof, the Company hereby makes the following representations and warranties to the Purchaser:

 

(a)     Subsidiaries. A true and complete list of the direct and indirect subsidiaries of the Company is set forth on Schedule 3.1(a), identifying the jurisdiction of incorporation or organization of each Subsidiary, and the percentage of the outstanding share capital or other equity or similar interests of each such Subsidiary owned by the Company and each of its other Subsidiaries. The Company owns, directly or indirectly, the capital stock or other equity interests of each Subsidiary as described on Schedule 3.1(a) free and clear of any Liens, and all of the issued and outstanding shares of capital stock of each Subsidiary are validly issued and are fully paid, non-assessable and free of preemptive and similar rights to subscribe for or purchase securities. 

 

(b)     Organization and Qualification. The Company and each of the Subsidiaries is an entity duly incorporated or otherwise organized, validly existing and in good standing under the Laws of the jurisdiction of its incorporation or organization, with the requisite power and authority to own and use its properties and assets and to carry on its business as currently conducted. Neither the Company nor any Subsidiary is in violation nor default of any of the provisions of its respective certificate or articles of incorporation, bylaws or other organizational or charter documents, complete and correct copies of which have been furnished to Purchaser, and which are in full force and effect and, to the extent required by applicable Law, have been duly filed with or approved or issued (as applicable) by applicable governmental authorities. Each of the Company and the Subsidiaries is duly qualified to conduct business and is in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as the case may be, could not have or reasonably be expected to result in: (i) a material adverse effect on the legality, validity or enforceability of any Transaction Document, (ii) a material adverse effect on the results of operations, assets, business, prospects or condition (financial or otherwise) of the Company and the Subsidiaries, taken as a whole, or (iii) a material adverse effect on the Company’s ability to perform in any material respect on a timely basis its obligations under any Transaction Document (any of (i), (ii) or (iii), a “Material Adverse Effect”) and no Proceeding has been instituted in any such jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or curtail such power and authority or qualification.

 

 

 

10

 

 

(c)     Authorization; Enforcement. The Company has the requisite corporate power and authority to enter into and to consummate the transactions contemplated by each of the Transaction Documents and otherwise to carry out its obligations hereunder and thereunder. The execution and delivery of each of the Transaction Documents by the Company and the consummation by it of the transactions contemplated hereby and thereby have been duly authorized by all necessary action on the part of the Company and no further action is required by the Company, the Board of Directors or the Company’s shareholders in connection therewith other than the Shareholder Approval and in connection with the Required Approvals. Each Transaction Document to which it is a party has been (or upon delivery will have been) duly executed by the Company and, when delivered in accordance with the terms hereof and thereof, will constitute the valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other Laws of general application affecting enforcement of creditors’ rights generally and (ii) as limited by Laws relating to the availability of specific performance, injunctive relief or other equitable remedies. The Board of Directors has (i) determined that this Agreement, the other Transaction Documents and the transactions contemplated herein and therein, on the terms and subject to the conditions set forth herein and therein, are fair to, and in the best interests of, the Company and its shareholders, (ii) approved and declared it advisable to enter into this Agreement and the other Transaction Documents, (iii) approved the execution, delivery and performance of this Agreement, the other Transaction Documents and the transactions contemplated herein and therein, and (iv) resolved to recommend the approval of this Agreement and, to the extent required by applicable Law, the other Transaction Documents and the transactions contemplated herein and therein by the shareholders of the Company, and directed that this Agreement and, to the extent required by applicable Law, the other Transaction Documents and the transactions contemplated herein and therein be submitted to the shareholders of the Company for their approval at the Shareholders Meeting. The only Shareholder Approval required to approve this Agreement and the other Transaction Documents and the transactions contemplated herein and therein is the vote of a majority of the votes cast by, collectively, holders of the Common Stock and holders of the Company’s Series B Convertible Preferred Stock on an as-converted basis voting as a single class at a meeting duly called and noticed at which a quorum is present in accordance with the Company’s articles of incorporation and bylaws. 

 

 

 

11

 

 

(d)     No Conflicts. Except as set forth on Schedule 3.1(d), the execution, delivery and performance by the Company of the Transaction Documents, the issuance and sale of the Securities and the consummation by it of the transactions contemplated hereby and thereby to which it is a party do not and will not (i) conflict with or violate any provision of the Company’s or any Subsidiary’s certificate or articles of incorporation, bylaws or other organizational or charter documents, or (ii) conflict with, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, result in the creation of any Lien upon any of the properties or assets of the Company or any Subsidiary, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement, credit facility, debt or other instrument (evidencing a Company or Subsidiary debt or otherwise) or other understanding to which the Company or any Subsidiary is a party or by which any property or asset of the Company or any Subsidiary is bound or affected, or (iii) subject to the Required Approvals, conflict with or result in a violation of any Law or other restriction of any court or governmental authority to which the Company or a Subsidiary is subject (including federal and state securities Laws), or by which any property or asset of the Company or a Subsidiary is bound or affected; except in the case of each of clauses (ii) and (iii), such as could not have or reasonably be expected to result in a Material Adverse Effect.

 

(e)     Filings, Consents and Approvals. The Company is not required to obtain any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other Person in connection with the execution, delivery and performance by the Company of the Transaction Documents, other than: (i) the Shareholder Approval and the Proxy Statement, (ii) a Current Report on Form 8-K, (iii) application(s) to each applicable Trading Market for the listing of the Common Stock included in the Subscribed Securities, the Conversion Shares and the Warrant Shares for trading thereon in the time and manner required thereby, (iv) the Certificate of Designation with the Wisconsin Department of Financial Institutions and (v) such filings as are required to be made under applicable state securities Laws (collectively, the “Required Approvals”).

 

(f)     Issuance of the Securities. The Subscribed Shares are duly authorized and, when issued and paid for in accordance with the applicable Transaction Documents, will be duly and validly issued, fully paid and nonassessable, free and clear of all Liens. The Conversion Shares, when issued in accordance with the terms of the Certificate of Designation, will be validly issued, fully paid and nonassessable, free and clear of all Liens. The Warrant Shares, when issued in accordance with the terms of the Warrants, will be validly issued, fully paid and nonassessable, free and clear of all Liens imposed by the Company. The Company has reserved from its duly authorized capital stock the maximum number of shares of Common Stock issuable pursuant to the Subscribed Preferred Shares and the Warrants.

 

 

 

12

 

 

(g)     Capitalization. The capitalization of the Company as of March 31, 2015 and the date hereof, is as set forth on Schedule 3.1(g). Except as set forth on Schedule 3.1(g), as of March 31, 2015 and the date hereof, the Company has not issued any capital stock since its most recently filed periodic report under the Exchange Act, other than pursuant to the exercise of employee stock options under and in accordance with the Company’s stock option plans, the issuance of shares of Common Stock to employees pursuant to the Company’s employee stock purchase plans and pursuant to the conversion and/or exercise of Common Stock Equivalents outstanding as of the date of the most recently filed periodic report under the Exchange Act. No Person has any right of first refusal, preemptive right, right of participation, or any similar right to participate in the transactions contemplated by the Transaction Documents. Except as a result of the purchase and sale of the Securities and as set forth on Schedule 3.1(g), (i) the Company has not issued any outstanding options, warrants, scrip rights to subscribe to, calls or commitments of any character whatsoever relating to any shares of Common Stock or other securities of the Company, (ii) the Company has not issued any securities, rights or obligations convertible into or exercisable or exchangeable for, or giving any Person any right to subscribe for or acquire, any shares of Common Stock or other securities of the Company, or (iii) there are no contracts, commitments, understandings or arrangements in any case, (i), (ii) or (iii), by which the Company or any Subsidiary is or may become bound to issue additional shares of Common Stock, Common Stock Equivalents or other securities of the Company. The issuance and sale of the Securities will not obligate the Company to issue shares of Common Stock or other securities to any Person (other than the Purchaser) and will not result in a right of any holder of Company securities to adjust the exercise, conversion, exchange or reset price under any of such securities. All of the outstanding shares of capital stock of the Company are validly issued, fully paid and nonassessable, have been issued in compliance with all federal and state securities Laws, and none of such outstanding shares was issued in violation of any preemptive rights or similar rights to subscribe for or purchase securities. Other than the Shareholder Approval, no further approval or authorization of any shareholder, the Board of Directors or others is required for the issuance and sale of the Securities. There are no shareholders agreements, voting agreements or other similar agreements with respect to the Company’s capital stock to which the Company is a party or, to the knowledge of the Company, between or among any of the Company’s shareholders.

 

(h)     SEC Reports; Financial Statements. Since July 1, 2012, the Company has filed all reports, schedules, forms, statements and other documents required to be filed by the Company under the Securities Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof (the foregoing materials, including the exhibits thereto and documents incorporated by reference therein, being collectively referred to herein as the “SEC Reports”) on a timely basis or has received a valid extension of such time of filing and has filed any such SEC Reports prior to the expiration of any such extension. As of their respective dates, the SEC Reports complied in all material respects with the requirements of the Securities Act and the Exchange Act, as applicable, and the rules and regulations promulgated thereunder, and none of the SEC Reports, when filed (or if amended, when amended), contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. The Company has never been an issuer subject to Rule 144(i) under the Securities Act. Neither the Company nor any of its Subsidiaries is the subject of ongoing review or investigation by the Commission. Each of the financial statements of the Company included in the SEC Reports complies in all material respects with applicable accounting requirements and the rules and regulations of the Commission with respect thereto as in effect at the time of filing. Such financial statements have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis during the periods involved (“GAAP”), except as may be otherwise specified in such financial statements or the notes thereto and except that unaudited financial statements may not contain all footnotes required by GAAP, and fairly present in all material respects the financial position of the Company and its consolidated Subsidiaries as of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal, immaterial, year-end audit adjustments.

 

 

 

13

 

 

(i)     Material Changes; Undisclosed Events, Liabilities or Developments. Since the date of the latest audited financial statements included within the SEC Reports through the date hereof, except as specifically disclosed in Schedule 3.1(i), (i) there has been no event, occurrence or development that has had or that could reasonably be expected to result in a Material Adverse Effect, (ii) the Company has not incurred any liabilities (contingent or otherwise) other than (A) trade payables and accrued expenses incurred in the ordinary course of business consistent with past practice and (B) liabilities not required to be reflected in the Company’s financial statements pursuant to GAAP or disclosed in filings made with the Commission, (iii) the Company has not altered its method of accounting, (iv) the Company has not declared or made any dividend or distribution of cash or other property to its shareholders or purchased, redeemed or made any agreements to purchase or redeem any shares of its capital stock and (v) the Company has not issued any equity securities to any officer, director or Affiliate, except pursuant to existing Company stock option plans. The Company does not have pending before the Commission any request for confidential treatment of information. Except for the issuance of the Securities contemplated by this Agreement or as set forth on Schedule 3.1(i), no event, liability, fact, circumstance, occurrence or development has occurred or exists or is reasonably expected to occur or exist with respect to the Company or its Subsidiaries or their respective business, properties, operations, assets or financial condition that would be required to be disclosed by the Company under applicable securities Laws at the time this representation is made or deemed made that has not been publicly disclosed at least one (1) Trading Day prior to the date that this representation is made.

 

(j)     Litigation. There is no action, suit, inquiry, notice of violation, proceeding or investigation pending or, to the knowledge of the Company, threatened against or affecting the Company, any Subsidiary or any of their respective properties before or by any court, arbitrator, governmental or administrative agency or regulatory authority (federal, state, county, local or foreign) (collectively, an “Action”) which (i) adversely affects or challenges the legality, validity or enforceability of any of the Transaction Documents or the Securities or (ii) could, if there were an unfavorable decision, have or reasonably be expected to result in a Material Adverse Effect. Neither the Company nor any Subsidiary, nor any director or officer thereof, is or has been the subject of any Action involving a claim of violation of or liability under federal or state securities Laws or a claim of breach of fiduciary duty. There has not been, and to the knowledge of the Company, there is not pending or contemplated, any investigation by the Commission involving the Company or any current or former director or officer of the Company. The Commission has not issued any stop order or other order suspending the effectiveness of any registration statement filed by the Company or any Subsidiary under the Exchange Act or the Securities Act. 

 

 

 

14

 

 

(k)     Labor Relations. 

 

(i)     No material labor dispute exists or, to the knowledge of the Company, is imminent with respect to any of the employees of the Company, which could reasonably be expected to result in a Material Adverse Effect. None of the Company’s or its Subsidiaries’ employees is a member of a union that relates to such employee’s relationship with the Company or such Subsidiary, and neither the Company nor any of its Subsidiaries is a party to a collective bargaining agreement, and the Company and its Subsidiaries believe that their relationships with their employees are good. No executive officer, to the knowledge of the Company, is, or is now expected to be, in violation of any material term of any employment contract, confidentiality, disclosure or proprietary information agreement or non-competition agreement, or any other contract or agreement or any restrictive covenant in favor of any third party, and the continued employment of each such executive officer does not subject the Company or any of its Subsidiaries to any liability with respect to any of the foregoing matters. The Company and its Subsidiaries are in compliance with all U.S. federal, state, local and foreign Laws relating to employment and employment practices, terms and conditions of employment and wages and hours, except where the failure to be in compliance could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. Neither the Company nor any Subsidiary has misclassified any person as an independent contractor, temporary employee, leased employee, volunteer or any other servant or agent compensated other than through reportable wages as an employee of the Company or any Subsidiary (each a “Contingent Worker”) and no Contingent Worker has been improperly excluded from any benefits plan and neither the Company nor any Subsidiary employs or engages any volunteer workers, paid or unpaid interns or any other unpaid workers. 

 

(ii)     Neither the Company nor any current or former ERISA Affiliate has maintained, established, sponsored, participated in or contributed to any employee benefit plan that is a multiemployer plan (within the meaning of Section 3(37) or 4001(a)(3) of ERISA) (a “Multiemployer Plan”) or for which the Company or any Subsidiary could incur liability under Section 4063 or 4064 of ERISA (a “Multiple Employer Plan”). No employee benefit or other arrangement as to which the Company or any Subsidiary has any liability provides for or promises medical, dental, disability, hospitalization, life or similar benefits (whether insured or self-insured) to any current or former Service Provider following termination of employment or service with the Company and the Subsidiaries (other than coverage mandated by applicable Law). 

 

(iii)     Neither the execution of this Agreement nor the consummation of the transactions contemplated hereby shall (either alone or in connection with the termination of employment or service of any employee, officer, director or independent contractor following, or in connection with, the transactions contemplated hereby): (i) entitle any current or former Service Provider to severance pay or benefits or any increase in severance pay or benefits upon any termination of employment or service with the Company or any Subsidiary, (ii) accelerate the time of payment or vesting or trigger any payment or funding (through a grantor trust or otherwise) of compensation or benefits under, or increase the amount payable or trigger any other obligation pursuant to, any of the Plans to any current or former Service Provider or (iii) limit or restrict the right of the Company or any Subsidiary or, after the consummation of the transactions contemplated hereby, the Purchaser, to merge, amend or terminate any arrangement providing compensation or benefits. Except with respect to the Company’s compensation and equity package for the Company’s current Chief Operating Officer, there are no arrangements in place that would result separately or in the aggregate (including, without limitation, as a result of this Agreement or the transactions contemplated hereby) in the payment of any “excess parachute payment” within the meaning of Section 280G of the Code.

 

 

 

15

 

 

(l)     Benefit Plans. Schedule 3.1(l) lists all material compensation, benefit, fringe benefit and other plans, programs, arrangements or agreements (A) to which the Company or any Subsidiary is a party or (B) that are maintained, contributed to or sponsored by the Company or any Subsidiary, for the benefit of any current or former employee, director, or consultant (the “Company Plans”). A copy of each plan document prepared in connection with a Company Plan, any summary plan descriptions, trust funding agreements, all related material governmental correspondence, and all material amendments have been made available to the Purchaser. 

 

(m)     Compliance. Neither the Company nor any Subsidiary: (i) is in default under or in violation of (and no event has occurred that has not been waived that, with notice or lapse of time or both, would result in a default by the Company or any Subsidiary under), nor has the Company or any Subsidiary received notice of a claim that it is in default under or that it is in violation of, any indenture, loan or credit agreement or any other agreement or instrument to which it is a party or by which it or any of its properties is bound (whether or not such default or violation has been waived), (ii) is in violation of any judgment, decree or order of any court, arbitrator or governmental body, (iii) is or has been in violation of any statute, rule, ordinance or regulation of any governmental authority or any other Law, including without limitation any Law relating to Taxes, product quality and safety and employment and labor matters, or (iv) is in violation of applicable Law or the provisions of any plan, program, policy or agreement with respect to the provision of compensation or benefits, except in each case as could not have or reasonably be expected to result in a Material Adverse Effect.

 

(n)     Regulatory Permits. The Company and the Subsidiaries possess, and are in compliance with, all certificates, authorizations and permits issued by the appropriate federal, state, local or foreign regulatory authorities necessary to conduct their respective businesses as currently conducted or as described in the SEC Reports, except where the failure to possess such permits could not reasonably be expected to result in a Material Adverse Effect (“Material Permits”), and neither the Company nor any Subsidiary has received any notice of proceedings relating to the revocation or modification of any Material Permit.

 

(o)     Title to Assets. The Company and the Subsidiaries have good and marketable title in fee simple to all real property owned by them and good and marketable title in all personal property owned by them that is material to the business of the Company and the Subsidiaries, in each case free and clear of all Liens, except for the Liens identified on Schedule 3.1(o), which do not and could not reasonably be expected to have a Material Adverse Effect, and Liens as do not materially affect the value of such property and do not materially interfere with the use made and proposed to be made of such property by the Company and the Subsidiaries and Liens for the payment of any Taxes, the payment of which is neither delinquent nor subject to penalties. All real property and facilities held under lease by the Company and the Subsidiaries are listed on Schedule 3.1(o) and are held by them under valid, subsisting and enforceable leases with which the Company and the Subsidiaries are in compliance.

 

 

 

16

 

 

(p)     Intellectual Property. The Company and the Subsidiaries have, or have rights to use, all patents, patent applications, trademarks, trademark applications, service marks, trade names, trade secrets, inventions, copyrights, licenses and other intellectual property rights and similar rights necessary or material for use in connection with their respective businesses as currently conducted or described in the SEC Reports or which the failure to so have could have a Material Adverse Effect (collectively, the “Intellectual Property Rights”), free and clear of all Liens, and all such Intellectual Property Rights are listed on Schedule 3.1(p). None of, and neither the Company nor any Subsidiary has received a notice (written or otherwise) that any of, the Intellectual Property Rights has expired, terminated or been abandoned, or is expected to expire or terminate or be abandoned, within two (2) years from the date of this Agreement. Neither the Company nor any Subsidiary has received, since the date of the latest audited financial statements included within the SEC Reports, a written notice of a claim or otherwise has any knowledge that the Intellectual Property Rights violate or infringe upon the rights of any Person, except as would not have a Material Adverse Effect. To the knowledge of the Company, all such Intellectual Property Rights are enforceable and there is no existing infringement by another Person of any of the Intellectual Property Rights. The Company and its Subsidiaries have taken reasonable security measures to protect the secrecy, confidentiality and value of all of their intellectual properties, except where failure to do so could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

(q)     Insurance. The Company and the Subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as are prudent and customary in the businesses in which the Company and the Subsidiaries are engaged, including, but not limited to, directors and officers insurance coverage. A true and complete list of all applicable insurance material policies held by the Company on the date hereof is set forth in Schedule 3.1(q). Neither the Company nor any Subsidiary is in breach or default of any insurance policy, or has any reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business without a significant increase in cost.

 

(r)     Transactions With Affiliates and Employees. Except as set forth in the SEC Reports, none of the officers or directors of the Company and, to the knowledge of the Company, none of the employees of the Company is presently a party to any transaction with the Company or any Subsidiary (other than for services as employees, officers and directors), including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from any officer, director or such employee or, to the knowledge of the Company, any entity in which any officer, director, or any such employee has a substantial interest or is an officer, director, trustee or partner, in each case in excess of $40,000 other than for (i) payment of salary, (ii) reimbursement for expenses incurred on behalf of the Company and (iii) other employee benefits, including stock option agreements under any stock option plan of the Company.

 

 

 

17

 

 

(s)     Sarbanes-Oxley; Internal Accounting Controls. The Company is in material compliance with any and all applicable requirements of the Sarbanes-Oxley Act of 2002 that are effective as of the date hereof, and any and all applicable rules and regulations promulgated by the Commission thereunder that are effective as of the date hereof and as of the Closing Date. The Company and the Subsidiaries maintain a system of internal accounting controls sufficient to provide reasonable assurance that: (i) transactions are executed in accordance with management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset accountability, (iii) access to assets is permitted only in accordance with management’s general or specific authorization, and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. The Company has established disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and designed such disclosure controls and procedures to ensure that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms. The Company’s certifying officers have evaluated the effectiveness of the Company’s disclosure controls and procedures as of the end of the period covered by the Company’s most recently filed periodic report under the Exchange Act (such date, the “Evaluation Date”). The Company presented in its most recently filed periodic report under the Exchange Act the conclusions of the certifying officers about the effectiveness of the disclosure controls and procedures based on their evaluations as of the Evaluation Date. Since the Evaluation Date, there have been no changes in the Company’s internal control over financial reporting (as such term is defined in the Exchange Act) that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

 

(t)     Certain Fees. Except as set forth on Schedule 3.1(t), no brokerage or finder’s fees or commissions are or will be payable by the Company or any Subsidiary to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other Person with respect to the transactions contemplated by the Transaction Documents. The Purchaser shall have no obligation with respect to any fees or with respect to any claims made by or on behalf of other Persons for fees of a type required to be set forth on Schedule 3.1(t).

 

(u)     Investment Company. The Company is not, and is not an Affiliate of, and immediately after receipt of payment for the Securities, will not be or be an Affiliate of, an “investment company” within the meaning of the Investment Company Act of 1940, as amended. The Company shall conduct its business in a manner so that it will not become an “investment company” subject to registration under the Investment Company Act of 1940, as amended.

 

(v)     Listing and Maintenance Requirements. Certain of the Common Stock is registered pursuant to Section 12(b) or 12(g) of the Exchange Act, and the Company has taken no action designed to, or which to its knowledge is likely to have the effect of, terminating the registration of the Common Stock under the Exchange Act nor has the Company received any notification that the Commission is contemplating terminating such registration. The Company has not, in the twenty-four (24) months preceding the date hereof, received notice from any Trading Market on which the Common Stock is or has been listed or quoted to the effect that the Company is not in compliance with the listing or maintenance requirements of such Trading Market.

 

 

 

18

 

 

(w)     No Integrated Offering. Assuming the accuracy of the Purchasers’ representations and warranties set forth in Section 3.2, neither the Company, nor any of its Affiliates, nor any Person acting on its or their behalf has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would cause this offering of the Securities to be integrated with prior offerings by the Company for purposes of any applicable shareholder approval provisions of any Trading Market on which any of the securities of the Company are listed or designated.

 

(x)     Tax Status. The Company and each Subsidiary (i) has timely made or filed all United States federal and state income, all foreign income and franchise, and all other material Tax returns, reports and declarations required by any jurisdiction to which it is subject, (ii) has timely paid all Taxes shown or determined to be due on such returns, reports and declarations or otherwise due in respect of the Company or such Subsidiary, as applicable and (iii) has set aside on its books provision reasonably adequate for the payment of all material Taxes for periods subsequent to the periods to which such returns, reports or declarations apply. There are no unpaid Taxes in any material amount claimed to be due by the taxing authority of any jurisdiction, and the officers of the Company or of any Subsidiary know of no basis for any such claim. No adjustment relating to any Tax return, report or declaration of the Company or any Subsidiary has been proposed in writing by any taxing authority and there are no pending Actions for the assessment or collection of Taxes against the Company or any Subsidiary. There are no Tax liens on any assets of the Company or any Subsidiary. The Company and each Subsidiary has properly and timely withheld, collected and deposited all Taxes that are required to be withheld, collected and deposited under applicable Law. Neither the Company nor any Subsidiary is doing business in or engaged in a trade or business in any jurisdiction in which it has not filed all required Tax returns, reports or declarations. Neither the Company nor any Subsidiary has any liability for the Taxes of any Person (other than the Company or any Subsidiary. The Company has not been a United States real property holding corporation within the meaning of Section 897(c)(2) of the Code during the applicable period specified in Section 897(c)(1)(A)(ii) of the Code.

 

(y)     Foreign Corrupt Practices. Neither the Company, nor to the knowledge of the Company, any agent or other person acting on behalf of the Company, has (i) directly or indirectly, used any funds for unlawful contributions, gifts, entertainment or other unlawful expenses related to foreign or domestic political activity, (ii) made any unlawful payment to foreign or domestic government officials or employees or to any foreign or domestic political parties or campaigns from corporate funds, (iii) failed to disclose fully any contribution made by the Company (or made by any person acting on its behalf of which the Company is aware) which is in violation of Law, or (iv) violated in any material respect any provision of the Foreign Corrupt Practices Act of 1977, as amended.

 

(z)     Material Contracts. The corresponding subsections of Schedule 3.1(z) list all contracts and agreements of the following types to which the Company or any Subsidiary is a party (such contracts and agreements as are required to be set forth in such subsections being the “Material Contracts”): 

 

(i)     each “material contract” (as such term is defined in Item 601(b)(10) of Regulation S-K of the SEC) with respect to the Company and its Subsidiaries;

 

 

 

19

 

 

(ii)     each contract and agreement which is reasonably expected to involve consideration of more than $1,000,000, in the aggregate, over any twelve (12) month period;

 

(iii)     all joint venture contracts, partnership arrangements or other agreements outside the ordinary course of business involving a sharing of profits, losses, costs or liabilities by the Company or any Subsidiary with any third party;

 

(iv)     each contract which is reasonably expected to involve consideration of more than $1,000,000 and which requires the Company or any Subsidiary to pay royalties or other amounts calculated based upon the revenues or income of the Company or any Subsidiary or income or revenues related to any product of the Company or any Subsidiary to which the Company or any Subsidiary is a party; 

 

(v)     each contract or agreement evidencing indebtedness in excess of $150,000;

 

(vi)     all contracts and agreements with any governmental body to which the Company or any Subsidiary is a party;

 

(vii)     all contracts and agreements that limit, or purport to limit, the ability of the Company or any Subsidiary to compete in any line of business or with any person or entity or in any geographic area or during any period of time; 

 

(viii)     all contracts and agreements providing for benefits under any compensation plan or with any employee of the Company or any Subsidiary that contain an obligation to pay or accrue compensation of more than $150,000 per year; and

 

(ix)     all other contracts and agreements, whether or not made in the ordinary course of business, which are material to the Company and the Subsidiaries, taken as a whole, or the conduct of their respective businesses, or the absence of which would, individually or in the aggregate, prevent or materially delay consummation of any of the transactions contemplated hereby or under the other Transaction Documents or otherwise prevent or materially delay the Company from performing its obligations under this Agreement or the other Transaction Documents or would, individually or in the aggregate, have a Material Adverse Effect.

 

Except as would not, individually or in the aggregate, prevent or materially delay consummation of any of the transactions contemplated hereby or under the other Transaction Documents or otherwise prevent or materially delay the Company from performing its obligations under this Agreement or any other Transaction Document and would not, individually or in the aggregate, have a Material Adverse Effect, (i) each Material Contract is a legal, valid and binding agreement, and the Company is not in default of any of the Material Contracts; (ii) to the Company’s knowledge, no Material Contract has been canceled by the other party; (iii) to the Company’s knowledge, no other party is in breach or violation of, or default under, any Material Contract; (iv) the Company and the Subsidiaries have not received any claim of default under any such agreement; and (v) neither the execution of this Agreement or any other Transaction Document nor the consummation of the transactions contemplated hereby and thereby shall constitute a default under, give rise to cancellation rights under, or otherwise adversely affect any of the rights of the Company or any Subsidiary under any Material Contract. The Company has furnished or made available to Purchaser true and complete copies of all Material Contracts, including any amendments thereto.

 

 

 

20

 

 

(aa)     Takeover Statutes. Assuming the accuracy of the representations and warranties contained in Section 3.2(h), the Company has taken all necessary action, including the necessary approvals of the Board of Directors, so that no “business combination”, “fair price”, “moratorium”, “control share acquisition” or other similar antitakeover statute or regulation enacted under state or federal laws in the United States applicable to the Company (including, without limitation, Section 180.1141 of the Wisconsin Business Corporation Law (the “WBCL”) and Section 180.1150 of the WBCL, but excluding Section 180.1130 to 180.1134 of the WBCL, Chapter 552 of the Wisconsin Statutes and Section 6.05 of Chapter DFI of the Wisconsin Administrative Code) will (i) prohibit or restrict the Purchaser’s ability to purchase, exercise or acquire any Securities, (ii) prohibit or restrict the Purchaser’s ability to purchase or otherwise acquire any additional Common Stock or Common Stock Equivalents after the Closing, (iii) prevent or delay the Purchaser or its Affiliates from entering into a merger or other business combination transaction with the Company or its Affiliates or (iv) otherwise apply to the Purchaser or the transactions contemplated by this Agreement. As of the date of this Agreement, (i) less than 33% of the outstanding shares of Common Stock is held of record by residents of the State of Wisconsin and (ii) the outstanding shares of Common Stock are held of record by less than 100 Persons in the State of Wisconsin. 

 

(bb)     Environmental Matters. Except as set forth on Schedule 3.1(bb), (i) the Company and the Subsidiaries and their owned, operated, and leased property (the “Properties”) are and have been for the last six (6) years in compliance with all Environmental Laws; (ii) the Company, the Subsidiaries and the Properties have all permits issued pursuant to Environmental Laws required to operate the Company and the Subsidiaries and, to the knowledge of the Company, there is not a reasonable objective basis for why any such permit required for the operations of the Company and the Subsidiaries would not be renewed or issued; (iii) there are no and have been no actual or alleged Releases of Hazardous Materials at, in, on, to or from any Properties, or, during the period of its ownership, operation or lease thereof, at, in, on, to or from any Company or Subsidiary formerly owned, operated or leased property, or, to the knowledge of the Company, at, in, on, to or from any offsite location relating to the operations of the Company or the Subsidiaries; (iv) the Company and the Subsidiaries are not conducting, and have not completed, any remediation of Hazardous Materials at any location; (v) there are no asbestos-containing materials, polychlorinated biphenyls or underground storage tanks at the Properties except as in compliance with Environmental Laws; and (vi) there are no pending or, to the knowledge of the Company, threatened claims, suits, proceedings, actions, order, judgments or notices relating to any Environmental Liability or Environmental Laws and the Company or the Subsidiaries. The Company has made available to Purchaser those reports, assessments, studies, and audits currently in the Company’s possession or control relating to the Environment and human health and safety and the Company, the Subsidiaries, the Property, and any formerly owned, operated or leased property that were generated in the last ten (10) years. 

 

 

 

21

 

 

3.2     Representations and Warranties of the Purchaser. The Purchaser hereby represents and warrants as of the date hereof and as of the Closing Date to the Company as follows (unless as of a specific date therein):

 

(a)     Organization; Authority. The Purchaser is a corporation duly incorporated, validly existing and in good standing under the Laws of California with full right, corporate or partnership power and authority to enter into and to consummate the transactions contemplated by this Agreement and otherwise to carry out its obligations hereunder and thereunder. The execution and delivery of this Agreement and performance by the Purchaser of the transactions contemplated by this Agreement have been duly authorized by all necessary corporate action, as applicable, on the part of the Purchaser. Each Transaction Document to which the Purchaser is a party has been duly executed by the Purchaser, and when delivered by the Purchaser in accordance with the terms hereof, will constitute the valid and legally binding obligation of the Purchaser, enforceable against it in accordance with its terms, except: (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other Laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by Laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable Law.

 

(b)     Understandings or Arrangements. The Purchaser is acquiring the Securities as principal for its own account and has no direct or indirect arrangement or understandings with any other persons to distribute or regarding the distribution of such Securities (this representation and warranty not limiting the Purchaser’s right to sell the Securities in compliance with applicable federal and state securities Laws). The Purchaser is acquiring the Securities hereunder in the ordinary course of its business.

 

(c)     Purchaser Status. At the time the Purchaser was offered the Securities, it was, and as of the date hereof it is, and on each date on which it exercises any Warrants, it will be an “accredited investor” as defined in Rule 501(a)(3) under the Securities Act. 

 

(d)     Experience of the Purchaser. The Purchaser, either alone or together with its representatives, has such knowledge, sophistication and experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment in the Securities, and has so evaluated the merits and risks of such investment. The Purchaser is able to bear the economic risk of an investment in the Securities and, at the present time, is able to afford a complete loss of such investment.

 

(e)     Certain Transactions and Confidentiality. Other than consummating the transactions contemplated hereunder, the Purchaser has not, nor has any Person acting on behalf of or pursuant to any understanding with the Purchaser, directly or indirectly executed any purchases or sales, including Short Sales, of the securities of the Company during the period commencing as of the time that the Purchaser first received a term sheet (written or oral) from the Company or any other Person representing the Company setting forth the material terms of the transactions contemplated hereunder and ending immediately prior to the execution hereof. The Purchaser has maintained the confidentiality of all disclosures made to it in connection with this transaction (including the existence and terms of this transaction). Notwithstanding the foregoing, for avoidance of doubt, nothing contained herein shall constitute a representation or warranty, or preclude any actions, with respect to the identification of the availability of, or securing of, available shares to borrow in order to effect Short Sales or similar transactions in the future.

 

 

 

22

 

 

(f)     Non-Registration of Securities. Purchaser understands that issuance of the Securities is not being registered with the Commission and that accordingly Purchaser must hold the Securities and the shares issuable upon exercise thereof indefinitely unless they are registered with the Commission and qualified by state authorities, or an exemption from such registration and qualification requirements is available. Purchaser represents that Purchaser is familiar with Rule 144 promulgated under the Securities Act, as presently in effect, and understands the resale limitations imposed thereby.

 

(g)     Certain Fees. Except as set forth on Schedule 3.2(g), no brokerage or finder’s fees or commissions are or will be payable by the Purchaser to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other Person with respect to the transactions contemplated by the Transaction Documents. The Company shall have no obligation with respect to any fees or with respect to any claims made by or on behalf of other Persons for fees of a type required to be set forth on Schedule 3.2(g).

 

(h)     Share Ownership. Neither the Purchaser nor any of its Subsidiaries, or the “affiliates” or “Associates” of any such Person is an “Interested Stockholder” of the Company, as defined in Section 180.1140 of the WBCL, immediately prior to the execution of the Agreement. 

 

The Company acknowledges and agrees that the representations and warranties contained in Section 3.2 (other than those representations and warranties set forth in Section 3.2(h)) shall not modify, amend or affect the Purchaser’s right (which right the Company acknowledges) to rely on the Company’s representations and warranties contained in this Agreement or any representations and warranties contained in any other Transaction Document or any other document or instrument executed and/or delivered in connection with this Agreement or the consummation of the transactions contemplated hereby. The Purchaser acknowledges that the Company has not made and is not making any representations or warranties regarding the subject matter of this Agreement, express or implied, except as provided in Section 3.1 and the Disclosure Schedule, and that Purchaser is not relying and has not relied on any representations or warranties whatsoever regarding the subject matter of this Agreement, express or implied, except as provided in Section 3.1 and the Disclosure Schedule.

 

 

ARTICLE IV.
OTHER AGREEMENTS OF THE PARTIES

 

4.1     Conduct of Business by the Company Prior to Closing. The Company agrees that, between the date hereof and the Closing Date, unless Purchaser shall otherwise consent in writing (which consent shall not be unreasonably withheld), (i) the businesses of the Company and the Subsidiaries shall use commercially reasonable efforts to conduct their business in the ordinary course of business consistent with past practice; and (ii) the Company shall use its commercially reasonable efforts to preserve substantially intact the business organization of the Company and the Subsidiaries. By way of amplification and not limitation, except as expressly contemplated by any other provision of this Agreement or any other Transaction Document, neither the Company nor any Subsidiary shall, between the date hereof this Agreement and the Closing Date, directly or indirectly, do any Restricted Action (as defined in the Governance Agreement).

 

 

 

23

 

 

4.2     Further Action; Commercially Reasonable Efforts. Upon the terms and subject to the conditions of this Agreement, each of the parties hereto shall use commercially reasonable efforts to (i) make promptly any filings or other required submissions, under applicable U.S. or foreign, federal or state antitrust, competition of fair trade Laws, or any other applicable Laws, with respect to the transactions contemplated hereby and (ii) use its commercially reasonable efforts to take, or cause to be taken, all appropriate action, and to do, or cause to be done, all things necessary, proper or advisable under applicable Laws or otherwise to consummate and make effective the transactions contemplated hereby. Without limiting the generality of the foregoing, the Company shall use its commercially reasonable efforts to receive the NYSE Clearance. 

 

4.3     Conversion Shares; Warrant Shares. If any Subscribed Preferred Shares are converted or the Warrant is exercised at a time when there is an effective registration statement to cover the issuance or resale of the Conversion Shares or Warrant Shares, as applicable, or at such time as a legend is no longer required under applicable requirements of the Securities Act (including judicial interpretations and pronouncements issued by the staff of the Commission), including if shares of Preferred Stock are converted six months or more following the Closing Date at a time when the holder is not an Affiliate of the Company, the Conversion Shares or Warrant Shares issued pursuant to any such conversion or exercise shall be issued free of all legends. If the Conversion Shares or Warrant Shares bear a legend, the Company agrees that at such time as such legend is no longer required under applicable Laws, it will, as promptly as practicable following the delivery by a Purchaser to the Company or the Transfer Agent of a certificate representing the Subscribed Shares, Conversion Shares or Warrant Shares, as applicable, issued with a restrictive legend, together with a customary Rule 144 representation letter, deliver or cause to be delivered to the Purchaser a certificate representing such shares that is free from all restrictive and other legends. 

 

4.4     Furnishing of Information. Until the earliest of the time that (i) the Purchaser owns no Securities or (ii) the Warrants have expired, the Company covenants to timely file (or obtain extensions in respect thereof and file within the applicable grace period) all reports required to be filed by the Company after the date hereof pursuant to the Exchange Act even if the Company is not then subject to the reporting requirements of the Exchange Act. As long as the Purchaser owns Securities, if the Company is not required to file reports pursuant to the Exchange Act, it will prepare and furnish to the Purchaser and make publicly available in accordance with Rule 144(c) such information as is required for the Purchaser to sell the Securities, including without limitation, under Rule 144. The Company further covenants that it will take such further action as any holder of Securities may reasonably request, to the extent required from time to time to enable such Person to sell such Securities without registration under the Securities Act, including without limitation, within the requirements of the exemption provided by Rule 144. 

 

 

 

24

 

 

4.5     Integration. The Company shall not sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security (as defined in Section 2 of the Securities Act) that would be integrated with the offer or sale of the Securities for purposes of the rules and regulations of any Trading Market such that it would require shareholder approval prior to the closing of such other transaction unless shareholder approval is obtained before the closing of such subsequent transaction. 

 

4.6     Use of Proceeds. The Company shall use a portion of the net proceeds from the sale of the Securities hereunder to make reasonable improvements to its products that will facilitate bankability, third party insurance and warranty coverage and shall not use such proceeds for: (a) the satisfaction of any portion of the Company’s debt (other than payment of regular monthly debt payments and trade payables in the ordinary course of the Company’s business and prior practices), (b) the redemption of any Common Stock or Common Stock Equivalents or the payment of any dividend to its equity holders, (c) the settlement of any outstanding litigation or (d) in violation of the FCPA or OFAC regulations.

 

4.7     Indemnification of Purchaser. Subject to the provisions of this Section 4.4, the Company will indemnify and hold the Purchaser and its directors, officers, shareholders, employees and agents, each Person who controls the Purchaser (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, shareholders, agents or employees of such controlling persons (each, a “Purchaser Party”) harmless from any and all losses, liabilities, obligations, claims, contingencies, damages, costs and expenses, including all judgments, amounts paid in settlements, court costs and reasonable attorneys’ fees and costs of investigation that any such Purchaser Party may suffer or incur (collectively, “Losses”) as a result of or relating to (a) any breach of any of the representations, warranties, covenants or agreements made by the Company in this Agreement, (b) any action instituted against the Purchaser in any capacity, or any of its Affiliates, by any shareholder of the Company who is not an Affiliate of the Purchaser, with respect to any of the transactions contemplated by this Agreement (unless such action is based upon a breach of the Purchaser’s representations, warranties or covenants under the Transaction Documents or any agreements or understandings the Purchaser may have with any such shareholder or any violations by the Purchaser of state or federal securities Laws or any conduct by the Purchaser which constitutes fraud, gross negligence, willful misconduct or malfeasance), (c) any Company Environmental Liability, or (d) ZBB PowerSav Holdings Limited’s capital contribution into Anhui Meineng Store Energy Co., Ltd being deemed invalid in part or whole by any Person. If any action shall be brought against any Purchaser Party in respect of which indemnity may be sought pursuant to this Agreement, such Purchaser Party shall promptly notify the Company in writing, and the Company shall have the right to assume the defense thereof with counsel of its own choosing reasonably acceptable to the Purchaser Party. Any Purchaser Party shall have the right to employ separate counsel in any such action and participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Purchaser Party except to the extent that (i) the employment thereof has been specifically authorized by the Company in writing, (ii) the Company has failed after a reasonable period of time to assume such defense and to employ counsel or (iii) in such action there is, in the reasonable opinion of counsel, a material conflict on any material issue between the position of the Company and the position of such Purchaser Party, in which case the Company shall be responsible for the reasonable fees and expenses of no more than one such separate counsel, The Company will not be liable to any Purchaser Party under this Agreement (y) for any settlement by a Purchaser Party effected without the Company’s prior written consent, which shall not be unreasonably withheld or delayed; or (z) to the extent, but only to the extent that a loss, claim, damage or liability is attributable to any Purchaser Party’s breach of any of the representations, warranties, covenants or agreements made by such Purchaser Party in this Agreement. The indemnification required by this Section 4.4 shall be made by periodic payments of the amount thereof during the course of the investigation or defense, as and when bills are received or are incurred. The indemnity agreements contained herein shall be in addition to any cause of action or similar right of any Purchaser Party against the Company or others.

 

 

 

25

 

 

4.8     Reservation of Common Stock. As of the date hereof, the Company has reserved and the Company shall continue to reserve and keep available at all times, free of preemptive rights, a sufficient number of shares of Common Stock for the purpose of enabling the Company to issue Conversion Shares pursuant to any conversion of the Subscribed Preferred Shares and Warrant Shares pursuant to any exercise of the Warrants. 

 

4.9     Listing of Common Stock. The Company hereby agrees to use commercially reasonable efforts to maintain the listing or quotation of the Common Stock on the Trading Market on which it is currently listed, and concurrently with the Closing, the Company shall apply to list or quote all of the Conversion Shares and Warrant Shares on such Trading Market and promptly secure the listing of all of the Conversion Shares and Warrant Shares on such Trading Market. The Company further agrees, if the Company applies to have the Common Stock traded on any other Trading Market, it will then include in such application all of the Conversion Shares and Warrant Shares, and will take such other action as is necessary to cause all of the Conversion Shares and Warrant Shares to be listed or quoted on such other Trading Market as promptly as possible. The Company will then take all action reasonably necessary to continue the listing and trading of its Common Stock on a Trading Market and will comply in all respects with the Company’s reporting, filing and other obligations under the bylaws or rules of the Trading Market. 

 

4.10     Non-Solicitation.

 

(a)     Until the earlier of (A) consummation of the Closing and (B) termination of this Agreement, the Company shall not, nor shall it authorize or knowingly permit its Subsidiaries or representatives to, directly or indirectly, (i) solicit, initiate or knowingly encourage or assist (including by way of furnishing information) the submission by any third party of an Acquisition Proposal, or any inquiry, proposal or offer that is reasonably likely to lead to an Acquisition Proposal, or (ii) engage in, continue or otherwise participate in any negotiations or discussions regarding an Acquisition Proposal, or provide any information or data to any Person relating to the Company or any of its Subsidiaries, in any such case with the intent to induce the making, submission or announcement of, or to encourage, facilitate or assist, an Acquisition Proposal. 

 

(b)     Notwithstanding anything to the contrary set forth in Section 4.10(a) above, the Company and its representatives may (i) provide information in response to a request therefor by a Person who has made a bona fide written Acquisition Proposal, if the Person so requesting such information executes an acceptable confidentiality agreement (which shall be promptly provided to Purchaser), provided, that any non-public information provided to such Person shall have been previously delivered or made available to Purchaser or its representatives, and (ii) engage in negotiations or discussions with any Person who has made a bona fide written Acquisition Proposal, if in each such case, such Acquisition Proposal did not result from a breach of this Section 4.9 and the Company’s Board of Directors determines in good faith (A) after consultation with outside legal counsel that the failure to take such action would reasonably be expected to be inconsistent with the Company directors’ fiduciary duties under applicable Law, and (B) such Acquisition Proposal constitutes a Superior Proposal or could reasonably result in a Superior Proposal. The Company shall keep the Purchaser reasonably informed of the status of any such negotiations or discussions and promptly provide copies of all material written correspondence relating to such Acquisition Proposal. 

 

 

 

26

 

 

4.11     Shareholder Approval.

 

(a)     The Company shall take all action necessary to duly call, give notice of, convene and hold the Shareholder Meeting as soon as reasonably practicable following the date hereof. In connection with the Shareholder Meeting, the Company shall as promptly as reasonably practicable (i) prepare the Proxy Statement and file the Proxy Statement with the SEC (which shall in no case be later than fifteen (15) Business Days following the date hereof), (ii) respond to any comments or requests for additional information received from the SEC with respect to such filing and promptly provide copies of such comments or requests, and any other correspondence with the SEC, to the Purchaser, (iii) prepare and file any amendments or supplements necessary to be filed in response to any SEC comments or as required by Law, (iv) after confirmation from the SEC that it has no further comments on, or that it is not reviewing, the Proxy Statement, use commercially reasonable efforts to mail to the Company’s shareholders the Proxy Statement and all other customary proxy or other materials for meetings such as the Shareholder Meeting, (v) to the extent required by applicable Law, prepare, file and distribute to the Company’s shareholders any supplement or amendment to the Proxy Statement if any event shall occur which requires such action at any time prior to the Shareholder Meeting and (vi) otherwise use commercially reasonable efforts to comply with all applicable Law applicable to the Shareholder Meeting.

 

(b)     The Purchaser shall cooperate with the Company in connection with the preparation of the Proxy Statement, including promptly furnishing the Company upon request with any and all information as may be required to be set forth in the Proxy Statement under applicable Law. The Company will provide the Purchaser a reasonable opportunity to review and comment upon the Proxy Statement and, if applicable, any amendments or supplements thereto, prior to filing the Proxy Statement (or such amendments or supplements, as applicable) with the SEC and prior to mailing the Proxy Statement to the Company’s shareholders and the Company shall reasonably consider in good faith all comments proposed by the Purchaser with respect to the Proxy Statement and, if applicable, any such amendments or supplements. The Company shall cause the information included in the Proxy Statement (and any amendment thereto) at the time of mailing of the Proxy Statement (or such amendment), and at the time of the Shareholder Meeting, not to contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. 

 

 

 

27

 

 

(c)     Except as contemplated in Section 4.10(d) below, the Company’s Board of Directors shall recommend adoption and approval of this Agreement by the Company’s shareholders (the “Company Recommendation”), and include such Company Recommendation in the Proxy Statement, and the Company shall take reasonable lawful action to solicit such adoption and approval.

 

(d)     Neither the Board of Directors nor any committee thereof shall withhold, withdraw, qualify or modify (or publicly propose to withhold, withdraw, qualify or modify), in a manner adverse to the Purchaser, the Company Recommendation or fail to include the Company Recommendation in the Proxy Statement, or adopt, approve, recommend to propose to adopt, approve or recommend (publicly or otherwise), or fail to reject within five (5) Business Days of receipt, an Acquisition Proposal (an “Adverse Recommendation Change”); unless prior to the time the Shareholder Approval is obtained, but not after, the Board of Directors determines in good faith (after consultation with outside legal counsel) that the failure to do so would reasonably be expected to be inconsistent with their fiduciary duties under applicable Law, make an Adverse Recommendation Change, provided (i) the Company shall provide written notice to Purchaser (a “Notice of Adverse Recommendation Change”) advising Purchaser that the Board of Directors intends to make an Adverse Recommendation Change, specifying the material terms and conditions of any Acquisition Proposal and identifying the person making such Acquisition Proposal, and (ii) the Company shall, during the period beginning at 5:00 p.m. Eastern Time on the day of delivery by the Company to Purchaser of such Notice of Adverse Recommendation Change (or, if delivered after 5:00 p.m. Eastern Time or any day other than a Business Day, beginning at 5:00 p.m. Eastern Time on the next Business Day) and ending five (5) Business Days later at 5:00 p.m. Eastern Time (the “Notice Period”) negotiate with Purchaser and its representatives in good faith (to the extent Purchaser desires to negotiate) any proposed modifications to the terms and conditions of this Agreement and/or the Transaction Documents so that the failure to make an Adverse Recommendation Change would no longer be inconsistent with the directors' fiduciary duties under applicable Law; provided that, in the event of any material revisions to an Acquisition Proposal, the Company shall deliver a new written notice to Purchaser and comply again with the requirements of this Section 4.11(d)(ii) with respect to such new written notice; provided, further, that with respect to the new written notice to Purchaser, the Notice Period shall be deemed to be a three (3) Business-Day period rather than the five (5) Business-Day period first described above.

 

(e)     Notwithstanding the foregoing or anything to the contrary herein, the Company shall not be obligated to prepare or file the Proxy Statement or any amendments thereto, nor to distribute the Proxy Statement or solicit votes from Company stockholders pursuant to the Proxy Statement, nor convene and hold the Stockholder Meeting, from and after the date of any Adverse Recommendation Change or any action taken pursuant to Section 5.1(g). 

 

4.12     Disclosure Schedule Update. On or before the Closing Date, the Company may disclose to Purchaser in writing any exceptions to or variances from the representations and warranties in Section 3.1 that are discovered by the Company or that occur as a result of subsequent events or developments. Such disclosures shall, subject to the satisfaction of the condition set forth in Section 2.3(b)(i), amend and supplement the Disclosure Schedules and will be deemed to have cured any misrepresentation or breach of warranty that otherwise might have existed hereunder by reason of such exception or variance; provided that, such exception or variance relates to an event or development which occurred after the date of this Agreement.

 

 

 

28

 

 

4.13     CFIUS. If Purchaser in good faith, upon consultation with the Company, determines within fifteen (15) Business Days following the date hereof, that it is advisable to make a voluntary filing with CFIUS, then the Purchaser shall notify the Company and promptly thereafter both Parties shall jointly submit a notification to CFIUS with respect to the transaction contemplated by this Agreement, and shall respond appropriately to any reasonable request for information from CFIUS in the time frame set forth in the CFIUS regulations; provided, however, that the Party from whom such information is requested shall have sole discretion with respect to the information to be provided in response to such request. 

 

4.14     Access to Information.  From the date of this Agreement until the Closing Date, the Company shall (and shall cause its Subsidiaries to):  (i) provide to Purchaser (and Purchaser's officers, directors, employees, accountants, consultants, legal counsel, agents and other representatives, collectively, “Representatives”) access at reasonable times upon prior notice to the officers, employees, agents, properties, offices and other facilities of such party and its subsidiaries and to the books and records thereof; and (ii) furnish promptly to Purchaser such information concerning the business, properties, contracts, assets, liabilities, personnel and other aspects of such party and its subsidiaries as Purchaser or its Representatives may reasonably request.

 

ARTICLE V.
MISCELLANEOUS

 

5.1     Termination.  This Agreement may be terminated:

 

(a)     by mutual written consent of Purchaser and the Company at any time prior to the Closing, whether before or after Shareholder Approval is obtained;

 

(b)     by either party by written notice to the other party, if the Closing has not been consummated on or before September 30, 2015 (the “Outside Date”); provided, however, that this right shall not be available to any party whose breach or failure to perform any of its representations, warranties, covenants or agreements set forth in this Agreement has been a principal cause of, or resulted in, the failure of the Closing to take place on or before the Outside Date;

 

(c)     by Purchaser, if prior to Closing (i) there shall have occurred any effects, events, occurrences, developments, state of facts or changes that, individually or in the aggregate, have had or would reasonably be expected to have a Material Adverse Effect or (ii) there shall have been a breach or inaccuracy of any representation, warranty, covenant or agreement on the part of the Company contained in this Agreement, which breach or inaccuracy would (A) give rise to the failure of a condition set forth in Section 2.3(a) or Section 2.3(b) and (B) is incapable of being cured or has not been cured prior to the Outside Date; provided, however, that Purchaser is not then in material breach of any representation, warranty or covenant under this Agreement;

 

 

 

29

 

 

(d)     by the Company prior to the Closing, if there shall have been a breach or inaccuracy of any representation, warranty, covenant or agreement on the part of Purchaser contained in this Agreement, which breach or inaccuracy (i) would reasonably be expected to prevent Purchaser from consummating the transactions contemplated hereby in accordance with the terms hereof and (ii) is incapable of being cured or has not been cured prior to the Outside Date; provided, however, that the Company is not then in material breach of any representation, warranty or covenant under this Agreement;

 

(e)     by either party, if the Company Shareholder Meeting (including any adjournment or postponement thereof) has concluded, the Company’s shareholders have voted and the Shareholder Approval was not obtained; provided, however, that the right to terminate this Agreement pursuant to this Section 5.1(e) shall not be available to the Company if it has not materially complied with its obligations under Sections 4.10 and 4.11;

 

(f)     by Purchaser if prior to the Shareholder Meeting an Adverse Recommendation Change occurs;

 

(g)     by the Company, upon written notice to Purchaser, if at any time prior to receipt of the Shareholder Approval, the Company’s Board of Directors has determined to enter into a definitive agreement with respect to a Superior Proposal; provided, however, that the right to terminate this Agreement pursuant to this Section 5.1(g) shall not be available to the Company if it has not materially complied with its obligations under Section 4.10 and 4.11; or

 

(h)     by either party by written notice to the other party if, at any time there shall be any final and non-appealable Order that prohibits or restrains the Purchaser and/or the Company from consummating the Closing or the transactions contemplated hereby.

 

5.2     Termination Fee.  In the event that this Agreement is terminated pursuant to Section 5.1(f) or Section 5.1(g), the Company shall pay to the Purchaser immediately prior to the consummation of the transactions contemplated by such Superior Proposal the Termination Fee by wire transfer of immediately available funds to an account or accounts designated in writing by Purchaser. The Company acknowledges that the agreement contained in this Section 5.2 is an integral part of this Agreement and the transactions contemplated hereby. Notwithstanding anything to the contrary in this Agreement, in the event that Purchaser shall receive the Termination Fee, the receipt of the Termination Fee shall be deemed to be liquidated damages for any and all losses or damages suffered or incurred by Purchaser, any of its Affiliates, or any other Person in connection with this Agreement (and the termination hereof), the other Transaction Documents, the transactions contemplated hereby and thereby (and the abandonment thereof) or any matter forming the basis for such termination, and none of Purchaser, any of its Affiliates, or any other Person shall be entitled to bring or maintain any other claim, action or proceeding against the Company or any of its Affiliates arising out of this Agreement, any of the other Transaction Documents, any of the transactions contemplated hereby or thereby or any matters forming the basis for such termination.

 

5.3     Fees and Expenses. Except as expressly set forth in the Transaction Documents to the contrary, each party shall pay the fees and expenses of its advisers, counsel, accountants and other experts, if any, and all other expenses incurred by such party incident to the negotiation, preparation, execution, delivery and performance of this Agreement. The Purchaser shall pay all Transfer Agent fees, stamp taxes and other similar taxes and duties levied in connection with the delivery of any Securities to the Purchaser. 

 

 

 

30

 

 

5.4     Entire Agreement. The Transaction Documents, together with the exhibits and schedules thereto, contain the entire understanding of the parties with respect to the subject matter hereof and supersede all prior agreements and understandings, oral or written, with respect to such matters, which the parties acknowledge have been merged into such documents, exhibits and schedules.

 

5.5     Notices. Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of: (a) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number set forth on the signature pages attached hereto prior to 5:30 p.m. (New York City time) on a Trading Day, (b) the next Trading Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number set forth on the signature pages attached hereto on a day that is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading Day, (c) the second (2nd) Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service or (d) upon actual receipt by the party to whom such notice is required to be given. The address for such notices and communications shall be as set forth on the signature pages attached hereto.

 

5.6     Amendments; Waivers. No provision of this Agreement may be waived, modified, supplemented or amended except in a written instrument signed, in the case of an amendment, by the Company and the Purchaser or, in the case of a waiver, by the party against whom enforcement of any such waived provision is sought. No waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of any party to exercise any right hereunder in any manner impair the exercise of any such right.

 

5.7     Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted assigns. Neither the Company nor Purchaser may assign this Agreement or any rights or obligations hereunder without the prior written consent of the other party (other than by a merger of Purchaser). Notwithstanding the previous sentence, the Purchaser may assign this Agreement or any of its rights hereunder to one or more of its Affiliates without the consent of the Company; provided, however, that (i) the Purchaser’s rights under the Warrant may only be assigned to one (and not more than one) Person and (ii) Purchaser shall remain liable for Purchaser’s obligations hereunder. 

 

5.8     No Third-Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective successors and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person, except as otherwise set forth in Section 4.4.

 

 

 

31

 

 

5.9     Governing Law. All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by and construed and enforced in accordance with the internal Laws of the State of New York except to the extent Wisconsin law mandatorily applies, without regard to the principles of conflicts of law thereof. Each party agrees that all legal proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this Agreement and any other Transaction Documents (whether brought against a party hereto or its respective affiliates, directors, officers, shareholders, employees or agents) shall be commenced exclusively in the state and federal courts sitting in the City of New York. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the City of New York, borough of Manhattan for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of any of the Transaction Documents), and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper or is an inconvenient venue for such proceeding. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by Law.

 

5.10     Survival. The representations and warranties contained herein shall survive the Closing. The representations and warranties set forth in Section 3.1(aa) (Environmental Matters) shall survive the Closing until the date that is four (4) years after the Closing Date. The indemnification provided in Section 4.6(c) regarding Company Environmental Liabilities shall survive the Closing until the date that is six (6) years after the Closing Date.

 

5.11     Execution. This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party, it being understood that both parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission or by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or “.pdf” signature page were an original thereof.

 

5.12     Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their commercially reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter declared invalid, illegal, void or unenforceable.

 

 

 

32

 

 

5.13     Replacement of Securities. If any certificate or instrument evidencing any Securities is mutilated, lost, stolen or destroyed, the Company shall issue or cause to be issued in exchange and substitution for and upon cancellation thereof (in the case of mutilation), or in lieu of and substitution therefor, a new certificate or instrument, but only upon receipt of evidence reasonably satisfactory to the Company of such loss, theft or destruction. The applicant for a new certificate or instrument under such circumstances shall also pay any reasonable third-party costs (including customary indemnity) associated with the issuance of such replacement Securities.

 

5.14     Remedies. In addition to being entitled to exercise all rights provided herein or granted by Law, including recovery of damages, each of the Purchaser and the Company will be entitled to specific performance under the Transaction Documents. The parties agree that monetary damages may not be adequate compensation for any loss incurred by reason of any breach of obligations contained in the Transaction Documents and hereby agree to waive and not to assert in any action for specific performance of any such obligation the defense that a remedy at law would be adequate; provided, that as a condition to the Company seeking specific performance compelling the Purchaser to effect the Closing, all conditions to Purchaser’s obligation to effect the Closing have been satisfied and that the Company stands ready, willing and able to immediately consummate the Closing.

 

5.15     Payment Set Aside. To the extent that the Company makes a payment or payments to the Purchaser pursuant to any Transaction Document or the Purchaser enforces or exercises its rights thereunder, and such payment or payments or the proceeds of such enforcement or exercise or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside, recovered from, disgorged by or are required to be refunded, repaid or otherwise restored to the Company, a trustee, receiver or any other person under any Law (including, without limitation, any bankruptcy law, state or federal law, common law or equitable cause of action), then to the extent of any such restoration the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such enforcement or setoff had not occurred.

 

5.16     Saturdays, Sundays, Holidays, etc.     If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall not be a Business Day, then such action may be taken or such right may be exercised on the next succeeding Business Day.

 

 

 

33

 

 

5.17     Construction. The parties agree that each of them and/or their respective counsel has reviewed and had an opportunity to revise the Transaction Documents and, therefore, the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of the Transaction Documents or any amendments hereto. In addition, each and every reference to share prices and shares of Common Stock in any Transaction Document shall be subject to adjustment for reverse and forward stock splits, stock dividends, stock combinations and other similar transactions of the Common Stock that occur after the date of this Agreement. The use of the masculine, feminine or neuter gender or the singular or plural form of words used herein (including defined terms) shall not limit any provision of any Transaction Document. The terms “include,” “includes” and “including” are not intended to be limiting and shall be deemed to be followed by the words “without limitation” (whether or not they are in fact followed by such words) or words of like import. The term “or” has the inclusive meaning represented by the phrase “and/or.” Reference to a particular Person includes such Person’s successors and assigns to the extent such successors and assigns are permitted by the terms of any applicable agreement. Reference to a particular agreement (including this Agreement), document or instrument (other than those referred to in the Disclosure Schedule) means such agreement, document or instrument as amended or modified and in effect from time to time in accordance with the terms thereof. The terms “dollars” and “$” wherever used in any Transaction Document mean United States Dollars. The exhibits and schedules identified in any Transaction Document are incorporated into such Transaction Document by reference and made a part of such Transaction Document. The article, section, paragraph, exhibit and schedule headings contained in any Transaction Document are for reference purposes only and shall not affect in any way the meaning or interpretation of any Transaction Document. Unless the context otherwise requires, references in any Transaction Document to articles, sections, paragraphs, clauses, exhibits or schedules shall refer to those portions of such Transaction Document. The use in any Transaction Document of the terms “hereunder,” “hereof,” “hereto” and words of similar import shall refer to such Transaction Document as a whole and not to any particular article, section, paragraph or clause of, or exhibit or schedule to, such Transaction Document.

 

5.18     WAIVER OF JURY TRIAL. IN ANY ACTION, SUIT, OR PROCEEDING IN ANY JURISDICTION BROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY, THE PARTIES EACH KNOWINGLY AND INTENTIONALLY, TO THE GREATEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY ABSOLUTELY, UNCONDITIONALLY, IRREVOCABLY AND EXPRESSLY WAIVES FOREVER TRIAL BY JURY. 

 

 

(Signature Pages Follow)

 

 

 

34

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.

 

 

	
ZBB Energy corporation

 
	
Address for Notice:

	
By: /s/ Eric Apfelbach                                                                   

     Eric Apfelbach

     Chief Executive Officer

 
	
Attention: Chief Executive Officer

N93 W14475 Whittaker Way

Menomonee Falls, WI 53051

Fax: (262) 253-9822

	 	 
	
With a copy to (which shall not constitute notice):

 

 
	
K&L Gates, LLP

Attention: Mark Busch

214 N. Tryon Street, 47th Floor

Charlotte, NC 28202

Fax: (704) 353-3140 

 

 

	
SOLAR POWER, INC.

 
	
Address for Notice:

	
By:/s/ Xiahou, Min                                                                       

     Name: Xiahou, Min

     Title: Chief Executive Officer
	
Attention: Chief Executive Officer

3400 Douglas Boulevard, Suite 285

Roseville, CA 95661

Fax: (916) 771-3657

 

	     With a copy to (which shall not constitute notice):	
Shearman & Sterling

Attention: Shuang Zhao

12th Floor Gloucester Tower

15 Queen's Road Central

Hong Kong

Fax: (852) 2978 8099

 

 

 

 

 

EXHIBIT A

Form of Supply Agreement

 

(see attached) 

 

 

 

EXHIBIT B

Form of Certificate of Designation

 

(see attached) 

 

 

 

EXHIBIT C

Form of Warrant

 

(see attached) 

 

 

 

EXHIBIT D

Form of Governance Agreement

 

(see attached) 

 

 

  

EXHIBIT E

Wire Transfer Instructions

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00243-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00243-of-00352.parquet"}]]