Exhibit 2.1
MERGER AGREEMENT
THIS MERGER AGREEMENT ("Agreement") is entered into as of
January 23, 1998, among PHOTOCOMM, INC., an Arizona corporation
("Photocomm"), PHOTOCOMM ACQUISITION, INC., an Arizona
corporation ("PAI"), SILICON ENERGY CORPORATION, a California
corporation dba Utility Power Group ("UPG") and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇ and R. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, constituting all
of the holders of the capital stock of UPG (the "Shareholders").
R E C I T A L S:
A. The Shareholders hold all of the issued and outstanding
capital stock of UPG (the "UPG Stock").
B. UPG is in the business of manufacturing and marketing
solar photovoltaic electric power systems and products.
▇. ▇▇▇ is a wholly owned subsidiary of Photocomm, formed
solely for the purpose of enabling the transaction contemplated
by this Agreement, in which Photocomm will acquire all of the
issued and outstanding stock of UPG for cash and shares of
Photocomm Common Stock (as provided below) through a forward
subsidiary merger of UPG with and into PAI.
D. The Boards of Directors of Photocomm and UPG and the
Shareholders deem it advisable and in the best interests of their
respective corporations that UPG be merged with and into PAI
pursuant to the applicable laws of the States of Arizona and
California, on the terms and conditions set forth in this
Agreement.
E. The Shareholders are executing and delivering this
Agreement to induce Photocomm and PAI to enter into this
Agreement.
NOW, THEREFORE, in consideration of the premises, and the
mutual representations, warranties, covenants and agreements
hereinafter set forth, and each intending to be legally bound
hereby, the parties agree as follows:
ARTICLE I
MERGER
On the Closing Date (as defined below), UPG shall be merged
into PAI (the "Merger"), the separate corporate existence of UPG
shall cease, and PAI shall be the surviving corporation
("Surviving Corporation"). The Merger shall have the effects set
forth in A.R.S. Section 10-1106. Without limiting the generality
of the foregoing, concurrently with the Merger, and as of the
Closing Date, PAI shall succeed to, without other transfer, and
shall possess and enjoy, all the rights, privileges, immunities,
powers and franchises of both a public and a private nature, and
be subject to all the restrictions, disabilities and duties of
both UPG and PAI, and all property, real, personal and mixed, and
all debts due to either of said corporations on whatever account,
and all other interests of any kind belonging to either UPG or
PAI shall be thereafter deemed vested in PAI without further act
or deed; provided, however, that all rights of creditors and all
liens upon any property of either UPG or PAI shall be preserved
unimpaired, and all debts, liabilities and duties of said
corporations shall thereafter attach to PAI and may be enforced
against it to the same extent as if said debts, liabilities and
duties had been incurred or contracted by PAI.
ARTICLE II
CLOSING; MERGER CONSIDERATION
Section 2.1 Closing. The Closing ("Closing") of the
transactions contemplated by this Agreement shall take place at
the offices of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, P.A., ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, at 2:00 p.m., local time on January 23,
1998, or at such other time and place as the parties may agree in
writing (the "Closing Date").
Section 2.2 Approval of Plan; Filing of Articles. Prior
to the Closing, the Boards of Directors of UPG and PAI, the
Shareholders and the sole shareholder of PAI shall have approved
a plan of merger in the form attached to this Agreement as
Exhibit "A" (the "Plan of Merger"). At the Closing, articles of
merger, in the form attached to this Agreement as Exhibit "B"
(the "Articles of Merger"), shall be delivered by UPG and PAI to
the Arizona Corporation Commission for filing, such articles of
merger to be effective upon such filing on the Closing Date.
Section 2.3 Articles of Incorporation and Bylaws;
Officers and Directors. Following the Merger, the Articles of
Incorporation and Bylaws of PAI as in effect immediately prior to
the Closing Date shall continue in effect as the Articles of
Incorporation and Bylaws of PAI as the surviving corporation.
The officers and directors of PAI immediately prior to the
Closing Date shall continue as the officers and directors of PAI
following the Merger until their respective successors are duly
elected and qualified.
Section 2.4 Merger Consideration; Conversion of Shares.
As of the Closing Date, each then outstanding share of capital
stock of UPG shall be converted into the right to receive
.0628841 shares of Common Stock, $.10 par value, of Photocomm
(the aggregate of 400,000 shares of Photocomm Common Stock issued
in connection with the Merger shall be referred to herein as the
"Shares") and $0.0943262 in cash (the aggregate of $600,000 paid
in connection with the Merger shall be referred to herein as the
"Cash Payment"). Each share of the issued and outstanding stock
of PAI shall remain outstanding and represent a share of the
capital stock of the Surviving Corporation.
Section 2.5 Issuance of Shares and Cash Payment. At the
Closing, Photocomm shall deliver or cause to be delivered to the
Shareholders certificates representing the Shares and a certified
check or wire transfer in an amount equal to the Cash Payment.
The Cash Payment and the Shares shall be allocated among the
Shareholders pro rata, based on their ownership of common stock
of UPG immediately prior to the Merger, as set forth on
Schedule 3.4. The certificates evidencing the Shares shall
contain the legend set forth in the Investment Letter to be
delivered by the Shareholders at the Closing as described in
Section 6.1.11 below.
Section 2.6 Assumption of UPG Debt . The Surviving
Corporation shall assume the obligation to pay certain non-
interest bearing promissory notes of UPG to ▇▇▇▇▇▇ ▇▇▇▇▇ in the
amount of $160,000, ▇▇▇▇▇▇▇ ▇▇▇▇▇ in the amount of $11,715,
▇▇▇▇▇▇▇ ▇▇▇▇▇ in the amount of $1,650, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ in the
amount of $1,365 and ▇▇▇▇▇ ▇▇▇▇▇▇▇ in the amount of $1,600 (the
"UPG Notes"), in an amount not to exceed $176,330 (the "UPG
Debt").
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF UPG AND SHAREHOLDERS
Each of UPG and the Shareholders, jointly and severally,
hereby represent and warrant to Photocomm as of the date hereof
and as of the Closing Date as follows:
Section 3.1 UPG Stock; Title. Each of the Shareholders
holds of record and owns beneficially the number of shares of UPG
Stock set forth next to such Shareholder's name in Schedule 3.4,
free and clear of any restrictions on transfer (including any
restrictions under applicable security laws), Taxes, security
interests, liens, pledges, mortgages, charges, covenants,
Encumbrances, options, warrants, purchase rights, contracts,
commitments, equities, claims and demands. No such Shareholder
is a party to any option, warrant, purchase right or other
contract or commitment that could require such Shareholder to
sell, transfer or otherwise dispose of any of the UPG Stock owned
by such Shareholder (other than this Agreement). No such
Shareholder is a party to any voting trust, proxy or other
agreement or understanding with respect to the voting of any of
the UPG Stock.
Section 3.2 Organization. UPG is a corporation duly
incorporated, validly existing and in good standing under the
laws of the State of California, and has the requisite corporate
power and authority to own, use, operate or lease its assets as
UPG is now conducting its business, operations and affairs. UPG
has no subsidiaries (whether partially or wholly owned). The
Articles of Incorporation and Bylaws attached as Schedule 3.2(a)
and 3.2(b) are the true, correct and complete Articles of
Incorporation and Bylaws of UPG, as amended, not having been
amended, altered or repealed.
Section 3.3 Qualification. Except as set forth in
Schedule 3.3, UPG is duly qualified or licensed as a foreign
corporation to do business, and is in good standing, in each
jurisdiction where the character of its assets, or the nature of
its activities makes such qualification or license necessary,
except those jurisdictions, if any, in which the failure to so
qualify or be licensed would not have a material adverse effect
on the assets, or the results of operations or financial
condition of UPG.
Section 3.4 Capitalization. The authorized, issued and
outstanding shares of capital stock of UPG are as set forth on
Schedule 3.4. The outstanding shares as of the date of this
Agreement are owned of record and beneficially by the persons and
in the amounts set forth on Schedule 3.4, and such shares have
been validly authorized and issued, are fully paid and
nonassessable, have been issued in compliance with applicable
securities laws and are owned as listed on the Schedule 3.4, free
and clear of any security interests, liens, pledges, charges,
mortgages, encumbrances or rights of third parties. Except as
set forth on Schedule 3.4, (i) there are no equity securities of
any class of UPG, or any security convertible or exchangeable
into or exercisable for such equity securities, issued, reserved
for issuance or outstanding and (ii) there are no outstanding or
authorized warrants, options, calls, preemptive rights, purchase
rights, subscription rights, conversion rights, rights of
exchange, plans, commitments or agreements of any nature that
could require UPG to issue, deliver, sell, or otherwise cause to
become outstanding, or to transfer, any capital stock or other
equity securities of UPG. There are no outstanding or authorized
stock appreciation, phantom stock, profit participation, or
similar rights with respect to UPG. There are no voting trusts,
proxies, or other agreements or understandings with respect to
the voting, transfer or disposition of the capital stock of UPG.
Certificates have been issued with respect to the capital stock
of UPG in the form and denominations set forth in Schedule 3.4,
and no legend or other reference to any purported security
interest appears upon any certificate representing capital stock
of UPG. None of the securities of UPG has been issued, redeemed
or repurchased in violation of any law.
Section 3.5 Authorization.
3.5.1 Authority. UPG and the Shareholders have all
requisite power and authority to enter into and perform this
Agreement and to consummate the Merger and the transactions
contemplated hereby. The execution, delivery, consummation and
performance of this Agreement have been duly authorized and
approved by all necessary actions of the Board of Directors of
UPG and the Shareholders. This Agreement is a valid and binding
obligation of UPG and the Shareholders and is enforceable against
UPG and the Shareholders in accordance with its terms.
3.5.2 No Breach or Violation. Execution, delivery
and performance of this Agreement by UPG and the Shareholders,
and consummation of the transactions contemplated hereby, will
not lead to or cause a violation, breach, or default or result in
the termination of, or accelerate the performance required by, or
result in the creation or imposition of any Encumbrance (as
defined below), or result in the loss of any right or the
increase in any obligation under, whether by notice or lapse of
time or both, or otherwise conflict with any term or provision of
(a) UPG's Articles of Incorporation and By-laws, as amended,
(b) any note, bond, mortgage, contract, indenture, agreement,
lease, license or other instrument or obligation to which UPG or
the Shareholders are party or UPG, the Shareholders or any of
UPG's or the Shareholders' assets are bound, or (c) any court or
administrative order, writ or injunction or process, or any
permit, license, or consent decree held by UPG or the
Shareholders or to which UPG or the Shareholders are a party or
UPG, the Shareholders or any of UPG's or the Shareholders' assets
are bound.
Section 3.6 Financial Statements.
3.6.1 Schedules. Schedule 3.6.1 fairly presents
the assets, liabilities, financial condition and results of
operations of UPG at December 31, 1996 ( the "Financials Date")
and November 30, 1997 (the "Interim Date") and for the indicated
periods then ended, and such Schedule contains each of the
following statements of UPG (the "UPG Financial Statements"):
(a) the statement of income and loss for the twelve months ended
on the Financials Date and the eleven months ended on the Interim
Date, and (b) the balance sheet at the Financials Date and the
Interim Date.
3.6.2 Accuracy; Books and Records. The UPG
Financial Statements are correct, complete and in accordance with
the books and records of UPG in all material respects and fairly
present the results of operations and the financial position of
UPG for and as of the date(s) or period(s) covered thereby. The
UPG Financial Statements were prepared in accordance with
generally accepted accounting principles ("GAAP") applied on a
basis consistent with principles applied by UPG in prior years,
except where noted thereon and shall be so certified by the
President of UPG at the Closing. It is understood that the UPG
Financial Statements are unaudited, do not contain footnotes and
will be subject to customary year-end adjustments, which
adjustments, in the aggregate, will not materially and adversely
affect the financial position or results of operations of UPG set
forth in the UPG Financial Statements. The books of account,
minute books, stock record books and other records of UPG, all of
which have been made available to Photocomm and will be in the
possession of UPG at Closing, are complete and correct and have
been maintained in accordance with sound business practices and
GAAP. Without limiting the generality of the foregoing, the
minute books of UPG contain complete and accurate records of all
official meetings held of, and corporation action taken by, the
shareholders, the Board of Directors, and committees of the Board
of Directors of UPG, and no meeting of any such shareholders,
Board of Directors, or committee has been held for which minutes
have not been prepared and are not contained in such minute
books.
3.6.3 No Undisclosed Liabilities. UPG does not
have any liabilities or obligations of any nature, secured or
unsecured (absolute, accrued or unaccrued, liquidated or
unliquidated, executory, contingent or otherwise and whether due
or to become due), which were not adequately and completely
disclosed and reserved for in the UPG Financial Statements,
except for those liabilities and obligations of UPG which relate
to UPG or its assets or business and were incurred since the
Interim Date in the ordinary course of business and which have
been disclosed in writing to Photocomm in an updated
Schedule 3.6.1.
3.6.4 Absence of Changes. Other than as set forth
in Schedule 3.6.4, since the Interim Date there has not been, and
as of the Closing Date there will not be, any material adverse
change in the business, financial condition, operations, results
of operations, or future prospects of UPG. Without limiting the
generality of the foregoing, since the Interim Date:
3.6.4.1 UPG has not sold, leased,
transferred, or assigned any of its assets, tangible or
intangible, other than for a fair consideration in the ordinary
course of business;
3.6.4.2 UPG has not entered into any
agreement, contract, lease, or license (or series of related
agreements, contracts, leases, and licenses) either involving
more than $5,000 or outside the ordinary course of business;
3.6.4.3 no party (including UPG) has
accelerated, terminated, modified, or canceled any agreement,
contract, lease, or license (or series of related agreements,
contracts, leases, and licenses) involving more than $5,000 to
which UPG is a party or by which it or its property is bound;
3.6.4.4 UPG has not imposed any security
interest upon any of its assets;
3.6.4.5 UPG has not made any capital
expenditure (or series of related capital expenditures) either
involving more than $5,000 or outside the ordinary course of
business;
3.6.4.6 UPG has not made any capital
investment in, any loan to, or any acquisition of the securities
or assets of, any other person (or series of related capital
investments, loans, and acquisitions) either involving more than
$ 5,000 or outside the ordinary course of business;
3.6.4.7 UPG has not issued any note, bond,
or other debt security or created, incurred, assumed, or
guaranteed any indebtedness for borrowed money or capitalized
lease obligation;
3.6.4.8 UPG has not delayed or postponed
the payment of accounts payable and other liabilities outside the
ordinary course of business;
3.6.4.9 UPG has not declared, set aside, or
paid any dividend or made any distribution with respect to its
capital stock (whether in cash or in kind) or redeemed,
purchased, or otherwise acquired any of its capital stock;
3.6.4.10 UPG has not canceled, compromised,
waived, or released any right or claim (or series of related
rights and claims) either involving more than $5,000 or outside
the ordinary course of business;
3.6.4.11 UPG has not sold, leased or otherwise
disposed of, or granted any license or sublicense or other rights
under or with respect to, any Intellectual Property or
Technology, or received notice of termination of (i) any license,
maintenance, distribution, dealer, sales representative,
consulting, joint venture, credit or similar agreement or
(ii) any contract or transaction involving a total remaining
commitment by UPG of at least $5,000;
3.6.4.12 UPG has not experienced any damage,
destruction, or loss (whether or not covered by insurance) to its
property;
3.6.4.13 UPG has not made any loan to or repaid
any loan from, any of the Shareholders or their respective
affiliates, or entered into any other transaction with, or made
any payments or other distributions to, any of the Shareholders
or their respective affiliates, except for compensation in the
ordinary course of business and scheduled payments in accordance
with the terms of the notes comprising the UPG Debt;
3.6.4.14 UPG has not made any loan to, entered
into any other transaction with, or made any payments or other
contributions to, any of its directors, officers and employees
outside the ordinary course of business;
3.6.4.15 UPG has not granted any increase in the
compensation of any of its employees outside the ordinary course
of business or any increase in the compensation of its directors
or officers;
3.6.4.16 UPG has not made any other change in
employment terms for any of its directors, officers, and
employees outside the ordinary course of business;
3.6.4.17 UPG has not changed its accounting
principles, methods, practices or assumptions;
3.6.4.18 there has not been any other occurrence,
event, incident, action, failure to act, or transaction outside
the ordinary course of business involving UPG; and
3.6.4.19 UPG has not agreed or otherwise
committed to any of the foregoing.
3.6.5 UPG Debt. On the Closing Date, the
obligations of UPG with respect to the UPG Debt will not exceed
the amount the Surviving Corporation is obligated to assume
pursuant to Section 2.6 of this Agreement.
Section 3.7 Tangible Personal Property.
3.7.1 Title. UPG has good, valid and marketable
title to all of the tangible personal property used in its
business and reflected on the UPG Financial Statements and
underlying books and records (the "Tangible Personal Property"),
free and clear of all title defects, objections, liens,
mortgages, security interests, pledges, charges and encumbrances,
adverse claims, equities, or any other rights of others or other
adverse interests of any kind, including without limitation
leases, liens, pledges, restrictions, charges, claims, security
interests, encumbrances or other adverse claims of any kind
(collectively, "Encumbrances"), except as set forth on
Schedule 3.7.1.
3.7.2 Sufficiency; Condition. The Tangible
Personal Property, Leases, Intellectual Property, Technology,
Contracts and Licenses constitute all of the assets and rights
necessary for the conduct of UPG's business as presently
conducted and as presently proposed to be conducted. All of the
Tangible Personal Property is structurally sound with no material
defects, in good operating condition and repair, reasonable wear
and tear excepted, adequate and suitable for the uses to which it
is put, and there exists no condition which interferes with the
economic value or usefulness of any item of Tangible Personal
Property, except as set forth on Schedule 3.7.2. UPG has
received no notice that any of the Tangible Personal Property
fails to conform to all applicable laws, ordinances, codes, rules
and regulations relating to its construction, use, operation and
maintenance.
3.7.3 Equipment. Schedule 3.7.3 sets forth a
complete list and depreciation schedule in reasonable detail of
all UPG's equipment by manufacturer, model, functional use and
serial number.
3.7.4 Inventories. Set forth on Schedule 3.7.4 is
a true, correct and complete list of the inventories of UPG as of
the date of this Agreement and the Closing Date, including a
description and valuation thereof consisting of raw materials and
supplies, manufactured and purchased parts, goods in process, and
finished goods, all of which is merchantable and fit for the
purpose for which it was procured or manufactured, and none of
which is slow-moving, obsolete, damaged or defective, subject
only to the reserve for inventory writedown set forth on the face
of the most recent UPG Financial Statements (rather than on any
notes thereto) as adjusted for the passage of time through the
Closing Date in accordance with past custom and practice of UPG.
Section 3.8 Accounts Receivable. Set forth on
Schedule 3.8 is a complete and accurate list of all accounts
receivable of UPG as of the Interim Date, showing the name of
each account debtor, the amount due from each by invoice number
and date and the aging of each account. Except as set forth in
Schedule 3.8, UPG owns all of its accounts receivable free and
clear of all Encumbrances and all such accounts receivable arose
out of the sales of inventories or services in the ordinary
course of business and are collectible in the face value thereof
within 90 days of the date of the invoice, using normal
collection procedures, without set off or reduction, net of the
reserve for doubtful accounts as set forth on the face of the
most recent UPG Financial Statements, which reserve is adequate
and was calculated in accordance with past practices of UPG.
Section 3.9 Real Property; Leases. Neither UPG nor its
predecessors in interest have ever owned any real property.
Schedule 3.9 is a complete and accurate description of all real
property leases held by UPG, and each personal property lease
under which UPG's aggregate obligations under such lease exceed
$5,000 (the "Leases"). All of the real property leased by UPG
(the "Real Property") is, to the best of the Shareholders' and
UPG's knowledge, being used in compliance with all applicable
occupancy, land use and zoning laws and UPG has received no
notice of violation of any rules or regulations which relate to
the Real Property.
Section 3.10 Intellectual Property. Schedule 3.10 sets
forth a complete and accurate list of (a) each patent, patent
application and docketed invention, (b) each trademark, trade
name, and registration or application therefor, (c) each
copyright registration and application therefor and (d) each
license or licensing agreement, for each patent, patent
application, invention, trademark, trade name, copyright, trade-
secret, rights to know-how, processes, computer programs or use
of technology, in each of the foregoing cases owned, held or used
by UPG in its business (all of the foregoing, "Intellectual
Property"). With respect to the Intellectual Property, and with
respect to all other technology including but not limited to all
(i) research and development results, processes, trade secrets,
methods, operating techniques, know-how, algorithms, formulae,
specifications, drawings, designs, inventions, discoveries and
engineering information, (ii) specifications, standard operating
procedures and outlines of production, and (iii) quality control,
testing, operational, logistical, maintenance and other technical
procedures, data and information and technology held or employed
by UPG ("Technology"):
3.10.1 Except as set forth in Schedule 3.7.1,
UPG owns, free and clear of all Encumbrances, all right, title
and interest in the Intellectual Property and Technology. UPG is
not bound by or a party to any licenses, options, or agreements
of any kind relating to the Intellectual Property or the
Technology, and no third person or entity has any rights of any
kind relating to the Intellectual Property and Technology or to
the use, manufacture, sale or other exploitation of products or
services based thereon, except as set forth on Schedule 3.10. To
the best of the Shareholders' and UPG's knowledge, UPG's use of
the Intellectual Property and Technology does not conflict with,
infringe upon or violate any patent, patent application,
trademark, trade name, copyright or any pending application
relating thereto, or any trade secret, know-how, programs or
processes or other intellectual property right of any third
person or entity.
3.10.2 UPG and the Shareholders have no
knowledge that any third person or entity is infringing on any
Intellectual Property or Technology.
3.10.3 UPG has taken commercially reasonable
security measures to protect the secrecy, confidentiality, and
value of the portions of Intellectual Property and Technology
which constitute trade secrets (the "Trade Secrets"), and any
other persons who have knowledge of or access to information
relating to such Trade Secrets have been put on notice and, if
appropriate, have entered into agreements that the Trade Secrets
are propriety to UPG and are not to be divulged (except as
authorized by UPG) or misused.
3.10.4 Upon consummation of the Merger, UPG
will be and remain vested with all right, title and interest, and
rights and authority to use all of the Intellectual Property and
Technology without the necessity of obtaining the consent of any
person or entity or taking any other action whatsoever.
Section 3.11 Computer Systems and Software. Schedule 3.11
sets forth a complete and accurate list of all (i) computer
programs (including operational and applications software and
computer source and object codes), firmware, leases, computer
databases, and related documentation, developed or used for any
purpose related to UPG's business or assets and (ii) computer
system hardware used for any purpose related to UPG's business or
assets.
Section 3.12 Contracts and Obligations.
3.12.1 Identification. Schedule 3.12 includes an
accurate and complete list as of the date hereof and as of the
Closing Date, of all material contracts (written or oral) to
which UPG is a party or by which it or any of its assets are
bound (collectively, the "Contracts"), including but not limited
to (a) agreements for the purchase or sale of tangible personal
property for an amount in excess of $5,000 or real property,
(b) loan or credit agreements, (c) guaranties and indemnities,
(d) distributor or dealer agreements, (e) partnership or joint
venture agreements, (f) agreements to perform services or supply
product or material to third parties, (g) stock subscription
agreements, stock option plans or other agreements with respect
to the ownership or acquisition of the capital stock of UPG,
(h) employment, independent contractor or consulting agreements,
(i) other agreements with present or former directors, officers
or employees of UPG, (j) acquisition documents pursuant to which
other companies or their assets were purchased or acquired by
UPG, or companies or assets owned by UPG were sold, and (k) each
vendor agreement under which UPG's aggregate obligation under
such agreement exceeds $5,000. Schedule 3.12 identifies each
Contract by the parties thereto and the date, subject matter and
term thereof.
3.12.2 Full Force and Effect. All Contracts are, to
the best of the Shareholders' and UPG's knowledge, valid and
binding upon UPG and are valid and binding on each other party
thereto. Upon consummation of the Merger, UPG will be and remain
vested with all rights, title and interest it currently holds
under the Contracts without the necessity of obtaining the
consent of any person or entity or taking any action whatsoever.
3.12.3 No Default. With respect to each of the
Contracts, neither UPG, nor, to the best of the Shareholders' and
UPG's knowledge, any other party thereto, is in breach thereof or
default thereunder, and, to the best of the Shareholders' and
UPG's knowledge, there does not exist any event, condition or
omission (including, without limitation the execution, delivery
and performance of this Agreement) which would constitute such
breach or default (whether by lapse of time or notice or both),
except for such breaches, defaults and events as to which
requisite waivers or consents have been obtained.
Section 3.13 Compliance with Laws.
3.13.1 Legal Requirements . Except as set forth in
Schedule 3.13.1:
3.13.1.1 UPG, and its predecessors and
affiliates, is in full compliance with all laws that are or were
applicable to it or to the conduct or operation of its business
or the ownership or use of any of its assets, except where the
failure to be in compliance has not had and is not expected to
have, a material adverse effect on UPG's business;
3.13.1.2 UPG has not received any notice or other
communication (oral or written) from any governmental body or any
other person regarding, and UPG and the Shareholders have no
knowledge of, any actual, alleged, or potential violation of, or
failure to comply with, any law, or any obligation on the part of
UPG to undertake, or to bear all or any portion of the cost of,
any remedial action of any nature.
3.13.2 Governmental Authorizations . Except as
set forth in Schedule 3.3, Schedule 3.13.2 contains a complete
and accurate list of each authorization of a governmental body
that is material to UPG's business. Each such authorization (the
"Governmental Authorizations") is valid and in full force and
effect and will remain in full force and effect following the
consummation of the transactions contemplated by this Agreement,
without any consent of, filing with, or notice to any
governmental body. Neither UPG nor any Shareholder has received
any notice or other communication from any governmental body or
any other person regarding, and UPG and the Shareholders have no
knowledge of, any actual, alleged, or potential (i) violation of
or failure to comply with any term or requirement of any
Governmental Authorization, or (ii) any revocation, withdrawal,
suspension, cancellation, or modification to any Governmental
Authorization.
Section 3.14 Taxes. As used in this Agreement, "Taxes"
and all derivations thereof means any federal, state, local or
foreign income, gross receipts, license, payroll, employment,
excise, severance, stamp, occupation, premium, windfall profits,
environmental, customs, duties, capital stock, franchise,
profits, withholding, social security (or similar), unemployment,
disability, real property, personal property, sales, use, ad
valorem, transfer, registration, value added, alternative or add-
on minimum, estimated, or other tax of any kind whatsoever,
including any interest, penalty, or addition thereto. The term
"Tax Returns" shall include all federal, state, local and foreign
returns, declarations, statements, reports, schedules, and
information returns required to be filed with any taxing
authority in connection with any Tax or Taxes.
3.14.1 Tax Returns. Except as set forth on Schedule
3.14.1, UPG has filed all Tax Returns that it was required to
file. All such Tax Returns were correct and complete in all
respects. All Taxes owed by UPG (whether or not shown on any Tax
Return) have been paid. UPG currently is not the beneficiary of
any extension of time within which to file any Tax Return. No
claim has ever been made by an authority in a jurisdiction where
UPG does not file Tax Returns that it is or may be subject to
taxation by that jurisdiction. There are no security interests
on any of the assets of UPG that arose in connection with any
failure (or alleged failure) to pay any Tax.
3.14.2 Withholding. UPG has withheld and paid all
Taxes required to have been withheld and paid in connection with
amounts paid or owing to any employee, independent contractor,
creditor, stockholder, or other third party.
3.14.3 Tax Disputes. No Shareholder or director or
officer (or employee responsible for Tax matters) of UPG expects
any authority to assess any additional Taxes for any period for
which Tax Returns have been filed. There is no dispute or claim
concerning any Tax liability of UPG either (i) claimed or raised
by any authority in writing or (ii) as to which UPG or any
Shareholder has knowledge based upon personal contact with any
agent of such authority. Schedule 3.14.3 lists all federal,
state, local, and foreign income Tax Returns filed with respect
to UPG for taxable periods ended on or after December 31, 1992,
indicates those Tax Returns that have been audited, and indicates
those Tax Returns that currently are the subject of audit. UPG
has delivered to Photocomm correct and complete copies of all
income Tax Returns, examination reports, correspondence between
UPG and any Tax authority, and statements of deficiencies
assessed against or agreed to by any of the Company and its
Subsidiaries since December 31, 1992.
3.14.4 Waivers and Extensions. UPG has not waived
any statute of limitations in respect of Taxes or agreed to any
extension of time with respect to a Tax assessment or deficiency.
3.14.5 Specific Code Provisions. UPG has disclosed
on its United States federal income Tax Returns all positions
taken therein that could give rise to a substantial
understatement of federal income Tax within the meaning of Code
Sec. 6662. UPG is not a party to any Tax allocation or sharing
agreement. UPG (i) has not been a member of an affiliated group
filing a consolidated federal income Tax Return and (ii) has no
liability for the Taxes of any person (other than UPG) under
Treas. Reg. Section 1.1502-6 (or any similar provision of state,
local, or foreign law), as a transferee or successor, by
contract, or otherwise.
3.14.6 Tax Information. Schedule 3.14.6 sets forth
the following information with respect to UPG as of the most
recent practicable date (as well as on an estimated pro forma
basis as of the Closing giving effect to the consummation of the
transactions contemplated hereby): (i) the tax basis of UPG in
its assets; (ii) detail of any assets or liabilities relating to
Taxes; (iii) the amount of any net operating loss, net capital
loss, unused investment or other credit, unused foreign tax, or
excess charitable contribution allocable to UPG; and (iv) the
amount of any deferred gain or loss allocable to UPG arising out
of any deferred intercompany transaction.
3.14.7 Unpaid Taxes. The unpaid Taxes of UPG
(i) did not, as of the Financials Date, exceed the reserve for
tax liability (rather than any reserve for deferred Taxes
established to reflect timing differences between book and Tax
income) set forth on the face of the UPG Financial Statements
(rather than in any notes thereto) and (ii) do not exceed that
reserve as adjusted for the passage of time through the Closing
Date in accordance with the past custom and practice of UPG in
filing its Tax Returns. No disclosure made by UPG or any
Shareholder on any of the Schedules attached hereto shall limit
or otherwise affect the Shareholders indemnification obligations
under Article 7 with respect to unpaid Taxes of UPG hereunder.
Section 3.15 Employees; Compensation; Labor.
3.15.1 Employees; Independent Contractors. Schedule
3.15.1 sets forth all employee records of UPG, which contain
complete and accurate records of the names of all employees of
UPG, the current level of compensation paid to each, and all
accrued vacation, severance pay, sick leave and other benefits
payable in connection with such employees. Except as set forth
on Schedule 3.15.1, there are no written or oral contracts of
employment, and no written or oral representations or warranties
of continued employment or engagement with respect to UPG's
business have been made by UPG to any of its employees or
independent contractors. All of UPG's employees are "at will"
employees and may be terminated by UPG at any time, without
liability or obligation except the payment of normal compensation
accrued up to the time of termination of employment.
3.15.2 Compliance With Law. In relation to its
employees, both present and former, UPG has, to the best of its
and the Shareholders' knowledge: (i) complied with all
obligations imposed on it by all statutes, agreements,
regulations and codes of conduct relevant to the relations
between it and its employees; (ii) maintained adequate and
suitable records regarding the service of its employees for
purposes of determining employee benefits due; and (iii) paid all
income tax required by the Internal Revenue Code by applicable
state and local law, and payments due for social security
contributions (including the employer's contributions), from
salaries, wages and bonuses paid by UPG, and complied with all
withholding requirements, and maintained proper records in
respect of the foregoing.
3.15.3 Labor Relations. To the best of UPG's and
the Shareholders' knowledge, no executive, key employee, or group
of employees has any plans to terminate employment with UPG. UPG
is not a party to or bound by any collective bargaining
agreement, nor has it experienced any strikes, grievances, claims
of unfair labor practices, or other collective bargaining
disputes. UPG has not committed any unfair labor practice. UPG
and the Shareholders have no knowledge of any organizational
effort presently being made or threatened by or on behalf of any
labor union with respect to employees of UPG.
3.15.4 Employee Claims. To the best of UPG's and
the Shareholders' knowledge, no present or former employee of UPG
has any claim against UPG (whether under federal or state law)
under any employment agreement, or otherwise, including but not
limited to, on account of or for (a) overtime pay, other than
overtime pay for the current payroll period, (b) wages or salary
for any period other than the current payroll period, or
(c) vacation time off other than that earned with respect to the
previous twelve (12) months, except as set forth on
Schedule 3.15.4.
Section 3.16 Employee Benefit Plans. Except as described
on Schedule 3.16, UPG does not currently sponsor or maintain and
has not at any time sponsored or maintained any qualified or
nonqualified "employee pension benefit plan" as that term is
defined in Section 3(2) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"). UPG does not
currently contribute to and is not currently obligated to
contribute to, and has not at any time contributed to or been
obligated to contribute to any multi-employer plan as that term
is defined in Section 4001(a)(3) of ERISA. None of UPG nor any
affiliated company of UPG has incurred or will incur by reason of
any relationship presently or heretofore maintained, or any act
or omission occurring or existing prior to the Closing, any
liability: (a) to the Pension Benefit Guaranty Corporation
pursuant to the provisions of Title IV of ERISA, (b) to any multi-
employer plan, as that term is defined in Section 4001 (a) (3) of
ERISA or (c) to any taxing authority by reason of the operation
or existence of any employee benefit plan. UPG has not at any
time participated in any transaction involving the assets of any
employee benefit plan (regardless by whom sponsored) which has
given rise or will give rise to a liability which could be
asserted against UPG pursuant to either Section 502(i) of ERISA
or Sections 4975(a) and (b) of the Internal Revenue Code of 1986,
as amended (the "Code"). UPG has fully disclosed in writing to
Photocomm all of the plans, funds, policies, programs,
arrangements or understandings sponsored or maintained by UPG
pursuant to which any employee of UPG (or any dependent or
beneficiary of any such employee) might be or become entitled to
(1) retirement benefits; (2) severance or separation from service
benefits; (3) incentive, performance, stock, share appreciation
or bonus awards; (4) health care benefits; (5) disability income
or wage continuation benefits; (6) supplemental unemployment
benefits; (7) life insurance, death or survivors benefits;
(8) accrued sick pay or vacation pay; (9) any type of benefit
offered under any arrangement subject to characterization as an
"employee welfare benefit plan" within the meaning of
Section 3(3) of ERISA; or (10) benefits of any other type offered
through any arrangement that could be characterized as providing
for additional compensation or fringe benefits. As to any plan,
fund, policy, program, arrangement or understanding identified by
UPG, all of the following are true: (1) all amounts due as
contributions, insurance premiums and benefits to the date hereof
have been fully funded and paid by UPG, and there are no unfunded
liabilities on a termination cost basis with respect to any such
plan, fund, policy, program, arrangement or understanding;
(2) all applicable requirements of law have been observed in all
material respects with respect to the operation thereof, and all
material reporting and disclosure requirements have been timely
satisfied; (3) UPG and the Shareholders are not aware of any
claim or demand by any employee (or beneficiary or dependent of
any employee) for benefits, or by any taxing authority for taxes
or penalties, which has not been satisfied in full or which may
be or become subject to litigation or arbitration; and (4) each
of the foregoing that is an "employee benefit pension plan"
within the meaning of Section 3(2) of ERISA and that is intended
to be qualified under Section 401(a) of the Code has received a
favorable determination letter from the Internal Revenue Service
and UPG and the Shareholders are not aware of any circumstances
likely to result in revocation of any such favorable
determination letter.
Section 3.17 Environmental, Health and Safety Matters.
3.17.1 Definitions.
3.17.1.1 "Environmental Claim" means any claim
(including, but not limited to, any claim under CERCLA), action ,
cause of action, investigation or notice by any person, entity or
governmental authority alleging potential liability (including,
but not limited to, potential liability for investigatory costs,
assessment costs, cleanup costs, response costs, natural
resources damages, property damages, personal injuries, or
penalties) arising out of, based on or resulting from (i) the
release by UPG into the environment of any Hazardous Materials at
any location, whether or not owned by UPG, (ii) the presence of
any Hazardous Materials at any location owned or leased by UPG or
(iii) circumstances forming the basis of any liability under or
any violation of any Environmental Law.
3.17.1.2 "Environmental Laws" means all federal,
state, local or foreign laws (including common law), statutes,
codes, ordinances, rules and regulations, orders and decrees
relating to pollution or protection of human health or the
environment (including, but not limited to, ambient air, surface
water, groundwater, land surface or subsurface strata), public
health and safety or employee health and safety, including,
without limitation, laws, statutes, codes, ordinances, rules and
regulations, orders and decrees relating to emissions,
discharges, releases or threatened releases of Hazardous
Materials, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or
handling of Hazardous Materials.
3.17.1.3 "Hazardous Materials" means (i) any
substance, material or waste defined or characterized as
hazardous, extremely hazardous, toxic or dangerous within the
meaning of any Environmental Law, (ii) any substance, material or
waste classified as a contaminant or pollutant under any
Environmental Law or (iii) any other substance (including, but
not limited to, petroleum), material or waste, the manufacture,
processing, distribution, use, treatment, storage, placement,
disposal, removal or transportation of which is subject to
regulation under any Environmental Law.
3.17.2 Compliance with Environmental Laws. Except
as set forth in Schedule 3.17, UPG's business and the Real
Property have been prior to the date hereof, and continue to be,
owned or leased, as the case may be, and operated by UPG in
compliance with all applicable Environmental Laws.
3.17.3 Environmental Claims. Except as set forth in
Schedule 3.17, neither UPG nor the Shareholders have received
notice from any person, entity, or governmental authority of any
Environmental Claim that is currently pending or threatened
against UPG or that in any way relates to the Real Property.
3.17.4 Activities. Except as set forth in
Schedule 3.17, there are no past or present actions, activities,
circumstances, conditions, events or incidents (including, but
not limited to, the release, emission, discharge, presence, or
disposal of any Hazardous Material) that are reasonably likely to
form the basis of any Environmental Claim against UPG or the
Shareholders or the Real Property, or to the best of UPG's and
the Shareholders' knowledge, any person or entity whose liability
for such an Environmental Claim UPG has or may have retained or
assumed either contractually or by operation of law.
3.17.5 Licenses and Permits. Schedule 3.17
identifies all material permits, licenses, certifications,
consents, exemptions, approvals and other authorizations
currently held by UPG pursuant to applicable Environmental Laws
and UPG is in compliance in all material respects with the terms
thereof.
3.17.6 Investigation and Cleanup. Except as set
forth in Schedule 3.17, UPG and the Shareholders have not
received notice or otherwise obtained knowledge that any Real
Property or real property previously owned or leased by UPG is
listed or proposed for listing on the National Priorities List
created pursuant to CERCLA, or on the CERCLIS or any similar
state, local or other list of sites potentially requiring
investigation or cleanup.
3.17.7 Disposition. Except as set forth in
Schedule 3.17, UPG has not transported or arranged for the
transportation of any Hazardous Materials to any location which
is listed on the National Priorities List, the CERCLIS or any
similar state list, nor received notice or otherwise obtained
knowledge of pending or threatened claims as a result of
transporting, disposing or arranging to transport or dispose
Hazardous Materials to any location.
3.17.8 Underground Tanks. Schedule 3.17 identifies
all underground and aboveground storage tanks, and the capacity
and contents of such tanks, located on the Real Property.
3.17.9 Asbestos. Except as set forth in
Schedule 3.17, there is no asbestos containing material located
in any building, building component, structure or office space on
the Real Property in any quantity or of such type that would give
rise to any material liability or remediation or removal
obligation under any Environmental Law upon the maintenance,
repair, remodeling, renovation or demolition of any such building
or improvement.
3.17.10 PCBs and Formaldehyde. Except as set forth
in Schedule 3.17, no polychlorinated biphenyls (PCBs) are used,
disposed of, stored or otherwise present on the Real Property and
no formaldehyde is contained in any of the products manufactured
by UPG, in each case with such exceptions as are not reasonably
likely to give rise to any liability under any Environmental Law
that is material to UPG's business.
3.17.11 Reports. All written reports and studies
(including, but not limited to, any site assessment or
environmental, health or safety audit report) obtained by or in
the possession of UPG with respect to any of the matters referred
to in this Section 3.17 are identified in Schedule 3.17. UPG has
heretofore provided to Photocomm correct and complete copies of
all such reports and studies.
3.17.12 Testing. Neither the performance of nor
failure to perform environmental testing on the Real Property by
or on behalf of Photocomm will negate or affect the
representations or warranties or agreement of UPG and the
Shareholders to indemnify contained herein. UPG has remedied all
environmental contamination found as a result of any
environmental tests performed by or on Photocomm's behalf.
Section 3.18 Insurance. UPG has maintained and now
maintains insurance on its assets and businesses covering
property damage and loss of income by fire or other casualty, as
well as insurance protection against liabilities, claims and
risks, as set forth on Schedule 3.18. UPG has provided Photocomm
an opportunity to inspect all policies of insurance currently
maintained by UPG. All such policies are in full force and
effect, and UPG has not done or omitted to do or suffered to be
done anything which has or might render the policies void or
voidable. There are no claims pending under any of the insurance
policies, and UPG and the Shareholders are not aware of any
circumstances likely to give rise to any claim under any such
policies.
Section 3.19 Litigation.
3.19.1 Litigation Pending or Threatened. Except as
set forth on Schedule 3.19, there are no claims, actions, suits,
hearings, arbitrations, disputes, proceedings (public or private)
or governmental investigations pending or threatened, against or
affecting UPG, the Shareholders or UPG's assets or business, at
law or in equity, before or by any Federal, state, municipal or
other governmental or non-governmental department, commission,
board, bureau, agency, court or other instrumentality, or by any
private person or entity, there is no basis for any such action,
suit or proceeding, and there are no existing or threatened,
orders, judgments or decrees of any court or governmental agency
affecting UPG, the Shareholders or any of UPG's assets or
business.
3.19.2 This Transaction. There are no legal,
administrative, arbitration or other proceedings or governmental
investigations pending or threatened, against UPG or the
Shareholders which seek to enjoin or rescind the transactions
contemplated by this Agreement or otherwise prevent UPG or the
Shareholders from complying with the terms and provisions of this
Agreement.
Section 3.20 Third Party Consents. All approvals,
authorizations, certificates and consents of all third parties
and governmental authorities necessary or required to effect the
Merger and the transactions contemplated by this Agreement and to
cause the Surviving Corporation to be and remain vested upon
consummation of the Merger with all UPG's assets and other
rights, title and interests it currently holds, where the failure
to obtain any such approval, authorization, certificate or
consent would have a material adverse effect on the assets or
financial condition of UPG or the effectiveness of the Merger,
have been obtained and are in full force and effect (the
"Consents and Approvals").
Section 3.21 Brokers. No broker or finder has acted for
UPG or the Shareholders in connection with this Agreement or the
transactions contemplated hereby. Neither UPG nor the
Shareholders have become obligated to pay any fee or commission
to any broker, finder, investment banker or other intermediary in
connection with the transactions contemplated by this Agreement.
Section 3.22 Customers and Suppliers. A list of all
customers and suppliers of UPG is set forth on Schedule 3.22.
Other than Siemens Solar, no single supplier (singularly a
"Supplier" and collectively "Suppliers") of raw materials to UPG
is of material importance to UPG. The relationships of UPG with
its material customers and its Suppliers are good commercial
working relationships. No material customer or Supplier (a) has
canceled or threatened in writing to cancel or otherwise modify
its relationship with UPG, or (b) to the best of the
Shareholders' and UPG's knowledge, intends to cancel or otherwise
modify its relationship with UPG. Neither the Merger nor the
transactions contemplated by this Agreement will, to the best of
the Shareholders' and UPG's knowledge, adversely affect the
relationship of PAI as successor to the UPG business with any
such Suppliers or material customers.
Section 3.23 Disclosure. No representation or warranty of
UPG or the Shareholders in this Agreement, including the Exhibits
and Schedules attached hereto, omits to state a material fact
necessary to make the statements herein or therein, in light of
the circumstances in which they were made, not misleading. No
notice given pursuant to this Agreement when taken together with
the disclosure described in the preceding sentence will contain
any untrue statement or omit to state a material fact necessary
to make the statements therein or in this Agreement, in light of
the circumstances in which they were made, not misleading.
Neither UPG nor the Shareholders have any knowledge of any fact
that has specific application to UPG (other than general economic
or industry conditions) and that materially and adversely affects
the assets or the business of UPG, or the prospects, financial
condition, or results of operations of UPG that has not been set
forth in this Agreement, including the Exhibits and Schedules
attached hereto.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PHOTOCOMM
Photocomm hereby represents and warrants to UPG, as of the
date hereof, and as of the Closing Date, except as set forth on a
Schedule of Exceptions attached hereto as Schedule 4, as follows:
Section 4.1 Organization. Photocomm is a corporation
duly incorporated, validly existing and in good standing under
the laws of Arizona, and has the requisite corporate power and
authority to own, use, operate or lease its assets as Photocomm
is now conducting its business, operations and affairs. PAI is a
corporation duly incorporated, validly existing and in good
standing under the laws of the State of Arizona.
Section 4.2 Qualification. Photocomm is duly qualified
or licensed as a foreign corporation to do business, and is in
good standing, in each jurisdiction where the character of its
assets, or the nature of its activities makes such qualification
or license necessary, except those jurisdictions, if any, in
which the failure to so qualify or be licensed would not have a
material adverse effect on the assets, or the results of
operations or financial condition of Photocomm.
Section 4.3 The Shares. When issued at the Closing, the
Shares shall be duly authorized, validly issued, fully paid and
non-assessable, free and clear of any liens, pledges or
encumbrances of any kind except for the restrictions imposed on
their subsequent sale or offer to sell imposed by the Securities
Act or applicable state laws or regulations.
Section 4.4 Corporate Authorization.
4.4.1 Authority. Photocomm and PAI each have all
requisite corporate power and authority to enter into and perform
this Agreement. PAI has all requisite corporate power and
authority to consummate the Merger. This Agreement is a valid
and binding obligation of Photocomm and PAI, enforceable against
each of them in accordance with its terms.
4.4.2 No Breach or Violation. Execution, delivery
and performance of this Agreement by Photocomm and PAI and
consummation of the transactions contemplated hereby will not
lead to or cause a violation, breach, or default or result in the
termination of, or accelerate the performance required by, or
result in the creation or imposition of any Encumbrance, or
result in the loss of any right or the increase in any obligation
under, whether by notice or lapse of time or both, or otherwise
conflict with any term or provision of (a) Photocomm's or PAI's
Articles of Incorporation and By-laws, as amended, (b) any note,
bond, mortgage, contract, indenture, agreement, lease, license or
other instrument or obligation to which Photocomm is a party or
Photocomm or any of its assets is bound, or (c) any court or
administrative order, writ or injunction or process, or any
permit, license or consent decree to which Photocomm is a party
or is bound.
Section 4.5 Brokers. No broker or finder has acted for
Photocomm in connection with this Agreement or the transactions
contemplated hereby. Photocomm has not paid or become obligated
to pay any fee or commission to any broker, finder, investment
banker or other intermediary in connection with the transactions
contemplated by this Agreement.
Section 4.6 Litigation.
4.6.1 Litigation Pending or Threatened. Except as
set forth on Schedule 4, there are no claims, actions, suits,
hearings, arbitrations, disputes, proceedings (public or private)
or governmental investigations pending or threatened, against or
affecting Photocomm or its assets or business, at law or in
equity, before or by any federal, state or municipal or other
governmental or non-governmental department, commission, board,
bureau, agency, court or other instrumentality, or by any private
person or entity. There is no basis for any such action, suit or
proceeding, and there are no existing or threatened, orders,
judgments or decrees of any court or governmental agency
affecting Photocomm or any of its assets or businesses.
4.6.2 This Transaction. Except as set forth on
Schedule 4, there are no legal, administrative, arbitration or
other proceedings or governmental investigations pending or
threatened, against Photocomm which seek to enjoin or rescind the
transactions contemplated by this Agreement or otherwise prevent
Photocomm from complying with the terms and provisions of this
Agreement.
ARTICLE V
COVENANTS
Section 5.1 General. Each of the parties will use his or
its best efforts to take all action and to do all things
necessary, proper, or advisable in order to consummate and make
effective the transactions contemplated by this Agreement
(including satisfaction, but not waiver, of the closing
conditions set forth in Article VI below).
Section 5.2 Notices and Consents. The Shareholders will
cause UPG to give any notices to third parties and governmental
bodies, and use their best efforts to obtain any third-party and
governmental body consents, that Photocomm may request in
connection with the transactions contemplated by this Agreement.
Section 5.3 Operation of Business. Neither UPG nor the
Shareholders will cause or permit UPG to engage in any practice,
take any action, enter into any transaction or experience any
consequences outside the ordinary course of business. Without
limiting the generality of the foregoing, neither UPG nor the
Shareholders will cause or permit UPG to, engage in any practice,
take any action, enter into any transaction or experience any
consequences of the sort described in Section 3.6.4 above. The
Shareholders will promptly notify Photocomm in writing of the
occurrence of any of the foregoing.
Section 5.4 Preservation of Business; Maintenance of
Insurance. The Shareholders will cause UPG to keep its
respective assets and business substantially intact, including
all present goodwill, operations, physical facilities, working
conditions, and relationship with lessors, licensors, suppliers,
customers, and employees. The Shareholders will cause UPG to
maintain all policies of insurance set forth on Schedule 3.18.
Section 5.5 Access to Information. UPG shall, and the
Shareholders will cause UPG to, permit representatives of
Photocomm to have full access at all reasonable times, to all
premises, properties, personnel, books, records (including Tax
records), contracts, and documents of or pertaining to UPG.
Without limiting the generality of the foregoing, Photocomm shall
be permitted to conduct a due diligence examination of UPG's
business, assets and liabilities, customer base, financial
records and statements, facilities, employee relations,
regulatory compliance and any other matters relating to the
financial condition, operations and prospects of UPG's business
and to discuss the foregoing with such of its personnel and third
persons, including but not limited to directors, officers,
employees, attorneys, accountants, customers and suppliers, as
Photocomm considers necessary or appropriate for purposes of a
full due diligence investigation. UPG shall, and the
Shareholders shall cause UPG to, use its best efforts to
cooperate with and assist Photocomm's due diligence
investigation.
Section 5.6 Non-Solicitation. UPG will not (and the
Shareholders will not cause or permit UPG to) directly or
indirectly (i) solicit, initiate, or encourage the submission of
any proposal or offer from any person relating to the acquisition
of any capital stock or other voting securities, or any
substantial portion of the assets of, UPG (including any
acquisition structured as a merger, consolidation, or share
exchange) or (ii) participate in any discussions or negotiations
regarding, furnish any information with respect to, assist or
participate in, or facilitate in any other manner any effort or
attempt by any person to do or seek any of the foregoing. None
of the Shareholders will vote their shares of capital stock of
UPG in favor of any such acquisition. UPG and the Shareholders
will notify Photocomm immediately if any person makes any
proposal, offer, inquiry, or contact with respect to any of the
foregoing.
Section 5.7 Further Assurances. From time to time after
the Closing, UPG and the Shareholders will, at Photocomm's
expense, execute and deliver, or cause to be executed and
delivered, such documents to Photocomm as Photocomm may
reasonably request, and from time to time after the Closing,
Photocomm will, at its own expense, execute and deliver such
documents to UPG and the Shareholders as they may reasonably
request, in order to more effectively consummate the transactions
contemplated by this Agreement. Each of the Shareholders, UPG
and Photocomm shall use their best efforts, promptly after the
date hereof, to comply with all Federal, state, local and foreign
laws and regulations and to obtain all necessary governmental
authorizations, approvals, permits, licenses and waivers, with
regard to the transactions contemplated by this Agreement.
Section 5.8 Press Releases and Public Announcements. No
party shall issue any press release or make any public
announcement relating to the subject matter of this Agreement
prior to the Closing without the prior written approval of
Photocomm and UPG; provided, however, that any party may make any
public disclosure it believes in good faith is required by
applicable law or any listing or Nasdaq agreement or rules
concerning its publicly-traded securities (in which case the
disclosing party will use its reasonable best efforts to advise
the other party prior to making the disclosure).
Section 5.9 Confidentiality.
5.9.1 Shareholder's Covenant. Each Shareholder
will treat and hold as such all of the Confidential Information,
refrain from using any of the Confidential Information except in
connection with this Agreement, and deliver promptly to Photocomm
or destroy, at the request and option of Photocomm, all tangible
embodiments (and all copies) of the Confidential Information
which are in his, her or its possession. Each Shareholder agrees
to safeguard any such Confidential Information using measures
that are equal to the standard of protection he, her or it uses
to protect its own confidential information of comparable value,
but in no event less than reasonable care. In the event that any
Shareholder is requested or required to disclose any Confidential
Information, that Shareholder will notify Photocomm promptly of
the request or requirement so that Photocomm may seek an
appropriate protective order or waive compliance with the
provisions of this Section. If, in the absence of a protective
order or the receipt of a waiver hereunder, any Shareholder is,
on the advice of counsel, compelled to disclose any Confidential
Information to any tribunal or else stand liable for contempt,
that Shareholder may disclose the Confidential Information to the
tribunal; provided, however, that the disclosing Party shall use
his, her or its best efforts to obtain, at the request of
Photocomm, an order or other assurance that confidential
treatment will be accorded to such portion of the Confidential
Information required to be disclosed as Photocomm shall
designate. "Confidential Information" means (a) all information
treated by Photocomm as confidential and proprietary information
of Photocomm and disclosed to UPG or any Shareholder in
connection with the transactions contemplated by this Agreement
and (b) all information treated by UPG or the Surviving
Corporation as confidential and proprietary, including, but not
limited to, the Intellectual Property, Technology and the
Contracts. Confidential Information does not include information
(i) in the public domain at the time of delivery or
(ii) subsequently published or otherwise made part of the public
domain through no fault of UPG or any Shareholder. The
obligations set forth in this Section shall survive termination
under Article 8.
5.9.2 Photocomm's Covenant. Prior to consummation
of the Merger, Photocomm shall maintain all information treated
by UPG or any Shareholder as confidential and proprietary and
disclosed in writing to Photocomm pursuant to this Agreement in
strict confidence and shall take precautions reasonably necessary
to prevent disclosure, access to, or transmission of such
information to any third party, except for the purpose of
evaluating the transactions contemplated hereby. Photocomm's
obligations under this Section 5.9.2 shall not apply to
information (i) in the public domain at the time of delivery or
(ii) subsequently published or otherwise made part of the public
domain through no fault of Photocomm. If this Agreement is
terminated for any reason prior to consummation of the Merger,
Photocomm shall return within ten (10) days after delivery of
written notice of termination, all documents and materials
received by Photocomm from UPG or the Shareholders in connection
with this Agreement. The obligations set forth in this Section
shall survive termination under Article 8.
Section 5.10 Covenant Not to Compete.
5.10.1 Covenant. Each of the Shareholders agrees
that he will not, and will cause his affiliates and their
respective officers, directors, employees, subsidiaries and
affiliates not to, engage or participate, directly or indirectly,
as principal, agent, employee, employer, consultant or in any
other individual or representative capacity whatever, in the
conduct or management of, or own (legally or beneficially), or
have the right or option to acquire, any direct or indirect
interest in any business which engages, directly or indirectly,
in any business competitive with the business related to utility
grid connected power generated by solar systems in the United
States for a period of one (1) year following the Closing Date.
Notwithstanding the foregoing, the foregoing covenants shall not
prohibit the ownership, or right or option to acquire, any
passive investment not involving personal services, consulting or
any involvement in operations, in any business; provided that
such investment constitutes not more than five percent (5%) of
the aggregate equity interests in such business and such equity
interests are registered under the Securities Exchange Act of
1934, as amended.
5.10.2 Acknowledgment. Each of the Shareholders
agrees that the covenants set forth herein are appropriate and
reasonable when considered in light of the nature and extent of
the Surviving Corporation's business and assets acquired by
Photocomm hereunder, which includes the goodwill of the business.
Each of the Shareholders acknowledges that (i) the Surviving
Corporation and Photocomm have a legitimate interest in
protecting the business and assets of the Surviving Corporation,
(ii) the covenants set forth herein are not oppressive to the
Shareholders and contain reasonable limitations as to time,
scope, geographical area and activity, (iii) the covenants do not
harm in any manner whatsoever the public interest, (iv) each
Shareholder has received and will receive substantial
consideration for agreeing to such covenants, (v) each
Shareholder is agreeing to such covenants in order, among other
things, to induce Photocomm to enter into this Agreement and
(vi) each Shareholder will derive substantial benefits from the
consummation of the transactions contemplated by this Agreement,
including, but not limited to, the payment of the Cash Payment
and the Shares in accordance with this Agreement.
5.10.3 Injunctive Relief. In the event any
Shareholder violates the foregoing covenant not to compete or any
other covenants set forth in this Agreement (collectively, the
"Covenants"), then, in addition to any other rights and remedies
available, Photocomm shall have the right and remedy to have the
applicable Covenant provisions specifically enforced by any court
of competent jurisdiction by way of an injunction or other legal
equitable relief, it being agreed that any breach of the
applicable Covenant would cause irreparable injury to Photocomm
and damages would be an inadequate remedy.
Section 5.11 Relocation Agreement for Key Employees. In
the event that during the three month period following the
Closing the Surviving Corporation requires any of the former key
employees of UPG set forth on Schedule 5.11 (each, a "Key
Employee") to relocate, and such Key Employee agrees to such
relocation, the Surviving Corporation shall pay such Key Employee
an amount in cash equal to 25% of his or her gross annual salary.
All other terms and conditions of any relocation under this
Section shall be in accordance with the provisions of the
Surviving Corporation's then effective Relocation Policy, a copy
of which is attached hereto as Exhibit C. Nothing in this
Agreement or any policy shall restrict an employee's right to
terminate his or her employment at any time, and nothing shall
restrict the Surviving Corporation's right to terminate the
employment of any employee at any time, without notice and for
any reason not otherwise prohibited by law. Employment with the
Surviving Corporation is on an "at-will" basis, and employees
have no guarantee of continued employment for any period.
Section 5.12 Salary Protection for Key Employees. During
the twelve month period following the Closing, for so long as a
Key Employee remains employed by the Surviving Corporation, the
Surviving Corporation agrees not to reduce such Key Employee's
salary as set forth in Schedule 5.12. In the event that a Key
Employee's employment with the Surviving Corporation is
terminated during such twelve month period for any reason other
than by the Surviving Corporation for "Cause," in consideration
of such Key Employee's execution and delivery of a release of the
Surviving Corporation and Photocomm from all liability in
connection with such Key Employee's employment and termination of
employment by the Surviving Corporation, in forms satisfactory to
the Surviving Corporation and its counsel, the Surviving
Corporation will pay to such Key Employee a lump sum amount in
cash equal to salary at the rate set forth in Schedule 5.12
during the remainder of such twelve month period. As used in
this Section 5.12, the term "Cause" shall mean that the Photocomm
Board of Directors has established, by clear and convincing
evidence, that the Key Employee has (i) been convicted of any
felony, (ii) committed any act of fraud, theft or embezzlement
against Photocomm or the Surviving Corporation, (iii) committed
any act involving gross misconduct against Photocomm or the
Surviving Corporation which has caused material injury to
Photocomm or the Surviving Corporation, or (iv) materially, and
in the case of nonmonetary obligations, intentionally, breached
any covenant or obligation under this Agreement or other
agreement with Photocomm or the Surviving Corporation and such
breach has not been cured within sixty (60) days after notice
thereof in writing from Photocomm, or if such breach is not
capable of cure within sixty (60) days, the Key Employee has not
promptly commenced such cure within sixty (60) days and
diligently prosecuted such cure to completion thereafter.
Nothing in this Agreement or any policy shall restrict an
employee's right to terminate his or her employment at any time,
and nothing shall restrict the Surviving Corporation right to
terminate the employment of any employee at any time, without
notice and for any reason not otherwise prohibited by law.
Employment with the Surviving Corporation is on an "at-will"
basis, and employees have no guarantee of continued employment
for any period.
Section 5.13 Spin Off of Certain Assets Prior to Closing.
Prior to the Closing, UPG and the Shareholders shall deliver to
Photocomm evidence satisfactory to Photocomm and its counsel that
all of UPG's right, title and interest in certain non-electronic
technology, as more particularly described on Schedule 5.13 (the
"Thin Film and Microturbine Technology"), has been assigned to
Western Gas and Electric Company ("Assignee"), and all of UPG's
liabilities in connection with the Thin Film and Microturbine
Technology have been assumed by Assignee.
Section 5.14 Joint Account with SSI. Prior to the
Closing, UPG shall deliver to Photocomm evidence satisfactory to
Photocomm and its counsel that money market account no. 11954-
09611 at the Bank of America for which UPG and Siemens Solar
Industries, L.P. ("SSI") are joint account holders (the "Joint
Account") has been closed.
ARTICLE VI
CONDITIONS PRECEDENT TO CLOSING
Section 6.1 Conditions to the Obligations of Photocomm.
The obligations of Photocomm under this Agreement to consummate
the transactions to be performed by it in connection with the
Closing shall be subject to the fulfillment, on or prior to the
Closing Date, of all of the following conditions precedent:
6.1.1 Representations and Warranties. All
representations and warranties of UPG and the Shareholders
contained in this Agreement, including the Exhibits and Schedules
hereto, and all certificates and other documents delivered by UPG
and the Shareholders to Photocomm or its representatives pursuant
to this Agreement or in connection with the transactions
contemplated hereby shall be true, complete and accurate in all
material respects as of the date when made and as of the Closing
Date with the same force and effect as though such
representations and warranties had been made on and as of the
Closing Date.
6.1.2 No Material Adverse Change. During the
period from the date hereof to the Closing Date, UPG shall not
have sustained any material loss or damage to its assets, whether
or not insured, nor shall there have been any material adverse
change in the assets or the business of UPG, taken as a whole.
6.1.3 Amendments and Supplements to Schedules. All
amendments and supplements to the schedules hereto to be
delivered prior to Closing to Photocomm by UPG and the
Shareholders hereunder shall have been so delivered with time
sufficient for Photocomm's review and in no event later than two
(2) business days prior to Closing, and each such amendment and
supplement shall be satisfactory in form, and content, to
Photocomm, such satisfaction to be determined at Photocomm's
reasonable discretion.
6.1.4 Obtaining of Consents and Approvals. Except
as otherwise contemplated by this Agreement, UPG and the
Shareholders shall have executed and delivered to Photocomm, or
shall have caused to be executed and delivered, any consents,
waivers, approvals, permits, licenses or authorizations which, if
not obtained on or prior to the Closing Date, would have a
material adverse effect on the consummation of the transactions
contemplated hereby or on the assets or the business of UPG,
taken as a whole.
6.1.5 Performance by UPG and the Shareholders. UPG
and the Shareholders shall have performed and complied in all
material respects with all agreements, covenants, obligations and
conditions required by this Agreement to be performed or complied
with by UPG and the Shareholders on or before the Closing Date.
6.1.6 Absence of Litigation. There shall not be in
effect any order enjoining or restraining the transactions
contemplated by this Agreement, and there shall not be instituted
or pending any action or proceeding before any governmental body
(i) seeking to restrain, materially condition, prohibit
consummation of or rescind the transactions contemplated by this
Agreement, or seeking to impose any material limitations on any
provision of this Agreement, (ii) seeking to compel Photocomm to
dispose of or hold separate a material portion of the assets of
UPG as a result of the transactions contemplated by this
Agreement, (iii) that might affect adversely the right of
Photocomm to own UPG or control UPG, or (iv) that might affect
adversely the right of UPG to own its assets and operate its
businesses as heretofore owned and operated.
6.1.7 Opinion of UPG's Counsel. UPG and the
Shareholders shall have furnished Photocomm with a favorable
opinion of ▇▇▇▇▇▇ & ▇▇▇▇, LLP, counsel for UPG and the
Shareholders, dated the Closing Date, substantially in the form
attached hereto as Exhibit D.
6.1.8 Delivery of Documents. The execution and
delivery to Photocomm by UPG and the Shareholders of the
following, all dated as of the Closing Date:
6.1.8.1 certified resolutions of the UPG Board
of Directors and of the Shareholders, duly authorizing the
execution and delivery of this Agreement and the performance by
UPG and the Shareholders of the obligations hereunder;
6.1.8.2 a release of security interest in form
satisfactory to Photocomm and its counsel (i) in UPG receivables
and inventory from SSI (UCC File No. 9714160799), (ii) in certain
equipment from AT&T Capital Corp. (UCC File No. 94-061372), and
(iii) in certain equipment from Commerce Security Bank (UCC File
Nos. 9519560819 and 9606760015);
6.1.8.3 the Escrow Agreement discussed in
Section 7.5; and
6.1.8.4 such other documents, instruments and
certificates as may be reasonably requested by Photocomm or its
counsel to effectuate the transactions contemplated by this
Agreement.
6.1.9 Articles of Merger; Plan of Merger. Executed
originals of the Articles of Merger and the Plan of Merger, and
any other documents required by the terms of this Agreement to be
executed and delivered by UPG, together with such other
conveyances, instruments of title, assignments, consents,
recordings, and other documents as may be, in the reasonable
opinion of Photocomm, necessary or proper to consummate the
transactions contemplated by this Agreement;
6.1.10 Consents. Executed originals of all Consents
and Approvals referred to in Section 3.20.
6.1.11 Investment Letters. Executed originals of
investment letters from each of the Shareholders in the form of
Exhibit "E" ("Investment Letters").
6.1.12 Termination Instrument. An executed original
of an instrument terminating all rights of the Shareholders (i)
to any of UPG's technology and know-how pursuant to individual
Officer Stock Purchase Agreements or any other agreement
involving such rights and (ii) pursuant to that certain Founder's
Agreement on Salary Equalization, respectively, to which UPG and
the Shareholders are parties;
6.1.13 Joint Account with SSI. An executed original
of an instrument closing the Joint Account, and verification that
all funds in such account have been transferred to UPG's regular
bank account.
6.1.14 Waiver. Photocomm may, in its sole
discretion, waive in writing fulfillment of any or all of the
conditions set forth in Section 6.1 of this Agreement, provided
that any such waiver granted by Photocomm shall have no effect
upon or as against any of the other conditions not so waived.
Section 6.2 Conditions to Obligation of UPG and the
Shareholders. The obligations of each of UPG and the
Shareholders under this Agreement to consummate the transactions
to be performed by it in connection with the Closing shall be
subject to the fulfillment, on or prior to the Closing Date, of
all of the following conditions precedent:
6.2.1 Representations and Warranties. The
representations and warranties of Photocomm contained in this
Agreement shall be true and correct in all material respects on
and as of the Closing Date with the same force and effect as
though such representations and warranties had been made on and
as of the Closing Date.
6.2.2 Performance by Photocomm. Photocomm shall
have performed and complied in all material respects with all
agreements, covenants, obligations and conditions required by
this Agreement to be performed or complied with by Photocomm on
or before the Closing Date.
6.2.3 Delivery of Documents. The execution and
delivery to UPG and the Shareholders by Photocomm of the
following, all dated as of the Closing Date:
6.2.3.1 certificates representing the Shares as
provided in Article II herein, which Shares shall be deposited
into escrow pursuant to the Escrow Agreement;
6.2.3.2 the Cash Payment paid by certified check
representing immediately available funds or wire transfer of
funds;
6.2.3.3 certified resolutions of the Board of
Directors of Photocomm duly authorizing the execution and
delivery of this Agreement and the performance by Photocomm of
its obligations hereunder;
1.1.1.1 6.2.3.4 the Escrow Agreement; and
1.1.1.2 6.2.3.4 such other documents,
instruments and certificates as may be reasonably requested by
UPG and the Shareholders or their counsel to effectuate the
transactions contemplated by this Agreement.
6.2.4 Articles of Merger; Plan of Merger. Executed
originals of the Articles of Merger and Plan of Merger and any
other documents required by the terms of this Agreement to be
executed and delivered by Photocomm.
6.2.5 Opinion of Photocomm's Counsel. The favorable
opinion of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, P.A., counsel for Photocomm, dated as
of the Closing Date, in form and substance reasonably
satisfactory to UPG.
6.2.6 Waiver. UPG and the Shareholders may, in
their sole discretion, waive in writing fulfillment of any or all
of the conditions set forth in Section 6.2 of this Agreement,
provided that any such waiver granted shall not constitute a
waiver by UPG or the Shareholders of any other conditions not so
waived.
ARTICLE VII
INDEMNIFICATION
Section 7.1 Survival of Certain Provisions.
7.1.1 Survival of Representations and Warranties.
All representations and warranties contained herein, in the
Exhibits and Schedules hereto, or in any certificates or other
documents delivered pursuant hereto, shall not be deemed to be
waived or otherwise affected by any prior knowledge of, or any
investigation made by or on behalf of, any party hereto. Each
and every such representation and warranty shall survive Closing
and remain in full force and effect until the first (1st)
anniversary of the Closing Date, except for those representations
and warranties made in connection with or arising out of
Section 3.14 (Taxes), which shall remain in full force and effect
until the seventh (7th) anniversary of the Closing Date, and
Section 3.1 (Title), which shall survive Closing and remain in
full force and effect either (i) until expiration of any rights
of Photocomm or any third party under law or equity with respect
thereto, it being understood and agreed that Photocomm, upon
written notice to UPG, may waive or toll any applicable statute
of limitation in Photocomm's sole discretion, or (ii) for an
indefinite period without end if no statute of limitation
applies.
7.1.2 Covenants and Indemnification Provisions.
Each covenant provision and each indemnification provision
contained herein shall survive Closing and remain in full force
and effect in accordance with its terms until the obligations
arising thereunder have been fully performed and discharged.
Section 7.2 General Indemnity.
7.2.1 Indemnification By the Shareholders. After
the Closing Date, each of the Shareholders, jointly and
severally, shall indemnify and hold Photocomm harmless on demand
on a dollar-for-dollar basis for, from and against all losses,
actual damages, liabilities, claims, demands, obligations,
deficiencies, payments, judgments, settlements, costs and
expenses of any nature whatsoever (including without limitation
the costs and expenses of any and all investigations, actions,
suits, proceedings, demands, assessments, judgment, settlements
and compromises relating thereto, and reasonable attorneys' and
other fees in connection therewith) ("Losses") resulting from,
arising out of, or due to, directly or indirectly any inaccuracy
or misrepresentation in, or breach or nonfulfillment of, any
representation or warranty of UPG or the Shareholders, or any
breach or nonfulfillment of any covenant of UPG or the
Shareholders, contained in this Agreement, in any Exhibit or
Schedule delivered hereunder, or in any certificates or documents
delivered by UPG or the Shareholders pursuant to this Agreement.
7.2.2 Indemnification By Photocomm. After the
Closing Date, Photocomm shall indemnify and hold UPG and the
Shareholders harmless on demand on a dollar-for-dollar basis for,
from and against any and all Losses resulting from, arising out
of, or due to, directly or indirectly any inaccuracy or
misrepresentation in, breach or nonfulfillment of, any
representation of warranty of Photocomm, or any breach or
nonfulfillment of any covenant of Photocomm, contained in this
Agreement, in any Exhibit or Schedule delivered hereunder, or in
any certificates or documents delivered pursuant to this
Agreement.
7.2.3 Limitations. For purposes of this Section
7.2, and except as provided in Subsection 7.2.4 herein, no party
shall be entitled to make any claim for indemnification under
this Section 7.2, with respect to the breach of any particular
representation and warranty contained herein, (i) after the date
on which such representation and warranty ceases to survive
pursuant to Section 7.1 herein; provided, however, that, if prior
to the date on which such representation and warranty ceases to
survive, the indemnitor shall have received written notification
of a claim for indemnity hereunder specifying in reasonable
detail the basis of any such claim, and such claim shall not have
been finally resolved or disposed of at such date, such claim
shall continue as a basis for indemnity until it is finally
resolved or disposed of, subject to applicable statutes of
limitation, and (ii) unless the aggregate amount of Losses with
respect to such claim (or, of more than one such claim is
asserted, with respect to all such claims) exceeds $30,000, in
which event the indemnification under this Section 7.2 shall be
effective as to the entire amount of such claim or claims,
provided, however, that in no event shall any individual
Shareholder's aggregate obligations to indemnify Photocomm
hereunder exceed the aggregate of the Fair Market Value of the
Shares issued to such Shareholder under this Agreement on the
date a claim for indemnity hereunder is finally resolved. "Fair
Market Value" as of any date shall be the closing price for one
share of the Photocomm Common Stock as reported on the Nasdaq
automated quotation system (or any national securities exchange
on which the Photocomm Common Stock is then listed) for that date
or, if no closing price is so reported for that date, the closing
price on the next preceding date for which a closing price was
reported. If the Photocomm Common Stock is not quoted or listed
in the foregoing manner, the Fair Market Value shall be
determined by the Photocomm Board of Directors in good faith.
7.2.4 No Limitation On Certain Claims. The
provisions of Subsection 7.2.3 herein shall not apply with
respect to any claims for breach of UPG's or the Shareholders'
representations and warranties set forth in Section 3.1 (Title)
of this Agreement.
Section 7.3 Defense of Third Party Claims.
7.3.1 Notice. No right to indemnification
hereunder shall be available to an indemnified party with respect
to a claim from any person not a party of this Agreement unless
such indemnified party shall have given to the indemnitor a
written notice (a "Claim Notice") describing in reasonable detail
the facts giving rise to the claim for indemnification hereunder
and enclosing a copy of any papers served, promptly upon the
indemnified party becoming aware of such facts. In the case of a
lawsuit being filed against any indemnified party, "promptly"
shall mean as soon as practicable but in no event later than
thirty (30) days after the indemnified party is served with
notice of the suit. The failure to notify the indemnitor under
this Subsection 7.3.1 shall not relieve the indemnitor of any
liability that it may have to the indemnified part otherwise than
under this Article 7 unless such failure to notify shall have
resulted in the waiver of any affirmative defenses to any third
party claims, whereupon such liability of the indemnitor to the
indemnified party under this Article 7 shall be reduced only to
the extent the indemnitor must pay any such third party claim by
reason of the waiver of an affirmative defense.
7.3.2 Defense of Claims. Upon receipt by the
indemnitor of a Claim Notice, the indemnitor may participate in,
and at the request of the indemnified party shall assume, the
administration and defense of the claim described therein. The
indemnified party shall have the right to approve the
indemnitor's selection of counsel with respect to any such claim,
such approval not to be withheld unreasonably. The fees and
expenses of the indemnitor's counsel as well as the fees and
expenses of the indemnified party shall be borne by the
indemnitor.
7.3.3 Settlement. Any indemnified party shall give
written notice to the indemnitor of any proposed settlement of
any third party claim. The indemnitor shall have the right, in
its sole discretion, to settle with money any claim for which
indemnification has been sought hereunder. Notwithstanding the
foregoing, however, in the case where Photocomm is the
indemnified party, UPG and the Shareholders shall have no right
to settle any such claim by agreeing to, or committing to agree
on behalf of the indemnified party, any encumbrance, lien or
pledge of UPG's assets or any restriction on the use of UPG's
assets or operation of UPG's business. An indemnified party may
refuse to accept a settlement proposed by the indemnitor, but in
such event (other than a proposed settlement described in the
foregoing sentence) the indemnitor shall not be obligated to pay
more than the amount for which the indemnitor was willing to
settle the claim (and any other Losses associated with such
settlement), and the indemnified party shall be responsible for
all Losses greater than such amount. Except following the
refusal by an indemnified party to accept a settlement proposed
by the indemnitor, under the conditions set forth in the
preceding sentence, no indemnified party may settle a claim for
which indemnification has been sought hereunder.
7.3.4 Cooperation. Any indemnified party shall
make available to any indemnitor and its attorneys and
accountants, all books, records and documents relating to any
claim hereunder and the parties shall render to each other
reasonable assistance in the defense of any claim hereunder which
arises as the result of claims made by persons not a party to
this Agreement.
Section 7.4 Waiver of Company Indemnification. Each
Shareholder hereby agrees that he, she or it will not make any
claim for indemnification against the Surviving Corporation by
reason of the fact that he, she or it was a director, officer,
employee, or agent of UPG or was serving at the request of UPG as
a partner, trustee, director, officer, employee, or agent of
another entity (whether such claim is pursuant to any statute,
corporate organizational document, bylaw, agreement, or
otherwise) with respect to any claim for indemnification or other
remedy brought by Photocomm against such Shareholder pursuant to
this Agreement, applicable law, or otherwise.
Section 7.5 Escrow of the Shares. Each of the
Shareholders agrees to place the Shares received hereunder in
escrow for a period of 1 year to provide a source for the payment
of any of their indemnification obligations under this Article 7
pursuant to an Escrow Agreement substantially in the form
attached hereto as Exhibit F. Prior to the first anniversary of
the Closing Date, any claim for indemnification against the
Shareholders under this Article 7 shall be satisfied by the
payment of Shares pursuant to such Escrow Agreement. On and
after the first anniversary of the Closing Date, any of the
Shareholders may continue to satisfy all or part of their
indemnification obligations under this Article 7 by delivering to
Photocomm Shares, in which case such Shares will be valued at
Fair Market Value at the time of such delivery.
ARTICLE VIII
TERMINATION
Section 8.1 Termination Events. Subject to the
provisions of Section 8.2, this Agreement may, by written notice
given at or prior to the Closing in the manner hereinafter
provided, be terminated and abandoned only as follows:
8.1.1 Breach. By either UPG or Photocomm upon
written notice, if a material default or breach shall be made by
the other, with respect to the due and timely performance of any
of the other party's respective covenants and agreements
contained herein, or with respect to the due compliance with any
of its respective covenants, agreements, representations and
warranties contained in this Agreement, and such default cannot
be cured prior to Closing and has not been waived;
8.1.2 Mutual Consent. By written mutual consent of
UPG and Photocomm; or
8.1.3 Closing Date. By written notice of either
UPG or Photocomm, if the Closing shall not have occurred on or
before January 22, 1998, or such later date as may be agreed upon
by the parties; provided, however, that the right to terminate
this Agreement under this Subsection 8.1.3 shall not be available
to either of the respective parties whose failure to fulfill any
obligation under this Agreement has been the cause of, or
resulted in, the failure of the Closing to occur on or before
such date.
Section 8.2 Effect of Termination. In the event this
Agreement is terminated pursuant to Section 8.1 herein, all
further rights and obligations of the parties hereunder shall
terminate, and neither UPG nor Photocomm, nor any of their
affiliates, nor any of the respective directors, officer or
employees of UPG or Photocomm or their affiliates shall have any
liability to any of the others, except that the obligations set
forth in Section 5.9 and this Section shall survive; it being
specifically agreed that if this Agreement is so terminated by
either UPG or Photocomm because one or more of the conditions to
its obligations hereunder as set forth in Article VI herein is
not satisfied as a result of the other party's failure to comply
with its obligations under this Agreement, the rights of the
terminating party to pursue all legal remedies for breach of
contract and damages shall survive such termination and the
breaching party shall be fully liable for any and all damages,
costs and expenses sustained or incurred by the terminating party
as a result of such breach.
ARTICLE IX
MISCELLANEOUS
Section 9.1 Expenses. Except as otherwise provided in
this Agreement, each of the respective parties to this Agreement
shall pay their own costs and expenses (including all legal,
accounting, broker, finder and investment banker fees) relating
to this Agreement, the negotiations leading up to this Agreement,
and the transactions contemplated by this Agreement. Any amounts
payable to any broker, finder or investment banker shall be paid
by the party that engaged the broker, finder or investment
banker. Notwithstanding the foregoing, the Shareholders
represent and warrant that UPG has not, and the Surviving
Corporation will not, bear any cost or expense of UPG or the
Shareholders (including all legal, accounting, broker, finder and
investment banker fees) relating to this Agreement in excess of
$10,000, any and all such excess to be borne by the Shareholders.
Section 9.2 Amendment. This Agreement shall not be
amended or modified except by a writing duly executed by UPG, the
Shareholders and Photocomm.
Section 9.3 Entire Agreement. This Agreement, including
the Exhibits hereto and the Schedules delivered hereunder,
contain all of the terms, conditions and representations and
warranties agreed upon by the parties relating to the subject
matter of this Agreement and supersede all prior and
contemporaneous agreements, inducements, negotiations,
correspondence, undertakings and communications of the parties,
oral or written, respecting such subject matter.
Section 9.4 Notices. All notices, requests, demands and
other communications made in connection with this Agreement shall
be in writing and shall be deemed to have been duly given on the
date of delivery, if delivered by hand or by telex or telecopy to
the persons identified below, or three (3) days after mailing if
mailed by certified or registered mail, postage prepaid, return
receipt requested, addressed as follows:
If to Photocomm or PAI: Photocomm, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Chief Executive Officer
With a copy to: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, P.A.
The Phoenix Plaza
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Esq.
If to UPG: Silicon Energy Corporation
▇▇▇▇-▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: President
With a copy to: R. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇ & ▇▇▇▇, LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to any of the Shareholders, to all of the Shareholders at
their respective addresses set forth below their signatures to
this Agreement, with a copy to R. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.,
▇▇▇▇▇▇ & ▇▇▇▇, LLP, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇.
Such addresses may be changed, from time to time, by means of a
notice given in the manner provided in this Section. Copies to
counsel shall not constitute notice.
Section 9.5 Severability . If any provision of this
Agreement is held to be unenforceable for any reason, it shall be
adjusted rather than voided, if possible, in order to achieve the
intent of the parties to this Agreement to the extent possible.
In any event all other provisions of this Agreement shall be
deemed valid and enforceable to the full extent possible. It is
understood and agreed by the parties that each of the provisions
of Section 5.10 of this Agreement are independent of and
severable from each other and the invalidity of Section 5.10 or
any provision thereof shall not affect the validity or hinder the
enforceability of the remaining provisions of this Agreement.
The parties expressly agree and declare that the time limitation
and geographic scope set forth in Section 5.10 hereof are
reasonable and are properly required for the adequate protection
of the business and goodwill associated with the Surviving
Corporation. If the provisions of Section 5.10 are ever
adjudicated to exceed the limitations on time or geographic scope
permitted by applicable law, then such provisions shall be deemed
reformed to the maximum time or geographic scope permitted by
applicable law. The parties hereby agree that such reformation
shall be accomplished (i) in the case of duration, the length of
the covenant in Section 5.10 shall be reduced in increments of
one (1) month until it is of the greatest duration as may be
enforceable under applicable law, and (ii) in the case of
geographic scope, the covenant area of such covenant shall be
reduced until it is of the greatest geographic scope as may be
enforceable under applicable law, which reduction shall be
effected by eliminating States in the inverse order of the
magnitude of revenues derived by the Surviving Corporation
therein until the geographic scope of such covenant is of maximum
enforceable size under applicable law.
Section 9.6 Cumulative Remedies. The remedies provided
herein are cumulative and not exclusive and shall not preclude
assertion by either party hereto of any other rights or the
seeking of any other remedies against the other party.
Section 9.7 Waiver. Waiver of any term or condition of
this Agreement by any of the respective parties shall only be
effective if in writing and shall not be construed as a waiver of
any subsequent breach or failure of the same term or condition,
or a waiver of any other term or condition, of this Agreement.
Section 9.8 Binding Effect: Assignment. No party to this
Agreement may assign or delegate, by operation of law or
otherwise, all or any portion of its rights, obligations or
liabilities under this Agreement without the prior written
consent of the other party to this Agreement, which it may
withhold in its absolute discretion, provided however, that
Photocomm may assign any and all of its rights and obligations to
one or more wholly-owned subsidiaries of Photocomm provided that
Photocomm remains subject to the terms and conditions of this
Agreement.
Section 9.9 Successors and Assigns. The rights,
liabilities and obligations of the parties hereto arising under
this Agreement shall attach to and be binding upon the respective
parties successors and assigns.
Section 9.10 No Third Party Beneficiaries. Nothing in
this Agreement shall confer any rights upon any person or entity
who is not a party to this Agreement.
Section 9.11 Counterparts. This Agreement may be signed in
any number of counterparts with the same effect as if the
signatures to each counterpart were upon a single instrument, and
all such counterparts together shall be deemed an original of
this Agreement.
Section 9.12 Governing Law. This Agreement shall be
governed by and construed in accordance with the laws of the
State of Arizona and of the United States without giving effect
to the doctrine of conflicts of laws.
Section 9.13 Construction.
9.13.1 Words. All references in this Agreement
to the singular shall include the plural, the plural shall
include the singular where applicable, and all references to
gender shall include both genders and the neuter. All references
in this Agreement to days shall be calendar days unless specified
as business days. All accounting terms not otherwise identified
herein shall have the meanings assigned to them in accordance
with GAAP consistently applied.
9.13.2 Cross-References. References in this
Agreement to any Article shall include all Sections, Subsections,
and Paragraphs in such Article; references in this Agreement to
any Section shall include all Subsections and Paragraphs in such
Section; and references in this Agreement to any Subsection shall
include all Paragraphs in such Subsection. Words "herein,"
"hereof," "hereunder" and words of similar import refer to this
Agreement as a whole and not to any particular paragraph or other
subdivision unless the context otherwise so admits.
9.13.3 No Presumption. In interpreting any
provision of this Agreement no presumption shall be drawn against
the party drafting the provision.
9.13.4 Exhibits and Schedules. Exhibits and
Schedules referred to herein are hereby incorporated into and
made part of this Agreement.
9.13.5 Headings. The table of contents and the
headings to each Article, Section and Subsection herein are for
the purposes of convenience only and shall not be read or
interpreted as having any meaning or effect.
[Signature Page to Follow]
EXECUTION AND DELIVERY
IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Agreement with legal and binding effect as of the
date and year first above written.
PHOTOCOMM, INC., an
Arizona corporation
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇
President
PHOTOCOMM ACQUISITION, INC.,
an Arizona corporation
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇
President
SILICON ENERGY CORPORATION,
a California corporation
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Print Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Its: President
Signature Page to Merger Agreement
THE SHAREHOLDERS:
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Address:
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇
Address:
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Address:
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Address:
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Address:
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇
Address:
/s/ R. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
R. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Address:
Signature Page to Merger Agreement
LIST OF EXHIBITS
Exhibit A - Plan of Merger
Exhibit B - Articles of Merger
Exhibit C - Relocation Agreement
Exhibit D - Opinion of UPG's Counsel
Exhibit E - Investment Letter
Exhibit F - Escrow Agreement
LIST OF SCHEDULES
Schedule 3.2(a) - UPG Articles of Incorporation
Schedule 3.2(b) - UPG Bylaws
Schedule 3.3 - Qualification as a Foreign Corporation
Schedule 3.4 - Capitalization of UPG
Schedule 3.6.1 - UPG Financial Statements
Schedule 3.6.4 - Changes in UPG Financial Matters
Schedule 3.7.1 - Title Exceptions
Schedule 3.7.2 - Property Condition
Schedule 3.7.3 - Equipment
Schedule 3.7.4 - Inventory
Schedule 3.8 - Accounts Receivable
Schedule 3.9 - Leases
Schedule 3.10 - Intellectual Property Agreements
Schedule 3.11 - Computer System and Software
Schedule 3.12 - Contracts
Schedule 3.13.1 - Compliance with Legal Requirements
Schedule 3.13.2 - Governmental Authorizations
Schedule 3.14.1 - Tax Returns
Schedule 3.14.3 - List of UPG Tax Returns
Schedule 3.14.6 - Tax Information
Schedule 3.15.1 - Employment Information
Schedule 3.15.4 - Employee Claims
Schedule 3.16 - Employee Benefit Plans
Schedule 3.17 - Environmental Matters
Schedule 3.18 - Insurance
Schedule 3.19 - Litigation
Schedule 3.22 - Customers and Suppliers
Schedule 4 - Photocomm Schedule of Exceptions
(▇▇▇▇▇ Letter)
Schedule 5.11 - Key Employees
Schedule 5.12 - Salary Schedule
Schedule 5.13 - Thin Film and Microturbine Technology