Exhibit 2.2
AMENDED AND RESTATED
ASSET PURCHASE AGREEMENT
Among
SATCON FILM MICROELECTRONICS, INC.
FILM MICROELECTRONICS, INC.
and
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
TABLE OF CONTENTS
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Section Page
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1. Sale and Delivery of the Assets........................................ 1
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1.1 Delivery of the Assets............................................ 1
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1.2 Further Assurances................................................ 3
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1.3 Purchase Price.................................................... 3
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1.4 Discharge and Assumption of Certain Liabilities; Etc.............. 3
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1.5 Allocation of Purchase Price and Assumed Liabilities.............. 5
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1.6 The Closing....................................................... 5
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1.7 Tax-Free Reorganization........................................... 5
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2. Representations of the Seller and Stockholder.......................... 5
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2.1 Organization...................................................... 5
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2.2 Capitalization of the Seller and the Subsidiaries................. 5
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2.3 Authorization..................................................... 6
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2.4 Ownership of the Assets........................................... 6
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2.5 Financial Statements.............................................. 6
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2.6 Absence of Undisclosed Liabilities................................ 7
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2.7 Litigation........................................................ 7
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2.8 Insurance......................................................... 8
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2.9 Inventory......................................................... 8
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2.10 Fixed Assets...................................................... 8
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2.11 Real Estate and Leases of Real Property........................... 9
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2.12 Change in Financial Condition and Assets.......................... 9
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2.13 Tax Matters....................................................... 9
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2.14 Accounts Receivable............................................... 11
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2.15 Books and Records................................................. 11
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2.16 Contracts and Commitments......................................... 12
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2.17 Compliance with Agreements and Laws............................... 13
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2.18 Employee Relations................................................ 14
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2.19 Absence of Certain Changes or Events.............................. 15
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2.20 Customers......................................................... 16
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2.21 Suppliers......................................................... 16
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2.22 Bank Accounts..................................................... 16
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2.23 Prepayments and Deposits.......................................... 16
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2.24 Trade Names and Other Intangible Property......................... 17
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2.25 Employee Benefit Plans............................................ 17
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2.26 Assets Complete................................................... 18
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2.27 Regulatory Approvals.............................................. 18
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2.28 Indebtedness to and from Officers, Directors and Shareholders..... 18
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2.29 Powers of Attorney and Suretyships................................ 19
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2.30 WARN Act......................................................... 19
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2.31 Disclosure....................................................... 19
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2.32 Securities Representations....................................... 19
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3. Representations of the Buyer........................................... 20
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3.1 Organization and Authority........................................ 20
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3.2 Authorization..................................................... 20
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3.3 Regulatory Approvals.............................................. 21
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3.4 Disclosure........................................................ 21
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4. Access to Information; Public Announcements............................ 21
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4.1 Access to Management, Properties and Records...................... 21
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4.2 Confidentiality................................................... 22
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4.3 Public Announcements.............................................. 22
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5. Pre-Closing Covenants of the Seller and the Stockholder................ 22
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5.1 Conduct of Business............................................... 22
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5.2 Absence of Material Changes....................................... 23
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5.3 Taxes............................................................. 24
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5.4 Delivery of Interim Financial Statements.......................... 25
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5.5 Communication with Customers and Suppliers........................ 25
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5.6 Compliance with Laws.............................................. 25
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5.7 Continued Truth of Representations and Warranties of the
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Seller and the Stockholder........................................ 25
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5.8 Continuing Obligation to Inform................................... 25
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5.9 Exclusive Dealing................................................. 25
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6. Best Efforts to Obtain Satisfaction of Conditions...................... 26
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7. Conditions to Obligations of the Buyer................................. 26
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7.1 Continued Truth of Representations and Warranties of the Seller
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and Stockholder; Compliance with Covenants and Obligations........ 26
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7.2 Corporate Proceedings............................................. 26
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7.3 Governmental Approvals............................................. 26
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7.4 Consents of Lenders, Lessors and Other Third Parties............... 26
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7.5 Adverse Proceedings................................................ 26
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7.6 Due Diligence...................................................... 27
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7.7 Opinion of Counsel................................................. 27
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7.8 Board of Directors and Shareholder Approval........................ 27
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7.9 The Assets......................................................... 27
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7.10 Update............................................................. 27
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7.11 [Intentionally omitted]............................................ 27
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7.12 Assignment of insurance Policies................................... 28
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7.13 Material Adverse Change............................................ 28
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7.14 Escrow Agreement................................................. 28
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7.15 Assumption of Indebtedness....................................... 28
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7.16 Tax Lien Waivers................................................. 28
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7.17 Certain Litigation............................................... 28
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7.18 Closing Deliveries............................................... 28
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8. Conditions to Obligations of the Seller and the Stockholder............. 30
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8.1 Continued Truth of Representations and Warranties of the Buyer;
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Compliance with Covenants and Obligations......................... 30
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8.2 Corporate Proceedings............................................. 30
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8.3 Governmental Approvals............................................ 30
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8.4 Consents of Lenders, Lessors and Other Third Parties.............. 30
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8.5 Adverse Proceedings............................................... 30
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8.6 Repayment of Indebtedness......................................... 30
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8.7 Non-Competition Agreement......................................... 31
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8.8 Closing Deliveries................................................ 31
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9. Indemnification........................................................ 31
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9.1 By the Buyer...................................................... 31
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9.2 By the Seller and the Stockholder................................. 32
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9.3 Claims for Indemnification........................................ 33
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9.4 Defense by Indemnifying Party..................................... 33
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9.5 Payment of Indemnification Obligation............................. 34
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9.6 Survival of Representations; Claims for Indemnification........... 34
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10. Post Closing Agreements................................................ 34
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10.1 Proprietary Information.......................................... 34
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10.2 No Solicitation or Hiring of Former Employees.................... 35
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10.3 Non-Competition Agreement........................................ 35
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10.4 Sharing of Data.................................................. 36
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10.5 Use of Name...................................................... 36
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10.6 Cooperation in Litigation........................................ 36
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10.7 [Intentionally omitted].......................................... 37
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10.8 Product Claims and Returns....................................... 37
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10.9 Cooperation with Buyer's Reporting Requirements.................. 37
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10.10 Discharge of Seller's Obligations................................ 37
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10.11 [Intentionally Omitted].......................................... 37
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10.12 Defense of Certain Claims........................................ 37
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10.13 Lock-up of Shares................................................ 37
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11. Termination of Agreement............................................... 38
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11.1 Termination by Lapse of Time..................................... 38
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11.2 Termination by Agreement of the Parties.......................... 38
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11.3 Termination by Reason of Breach.................................. 38
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12. Transfer and Sales Tax................................................. 38
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13. Brokers................................................................ 38
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13.1 For the Seller................................................... 38
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13.2 For the Buyer.................................................... 39
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14. Notices................................................................ 39
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15. Successors and Assigns................................................. 40
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16. Entire Agreement: Amendments; Attachments.............................. 40
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17. Expenses............................................................... 41
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18. Legal Fees............................................................. 41
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19. Governing Law.......................................................... 41
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20. Section Headings....................................................... 41
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21. Severability........................................................... 41
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22. Counterparts........................................................... 41
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Schedules to be provided by the Seller
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1.1(ii) - Excluded Assets
1.4 - Assumed Liabilities
1.5 - Allocation of the Purchase Price
2.2 - Stock Ownership
2.3 - Third Party Consents
2.4(i) - Encumbrances
2.5 - Financial Statements
2.6 - Undisclosed Liabilities
2.7 - Litigation
2.8 - Insurance
2.9 - Inventory
2.10 - Fixed Assets
2.11 - Leases
2.12 - Changes in Financial Condition
2.14 - Accounts Receivable
2.16 - Contracts
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2.17 - Permits
2.18 - Employee Relations
2.19 - Certain Changes or Events
2.20 - Customer List
2.21 - Suppliers
2.22 - Bank Accounts
2.23 - Prepayments and Deposits
2.24 - Intangible Property
2.25 - Employee Plans
Schedules to be provided by the Buyer
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3.2 - Third Party Consents
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Exhibits
A - Escrow Agreement
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AMENDED AND RESTATED ASSET PURCHASE AGREEMENT
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Agreement made as of the 3rd day of April, 1997 among SatCon Film
Microelectronics, Inc, a Delaware corporation and a wholly-owned subsidiary of
SatCon Technology Corporation, a Delaware corporation, with its principal office
at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (the "Buyer"), Film Microelectronics,
Inc., a Massachusetts corporation with its principal office at ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (the "Seller") and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, the
principal stockholder of the Seller (the "Stockholder").
Preliminary Statement
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The Buyer desires to purchase, and the Seller desires to sell,
substantially all of the assets and business of the Seller, for the
consideration set forth below and the assumption of certain of the Seller's
liabilities set forth below, subject to the terms and conditions of this
Agreement.
NOW, THEREFORE, in consideration of the mutual promises hereinafter set
forth and other good and valuable consideration, the receipt of which is hereby
acknowledged, the parties hereby agree as follows:
1. Sale and Delivery of the Assets
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1.1 Delivery of the Assets.
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(a) Subject to and upon the terms and conditions of this Agreement, at
the closing of the transactions contemplated by this Agreement (the "Closing"),
the Seller shall sell, transfer, convey, assign and deliver to the Buyer, and
the Buyer shall purchase from the Seller, the following properties, assets and
other claims, rights and interests:
(i) all inventories of raw materials, work in process, finished
goods, office supplies, maintenance supplies, packaging materials, spare parts
and similar items of the Seller (collectively, the "Inventory") which exist on
the Closing Date (as defined below);
(ii) all accounts, accounts receivable, notes and notes
receivable existing on the Closing Date which are payable to the Seller,
including any security held by the Seller for the payment thereof, but excluding
any account, account receivable, note or note receivable payable by any
affiliate (as such term is defined in the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder) of Seller ("Affiliate") to
the Seller (the accounts, accounts receivable, notes and notes receivable,
including any related security therein, to be transferred to the Buyer pursuant
hereto are collectively referred to herein as the "Accounts Receivable");
(iii) all prepaid expenses, deposits, bank accounts and other
similar assets of the Seller existing on the Closing Date, including the cash
represented by such assets;
(iv) all rights of the Seller under the contracts, agreements,
leases, licenses and other instruments set forth on Schedules 2.11 and 2.16
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attached hereto (collectively, the "Contract Rights");
(v) all Permits (as defined in Section 2.17) necessary to
conduct the business of the Seller;
(vi) all books, records and accounts, correspondence, production
records, technical, accounting, manufacturing and procedural manuals, customer
lists, employment records, studies, reports or summaries relating to any
environmental conditions or consequences of any operation, present or former, as
well as all studies, reports or summaries relating to any environmental aspect
or the general condition of the Assets, and any confidential information which
has been reduced to writing relating to or arising out of the business of the
Seller;
(vii) all rights of the Seller under express or implied
warranties from the suppliers of the Seller;
(viii) the motor vehicles and other rolling stock owned by the
Seller on the Closing Date;
(ix) all of the machinery, equipment, tools, production reels
and spools, tooling, dies, production fixtures, maintenance machinery and
equipment, furniture, leasehold improvements and construction in progress owned
by the Seller on the Closing Date whether or not reflected as capital assets in
the accounting records of the Seller (collectively, the "Fixed Assets");
(x) all of the Seller's right, title and interest in and to all
intangible property rights, including but not limited to inventions,
discoveries, trade secrets, processes, formulas, know-how, United States and
foreign patents, patent applications, trade names, including the name "Film
Microelectronics" or any derivation thereof, trademarks, trademark
registrations, applications for trademark registrations, copyrights, copyright
registrations, owned or, where not owned, used by the Seller in its business and
all licenses and other agreements to which the Seller is a party (as licensor or
licensee) or by which the Seller is bound relating to any of the foregoing kinds
of property or rights to any "know-how" or disclosure or use of ideas
(collectively, the "Intangible Property");
(xi) except as specifically provided in Subsection 1.1(b)
hereof, all other assets, properties, claims, rights and interests of the Seller
which exist on the
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Closing Date, of every kind and nature and description, whether tangible or
intangible, real, personal or mixed.
(b) Notwithstanding the provisions of paragraph (a) above, the assets
to be transferred to the Buyer under this Agreement shall not include those
assets listed on Schedule 1.1(ii) attached hereto (the "Excluded Assets").
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(c) The Inventory, Accounts Receivable, Contract Rights, Fixed Assets,
Intangible Property and other properties, assets and business of the Seller
described in paragraph (a) above, other than the Excluded Assets, shall be
referred to collectively as the "Assets."
1.2 Further Assurances. At any time and from time to time after the
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Closing, at the Buyer's request and without further consideration, the Seller
promptly shall execute and deliver such instruments of sale, transfer,
conveyance, assignment and confirmation, and take such other action, as the
Buyer may reasonably request to more effectively transfer, convey and assign to
the Buyer, and to confirm the Buyer's title to, all of the Assets, to put the
Buyer in actual possession and operating control thereof, to assist the Buyer in
exercising all rights with respect thereto and to carry out the purpose and
intent of this Agreement.
1.3 Purchase Price.
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(a) The purchase price for the assets shall consist of 420,000 shares
(the "Shares") of the common stock, par value $0.01 per share (the "Common
Stock"), of SatCon Technology Corporation. The Purchase Price shall be payable
in the manner described in paragraph (b) of this Subsection 1.3.
(b) At the Closing, the Buyer shall deliver (i) 142,858 shares of
Common Stock, not subject to any lien or security interest, to a commercial bank
reasonably acceptable to the Buyer and the Seller (the "Escrow Agent") to be
held pursuant to an escrow agreement substantially in the form attached hereto
as Exhibit A (the "Escrow Agreement") and (ii) 277,142 shares of Common Stock to
the Seller.
1.4 Discharge and Assumption of Certain Liabilities; Etc.
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(a) At the Closing, the Buyer shall execute and deliver an Instrument
of Assumption of Liabilities (the "Instrument of Assumption") in a form
reasonably acceptable to the Buyer pursuant to which it shall assume and agree
to perform, pay and discharge the following liabilities, obligations and
commitments of the Seller (together with the amount to be paid to Freemont
Financial Corporation pursuant to clause (b) of this Section 1.4, the "Assumed
Liabilities"):
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(i) All trade accounts payable of the Seller which were incurred
in the ordinary course of business of the Seller prior to the date set forth on
Schedule 1.4 hereto, and which are listed on Schedule 1.4 hereto or incurred in
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the ordinary course of business after the date set forth on Schedule 1.4 hereto
and reasonably acceptable to the Buyer; and
(ii) All obligations of the Seller continuing after the Closing
under the leases, contracts and employee benefit plans set forth on Schedule 1.4
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attached hereto which become due and payable after the Closing Date.
(b) At the Closing, Buyer agrees to pay to Freemont Financial
Corporation up to $500,000 of principal of the indebtedness plus accrued
interest outstanding on the Closing Date under the Loan and Security Agreement,
dated as of November 26, 1996, between the Seller and Freemont Financial
Corporation (the "Freemont Agreement").
In the event that any amount is due from Seller to Fremont in addition to
the amount shown in a payout letter presented at closing because of the
presentation of additional accounts payable which are Assumed Liabilities under
this Agreement by third parties to Fremont on the day prior to the Closing Date
or on the Closing Date, Buyer agrees to reimburse Seller for such amounts,
provided that the aggregate principal balance and accrued interest paid by Buyer
with respect to the Fremont pursuant to this Agreement shall not exceed
$500,000. At the Closing, Seller shall direct Fremont and Fleet Bank, N.A.
promptly to turn over to the Buyer any accounts receivable deposited with
Fremont or Fleet Bank, N.A. on or after the Closing Date for the benefit of
Seller and any balances in accounts maintained with Fremont or Fleet Bank, N.A.
in the name of or for the benefit of the Seller. To the extent that Fremont or
Fleet Bank, N.A. does not promptly turn over such accounts or receivables to
Buyer, Seller agrees to do so.
(c) At Closing, Buyer agrees to assume up to $500,000 of the aggregate
principal balance and accrued interest on the Note (the "Stockholder Note"),
dated March 31, 1995, issued by the Seller to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇. Notwithstanding
any terms to the contrary in the Stockholder's Note, Buyer shall pay a weekly
installment of $2,100 with respect to the outstanding principal and interest on
the Stockholder's Note and any remaining principal and accrued interest shall be
payable on March 1, 2000. Provided that the Buyer has made such weekly
payments, the Stockholder agrees that the Stockholder on any subsequent transfer
of the Stockholder's Note, shall not be entitled to declare a default with
respect to or accelerate the payment of principal on the Stockholder's Note.
(d) The Buyer shall not at the Closing assume or agree to perform, pay
or discharge, and the Seller shall remain unconditionally liable for, all
obligations, liabilities and commitments, fixed or contingent, of the Seller
other than
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the Assumed Liabilities, including any balances under the Fremont Agreement in
excess of the amount set forth in clause (b) above.
1.5 Allocation of Purchase Price and Assumed Liabilities. The parties
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agree that the aggregate amount of the Purchase Price, and the Assumed
Liabilities shall be reasonably allocated among the Assets by the Buyer at the
Closing.
1.6 The Closing. The Closing shall take place at the offices of ▇▇▇▇ and
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▇▇▇▇ LLP, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ at 9:00 a.m., Boston time, on
April 15, 1997 or at such other place, time or date as may be mutually agreed
upon in writing by the parties hereto. The transfer of the Assets by the Seller
to the Buyer shall be deemed to occur at 9:00 a.m., Boston time, on the date of
the Closing (the "Closing Date").
1.7 Tax-Free Reorganization. To the extent the transactions subject to
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this Agreement so qualifies, the parties intend to adopt this Agreement as a
tax-free reorganization under Section 368 of the Internal Revenue Code of 1986,
as amended.
2. Representations of the Seller and Stockholder
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Each of the Seller and the Stockholder represents and warrants to the
Buyer as follows:
2.1 Organization. The Seller is a corporation duly organized, validly
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existing and in good standing under the laws of the Commonwealth of
Massachusetts and has all requisite power and authority (corporate and other) to
own its properties, to carry on its business as now being conducted, to execute
and deliver this Agreement and the agreements contemplated herein, and to
consummate the transactions contemplated hereby. The Seller has no subsidiaries
and does not own any capital stock or other equity interest in any other
corporation, partnership, joint venture or other entity. The Seller is duly
qualified to do business and in good standing in all jurisdictions in which its
ownership of property or the character of its business requires such
qualification. Certified copies of the Articles of Organization and Bylaws of
the Seller, each as amended to date, have been previously delivered to the
Buyer, are complete and correct, and no amendments have been made thereto or
have been authorized since the date thereof.
2.2 Capitalization of the Seller and the Subsidiaries. The Seller's
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authorized capital stock consists of 200,000 shares of common stock, $0.01 par
value, of which 1,000 shares are issued and outstanding. Except as set forth in
Schedule 2.2 all outstanding shares of common stock of the Seller are held of
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record and beneficially by the Stockholder. All of such shares have been duly
and validly issued and are fully paid and nonassessable.
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2.3 Authorization. The execution and delivery of this Agreement by the
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Seller, and the agreements provided for herein, and the consummation by the
Seller of all transactions contemplated hereby, have been duly authorized by all
requisite corporate and shareholder action. This Agreement and all such other
agreements and obligations entered into and undertaken in connection with the
transactions contemplated hereby to which the Seller or the Stockholder is a
party constitute the valid and legally binding obligations of the Seller and the
Stockholder, enforceable against the Seller and the Stockholder in accordance
with their respective terms. The execution, delivery and performance by the
Seller and the Stockholder of this Agreement and the agreements provided for
herein, and the consummation by the Buyer of the transactions contemplated
hereby and thereby, will not, with or without the giving of notice or the
passage of time or both, (a) violate the provisions of any law, rule or
regulation applicable to the Seller; (b) violate the provisions of the Articles
of Organization or Bylaws of the Seller; (c) violate any judgment, decree, order
or award of any court, governmental body or arbitrator (each a "Governmental
Entity") applicable to the Seller or the Stockholder; or (d) conflict with or
result in the breach or termination of any term or provision of, or constitute a
default under, or cause any acceleration under, or cause the creation of any
lien, charge or encumbrance upon the properties or assets of the Seller pursuant
to, any indenture, mortgage, deed of trust or other instrument or agreement to
which the Seller is a party or by which the Seller or any of its properties is
or may be bound. Schedule 2.3 attached hereto sets forth a true, correct and
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complete list of all consents and approvals of third parties that are required
in connection with the consummation by the Seller or the Stockholder of the
transactions contemplated by this Agreement.
2.4 Ownership of the Assets. Schedule 2.4(i) attached hereto sets forth
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a true, correct and complete list of all claims, liabilities, liens, pledges,
charges, encumbrances and equities of any kind affecting the Assets
(collectively, the -"Encumbrances"). The Seller is, and at the Closing will be,
the true and lawful owner of the Assets, and will have the right to sell and
transfer to the Buyer good, clear, record and marketable title to the Assets,
free and clear of all Encumbrances of any kind. The delivery to the Buyer of the
instruments of transfer of ownership contemplated by this Agreement will vest
good and marketable title to the Assets in the Buyer, free and clear of all
liens, mortgages, pledges, security interests, restrictions, prior assignments,
encumbrances and claims of any kind or nature whatsoever.
2.5 Financial Statements.
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(a) The Seller has previously delivered to the Buyer its balance sheet
as of February 29, 1996 (the "Balance Sheet") and the related statements of
income, shareholders' equity, retained earnings and changes in financial
condition of the Seller for the fiscal year then ended (collectively, including
the Balance Sheet, the "Financial Statements"). The Seller has also delivered to
the Buyer its balance sheet
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and statement of income from operations for the period ended February 28, 1997
(collectively, the "Current Financial Statements"). The Financial Statements,
the Current Financial Statements and the interim financial statements (the
"Interim Financial Statements") to be delivered pursuant to Subsection 5.4
hereof (collectively, the "Financial Statements") have been (or will be)
prepared in accordance with generally accepted accounting principles applied
consistently with past practice and have been (or will be) certified by the
Seller's chief financial officer. Copies of the Financial Statements are
attached hereto as Schedule 2.5.
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(b) The Financial Statements fairly present, as of their respective
dates, the financial condition, retained earnings, assets and liabilities of the
Seller and the results of operations of the Seller's business for the periods
indicated; with respect to the contracts and commitments for the sale of goods
or the provision of services by the Seller, the Financial Statements contain and
reflect adequate reserves, which are consistent with previous reserves taken,
for all reasonably anticipated material losses and costs and expenses; and the
amounts shown as accrued for current and deferred income and other taxes in the
Financial Statements are sufficient for the payment of all accrued and unpaid
federal, state and local income taxes, interest, penalties, assessments or
deficiencies applicable to the Seller, whether disputed or not, for the
applicable period then ended and periods prior thereto.
2.6 Absence of Undisclosed Liabilities. Except as and to the extent (a)
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reflected and reserved against in the Balance Sheet of the Current Financial
Statements, (b) set forth on Schedule 2.6 attached hereto or (c) incurred in the
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ordinary course of business after the date of the Balance Sheet of the Current
Financial Statements and not material in amount, either individually or in the
aggregate, the Seller does not have any liability or obligation, secured or
unsecured, whether accrued, absolute, contingent, unasserted or otherwise,
affecting the Assets. For purposes of this Subsection 2.6, "material" means any
amount in excess of $25,000.
2.7 Litigation. Except as set forth on Schedule 2.7 attached hereto,
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neither the Stockholder nor the Seller is a party to, or to the Seller's or
Stockholder's best knowledge threatened with, and none of the Assets are subject
to, any litigation, suit, action, investigation, proceeding or controversy
before any court, administrative agency or other governmental authority relating
to or affecting the Assets or the business or condition (financial or otherwise)
of the Seller. To the best of the Seller's and the Stockholder's knowledge,
there is no basis for any such litigation, suit, action, investigation or
proceeding. Neither the Stockholder nor the Seller is in violation of or in
default with respect to any judgment, order, writ, injunction, decree or rule of
any court, administrative agency or governmental authority or any regulation of
any administrative agency or governmental authority.
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2.8 Insurance. Schedule 2.8 attached hereto sets forth a true, correct
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and complete list of all fire, theft, casualty, general liability, workers
compensation, business interruption, environmental impairment, product
liability, automobile and other insurance policies insuring the Assets or
business of the Seller and of all life insurance policies maintained for any of
its employees, specifying the type of coverage, the amount of coverage, the
premium, the insurer and the expiration date of each such policy (collectively,
the "Insurance Policies") and all claims made under such Insurance Policies
since January 1, 1992. True, correct and complete copies of all of the Insurance
Policies have been previously delivered by the Seller to the Buyer. The
Insurance Policies are in full force and effect and are in amounts and of a
nature which are adequate and customary for the Seller's business. All premiums
due on the Insurance Policies or renewals thereof have been paid and there is no
default under any of the Insurance Policies. Except as set forth on Schedule 2.8
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attached hereto, the Seller has not received any notice or other communication
from any issuer of the Insurance Policies since January 1, 1992 cancelling or
materially amending any of the Insurance Policies, materially increasing any
deductibles or retained amounts thereunder, or materially increasing the annual
or other premiums payable thereunder, and, to the best knowledge of the Seller,
no such cancellation, amendment or increase of deductibles, retainages or
premiums is threatened.
2.9 Inventory. Schedule 2.9 attached hereto sets forth a true, correct
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and complete list of the Inventory as of February 28, 1997, including a
description and the book value thereof. Schedule 2.9 as updated pursuant to
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Subsection 7.10 hereof, shall set forth a true, correct and complete list of the
Inventory as of the Closing Date, including a description and valuation thereof.
Such Inventory consists of items of a quality and quantity which are usable or
saleable without discount in the ordinary course of the business conducted by
the Seller. The value of all items of obsolete materials and of materials of
below standard quality has been written down to realizable market value, and the
values at which such Inventory is carried reflect the normal inventory valuation
policy of the Seller of stating the Inventory at the lower of cost or market
value in accordance with generally accepted accounting principles.
2.10 Fixed Assets. Schedule 2.10 attached hereto sets forth a true,
------------ -------------
correct and complete list of all Fixed Assets as of the date set forth thereon,
including a description and the appraised value thereof. Schedule 2.10 as
-------------
updated pursuant to Subsection 7.10 hereof, shall set forth a true, correct and
complete list of all Fixed Assets as of the Closing Date, including a
description and valuation thereof. All of the Fixed Assets are in good operating
condition and repair, normal wear and tear excepted, are currently used by the
Seller in the ordinary course of business and in the production of products of
the Seller and normal maintenance has been consistently performed with respect
to such Fixed Assets.
-8-
2.11 Real Estate and Leases of Real Property. The Seller does not own any
---------------------------------------
real property. Schedule 2.11 attached hereto sets forth a true, correct and
-------------
complete list as of the date hereof of all leases of real property, identifying
separately each ground lease, to which the Seller is a party (the "Leases").
True, correct and complete copies of the Leases, and all amendments,
modifications and supplemental agreements thereto, have previously been
delivered by the Seller to the Buyer. The Leases are in full force and effect,
are binding and enforceable against each of the parties thereto in accordance
with their respective terms and, except as set forth on Schedule 2.11, have not
-------------
been modified or amended since the date of delivery to the Buyer. No party to
any Lease has sent written notice to the other claiming that such party is in
default thereunder, which remains uncured. Except as set forth on Schedule 2.11
-------------
attached hereto, there has not occurred any event which would constitute a
breach of or default in the performance of any material covenant, agreement or
condition contained in any Lease, nor has there occurred any event which with
the passage of time or the giving of notice or both would constitute such a
breach or material default. The Seller is not obligated to pay any leasing or
brokerage commission relating to any Lease and, except as set forth on Schedule
--------
2.11 attached hereto, will not have any enforceable obligation to pay any
----
leasing or brokerage commission upon the renewal of any Lease. No material
construction, alteration or other leasehold improvement work with respect to any
of the Leases remains to be paid for or to be performed by the Seller. The
Financial Statements contain adequate reserves to provide for the restoration of
the properties subject to the Leases at the end of the respective Lease terms,
to the extent required by the Leases.
2.12 Change in Financial Condition and Assets. Except as set forth on
---------------------------------
on Schedule 2.12 attached hereto, since the Balance Sheet Date, there has been
no change which materially and adversely affects the business, properties,
assets, condition (financial or otherwise) or prospects of the Seller. The
Seller has no knowledge of any existing or threatened occurrence, event or
development which, as far as can be reasonably foreseen, could have a material
adverse effect on the Seller or its business, properties, assets, condition
(financial or otherwise) or prospects.
2.13 Tax Matters.
-----------
(a) Within the times and in the manner prescribed by law, the Seller
has filed all returns, declarations, reports, statements and other documents
required to be filed by the Seller in respect of Taxes (as defined below) (the
"Returns") which were required to be filed.
(b) The Seller has paid all federal, state, local, foreign and other
net income, gross income, gross receipts, sales, use, ad valorem, transfer,
franchise, profits, license, lease, service use, withholding, payroll,
employment, excise, severance, stamp, occupation, premium, property, windfall
profits, customs, duties or
-9-
other taxes, fees, assessments or charges of any kind whatever, together with
interest and any penalties, additions to tax or additional amounts with respect
thereto ("Taxes") imposed upon them or for which they could be liable, whether
to taxing authorities (as, for example, under law) or to other persons or
entities (as, for example, under tax allocation agreements), with respect to all
taxable periods or portions of taxable periods ending on or before the Closing
Date to the extent such amounts are due on or before the Closing Date.
(c) All Taxes that the Seller is or was required by law to withhold or
collect have been duly withheld or collected and, to the extent required, have
been paid to the proper Governmental Entity.
(d) All Returns filed by the Seller constitute complete and accurate
representations of the Tax liabilities of the Seller for such years.
(e) The Seller has not waived or extended any applicable statute of
limitations relating to the assessment of Taxes which waiver is now in effect.
(f) The Seller has not filed a consent pursuant to Section 341(f) of
the Internal Revenue Code of 1986, as amended (the "Code") relating to
collapsible corporations nor has either Seller agreed to have Section 341(f)(2)
of the Code apply to any disposition of a subsection (f) asset (as such term is
defined in Section 341(f)(4) of the Code).
(g) The Seller has not participated in or cooperated with an
international boycott, within the meaning of Section 999 of the Code, nor has
the Seller had operations which are or may hereafter become reportable under
Section 999 of the Code.
(h) There are no liens for Taxes (other than for current Taxes not
yet due and payable) upon the assets of the Seller.
(i) The Seller is not a party to or bound by any Tax indemnity, Tax
sharing or Tax allocation agreement.
(j) The Seller has not been a member of an affiliated group of
corporations within the meaning of Section 1504 of the Code filing consolidated
Returns (a "Consolidated Group").
(k) The Seller is not a party to any agreement, contract, arrangement
or plan that has resulted or would result, separately or in the aggregate, in
the payment of any "excess parachute payments" within the meaning of Section
280G of the Code.
-10-
(l) No stockholder of the Seller is a person other than a United
States person within the meaning of the Code.
(m) The Seller is not and has not been a United States real property
holding corporation within the meaning of Section 897(c)(2) of the Code during
the applicable period specified in Section 897(c)(1)(A)(ii) of the Code.
(n) The Seller has not agreed to make nor is the Seller required to
make any adjustment under Section 481 of the Code by reason of a change in
accounting method or otherwise.
(o) The Seller has not had a permanent establishment in any foreign
country, as defined in any applicable treaty or convention between the United
States and such foreign country. The Seller is not a party to any joint venture,
partnership or other arrangement or contract that could be treated as a
partnership for federal income Tax purposes.
(p) The Returns of the Seller have not been reviewed or audited by
applicable federal, state, local and foreign taxing authorities. The Seller has
not made Tax elections that are currently in effect for the Seller and that,
absent revocation, will remain in effect for taxable years ending on or after
the Closing Date. No issue or issues have been raised in connection with any
prior or pending review or audit of said Returns which Seller reasonably
believes may be expected to be raised in the future by such taxing authorities
in connection with the audit or review of the Returns of the Seller.
2.14 Accounts Receivable. Schedule 2.14 attached hereto sets forth a true,
------------------- -------------
correct and complete list of all Accounts Receivable, including an aging thereof
as of February 28, 1997. Schedule 2.14, as updated pursuant to Subsection 7.10
-------------
hereof, shall set forth a true, correct and complete list of the Accounts
Receivable as of the Closing Date, including an aging thereof. All Accounts
Receivable arose out of the sales of inventory or services in the ordinary
course of business and are collectible in the face value thereof within 60 days
of the date of invoice, using normal collection procedures, net of the reserve
for doubtful accounts as set forth thereon.
2.15 Books and Records. The general ledgers and books of account of the
-----------------
Seller, all federal, state and local income, franchise, property and other tax
returns filed by the Seller, with respect to the Assets, and all other books and
records of the Seller are in all material respects complete and correct and have
been maintained in accordance with good business practice and in accordance with
all applicable procedures required by laws and regulations.
-11-
2.16 Contracts and Commitments.
-------------------------
(a) Schedule 2.16 attached hereto contains a true, complete and
-------------
correct list and description of the following contracts and agreements, whether
written or oral (collectively, the "Contracts"):
(i) all loan agreements, indentures, mortgages and guaranties
to which the Seller is a party or by which the Seller or any of its property is
bound;
(ii) all pledges, conditional sale or title retention
agreements, security agreements, equipment obligations, personal property leases
and lease purchase agreements relating to any of the Assets to which the Seller
is a party or by which the Seller or any of its property is bound;
(iii) all contracts, agreements, commitments, purchase orders or
other understandings or arrangements to which the Seller is a party or by which
the Seller or any of its property is bound which (A) involve payments or
receipts by the Seller of more than $25,000 in the case of any single contract,
agreement, commitment, understanding or arrangement under which full performance
(including payment) has not been rendered by all parties thereto or (B) which
may materially adversely affect the condition (financial or otherwise) or the
properties, assets, business or prospects of the Seller;
(iv) all collective bargaining agreements, employment and
consulting agreements, executive compensation plans, bonus plans, deferred
compensation agreements, pension plans, retirement plans, employee stock option
or stock purchase plans and group life, health and accident insurance and other
employee benefit plans, agreements, arrangements or commitments to which the
Seller is a party or by which the Seller or any of its property is bound;
(v) all agency, distributor, sales representative and similar
agreements to which the Seller is a party;
(vi) all contracts, agreements or other understandings or
arrangements between the Seller and any stockholder or Affiliate of the Seller;
(vii) all leases, whether operating, capital or otherwise,
under which the Seller is lessor or lessee;
(viii) all contracts, agreements and other documents or
information relating to past disposal of waste (whether or not hazardous); and
-12-
(ix) any other material agreement or contract entered into by
the Seller.
(b) Except as set forth on Schedule 2.16 attached hereto:
-------------
(i) each Contract is a valid and binding agreement of the
Seller, enforceable against the Seller in accordance with its terms, and the
Seller does not have any knowledge that any Contract is not a valid and binding
agreement of the other parties thereto;
(ii) the Seller has fulfilled all material obligations required
pursuant to the Contracts to have been performed by the Seller on its part prior
to the date hereof, and the Seller has no reason to believe that it will not be
able to fulfill, when due, all of its obligations under the Contracts which
remain to be performed after the date hereof;
(iii) the Seller is not in breach of or default under any
Contract, and no event has occurred which with the passage of time or giving of
notice or both would constitute such a default, result in a loss of rights or
result in the creation of any lien, charge or encumbrance, thereunder or
pursuant thereto;
(iv) to the best knowledge of the Seller, there is no existing
breach or default by any other party to any Contract, and no event has occurred
which with the passage of time or giving of notice or both would constitute a
default by such other party, result in a loss of rights or result in the
creation of any lien, charge or encumbrance thereunder or pursuant thereto;
(v) the Seller is not restricted by any Contract from carrying
on its business anywhere in the world; and
(vi) the Seller has no written or oral Contracts to sell
products or perform services which are expected to be performed at, or to
result in, a loss.
(c) Except as set forth on Schedule 2.3 or Schedule 2.16, the
------------ -------------
continuation, validity and effectiveness of each Contract will not be affected
by the transfer thereof to Buyer under this Agreement and all such Contracts are
assignable to Buyer without a consent.
(d) True, correct and complete copies of all Contracts have
previously been delivered by the Seller to the Buyer.
2.17 Compliance with Agreements and Laws. The Seller has all requisite
-----------------------------------
licenses, permits and certificates, including environmental, health and safety
-13-
permits, from federal, state and local authorities necessary to conduct its
business and own and operate its assets, including a Hybird Microcircuit
Certification from the Defense Electronics Supply Center (collectively, the
"Permits"). Schedule 2.17 attached hereto sets forth a true, correct and
-------------
complete list of all such Permits, copies of which have previously been
delivered by the Seller to the Buyer. Except as set forth on Schedule 2.17 the
-------------
Seller will transfer such Permits to the Buyer on the Closing Date and the Buyer
shall be entitled to the benefits thereof without any further action on the part
of the Buyer. The Seller is not in violation of any law, regulation or ordinance
(including, without limitation, laws, regulations or ordinances relating to
building, zoning, environmental, disposal of hazardous substances, land use or
similar matters) relating to its properties, the violation of which could have a
material adverse effect on the Seller or its properties. The business of the
Seller does not violate, in any material respect, any federal, state, local or
foreign laws, regulations or orders (including, but not limited to, any of the
foregoing relating to employment discrimination, occupational safety,
environmental protection, hazardous waste (as defined in the Resource
Conservation and Recovery Act, as amended, and the regulations adopted pursuant
thereto), conservation, or corrupt practices, the enforcement of which would
have a material and adverse effect on the results of operations, condition
(financial or otherwise), assets, properties, business or prospects of the
Seller. Except as set forth on Schedule 2.17 attached hereto, the Seller has not
-------------
since January 1, 1992 received any notice or communication from any federal,
state or local governmental or regulatory authority or otherwise of any such
violation or noncompliance.
2.18 Employee Relations.
------------------
(a) The Seller is in compliance with all federal, state and municipal
laws respecting employment and employment practices, terms and conditions of
employment, and wages and hours, and is not engaged in any unfair labor
practice, and there are no arrears in the payment of wages or social security
taxes.
(b) Except as set forth on Schedule 2.18 attached hereto:
-------------
(i) none of the employees of the Seller is represented by any
labor union;
(ii) there is no unfair labor practice complaint against the
Seller pending before the National Labor Relations Board or any state or local
agency;
(iii) there is no pending labor strike or other material labor
trouble affecting the Seller (including, without limitation, any organizational
drive);
-14-
(iv) there is no material labor grievance pending against the
Seller;
(v) there is no pending representation question respecting the
employees of the Seller; and
(vi) there are no pending arbitration proceedings arising out
of or under any collective bargaining agreement to which the Seller is a party,
or to the best knowledge of the Seller, any basis for which a claim may be made
under any collective bargaining agreement to which the Seller is a party.
(c) Schedule 2.18 attached hereto sets forth a true, correct and
-------------
complete list of (a) the employee benefits provided by the Seller to its
employees and all contracts or agreements between the Seller and its employees,
and (b) the Seller's current payroll, including the job descriptions and salary
or wage rates of each of its employees, showing separately for each such person
who received an annual salary in excess of $20,000 the amounts paid or payable
as salary and bonus payments for the year ended December 31, 1996.
(d) For purposes of this Subsection 2.18, the term "employee" shall be
construed to include sales agents and other independent contractors who spend a
majority of their working time on the Seller's business.
2.19 Absence of Certain Changes or Events. Except as set forth on Schedule
------------------------------------ --------
2.19 attached hereto, since the December 31, 1996, the Seller has not entered
----
into any transaction which is not in the usual and ordinary course of business,
and, without limiting the generality of the foregoing, the Seller has not:
(a) Incurred any material obligation or liability for borrowed money;
(b) Discharged or satisfied any lien or encumbrance or paid any
obligation or liability other than current liabilities reflected in the Current
Balance Sheet;
(c) Mortgaged, pledged or subjected to lien, charge or other
encumbrance any of the Assets;
(d) Sold or purchased, assigned or transferred any of its tangible
assets or cancelled any debts or claims, except for inventory sold and raw
materials purchased in the ordinary course of business;
-15-
(e) Made any material amendment to or termination of any Contract or
done any act or omitted to do any act which would cause the breach of any
Contract;
(f) Suffered any losses, whether insured or uninsured, and whether or
not in the control of the Seller, in excess of $25,000 in the aggregate, or
waived any rights of any value;
(g) Made any changes in compensation of its officers, directors or
employees;
(h) Authorized or issued recall notices for any of its products or
initiated any safety investigations;
(i) Received notice of any litigation, warranty claim or products
liability claims;
(j) declared or paid any dividend, distribution or other payment to
any stockholder of the Company or any Affiliate of the Company, other then
payments of salary in amounts and to the persons set forth in Schedule 2.18; or
-------------
(k) Made any material change in the terms, status or funding condition
of any Employee Plan, as defined in Subsection 2.25 hereof.
2.20 Customers. Schedule 2.20 attached hereto sets forth a true, correct
--------- -------------
and complete list of the names and addresses of all customers of the Seller
which accounted for more than 2% of the Seller's total sales in the fiscal year
ended February 28, 1997. None of such customers has notified the Seller that it
has discontinued or intends to discontinue its relationship with the Seller.
2.21 Suppliers. Schedule 2.21 attached hereto sets forth a true, correct
--------- -------------
and complete list of the names and addresses of the ten suppliers of the Seller
which accounted for the largest dollar volume of purchases by the Seller for the
fiscal year ended February 28, 1997. None of such suppliers has notified the
Seller that it has discontinued or intends to discontinue its relationship with
the Seller.
2.22 Bank Accounts. Schedule 2.22 attached hereto contains a true, correct
------------- -------------
and complete list of all bank accounts and safe deposit boxes in the name of or
controlled by the Seller and the names of persons having access thereto.
2.23 Prepayments and Deposits. Schedule 2.23 attached hereto sets forth
------------------------ -------------
all prepayments or deposits from customers for products to be shipped, or
services to be performed, after the Closing Date which have been received by the
Seller as of the date hereof.
-16-
2.24 Trade Names and Other Intangible Property.
-----------------------------------------
(a) Schedule 2.24 attached hereto sets forth a true, correct and
-------------
complete list and, where appropriate, a description of, all Intangible Property.
True, correct and complete copies of all licenses and other agreements relating
to the Intangible Property have been previously delivered by the Seller to the
Buyer.
(b) Except as otherwise disclosed in Schedule 2.24 attached hereto,
-------------
the Seller is the sole and exclusive owner of all Intangible Property and all
designs, permits, labels and packages used on or in connection therewith. The
Intangible Property owned by the Seller is sufficient to conduct the Seller's
business as presently conducted and, when transferred to the Buyer pursuant to
this Agreement, will be sufficient to permit the Buyer to conduct the business
of the Seller as presently conducted by the Seller. The Seller has received no
notice of, and has no knowledge of any basis for, a claim against it that any of
its operations, activities, products or publications infringes on any patent,
trademark, trade name, copyright or other property right of a third party, or
that it is illegally or otherwise using the trade secrets, formulae or any
property rights of others. The Seller has no disputes with or claims against any
third party for infringement by such third party of any trade name or other
Intangible Property of the Seller. The Seller has taken all steps reasonably
necessary to protect its right, title and interest in and to the Intangible
Property.
2.25 Employee Benefit Plans.
----------------------
(a) Employee Plans. Schedule 2.25 attached hereto contains a true,
-------------- -------------
correct and complete list of all pension, benefit, profit sharing, retirement,
deferred compensation, welfare, insurance, disability, bonus, vacation pay,
severance pay and other similar plans, programs and agreements, whether reduced
to writing or not, relating to the Seller's employees, or maintained at any time
since December 31, 1992 by the Seller or by any other member (hereinafter,
"Affiliate") of any controlled group of corporations, group of trades or
businesses under common control, or affiliated service group (as defined for
purposes of Section 414(b), (c) and (m), respectively, of the Code (the
"Employee Plans").
(b) Copies of Employee Plans and Related Documents. The Seller has
----------------------------------------------
previously delivered to the Buyer true, correct and complete copies of all
Employee Plans which have been reduced to writing and written descriptions of
all Employee Plans which have not been reduced to writing, and all agreements,
including trust agreements and insurance contracts, related to such Employee
Plans, and the Summary Plan Description and all modifications thereto for each
Employee Plan communicated to employees. With respect to each Employee Plan that
is a "defined benefit plan," as such term is defined in Section 3(35) of ERISA
(the "Defined Benefit Plans"), true, correct and complete copies of (i) the
annual actuarial valuation reports for the last five years, (ii) the Form 5500
and Schedule A or B thereto, or both,
-17-
filed for the last five years and (iii) any filings made with the Pension
Benefit Guaranty Corporation ("PBGC"), Internal Revenue Service or Department of
Labor, or any correspondence with or from such agencies, regarding the
termination of any such Defined Benefit Plan, have been delivered to the Buyer.
(c) No Implied Rights. Nothing expressed or implied herein shall
-----------------
confer upon any past or present employee of the Seller, his or her
representatives, beneficiaries, successors and assigns, nor upon any collective
bargaining agent, any rights or remedies of any nature, including, without
limitation, any rights to employment or continued employment with the Seller,
the Buyer, or any successor or affiliate.
(d) COBRA. No current or former employee of the Seller has elected to
-----
exercise rights under, and the Seller does not have any liabilities under, the
Consolidated Omnibus Budget Reconciliation Act of 1984, as amended ("COBRA").
(e) Liabilities. The Buyer does not assume, and neither it nor the
-----------
Assets will be subject to, any liabilities with respect to any Employee Plan,
including, without limitation, any Taxes, employee policies, employee benefit
claims or liability to the PBGC except that the Buyer assumes liability for
accrued vacation and sick pay and vacation leave to the extent reflected on the
Current Financial Statements or incurred subsequent to the date of the Current
Financial Statements.
2.26 Assets Complete. The Assets are, when utilized by a labor force
---------------
substantially similar to that employed by the Seller on the date hereof,
adequate to conduct the business operations currently conducted by the Seller.
2.27 Regulatory Approvals. No consents, approvals, authorizations and other
--------------------
requirements prescribed by any federal, state or local law or regulation must be
obtained from any governmental entity or satisfied by the Seller or are
necessary for the execution and delivery by the Seller or the Stockholder of
this Agreement and the documents to be executed and delivered by the Seller in
connection herewith.
2.28 Indebtedness to and from Officers, Directors and Shareholders. Except
-------------------------------------------------------------
for the Stockholders' Lease, the Seller is not indebted, directly or indirectly,
to any person who is an officer, director or shareholder of the Seller or any
Affiliate of any such person in any amount whatsoever other than for salaries
for services rendered or reimbursable business expenses or indebtedness that
shall be satisfied on the Closing Date, all of which have been reflected on the
Current Financial Statements, and no such officer, director, shareholder or
affiliate is indebted to the Seller, except for advances made to employees of
the Seller in the ordinary course of business to meet reimbursable business
expenses anticipated to be incurred by such obligor.
-18-
2.29 Powers of Attorney and Suretyships. The Seller does not have any
----------------------------------
general or special powers of attorney outstanding (whether as grantor or grantee
thereof) and has no obligations or liability (whether actual, accrued, accruing,
contingent or otherwise) as guarantor, surety, co-▇▇▇▇▇▇, endorser, co-maker,
indemnitor or otherwise in respect of the obligation of any person, corporation,
partnership, joint venture, association, organization or other entity, except as
endorser or maker of checks or letters of credit, respectively, endorsed or made
in the ordinary course of business.
2.30 WARN Act. The Worker Adjustment and Retraining Notification Act, 29
--------
U.S.C. (S) 2101 et sec. and the regulations applicable thereto, 20 C.F.R. (S)
639 et sec. (collectively, the "WARN Act") does not apply to the transactions
contemplated by this Agreement. Seller has no affiliated companies; and Seller
employs less than one hundred (100) employees.
2.31 Disclosure. No representation or warranty by the Seller or the
----------
Stockholder in this Agreement or in any Exhibit hereto, or in any list,
statement, document or information set forth in or attached to any Schedule
delivered, to be delivered pursuant to this Agreement or previously delivered to
the Buyer, contains or will contain any untrue statement of a material fact or
omits or will omit any material fact necessary in order to make the statements
contained therein not misleading. The Seller and the Stockholder have disclosed
to the Buyer all material facts pertaining to the Seller, its business and the
transactions contemplated by this Agreement.
2.32 Securities Representations.
--------------------------
(a) The Seller and each stockholder of the Seller are "accredited
investors" within the meaning of the Securities Act. Each of the Seller and each
stockholder has knowledge and experience in financial and business matters such
that it is capable of evaluating the merits and risks of the investment in the
Shares issued to the Seller by the Buyer pursuant to this Agreement and is
financially able to undertake the risks involved in such an investment. The
Seller and the Stockholder further understand that (i) the Shares have not been
registered under the Securities Act, or any state securities law by reason of
their issuance in a transaction exempt from the registration requirements of the
Securities Act pursuant to Section 4(2) and Regulation D promulgated thereunder
and an exemption under the applicable state securities law, (ii) such Shares
must be held indefinitely unless a registration statement covering the resale of
such shares is effective under the Securities Act and such state law or unless
an exemption from registration under the Securities Act and such state law is
available and (iii) the Shares will bear a legend to the foregoing effect.
-19-
(b) The Buyer has provided the Seller and Stockholder with copies of
the annual report and quarterly reports to stockholders, proxy statements and
all filing under the Securities Exchange Act of 1934, as amended, published or
filed during the past two fiscal years by SatCon Technology Corporation. The
Buyer has granted the Seller and the Stockholder and their attorneys or other
representatives access to all other information about the Buyer and SatCon
Technology Corporation which the Seller and the Stockholder have requested; and
the Seller and its attorneys or other representatives have had the opportunity
to ask questions of, and receive answers from, representatives of the Buyer and
SatCon Technology Corporation concerning such information and the Buyer's and
SatCon Technology Corporation's financial condition and prospects.
(c) The principal office of the Seller and the place at which the
decision by the Seller and the Stockholder to participate in this Agreement and
the transactions contemplated hereby was made is located at the address
appearing next to the Seller's and the Stockholders' names in Section 10 hereof.
3. Representations of the Buyer
----------------------------
The Buyer represents and warrants to the Seller as follows:
3.1 Organization and Authority. The Buyer is a corporation duly organized,
--------------------------
validly existing and in good standing under the laws of the state of Delaware,
and has requisite power and authority (corporate and other) to own its
properties and to carry on its business as now being conducted. The Buyer has
full power to execute and deliver this Agreement, and the Instrument of
Assumption of Liabilities and to consummate the transactions contemplated hereby
and thereby. Certified copies of the Certificate of Incorporation and the Bylaws
of the Buyer, as amended to date, have been previously delivered to the Seller,
are complete and correct, and no amendments have been made thereto or have been
authorized since the date thereof.
3.2 Authorization. The execution and delivery of this Agreement by the
-------------
Buyer, and the agreements provided for herein, and the consummation by the Buyer
of all transactions contemplated hereby, have been duly authorized by all
requisite corporate action. This Agreement and all such other agreements and
written obligations entered into and undertaken in connection with the
transactions contemplated hereby constitute the valid and legally binding
obligations of the Buyer, enforceable against the Buyer in accordance with their
respective terms. The execution, delivery and performance of this Agreement and
the agreements provided for herein, and the consummation by the Buyer of the
transactions contemplated hereby and thereby, will not, with or without the
giving of notice or the passage of time or both, (a) violate the provisions of
any law, rule or regulation applicable to the Buyer; (b) violate the provisions
of the Buyer's Certificate of Incorporation or Bylaws;
-20-
(c) violate any judgment, decree, order or award of any court, governmental body
or arbitrator; or (d) conflict with or result in the breach or termination of
any term or provision of, or constitute a default under, or cause any
acceleration under, or cause the creation of any lien, charge or encumbrance
upon the properties or assets of the Buyer pursuant to, any indenture, mortgage,
deed of trust or other agreement or instrument to which it or its properties is
a party or by which the Buyer is or may be bound. Schedule 3.2 attached hereto
------------
sets forth a true, correct and complete list of all consents and approvals of
third parties that are required in connection with the consummation by the Buyer
of the transactions contemplated by this Agreement.
3.3 Regulatory Approvals. All consents, approvals, authorizations and
--------------------
other requirements prescribed by any law, rule or regulation which must be
obtained or satisfied by the Buyer and which are necessary for the consummation
of the transactions contemplated by this Agreement have been, or will be prior
to the Closing Date, obtained and satisfied.
3.4 Disclosure. No representation or warranty by the Buyer in this
----------
Agreement or in any Exhibit hereto, or in any list, statement, document or
information set forth in or attached to any Schedule delivered or to be
delivered pursuant hereto, contains or will contain any untrue statement of a
material fact or omits or will omit any material fact necessary in order to make
the statements contained therein not misleading.
4. Access to Information; Public Announcements
-------------------------------------------
4.1 Access to Management, Properties and Records.
--------------------------------------------
(a) From the date of this Agreement until the Closing Date, the Seller
shall afford the officers, attorneys, accountants and other authorized
representatives of the Buyer free and full access upon reasonable notice and
during normal business hours to all management personnel, offices, properties,
books and records of the Seller, so that the Buyer may have full opportunity to
make such investigation as it shall desire to make of the management, business,
properties and affairs of the Seller, and the Buyer shall be permitted to make
abstracts from, or copies of, all such books and records. Without limiting the
foregoing, the Seller shall co-operate with the audit of the Seller's financial
statements contemplated by Section 7.7. The Seller shall, at the Buyer's
request, use its best efforts to arrange for the Buyer to meet with the
customers and suppliers listed on Schedules 2.20 and 2.21, prior to the Closing
Date and to discuss the Seller's operations and their willingness to conduct
business with the Buyer. The Seller shall furnish to the Buyer such financial
and operating data and other information as to the Assets and the business of
the Seller as the Buyer shall reasonably request.
-21-
(b) If the Buyer, at its option and expense, prior to the Closing
Date, elects to have a report or reports prepared by an engineer or other
professional selected by the Buyer, certifying that the real property leased by
the Seller (i) complies with all applicable federal, state and local
environmental and wetlands laws, rules and regulations and that there is not
now, and never has been, manufacture, storage, or disposal of hazardous wastes
at the real property leased by the Seller in violation of said laws, rules and
regulations, (ii) complies with all applicable building, health and fire codes,
and subdivision control laws, rules and regulations, and (iii) does not contain
any friable asbestos, the Seller shall cooperate with such engineer or
professional to the extent necessary to prepare such reports, including, without
limitation, providing such engineer or professional access to the real property
leased by the Seller and necessary records, and arranging interviews with
employees of the Seller.
(c) The Seller shall authorize the release to the Buyer of all files
pertaining to the Seller, the Assets or the business or operations of the Seller
held by any federal, state, county or local authorities, agencies or
instrumentalities.
4.2 Confidentiality. All information not previously disclosed to the
---------------
public or generally known to persons engaged in the respective businesses of the
Seller or the Buyer which shall have been furnished by the Buyer or the Seller
to the other party in connection with the transactions contemplated hereby or as
provided pursuant to this Section 4 shall not be disclosed to any person other
than their respective employees, directors, attorneys, accountants or financial
advisors or other than as contemplated herein. In the event that the
transactions contemplated by this Agreement shall not be consummated, all such
information which shall be in writing shall be returned to the party furnishing
the same, including, to the extent reasonably practicable, all copies or
reproductions thereof which may have been prepared, and neither party shall at
any time thereafter disclose to third parties, or use, directly or indirectly,
for its own benefit, any such information, written or oral, about the business
of the other party hereto.
4.3 Public Announcements. The parties agree that prior to the Closing
--------------------
Date, except as otherwise required by law, any and all public announcements or
other public communications concerning this Agreement and the purchase of the
Assets by the Buyer shall be subject to the approval of both parties, which
approval shall not be unreasonably withheld.
5. Pre-Closing Covenants of the Seller and the Stockholder
-------------------------------------------------------
From and after the date hereof and until the Closing Date:
5.1 Conduct of Business. The Seller shall carry on its business diligently
-------------------
and substantially in the same manner as heretofore and shall not make or
-22-
institute any unusual or new methods of manufacture, purchase, sale, shipment or
delivery, lease, management, accounting or operation, and shall not ship or
deliver any quantity of products in excess of normal shipment or delivery
levels, except as agreed to in writing by the Buyer. All of the property of the
Seller shall be used, operated, repaired and maintained in a normal business
manner consistent with past practice.
5.2 Absence of Material Changes. Without the prior written consent of
---------------------------
the Buyer, the Seller shall not:
(a) Take any action to amend its Articles of Organization or Bylaws;
(b) Issue any stock, bonds or other corporate securities or grant any
option or issue any warrant to purchase or subscribe to any of such securities
or issue any securities convertible into such securities;
(c) Incur any obligation or liability (absolute or contingent), except
current liabilities incurred and obligations under contracts entered into in the
ordinary course of business, and shall not permit the amount of indebtedness
outstanding under the Freemont Agreement to exceed $500,000;
(d) Declare or make any payment or distribution to its shareholders
with respect to their stock or purchase or redeem any shares of its capital
stock;
(e) Mortgage, pledge, or subject to any lien, charge or any other
encumbrance any of the Assets;
(f) Sell, assign, or transfer any of the Assets, except for inventory
sold in the ordinary course of business, at a normal profit margin, and for not
less than replacement cost;
(g) Cancel any debts or claims, except in the ordinary course of
business;
(h) Merge or consolidate with or into any corporation or other entity;
(i) Make, accrue or become liable for any bonus, profit sharing or
incentive payment, except for accruals under existing plans, if any, or increase
the rate of compensation payable or to become payable by it to any of its
officers, directors or employees, other than increases in the ordinary course of
business consistent with past practice;
-23-
(j) Make any election or give any consent under the Code or the tax
statutes of any state or other jurisdiction or make any termination, revocation
or cancellation of any such election or any consent or compromise or settle any
claim for past or present tax due;
(k) Waive any rights of material value;
(l) Modify, amend, alter or terminate any of its executory contracts
of a material value or which are material in amount;
(m) Take or permit any act or omission constituting a breach or
default under any contract, indenture or agreement by which it or its properties
are bound;
(n) Fail to (i) preserve the possession and control of its assets and
business, (ii) keep in faithful service its present officers and key employees,
(iii) preserve the goodwill of its customers, suppliers, agents, brokers and
others having business relations with it, and (iv) keep and preserve its
business existing on the date hereof until after the Closing Date;
(o) Fail to operate its business and maintain its books, accounts and
records in the customary manner and in the ordinary or regular course of
business and maintain in good repair its business premises, fixtures, machinery,
furniture and equipment;
(p) Enter into any leases, contracts, agreements or understandings
other than those entered into in the ordinary course of business calling for
payments which in the aggregate do not exceed $10,000 for each such lease,
contract, agreement or understanding;
(q) Engage any employee;
(r) Materially alter the terms, status or funding condition of any
Employee Plan; or
(s) Commit or agree to do any of the foregoing in the future.
5.3 Taxes. The Seller will, on a timely basis, file all tax returns for
-----
and pay any and all taxes which shall become due or shall have accrued (a) on
account of the operation of the business of the Seller or the ownership of the
Assets on or prior to the Closing Date or (b) on account of the sale of the
Assets (including a pro-rata portion of all personal property and excise taxes
payable with respect to the Assets by the Seller).
-24-
5.4 Delivery of Interim Financial Statements. As promptly as possible
----------------------------------------
following the last day of each month after the date hereof, and in any event
within 15 days after the end of each such month, the Seller shall deliver to the
Buyer its balance sheet and related statements of income, shareholders' equity,
retained earnings and changes in financial condition for the one-month period
then ended, all certified by the chief financial officer (collectively, the
"Interim Financial Statements").
5.5 Communication with Customers and Suppliers.
------------------------------------------
(a) Unless instructed otherwise by the Buyer in writing, the Seller
will accept customer orders in the ordinary course of business and consistent
with past practice as the Buyer's agent for all products offered by the Seller
but expected to be shipped by the Buyer after the Closing Date.
(b) The Seller and the Buyer will cooperate in communication with
suppliers and customers to accomplish the transfer of the Assets to the Buyer on
the Closing Date.
5.6 Compliance with Laws. The Seller will comply with all laws and
--------------------
regulations which are applicable to it, its ownership of the Assets or to the
conduct of its business and will perform and comply with all contracts,
commitments and obligations by which it is bound.
5.7 Continued Truth of Representations and Warranties of the Seller and
-------------------------------------------------------------------
the Stockholder. Neither the Stockholder nor the Seller will take any actions,
---------------
including any amendment to the corporate or shareholder authorization for this
transaction, which would result in any of the representations or warranties set
forth in Section 2 hereof being untrue.
5.8 Continuing Obligation to Inform. From time to time prior to the
-------------------------------
Closing, the Seller will deliver or cause to be delivered to the Buyer
supplemental information concerning events subsequent to the date hereof which
would render any statement, representation or warranty in this Agreement or any
information contained in any Schedule inaccurate or incomplete in any material
respect at any time after the date hereof until the Closing Date.
5.9 Exclusive Dealing. Neither the Stockholder nor the Seller will,
-----------------
directly or indirectly, through any officer, director, agent or otherwise, (a)
solicit, initiate or encourage submission of proposals or offers from any person
relating to any acquisition or purchase of all or a material portion of the
Assets, or any equity interest in, the Seller or any equity investment, merger,
consolidation or business combination with the Seller, or (b) participate in any
discussions or negotiations regarding, or furnish to any other person, any non-
public information with respect to, or otherwise cooperate in any way with, or
assist or participate in, facilitate or
-25-
encourage, any effort or attempt by any other person to do or seek any of the
foregoing. The Seller shall promptly notify the Buyer if any such proposal or
offer, or any inquiry or contact with any person with respect thereto, is made.
6. Best Efforts to Obtain Satisfaction of Conditions
-------------------------------------------------
The Seller, the Stockholder and the Buyer covenant and agree to use their
best efforts to obtain the satisfaction of the conditions specified in this
Agreement.
7. Conditions to Obligations of the Buyer
--------------------------------------
The obligations of the Buyer under this Agreement are subject to the
fulfillment, at the Closing Date, of the following conditions precedent, each of
which may be waived in writing in the sole discretion of the Buyer:
7.1 Continued Truth of Representations and Warranties of the Seller and
-------------------------------------------------------------------
Stockholder; Compliance with Covenants and Obligations. The representations and
------------------------------------------------------
warranties of the Seller and Stockholder shall be true on and as of the Closing
Date as though such representations and warranties were made on and as of such
date, except for any changes permitted by the terms hereof or consented to in
writing by the Buyer. The Seller and Stockholder shall have performed and
complied with all terms, conditions, covenants, obligations, agreements and
restrictions required by this Agreement to be performed or complied with by them
prior to or at the Closing Date.
7.2 Corporate Proceedings. All corporate and other proceedings required
---------------------
to be taken on the part of the Seller to authorize or carry out this Agreement
and to convey, assign, transfer and deliver the Assets shall have been taken.
7.3 Governmental Approvals. All governmental agencies, departments,
----------------------
bureaus, commissions and similar bodies, the consent, authorization or approval
of which is necessary under any applicable law, rule, order or regulation for
the consummation by the Seller of the transactions contemplated by this
Agreement and the operation of the Seller's business by the Buyer shall have
consented to, authorized, permitted or approved such transactions.
7.4 Consents of Lenders, Lessors and Other Third Parties. The Seller shall
----------------------------------------------------
have received all requisite consents and approvals of all lenders, lessors and
other third parties whose consent or approval is required in order for the
Seller to consummate the transactions contemplated by this Agreement, including,
without limitation, those set forth on Schedule 2.3 attached hereto.
------------
7.5 Adverse Proceedings. No action or proceeding by or before any court or
-------------------
other governmental body shall have been instituted or threatened by any
-26-
governmental body or person whatsoever which shall seek to restrain, prohibit or
invalidate the transactions contemplated by this Agreement or which might affect
the right of the Buyer to own or use the Assets after the Closing.
7.6 Due Diligence. The Seller and the Stockholder shall have provided to
-------------
the Buyer access to all material and information requested by the Buyer to
conduct a thorough due diligence review of all aspects of the Seller's business
and the Assets. The Buyer shall, in its sole discretion, be satisfied with such
review, both in scope and substance, including such review with respect to
environmental matters.
7.7 Opinion of Counsel. The Buyer shall have received an opinion of ▇▇▇▇▇
------------------
& ▇▇▇▇▇▇, counsel to the Seller, dated as of the Closing Date, in a form and as
to such matters as may be reasonably requested by the Buyer or its counsel.
7.8 Board of Directors and Shareholder Approval. The directors and
-------------------------------------------
shareholders of the Seller shall have duly authorized the transactions
contemplated by this Agreement.
7.9 The Assets. At the Closing, the Buyer shall receive good, clear,
----------
record and marketable title to the Assets, free and clear of all liens,
liabilities, security interests and encumbrances of any nature whatsoever.
7.10 Update. The Seller shall have provided the Buyer with a true, correct
------
and complete list and amount, as of the Closing Date, of:
(a) the Inventory;
(b) the Fixed Assets;
(c) the Accounts Receivable, including an aging thereof;
(d) the trade accounts payable and accrued liabilities assumed
pursuant to Subsection 1.4(a)(i) and (ii) hereof;
(e) all unfilled customer orders; and
(f) all shipments made during the period from the date of this
Agreement to the Closing Date,
none of which information shall be materially different from the information
supplied by the Seller as of the date hereof on Schedules 2.9, 2.10, 2.14 and
------------- ---- ----
2.20 attached hereto.
----
7.11 [Intentionally omitted]
-----------------------
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7.12 Assignment of insurance Policies. On or prior to the Closing Date,
--------------------------------
the Seller shall have assigned to the Buyer any and all insurance policies
extending warranty or products liability coverage to the Seller for products
manufactured by the Seller prior to the Closing Date or for claims made on or
prior to the Closing Date.
7.13 Material Adverse Change. There shall not have occurred a material
-----------------------
adverse change, or an event or development involving a prospective material
adverse change, in the Assets or in the business, properties, operations,
conditions (financial or otherwise), prospects or liabilities of the Seller
since December 29, 1996.
7.14 Escrow Agreement. On or prior to the Closing Date, the Buyer, Seller
----------------
and Stockholder shall have entered into an Escrow Agreement in the form
attached hereto as Exhibit A.
---------
7.15 Assumption of Indebtedness. Seller shall have provided Buyer with a
--------------------------
list (showing payee, and date of invoice and outstanding balance) of all trade
account payables as of the Closing Date. After giving effect to the payment by
the Buyer to Freemont Financial Corporation pursuant to Section 1.4(b), the
Seller's indebtedness and other obligations to Freemont Financial Corporation
shall have been completely discharged. The Buyer shall pay one-half of any fees
or penalties due in connection with the repayment of such indebtedness provided
the Buyer's aggregate obligation for fees and penalties shall not exceed
$12,500. Freemont Financial Corporation shall have released all of the Assets
from the security interest granted under the Freemont Agreement or any related
agreement and delivered to the Buyer UCC Termination Statements reflecting such
release.
7.16 Tax Lien Waivers. On or prior to the Closing Date, the Seller shall
----------------
have obtained and delivered to the Buyer tax lien waivers from all jurisdictions
in which Assets are located and which provide such tax lien waivers.
7.17 Certain Litigation. The Seller shall have filed an Answer in the civil
------------------
litigation ▇▇▇▇▇ Stoltani v. Film Microelectronics Inc. and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
------------------------------------------------------------------
Essex Superior Court, Civil No. 96-3150, and the Buyer shall be satisfied,
acting reasonably, that the Seller is not subject to a default judgment in such
action.
7.18 Closing Deliveries. The Buyer shall have received at or prior to the
------------------
Closing each of the following documents:
(a) a ▇▇▇▇ of sale substantially in a form reasonably satisfactory to
the Buyer;
(b) such instruments of conveyance, assignment and transfer, in form
and substance satisfactory to the Buyer, as shall be appropriate to convey,
-28-
transfer and assign to, and to vest in, the Buyer, good, clear, record and
marketable title to the Assets;
(c) all technical data, formulations, product literature and other
documentation relating to the Seller's business, all in form and substance
satisfactory to the Buyer;
(d) such contracts, files and other data and documents pertaining to
the Assets or the Seller's business as the Buyer may reasonably request;
(e) copies of the general ledgers and books of account of the Seller,
and all federal, state and local income, franchise, property and other tax
returns filed by the Seller with respect to the Assets since June 30, 1992;
(f) such certificates of the Seller's officers and such other
documents evidencing satisfaction of the conditions specified in Section 7 as
the Buyer shall reasonably request;
(g) a certificate of the Secretary of State of the Commonwealth of
Massachusetts as to the legal existence and good standing (including tax) of the
Seller in the Commonwealth of Massachusetts;
(h) certificates of the Clerk of the Seller attesting to the
incumbency of the Seller's officers, respectively, the authenticity of the
resolutions authorizing the transactions contemplated by the Agreement, and the
authenticity and continuing validity of the charter documents delivered pursuant
to Subsection 2.1;
(i) estoppel certificates from each lessor from whom the Seller leases
real or personal property consenting to the assumption of such lease by the
Buyer and representing that there are no outstanding claims against the Seller
under any such lease;
(j) a current UCC-11 search confirming the absence of any UCC
Financing Statements or other liens affecting the Assets;
(k) the schedules listed in Subsection 7.10;
(l) evidence in form satisfactory to the Buyer that the Seller's
Hybird Microcircuit Certification has been transferred to Buyer;
(m) cross receipt executed by the Buyer and the Seller;
-29-
(n) such other documents, instruments or certificates as the Buyer
may reasonably request.
8. Conditions to Obligations of the Seller and the Stockholder
-----------------------------------------------------------
The obligations of the Seller and the Stockholder under this Agreement are
subject to the fulfillment, at the Closing Date, of the following conditions
precedent, each of which may be waived in writing at the sole discretion of the
Seller:
8.1 Continued Truth of Representations and Warranties of the Buyer;
--------------------------------------------------------------
Compliance with Covenants and Obligations. The representations and warranties of
-----------------------------------------
the Buyer in this Agreement shall be true on and as of the Closing Date as
though such representations and warranties were made on and as of such date,
except for any changes consented to in writing by the Seller. The Buyer shall
have performed and complied with all terms, conditions, obligations, agreements
and restrictions required by this Agreement to be performed or complied with by
it prior to or at the Closing Date.
8.2 Corporate Proceedings. All corporate and other proceedings required to
---------------------
be taken on the part of the Buyer to authorize or carry out this Agreement shall
have been taken.
8.3 Governmental Approvals. All governmental agencies, departments,
----------------------
bureaus, commissions and similar bodies, the consent, authorization or approval
of which is necessary under any applicable law, rule, order or regulation for
the consummation by the Buyer of the transactions contemplated by this Agreement
shall have consented to, authorized, permitted or approved such transactions.
8.4 Consents of Lenders, Lessors and Other Third Parties. The Buyer shall
----------------------------------------------------
have received all requisite consents and approvals of all lenders, lessors and
other third parties whose consent or approval is required in order for the Buyer
to consummate the transactions contemplated by this Agreement, including,
without limitation, those set forth on Schedule 3.2 attached hereto.
------------
8.5 Adverse Proceedings. No action or proceeding by or before any court
-------------------
or other governmental body shall have been instituted or threatened by any
governmental body or person whatsoever which shall seek to restrain, prohibit or
invalidate the transactions contemplated by this Agreement or which might affect
the right of the Seller to transfer the Assets.
8.6 Repayment of Indebtedness. At the Closing, Buyer shall have repaid the
-------------------------
lesser of $500,000 principal amount of indebtedness under the Freemont Agreement
or the principal balance outstanding under the Freemont Agreement
-30-
(including accrued interest) on the Closing Date. The Buyer shall also have paid
the Stockholder $30,814 to acquire the equipment subject to the Stockholders
Lease.
8.7 Non-Competition Agreement. At the Closing, Buyer shall have entered
-------------------------
into a Non-Competition Agreement with the Stockholder in a form acceptable to
the Buyer and the Stockholder.
8.8 Closing Deliveries. The Seller shall have received at or prior to the
------------------
Closing each of the following documents:
(a) such certificates of the Buyer's officers and such other documents
evidencing satisfaction of the conditions specified in this Section 8 as the
Seller shall reasonably request;
(b) a certificate of the Secretary of State of the State of Delaware
as to the legal existence and good standing (including tax) of the Buyer in
Delaware;
(c) a certificate of the Secretary of the Buyer attesting to the
incumbency of the Buyer's officers, the authenticity of the resolutions
authorizing the transactions contemplated by this agreement, and the
authenticity and continuing validity of the charter documents delivered pursuant
to Subsection 3.1;
(d) Instrument of Assumption of Liabilities executed by the Buyer and
accepted by the Seller;
(e) payment of the Purchase Price in the manner contemplated by
Section 1.3(b);
(f) cross receipt executed by the Buyer and the Seller; and
(g) such other documents, instruments or as the Seller may reasonably
request.
9. Indemnification
---------------
9.1 By the Buyer. The Buyer hereby indemnifies and holds harmless the
------------
Seller against all claims, damages, losses, liabilities, costs and expenses
(including, without limitation, settlement costs and any legal, accounting or
other expenses for investigating or defending any actions or threatened actions)
reasonably incurred by the Seller in connection with each and all of the
following:
(a) Any breach by the Buyer of any representation or warranty made by
the Buyer in this Agreement;
-31-
(b) Any breach of any covenant, agreement or obligation of the Buyer
contained in this Agreement or any other agreement, instrument or document
contemplated by this Agreement; and
(c) Any misrepresentation contained in any statement, certificate or
schedule furnished by the Buyer pursuant to this Agreement or in connection with
the transactions contemplated by this Agreement.
9.2 By the Seller and the Stockholder. The Seller and the Stockholder,
---------------------------------
jointly and severally, agree to indemnify and hold harmless the Buyer and each
of its affiliates, stockholders, officers, directors and agents from any and all
claims, damages, losses, liabilities, costs and expenses (including, without
limitation, settlement costs and any legal, accounting or other expenses for
investigating or defending any actions or threatened actions) reasonably
incurred by the Buyer, its stockholders, officers, directors, affiliates or
agents, in connection with each and all of the following:
(a) Any breach by the Seller or the Stockholder of any representation
or warranty made by the Seller or the Stockholder in this Agreement;
(b) Any breach of any covenant, agreement or obligations of the Seller
or the Stockholder contained in this Agreement or any other agreement,
instrument, or document contemplated by this Agreement;
(c) Any misrepresentation contained in any statement, certificate,
document or schedule furnished by the Seller or the Stockholder pursuant to this
Agreement or in connection with the transactions contemplated by this Agreement;
(d) Any claims against, or liabilities or obligations of, the Seller
or against the Assets not specifically assumed by the Buyer pursuant this
Agreement;
(e) The failure of the Buyer to obtain the protection afforded by
compliance with the notification and other requirements of the bulk sales laws
in force in the jurisdictions in which such laws may be applicable to either the
Seller or the transactions contemplated by this Agreement;
(f) Any violation by the Seller of, or any failure by the Seller to
comply with, any law, ruling, order, decree, regulation or zoning, environmental
or permit requirement applicable to the Seller, the Assets or its business,
whether or not any such violation or failure to comply has been disclosed to the
Buyer, including any costs incurred by the Buyer (i) in order to bring the
Assets into compliance with environmental laws as a consequence of noncompliance
with such laws on the Closing Date or (ii) in connection with the transfer of
the Assets;
-32-
(g) Except as provided in Section 10.8, any warranty claim or product
liability claim relating to (i) products manufactured (including works in
progress more than 50% completed as of the Closing Date) or sold by the Seller
prior to the Closing Date or (ii) the Seller's business or operation prior to
the Closing Date;
(h) Any tax liabilities or obligations of the Seller or the
Stockholder;
(i) Any claims against, or liabilities or obligations of, the Seller
with respect to obligations under Employee Plans or COBRA;
(j) Except as provided in Section 10.12, the claim made against
Seller by State Mutual Insurance; and
(k) The civil action, ▇▇▇▇▇ ▇▇▇▇▇▇▇ v. Film Microelectronics Inc. and
-----------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, or any other actions brought on a similar factual basis or
----------------
questioning the Seller's ownership of or right to transfer the Assets.
9.3 Claims for Indemnification. Whenever any claim shall arise for
--------------------------
indemnification hereunder, the party seeking indemnification (the "Indemnified
Party") shall promptly notify the party from whom indemnification is sought (the
"Indemnifying Party") of the claim and, when known, the facts constituting the
basis for such claim. In the event of any such claim for indemnification
hereunder resulting from or in connection with any claim or legal proceedings by
a third-party, the notice to the Indemnifying Party shall specify, if known, the
amount or an estimate of the amount of the liability arising therefrom. The
Indemnified Party shall not settle or compromise any claim by a third party for
which it is entitled to indemnification hereunder without the prior written
consent of the Indemnifying Party, which shall not be unreasonably withheld,
unless suit shall have been instituted against it and the Indemnifying Party
shall not have taken control of such suit after notification thereof as provided
in Subsection 9.4 of this Agreement.
9.4 Defense by Indemnifying Party. In connection with any claim giving
-----------------------------
rise to indemnity hereunder resulting from or arising out of any claim or legal
proceeding by a person who is not a party to this Agreement, the Indemnifying
Party at its sole cost and expense may, upon written notice to the Indemnified
Party, assume the defense of any such claim or legal proceeding if it
acknowledges to the Indemnified Party in writing its obligations to indemnify
the Indemnified Party with respect to all elements of such claim. The
Indemnified Party shall be entitled to participate in (but not control) the
defense of any such action, with its counsel and at its own expense. If the
Indemnifying Party does not assume the defense of any such claim or litigation
resulting therefrom within 30 days after the date such claim is made, (a) the
Indemnified Party may defend against such claim or litigation, in such manner as
it may deem appropriate, including, but not limited to, settling such claim or
litigation, after giving notice of the same to the Indemnifying Party, on such
terms
-33-
as the Indemnified Party may deem appropriate, and (b) the Indemnifying Party
shall be entitled to participate in (but not control) the defense of such
action, with its counsel and at its own expense. If the Indemnifying Party
thereafter seeks to question the manner in which the Indemnified Party defended
such third party claim or the amount or nature of any such settlement, the
Indemnifying Party shall have the burden to prove by a preponderance of the
evidence that the Indemnified Party did not defend or settle such third party
claim in a reasonably prudent manner.
9.5 Payment of Indemnification Obligation. The Seller hereby agrees that
-------------------------------------
any claim for indemnification by the Buyer under this Section 9 for an
Indemnified Claim (as defined in the Escrow Agreement), may, at the Buyer's
option, be set off by cancellation of all or a portion of the Shares issued
pursuant to this Agreement and held pursuant to the Escrow Agreement (the number
of Shares to be cancelled shall be determined based upon the average closing
price of SatCon Technology Corporation's Common Stock on the Nasdaq National
Market System for 30 days immediately preceding such cancellation). All
indemnification by the Buyer or the Seller hereunder (to the extent not
satisfied in the manner specified in the preceding sentence) shall be effected
by payment of cash or delivery of a cashier's or certified check in the amount
of the indemnification liability.
9.6 Survival of Representations; Claims for Indemnification. All
-------------------------------------------------------
representations, warranties and indemnities made by the parties herein or in any
instrument or document furnished in connection herewith shall survive the
Closing and any investigation at any time made by or on behalf of the parties
hereto. All such representations, warranties and indemnities shall expire on the
third anniversary of the Closing Date, except for (i) claims with respect to the
matters set forth in Section 9.2(d), (h), (i), (j) and (k), which shall survive
until the date six months after the expiration of the applicable statute of
limitations, or any extension thereof and (ii) claims, if any, asserted in
writing prior to such third anniversary, which shall survive until finally
resolved and satisfied in full. All claims and actions for indemnity pursuant to
this Section 9 for breach of any representation or warranty shall be asserted or
maintained in writing by a party hereto on or prior to the expiration of such
three-year period.
10. Post Closing Agreements
-----------------------
The Seller and Stockholder agree that from and after the Closing Date:
10.1 Proprietary Information.
-----------------------
(a) Each of the Seller and Stockholder shall hold in confidence, and
use its best efforts to have all of its officers, directors and personnel hold
in confidence, all knowledge and information of a secret or confidential nature
with respect to the business of the Seller and shall not disclose, publish or
make use of the
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same without the consent of the Buyer, except to the extent that such
information shall have become public knowledge other than by breach of this
Agreement by the Seller or the Stockholder.
(b) The Seller and Stockholder agree that the remedy at law for any
breach of this Subsection 10.1 would be inadequate and that the Buyer shall be
entitled to injunctive relief in addition to any other remedy it may have upon
breach of any provision of this Subsection 10.1.
10.2 No Solicitation or Hiring of Former Employees. Except as provided by
---------------------------------------------
law, for a period of three years after the Closing Date, neither the Seller nor
the Stockholder shall solicit any person who was an employee of the Seller on
the Closing Date to terminate his employment with the Buyer or to become an
employee of the Seller, any entity with which the Stockholder is affiliated, or
hire any person who was such an employee on the date hereof or on the Closing
Date.
10.3 Non-Competition Agreement.
-------------------------
(a) For a period of three years after the Closing Date, neither the
Seller, the Stockholder nor any of their Affiliates shall (i) manufacture,
market or sell any product which has the same or substantially the same form,
function and primary application as any existing or proposed product
manufactured by the Seller, Buyer or any of their Affiliates on or prior to the
Closing Date or (ii) engage in any business competitive with the business of the
Seller, Buyer or any of their Affiliates as conducted on the date hereof or on
the Closing Date, in the United States or any other country in which the Seller,
Buyer or any of their Affiliates conducted its business during the two years
prior to the Closing Date.
(b) The parties hereto agree that the duration and geographic scope of
the non-competition provision set forth in this Subsection 10.3 are reasonable.
In the event that any court determines that the duration or the geographic
scope, or both, are unreasonable and that such provision is to that extent
unenforceable, the parties hereto agree that the provision shall remain in full
force and effect for the greatest time period and in the greatest area that
would not render it unenforceable. The parties intend that this non-competition
provision shall be deemed to be a series of separate covenants, one for each and
every county of each and every state of the United States of America and each
and every political subdivision of each and every country outside the United
States of America where this provision is intended to be effective. The Seller
and Stockholder agree that damages are an inadequate remedy for any breach of
this provision and that the Buyer shall, whether or not it is pursuing any
potential remedies at law, be entitled to equitable relief in the form of
preliminary and permanent injunctions without bond or other security upon any
actual or threatened breach of this non-competition provision.
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10.4 Sharing of Data.
---------------
(a) The Seller shall have the right for a period of three years
following the Closing Date to have reasonable access to such books, records and
accounts, including financial and tax information, correspondence, production
records, employment records and other similar information as are transferred to
the Buyer pursuant to the terms of this Agreement for the limited purposes of
concluding its involvement in the business of the Seller prior to the Closing
Date and for complying with its obligations under applicable securities, tax,
environmental, employment or other laws and regulations. The Buyer shall have
the right for a period of three years following the Closing Date to have
reasonable access to those books, records and accounts, including financial and
tax information, correspondence, production records, employment records and
other records which are retained by the Seller pursuant to the terms of this
Agreement to the extent that any of the foregoing relates to the business of the
Seller transferred to the Buyer hereunder or is otherwise needed by the Buyer in
order to comply with its obligations under applicable securities, tax,
environmental, employment or other laws and regulations.
(b) The Seller, Stockholder and the Buyer agree that from and after
the Closing Date they shall cooperate fully with each other to facilitate the
transfer of the Assets from the Seller to the Buyer and the operation thereof by
the Buyer.
10.5 Use of Name. The Seller and Stockholder agree not to use the name
-----------
"Film Microelectronics" or any derivation thereof after the Closing Date in
connection with any business related to, competitive with, or an outgrowth of,
the business conducted by the Seller on the date hereof and as soon as
practicable after the Closing Date to amend its Articles of Organization to
remove "Film Microelectronics" from Seller's name.
10.6 Cooperation in Litigation. Each party hereto will fully cooperate
-------------------------
with the other in the defense or prosecution of any litigation or proceeding
already instituted or which may be instituted hereafter against or by such party
relating to or arising out of the conduct of the business of the Seller prior to
or after the Closing Date (other than litigation arising out the transactions
contemplated by this Agreement). The party requesting such cooperation shall pay
the out-of-pocket expenses (including legal fees and disbursements) of the party
providing such cooperation and of its officers, directors, employees and agents
reasonably incurred in connection with providing such cooperation, but shall not
be responsible to reimburse the party providing such cooperation for such
party's time spent in such cooperation or the salaries or costs of fringe
benefits or similar expenses paid by the party providing such cooperation to its
officers, directors, employees and agents while assisting in the defense or
prosecution of any such litigation or proceeding.
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10.7 [Intentionally omitted]
-----------------------
10.8 Product Claims and Returns. Seller shall be responsible for customer
--------------------------
claims relating to services rendered by Seller prior to the Closing Date, and
customer claims relating to, or returns of, products of Seller which (a) were
sold and shipped by the Seller prior to the Closing Date, (b) were in the
finished goods inventory of the Seller as of the Closing Date, or (c) were work
in process and more than fifty percent (50%) completed by the Closing Date. If a
customer makes a claim or seeks a return and, in the judgment of the Buyer, the
Claim or return is proper, Buyer shall replace or repair, as the case may be,
the services rendered or product purchased at the Buyer's then generally
prevailing prices and labor rates. Such repairs or returns shall be for the
account of Seller and Seller shall promptly reimburse Buyer, for the amounts
thereof in excess of reserves for such items included in the Closing Balance
Sheet. Notwithstanding anything in this Section 10.8 to the contrary, Seller
shall not be required to reimburse Buyer, with respect to warranty claims and
returns incurred in any fiscal quarter ending after the Closing Date until Buyer
has incurred of warranty claims or returns in an amount equal to the claims and
returns incurred during the three month period ended February 28, 1997, and then
only for returns or claims in excess of such amount. Such reimbursement shall be
in immediately available funds.
10.9 Cooperation with Buyer's Reporting Requirements. The Seller and
-----------------------------------------------
Stockholder agree fully to cooperate with Buyer in order to enable Buyer to
comply with its reporting obligations under the Securities Act and the
Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder, as such obligations relate to the Seller's business and
the Assets.
10.10 Discharge of Seller's Obligations. Subsequent to the closing, the
---------------------------------
Seller shall pay its obligation not assumed by the Buyer pursuant to this
Agreement on a timely basis and in a manner calculated to avoid any adverse
effect on the conduct by Buyer of its business operations.
10.11 [Intentionally Omitted]
-----------------------
10.12 Defense of Certain Claims. Seller agrees to actively pursue the
-------------------------
defense of the claims brought against the Seller by State Mutual Insurance and
the civil action entitled ▇▇▇▇▇ ▇▇▇▇▇▇▇ v. Film Microelectronics, Inc. and
------------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇. Buyer agrees to share in 50% of the costs of settlement or any
----------------
judgment awarded to State Mutual, exclusive of costs of defense, but in no event
shall Buyer's liability exceed $37,000.
10.13 Lock-up of Shares. Seller and Stockholder agree that so long as
-----------------
either the Seller or the Stockholder is the beneficial owner of any Shares
acquired pursuant to this Agreement, the Seller and Stockholder will agree on
one or more
-37-
occasions, if requested by the Buyer, not to sell, dispose of or otherwise
transfer any of the Shares for a period not to exceed 180 days in connection
with an underwritten offering of the Buyer's securities.
11. Termination of Agreement
------------------------
11.1 Termination by Lapse of Time. This Agreement shall terminate at
----------------------------
5:00 p.m., Boston time, on May 15, 1997, if the transactions contemplated hereby
have not been consummated, unless such date is extended by the written consent
of all of the parties hereto.
11.2 Termination by Agreement of the Parties. This Agreement may be
---------------------------------------
terminated by the mutual written agreement of the parties hereto. In the event
of such termination by agreement, the Buyer shall have no further obligation or
liability to the Seller under this Agreement, and the Seller shall have no
further obligation or liability to the Buyer under this Agreement.
11.3 Termination by Reason of Breach. This Agreement may be terminated
-------------------------------
by the Seller, if at any time prior to the Closing there shall occur a breach of
any of the representations, warranties or covenants of the Buyer or the failure
by the Buyer to perform any condition or obligation hereunder, and may be
terminated by the Buyer, if at any time prior to the Closing there shall occur a
breach of any of the representations, warranties or covenants of the Seller or
the failure of the Seller to perform any condition or obligation hereunder. In
the event of a termination pursuant to this Section 11.3, the breaching party
shall remain liable to the non-breaching party for any losses, claims, damages
or expenses that arise out of the breach of this Agreement, which liability
shall survive the termination of this Agreement.
12. Transfer and Sales Tax
----------------------
Notwithstanding any provisions of law imposing the burden of such
taxes on the Seller or the Buyer, as the case may be, the Seller shall be
responsible for and shall pay (a) all sales, use and transfer taxes, and (b) all
governmental charges, if any, upon the sale or transfer of any of the Assets
hereunder. If the Seller shall fail to pay such amounts on a timely basis, the
Buyer may pay such amounts to the appropriate governmental authority or
authorities, and the Seller shall promptly reimburse the Buyer for any amounts
so paid by the Buyer.
13. Brokers
-------
13.1 For the Seller. The Seller represents and warrants that it has not
--------------
engaged any broker or finder or incurred any liability for brokerage fees,
commissions or finder's fees in connection with the transactions contemplated by
this
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Agreement. The Seller agrees to indemnify and hold harmless the Buyer against
any claims or liabilities asserted against it by any person acting or claiming
to act as a broker or finder on behalf of the Seller.
13.2 For the Buyer. The Buyer agrees to pay all fees, expenses and
-------------
compensation owed to any person, firm or corporation who has acted in the
capacity of broker or finder on its behalf in connection with the transactions
contemplated by this Agreement. The Buyer agrees to indemnify and hold harmless
the Seller against any claims or liabilities asserted against it by any person
acting or claiming to act as a broker or finder on behalf of the Buyer.
14. Notices
-------
Any notices or other communications required or permitted hereunder shall
be sufficiently given if delivered personally or sent by telex, federal express,
registered or certified mail, postage prepaid, addressed as follows or to such
other address of which the parties may have given notice:
To the Seller:
Film Microelectronics, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
To the Buyer:
c/o SatCon Technology Corporation
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
-39-
With copies to:
▇▇▇▇ and ▇▇▇▇ LLP
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
To the Stockholder:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Unless otherwise specified herein, such notices or other communications shall be
deemed received (a) on the date delivered, if delivered personally; or (b) three
business days after being sent, if sent by registered or certified mail.
15. Successors and Assigns
----------------------
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns, except that the
Buyer and the Seller may not assign their respective obligations hereunder
without the prior written consent of the other party; provided, however, that
the Buyer may assign this Agreement, and its rights and obligations hereunder,
to a subsidiary or affiliate. Any assignment in contravention of this provision
shall be void. No assignment shall release the Buyer from any obligation or
liability under this Agreement.
16. Entire Agreement: Amendments; Attachments
-----------------------------------------
(a) This Agreement, all Schedules and Exhibits hereto, and all agreements
and instruments to be delivered by the parties pursuant hereto represent the
entire understanding and agreement between the parties hereto with respect to
the subject matter hereof and supersede all prior oral and written and all
contemporaneous oral negotiations, commitments and understandings between such
parties including the letter agreement, dated February 14, 1997. The Buyer and
the Seller, by the consent of their respective Boards of Directors, or officers
authorized by such Boards, may amend or modify this Agreement, in such manner as
may be agreed upon, by a written instrument executed by the Buyer and the
Seller.
(b) If the provisions of any Schedule or Exhibit to this Agreement are
inconsistent with the provisions of this Agreement, the provision of the
Agreement
-40-
shall prevail. The Exhibits and Schedules attached hereto or to be attached
hereafter are hereby incorporated as integral parts of this Agreement.
17. Expenses
--------
Except as otherwise expressly provided herein, the Buyer and the Seller
shall each pay their own expenses in connection with this Agreement and the
transactions contemplated hereby.
18. Legal Fees
----------
In the event that legal proceedings are commenced by the Buyer against
the Seller, or by the Seller against the Buyer, in prior to the closing of the
transactions contemplated hereby, the party or parties which do not prevail in
such proceedings shall pay the reasonable attorneys' fees and other costs and
expenses, including investigation costs, incurred by the prevailing party in
such proceedings.
19. Governing Law
-------------
This Agreement shall be governed by and construed in accordance with the
laws of the Commonwealth of Massachusetts.
20. Section Headings
----------------
The section headings are for the convenience of the parties and in no
way alter, modify, amend, limit, or restrict the contractual obligations of the
parties.
21. Severability
------------
The invalidity or unenforceability of any provision of this Agreement
shall not affect the validity or enforceability of any other provision of this
Agreement.
22. Counterparts
------------
This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original, but all of which shall be one and the
same document.
-41-
IN WITNESS WHEREOF, this Amended and Restated Agreement has been duly
executed by the parties hereto as of and on the date first above written.
SELLER:
FILM MICROELECTRONICS, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------
Title: President
-------------------------
STOCKHOLDER:
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
BUYER:
SATCON FILM MICROELECTRONICS, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
--------------------------
Title: President, Chief Executive
Officer and Chairman
of the Board
--------------------------
The undersigned hereby represents and warrants that this Agreement has been
approved by the Board of Directors and stockholders of the Seller and that the
undersigned agrees not to take any action to rescind or modify such approvals.
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-42-
Omitted Schedules
-----------------
Pursuant to Item 601(b)(2) of Regulation S-K promulgated by the
Securities and Exchange Commission (the "Commission") under the Securities Act
of 1933, as amended and the Securities Exchange Act of 1934. SatCon Technology
Corporation (the "Company") has, with respect to the Amended and Restated Asset
Purchase Agreement, dated as of April 3, 1997, among SatCon Film
Microelectronics, Inc., a wholly-owned subsidiary of the Company, Film
Microelectronics, Inc. and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, omitted to file the schedules
listed in the table of contents herewith. These schedules will be supplementally
furnished to the Commission upon request.
