e. Potential Acquisition of Genesis Solar Espana, S.L.
On May 12, 2010 the Company entered into an Amended and Restated Stock Purchase Agreement (the “Restated SPA”) with GEI Plc (then an affiliate of GCM Ltd) regarding the Company’s potential acquisition of the “Solar Subsidiaries” (being Genesis Solar Espana, S.L. (“GSE”), Genesis Solar Singapore Pte. Ltd. (“GSS”), and Genesis Solar Hungary Kft (“GSH”)). This agreement amended and restated the agreement the parties initially entered into on August 11, 2009 and then amended twice subsequently (on November 24, 2009 and January 19, 2010). The parties completed the initial closing into escrow on May 25, 2010 at which time the Company deposited share certificates with a third party escrow agent (the “Escrow Agent”) representing 14,146,093 shares of the Company’s common stock, and certain other certificates and documents. The shares deposited were allocated for the purchase price of GSE, GSS, GSH, and certain intellectual property owned by GEI Plc.
In July 2010 the Company assigned its rights under the Restated SPA to GCM Ltd, and on or about August 3, 2010, GCM Ltd exercised its rights to acquire the Solar Subsidiaries and certain know-how from GEI Plc. As a part of that that transaction, the Company indicated that it was not interested in acquiring GSS or GSH, and as a result 50,000 shares of Company common stock were returned to the Company for cancellation. GCM Ltd. exercised its rights under the Restated SPA to acquire the Solar Subsidiaries and Know-How on or about August 3, 2010. Genesis Solar retained rights to acquire GSE and the know-how from GCM Ltd. Pursuant to the terms of a new escrow agreement the Escrow Agent continued to hold certificates representing 14,096,093 shares of Company common stock (the “Shares”) in escrow, which the parties agreed would not be released from escrow until Gensis Solar’s notification following the satisfaction or waiver of various conditions precedent (the “Release Conditions”). The parties had agreed that if the Release Conditions were not satisfied or waived by December 31, 2010 the Escrow Agent would return the Shares to the Company.
In large part because the Company did not have the working capital necessary to engage in significant due diligence with respect to GSE and the Know-How, and the other parties did not enter into various other agreements necessary to satisfy the Release Conditions, Genesis Solar’s rights to acquire GSE and the Know-How expired on January 1, 2011 when the escrow agreement terminated.
Genesis Solar does not know whether it will now be able to acquire GSE or the Know-How, but it has advised the other parties to the transaction that it is willing to continue negotiations subject to compliance with its disclosure requirements. Nevertheless, Genesis Solar has requested the Escrow Agent to return to it the 14,096,093 shares of Genesis Solar common stock that the Escrow Agent continues to hold. Upon receipt of those shares (which are considered outstanding for the purposes of the Colorado Business Corporation Act), Genesis Solar will direct its transfer agent to cancel them.
As of the date of this Report, the Company has not acquired GSE and there can be no assurance that it will be able to do so at any time in the future. Genesis Solar’s ability to acquire GSE and the Know-How depends on a number of factors, including Genesis Solar’s ability to perform adequate due diligence and the ability of other parties to negotiate acceptable arrangements among themselves. A significant issue for Genesis Solar’s ability to negotiate a new arrangement and then to complete the transaction will be Genesis Solar’s ability to obtain the financing necessary to do so – financing that Genesis Solar has not been able to acquire.
GENESIS
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