EXHIBIT 10.1
INVESTMENT AND EXCHANGE AGREEMENT
This Investment and Exchange Agreement is made as of April 4, 2000, by and
among DeNora Fuel Cells S.p.A., a company established under the laws of Italy
("DNFC"), DeNora New Energy Investments B.V., a company established under the
laws of The Netherlands and the parent company of DNFC ("DN"), Arthur D.
Little, Inc., a Massachusetts corporation ("ADL"), and Epyx Corporation, a
Delaware corporation ("Epyx").
W I T N E S S E T H:
WHEREAS, DN desires to exchange all of the shares of DNFC for 500,000
newly issued shares of Epyx, and Epyx desires to exchange such shares of Epyx
for all of the shares of DNFC, on the terms and conditions set forth in this
Agreement;
WHEREAS, upon consummation of such exchange, Epyx shall change its name to
Nuvera ("New DeNora Epyx"), DNFC shall be a wholly-owned subsidiary of New
DeNora Epyx, and DN and ADL shall each own 50% of the outstanding shares of New
DeNora Epyx; and
WHEREAS, DN and ADL desire to provide for certain matters with respect to
the funding of the operations of New DeNora Epyx and their ownership of common
stock of New DeNora Epyx.
NOW THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements hereinafter set forth, the parties hereto agree as follows:
ARTICLE I. DEFINITIONS
The following capitalized terms, as used in this Agreement, shall have the
meanings set forth below.
An "Affiliate" of any Person means a Person that directly or indirectly,
through one or more intermediaries, controls, is controlled by or is under
common control with the first mentioned Person. A Person shall be deemed to
control another Person if such first Person possesses directly or indirectly
the power to direct, or cause the direction of, the management and policies of
the second Person, whether through the ownership of voting securities, by
contract or otherwise.
"Board" means the Board of Directors of New DeNora Epyx.
"Closing" and "Closing Date" have the meanings set forth in Section 2.2.
"Common Stock" means the Common Stock, par value $.01 per share, of New
DeNora Epyx, issued in accordance with and subject to the terms of the
Certificate of Incorporation of
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Epyx, and any other common equity securities now or hereafter issued by Epyx,
together with any other shares of stock issued or issuable with respect thereto
(whether by way of a stock dividend, stock split or in exchange for or upon
conversion of such shares or otherwise in connection with a combination of
shares, recapitalization, merger, consolidation or other corporate
reorganization).
"DNFC Business" means the development and manufacture by DNFC of
commercial multifuel stacks (hydrogen, direct methanol and reformate operation)
for micropower and mobile applications and the development of expertise for the
integration of fuel stacks in power modules and/or fully integrated units.
"DNFC Intellectual Property" means the Italian and foreign patents and
patent applications, invention disclosures (whether patentable or not),
copyrights, trademarks (including, in the case of trademarks, all goodwill
pertaining thereto) and licenses under any third party intellectual property
rights (including but not limited to patents, patent applications, copyrights,
trademarks, trade secrets and know-how) currently used in the DNFC Business,
together with all associated trade secrets and know-how related to DNFC
Business.
"DN Shares" means the shares of Common Stock issued to DN at the Closing.
"Epyx Business" means the development by Epyx of fuel cells, fuel
processors and reformer technology pertaining to the conversion of hydrocarbon
fuels into hydrogen for fuel cells or other purposes and other development
activities directly related to integration of fuel cells and fuel processing
technology to fuel cell development, including the development by Epyx of
commercial distributed power and transportation products related thereto and
components thereof.
"Epyx Intellectual Property" means the United States and foreign patents
and patent applications, invention disclosures (whether patentable or not),
copyrights, trademarks (including, in the case of trademarks, all goodwill
pertaining thereto) and licenses under any third party intellectual property
rights (including but not limited to patents, patent applications, copyrights,
trademarks, trade secrets and know-how) currently used in the Epyx Business,
together with all associated trade secrets and know-how related to the Epyx
Business.
"Liabilities" means, with respect to any party, obligations or liabilities
of any nature, whether known or unknown, accrued, absolute, contingent or
otherwise, and whether due or to become due of such party.
"Operating Plan" means the operating plan of New DeNora Epyx, as prepared
by the senior officers of New DeNora Epyx and approved by the Board from time
to time.
"Person" means an individual, a corporation, an association, a
partnership, a limited liability company, an estate, a trust, and any other
entity or organization, governmental or otherwise.
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"Securities Act" means the Securities Act of 1933, as amended from time to
time, and the rules and regulations promulgated thereunder.
"Stock" means Common Stock and any other equity securities of Epyx.
"Stockholders" means ADL and DN, together with such other Persons as may
become stockholders of New DeNora Epyx from time to time.
ARTICLE II. EXCHANGE OF SHARES; CLOSING
2.1 Exchange of Shares. On the terms and subject to the conditions herein
set forth, New DeNora Epyx agrees to purchase from DN, and DN hereby agrees to
sell to New DeNora Epyx, at the Closing, 400,000 ordinary shares of capital
stock of DNFC, representing all of the outstanding shares of DNFC, in exchange
for 500,000 newly issued shares of Common Stock. Upon such issuance, DN and ADL
each shall own 50% of the outstanding shares of Common Stock.
2.2 Closing. The exchange of shares contemplated by Section 2.1 above (the
"Closing") shall take place at the offices of Epyx, Acorn Park, Cambridge,
Massachusetts, on April 4, 2000, or at such other place or on such date as the
parties may mutually agree. Such date is referred to herein as the "Closing
Date." At the Closing, DN shall deliver to New DeNora Epyx stock certificates
representing all of the outstanding shares of DNFC. Such stock certificates
shall be duly endorsed in blank for transfer or shall be presented with stock
powers duly executed in blank, with such other documents as may be reasonably
required by New DeNora Epyx to effect a valid transfer of such shares to New
DeNora Epyx, free and clear of any and all liens, encumbrances, charges or
claims. At the Closing, New DeNora Epyx shall deliver to DN a certificate or
certificates representing 500,000 shares of Common Stock.
2.3 Financial Statements. Within twenty (20) days after the Closing, ADL
shall deliver to DN a balance sheet of Epyx as of March 31, 2000, and DN shall
deliver to ADL a balance sheet of DNFC as of March 31, 2000. ADL represents and
warrants that the Epyx balance sheet shall be true and correct in all material
respects, have been prepared in conformity with generally accepted accounting
principles applied on a consistent basis, and fairly present the financial
condition of Epyx as of the date thereof (subject to the absence of footnotes
and to year-end audit adjustments). DN represents and warrants that the DNFC
balance sheet shall be true and correct in all material respects, have been
prepared in conformity with EC accepted accounting principles applied on a
consistent basis, and fairly present the financial condition of DNFC as of the
date thereof (subject to the absence of footnotes and to year-end audit
adjustments). Provided that the respective balance sheet reflects that each of
Epyx and DNFC have a net worth of US$500,000 or more and net financial
indebtedness of US$700,000 or less, there will be no adjustment in the exchange
of shares of Common Stock pursuant to Section 2.1 above.
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF EPYX
Epyx and ADL hereby represent and warrant to DNFC and DN as follows:
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3.1 Corporate Organization; No Subsidiaries or Investments. Epyx is
duly incorporated, validly existing and in good standing under the laws of the
State of Delaware. Epyx has the requisite corporate power and authority to
conduct its business as it is currently being conducted. Epyx is duly qualified
as a foreign corporation in the Commonwealth of Massachusetts. Epyx has no
subsidiaries and does not own of record or beneficially any capital stock or
other equity interest in any other Person. The corporate documents and records
delivered to DN prior to the execution of this Agreement constitute true,
complete and correct copies of the corporate documents of Epyx and reflect all
amendments thereto through and including the Closing Date.
3.2 Corporate Power and Authority; Non-Contravention.
(a) Epyx has all requisite corporate power and authority to execute
and deliver this Agreement and each agreement, document and instrument to
be executed and delivered by Epyx pursuant to or as contemplated by this
Agreement (collectively, the "Epyx Agreements") and to carry out the
transactions contemplated hereby and thereby. The execution and delivery
of this Agreement and the Epyx Agreements by Epyx and the consummation by
Epyx of the transactions contemplated hereby and thereby have been duly
authorized by all necessary corporate action on the part of Epyx,
including the approval of the Board and of Epyx's stockholders, and no
other corporate action or proceeding on the part of Epyx is necessary to
authorize the execution and delivery by Epyx of this Agreement and the
Epyx Agreements or the consummation by Epyx of the transactions
contemplated hereby and thereby. This Agreement and each of the Epyx
Agreements constitutes the valid and binding obligation of Epyx,
enforceable against Epyx in accordance with their respective terms. The
execution, delivery and performance by Epyx of this Agreement and each of
the Epyx Agreements:
(i) do not and will not conflict with or violate any provision
of the Certificate of Incorporation or By-Laws of Epyx;
(ii) do not and will not violate any laws, rules or regulations
of the United States or any state or other jurisdiction applicable to
Epyx, or require Epyx to obtain any approval, consent or waiver of,
or to make any filing with, any Person that has not been obtained or
made; and
(iii) do not and will not result in a breach of, constitute a
default under, accelerate any obligation under or give rise to a
right of termination of any indenture or loan or credit agreement or
any other agreement, contract, instrument, mortgage, lien, lease,
permit, license, authorization, order, writ, judgment, injunction or
decree to which Epyx is a party or by which Epyx or its property is
bound, or result in the creation or imposition of any mortgage,
pledge, lien, security interest or other charge or encumbrance on any
of the assets or properties of Epyx.
(b) The DN Shares, when issued and delivered to and paid for by DN in
accordance with the terms of this Agreement (i) will be validly issued,
fully paid and nonassessable, (ii) will represent 50% of the outstanding
capital stock of New DeNora Epyx and (iii) will be free and clear of any
and all liens, encumbrances, charges or claims.
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3.3 No Consents or Approvals Required. Except as set forth in Schedule
3.3, no notice, declaration, report or other filing or registration with, and
no consent, waiver, approval or authorization of, any governmental or
regulatory authority or instrumentality or any other person is required to be
submitted, made or obtained by Epyx in connection with the execution, delivery
or performance of this Agreement or the Epyx Agreements, or the consummation of
the transactions contemplated hereby or thereby, except for those the failure
of which to submit, make or obtain would not have a material adverse effect
upon the assets or business of Epyx.
3.4 Capitalization. The authorized capital stock of Epyx consists of
2,000,000 shares of common stock, $.01 par value per share, of which 500,000
shares are issued and outstanding. All such shares have been duly authorized
and validly issued, are fully paid and nonassessable. There are no outstanding
options, warrants, rights, commitments, preemptive rights or agreements of any
kind for the issuance or sale of, or outstanding securities convertible into,
any additional shares of common stock. There are no other securities of Epyx
entitled, in the ordinary course, to vote in the election of the Board. There
are no outstanding obligations of Epyx to repurchase, redeem or otherwise
acquire any securities of Epyx.
3.5 Material Contracts. Schedule 3.5 hereto contains a complete and
correct list of all agreements, contracts and commitments (collectively, the
"Material Contracts") of the following types, written or oral to which Epyx or
ADL is a party or by which it is bound and which, in each case, relate
primarily to Epyx Business, including (i) leases of real or personal property,
(ii) employment, consulting and agency agreements; (iii) research and
development contracts; (iv) agreements, orders or commitments for the sale or
purchase of raw materials, supplies or finished products; (v) joint ventures,
partnerships or similar arrangements; (vi) agreements for the acquisition or
disposition of all or substantially all of the Epyx Business; and (vii)
licenses to or from others relating to the Epyx Intellectual Property. Each of
the Material Contracts is in full force and effect and there does not exist
thereunder any material default by Epyx or ADL, or to the best knowledge of
Epyx and ADL, of any other party thereto, or event or condition which, after
notice or lapse of time or both, would constitute a material default thereunder
by Epyx or ADL or, to the best knowledge of Epyx and ADL, by any other party
thereto. Neither Epyx nor ADL has received any notice that any party to any of
the Material Contracts intends to cancel or terminate any such Material
Contract. Epyx has delivered or made available to DN true, complete and correct
copies of all Material Contracts.
3.6 Intellectual Property. The Epyx Intellectual Property includes all
rights necessary to conduct the Business as currently conducted, with no known
infringement of the proprietary rights of any third party. Except as set forth
on Schedule 3.6 and except with respect to standard rights reserved to the U.S.
government pursuant to contracts between Epyx or ADL and the U.S. government,
(i) to the best knowledge of Epyx and ADL, Epyx is the sole and exclusive owner
of all rights to the Epyx Intellectual Property and has the right to use the
same without the payment of any license, fee, royalty or similar charge; (ii)
there is no material claim of any other person, firm or corporation or any
proceeding pending or, to the best knowledge of Epyx and ADL, threatened which
relates to any of the Epyx Intellectual Property or the validity or
enforceability thereof or Epyx's rights thereto; and (iii) to the best
knowledge of Epyx and ADL, there are no inventions within the scope of the Epyx
Intellectual Property for which the
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inventor(s) thereof is or are not contractually obligated to assign all of
their rights therein to Epyx or ADL.
3.7 Litigation; Disputes. There are no claims, actions, suits, proceedings
or investigations by any third party or by governmental, regulatory or
administrative authorities of any nature, civil, criminal or regulatory, at law
or in equity, by or before any court, arbitrator or governmental or other
regulatory or administrative agency, instrumentality or authority which are
pending or, to the best knowledge of Epyx and ADL, threatened, by or against or
affecting Epyx or the Epyx Business.
3.8 Compliance with Applicable Law. Epyx is currently in compliance, in
all material respects, with all applicable statutes, laws, rules, regulations,
orders, ordinances, judgments or decrees of all governmental authorities
(federal, state, local or otherwise) applicable to the Epyx Business. Epyx has
all governmental licenses, authorizations, permits, consents and approvals
necessary to conduct its business as it is currently being conducted.
3.9 Taxes. Epyx (or ADL on behalf of Epyx) has filed or will file within
the time prescribed by law (including extensions of time approved by the
appropriate taxing authority) all tax returns and reports required to be filed
with the United States Internal Revenue Service, the Commonwealth of
Massachusetts, and any other jurisdictions where such filing is required by
law. All taxes which are due and payable by Epyx or ADL related to the Epyx
Business, and any interest and penalties thereon, whether disputed or not, have
been paid in full. Neither ADL nor Epyx is delinquent in the payment of any tax
related to the Epyx Business, and there is no tax deficiency or claim
outstanding, proposed or assessed against either of them related to the Epyx
Business.
3.10 Sufficiency of Assets. Upon consummation of the transactions
contemplated hereby (including, but not limited to, the execution and
performance of the Transition Services Agreement and the Sublease), Epyx will
have the assets that are necessary and adequate for it to conduct the Epyx
Business as currently conducted.
3.11 Financial Statements. Attached hereto as Schedule 3.11 is the
unaudited balance sheet of Epyx as of December 31, 1999 (the "Balance Sheet") ,
and the unaudited statement of income of Epyx for the period ending December
31, 1999 (collectively, the "Epyx Financial Statements"). The Epyx Financial
Statements are true and correct in all material respects, have been prepared in
conformity with generally accepted accounting principles applied on a
consistent basis, and fairly present the financial condition of Epyx as of the
date thereof (subject to the absence of footnotes and to year-end audit
adjustments).
3.12 No Undisclosed Liabilities. Since the date of the Epyx Financial
Statements, Epyx has not incurred any Liabilities relating to the Epyx Business
except Liabilities (a) that were incurred in the usual and ordinary course of
business consistent with past practice and (b) that, individually and in the
aggregate, would not have a materially adverse effect upon the Epyx Business.
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3.13 Absence of Certain Changes. Since December 31, 1999, Epyx has
conducted the Epyx Business only in the ordinary course. Without limiting the
generality of the foregoing, Epyx has not since such date:
(a) experienced any material adverse change in its financial
condition, assets, liabilities, prospective contracts or its relationship
with its principal clients;
(b) sold, assigned, transferred, pledged, leased or otherwise
disposed of any asset except in the ordinary course of business consistent
with past practices, but not in any event exceeding $200,000;
(c) incurred any obligation, liability or indebtedness except in the
ordinary course of business consistent with past practices, but not in any
event exceeding $200,000, or incurred any extraordinary losses;
(d) made any declaration, setting aside or payment of any dividend by
Epyx, or made any other distribution in respect of the capital stock of
Epyx, or any direct or indirect redemption, purchase or other acquisition
by Epyx of its own capital stock;
(e) incurred any obligation or liability to any of its officers,
directors, stockholders or employees, or made any loans or advances to any
of its officers, directors, stockholders or employees, except normal
compensation and expense allowances payable to officers or employees;
(f) amended, waived, released, disposed of or permitted to lapse any
right relating to the Epyx Business;
(g) transferred or granted any rights under any concessions, leases,
licenses, agreements, patents, inventions, trademarks, service marks,
trade names, trade dress, brand names, trade secrets or copyrights or with
respect to the Epyx Intellectual Property;
(h) experienced any material damage, destruction or loss (whether or
not covered by insurance) relating to the assets of the Epyx Business; or
(i) agreed, whether or not in writing, to do any of the foregoing.
3.14 Insurance. ADL currently maintains policies of fire, liability,
worker's compensation, life, and property and casualty in respect to the Epyx
Business. All such policies (i) are in full force and effect and (ii) are
sufficient for compliance in all material respects by Epyx with all
requirements of law and all agreements to which Epyx is a party.
3.15 Employee Benefit Plans. Except for the arrangements set forth in
Schedule 3.15, neither Epyx nor ADL currently maintains, contributes to, or
participates in, any pension, profit-sharing, deferred compensation, bonus,
stock option, share appreciation right, severance, group or individual health,
dental, medical, life insurance, survivor benefit, car allowance, or similar
plan, policy or arrangement, whether formal or informal, for the benefit of any
employee of Epyx. Such arrangements are referred to in this Agreement as the
"Employee Benefit Plans." Epyx has heretofore delivered or made available to DN
and DNFC true and correct descriptions of each Employee Benefit Plan.
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3.16 Real and Personal Property.
(a) Real Property. Epyx does not own any real property. All of the
real property leased by Epyx is identified on Schedule 3.16(a). True and
complete copies of all leases with respect to such leased real property
have been delivered to DN. Each of said leases has been duly authorized
and executed by the parties and is in full force and effect. Neither ADL
nor Epyx is in default under any of said leases, nor, to the knowledge of
ADL and Epyx, has any event occurred which, with notice or the passage of
time, or both, would give rise to such a default. To the knowledge of ADL
and Epyx, the other party to each of said leases is not in default under
any of said leases and there is no event which, with notice or the passage
of time, or both, would give rise to such a default. Except as set forth
in Schedule 3.16(a), no consent or approval is required from the other
parties to any such lease or from any regulatory authority in the United
States relating to the transfer of a leasehold interest in real property
and no filing with any such regulatory authority is required in connection
therewith. To the extent that any such consents, approvals or filings are
required, ADL or Epyx will obtain or complete them before the Closing.
(b) Personal Property. A complete description of the equipment of
Epyx is contained in Schedule 3.16(b) hereto. Except as specifically
disclosed in said Schedule, Epyx has good and marketable title to all of
its personal property. None of such personal property or assets is subject
to any mortgage, pledge, lien or encumbrance except as specifically
disclosed in said Schedule. Except as otherwise specified in Schedule
3.16(b) hereto, all leasehold improvements, furnishings and equipment of
Epyx are in good working order and comply in all material respects with
all applicable laws, ordinances and regulations.
3.17 Receivables from Affiliates. Except as disclosed on Schedule 3.17
hereto, Epyx does not have any accounts or loans receivable from any person,
firm or corporation which is affiliated with Epyx or ADL or from any director,
officer or employee of Epyx or ADL, and all accounts and loans receivable from
any such person, firm or corporation shall be paid in cash prior to the
Closing.
3.18 Transactions with Interested Persons. Except as set forth in Schedule
3.18 hereto, neither Epyx nor any stockholder, officer, supervisory employee or
director of Epyx or ADL or, to the knowledge of ADL and Epyx, any of their
respective spouses or family members, owns directly or indirectly on an
individual or joint basis any material interest in, or serves as an officer or
director or in another similar capacity of, any competitor or supplier of Epyx,
or any organization which has a material contract or arrangement with Epyx.
3.19 Employees; Labor Matters. A complete list of employees of Epyx is
contained in Schedule 3.19(a) hereto, together with their current position and
compensation. Epyx is not delinquent in payments to any of its employees for
any wages, salaries, commissions, bonuses or other direct compensation for any
services performed for it to the date hereof or amounts
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required to be reimbursed to such employees. Upon termination of the employment
of any of said employees, neither ADL nor Epyx will by reason of the
transactions contemplated under this Agreement or anything done prior to the
Closing be liable to any of said employees for so-called "severance pay" or any
other payments, except as set forth in Schedule 3.19(b). Neither Epyx nor ADL
has any policy, practice, plan or program of paying any form of severance
compensation in connection with the termination of employment, except as set
forth in said Schedule. Epyx is in compliance with all applicable laws and
regulations respecting labor, employment, fair employment practices, work place
safety and health, terms and conditions of employment, and wages and hours.
There are no charges of employment discrimination or unfair labor practices,
nor are there any strikes, slowdowns, stoppages of work, or any other concerted
interference with normal operations which are existing, pending or threatened
against or involving Epyx. There are no grievances, complaints or charges that
have been filed against Epyx, and there is no arbitration or similar proceeding
pending and no claim therefor has been asserted. No collective bargaining
agreement is in effect or is currently being or is about to be negotiated by
Epyx. Neither Epyx nor ADL has received any information indicating that any of
its employment policies or practices is currently being audited or investigated
by any domestic or foreign government agency. No circumstances have arisen
under which Epyx is likely to be required to pay damages for wrongful
dismissal, to make any statutory redundancy payment or make or pay any
compensation in respect of unfair dismissal, or make any other payment under
any employment protection or other employment statutes, treaties, regulations,
by-laws, codes or orders, or to reinstate or re-engage any former employee.
3.20 Environmental Matters.
(a) Epyx is in compliance with all Environmental Laws applicable to
the Business. Epyx has all permits necessary under any Environmental Law
to conduct the Business as presently conducted. There is no suit, action,
claim, arbitration, administrative, governmental investigation (including,
but not limited to, requests for information) or other legal proceeding
pending or, to the best of Epyx's knowledge, threatened, which relates to
the ownership, conduct or operation of the Epyx Business and which arises
under Environmental Law or which is reasonably likely to give rise to an
Environmental Liability.
(b) For purposes of this Section 3.20, the following terms shall have
the meanings set forth below:
(i) "Environmental Laws" means any and all federal, state, local
and foreign statutes, laws, judicial decisions, regulations,
ordinances, rules, judgments, orders, decrees, codes, plans,
injunctions, permits, licenses, agreements and governmental
restrictions, relating to human health, safety, the environment or to
emissions, discharges or releases of pollutants, contaminants or
other hazardous substances or wastes into the environment, including
without limitation ambient air, surface water, ground water or land,
or otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of
pollutants, contaminants or other hazardous substances or wastes or
the clean-up or other remediation thereof.
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(ii) "Environmental Liabilities" means any and all liabilities
of or relating to the Epyx Business which arise under or relate to
matters covered by Environmental Laws.
3.21 No Right of Set-Off. Neither Epyx nor ADL enjoys any right of
immunity from set-off, suit or execution with respect to their obligations
under this Agreement and the Epyx Agreements.
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF DNFC
DN and DNFC hereby represent and warrant to Epyx and ADL as follows:
4.1 Corporate Organization; No Subsidiaries or Investments. DNFC is duly
incorporated, validly existing and in good standing under the laws of Italy.
DNFC has the requisite corporate power and authority to conduct its business as
it is currently being conducted. DNFC has no subsidiaries and does not own of
record or beneficially any capital stock or other equity interest in any other
Person. The corporate documents and records delivered to ADL prior to the
execution of this Agreement constitute true, complete and correct copies of the
corporate documents of DNFC and reflect all amendments thereto through and
including the Closing Date.
4.2 Corporate Power and Authority; Non-Contravention.
(a) DNFC has all requisite corporate power and authority to execute
and deliver this Agreement and each agreement, document and instrument to
be executed and delivered by DNFC pursuant to or as contemplated by this
Agreement (collectively, the "DNFC Agreements") and to carry out the
transactions contemplated hereby and thereby. The execution and delivery
of this Agreement and the DNFC Agreements by DNFC and the consummation by
DNFC of the transactions contemplated hereby and thereby have been duly
authorized by all necessary corporate action on the part of DNFC,
including the approval of the Board of Directors of DNFC and of DNFC's
stockholders, and no other corporate action or proceeding on the part of
DNFC is necessary to authorize the execution and delivery by DNFC of this
Agreement and the DNFC Agreements or the consummation by DNFC of the
transactions contemplated hereby and thereby. This Agreement and each of
the DNFC Agreements constitutes the valid and binding obligation of DNFC,
enforceable against DNFC in accordance with their respective terms. The
execution, delivery and performance by DNFC of this Agreement and each of
the DNFC Agreements:
(i) do not and will not conflict with or violate any provision
of the charter documents of DNFC;
(ii) do not and will not violate any laws, rules or regulations
of Italy or any other jurisdiction applicable to DNFC, or require
DNFC to obtain any approval, consent or waiver of, or to make any
filing with, any Person that has not been obtained or made; and
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(iii) do not and will not result in a breach of, constitute a
default under, accelerate any obligation under or give rise to a
right of termination of any indenture or loan or credit agreement or
any other agreement, contract, instrument, mortgage, lien, lease,
permit, license, authorization, order, writ, judgment, injunction or
decree to which DNFC is a party or by which DNFC or its property is
bound, or result in the creation or imposition of any mortgage,
pledge, lien, security interest or other charge or encumbrance on any
of the assets or properties of DNFC.
4.3 No Consents or Approvals Required. No notice, declaration, report or
other filing or registration with, and no consent, waiver, approval or
authorization of, any governmental or regulatory authority or instrumentality
or any other person is required to be submitted, made or obtained by DNFC in
connection with the execution, delivery or performance of this Agreement or the
DNFC Agreements, or the consummation of the transactions contemplated hereby or
thereby, except for those the failure of which to submit, make or obtain would
not have a material adverse effect upon the assets or business of DNFC.
4.4 Capitalization. The authorized capital of DNFC is 400,000,000 Italian
lire, divided into 400,000 shares of stock with a value of 1,000 Italian lire
per share. All of such shares are issued and outstanding, have been duly
authorized and validly issued, are fully paid and nonassessable, and are owned
of record by DN. There are no outstanding options, warrants, rights,
commitments, preemptive rights or agreements of any kind for the issuance or
sale of, or outstanding securities convertible into, any additional shares of
DNFC stock. There are no other securities of DNFC entitled, in the ordinary
course, to vote in the election of the Board of Directors of DNFC. There are no
outstanding obligations of DNFC to repurchase, redeem or otherwise acquire any
securities of DNFC.
4.5 Material Contracts. Schedule 4.5 hereto contains a complete and
correct list of all agreements, contracts and commitments (collectively, the
"Material Contracts") of the following types, written or oral to which DNFC or
DN is a party or by which it is bound and which, in each case, relate primarily
to the DNFC Business, including (i) leases of real or personal property, (ii)
employment, consulting and agency agreements; (iii) research and development
contracts; (iv) agreements, orders or commitments for the sale or purchase of
raw materials, supplies or finished products; (v) joint ventures, partnerships
or similar arrangements; (vi) agreements for the acquisition or disposition of
all or substantially all of the DNFC Business; and (vii) licenses to or from
others relating to the DNFC Intellectual Property. Each of the Material
Contracts is in full force and effect and there does not exist thereunder any
material default by DNFC or DN, or to the best knowledge of DNFC and DN, of any
other party thereto, or event or condition which, after notice or lapse of time
or both, would constitute a material default thereunder by DNFC or DN or, to
the best knowledge of DNFC and DN, by any other party thereto. Neither DNFC nor
DN has received any notice that any party to any of the Material Contracts
intends to cancel or terminate any such Material Contract. DNFC has delivered
or made available to ADL true, complete and correct copies of all Material
Contracts.
4.6 Intellectual Property. The Intellectual Property includes all rights
necessary to conduct the DNFC Business as currently conducted, with no known
infringement of the proprietary rights of any third party. Except as set forth
on Schedule 4.6 and except with respect
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to standard rights granted to Italian or European Union government or agencies
pursuant to the contracts listed in Schedule 4.6, (i) to the best knowledge of
DNFC and DN, DNFC is the sole and exclusive owner of all rights to the DNFC
Intellectual Property and has the right to use the same without the payment of
any license, fee, royalty or similar charge; (ii) there is no material claim of
any other person, firm or corporation or any proceeding pending or, to the best
knowledge of DNFC and DN, threatened which relates to any of the DNFC
Intellectual Property or the validity or enforceability thereof or DNFC's
rights thereto; and (iii) to the best knowledge of DNFC and DN, there are no
inventions within the scope of the DNFC Intellectual Property for which the
inventor(s) thereof is or are not contractually obligated to assign all of
their rights therein to DNFC or DN.
4.7 Litigation; Disputes. There are no claims, actions, suits, proceedings
or investigations by any third party or by governmental, regulatory or
administrative authorities of any nature, civil, criminal or regulatory, at law
or in equity, by or before any court, arbitrator or governmental or other
regulatory or administrative agency, instrumentality or authority which are
pending or, to the best knowledge of DNFC and DN, threatened, by or against or
affecting DNFC or the DNFC Business.
4.8 Compliance with Applicable Law. DNFC is currently in compliance, in
all material respects, with all applicable statutes, laws, rules, regulations,
orders, ordinances, judgments or decrees of all governmental authorities
(federal, state, local or otherwise) applicable to the DNFC Business. DNFC has
all governmental licenses, authorizations, permits, consents and approvals
necessary to conduct its business as it is currently being conducted.
4.9 Taxes. DNFC (or DN on behalf of DNFC) has filed or will file within
the time prescribed by law (including extensions of time approved by the
appropriate taxing authority) all tax returns and reports required to be filed
with the Italian taxing authorities and any other jurisdictions where such
filing is required by law. All taxes which are due and payable by DNFC or DN
related to the DNFC Business, and any interest and penalties thereon, whether
disputed or not, have been paid in full. Neither DN nor DNFC is delinquent in
the payment of any tax related to the DNFC Business, and there is no tax
deficiency or claim outstanding, proposed or assessed against either of them
related to the DNFC Business. There has not been any audit of any tax return
filed by DN or DNFC, no such audit is in progress, and neither DN nor DNFC has
been notified by any tax authority that any such audit is contemplated or
pending. Except as provided for in the DNFC Financial Statements or incurred in
the ordinary course of business since the date thereof, there is no existing
contingent or deferred liability for taxes and no material changes in the
assets and liabilities as shown in the DNFC Financial Statements have occurred,
other than in the ordinary course of business, since the date thereof which
might result in any such liability.
4.10 Sufficiency of Assets. Upon consummation of the transactions
contemplated hereby (including, but not limited to, the execution and
performance of the Transition Services Agreement and the Sublease), DNFC will
have the assets that are necessary and adequate for it to conduct the DNFC
Business as currently conducted.
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4.11 Financial Statements. Attached hereto as Schedule 4.11 is the
unaudited balance sheet of DNFC as of December 31, 1999, and the unaudited
statement of income of DNFC for the period ending December 31, 1999
(collectively, the "DNFC Financial Statements"). The DNFC Financial Statements
are true and correct in all material respects, have been prepared in conformity
with EC accepted accounting principles applied on a consistent basis, and
fairly present the financial condition of DNFC as of the date thereof (subject
to the absence of footnotes and to year-end audit adjustments).
4.12 No Undisclosed Liabilities. Since the date of the DNFC Financial
Statements, DNFC has not incurred any Liabilities relating to the DNFC Business
except Liabilities (a) that were incurred in the usual and ordinary course of
business consistent with past practice and (b) that, individually and in the
aggregate, would not have a materially adverse effect upon the DNFC Business.
4.13 Absence of Certain Changes. Since December 31, 1999, DNFC has
conducted the DNFC Business only in the ordinary course. Without limiting the
generality of the foregoing, except as set forth on Schedule 4.13, DNFC has not
since such date:
(a) experienced any material adverse change in its financial
condition, assets, liabilities, prospective contracts or its relationship
with its principal clients;
(b) sold, assigned, transferred, pledged, leased or otherwise
disposed of any asset except in the ordinary course of business consistent with
past practices, but not in any event exceeding $200,000;
(c) incurred any obligation, liability or indebtedness except in the
ordinary course of business consistent with past practices, but not in any
event exceeding $200,000, or incurred any extraordinary losses;
(d) made any declaration, setting aside or payment of any dividend by
DNFC, or made any other distribution in respect of the capital stock of
DNFC, or any direct or indirect redemption, purchase or other acquisition
by DNFC of its own capital stock;
(e) incurred any obligation or liability to any of its officers,
directors, stockholders or employees, or made any loans or advances to any
of its officers, directors, stockholders or employees, except normal
compensation and expense allowances payable to officers or employees;
(f) amended, waived, released, disposed of or permitted to lapse any
right relating to the DNFC Business;
(g) transferred or granted any rights under any concessions, leases,
licenses, agreements, patents, inventions, trademarks, service marks,
trade names, trade dress, brand names, trade secrets or copyrights or with
respect to the DNFC Intellectual Property;
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(h) experienced any material damage, destruction or loss (whether or
not covered by insurance) relating to the assets of the DNFC Business; or
(i) agreed, whether or not in writing, to do any of the foregoing.
4.14 Insurance. DNFC, directly or through its Affiliates, currently
maintains policies of fire, liability, worker's compensation, life, and
property and casualty in respect to the DNFC Business. All such policies (i)
are in full force and effect and (ii) are sufficient for compliance in all
material respects by DNFC with all requirements of law and all agreements to
which DNFC is a party.
4.15 Employee Benefit Plans. Neither DNFC nor DN currently maintains,
contributes to, or participates in, any pension, profit-sharing, deferred
compensation, bonus, stock option, share appreciation right, severance, group
or individual health, dental, medical, life insurance, survivor benefit, car
allowance, or similar plan, policy or arrangement, whether formal or informal,
for the benefit of any employee of DNFC. Such arrangements are referred to in
this Agreement as the "Employee Benefit Plans." DNFC has heretofore delivered
or made available to Epyx and ADL true and correct descriptions of each
Employee Benefit Plan.
4.16 Real and Personal Property
(a) Real Property. DNFC does not own any real property. All of the
real property leased by DNFC is identified on Schedule 4.16(a). True and
complete copies of all leases with respect to such leased real property
have been delivered to ADL. Each of said leases has been duly authorized
and executed by the parties and is in full force and effect. Neither DN
nor DNFC is in default under any of said leases, nor, to the knowledge of
DN and DNFC, has any event occurred which, with notice or the passage of
time, or both, would give rise to such a default. To the knowledge of DN
and DNFC, the other party to each of said leases is not in default under
any of said leases and there is no event which, with notice or the passage
of time, or both, would give rise to such a default. Except as set forth
in Schedule 4.16(a), no consent or approval is required from the other
parties to any such lease or from any regulatory authority in Italy
relating to the transfer of a leasehold interest in real property and no
filing with any such regulatory authority is required in connection
therewith. To the extent that any such consents, approvals or filings are
required, DN or DNFC will obtain or complete them before the Closing.
(b) Personal Property. A complete description of the equipment of
DNFC is contained in Schedule 4.16(b) hereto. Except as specifically
disclosed in said Schedule, DNFC has good and marketable title to all of
its personal property. None of such personal property or assets is subject
to any mortgage, pledge, lien or encumbrance except as specifically
disclosed in said Schedule. Except as otherwise specified in Schedule
4.16(b) hereto, all leasehold improvements, furnishings and equipment of
DNFC are in good working order and comply in all material respects with
all applicable laws, ordinances and regulations.
4.17 Receivables from Affiliates. Except as disclosed on Schedule 4.17
hereto, DNFC does not have any accounts or loans receivable from any person,
firm or corporation which is affiliated with DNFC or DN or from any director,
officer or employee of DNFC or DN, and all
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accounts and loans receivable from any such person, firm or corporation shall
be paid in cash prior to the Closing.
4.18 Transactions with Interested Persons. Neither DNFC nor any
stockholder, officer, supervisory employee or director of DNFC or DN or, to the
knowledge of DN and DNFC, any of their respective spouses or family members,
owns directly or indirectly on an individual or joint basis any material
interest in, or serves as an officer or director or in another similar capacity
of, any competitor or supplier of DNFC, or any organization which has a
material contract or arrangement with DNFC.
4.19 Employees; Labor Matters. A complete list of employees of DNFC is
contained in Schedule 4.19(a) hereto, together with their current position and
compensation. DNFC is not delinquent in payments to any of its employees for
any wages, salaries, commissions, bonuses or other direct compensation for any
services performed for it to the date hereof or amounts required to be
reimbursed to such employees. Upon termination of the employment of any of said
employees, neither DNFC nor Epyx will by reason of the transactions
contemplated under this Agreement or anything done prior to the Closing be
liable to any of said employees for so-called "severance pay" or any other
payments, except as set forth in Schedule 4.19(b). Neither DNFC nor DN has any
policy, practice, plan or program of paying any form of severance compensation
in connection with the termination of employment, except as set forth in said
Schedule. DNFC is in compliance with all applicable laws and regulations
respecting labor, employment, fair employment practices, work place safety and
health, terms and conditions of employment, and wages and hours. There are no
charges of employment discrimination or unfair labor practices, nor are there
any strikes, slowdowns, stoppages of work, or any other concerted interference
with normal operations which are existing, pending or threatened against or
involving DNFC. There are no grievances, complaints or charges that have been
filed against DNFC, and there is no arbitration or similar proceeding pending
and no claim therefor has been asserted. No collective bargaining agreement is
in effect or is currently being or is about to be negotiated by DNFC. Neither
DNFC nor DN has received any information indicating that any of its employment
policies or practices is currently being audited or investigated by any
domestic or foreign government agency. No circumstances have arisen under which
DNFC is likely to be required to pay damages for wrongful dismissal, to make
any statutory redundancy payment or make or pay any compensation in respect of
unfair dismissal, or make any other payment under any employment protection or
other employment statutes, treaties, regulations, by-laws, codes or orders, or
to reinstate or re-engage any former employee.
4.20 Environmental Matters.
(a) DNFC is in compliance with all Environmental Laws applicable to
the DNFC Business. DNFC has all permits necessary under any Environmental
Law to conduct the DNFC Business as presently conducted. There is no suit,
action, claim, arbitration, administrative, governmental investigation
(including, but not limited to, requests for information) or other legal
proceeding pending or, to the best knowledge of DNFC and DN, threatened,
which relates to the ownership, conduct or operation of the DNFC Business
and which arises under Environmental Law or which is reasonably likely to
give rise to an Environmental Liability.
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(b) For purposes of this Section 4.20, the following terms shall have
the meanings set forth below:
(i) "Environmental Laws" means any and all federal, state, local
and foreign statutes, laws, judicial decisions, regulations,
ordinances, rules, judgments, orders, decrees, codes, plans,
injunctions, permits, licenses, agreements and governmental
restrictions, relating to human health, safety, the environment or to
emissions, discharges or releases of pollutants, contaminants or
other hazardous substances or wastes into the environment, including
without limitation ambient air, surface water, ground water or land,
or otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of
pollutants, contaminants or other hazardous substances or wastes or
the clean-up or other remediation thereof.
(ii) "Environmental Liabilities" means any and all liabilities
of or relating to the DNFC Business which arise under or relate to
matters covered by Environmental Laws.
ARTICLE V. REPRESENTATIONS AND WARRANTIES OF DN
DN hereby represents and warrants to ADL and Epyx as follows:
5.1 Corporate Organization. DN is duly incorporated, validly existing and
in good standing under the laws of The Netherlands. DN has the requisite
corporate power and authority to conduct its business as it is currently being
conducted. By the date of execution of this Agreement, the corporate name of DN
is still "Androma B.V.", while the name "New DeNora New Energy Investments" is
its registered tradename, as confirmed by the certificate of the Amsterdam
Chamber of Commerce dated March 30, 2000, which has been delivered to ADL and
to Epyx prior to the execution of this Agreement. All requested corporate
action and resolutions to record "De Nora New Energy Investments" as the proper
corporate name of the company, have been adopted by DN.
5.2 Corporate Power and Authority; Non-Contravention. DN has all requisite
corporate power and authority to execute and deliver this Agreement and each
agreement, document and instrument to be executed and delivered by DN pursuant
to or as contemplated by this Agreement (collectively, the "DN Agreements") and
to carry out the transactions contemplated hereby and thereby. The execution
and delivery of this Agreement and the DN Agreements by DN and the consummation
by DN of the transactions contemplated hereby and thereby have been duly
authorized by all necessary corporate action on the part of DN, including the
approval of DN's Board of Directors, and no other corporate action or
proceeding on the part of DN is necessary to authorize the execution and
delivery by DN of this Agreement and the DN Agreements or the consummation by
DN of the transactions contemplated hereby and thereby. This Agreement and each
of the DN Agreements constitute the valid and binding obligation of DN,
enforceable in accordance with their respective terms. The execution, delivery
and performance by DN of this Agreement and each of the DN Agreements:
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(i) do not and will not conflict with or violate any provision
of the charter documents of DN;
(ii) do not and will not violate any laws, rules or regulations
of The Netherlands or any other jurisdiction applicable to DN, or
require DN to obtain any approval, consent or waiver of, or to make
any filing with, any Person that has not been obtained or made; and
(iii) do not and will not result in a breach of, constitute a
default under, accelerate any obligation under or give rise to a
right of termination of any indenture or loan or credit agreement or
any other agreement, contract, instrument, mortgage, lien, lease,
permit, license, authorization, order, writ, judgment, injunction or
decree to which DN is a party or by which DN or its property is
bound, or result in the creation or imposition of any mortgage,
pledge, lien, security interest or other charge or encumbrance on any
of the assets or properties of DN.
5.3 Transfer of Assets. DN has transferred to DNFC all of DN's right,
title and interest to the assets of DN used primarily in the DNFC Business,
including without limitation, the DNFC Intellectual Property and all DN
personnel dedicated to the DNFC Business. DN has transferred to DNFC all of
DN's rights and obligations under the contracts and agreements listed on
Schedule 4.5 or, to the extent that such rights and obligations are not
transferable, DN has entered into arrangements with DNFC to provide that DNFC
shall receive the benefits and burdens of such contracts and agreements.
5.4 Investment Representations.
(a) DN, by reason of its business and financial experience, has such
knowledge, sophistication and experience in business and financial matters
as to be capable of evaluating the merits and risks of its investment in
the DN Shares, and is purchasing the DN Shares hereunder for its own
account, for investment only and not with a view to, or any present
intention of, effecting a distribution of such securities or any part
thereof. DN acknowledges that the DN Shares to be purchased hereunder have
not been registered under the Securities Act or the securities laws of any
state or other jurisdiction and cannot be disposed of unless they are
subsequently registered under the Securities Act and any applicable state
laws or exemption from such registration is available.
(b) DN is an "accredited investor" as that term is defined in Rule
501 promulgated under the Securities Act.
(c) DN has had the opportunity to ask questions and to
receive answers concerning the financial condition, operations and prospects of
Epyx and the terms and conditions of DN's investment.
ARTICLE VI. REPRESENTATIONS AND WARRANTIES OF ADL
ADL hereby represents and warrants to DN and DNFC as follows:
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6.1 Corporate Organization. ADL is duly incorporated, validly existing and
in good standing under the laws of the Commonwealth of Massachusetts. ADL has
the requisite corporate power and authority to conduct its business as it is
currently being conducted.
6.2 Corporate Power and Authority; Non-Contravention. ADL has all
requisite corporate power and authority to execute and deliver this Agreement
and each agreement, document and instrument to be executed and delivered by ADL
pursuant to or as contemplated by this Agreement (collectively, the "ADL
Agreements") and to carry out the transactions contemplated hereby and thereby.
The execution and delivery of this Agreement and the ADL Agreements by ADL and
the consummation by ADL of the transactions contemplated hereby and thereby
have been duly authorized by all necessary corporate action on the part of ADL,
including the approval of ADL's Board of Directors, and no other corporate
action or proceeding on the part of ADL is necessary to authorize the execution
and delivery by ADL of this Agreement and the ADL Agreements or the
consummation by ADL of the transactions contemplated hereby and thereby. This
Agreement and each of the ADL Agreements constitute the valid and binding
obligation of ADL, enforceable in accordance with their respective terms. The
execution, delivery and performance by ADL of this Agreement and each of the
ADL Agreements:
(i) do not and will not conflict with or violate any provision
of the Articles of Organization or By-Laws of ADL;
(ii) do not and will not violate any laws, rules or regulations
of the United States or any state or other jurisdiction applicable to
ADL, or require ADL to obtain any approval, consent or waiver of, or
to make any filing with, any Person that has not been obtained or
made; and
(iii) do not and will not result in a breach of,
constitute a default under, accelerate any obligation under or give
rise to a right of termination of any indenture or loan or credit
agreement or any other agreement, contract, instrument, mortgage,
lien, lease, permit, license, authorization, order, writ, judgment,
injunction or decree to which ADL is a party or by which ADL or its
property is bound, or result in the creation or imposition of any
mortgage, pledge, lien, security interest or other charge or
encumbrance on any of the assets or properties of ADL.
6.3 Transfer of Assets. ADL has transferred to Epyx all of ADL's right,
title and interest to the assets of ADL used primarily in the Epyx Business,
other than the two government contracts listed on Schedule 6.3 hereto,
including without limitation, the Epyx Intellectual Property and all ADL
personnel dedicated to the Epyx Business. ADL has transferred to Epyx all of
ADL's rights and obligations under the contracts and agreements listed on
Schedule 3.5 (other than the two government contracts listed on Schedule 6.3)
or, to the extent that such rights and obligations are not transferable, ADL
has entered into arrangements with Epyx to provide that Epyx shall receive the
benefits and burdens of such contracts and agreements.
6.4 Investment Representations.
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(a) ADL, by reason of its business and financial experience, has such
knowledge, sophistication and experience in business and financial matters
as to be capable of evaluating the merits and risks of its investment in
New DeNora Epyx, and has purchased its shares of New DeNora Epyx for its
own account, for investment only and not with a view to, or any present
intention of, effecting a distribution of such securities or any part
thereof. ADL acknowledges that such shares have not been registered under
the Securities Act or the securities laws of any state or other
jurisdiction and cannot be disposed of unless they are subsequently
registered under the Securities Act and any applicable state laws or
exemption from such registration is available.
(b) ADL is an "accredited investor" as that term is defined in Rule
501 promulgated under the Securities Act.
(c) ADL has had the opportunity to ask questions and to receive
answers concerning the financial condition, operations and prospects of
New DeNora Epyx and DNFC and the terms and conditions of ADL's investment.
ARTICLE VII. BUSINESS OF NEW DENORA EPYX AND FUNDING
7.1 Business of New DeNora Epyx.
(a) DN and ADL agree that the primary mission of New DeNora Epyx will
be the development of multifuel power modules as follows:
(i) Develop and manufacture world class commercial multifuel
fuel processors and stacks (hydrogen and reformate operation) for
micropower and mobile applications; and
(ii) Develop expertise for integration of fuel processors and
stacks in power modules and/or fully integrate units (directly or
with external technological partners)
(b) DN and ADL agree that the key objectives of New DeNora Epyx to be
achieved are:
(i) MicroPower(TM)Market.
(1) Residential Sector: Design manufacture and test of 100,
5kW-class MicroPower prototype units for residential markets of
interest in the near term.
(2) Premium/Portable Power Sector: Design manufacture and
test approximately ten 1kW- class prototype units for portable
power applications of interest in the near term.
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(3) Commercial/Industrial Sector: Implement system studies,
develop stacks and system integration expertise (with selected
industrial partners) for applications of hydrogen recovery
(industrial cogeneration). System studies will include the
commercial building market up to 100 kW.
(ii) Transportation Market. Develop and demonstrate fuel
processors and stacks for mobile applications in the frame of funded
projects.
(c) DN and ADL do not intend to pursue component activities at this
time, but the Board may change the business focus of New DeNora Epyx or
any of the foregoing business purposes of New DeNora Epyx at any time or
from time to time.
7.2 Facilities and Services. New DeNora Epyx will use the present
facilities of Epyx in Cambridge, Massachusetts and DNFC will use the present
facilities of DNFC in Milan, Italy for early stage manufacturing and assembly
activities. ADL will license such facilities to New DeNora Epyx pursuant to the
ADL License and Services Agreement, and DN, directly or through any of its
Affiliates, will lease or sublease such facilities to DNFC pursuant to existing
agreements with DNFC. The Board will agree on new facilities when larger
volumes of fuel cells are required by the market. DN and ADL shall provide
services to New DeNora Epyx pursuant to the terms of the DN Services Agreement
and the ADL License and Services Agreement, respectively. The Board may elect
at any time or from time to time to discontinue the use of any or all of such
services.
7.3 Marketing. On a priority basis, New DeNora Epyx will identify
appropriate distribution channels and present them to the Board for approval.
New DeNora Epyx will take the lead in identifying a first-class distribution
channel in the United States, and DNFC will take the lead in identifying a
first-class distribution channel in Europe. Asian distribution channels will be
identified jointly.
7.4 Funding.
(a) New DeNora Epyx shall be funded by the Stockholders in accordance
with this Section 7.4 and the then current Operating Plan. DN shall be
responsible for 50% of the funding of New DeNora Epyx and ADL shall be
responsible for the other 50% of the funding of New DeNora Epyx.
(b) The operations of New DeNora Epyx shall be funded as follows: Not
later than April 10, 2000, each of ADL and DN shall pay to New DeNora Epyx
three million US dollars (US$3,000,000) by wire transfer of immediately
available funds. Such funds shall be used by New DeNora Epyx in accordance
with the then-current Operating Plan, and shall be treated as additional
paid in capital. Each of ADL and DN hereby further agree to provide an
additional eight million US dollars ($8,000,000) by December 31, 2000 in
accordance with this Section 7.4(b). From time to time after the date
hereof, upon resolution duly approved by the Board, ADL and DN shall
contribute additional funds to New DeNora Epyx in order for New DeNora
Epyx to fund its operations pursuant to the then-current Operating Plan.
All such amounts shall be funded equally and simultaneously by ADL and DN,
and shall be treated as
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paid in capital. In the event that at October 15, 2000, the Board
determines that an IPO (as defined in Section 5.10 of the Stockholders'
Agreement) will not be completed by December 31, 2000 for any reason or
that funding in excess of the aggregate US$22,000,000 provided for above
is required, the Board will meet to determine the amount of additional
funding necessary and the mechanism for providing such funds to New DeNora
Epyx. DNFC shall be funded by New DeNora Epyx in accordance with the
then-current Operating Plan and, in any case, in such a manner as to
comply with any mandatory legal requirements imposed by the laws of Italy,
and otherwise as directed from time to time by the Board of Directors of
DNFC.
(c) New DeNora Epyx shall use all amounts funded by the Stockholders
in accordance with the then-current Operating Plan.
ARTICLE VIII. CONDITIONS PRECEDENT TO CLOSING
8.1 Conditions Precedent to Obligations of DN. The obligations of DN to
consummate the transactions contemplated by this Agreement are subject to the
satisfaction of the following conditions, at or prior to the Closing:
(a) All covenants, agreements, obligations and conditions contained
in this Agreement to be performed or complied with by Epyx and ADL on or
prior to the Closing Date shall have been performed or complied with in
all respects.
(b) At the Closing Date, the issuance of the DN Shares to DN shall be
legally permitted by all laws and regulations to which the parties hereto
are subject.
(c) DN shall have received from Epyx and ADL such documents with
respect to the legal existence and authority of Epyx and ADL as DN shall
reasonably request.
(d) DN shall have received a legal opinion from Hale and Dorr LLP,
substantially in the form attached hereto as Exhibit A.
8.2 Conditions Precedent to Obligations of ADL. The obligations of ADL to
consummate the transactions contemplated by this Agreement are subject to the
satisfaction of the following conditions, at or prior to the Closing:
(a) All covenants, agreements and conditions contained in this
Agreement to be performed or complied with by DN and DNFC on or prior to
the Closing Date shall have been performed or complied with in all
respects.
(b) At the Closing Date, the issuance of the DN Shares to DN and the
transfer of the shares of DNFC to Epyx shall be legally permitted by all
laws and regulations to which the parties hereto are subject.
(c) ADL shall have received from DN and DNFC such documents with
respect to the legal existence and authority of DN and DNFC as ADL shall
reasonably request.
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(d) ADL shall have received a legal opinion from Studio Legale
Cannata, Pierallini e Associati, substantially in the form attached hereto
as Exhibit B.
(e) ADL and Epyx shall have entered into a license agreement,
substantially in the form attached hereto as Exhibit C (the "License
Agreement").
8.3 Conditions Precedent to Obligations of DN and ADL. The obligations of
DN and ADL to consummate the transactions contemplated by this Agreement are
subject to the satisfaction of the following conditions, at or prior to the
Closing:
(a) DN and ADL shall have agreed on the initial Operating Plan,
attached hereto as Exhibit D.
(b) DN, ADL and New DeNora Epyx shall have entered into a
stockholders' agreement, substantially in the form attached hereto as
Exhibit E (the "Stockholders' Agreement").
(c) ADL and New DeNora Epyx shall have entered into a license
agreement for space and services in the ADL facility in Cambridge,
Massachusetts, substantially in the form attached hereto as Exhibit F (the
"ADL License and Services Agreement").
(d) DN, directly or through any of its Affiliates, and DNFC shall
have entered into a services agreement, substantially in the form attached
hereto as Exhibit G (the "DN Services Agreement").
(e) Each party shall have made all filings with and
notifications of governmental authorities, regulatory agencies and other
entities required to be made by such party in connection with the execution and
delivery of this Agreement and the performance of the transactions contemplated
hereby; and each party shall have received all authorizations, waivers from all
third parties, including, without limitation, applicable governmental
authorities, regulatory agencies, lessors, lenders and contract parties,
required to permit the consummation of the transactions contemplated by this
Agreement.
(f) The transactions contemplated by this Agreement shall have been
approved by the Board of Directors of each party and, if required, by the
stockholders of each party.
ARTICLE IX. COVENANTS OF DN AND ADL
9.1 Noncompetition by ADL.
(a) For a period of four (4) years after the date hereof, ADL, for
itself and each of its subsidiaries and Affiliates, agrees that it will
not perform any work in the reformate fueled direct hydrogen or direct
methanol fueled PEMFC systems field (the "Field") in competition with New
DeNora Epyx, except that ADL may work unrestricted in the fields of use
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in which it has been provided a license pursuant to the License Agreement.
The foregoing shall not prevent ADL from continuing to work under the
following existing government sponsored projects, including any extensions
thereof: (1) "Design of a 50 kw Stationary PEMFC System," and (2) "Design
of next generation of PEMFC stacks with clearly superior hydrogen
utilization." In the event that ADL acquires rights in intellectual
property in the Field arising out of the foregoing projects, ADL agrees to
grant to New DeNora Epyx a royalty-free, non-exclusive license in such
intellectual property. Neither ADL nor any of its Affiliates shall license
any such intellectual property to fuel cell companies other than New
DeNora Epyx without approval of the Board (excluding the directors
appointed by ADL). The provisions of this Section 9.1(a) also shall not
prevent ADL from owning beneficially or of record up to five percent (5%)
of the outstanding securities of a publicly-held corporation which engages
in any competing activity in the Field.
(b) DN agrees that ADL can conduct internal projects in the Field,
and, provided that ADL complies with the procedure set forth in the
following five sentences, ADL may work on U.S. government funded projects
in the Field. If ADL desires to work on U.S. government funded projects in
the Field, ADL shall provide written notice thereof to New DeNora Epyx
describing the project. New DeNora Epyx shall have fifteen (15) days from
receipt of such notice to elect to pursue such project on its own. If New
DeNora Epyx informs ADL in writing that it has elected to pursue such
project, ADL shall not be permitted to pursue such project. If New DeNora
Epyx informs ADL in writing that it has elected not to pursue such project
or if New DeNora Epyx fails to respond within such 15-day period, ADL
shall be permitted to pursue such project. In the event that ADL acquires
rights in intellectual property in the Field arising out of the foregoing
work, ADL agrees to grant to New DeNora Epyx a royalty-free, non-exclusive
license and to provide New DeNora Epyx with a right of first refusal to
take a mutually agreeable exclusive royalty bearing license.
9.2 Noncompetition by DN.
(a) For a period of four (4) years after the date hereof, DN, for
itself and each of its subsidiaries and Affiliates, agrees that it will
not perform any work in the Field in competition with New DeNora Epyx. The
foregoing shall not prevent DN from continuing its current research and
manufacture of catalysts, provided that supply of catalysts by DN or its
Affiliates to fuel cell companies other than New DeNora Epyx will require
approval of the Board (excluding the directors appointed by DN). The
foregoing also shall not prevent DN from owning beneficially or of record
up to five percent (5%) of the outstanding securities of a publicly-held
corporation which engages in any competing activity in the Field.
(b) ADL agrees that DN, directly or through any of its Affiliates,
can conduct internal projects in the Field, and, provided that DN complies
with the procedure set forth in the following five sentences, DN may work
on Italian or EC government funded projects in the Field. If DN desires to
work on Italian or EC government funded projects in the Field, DN shall
provide written notice thereof to New DeNora Epyx describing the project.
New DeNora Epyx shall have fifteen (15) days from receipt of such notice
to elect to pursue such project on its own. If New DeNora Epyx informs DN
in writing that it has elected to pursue such project, DN shall not be
permitted to pursue such project. If New DeNora Epyx informs DN in writing
that it has
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elected not to pursue such project or if New DeNora Epyx fails to respond
within such 15-day period, DN shall be permitted to pursue such project.
In the event that DN acquires rights in intellectual property in the Field
arising out of the foregoing work, DN agrees to grant to New DeNora Epyx a
royalty-free, non-exclusive license and to provide New DeNora Epyx with a
right of first refusal to take a mutually agreeable exclusive royalty
bearing license.
9.3 Supply of Catalysts. DN will supply catalysts and related technology
to New DeNora Epyx on favorable terms to be approved by the Board (excluding
the directors appointed by DN).
9.4 Equity Participation Plan. As soon as practicable after the Closing,
the Board shall adopt a stock option or other equity participation plan for the
employees of New DeNora Epyx and its subsidiaries and Affiliates, and shall
agree on which New DeNora Epyx employees initially will receive options or
rights under such plan. The aggregate pool of equity available for grant under
such plan shall be up to 15% of the Common Stock, on a fully diluted basis, and
the pool of equity available for the initial grants to New DeNora Epyx
employees shall be between 3% and 4% of the Common Stock, on a fully diluted
basis.
ARTICLE X. INDEMNIFICATION
10.1 Agreement to Indemnify.
(a) From and after the Closing, ADL agrees to indemnify, defend and
hold harmless DN and New DeNora Epyx from and against any and all demands,
claims, losses, damages, costs and expenses, including without limitation
interest, costs, liabilities, fines, penalties and reasonable fees of
attorneys and consultants (collectively, "Damages"), asserted against,
imposed upon or incurred or suffered by DN or New DeNora Epyx as a result
of or arising from any breach of any representation, warranty, covenant or
agreement of ADL contained in this Agreement.
(b) The aggregate liability of ADL with respect to claims for
indemnification pursuant to Section 10.1(a) above shall not exceed the
lesser of (i) the aggregate dollar amount which, as of the date of any
such claim, DN shall have contributed to New DeNora Epyx for funding of
New DeNora Epyx's operations and (ii) twenty-five million dollars
($25,000,000). ADL shall have no liability in respect of claims for
indemnification pursuant to Section 10.1(a) above (i) unless and until the
total Damages suffered by DN and/or New DeNora Epyx with respect to such
claims exceeds $100,000, and then only to the extent of such excess, and
(ii) unless written notice of such claim, in accordance with the
provisions of Section 10.2, shall have been given to ADL on or before the
date which is fifteen (15) months after the Closing Date.
(c) From and after the Closing, DN agrees to indemnify, defend and
hold harmless ADL and New DeNora Epyx from and against any and all
Damages, asserted against, imposed upon or incurred or suffered by ADL or
New DeNora Epyx as a result of or arising from any breach of any
representation, warranty, covenant or agreement of DN contained in this
Agreement.
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(d) The aggregate liability of DN with respect to claims for
indemnification pursuant to Section 10.1(c) above shall not exceed the
lesser of (i) the aggregate dollar amount which, as of the date of any
such claim, ADL shall have contributed to New DeNora Epyx for funding of
New DeNora Epyx's operations and (ii) twenty-five million dollars
($25,000,000). DN shall have no liability in respect of claims for
indemnification pursuant to Section 10.1(c) above (i) unless and until the
total Damages suffered by ADL and/or New DeNora Epyx with respect to such
claims exceeds $100,000, and then only to the extent of such excess, and
(ii) unless written notice of such claim, in accordance with the
provisions of Section 10.2, shall have been given to DN on or before the
date which is fifteen (15) months after the Closing Date.
10.2 Procedure for Indemnification.
(a) In the event that any indemnified party receives written notice
of the commencement of any action or proceeding, the assertion of any
claim by a third party or the imposition of any penalty or assessment for
which indemnity may be sought pursuant to this Article X (a "Third Party
Claim"), and such indemnified party intends to seek indemnity pursuant to
this Article X, such indemnified party shall promptly provide the
indemnifying party with notice of such action, proceeding, claim, penalty
or assessment, and such indemnifying party shall, upon receipt of such
notice, be entitled to participate in or, at the indemnifying party's
option, assume the defense, appeal or settlement of such action,
proceeding, claim, penalty or assessment with respect to which such
indemnity has been invoked with counsel selected by it and approved by the
indemnified party (such approval not to be unreasonably withheld), and
such indemnified party will fully cooperate with the indemnifying party in
connection therewith; provided that such indemnified party shall be
entitled to employ its own counsel to represent it if, in such indemnified
party's reasonable judgment, a conflict of interest between the
indemnifying party and the indemnified party exists in respect of such
claim, or if the defendants in, or targets of, any such action or
proceeding include both an indemnified party and an indemnifying party and
such indemnified party shall have reasonably concluded that there may be
legal defenses available to it that are different from or additional to
those available to the indemnifying party, and in any such event the
reasonable fees and expenses of such separate counsel shall be paid by the
indemnifying party. In the event that the indemnifying party fails to
assume the defense, appeal or settlement of such action, proceeding,
claim, penalty or assessment within 20 days after receipt of notice
thereof from such indemnified party, such indemnified party shall have the
right to undertake the defense or appeal of or settle or compromise such
action, proceeding, claim, penalty or assessment on behalf of and for the
account and risk of the indemnifying party. The indemnifying party shall
not settle or compromise any such action, proceeding, claim, penalty or
assessment without the indemnified party's prior written consent, unless
such settlement or compromise provides solely for the payment of money and
provides a complete release of, or dismissal with prejudice of claims
against, the indemnified party. If written notice of a Third Party Claim
is not provided promptly as required by this Section 10.2(a), the
indemnified party shall nonetheless be entitled to indemnification by the
indemnifying party except to the extent that the indemnifying party is
prejudiced by such late receipt of such written notice.
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(b) Any indemnifiable claim that is not a Third Party Claim shall be
asserted by written notice to the indemnifying party from the indemnified
party, which notice shall be provided promptly after the indemnifying
party becomes aware of the claim. If the indemnifying party does not
respond to such notice within 60 days, it shall have no further right to
contest the validity of such claim and shall pay such claim to the
indemnified party within 30 days after the expiration of such 60 day
period.
ARTICLE XI. MISCELLANEOUS PROVISIONS
11.1 Expenses. Each party shall bear its own costs and expenses, including
the reasonable fees and disbursements of legal counsel and other professionals,
incurred in connection with the transactions contemplated by this Agreement.
11.2 Legend on Securities. DN acknowledges and agrees that the following
legend shall be typed on each certificate evidencing any of the securities
issued hereunder held at any time by DN:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE OFFERED, SOLD, TRANSFERRED,
HYPOTHECATED OR OTHERWISE ASSIGNED EXCEPT PURSUANT TO (1) A REGISTRATION
STATEMENT WITH RESPECT TO SUCH SECURITIES WHICH IS EFFECTIVE UNDER SUCH ACT OR
(2) AN AVAILABLE EXEMPTION FROM REGISTRATION UNDER SUCH ACT RELATING TO THE
DISPOSITION OF SECURITIES. THESE SECURITIES ARE ALSO SUBJECT TO THE PROVISIONS
OF A STOCKHOLDERS' AGREEMENT, DATED AS OF APRIL 4, 2000, INCLUDING CERTAIN
RESTRICTIONS ON TRANSFER SET FORTH THEREIN. A COMPLETE AND CORRECT COPY OF SUCH
AGREEMENT IS AVAILABLE FOR INSPECTION AT THE PRINCIPAL OFFICE OF NEW DENORA
EPYX AND WILL BE FURNISHED UPON WRITTEN REQUEST AND WITHOUT CHARGE.
11.3 Amendment and Waiver. Any party may waive any provision hereof
intended solely for its benefit in writing. No failure or delay on the part of
any party hereto in exercising any right, power or remedy hereunder shall
operate as a waiver thereof. Except as otherwise expressly provided herein, the
remedies provided for herein are cumulative and are not exclusive of any
remedies that may be available to any party hereto at law or in equity or
otherwise. This Agreement may not be amended without the prior written consent
of each of the parties hereto.
11.4 Notices. All notices and other communications shall be in writing and
shall be deemed given if delivered by hand, sent via facsimile, sent via a
reputable nationwide courier service or mailed by registered mail (return
receipt requested) to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice) and shall be deemed
given on the date on which so hand-delivered, the date on which receipt of the
facsimile is acknowledged, the next business day following the date on which so
sent or on the third business day following the date on which so mailed, as the
case may be:
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If to ADL:
Acorn Park
Cambridge, MA 02140
Attention: General Counsel
Facsimile: +1.617.498-7116
If to DN:
Herengracht 548
Postbus 990
1000AZ Amsterdam, The Netherlands
Attention: Board of Managing Directors
Facsimile: +31.20.625.8274
If to DNFC:
Via Bistolfi 35
20134 Milano, Italy
Attention: Chief Executive Officer
Facsimile: +39.02.2129.2403
with a copy to:
Avv. Giuseppe Cambareri
Via dei Giardini 10
20121 Milano, Italy
Facsimile: +39.02.6555.152
If to Epyx:
Acorn Park
Cambridge, MA 02140
Attention: Chief Operating Officer
Facsimile: (617) 498-6655
11.5 Headings. The Article and Section headings used or contained in this
Agreement are for convenience of reference only and shall not affect the
construction of this Agreement.
11.6 Counterparts. This Agreement may be executed in one or more
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which together
shall be deemed to constitute one and the same agreement.
11.7 Severability. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstances, is held
invalid, illegal or unenforceable in any respect for any reason, the validity,
legality and enforceability of any such provision in every other respect and of
the remaining provisions contained herein shall not be in any way impaired
thereby, it being intended that all of the rights and privileges of the parties
hereto shall be enforceable to the fullest extent permitted by law.
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11.8 Entire Agreement. This Agreement and the other agreements
contemplated hereby are intended by the parties as a final expression of their
agreement and intended to be complete and exclusive statement of the agreement
and understanding of the parties hereto in respect of the subject matter
contained herein and therein. This Agreement and the other agreements
contemplated hereby (including the exhibits hereto) supersede all prior
agreements and understandings between the parties with respect to such subject
matter.
11.9 Adjustments. All references to share prices and amounts herein shall
be equitably adjusted to reflect stock splits, stock dividends,
recapitalizations and similar changes affecting the capital stock of New DeNora
Epyx and DNFC.
11.10 Law Governing. This Agreement shall be construed and enforced in
accordance with and governed by the laws of The Commonwealth of Massachusetts
(without giving effect to principles of conflicts of law). Any controversy,
claim or dispute arising out of or relating to this Agreement, the
Stockholders' Agreement or any other agreement or instrument delivered in
connection therewith shall be submitted to and resolved exclusively by
arbitration in accordance with the rules of the American Arbitration
Association in effect on the date thereof. Judgment upon the award rendered by
the arbitrator(s) in accordance with said rules may be entered and enforced in
any court of competent jurisdiction and, for such purpose, each party hereby
waives trial by jury in any action relating thereto and consents to the
jurisdiction of any Massachusetts court (federal or state). Any such
arbitration proceedings shall be held in Boston, Massachusetts.
11.11 Cooperation. Each of New DeNora Epyx, DNFC, DN and ADL shall
cooperate with all reasonable requests of the others not inconsistent with the
terms of this Agreement or any other agreement entered into in connection
herewith to more effectively consummate the transactions contemplated hereby
and the transactions referred to herein and therein.
11.12 Public Statements. No party shall issue any press release or
otherwise make any public statements with respect to this Agreement or the
transactions contemplated hereby without the prior written consent of the other
parties hereto. This provision shall not restrict a party from making an
announcement internally to its employees.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
DENORA NEW ENERGY INVESTMENTS B.V.
(presently ANDROMA B.V.)
By: /s/ Mauro Saponelli
---------------------------------------
Mauro Saponelli
Managing Director
DENORA FUEL CELLS S.p.A.
By: /s/ Franco Ladavas
---------------------------------------
Franco Ladavas
Chairman of the Board of Directors
EPYX CORPORATION
By: /s/ Mark A. Brodsky
---------------------------------------
Mark A. Brodsky
President
ARTHUR D. LITTLE, INC.
By: /s/ Lorenzo C. Lamadrid
---------------------------------------
Lorenzo C. Lamadrid
President and Chief Executive Officer
29
