EXHBIT 10.35
ASSET PURCHASE AGREEMENT
DATED DECEMBER 13, 2005
BETWEEN
SATCON POWER SYSTEMS, INC.,
SELLER
AND
QUALMARK LING CORPORATION,
BUYER
TABLE OF CONTENTS
Exhibits Page
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Exhibit A - ▇▇▇▇ of Sale
Exhibit B - Instrument of Assumption
Exhibit C - Cross Receipt
Exhibit D - Confidentiality and Non-Disclosure Agreement
Schedules
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Schedule 1.1(b) - Excluded Assets
Schedule 1.5 - PM10 Designs
Schedule 2.1 - Organization
Schedule 2.3 - Non-Contravention
Schedule 2.5(a) - Acquired Assets
Schedule 2.5(c) - Security Interests
Schedule 2.6(a) - Intellectual Property
Schedule 2.7 - Inventory
Schedule 2.8 - Contracts
Schedule 2.10 - Warranties
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement is entered into as of December , 2005 by and
between Qualmark Ling Corporation, a Colorado corporation (the "Buyer"), and
SatCon Power Systems, Inc., a Delaware corporation (the "Seller").
This Agreement contemplates a transaction in which the Buyer will purchase
certain of the assets and assume certain of the liabilities of the Seller
related to its Ling Shaker and Amplifier business.
Capitalized terms used in this Agreement shall have the meanings ascribed
to them in Article IX.
In consideration of the representations, warranties and covenants herein
contained, the Parties agree as follows.
ARTICLE I
THE ASSET PURCHASE
1.1 Purchase and Sale of Assets.
(a) Upon and subject to the terms and conditions of this Agreement,
the Buyer shall purchase from the Seller, and the Seller shall sell, transfer,
convey, assign and deliver to the Buyer, at the Closing, for the consideration
specified below in this Article I, all right, title and interest in, to and
under the Acquired Assets.
(b) Notwithstanding the provisions of Section 1.1(a), the Acquired
Assets shall not include the Excluded Assets.
1.2 Assumption of Liabilities.
(a) Upon and subject to the terms and conditions of this Agreement,
the Buyer shall assume and become responsible for, from and after the Closing,
the Assumed Liabilities.
(b) Notwithstanding the terms of Section 1.2(a) or any other provision
of this Agreement to the contrary, the Buyer shall not assume or become
responsible for, and the Seller shall remain liable for, the Retained
Liabilities.
1.3 Purchase Price.
(a) The Purchase Price to be paid in full in cash by the Buyer for the
Acquired Assets at the Closing shall be $2,325,000, subject to adjustment as set
forth in Section 1.3(b) below.
(b) Prior to Closing Seller and Buyer shall, jointly and in good
faith, make an evaluation of any changes in the inventory of Seller as reflected
in Schedule 2.7. Any reduction in such inventory shall result in a concomitant
reduction in the Purchase Price to be paid at closing, and any increase in such
inventory shall result in a concomitant increase in the Purchase Price to be
paid at closing. The amount of such reduction or increase, if any, shall be
agreed upon in writing by Seller and Buyer immediately prior to closing, and
such written document will constitute an amendment to this Agreement.
1.4 Allocation. Seller and Buyer agree to the allocated fair market value
of the Acquired Assets as follows:
Inventory $1,842,749
Furniture, Fixtures and Equipment $ 68,000
Vendor Tooling $ 240,000
Ling name and trademark $ 171,251
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TOTAL $2,325,000
==========
Such allocation shall be binding on Buyer and Seller for all federal, state
and local tax purposes. Buyer and Seller shall file with their respective
federal income tax returns forms that shall reflect such allocation. In the
event that the Purchase Price is adjusted pursuant to Section 1.3(b) above, the
allocation of the Purchase Price among the Acquired Assets shall be
appropriately modified to reflect increases or decreases in the inventory.
1.5 PM10 Designs and Amplifiers. At the Closing, Seller will transfer to
Buyer and Seller joint ownership of Seller's PM 10 Power Module designs listed
on Section 1.5 of the Disclosure Schedule (the "PM10 Designs"). Buyer agrees
that it will not use the PM10 Designs for the production of devices for the
power sources market. Seller agrees that that it will not use the PM10 Designs
in the production of devices for the electrodynamic vibration market. Buyer
acknowledges and agrees that Seller retains all of its rights to build
amplifiers for its EPT Acoustical product line, and Seller acknowledges and
agrees that, effective on the Closing Date, it shall not retain rights to
continue the use of the LING name or trademark. Neither party shall have any
obligation to account to the other for profits derived from its use of the PM10
Designs in accordance with this Section 1.5.
1.6 The Closing. The Closing shall take place on December , 2005 at the
offices of ▇▇▇▇▇▇▇▇▇ Traurig LLP in Boston, Massachusetts commencing at 9:00
a.m. local time on the Closing Date or at such other time and place as the
parties may mutually agree upon. All transactions at the Closing shall be deemed
to take place simultaneously, and no transaction shall be deemed to have been
completed and no documents or certificates shall be deemed to have been
delivered until all other transactions are completed and all other documents and
certificates are delivered.
1.7 Further Assurances. At any time and from time to time after the
Closing, at the request of the Buyer and without further consideration, the
Seller shall execute and deliver such other instruments of sale, transfer,
conveyance and assignment and take such actions as the Buyer may reasonably
request to more effectively transfer, convey and assign to the Buyer, and to
confirm the Buyer's rights to, title in and ownership of, the Acquired Assets
and to place the Buyer in actual possession and operating control thereof.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Seller represents and warrants to the Buyer that, except as set forth
in the Schedule hereto, the statements contained in this Article II are true and
correct as of the date of this Agreement and will be true and correct as of the
Closing as though made as of the Closing, except to the extent such
representations and warranties are specifically made as of a particular date (in
which case such representations and warranties will be true and correct as of
such date). For purposes of this Article II, the phrase "to the knowledge of the
Seller" or any phrase of similar import shall be deemed to refer to the actual
knowledge of the executive officers of the Seller. For the purposes of this
Article II, any representation or warranty made by the Seller is made
exclusively in relation to the Acquired Business.
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2.1 Organization, Qualification and Corporate Power. The Seller is a
corporation duly organized, validly existing and in corporate good standing
under the laws of the State of Delaware. The Seller is duly qualified to conduct
business and is in corporate good standing under the laws of each jurisdiction
listed in Schedule 2.1, which jurisdictions constitute the only jurisdictions in
which the nature of the Seller's businesses or the ownership or leasing of its
properties requires such qualification, except for those jurisdictions in which
the failure to be so qualified or in good standing, individually or in the
aggregate, has not had and would not reasonably be expected to have a Seller
Material Adverse Effect. The Seller has all requisite corporate power and
authority to carry on the businesses in which it is engaged and to own and use
the properties owned and used by it. The Seller has furnished to the Buyer
complete and accurate copies of its Certificate of Incorporation and by-laws.
The Seller is not in default under or in violation of any provision of its
Certificate of Incorporation or by-laws.
2.2 Authorization of Transaction. The Seller has all requisite power and
authority to execute and deliver this Agreement and the Ancillary Agreements and
to perform its obligations hereunder and thereunder. The execution and delivery
by the Seller of this Agreement and, the performance by the Seller of this
Agreement and the Ancillary Agreements and the consummation by the Seller of the
transactions contemplated hereby and thereby have been duly and validly
authorized by all necessary corporate action on the part of the Seller. This
Agreement has been duly and validly executed and delivered by the Seller and
constitutes, and each of the Ancillary Agreements, upon its execution and
delivery by the Seller, will constitute, a valid and binding obligation of the
Seller, enforceable against the Seller in accordance with its terms.
2.3 Noncontravention. Except as set forth on Schedule 2.3, neither the
execution and delivery by the Seller of this Agreement or the Ancillary
Agreements, nor the consummation by the Seller of the transactions contemplated
hereby or thereby, will (a) conflict with or violate any provision of the
Certificate of Incorporation or by-laws of the Seller, (b) require on the part
of the Seller any notice to or filing with, or any permit, authorization,
consent or approval of, any Governmental Entity, (c) conflict with, result in a
breach of, constitute (with or without due notice or lapse of time or both) a
default under, result in the acceleration of obligations under, create in any
party the right to terminate, modify or cancel, or require any notice, consent
or waiver under, any contract or instrument to which the Seller is a party or by
which the Seller is bound or to which any of its respective assets is subject,
except for (i) any conflict, breach, default, acceleration, termination,
modification or cancellation which, individually or in the aggregate, would not
have a Seller Material Adverse Effect and would not adversely affect the
consummation of the transactions contemplated hereby or (ii) any notice, consent
or waiver the absence of which, individually or in the aggregate, would not have
a Seller Material Adverse Effect and would not adversely affect the consummation
of the transactions contemplated hereby, (d) result in the imposition of or
acceleration of any Security Interest upon any assets of the Seller or (e)
violate any order, writ, injunction, decree, statute, rule or regulation
applicable to the Acquired Assets or the Acquired Business.
2.4 Tax Matters. The Seller has filed on a timely basis all Tax Returns
that it was required to file which relate to the Acquired Business, and all such
Tax Returns were complete and accurate in all material respects and all Taxes
shown thereon to be due and payable have been paid in full. Seller has not
received notice of any tax deficiency outstanding, proposed or assessed against
it, nor does Seller have any knowledge of any basis for any tax deficiency or
assessment. There are no tax liens upon, pending against or, to the best
knowledge of Seller, threatened against any Acquired Assets. No examination or
audit of any Tax Return of the Seller related to the Acquired Business by any
Governmental Entity is currently in progress or, to the knowledge of the Seller,
threatened or contemplated. The Seller has not been informed by any jurisdiction
that the jurisdiction believes that the Seller was required to file any Tax
Return that was not filed that related to the Acquired Business. The Seller has
not waived any statute of limitations with respect to Taxes that relate to the
Acquired Business or agreed to an extension of time with respect to a Tax
assessment or deficiency that relates to the Acquired Business.
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2.5 Ownership and Condition of Assets.
(a) Seller has previously provided Buyer's representatives with an
opportunity to inspect the tangible personal property listed on Schedule 2.5(a).
(b) The Seller is the true and lawful owner, and has good title to,
all of the Acquired Assets, free and clear of all Security Interests, except as
set forth in Schedule 2.5(b). Upon execution and delivery by the Seller to the
Buyer of the instruments of conveyance referred to in Sections 5.1 and 5.2, the
Buyer will become the true and lawful owner of, and will receive good title to,
the Acquired Assets, free and clear of all Security Interests other than those
set forth in Schedule 2.5(b).
(c) The Acquired Assets are being sold AS IS/WITH ALL FAULTS. The
machinery and equipment included in the Acquired Assets is sufficient to operate
the Acquired Business as it has been conducted by the Seller during the year
prior to the date hereof. None of the Acquired Assets has been affected by any
fire, accident, act of God or any other casualty that materially and adversely
impairs its function in the Acquired Business.
2.6 Intellectual Property. At the Closing, Seller will deliver all of the
Ling Shaker and Amplifier Intellectual Property used to operate the Acquired
Business. None of the Acquired Assets or the Ling Shaker and Amplifier
Intellectual Property included therein infringes upon, or is subject to any
claims of such infringement upon, the Intellectual Property of any third party.
2.7 Inventory. Schedule 2.7 lists each item of inventory held for sale by
the Acquired Business other than those items listed on Schedule 1.1(b) (Excluded
Assets). The inventories of Seller reflected in Schedule 2.7 have been valued in
Seller's reasonable determination at the lower of cost or fair market value in
accordance with GAAP except, for the purpose of any reduction or increase of the
Purchase Price pursuant to Section 1.3(b) hereof, that (i) such inventory has
not been and shall not be adjusted to reflect any reserves for slow moving items
and (ii) such inventory has been and shall be adjusted to reflect reserves for
the value of obsolete materials and materials of below standard quality.
2.8 Contracts.
(a) Schedule 2.8 lists the following agreements to which the Seller is
a party as of the date of this Agreement that relate to the Acquired Business:
(i) any agreement (or group of related agreements) for the lease
of personal property from or to third parties;
(ii) any agreement (or group of related agreements) for the
purchase or sale of products or for the furnishing or receipt of services;
(iii) any agreement (or group of related agreements) under which
it has created, incurred, assumed or guaranteed (or may create, incur, assume or
guarantee) indebtedness (including capitalized lease obligations) or under which
there is imposed (or may be imposed) a Security Interest on any of its assets,
tangible or intangible;
(v) any agreement concerning confidentiality or noncompetition;
and
(vi) any other agreement (or group of related agreements) either
involving more than $500 or not entered into in the ordinary course of business.
(b) The Seller has delivered to the Buyer a complete and accurate copy
of each agreement listed in Schedule 2.6 or Schedule 2.8. With respect to each
agreement so listed: (i) the agreement is legal,
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valid, binding and enforceable and in full force and effect; (ii) for those
agreements to which the Seller is a party, the agreement is assignable by the
Seller to the Buyer without the consent or approval of any party (except as set
forth in Schedule 2.3) and will continue to be legal, valid, binding and
enforceable and in full force and effect immediately following the Closing in
accordance with the terms thereof as in effect immediately prior to the Closing;
and (iii) the Seller is not in breach or violation of, or default under, any
such agreement, and no event has occurred, is pending or, to the knowledge of
the Seller, is threatened, which, after the giving of notice, with lapse of
time, or otherwise, would constitute a breach or default by the Seller; and (iv)
to Seller's knowledge, no other party to any such agreement is in breach
thereof, and no party is paying liquidated damages in lieu of performance
thereunder.
2.9 Litigation. As of the date of this Agreement, there is no Legal
Proceeding which is pending or has been threatened in writing against the Seller
related to the Acquired Business which (a) seeks either damages or equitable
relief or (b) in any manner challenges or seeks to prevent, enjoin, alter or
delay the transactions contemplated by this Agreement.
2.10 Warranties. No product or service manufactured, sold, leased, licensed
or delivered by the Seller related to the Acquired Business is subject to any
guaranty, warranty, right of return, right of credit or other indemnity other
than the applicable standard terms and conditions of sale or lease of the
Seller, which are set forth in Schedule 2.10.
2.11 Environmental Matters.
(a) In connection with the Acquired Business, the Seller has complied
with all applicable Environmental Laws, except for violations of Environmental
Laws that, individually or in the aggregate, have not had and would not
reasonably be expected to have a Seller Material Adverse Effect. There is no
pending or, to the knowledge of the Seller, threatened civil or criminal
litigation, written notice of violation, formal administrative proceeding, or
investigation, inquiry or information request by any Governmental Entity,
relating to any Environmental Law involving the Acquired Business.
(b) The Seller is not a party to or bound by any court order,
administrative order, consent order or other agreement with any Governmental
Entity entered into in connection with any legal obligation or liability arising
under any Environmental Law relating to the Acquired Business.
2.12 Legal Compliance. The Seller is currently conducting the Acquired
Business in compliance with each applicable law (including rules and regulations
thereunder) of any federal, state, local or foreign government, or any
Governmental Entity, except for any violations or defaults that, individually or
in the aggregate, have not had and would not reasonably be expected to have a
Seller Material Adverse Effect. The Seller has not received any notice or
communication from any Governmental Entity alleging noncompliance with any
applicable law, rule or regulation relating to the Acquired Business.
2.13 Certain Business Relationships With Affiliates. No affiliate of the
Seller (a) owns any property or right, tangible or intangible, which is used in
the Acquired Business, (b) has any claim or cause of action against the Seller,
or (c) owes any money to, or is owed any money by, the Seller relating to the
Acquired Business.
2.14 Brokers' Fees. The Seller does not have any liability or obligation to
pay any fees or commissions to any broker, finder or agent with respect to the
transactions contemplated by this Agreement.
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2.15 Financial Statements and Financial Condition. Seller has delivered to
Buyer its summary of unaudited revenues and materials costs for the Acquired
Business for the periods 2003, 2004 and 2005 (the "Financial Information"). The
Financial Information is correct, complete and accurate in all material
respects. Seller agrees to cooperate with Buyer after the Closing in providing
such information as Seller may have and as Buyer may reasonably request to
assist the Buyer in filing any necessary SEC form 8-K, or other governmental
compliance or reporting requirements.
2.16 Insurance. The Acquired Business and the Acquired Assets are covered
by policies of property loss, casualty and liability insurance. There are no
claims pending or, to the best knowledge of Seller, threatened under Seller's
property loss, casualty or liability insurance policies, and no claim has been
made thereunder during the three years preceding the date hereof. All premiums
due and payable thereon have been paid, and all such policies are in full force
and effect in accordance with their respective terms. Such policies are
underwritten by financially sound and reputable insurers and constitute
commercially reasonable insurance coverage in respect of Seller's past practice
and companies similarly situated with Seller.
2.17 Fraudulent Conveyances; Bankruptcy. Seller is not entering into this
Agreement with the intent to hinder, delay or defraud present or future
creditors. Seller is not now insolvent and is not, and has not been, involved in
any bankruptcy or similar proceeding.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer represents and warrants to the Seller that the statements
contained in this Article III are true and correct as of the date of this
Agreement and will be true and correct as to the Closing as though made as of
the Closing.
3.1 Organization and Corporate Power. The Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Colorado. The Buyer has all requisite corporate power and authority to carry on
the businesses in which it is engaged and to own and use the properties owned
and used by it.
3.2 Authorization of the Transaction. The Buyer has all requisite power and
authority to execute and deliver this Agreement and the Ancillary Agreements and
to perform its obligations hereunder and thereunder. The execution and delivery
by the Buyer of this Agreement and the Ancillary Agreements and the consummation
by the Buyer of the transactions contemplated hereby and thereby have been duly
and validly authorized by all necessary corporate action on the part of the
Buyer. This Agreement has been duly and validly executed and delivered by the
Buyer and constitutes a valid and binding obligation of the Buyer, enforceable
against it in accordance with its terms.
3.3 Noncontravention. Neither the execution and delivery by the Buyer of
this Agreement or the Ancillary Agreements, nor the consummation by the Buyer of
the transactions contemplated hereby or thereby, will (a) conflict with or
violate any provision of the Certificate of Incorporation or by-laws of the
Buyer, (b) require on the part of the Buyer any filing with, or permit,
authorization, consent or approval of, any Governmental Entity, (c) conflict
with, result in breach of, constitute (with or without due notice or lapse of
time or both) a default under, result in the acceleration of obligations under,
create in any party any right to terminate, modify or cancel, or require any
notice, consent or waiver under, any contract or instrument to which
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the Buyer is a party or by which it is bound or to which any of its assets is
subject, except for (i) any conflict, breach, default, acceleration,
termination, modification or cancellation which would not adversely affect the
consummation of the transactions contemplated hereby or (ii) any notice, consent
or waiver the absence of which would not adversely affect the consummation of
the transactions contemplated hereby, or (d) violate any order, writ,
injunction, decree, statute, rule or regulation applicable to the Buyer or any
of its properties or assets.
ARTICLE IV
PRE-CLOSING COVENANTS
4.1 Closing Efforts. Each of the Parties shall use its Reasonable Best
Efforts to take all actions and to do all things necessary, proper or advisable
to consummate the transactions contemplated by this Agreement, including using
its Reasonable Best Efforts to ensure that (i) its representations and
warranties remain true and correct in all material respects through the Closing
Date and (ii) the conditions to the obligations of the other Party to consummate
the transactions contemplated by this Agreement are satisfied.
4.2 Governmental and Third-Party Notices and Consents.
(a) Each Party shall use its Reasonable Best Efforts to obtain, at its
expense, all waivers, permits, consents, approvals or other authorizations from
Governmental Entities, and to effect all registrations, filings and notices with
or to Governmental Entities, as may be required for such Party to consummate the
transactions contemplated by this Agreement and to otherwise comply with all
applicable laws and regulations in connection with the consummation of the
transactions contemplated by this Agreement.
(b) The Seller shall use its Reasonable Best Efforts to obtain, at its
expense, all such waivers, consents or approvals from third parties, and to give
all such notices to third parties, as are required and as are listed in the
Schedules hereto.
(c) If (i) any of the Assigned Contracts or other assets or rights
constituting Acquired Assets may not be assigned and transferred by the Seller
to the Buyer (as a result of either the provisions thereof or applicable law)
without the consent or approval of a third party, (ii) the Seller, after using
its Reasonable Best Efforts, is unable to obtain such consent or approval prior
to the Closing and (iii) the Closing occurs nevertheless, then (A) such Assigned
Contracts and/or other assets or rights shall not be assigned and transferred by
the Seller to the Buyer at the Closing and the Buyer shall not assume the
Seller's liabilities or obligations with respect thereto at the Closing, (B) the
Seller shall continue to use its Reasonable Best Efforts to obtain the necessary
consent or approval as soon as practicable after the Closing, and (C) upon the
obtaining of such consent or approval, the Buyer and the Seller shall execute
such further instruments of conveyance (in substantially the form executed at
the Closing) as may be necessary to assign and transfer such Assigned Contracts
and/or other assets or rights (and the associated liabilities and obligations of
the Seller) to the Buyer.
4.3 Operation of Business. Except as contemplated by this Agreement,
including as set forth in the Schedules attached hereto and made a part hereof,
during the period from the date of this Agreement to the Closing, the Seller
shall conduct its operations relating to the Acquired Business in the ordinary
course and in compliance with all applicable laws and regulations and, to the
extent consistent therewith, use its Reasonable Best Efforts to preserve intact
its current business organization, keep its physical assets in good working
condition, keep available the services of its current officers and employees and
preserve its relationships with customers, suppliers and others having business
dealings with it. Seller will immediately notify Buyer in the
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event Seller is unable (or reasonably believes it may become unable) to comply
with the requirements of this Section 4.3.
4.4 Exclusivity. The Seller shall not, and the Seller shall require each of
its officers, directors, employees, representatives and agents not to, directly
or indirectly, initiate, solicit, encourage or otherwise facilitate any inquiry,
proposal, offer or discussion with any party (other than the Buyer) concerning
any merger, reorganization, consolidation, recapitalization, business
combination, liquidation, dissolution, share exchange, sale of stock, sale of
material assets or similar business transaction involving the Acquired Business
or engage in discussions or negotiations with any party (other than the Buyer)
concerning any such transaction.
ARTICLE V
CONDITIONS TO CLOSING
5.1 Conditions to Obligations of each Party. The respective obligations of
each Party to consummate the transactions contemplated by this Agreement to be
consummated at the Closing are subject to the satisfaction of the following
conditions:
(a) The Buyer shall have obtained the requisite financing sufficient
to pay the consideration required in connection with the purchase of the
Acquired Assets; and
(b) the Buyer and the Seller shall have executed and delivered to each
other a cross-receipt in the form attached hereto and made a hereof as Exhibit C
evidencing the transactions referred to above;
(c) Buyer shall have conducted its due diligence with respect to the
Seller's books and records that relate to the Acquired Business and shall have
taken an inventory, verified by the Seller's financial records that relate to
the Acquired Business.
(e) This Agreement and the execution hereof by each of the parties
hereto shall have been ratified by their respective Boards of Directors.
5.2 Conditions to Obligations of the Buyer. The obligation of the Buyer to
consummate the transactions contemplated by this Agreement to be consummated at
the Closing is subject to the satisfaction of the following additional
conditions:
(a) the Seller shall have obtained at its own expense (and shall have
provided copies thereof to the Buyer) all of the waivers, permits, consents,
approvals or other authorizations, and effected all of the registrations,
filings and notices, referred to in Section 4.2 which are required on the part
of the Seller, except for any failure of which to obtain or effect would not,
individually or in the aggregate, have a material adverse effect on the right of
the Buyer to own, operate or control the Acquired Assets following the Closing
or on the ability of the Parties to consummate the transactions contemplated by
this Agreement;
(b) the representations and warranties of the Seller set forth in this
Agreement shall be true and correct as of the date of this Agreement and shall
be true and correct as of the Closing as though made as of the Closing, except
to the extent that the inaccuracy of any such representation or warranty is the
result of events or circumstances occurring subsequent to the date of this
Agreement and any such inaccuracies, individually or in the aggregate, would not
have a material adverse effect on the right of the Buyer to own, operate or
control the Acquired Assets following the Closing or on the ability of the
Parties to consummate the transactions contemplated by this Agreement;
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(c) the Seller shall have performed or complied in all material
respects with its agreements and covenants required to be performed or complied
with under this Agreement as of or prior to the Closing;
(d) no Legal Proceeding shall be pending wherein an unfavorable
judgment, order, decree, stipulation or injunction would (i) prevent
consummation of the transactions contemplated by this Agreement, (ii) cause the
transactions contemplated by this Agreement to be rescinded following
consummation or (iii) affect adversely the right of the Buyer to own, operate or
control any of the Acquired Assets, or to conduct the Acquired Business as
currently conducted by the Seller, following the Closing, and no such judgment,
order, decree, stipulation or injunction shall be in effect;
(e) the Seller shall have delivered to the Buyer the Seller
Certificate, the Seller's Secretary Certificate, and the Ancillary Agreements;
(f) the Seller shall have delivered to the Buyer an update of each
list contained in the Schedules hereto that lists or describes Acquired Assets;
(g) the Buyer shall have received such other certificates, instruments
and evidence (including certificates of good standing of the Seller in its
jurisdiction of organization and the various foreign jurisdictions in which it
is qualified, certified charter documents, certificates as to the incumbency of
officers and the adoption of authorizing resolutions) as it shall reasonably
request in connection with the Closing; and
(h) Seller shall have delivered to Buyer the Acquired Assets, the
Ancillary Agreements and such other good and sufficient instruments of transfer
and conveyance, in form and substance reasonably satisfactory to Buyer and its
counsel, as shall be effective to vest in Buyer, and to evidence the vesting in
Buyer of, good and marketable title to the Acquired Assets as provided for
herein.
5.3 Conditions to Obligations of the Seller. The obligation of the Seller
to consummate the transactions contemplated by this Agreement to be consummated
at the Closing is subject to the satisfaction of the following additional
conditions:
(a) the Buyer shall pay to the Seller, payable by wire transfer of
immediately available funds to an account designated by the Buyer, the Purchase
Price set forth in Section 1.3;
(b) the representations and warranties of the Buyer set forth in the
first sentence of Section 3.1 and in Section 3.2 and any representations and
warranties of the Buyer set forth in this Agreement that are qualified as to
materiality shall be true and correct in all respects, and all other
representations and warranties of the Buyer set forth in this Agreement shall be
true and correct in all material respects, in each case as of the date of this
Agreement and as of the Closing as though made as of the Closing, except to the
extent such representations and warranties are specifically made as of a
particular date (in which case such representations and warranties shall be true
and correct as of such date);
(c) the Buyer shall have performed or complied with in all material
respects its agreements and covenants required to be performed or complied with
under this Agreement as of or prior to the Closing;
(d) no Legal Proceeding shall be pending or threatened wherein an
unfavorable judgment, order, decree, stipulation or injunction would (i) prevent
consummation of the transactions contemplated by this Agreement or (ii) cause
the transactions contemplated by this Agreement to be rescinded following
consummation, and no such judgment, order, decree, stipulation or injunction
shall be in effect;
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(e) the Buyer shall have delivered to the Seller the Buyer
Certificate, the Buyer Secretary's Certificate and the Ancillary Agreements;
(f) The Buyer shall have delivered certificates of insurance naming
the Seller as additional insured as required pursuant to Section 6.6 hereof; and
(g) the Seller shall have received such other certificates and
instruments (including certificates of good standing of the Buyer in its
jurisdiction of organization, certificates as to the incumbency of officers and
the adoption of authorizing resolutions) as it shall reasonably request in
connection with the Closing.
ARTICLE VI
POST-CLOSING COVENANTS
6.1 Proprietary Information. From and after the Closing, the Seller shall
not disclose or make use of (except to pursue its rights under this Agreement
and the Ancillary Agreements), any knowledge, information or documents of a
confidential nature or not generally known to the public with respect to
Acquired Assets except (i) such information relating to the PM10 Designs in the
power systems market, and (ii) to the extent that such knowledge, information or
documents shall have become public knowledge other than through improper
disclosure by the Seller or an affiliate. The Seller shall, if reasonably
requested by the Buyer, enforce, for the benefit of the Buyer, all
confidentiality, invention assignments and similar agreements between the Seller
and any other party relating to the Acquired Assets. In the event that, after
the Closing Date, either Party shall discover that it is holding in its
possession Intellectual Property that is the property of the other Party in
accordance with the terms of this Agreement, such Party will immediately notify
the other Party and undertake best efforts to deliver such Intellectual Property
to the other Party within a commercially reasonable time frame.
6.2 Non-Competition.
(a) For a period of 3 years after the Closing Date, the Seller shall
not, either directly or indirectly as a stockholder, investor, partner,
consultant or otherwise, (i) design, develop, manufacture, market, sell or
license any product or provide any service anywhere in the world which is
competitive with the Acquired Business, including any product designed,
developed (or under development), manufactured, sold or licensed or any service
provided by the Acquired Business within the three-year period prior to the
Closing Date or (ii) engage anywhere in the world in any business competitive
with the Acquired Business as conducted as of the Closing Date or during the
three-year period prior to the Closing Date. The Seller shall notify Buyer of,
and, if reasonably requested by the Buyer, enforce, for the benefit of the
Buyer, all non-competition and similar agreements between the Seller and any
other party which are not Assigned Contracts.
(b) The Seller agrees that the duration and geographic scope of the
non-competition provision set forth in this Section 6.2 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 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.
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(c) Each Party shall, and shall use its best efforts to cause its
affiliates to, refer all inquiries regarding the business, products and services
of the other Party to such Party within a commercially reasonable time frame.
6.3 Tax Matters. Each of the Buyer and Seller shall equally share and pay
promptly when due any and all sales/use tax incurred in connection with the
transactions contemplated by this Agreement.
6.4 Cooperation in Litigation. From and after the Closing Date, each Party
shall 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 other Party relating to or arising out of the conduct of the
business of the Seller or the Buyer prior to or after the Closing Date (other
than litigation among the Parties and/or their affiliates arising out the
transactions contemplated by this Agreement). The Party requesting such
cooperation shall pay the reasonable out-of-pocket expenses incurred in
providing such cooperation (including legal fees and disbursements) by the Party
providing such cooperation and by its officers, directors, employees and agents,
but shall not be responsible for reimbursing such Party or its officers,
directors, employees and agents, for their time spent in such cooperation.
6.5 Solicitation and Hiring. It is understood and agreed between the
parties that the transaction set forth herein does not include any employees of
Seller, and that Seller shall retain all liabilities and obligations with
respect to its employees as set forth in subparagraph (f) of "Retained
Liabilities" in Article IX hereof. It is acknowledged and agreed that the Seller
will be terminating the employment of any such employee that it does not wish to
employ following the Closing Date. Notwithstanding the above, Buyer may, but
shall not be obligated to, discuss employment possibilities with employees of
Seller who have been directly involved in the Acquired Business. Such
discussions will only take place, however, with the prior consent of Seller,
which shall not be unreasonably withheld. Under no circumstances shall the Buyer
contact the following individuals: ▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇, and ▇▇▇ ▇'▇▇▇▇▇▇. Except
as provided herein, in the event that Buyer should employ any employee of Seller
pursuant to this paragraph, Buyer shall have no liability to Seller arising
therefrom. In addition, Buyer shall have no obligation to continue any the terms
of any employee contract, salary level, employee benefit, vesting, seniority
right or any other matter relating to the employees' employment with Seller.
It is understood and agreed between the parties that Seller utilized
certain contractors in its conduct of the Acquired Business prior to Closing.
Seller will provide Buyer with the contact and other information regarding such
contractors and will assist Buyer in the continuing utilization of such
contractors in Buyer's business after Closing.
Except as provided above, for a period of 1 year after the Closing Date,
the Seller and the Buyer shall not, either directly or indirectly (including
through an Affiliate), (a) solicit or attempt to induce any employee or
contractor to terminate his employment or contract with the Seller or the Buyer
or any subsidiary of the Buyer or (b) hire or attempt to hire or otherwise
retain any such employee or contractor; provided, that this clause (b) shall not
apply to any individual whose employment with the Seller, Buyer or a subsidiary
of the Buyer has been terminated for a period of six months or longer. The
Seller and the Buyer shall enforce, for the benefit of the other, all
confidentiality, non-solicitation and non-hiring assignments and similar
agreements between the Seller or the Buyer and any other party which are not
Assigned Contracts.
6.6 Removal of Inventory and Equipment. The Buyer shall remove all
inventory and equipment that constitute Acquired Assets from the Seller's
premises no later than 60 days after the Closing Date. In the event that Buyer
is unable to remove the Acquired Assets at or before the expiration of 60 days
after the Closing Date, for reasons not caused by Seller, Buyer shall pay rent
in the amount of $500.00 per day for housing such Acquired Assets until they are
removed from Seller's premises. Buyer shall maintain insurance on the inventory
and equipment effective as of the Closing Date, and Seller shall be named as an
additional insured on the Buyer's property loss and casualty insurance. Buyer
shall pay all costs and expenses related to the removal of the inventory and
equipment and shall obtain all other insurance and/or bonding necessary to
remove the inventory and equipment from the premises. Except to the extent
caused by the negligence or intentional
12
misconduct of the Seller or its agents, under no circumstances shall the Seller
be liable to the Buyer or any third party for any loss, damage or unauthorized
removal of the inventory and equipment. Buyer shall deliver evidence of all
insurance coverage naming the Seller as additional insured prior to the Closing
Date.
6.7 Retained Assets. The Buyer acknowledges and agrees that the assets set
forth on Schedule 1.1(b) are owned by the Seller and are not acquired by the
Buyer under the terms of this Agreement. In the event that the Seller sells the
assets on the attached Schedule 1.1(b) to a customer after the Closing Date and
the customer requires parts or service on the assets, the Buyer agrees to supply
such parts or service at actual variable cost to be charged to the Seller.
6.8 Warranty. Buyer accepts any warranty liabilities for products and
services shipped from the Seller prior to the Closing Date; however, in the
event that any portions of sales orders were not shipped prior to the Closing
Date, the Seller retains the responsibility to complete such sales orders. In
the event that the Seller does need to complete a sales order, the Buyer agrees
to supply parts and/or services that are required to complete those orders at
actual variable cost.
6.9 UCC Termination. Immediately upon Closing, the Seller shall file the
UCC 3 amendment statement with the Secretary of State of the State of Delaware
releasing the liens held in the Acquired Assets by Silicon Valley bank.
ARTICLE VII
INDEMNIFICATION
7.1 Indemnification by Seller. Seller agrees to indemnify and hold Buyer
and its respective affiliates and persons serving as officers, directors,
partners or employees thereof harmless from and against any damages,
liabilities, losses, taxes, fines, penalties, costs, and expenses (including,
without limitation, reasonable fees of counsel) of any kind or nature whatsoever
(whether or not arising out of third-party claims, and including all amounts
paid in investigation, defense or settlement of the foregoing) ("claims") which
may be sustained or suffered by any of them arising out of or based upon any of
the following matters:
(a) breach by Seller of any of its representations, warranties,
covenants or agreements under this Agreement or in any Ancillary Agreement,
certificate, schedule or exhibit delivered pursuant hereto;
(b) any failure by Seller to perform and discharge any covenant or
agreement of the Seller contained in the Agreement or any Ancillary Agreement,
or other agreement or instrument furnished by the Seller to the Buyer pursuant
to this Agreement;
(c) any Retained Liabilities; and
(d) pre-closing activities of the Seller relating to the Acquired
Business except to the extent that the same constitute Assumed Liabilities.
7.2 Indemnification by Buyer. Buyer agrees to indemnify and hold Seller and
its respective affiliates and persons serving as officers, directors or
employees thereof harmless from and against any damages, liabilities, losses and
expenses (including, without limitation, reasonable fees of counsel) of any kind
or nature whatsoever (whether or not arising out of third-party claims, and
including all amounts paid in investigation, defense or settlement of the
foregoing) ("claims") which may be sustained or suffered by any of them arising
out of or based upon any of the following matters:
(a) breach by Buyer of any of its representations, warranties or
covenants under this Agreement or in any Ancillary Agreement, certificate,
schedule or exhibit delivered pursuant hereto; and
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(b) any failure by Buyer to perform and discharge any covenant or
agreement of the Buyer contained in the Agreement or any Ancillary Agreement, or
other agreement or instrument furnished by the Buyer to the Seller pursuant to
this Agreement;
(c) any Assumed Liabilities; and
(d) post-closing activities of the Buyer relating to the operation of
the Acquired Business.
7.3 Notice; Defense of Claims An Indemnified Party may make claims for
indemnification hereunder by giving written notice thereof to the Indemnifying
Party within the period in which indemnification claims can be made hereunder.
If indemnification is sought for a claim or liability asserted by a third party,
the Indemnified Party shall also give written notice thereof to the Indemnifying
Party promptly after it receives notice of the claim or liability being
asserted, but the failure to do so shall not relieve the Indemnifying Party from
any liability except to the extent that it is prejudiced by the failure or delay
in giving such notice. Such notice shall summarize the bases for the claim for
indemnification and any claim or liability being asserted by a third party.
Within 20 days after receiving such notice, the Indemnifying Party shall give
written notice to the Indemnified Party stating whether it disputes the claim
for indemnification and whether it will defend against any third-party claim or
liability at its own cost and expense. If the Indemnifying Party fails to give
notice that it disputes an indemnification claim within 20 days after receipt of
notice thereof, it shall be deemed to have accepted and agreed to the claim,
which shall become immediately due and payable. The Indemnifying Party shall be
entitled to direct the defense against a third-party claim or liability with
counsel selected by it (subject to the consent of the Indemnified Party, which
consent shall not be unreasonably withheld) as long as the Indemnifying Party is
conducting a good faith and diligent defense. The Indemnified Party shall at all
times have the right to fully participate in the defense of a third-party claim
or liability at its own expense directly or through counsel; provided, however,
that if the named parties to the action or proceeding include both the
Indemnifying Party and the Indemnified Party, and the Indemnified Party is
advised that representation of both parties by the same counsel would be
inappropriate under applicable standards of professional conduct, the
Indemnified Party may engage separate counsel at the expense of the Indemnifying
Party. If no such notice of intent to dispute and defend a third-party claim or
liability is given by the Indemnifying Party, or if such good faith and diligent
defense is not being or ceases to be conducted by the Indemnifying Party, the
Indemnified Party shall have the right, at the expense of the Indemnifying
Party, to undertake the defense of such claim or liability (with counsel
selected by the Indemnified Party), and to compromise or settle it, exercising
reasonable business judgment. If the third-party claim or liability is one that
by its nature cannot be defended solely by the Indemnifying Party, then the
Indemnified Party shall make available such information and assistance as the
Indemnifying Party may reasonably request and shall cooperate with the
Indemnifying Party in such defense, at the expense of the Indemnifying Party.
Except for claims of fraud, intentional misrepresentation, and willful
misconduct of Seller, and claims for breach of Seller's representations
regarding broker fees, Buyer shall not have the right to bring any claim for
indemnification with respect to the breach of a representation or warranty until
the aggregate amount of Buyer claims for indemnification exceed $30,000. Once
said $30,000 threshold is met, however, such indemnification shall commence at
$30,000.
7.4 Treatment of Indemnity Payments. Any payments made to an Indemnified
Party pursuant to this Article VII shall be treated as an adjustment to the
Purchase Price for tax purposes.
7.5 Limitations. Notwithstanding anything to the contrary contained herein
or in any Ancillary Agreement, each Party's indemnification obligations shall
terminate 18 months following the execution of this Agreement (the
"Indemnification Period"), except for those claims for which notice has been
properly given pursuant to Section 7.3 herein, within such Indemnification
Period, and except for those claims that are based on fraud, intentional
misrepresentation, willful misconduct, product liability, infringement claims by
third parties, or breach of the Parties' obligations of confidentiality or
non-competition. Each Party's aggregate liability for indemnification claims,
except to the extent such claims are based on fraud, intentional
misrepresentation, willful misconduct, product liability, infringement claims by
third parties, or the breach of the Parties' obligations of confidentiality or
noncompetition, shall not exceed the Purchase Price.
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ARTICLE VIII
TERMINATION
8.1 Termination of Agreement. The Parties may terminate this Agreement
prior to the Closing, as provided below:
(a) the Parties may terminate this Agreement by mutual written
consent;
(b) the Buyer may terminate this Agreement by giving written notice to
the Seller in the event the Seller is in breach of any representation, warranty
or covenant contained in this Agreement, and such breach, individually or in
combination with any other such breach, (i) would cause the conditions set forth
in clauses (b) or (c) of Section 5.2 not to be satisfied and (ii) is not cured
within 20 days following delivery by the Buyer to the Seller of written notice
of such breach;
(c) the Seller may terminate this Agreement by giving written notice
to the Buyer in the event the Buyer is in breach of any representation, warranty
or covenant contained in this Agreement, and such breach, individually or in
combination with any other such breach, (i) would cause the conditions set forth
in clauses (c) or (d) of Section 5.3 not to be satisfied and (ii) is not cured
within 20 days following delivery by the Seller to the Buyer of written notice
of such breach;
8.2 Effect of Termination. If either Party terminates this Agreement
pursuant to Section 8.1, all obligations of the Parties hereunder shall
terminate without any liability of either Party to the other Party (except for
any liability of a Party for willful breaches of this Agreement, in any event,
not to exceed the Purchase Price).
ARTICLE IX
DEFINITIONS
For purposes of this Agreement, each of the following terms shall have the
meaning set forth below.
"Acquired Assets" shall mean all of the right, title and interest of Seller
in and to all of the following assets, wherever located, whether now owned or
acquired on or after the date hereof but prior to the Closing, whether tangible
or intangible (including, without limitation, goodwill) provided, however, that
Acquired Assets shall in no event include any of the Excluded Assets:
(a) all raw materials, work in process, finished goods, supplies,
packaging materials, spare parts and inventories expressly listed on the
attached Schedule 2.5(a);
(b) the machinery, tools and equipment expressly listed on the
attached Schedule 2.5(a);
(c) all Ling Shaker and Amplifier Intellectual Property utilized by
Seller in the Acquired Business or attributed to the Acquired business,
including without limitation Seller's trademarks expressly listed on the
attached Schedule 2.6(a) (the "Ling Shaker and Amplifier Intellectual
Property");
(d) the Seller's rights under Assigned Contracts relating to the
Acquired Business and expressly listed on the attached Schedule 2.8;
(e) all customer and prospect lists, manufacturing and procedural
manuals, Intellectual Property records, sales and promotional materials,
studies, reports and other similar printed or written materials, electronic and
optical data files, and computer records relating to the Acquired Assets or
necessary to conduct the Acquired Business;
15
(f) all claims, demands, judgments, rights, choses in action related
to the Acquired Business;
(g) the PM10 Designs (in joint ownership with the Seller) and all
assets and Intellectual Property of Seller necessary for Buyer to manufacture
and sell PM10 Designs in accordance with Section 1.5 hereof; provided, however,
that Seller may copy such Intellectual Property for its use and at its expense
to the extent necessary to exercise its rights in the PM10 Designs under Section
1.5 hereof; and
(h) all those items listed on the physical inventory of the Acquired
Business conducted in October, 2005 and updated as of November 15, 2005, as
shown in Schedule 2.7, except such of those items as may have been disposed of
in the ordinary course of Seller's business prior to Closing.
"Acquired Business" means all of the business of Seller manufacturing and
selling Ling Shaker and Amplifier Assets for the electrodynamic market and
expressly excluding the Starsine and EPT Acoustical product lines and related
Intellectual Property necessary to market the Starsine and EPT Acoustical
product lines.
"Ancillary Agreements" shall mean the ▇▇▇▇ of Sale and other instruments of
conveyance referred to in Article V, and the instrument of assumption and other
instruments referred to in Article V.
"Assigned Contracts" shall mean any contracts, agreements, vendor orders or
instruments to which the Seller is a party which relate exclusively to the
Acquired Business as listed on Schedule 2.8.
"Assumed Liabilities" shall mean all of the following liabilities of the
Seller:
(a) all obligations of the Seller arising after the Closing under the
Assigned Contracts;
(b) all obligations of the Seller to its customers for the warranty,
repair, replacement or return of products manufactured or sold by the Acquired
Business prior to the Closing; and
(c) all obligations of the Seller to its customers for the warranty,
repair, replacement or return of products set forth on Schedule 1.1(b) that are
manufactured or sold after the Closing, which warranty claims will be charged
back from the Buyer to the Seller at actual variable cost.
"▇▇▇▇ of Sale" shall mean a ▇▇▇▇ of sale substantially in the form set
forth in Exhibit A attached hereto and made a part hereof.
"Buyer" shall have the meaning set forth in the first paragraph of this
Agreement.
"Buyer Certificate" shall mean a certificate, signed by an authorized
officer of Buyer, to the effect that each of the conditions specified in clauses
(a) through (d) (insofar as clause (d) relates to Legal Proceedings involving
the Buyer) and (f) of Section 5.3 is satisfied in all respects.
"Buyer Secretary's Certificate" shall be a certificate by the Buyer's
secretary or assistant secretary (i) certifying the Buyer's articles of
incorporation, bylaws, and good standing, (ii) certifying the approval of the
execution of this Agreement by the Buyer's board of directors, and (iii)
certifying the authority of the officer(s) of Buyer executing this Agreement.
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"CERCLA" shall mean the Federal Comprehensive Response, Compensation and
Liability Act of 1980, as amended.
"Closing" shall mean the closing of the transactions contemplated by this
Agreement.
"Closing Date" shall mean the date of the satisfaction or waiver of all of
the conditions to the obligations of the Parties to consummate the transactions
contemplated hereby (excluding the delivery at the Closing of any of the
documents set forth in Article V). The Parties shall use reasonable commercial
efforts to complete Closing on the date set forth in Section 1.5 hereof, or such
other date as may be mutually agreeable to the Parties.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Customer Deliverables" shall mean the products that the Acquired Business
currently manufactures, markets, sells or licenses, and the services that it
currently provides.
"Environmental Law" shall mean any federal, state or local law, statute,
rule, order, directive, judgment, Permit or regulation or the common law
relating to the environment, occupational health and safety, or exposure of
persons or property to Materials of Environmental Concern, including any
statute, regulation, administrative decision or order pertaining to: (i) the
presence of or the treatment, storage, disposal, generation, transportation,
handling, distribution, manufacture, processing, use, import, export, labeling,
recycling, registration, investigation or remediation of Materials of
Environmental Concern or documentation related to the foregoing; (ii) air, water
and noise pollution; (iii) groundwater and soil contamination; (iv) the release,
threatened release, or accidental release into the environment, the workplace or
other areas of Materials of Environmental Concern, including emissions,
discharges, injections, spills, escapes or dumping of Materials of Environmental
Concern; (v) transfer of interests in or control of real property which may be
contaminated; (vi) community or worker right-to-know disclosures with respect to
Materials of Environmental Concern; (vii) the protection of wild life, marine
life and wetlands, and endangered and threatened species; (viii) storage tanks,
vessels, containers, abandoned or discarded barrels and other closed
receptacles; and (ix) health and safety of employees and other persons. As used
above, the term "release" shall have the meaning set forth in CERCLA.
"Excluded Assets" shall mean the following assets of the Seller:
(a) all trade and other accounts receivable and notes and loans
receivable that are payable to the Seller on the Closing Date, and all trade and
other accounts receivable and notes and loans receivable that are payable to the
Seller in connection with the assets listed on Schedule 1.1(b) attached hereto,
and all rights to unbilled amounts for products delivered by Seller or services
provided by Seller, together with any security held by the Seller for the
payment thereof;
(b) any inventory shipped to a verifiable customer prior to the
Closing Date;
(c) all rights relating to refunds, recovery or recoupment of Taxes;
(d) any of the rights of the Seller under this Agreement or under the
Ancillary Agreements;
(e) those assets, including work in process and finished goods, listed
on Schedule 1.1(b) attached hereto;
17
(f) the Starsine and EPT Acoustical product lines and the PM10 Designs
to the extent provided for under Section 1.5 hereof, and copies of related
Intellectual Property necessary to manufacture and market the Starsine and EPT
Acoustical product lines and the PM10 Designs for the power market;
(g) employees of the Seller and all contracts of employment and
contractor's contracts; and
(h) any other assets of the Seller not included within the definition
of the Acquired Assets.
"GAAP" shall mean United States generally accepted accounting principles.
"Governmental Entity" shall mean any court, arbitrational tribunal,
administrative agency or commission or other governmental or regulatory
authority or agency.
"Indemnified Party" shall mean a party entitled, or seeking to assert
rights, to indemnification under Article VII of this Agreement.
"Indemnifying Party" shall mean the party from whom indemnification is
sought by the Indemnified Party.
"Intellectual Property" shall mean all:
(a) patents, patent applications, patent disclosures and all related
continuation, continuation-in-part, divisional, reissue, reexamination, utility
model, certificate of invention and design patents, patent applications,
registrations and applications for registrations;
(b) trademarks, service marks, trade dress, Internet domain names,
logos, trade names and corporate names and registrations and applications for
registration thereof;
(c) copyrights and registrations and applications for registration
thereof;
(d) mask works and registrations and applications for registration
thereof;
(e) computer software, data and documentation;
(f) inventions, trade secrets and confidential business information,
whether patentable or nonpatentable and whether or not reduced to practice,
know-how, manufacturing and product processes and techniques, drawings, designs,
formulas, research and development information, copyrightable works, financial,
marketing and business data, pricing and cost information, business and
marketing plans and customer and supplier lists and information;
(g) other proprietary rights relating to any of the foregoing
(including remedies against infringements thereof and rights of protection of
interest therein under the laws of all jurisdictions); and
(h) copies and tangible embodiments thereof.
"Legal Proceeding" shall mean any action, suit, proceeding, claim,
arbitration or investigation before any Governmental Entity or before any
arbitrator.
"Materials of Environmental Concern" shall mean any: pollutants,
contaminants or hazardous substances (as such terms are defined under CERCLA),
pesticides (as such term is defined under the Federal
18
Insecticide, Fungicide and Rodenticide Act), solid wastes and hazardous wastes
(as such terms are defined under the Resource Conservation and Recovery Act),
chemicals, other hazardous, radioactive or toxic materials, oil, petroleum and
petroleum products (and fractions thereof), or any other material (or article
containing such material) listed or subject to regulation under any law,
statute, rule, regulation, order, Permit, or directive due to its potential,
directly or indirectly, to harm the environment or the health of humans or other
living beings.
"Parties" shall mean the Buyer and the Seller.
"Purchase Price" shall mean the purchase price to be paid by the Buyer for
the Acquired Assets at the Closing, as set forth in Section 1.3.
"Reasonable Best Efforts" shall mean best efforts, to the extent
commercially reasonable.
"Retained Liabilities" shall mean any and all liabilities or obligations
(whether known or unknown, absolute or contingent, liquidated or unliquidated,
due or to become due and accrued or unaccrued, and whether claims with respect
thereto are asserted before or after the Closing) of the Seller which are not
Assumed Liabilities. The Retained Liabilities shall include, without limitation,
all liabilities and obligations of the Seller:
(a) for costs and expenses, including but not limited to obligations
for Taxes incurred by Seller in connection with this Agreement or the
consummation of the transactions contemplated by this Agreement;
(b) under this Agreement or the Ancillary Agreements;
(c) under any agreements, contracts, leases or licenses which are
listed on Schedule 1.1(b), except as otherwise set forth in Section 6.8 of this
Agreement;
(d) arising out of events, conduct or conditions existing or occurring
prior to the Closing, including but not limited to product liability claims, or
any violation of or non-compliance with any law, rule or regulation (including
Environmental Laws), any judgment, decree or order of any Governmental Entity,
or any Permit or that give rise to liabilities or obligations with respect to
Materials of Environmental Concern;
(e) related to or arising out of the Excluded Assets;
(f) to employees of Seller, including without limitation employment
contracts, workers' compensation awards, incentive compensation accrued, ERISA
benefits, pension costs accrued, benefits accrued or claims payable pursuant to
the benefit plans of Seller, payroll, payroll tax accruals, and income,
franchise, excise, sales, use, personal, real property and employment taxes (or
any other taxes or similar imposts) to the extent that they relate to the period
prior to the Closing or to termination of the employment of such employees as a
result of this Agreement; and
(g) arising out of or related to that certain Sales Representative
Agreement between Seller and Dataphysics, which agreement expired at the end of
September, 2005.
"Schedule(s)" shall mean the disclosure schedule provided by the Seller to
the Buyer on the date hereof, attached to this Agreement and made a binding part
hereof.
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"Security Interest" shall mean any mortgage, pledge, security interest,
encumbrance, charge or other lien (whether arising by contract or by operation
of law).
"Seller" shall have the meaning set forth in the first paragraph of this
Agreement.
"Seller Certificate" shall mean a certificate, signed by an authorized
officer of the Seller, to the effect that each of the conditions specified in
clauses (a) through (d) (insofar as clause (d) relates to Legal Proceedings
involving the Seller) of Section 5.2 is satisfied in all respects.
"Seller Secretary's Certificate" shall be a certificate by the Seller's
secretary or assistant secretary (i) certifying the Seller's articles of
incorporation, bylaws, and good standing, (ii) certifying the approval of the
execution of this Agreement by the Seller's board of directors, and (iii)
certifying the authority of the officer(s) of Seller executing this Agreement.
"Seller Intellectual Property" shall mean the Intellectual Property owned
by or licensed to the Seller and covering, incorporated in, underlying or used
in connection with the Customer Deliverables.
"Seller Material Adverse Effect" shall mean any material adverse change,
event, circumstance or development with respect to, or material adverse effect
on, (i) the business, assets, liabilities, capitalization, prospects, condition
(financial or other), or results of operations of the Seller relating to the
Acquired Business.
"Taxes" shall mean all taxes, charges, fees, levies or other similar
assessments or liabilities, including income, gross receipts, ad valorem,
premium, value-added, excise, real property, personal property, sales, use,
transfer, withholding, employment, unemployment, insurance, social security,
business license, business organization, environmental, workers compensation,
payroll, profits, license, lease, service, service use, severance, stamp,
occupation, windfall profits, customs, duties, franchise and other taxes imposed
by the United States of America or any state, local or foreign government, or
any agency thereof, or other political subdivision of the United States or any
such government, and any interest, fines, penalties, assessments or additions to
tax resulting from, attributable to or incurred in connection with any tax or
any contest or dispute thereof.
"Tax Returns" shall mean all reports, returns, declarations, statements or
other information required to be supplied to a taxing authority in connection
with Taxes.
ARTICLE X
MISCELLANEOUS
10.1 Press Releases and Announcements. Neither Party shall issue any press
release or public announcement relating to the subject matter of this Agreement
without the prior written approval of the other Party; provided, however, that
either Party may make any public disclosure it believes in good faith is
required by applicable law, regulation or stock market rule (in which case the
disclosing Party shall use reasonable efforts to advise the other Party and
provide it with a copy of the proposed disclosure prior to making the
disclosure).
10.2 No Third Party Beneficiaries. This Agreement shall not confer any
rights or remedies upon any person other than the Parties and their respective
successors and permitted assigns.
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10.3 Entire Agreement. This Agreement (including the documents referred to
herein) constitutes the entire agreement between the Parties and supersedes any
prior understandings, agreements, or representations by or between the Parties,
written or oral, with respect to the subject matter hereof.
10.4 Succession and Assignment. This Agreement shall be binding upon and
inure to the benefit of the Parties named herein and their respective successors
and permitted assigns. Neither Party may assign either this Agreement or any of
its rights, interests, or obligations hereunder without the prior written
approval of the other Party; provided that the Buyer may assign its rights,
interests and/or obligations hereunder to a wholly-owned subsidiary of the Buyer
provided that such subsidiary expressly assumes the obligations of the Buyer
hereunder and the Buyer guarantees the prompt payment and performance of such
subsidiary's obligations in connection herewith and with any Ancillary
Documents, in each case by way of agreements in form and substance reasonably
satisfactory to the Seller.
10.5 Counterparts and Facsimile Signature. This Agreement may be executed
in two or more counterparts, each of which shall be deemed an original but all
of which together shall constitute one and the same instrument. This Agreement
may be executed by facsimile signature.
10.6 Headings. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
10.7 Notices. All notices, requests, demands, claims, and other
communications hereunder shall be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly delivered four
business days after it is sent by registered or certified mail, return receipt
requested, postage prepaid, or one business day after it is sent for next
business day delivery via a reputable nationwide overnight courier service, in
each case to the intended recipient as set forth below:
If to the Seller: Copy to:
SatCon Power Systems ▇▇▇▇▇▇▇▇ ▇▇▇▇, Esq.
c/o Satcon Techonlogy Corporation ▇▇▇▇▇▇▇▇▇ Traurig, LLP
Attention: ▇▇▇▇▇ ▇'▇▇▇▇, Vice One International Place,
President of Finance and Treasurer ▇▇▇▇ ▇▇▇▇▇
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
If to the Buyer: Copy to:
Qualmark Ling Corporation ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
c/oMr. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ & Associates, LLC
Chief Executive Officer ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
QualMark Corporation ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇. Fax: ▇▇▇-▇▇▇-▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
and
▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Chief Financial Officer
QualMark Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇. ▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
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Either Party may give any notice, request, demand, claim, or other
communication hereunder using any other means (including personal delivery,
expedited courier, messenger service, telecopy, telex, ordinary mail, or
electronic mail), but no such notice, request, demand, claim, or other
communication shall be deemed to have been duly given unless and until it
actually is received by the party for whom it is intended. Either Party may
change the address to which notices, requests, demands, claims, and other
communications hereunder are to be delivered by giving the other Party notice in
the manner herein set forth.
10.8 Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the Commonwealth of Massachusetts, without
giving effect to any choice or conflict of law provision or rule (whether of the
Commonwealth of Massachusetts or any other jurisdiction) that would cause the
application of laws of any jurisdictions other than those of the Commonwealth of
Massachusetts.
10.9 Amendments and Waivers. The Parties may mutually amend any provision
of this Agreement at any time prior to the Closing. No amendment of any
provision of this Agreement shall be valid unless the same shall be in writing
and signed by each of the Parties. No waiver by either Party of any right or
remedy hereunder shall be valid unless the same shall be in writing and signed
by the Party giving such waiver. No waiver by either Party with respect to any
default, misrepresentation, or breach of warranty or covenant hereunder shall be
deemed to extend to any prior or subsequent default, misrepresentation, or
breach of warranty or covenant hereunder or affect in any way any rights arising
by virtue of any prior or subsequent such occurrence.
10.10 Severability. Any term or provision of this Agreement that is invalid
or unenforceable in any situation in any jurisdiction shall not affect the
validity or enforceability of the remaining terms and provisions hereof or the
validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction. If the final judgment of a court of
competent jurisdiction declares that any term or provision hereof is invalid or
unenforceable, the Parties agree that the court making the determination of
invalidity or unenforceability shall have the power to limit the term or
provision, to delete specific words or phrases, or to replace any invalid or
unenforceable term or provision with a term or provision that is valid and
enforceable and that comes closest to expressing the intention of the invalid or
unenforceable term or provision, and this Agreement shall be enforceable as so
modified.
10.11 Expenses. Except as set forth in Article VII, each Party shall bear
its own costs and expenses (including legal fees and expenses) incurred in
connection with this Agreement and the transactions contemplated hereby.
10.12 Specific Performance. Each Party acknowledges and agrees that the
other Party would be damaged irreparably in the event any of the provisions of
this Agreement (including Sections 6.1 and 6.2) are not performed in accordance
with their specific terms or otherwise are breached. Accordingly, each Party
agrees that the other Party shall be entitled to an injunction or other
equitable relief to prevent breaches of the provisions of this Agreement and to
enforce specifically this Agreement and the terms and provisions hereof in any
action instituted in any court of the United States or any state thereof having
jurisdiction over the Parties and the matter, in addition to any other remedy to
which it may be entitled, at law or in equity.
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10.13 Confidentiality. Seller's parent company, Satcon Technology
Corporation and Buyer's parent company, QualMark Corporation, have previously
executed that certain Confidentiality and Non-Disclosure Agreement dated August
23, 2005 and attached hereto and made a part hereof as Exhibit D, and agree that
such Confidentiality and Non-Disclosure Agreement will survive and govern the
exchange of information between the parties under this Agreement.
10.14 Construction.
(a) The language used in this Agreement shall be deemed to be the
language chosen by the Parties to express their mutual intent, and no rule of
strict construction shall be applied against either Party.
(b) Any reference to any federal, state, local, or foreign statute or
law shall be deemed also to refer to all rules and regulations promulgated
thereunder, unless the context requires otherwise.
(c) Any reference herein to "including" shall be interpreted as
"including without limitation".
(d) Any reference to any Article, Section or paragraph shall be deemed
to refer to an Article, Section or paragraph of this Agreement, unless the
context clearly indicates otherwise.
10.15 Survival. Any provision of this Agreement which by its nature is
intended to survive the termination of this Agreement, including but not limited
to the warranty, representation, indemnity, and confidentiality provisions
hereof, shall, except to the extent expressly limited herein, so survive.
[Signature page follows]
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IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date
first above written.
QUALMARK LING CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: CFO
SATCON POWER SYSTEMS, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Title: Assistant Secretary
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