Exhibit 10.32
STOCK PURCHASE AGREEMENT
among
MECHANICAL TECHNOLOGY INCORPORATED,
LING ELECTRONICS, INC.,
LING ELECTRONICS, LTD.
and
SATCON TECHNOLOGY CORPORATION
TABLE OF CONTENTS
Section Page
1. Purchase and Sale of the Shares and the U.K. Shares. 1
1.1 Purchase of the Shares and the U.K. Shares from the Parent. 1
1.2 Further Assurances. 1
1.3 Purchase Price for the Shares. 2
1.4 Closing. 2
2. Representations of the Parent Regarding the Securities. 2
3. Representations Regarding the Parent, the Company and the U.K. 3
Subsidiary.
3.1 Organization. 3
3.2 Capitalization of the Company. 3
3.3 Subsidiaries. 3
3.4 Authorization. 4
3.5 Financial Statements. 5
3.6 Absence of Undisclosed Liabilities. 6
3.7 Litigation. 6
3.8 Insurance. 6
3.9 Personal Property. 7
3.10 Intangible Property. 8
3.11 Real Estate and Leases. 9
3.12 Inventory. 9
3.13 Accounts Receivable and Payable.. 10
3.14 Tax Matters. 10
3.15 Books and Records. 13
3.16 Contracts and Commitments. 13
3.17 Compliance with Agreements and Laws. 15
3.18 Employee Relations. 16
3.19 Employee Benefit Plans. 17
3.20 Environmental Matters. 20
3.21 Absence of Certain Changes or Events. 22
3.22 Suppliers. 24
3.23 Warranty and Product Liability Claims. 24
3.24 Prepayments and Deposits. 24
3.25 Indebtedness to and from Officers, Directors and Parent. 24
3.26 Banking Facilities. 25
3.27 Powers of Attorney and Suretyships. 25
3.28 Conflicts of Interest. 25
3.29 Regulatory Approvals. 26
3.30 Year 2000 Compliance. 26
3.31 Disclosure. 27
3.32 Broker's Fees. 27
3.33 Securities Representations. 27
4. Representation and Warranties of the Buyer. 29
4.1 Organization and Qualification. 29
4.2 Authorization; Enforcement. 30
4.3 Capitalization. 30
4.4 Authorization and Validity; Issuance of Shares. 31
4.5 No Conflicts. 31
4.6 Consents and Approvals. 31
4.7 Litigation; Proceedings. 32
4.8 No Default or Violation. 32
4.9 Disclosure; Absence of Certain Changes. 33
4.10 Buyer SEC Documents; Financial Statements. 33
4.11 Broker's Fees. 33
4.12 Form S-3 Eligibility. 34
4.13 Listing and Maintenance Requirements Compliance. 34
4.14 Intellectual Property Rights. 34
4.15 Registration Rights; Rights of Participation. 34
4.16 Tax Status; Firpta. 34
4.17 Transactions With Affiliates. 35
4.18 Material Contracts.: 35
4.19 ERISA.. 36
4.20 Environmental Matters. 36
4.21 Year 2000 Matters. . 38
4.22 Private Offering. 38
4.23 Investment Company. 38
5. Public Announcements. 39
6. Conditions to Obligations of the Buyer. 39
6.1 Continued Truth of Representations and Warranties of
the Parent and the Company; Compliance with Covenants
and Obligations. 39
6.2 Performance by the Parent and the Company. 39
6.3 Governmental Approvals. 39
6.4 Consent of Lenders, Lessors and Other Third Parties. 39
6.5 Adverse Proceedings. 40
6.6 Opinion of Counsel. 40
6.7 Employment Contracts. 40
6.8 Repayment of Indebtedness. 40
6.9 Closing Deliveries. 40
7. Conditions to Obligations of the Parent. 41
7.1 Continued Truth of Representations and Warranties of the Buyer;
Compliance with Covenants and Obligations. 42
7.2 Corporate Proceedings. 42
7.3 Governmental Approvals. 42
7.4 Consents of Lenders, Lessors and Other Third Parties. 42
7.5 Adverse Proceedings. 42
7.6 Opinion of Counsel. 42
7.7 Closing Deliveries. 42
7.8 Buyer Registration Rights Agreement. 43
8. Indemnification. 43
8.1 By the Parent and the Company. 43
8.2 By the Buyer. 44
8.3 Indemnification Claims. 44
8.4 Survival of Representations and Warranties. 47
8.5 Limitations. 47
9. Tax Matters. 48
9.1 Preparation and Filing of Tax Returns. 48
9.2 Tax Indemnification by the Parent. 48
9.3 Allocation of Certain Taxes. 49
9.4 Cooperation on Tax Matters. 49
9.5 Termination of Tax-Sharing Agreements. 50
9.6 Certain Tax Elections. 50
10. Post-Closing Agreements. 51
10.1 Proprietary Information. 51
10.2 No Solicitation or Hiring of Former Employees. 51
10.3 Non-Competition Agreement. 52
10.4 Board Representation. 52
10.5 Benefit Transition. 53
10.6 Co-operation in Financial and Other Reparation. 53
11. Notices. 53
12. Successors and Assigns. 54
13. Entire Agreement; Amendments; Attachments. 54
14. Severability. 55
15. Investigation of the Parties. 55
16. Expenses. 55
17. Submission to Jurisdiction. 55
18. Governing Law. 56
19. Section Headings. 56
20. Counterparts. 56
Exhibit A - Opinion of ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇ PLLC
Exhibit B - Estoppel Certificate
Exhibit C - Opinion of ▇▇▇▇ and ▇▇▇▇ LLP
Exhibit D - Buyer Registration Rights Agreement
STOCK PURCHASE AGREEMENT
Agreement (the "Agreement") made as of the 21st day of October, 1999 by and
among SatCon Technology Corporation, a Delaware corporation with its principal
office at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Buyer"),
Mechanical Technology Incorporated, a New York corporation with its principal
office at ▇▇▇ ▇▇▇▇▇▇-▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (the "Parent"), Ling
Electronics, Inc., a California corporation and a wholly-owned subsidiary of
the Parent, with its principal office at ▇▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Company") and Ling Electronics, Ltd., a United Kingdom
corporation and a wholly-owned subsidiary of the Parent with its principal
office ▇/▇ ▇.▇▇▇▇▇▇▇, ▇ ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇
▇▇▇ (the "U.K. Subsidiary" or the "Subsidiaries").
Preliminary Statement
1. The Buyer desires to purchase, and the Parent desires to sell (i) all
of the issued and outstanding shares (collectively, the "Shares") of the common
stock, $0.01 par value per share of the Company and (ii) all of the issued and
outstanding ordinary shares (the "U.K. Shares") of the U.K. Subsidiary, 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. Purchase and Sale of the Shares and the U.K. Shares.
1.1 Purchase of the Shares and the U.K. Shares from the Parent. Subject to and
upon the terms and conditions of this Agreement, at the closing of the
transactions contemplated by this Agreement (the "Closing"), the Parent shall
sell, transfer, convey, assign and deliver to the Buyer, and the Buyer shall
purchase, acquire and accept from the Parent, all the Shares and the U.K.
Shares. At the Closing the Parent shall deliver to the Buyer certificates
evidencing the Shares and the U.K. Shares duly endorsed in blank or with stock
powers duly executed by the Parent.
1.2 Further Assurances. At any time and from time to time after the Closing, at
the Buyer's request and without further consideration, the Parent shall
promptly execute and deliver such instruments of sale, transfer, conveyance,
assignment and confirmation, and take all such other action as the Buyer may
reasonably request, more effectively to transfer, convey and assign to the
Buyer, and to confirm the Buyer's title to, all of the Shares and the U.K.
Shares owned by the Parent, to put the Buyer in actual possession and operating
control of the assets, properties and business of the Company and the U.K.
Subsidiary, 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 for the Shares. In full payment for the Shares and the U.K.
Shares (collectively, the "Securities"), the Buyer shall pay to the Parent
$70,000.00 and shall issue to the Parent a certificate issued in the name of
the Parent representing 770,000 shares (the "SatCon Shares") of common stock,
$0.01 par value per share, of the Buyer ("Buyer Common Stock").
1.4 Closing. The Closing shall take place at the offices of ▇▇▇▇ and ▇▇▇▇ LLP,
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ at 10:00 a.m., Boston Time, on the
date of execution of this Agreement or at such other location as the parties
shall mutually agree. The transfer of the Securities by the Parent to the Buyer
shall be deemed to occur at 8:00 a.m., Boston Time, on the Closing Date.
2. Representations of the Parent Regarding the Securities.
The Parent represents and warrants to the Buyer as follows: (a) The Parent has
good and marketable title to the Securities free and clear of any and all
covenants, conditions, restrictions, voting trust arrangements, liens, charges,
encumbrances, options and adverse claims or rights whatsoever. The Securities
constitute all of the outstanding securities of the Company and the U.K.
Subsidiary.
(b) The Parent has the full right, power and authority to enter into this
Agreement and to transfer, convey and sell to the Buyer at the Closing the
Securities to be sold by the Parent hereunder and, upon consummation of the
purchase contemplated hereby, the Buyer will acquire from the Parent good and
marketable title to the Securities free and clear of all covenants, conditions,
restrictions, voting trust arrangements, liens, charges, encumbrances, options
and adverse claims or rights whatsoever.
(c) The Parent is not a party to, subject to or bound by any agreement or any
judgment, order, writ, prohibition, injunction or decree of any court or other
governmental body which would prevent the execution or delivery of this
Agreement by the Parent or the transfer, conveyance and sale of the Securities
to be sold by the Parent to the Buyer pursuant to the terms hereof.
3. Representations Regarding the Parent, the Company and the U.K. Subsidiary.
The Parent, the Company and the U.K. Subsidiary, jointly and severally,
represent and warrant to the Buyer that:
3.1 Organization. Each of the Parent and the Company is a corporation duly
organized, validly existing and in good standing under the laws of their
respective jurisdictions of incorporation, 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 and thereby. Each of the Parent and the Company 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, except
where the failure to be so qualified or in good standing, as the case may be,
would not, individually or in the aggregate, (x) adversely affect the legality,
validity or enforceability of any of this Agreement or any of the material
transactions contemplated hereby, (y) have or result in a material adverse
effect on the results of operations, assets, or financial condition of the
Parent or the Company or (z) impair the Parent's or the Company's ability to
perform in all material respects on a timely basis their respective material
obligations under this Agreement (any of (x), (y) or (z), being a "Material
Adverse Effect"). Certified copies of the Certificate of Incorporation and
Bylaws of the Company, 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.
3.2 Capitalization of the Company. The Company's authorized capital stock
consists of 5,000,000 shares of Common Stock, $0.01 par value per share, of
which Thirty-Two Thousand, Three Hundred and Ninety Eight (32,398) shares are
issued and outstanding on the date hereof and held of record and beneficially
by the Parent. All such issued and outstanding shares of the Company's common
stock have been and on the Closing Date will be duly and validly issued and
are, or will be on such date, fully paid and non-assessable. There are not, and
on the Closing Date there will not be, outstanding (i) any options, warrants or
other rights to purchase from the Company any capital stock of the Company;
(ii) any securities convertible into or exchangeable for shares of such stock;
(iii) any outstanding debt securities issued or guaranteed by the Company or
(iv) any other commitments of any kind for the issuance of additional shares of
capital stock or options, warrants or other securities of the Company. No
shares of the issued and outstanding shares of Common Stock are held in the
treasury of the Company.
3.3 Subsidiaries.
(a) Other than Plug Power, LLC, Turbonetics Energy, Inc. , MTI
International, Inc. and the U.K. Subsidiary, the Parent does not own any equity
interest in any corporation partnership, joint venture or other entity.
Turbonetics Energy, Inc., MTI International, Inc., Power Plug, LLC do not
compete with the Company.
(b) Except as set forth in Schedule 3.3(b), the Parent owns of
record and beneficially all of the outstanding shares of capital stock of the
U.K. Subsidiary free and clear of all covenants, conditions, restrictions,
liens, charges and encumbrances.
(c) Except as set forth in Schedule 3.3(c), the U.K. Subsidiary is a
corporation duly organized and validly existing and in good standing under the
laws of the jurisdiction of its incorporation or organization and has all
requisite power and authority to own its properties and carry on its business
as now being conducted. The U.K. Subsidiary 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 except where the
failure to be so qualified or in good standing, as the case may be, would not
have a Material Adverse Effect. Copies of the charter, bylaws and other
governing instruments of The U.K. Subsidiary, 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 of
such delivery. The Company does not own any capital stock of or other equity
interest in any corporation, partnership or other entity. The shares of capital
stock of the U.K. Subsidiary have been duly and validly issued and are fully
paid and non-assessable.
(d) The U.K. Subsidiary does not hold shares of its capital stock in its
treasury, and there are not, and on the Closing Date there will not be,
outstanding any (i) options, warrants or other rights with respect to the
capital stock of the U.K. Subsidiary, (ii) any securities convertible into or
exchangeable for shares of such stock, or (iii) any other commitments of any
kind for the issuance of additional shares of capital stock or options,
warrants or other securities of any of them.
(e) As of August 22, 1999, the U.K. Subsidiary had the assets and
liabilities set forth on Schedule 3.3(e). Since August 22, 1999, there have
been no material changes in the assets or liabilities of the U.K. Subsidiaries.
3.4 Authorization. The execution and delivery by the Company, the U.K.
Subsidiary and the Parent of this Agreement and the agreements provided for
herein, and the consummation by the Company, the U.K. Subsidiary and the Parent
of all transactions contemplated hereunder and thereunder by the Company, the
U.K. Subsidiary and the Parent, have been duly authorized by all requisite
corporate action. This Agreement has been duly executed by the Company, the
U.K. Subsidiary and the Parent. This Agreement and all other agreements and
obligations entered into and undertaken in connection with the transactions
contemplated hereby to which the Company, the U.K. Subsidiary or the Parent is
a party constitute the valid and legally binding obligations of the Company,
the U.K. Subsidiary and the Parent, enforceable against them in accordance with
their respective terms. The execution, delivery and performance by the Company,
the U.K. Subsidiary and the Parent of this Agreement and the agreements
provided for herein, and the consummation by the Company, the U.K. Subsidiary
and the Parent 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
Company, the U.K. Subsidiary or the Parent; (b) violate the provisions of the
Certificate of Incorporation or Bylaws of the Company, the U.K. Subsidiary or
the Parent; (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 Company, the U.K. Subsidiary
or the Parent pursuant to, any indenture, mortgage, deed of trust or other
instrument or agreement to which the Company, the U.K. Subsidiary or the Parent
is a party or by which the Company, the U.K. Subsidiary or the Parent or any of
their respective properties is or may be bound. Schedule 3.4 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
Company, the U.K. Subsidiary and the Parent of the transactions contemplated by
this Agreement.
3.5 Financial Statements.
(a) The Parent previously delivered to the Buyer the unaudited consolidated
balance sheets of the Company and the U.K. Subsidiary as of September 30, 1996,
1997 and 1998 (the "Fiscal Year Balance Sheets") and the related statements of
income of the Company and the U.K. Subsidiary for the fiscal years then ended
(collectively, the "Fiscal Year Financial Statements"). The Parent has also
previously delivered to the Buyer the unaudited consolidated balance sheets of
the Company and the U.K. Subsidiary as of August 22, 1999 (the "Current Balance
Sheet") and the related statements of income for the eleven-month period then
ended (collectively, the "Current Financial Statements"). The Fiscal Year
Financial Statements and, the Current Financial Statements (collectively, the
"Financial Statements") have been prepared in accordance with generally
accepted accounting principles applied consistently with past practices and
have been certified by the Company's chief financial officer. The date of the
August 22, 1999 Fiscal Year Balance Sheet is hereinafter referred to as the
"Balance Sheet Date."
(b) The Financial Statements fairly present, as of their respective dates,
the financial condition, retained earnings, assets and liabilities of the
Company and the U.K. Subsidiary and the results of operations of the Company's
and the U.K. Subsidiary's businesses for the periods indicated. With respect to
contracts and commitments for the sale of goods or the provision of services by
the Company and the U.K. Subsidiary, 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. The
amounts shown as accrued for current and deferred Taxes (other than state and
federal income taxes) in the Financial Statements are sufficient for the
payment of all accrued and unpaid Taxes (other than state and federal income
taxes), interest, penalties, assessments or deficiencies applicable to the
Company or any Subsidiary, whether disputed or not, for the applicable period
then ended and periods prior thereto.
(c) The book value of inventory reflected on the August 22, 1999 Balance
Sheet, as computed on a first-in, first-out basis is true and correct.
3.6 Absence of Undisclosed Liabilities. Except as and to the extent (a)
reflected and reserved against in the Current Balance Sheet, (b) set forth on
Schedule 3.6 attached hereto, or (c) incurred in the ordinary course of
business after the date of the Current Balance Sheet and not material in
amount, either individually or in the aggregate, neither the Company nor any of
the Subsidiaries has any liability or obligation, secured or unsecured, whether
accrued, absolute, contingent, unasserted or otherwise, which is material to
the condition (financial or otherwise) of the assets, properties, business or
prospects of the Company and the U.K. Subsidiaries taken as a whole. For
purposes of this Subsection 3.6, "material" means any amount in excess of
$100,000.
3.7 Litigation. Except as set forth on Schedule 3.7 attached hereto (a) there
is no action, suit or proceeding to which the Company or any of the
Subsidiaries is a party (either as a plaintiff or defendant) pending or
threatened before any court or governmental agency, authority, body or
arbitrator and to the best knowledge of the Parent, there is no basis for any
such action, suit or proceeding; (b) neither the Company nor any of the
Subsidiaries, nor any officer, director or employee of any of the foregoing,
has been permanently or temporarily enjoined by any order, judgment or decree
of any court or any governmental agency, authority or body from engaging in or
continuing any conduct or practice in connection with the business, assets, or
properties of the Company or any of the Subsidiaries; and (c) there is not in
existence on the date hereof any order, judgment or decree of any court,
tribunal or agency enjoining or requiring the Company or any of the
Subsidiaries to take any action of any kind with respect to its business,
assets or properties.
3.8 Insurance. Schedule 3.8 attached hereto sets forth a true, correct and
complete list of all fire, theft, casualty, general liability, workers
compensation, business interruption, environmental impairment, product
liability, automobile and other insurance policies maintained by the Company,
the U.K. Subsidiary or the Parent with respect to the business and the Company
or the U.K. Subsidiary and of all life insurance policies maintained on the
lives of any of their employees (collectively, the "Insurance Policies"). The
Company has previously delivered complete and accurate information to the Buyer
on all claims made under such Insurance Policies (other than life insurance
policies) since October 1, 1996. A true, correct and complete summary of all
Insurance Policies currently in effect has previously been delivered by the
Parent or the Company to the Buyer. As of the date hereof and the Closing Date,
the Insurance Policies are in full force and effect and are in amounts of a
nature which are adequate and customary for the Company's and the Subsidiaries'
business. All premiums due on the Insurance Policies or renewals thereof have
been paid, if billed, and there is no default under the Insurance Policies.
Except as set forth on Schedule 3.8, neither the Company nor any of the
Subsidiaries has received any notice or other communication from any issuer of
the Insurance Policies since September 30, 1996 canceling 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 Parent, no such
cancellation, amendment or increase of deductibles, retainages or premiums is
threatened. Except as set forth on Schedule 3.8, neither the Company nor any of
the Subsidiaries has any outstanding claims or any dispute with any insurance
carrier regarding claims, settlements or premiums and neither the Company nor
any of the Subsidiaries has failed to give any notice or present any claim
under any Insurance Policy in due and timely fashion. There are no outstanding
requirements or recommendations by any issuer of the Insurance Policies or by
any Board of Fire Underwriters or other similar body exercising similar
functions or by any governmental authority exercising similar functions which
requires or recommends any changes in the conduct of the business of, or any
repairs or other work to be done on or with respect to any of the properties or
assets of, the Company or any of the Subsidiaries.
3.9 Personal Property. Except as disclosed in Schedule 3.9:
(a) the Company or the U.K. Subsidiary, as the case may be, has good and
marketable title to each item of tangible personal property used by the Company
in the conduct of the Company's historic operations ("Personal Property") free
and clear of all liens, leases, encumbrances, claims under bailment and storage
agreements, equities, conditional sales contracts, security interests, charges
and restrictions ("Liens"), except for Liens, if any, for personal property
taxes not due;
(b) no officer, director, stockholder or employee of the Company or the
U.K. Subsidiary, nor any spouse, child or other relative or affiliate thereof,
owns directly or indirectly, in whole or in part, any of the Personal Property;
(c) each item of Personal Property not owned by the Company or the U.K.
Subsidiary is in such condition that upon the return of such property to its
owner in its present condition at the end of the relevant lease term or as
otherwise contemplated by the applicable agreement between the Company or the
U.K. Subsidiary, as the case may be, and the owner or lessor thereof, the
obligations of the Company or the U.K. Subsidiary, as the case may be, to such
owner or lessor will be discharged; and
(d) the Company and the U.K. Subsidiary own or otherwise have the right to
use all of the Personal Property now used or useful in the operation of their
business or the use of which is necessary for or useful in the performance of
any material contract, letter of intent or proposal to which any of them is a
party.
3.10 Intangible Property. Schedule 3.10 attached hereto sets forth: (i) a true,
correct and complete list of, all items of intangible property owned by, or
used or useful in connection with the business of, the Company or any of the
Subsidiaries, including, but not limited to, trade secrets, know-how, any other
confidential information of the Company, United States and foreign patents,
trade names, trademarks, trade name and trademark registrations, copyrights and
copyright registrations, and applications for any of the foregoing (the
"Intangible Property"); and (ii) a true, correct and complete list of all
licenses or similar agreements or arrangements to which the Company or the U.K.
Subsidiary is a party, either as licensee or licensor, with respect to the
Intangible Property. Except as otherwise disclosed in Schedule 3.10:
(a) the Company or the U.K. Subsidiary is the sole and exclusive owner of
all right, title and interest in and to the Intangible Property and all
designs, and permits, used in connection therewith, free and clear of all
liens, security interests, charges, encumbrances, equities or other adverse
claims;
(b) the Company or the U.K. Subsidiary has the right and authority to use,
and to continue to use after the Closing, the Intangible Property in connection
with the conduct of its business in the manner presently conducted, and such
use or continuing use does not and, to the best of the Company's knowledge,
will not conflict with, infringe upon or violate any rights of any other
person, corporation or entity;
(c) none of the Company, the Parent nor the U.K. Subsidiary has received
notice of, or to the best of the Parent's knowledge there is no basis for, a
pleading or threatened claim, interference action or other judicial or
adversarial proceeding against the Company that any of the operations,
activities, products, services or publications of the Company or any of its
customers or distributors infringes or will infringe any patent, trademark,
trade name, copyright, trade secret or other property right of a third party,
or that it is illegally or otherwise using the trade secrets, formulae or
property rights of others;
(d) there are no outstanding, nor, to the best of the Company's knowledge,
any threatened disputes or other disagreements with respect to any licenses or
similar agreements or arrangements described in Schedule 3.10 or with respect
to infringement by a third party of any of the Intangible Property;
(e) the Intangible Property owned or licensed by the Company or the
relevant Subsidiary is sufficient to conduct the Company's or the U.K.
Subsidiary's business as presently conducted;
(f) the Company or the U.K. Subsidiary has taken all steps reasonably
necessary to protect its right, title and interest in and to the Intangible
Property and the continued use of the Intangible Property;
(g) no officer, director, stockholder or employee of the Company or the
U.K. Subsidiary, nor any spouse, child or other relative or affiliate thereof,
owns directly or indirectly, in whole or in part, any of the Intangible
Property; and
(h) To the best of the Parent's knowledge, no third party is infringing, or
will threaten to infringe, upon or otherwise violate any of the Intangible
Property in which the Company or the U.K. Subsidiary has ownership rights.
3.11 Real Estate and Leases. Neither the Company nor any Subsidiary owns any
real property. Schedule 3.11 attached hereto sets forth (a) 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 Company or any of the Subsidiaries
is a party (collectively, the "Leases"). True, correct and complete copies of
all Leases and all amendments, modifications and supplemental agreements
thereto, have previously been delivered by the Parent or the Company 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 3.11, 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 and that
such default remains uncured. Except as set forth on Schedule 3.11, there has
not occurred any event which would constitute a breach of or default in the
performance of any 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. Neither the
Company nor any of the Subsidiaries is obligated to pay any leasing or
brokerage commission relating to any Lease and, except as set forth on Schedule
3.11, will not have any obligation to pay any leasing or brokerage commission
upon the renewal of any Lease. Except as set forth on Schedule 3.11, no
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 Company or
any of the Subsidiaries. Except as set forth on Schedule 3.11, the Financial
Statements contain adequate reserves to provide for the restoration of the
property subject to the Leases at the end of the respective Lease terms, to the
extent required by the Leases.
3.12 Inventory. The inventory owned by the Company and its U.K. Subsidiary
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
Company and the Subsidiaries. The value of all items of obsolete materials and
of materials of below standard quality have been written down to realizable
market value and the values at which such inventory is carried reflect the
normal Inventory valuation policy of the Company and the Subsidiaries of
stating Inventory at the lower of cost or market value in accordance with
generally accepted accounting principles.
3.13 Accounts Receivable and Payable. Schedule 3.13 attached hereto sets forth
a true, correct and complete list of the accounts and notes receivable of the
Company and the Subsidiaries (the "Account Receivable"), including the aging
thereof as of October 19, 1999. All Accounts Receivable of the Company and the
U.K. Subsidiary arose out of the sales of inventory or services in the ordinary
course of business and are collectible in the face value thereof within 90 days
after the date of invoice, except for retainages and balances which are subject
to customer acceptance of units, using normal collection procedures, net of the
reserve for doubtful accounts set forth thereon, which reserve is adequate and
was calculated in accordance with generally accepted accounting principles
consistently applied. Schedule 3.13 attached hereto also sets forth a true,
correct and complete list of accounts payable of the Company and the
Subsidiaries ("Accounts Payable"), including the aging thereof as of the date
hereof. All Accounts Payable arose in the ordinary course of business.
3.14 Tax Matters.
(a) Unless otherwise provided, for purposes of this Agreement, "Taxes"
means all taxes, charges, fees, levies or other similar assessments or
liabilities, including without limitation income, gross receipts, ad valorem,
premium, value- added, excise, real property, personal property, sales, use,
transfer, withholding, employment, payroll and franchise 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.
(b) Unless otherwise provided, for purposes of this Agreement, "Tax
Returns" means all reports, returns, declarations, statements or other
information required to be supplied to a taxing authority in connection with
Taxes.
(c) Except as set forth on Schedule 3.14, since October 1, 1996, each of
the Company and the Subsidiaries has filed all material Tax Returns that it was
required to file, and all such material Tax Returns were correct and complete
in all material respects. Each group of corporations with which the Company or
any of the Subsidiaries has filed (or was required to file) consolidated,
combined, unitary or similar material Tax Returns (an "Affiliated Group") has
filed all material Tax Returns that it was required to file with respect to any
period in which the Company or any of the Subsidiaries was a member of such
Affiliated Group (an "Affiliated Period"), and all such Tax Returns were
correct and complete in all material respects. Each of the Company and the
Subsidiaries has paid all Taxes that are shown to be due on any such Tax
Returns and subsequent assessment to such Tax Returns that were due and payable
and each Affiliated Group has paid all Taxes and subsequent assessments to such
Tax Returns that were due and payable with respect to all Affiliated Periods.
The unpaid Taxes of the Company and the Subsidiaries for tax periods through
the date of the Current Balance Sheet do not exceed the accruals and reserves
for Taxes set forth on the Current Balance Sheet (exclusive of any accruals for
"deferred taxes" or similar items that reflect timing differences between Tax
and financial accounting principles and exclusive of federal and state income
taxes that are accrued on the Parent's balance sheet). Since October 1, 1996,
all Taxes that the Company or any of the Subsidiaries 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) The Parent has delivered to the Buyer correct and complete copies of
all federal income Tax Returns, examination reports and statements of
deficiencies assessed against or agreed to by the Company or any of the
Subsidiaries since September 30, 1996 and materially correct and complete
copies of the portion of the federal income Tax Returns, examination reports
and statements of deficiency assessed against or agreed to with respect to any
Affiliated Group relating to the activities of the Company and the Subsidiaries
for all Affiliated Periods since September 30, 1996. The Parent has delivered
or made available to the Buyer materially correct and complete copies of all
other Tax Returns of the Company and the Subsidiaries request by the Buyer
together with all related examination reports and statements of deficiency for
all periods from and after September 30, 1996 and materially correct and
complete copies of the portion of all other Tax Returns, examination reports
and statements of deficiency assessed against or agreed to with respect to any
Affiliated Group relating to the activities of the Company and the Subsidiaries
for all Affiliated Periods since September 30, 1996. The Tax Returns of the
Company, each of the Subsidiaries, and each Affiliated Group have been audited
by the applicable taxing authorities or are closed by the applicable statute of
limitations for all taxable years through the taxable year specified on
Schedule 3.14 hereto. No examination or audit of any Tax Return of the Company
or any of the Subsidiaries or any Affiliated Group with respect to an
Affiliated Period by any Governmental Entity is currently in progress or, to
the knowledge of the Company and the Subsidiaries and the members of any
Affiliated Group, threatened or contemplated and exclusive of federal and state
income taxes that are accrued on the Parent's balance sheet. Since October 1,
1996, neither the Company nor any of the Subsidiaries nor the members of any
Affiliated Group has been informed by any jurisdiction that the jurisdiction
believes that the Company or any of the Subsidiaries or the Affiliated Group
was required to file any Tax Return that was not filed.
(e) Neither the Company nor any of the Subsidiaries nor any Affiliated
Group has waived any statute of limitations with respect to Taxes or agreed to
an extension of time with respect to a Tax assessment or deficiency.
(f) Neither the Company nor any of the Subsidiaries is a "consenting
corporation" within the meaning of Section 341(f) of the Internal Revenue Code
of 1986, as amended (the "Code"), and none of the assets of the Company or the
Subsidiaries are subject to an election under Section 341(f) of the Code.
(g) Neither the Company nor any of the Subsidiaries has 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)(l)(A)(ii) of the Code.
(h) Other than the Parent's employment agreement with ▇▇▇ ▇▇▇▇▇▇▇ executed
in connection with this Agreement, neither the Company nor any of the
Subsidiaries has made any payments, is obligated to make any payments, or is a
party to any agreement that could obligate it to make any payments that will be
an "excess parachute payment" under Code Section 280G.
(i) Neither the Company nor any of the Subsidiaries has any actual or to
the best of the Parent's knowledge, potential liability for any Taxes of any
person (other than the Company, the Subsidiaries, and any Affiliated Group) as
a transferee or successor, by contract, or otherwise.
(j) None of the assets of the Company or any of the Subsidiaries is
property that is required to be treated as being owned by any other person
pursuant to the provisions of former Section 168(f)(8) of the Code.
(k) None of the assets of the Company or any of the Subsidiaries is
"tax-exempt use property" within the meaning of Section 168(h) of the Code.
(l) None of the assets of the Company or any of the Subsidiaries directly
or indirectly secures any debt the interest on which is tax exempt under
Section 103(a) of the Code.
(m) Neither the Company nor any of the Subsidiaries has undergone a change
in its method of accounting resulting in an adjustment to its taxable income
pursuant to Section 481 of the Code.
(n) Neither the Company nor any of the Subsidiaries has ever participated
in or cooperated with an international boycott within the meaning of Section
999 of the Code.
(o) Neither the Company nor any of the Subsidiaries is or has ever been a
member of a group of corporations with which it has filed (or been required to
file) consolidated, combined or unitary Tax Returns, other than a group of
which only the Company, the Subsidiaries, and any current Affiliated Group are
or were members.
(p) Neither the Company nor any Subsidiary is or has been
required to make a basis reduction pursuant to Treasury Regulation
Section 1.1502-20(b) or Treasury Regulation Section 1.337(d)-2(b).
3.15 Books and Records. The general ledgers and books of account of the Company
and the Subsidiaries, all federal, state and local income, franchise, property
and other Tax Returns filed by the Company and the Subsidiaries 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.
3.16 Contracts and Commitments.
(a) Schedule 3.16 attached hereto contains a true, complete and correct
list and description of the following contracts and agreements, whether written
or oral (collectively, the "Contracts"):
(1) all loan agreements, indentures, mortgages and guaranties to which the
Company or any of the Subsidiaries is a party or by which the Company or any of
the Subsidiaries or any of their property is bound;
(2) all pledges, conditional sale or title retention agreements, security
agreements, equipment obligations, personal property leases and lease purchase
agreements to which the Company or any of the Subsidiaries is a party or by
which the Company or any of the Subsidiaries or any of their property is bound;
(3) all contracts, agreements, commitments, (other than purchase orders) or
other understandings or arrangements to which the Company or any of the
Subsidiaries is a party or by which the Company or any of the Subsidiaries or
any of their property is bound which (A) involve payments or receipts by the
Company or any of the Subsidiaries 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 Company
or any of the Subsidiaries;
(4) 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 Company or any of the
Subsidiaries is a party or by which the Company or any of the Subsidiaries or
any of their property is bound;
(5) all agency, distributor, sales representative, franchise or similar
agreements to which the Company or any of the Subsidiaries is a party or by
which the Company or any of the Subsidiaries or any of their property is bound;
(6) all contracts, agreements or other understandings or arrangements between
the Company and any of the Subsidiaries (including, but not limited to, any tax
sharing arrangements) or between the Company and the Parent or their
affiliates;
(7) all leases, whether operating, capital or otherwise, under which the
Company or any of the Subsidiaries is lessor or lessee;
(8) all contracts, agreements and other documents or information relating to
past disposal of waste (whether or not hazardous), and sales of steel scrap,
prototypes, tools and dies;
(9) all contracts, agreements or other arrangements imposing a non-competition
or non-solicitation obligation on the Company or any of its Subsidiaries; and
(10) any other material agreements or contracts (other
than purchase orders) entered into by the Company or any of the Subsidiaries.
(b) Except as set forth on Schedule 3.16:
(1) Each Contract is a valid and binding agreement of the Company or the
relevant Subsidiary, enforceable against the Company or the relevant Subsidiary
in accordance with its terms, and, to the best of the Parent's knowledge, each
Contract is a valid and binding agreement of the other parties thereto;
(2) the Company or the relevant Subsidiary has fulfilled all material
obligations required pursuant to the Contracts to have been performed by the
Company or the relevant Subsidiary, as the case may be, on its part prior to
the date hereof, and to the best of the Parent's knowledge it will be able to
fulfill, when due, all of its obligations under the Contracts which remain to
be performed after the date hereof; the Company's outstanding purchase orders
on the Closing Date provide for a number of units to be delivered that are
consistent with the Company's historical capacity to produce such number of
units within the prescribed contractual period;
(3) the Company or the relevant Subsidiary is not in breach of or default
in any material respect under any Contract, and, to the best knowledge of the
Parent, 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;
(4) to the best knowledge of the Parent, there is no existing breach or
default by any other party of a material obligation under any Contract, and to
the best knowledge of the Parent 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;
(5) there are not and, since October 1, 1996 have not been, any claims
material in amount of a non-routine nature relating to the Company or any
Subsidiary by customers of the Company or any of the Subsidiaries under any
warranties, whether express or implied;
(6) the Company and the Subsidiaries are not restricted by any Contract
from carrying on their business anywhere in the world; and
(7) neither the Company nor any of the Subsidiaries has any written or oral
contracts to sell products or perform services which are expected to be
performed at, or to result in, a loss.
(c) True, correct and complete (in all material respects) copies of all
Contracts have previously been delivered by the Company or the Parent to the
Buyer.
3.17 Compliance with Agreements and Laws. The Company and the Subsidiaries each
have all licenses, permits and certificates, including environmental, health
and safety permits, from federal, state and local authorities the possession of
which are material to conduct their respective business and the ownership and
operation of their respective assets (collectively, the "Permits"). Schedule
3.17 attached hereto sets forth a true, correct and complete list of all such
Permits which are material to the conduct of the Company's business, copies of
which have previously been delivered by the Company or the Parent to the Buyer.
Neither the Company nor any of the Subsidiaries is in violation in any material
respect of any law, regulation or ordinance (including, without limitation,
laws, regulations or ordinances relating to building, zoning, environmental
protection, occupational, health and safety, disposal of hazardous substances,
hazardous waste, land use or similar matters) relating to its properties. The
business of the Company and the Subsidiaries as conducted since October 1,
1996, has not violated, and on the date hereof 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 and health, environmental
protection, hazardous substances, hazardous waste or corrupt practices), the
enforcement of which would have a material adverse effect on the results of
operations, condition (financial or otherwise), assets, properties business or
prospects of the Company or any of the Subsidiaries. Except as set forth on
Schedule 3.17, neither the Company nor any of the Subsidiaries has had notice
or communication from any federal, state or local governmental or regulatory
authority or otherwise since October 1, 1996 of any such violation or
noncompliance.
3.18 Employee Relations.
(a) The Company and each of the Subsidiaries is in compliance in all
material respects 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 (other than arising out of its normal weekly payroll cycle) in the
payment of wages or social security taxes.
(b) Except as set forth on Schedule 3.18 attached hereto:
(1) none of the employees of the Company or the Subsidiaries is represented by
any labor union;
(2) there is no unfair labor practice complaint against the Company or any of
the Subsidiaries pending before the National Labor Relations Board or any state
or local agency;
(3) to the best of the Parent's knowledge, there is no pending labor strike or
other material labor trouble affecting the Company or any of the Subsidiaries
(including, without limitation, any organizational drive);
(4) there is no material labor grievance pending against the Company or any of
the Subsidiaries;
(5) to the best of the Parent's knowledge, there is no pending representation
question respecting the employees of the Company or any of the Subsidiaries;
(6) there are no pending arbitration proceedings arising out of or under any
collective bargaining agreement to which the Company or any of the Subsidiaries
is a party, or to the best knowledge of the Parent, any basis for which a claim
may be made under any collective bargaining agreement to which the Company or
any of the Subsidiaries is a party;
(7) other then as required under COBRA, neither the Company nor any of the
Subsidiaries has any continuing obligation for health, life, medical insurance
or other similar fringe benefits to any former employee of the Company or any
Subsidiary; and
(8) no employee is entitled to a bonus payment for any period prior to the
Closing Date or has any contractual arrangements (whether oral or in writing)
relating to severance, or has been promised any stay pay or similar
arrangement.
(c) For purposes of this Subsection 3.18, the term "employee" shall be
construed to include sales agents and other independent contractors who spend a
majority of their working time on the business of the Company or any of the
Subsidiaries.
3.19 Employee Benefit Plans.
(a) Employee Plans. Schedule 3.19 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, other than any "multiemployer plan" as such term is defined in
Section 4001(a)(3) of ERISA, relating to the Company's employees, or maintained
at any time since October 1, 1996 by the Company 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
Internal Revenue Code of 1986, as amended (the "Code")) (the Employee Plans")
and, except as set forth on Schedule 3.19 attached hereto, the Company has no
obligations, contingent or otherwise, past or present, under applicable law or
the terms of any Employee Plan.
(b) Prohibited Transactions. Neither the Company nor any of its Affiliates,
directors, officers, employees or agents, or any "party in interest" or
"disqualified person," as such terms are defined in Section 3 of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), and Section 4975
of the Code has, with respect to any Employee Plan, engaged in or been a party
to any nonexempt "prohibited transaction," as such term is defined in Section
4975 of the Code or Section 406 of ERISA, in connection with which, directly or
indirectly, the Buyer or any of its Affiliates, directors or employees or any
Employee Plan or any related funding medium could be subject to either a
penalty assessed pursuant to Section 502(i) of ERISA or a tax imposed by
Section 4975 of the Code.
(c) Compliance. With respect to all Employee Plans, the Company and its
Affiliates are in compliance in all material respects with the requirements
prescribed by any and all statutes, orders or governmental rules or regulations
currently in effect, including, but not limited to, ERISA and the Code,
applicable to such Employee Plans. The Company and its Affiliates have in all
material respects performed all obligations required to be performed by them
under, and is not in violation in any respect of, and there has been no default
or violation by any other party with respect to, any of the Employee Plans.
Except as set forth on Schedule 3.19 attached hereto: (i) none of the Employee
Plans which are subject to Title IV of ERISA has been or will be terminated in
whole or in part within the meaning of ERISA or the Code; (ii) no liability has
been incurred to, nor has any event or circumstance occurred, nor will any
event or circumstance occur prior to the Closing Date, which could result in
such a liability being asserted by, the Pension Benefit Guaranty Corporation
("PBGC") with respect to any Employee Plan (other than the payment of annual
premiums under Section 4007 of ERISA or benefits payable in accordance with the
terms of such Employee Plan); (iii) no Employee Plan that is subject to Part 3
of Subtitle B of Title I of ERISA or Section 412 of the Code, or both, incurred
any "accumulated funding deficiency" (as defined in ERISA), whether or not
waived; (iv) neither the Company nor any Affiliate has failed to pay any
amounts due and owing as required by the terms of any Employee Plan; (v) there
has been no "reportable event" within the meaning of Section 4043(b)(1)-(9) of
ERISA, or any event described in Section 4063(a) of ERISA, with respect to any
Employee Plan, other than as disclosed herein or on accompanying schedules;
(vi) neither Company nor any Affiliate has failed to make any payment to an
Employee Plan required under Section 302 of ERISA nor has any lien ever been
imposed under Section 302(f) of ERISA; (vii) neither the Company nor any
Affiliate has adopted an amendment to any Employee Plan which requires the
provision of security under Section 307 of ERISA, (viii) the PBGC has not
instituted any proceedings to terminate an Employee Plan pursuant to Section
4042 of ERISA.
(d) Multiemployer Plans. Schedule 3.19 lists each and every multiemployer
plan to which the Company or its Affiliates contribute, are required to
contribute at any time since October 1, 1996. No multiemployer plan listed in
Schedule 3.14 is in "reorganization" (as defined in Section 4241 of ERISA) or
"insolvent" (as defined in Section 4245 of ERISA). Neither the Company nor any
Affiliate has withdrawn or is reasonably expected to withdraw from a
multiemployer plan in a complete or partial withdrawal which has resulted or
will result in "withdrawal liability," as defined for purposes of Part I of
Subtitle E of Part IV of ERISA, with respect to any such plan which has not
been satisfied in full. The Company and its Affiliates have made all
contributions to any such plan as are required through the Closing Date under
the terms of any such plans or applicable statutes, regulations, rulings and
other applicable law; and no event has occurred, or can occur prior to the
Closing Date, which could give rise to any other liability (other than a
continuing obligation to contribute to such plan(s) under the terms of any
applicable collective bargaining agreements) on the part of the Company or the
Buyer, or their Affiliates, officers, employees or directors with respect to
such plan(s).
(e) Retiree Benefits. Except as set forth in Schedule 3.19, no Employee
Plan provides health or life insurance benefits for retirees. No such plan
contains any provisions, and no commitments or agreements exist, which in any
way would limit or prohibit the Buyer from amending any such plan to reduce or
eliminate such retiree benefits.
(f) Copies of Employee Plans and Related Documents. The Company 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. The Company does not have and is not
required to contribute to an Employee Plan that is a "defined benefit plan," as
such term is defined in Section 3(35) of ERISA (the "Defined Benefit Plans").
(g) Qualifications. Each Employee Plan intended to qualify under Section
401(a) of the Code has been determined by the Internal Revenue Service to so
qualify, and the trusts created thereunder have been determined to be exempt
from tax under the provisions of Section 501(a). Each Employee Plan which is a
funded welfare benefit plan intended to be exempt from tax under the provisions
of Section 501(c)(9) of the Code has been determined by the Internal Revenue
Service to be so exempt. Copies of all determination letters with respect to
each such Employee Plan have been previously delivered by the Company to the
Buyer, and nothing has since occurred, or will occur prior to the Closing Date,
which might cause the loss of such qualification or exemption, no such Employee
Plan has been operated in a manner which would cause it to be disqualified in
operation, and all such Employee Plans have been administered in compliance
with and consistent with all applicable requirements of the Code and ERISA,
including, without limitation, all reporting, notice, and disclosure
requirements.
(h) Funding Status, Etc.
(1) Except as set forth on Schedule 3.19, neither the Company nor any
corporation or trade or business (whether or not incorporated) which would be
treated as a member of the controlled group of the Company under Section
4001(a)(14) of ERISA would be liable for (A) any amount pursuant to Section
4062, 4063, 4064, 4068 or 4069 of ERISA if any of the Employee Plans which are
subject to Title IV of ERISA were to terminate or (B) any amount pursuant to
Section 4201 of ERISA if a complete or partial withdrawal from any
multiemployer plan listed on Schedule 3.19 occurred before the Closing. Except
as set forth on Schedule 3.19, all Employee Plans which are subject to Title IV
of ERISA have no unfunded benefit liabilities, as defined in Section
4001(a)(18) of ERISA. There is no unpaid contribution due with respect to the
plan year of any such Defined Benefit Plan ended prior to the Closing Date, as
required under the minimum funding requirements of Section 412 of ERISA.
(2) With respect to each Employee Plan which is a qualified defined
contribution pension, profit-sharing or stock bonus plan, as defined in ERISA,
all employer contributions accrued for plan years ending prior to the Closing
Date under the Plan terms and applicable law have been made by the Company.
(3) All premiums or other payments required by the terms of any group or
individual insurance policies and programs maintained by the Company and
covering any present or former employees of the Company with respect to all
periods up to and including the Closing Date have been fully paid for the
length of the obligation.
(i) Claims and Litigation. Except as set forth on Schedule 3.19, to the
best of the Company's knowledge, there are no threatened or pending claims,
suits or other proceedings by present or former employees of the Company or its
affiliates, plan participants, beneficiaries or spouses of any of the above,
the Internal Revenue Service, the PBGC, or any other person or entity involving
any Employee Plan including claims against the assets of any trust, involving
any Employee Plan, or any rights or benefits thereunder, other than ordinary
and usual claims for benefits by participants or beneficiaries including claims
pursuant to domestic relations orders.
(j) No Implied Rights. Nothing expressed or implied herein shall confer
upon any past or present employee of the Company, 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 Company, the Buyer, or
any successor or affiliate.
(k) Liabilities. Except as heretofore accrued on the Current Financial
Statements and except with respect to the period between August 22, 1999 and
the Closing Date, there are no liabilities with respect to any Employee Plan
which liability relates to any period prior to the Closing Date, including,
without limitation, any taxes, accrued vacation or sick pay (whether or not
vested), accrued vacation, sick and personal leaves, employee policies,
employee benefit claims or liability to the Pension Benefit Guaranty
Corporation. The Company does not have a policy or any contractual obligation
to pay severance pay.
3.20 Environmental Matters.
(a) Hazardous Materials have not at any time been generated, used, treated
or stored on any property, plants or other facility now or formerly owned,
leased, or operated by the Company or any Subsidiary or their predecessors, in
violation in any material respect of any applicable law, ordinance, rule,
regulation, order, judgment, decree or permit or which would require remedial
action under any applicable law, ordinance, rule, regulation, order, judgment,
decree or permit, and none of the Company or any of its Subsidiaries or their
predecessors have received any notice of any such violation with respect to
Hazardous Materials.
(b) There has been no spill, discharge, leak, emission, injection, escape,
dumping or release of any kind onto any property now owned or leased by the
Company or any of its Subsidiaries or their predecessors, or into the
environment surrounding any such property, of Hazardous Materials, other than
those releases permissible under applicable environmental laws.
(c) The Company or any of its Subsidiaries or their predecessors, their
operations and any property owned, leased or operated by the Company, the
Subsidiaries or their predecessors are in compliance in all material respects
with all applicable Environmental Laws and the requirements of any permits
issued under such laws.
(d) There are no past, pending or, to the best knowledge of the Parent,
threatened Environmental Claims against the Company or any of the Subsidiaries
or their predecessors, or which involves or relates to any property now or
previously owned, leased or operated by the Company or any of the Subsidiaries,
or their predecessors.
(e) There is no condition or occurrence on any property now or previously
owned, leased or operated by the Company, the Subsidiaries, or their
predecessors or any property adjoining or in the vicinity of any such property
that to the best knowledge of the Parent could reasonably be anticipated (i) to
form the basis of an Environmental Claim against the Company or any of the
Subsidiaries or their predecessors or (ii) to cause any property of the
Company, the Subsidiaries or their predecessors, to be subject to any
restrictions on the ownership, occupancy, use or transferability of such
property under any Environmental Law.
(f) Schedule 3.20 is a list of all documents (whether in hard copy or
electronic form) that contain any environmental reports, investigations and
audits relating to premises currently or previously owned, leased or operated
by the Company or any Subsidiary or other predecessors (whether conducted by or
on behalf of the Company or a Subsidiary or a third party, and whether done at
the initiative of the Company or a Subsidiary or directed by a Governmental
Entity or other third party) which were issued or conducted during the past
five years and which the Company has possession of or access to. A complete and
accurate copy of each such document has been provided to the Buyer.
(g) For purposes of this Agreement, "Hazardous Materials" shall refer to
(a) any petroleum or petroleum products, radioactive materials, asbestos in any
form that is or could become friable, urea formaldehyde foam insulation,
transformers or other equipment that contain dielectric fluid containing levels
of polychlorinated biphenyls, and radon gas; (b) any chemicals, materials or
substances defined as or included in the definition of "hazardous substances,"
"hazardous wastes," "hazardous materials," "extremely hazardous wastes,"
"restricted hazardous wastes," "toxic substances," "toxic pollutants,"
"contaminants" or "pollutants," or words of similar import, under any
applicable Environmental Law; and (c) any other chemical, material or substance
exposure to which is prohibited, limited or regulated by any governmental
authority; "Environmental Law" means any federal, state or local statute, law,
rule, regulation, ordinance, code, policy or rule of common law now or
hereafter in effect and in each case as amended, and any judicial or
administrative interpretation thereof, including any judicial or administrative
order, consent decree or judgment, relating to the environment, health, safety
or Hazardous Materials, including without limitation the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended
("CERCLA") 42 U.S.C. 9601 et seq.; the Hazardous Materials Transportation
Act, as amended, 49 U.S.C. 1801 et seq.; the Resource Conservation and
Recovery Act, as amended, 42 U.S.C. 6901 et seq.; the Federal Water Pollution
Control Act, as amended, 33 U.S.C. 1251 et seq.; the Toxic Substances Control
Act, 15 U.S.C. 2601 et seq.; the Clean Air Act, 42 U.S.C. 7401 et seq.; the
Safe Drinking Water Act, 42 U.S.C. 3808 et seq.; and their counterparts under
any state or local laws; "Environmental Claims" means any and all
administrative, regulatory or judicial actions, suits, demands, demand letters,
claims, liens, notices of non-compliance or violation, investigations or
proceedings relating in any way to any Environmental Law or any permit issued
under any such Law (hereafter "Claims"), including without limitation (a) any
and all Claims by governmental or regulatory authorities for enforcement,
cleanup, removal, response, remedial or other actions or damages, fines or
penalties pursuant to any applicable Environmental Law, and (b) any and all
Claims by any third party seeking damages, contribution, indemnification, cost
recovery, compensation or injunctive relief resulting from Hazardous Materials
or arising from alleged injury or threat of injury to health, safety or the
environment.
3.21 Absence of Certain Changes or Events.
(a) Except as set forth on Schedule 3.21 attached hereto, since August 22,
1999, neither the Company nor any of the Subsidiaries has entered into any
transaction which is not in the usual and ordinary course of business, and,
without limiting the generality of the foregoing, neither the Company nor any
of the Subsidiaries has:
(1) incurred any material obligation or liability for borrowed money;
(2) discharged or satisfied any Lien or paid any obligation or liability other
than current liabilities reflected in the Current Balance Sheet;
(3) mortgaged, pledged or subjected to Lien any of their
respective properties or assets;
(4) 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;
(5) 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;
(6) except for the Starsine Unit shipped in August which was lost and with
respect to which an insurance claim has been made, suffered any losses of
personal or real property, whether insured or uninsured, and whether or not in
the control of the Company or the relevant Subsidiary, as the case may be, in
excess of $75,000 in the aggregate, or waived any rights of any value;
(7) authorized any declaration or payment of dividends by the Company or any
Subsidiary which is not wholly owned by the Company, or paid any such
dividends, or authorized any transfer of assets of any kind whatsoever by the
Company or any such Subsidiary to any of their respective stockholders with
respect to any shares of their capital stock;
(8) authorized or issued recall notices for any of its products
or initiated any safety investigations;
(9) received notice of any litigation, warranty claim or
products liability claims;
(10) made any material change in the terms, status or funding condition of any
Employee Plan, as defined in Subsection 3.19 hereof;
(11) other than has previously been disclosed in writing to
the Buyer; engaged any new employee for a salary in excess of $50,000 per
annum;
(12) other than the release of incentive compensation to the Company's sales
force, made, or committed to make, any changes in the compensation payable to
any officer, director, employee or agent of the Company or any Subsidiary, or
any bonus payment or similar arrangements made to or with any of such officers,
directors, employees or agents;
(13) incurred any capital expenditure in excess of $50,000
in any instance or $100,000 in the aggregate;
(14) made any material alteration in the manner of keeping the books, accounts
or records of the Company or any Subsidiary, or in the accounting practices
therein reflected; or
(b) Except as set forth on Schedule 3.21 or disclosed to the Buyer in
writing prior to the Closing, since September 30, 1998, neither the Company nor
any Subsidiary has suffered any material adverse change in the consolidated
results of operations, condition (financial or otherwise), assets, liabilities
(whether absolute, accrued, contingent or otherwise), business or prospects of
the Company and the Subsidiaries taken as a whole.
(c) To the best of the Parent's knowledge, there is no existing or
threatened occurrence, event or development which, as far as can be reasonably
foreseen, could have a material adverse effect on the business, properties,
assets, condition (financial or otherwise) or prospects of the Company and the
Subsidiaries taken as a whole.
3.22 Suppliers. Schedule 3.22 attached hereto sets forth a true, correct and
complete list of the present sole source suppliers of significant goods or
services, other than utilities, for any product with respect to which practical
alternative sources of supply are not available on comparable terms and
conditions, indicating the contractual arrangements for continued supply from
each such supplier. Except as set forth on Schedule 3.22, (a) the Company and
each of the Subsidiaries has good relations with all of its sole source
suppliers, and (b) neither the Company nor any of the Subsidiaries is more than
60 days in arrears in any trade accounts payable or other payments owing to any
supplier, except for amounts which the Company is disputing in good faith.
3.23 Warranty and Product Liability Claims. Other than as set forth on Schedule
3.23 attached hereto neither the Company nor the U.K. Subsidiary has suffered
any nor has any outstanding warranty and product liability claims against the
Company or any of the Subsidiaries from October 1, 1997 through the date hereof
in excess of $10,000 per occurrence or $100,000 on the aggregate for such
period.
3.24 Prepayments and Deposits. Neither the Company nor the U.K. Subsidiary has
received any prepayments and deposits, from customers for products to be
shipped, or services to be performed, after the Closing Date.
3.25 Indebtedness to and from Officers, Directors and Parent. Except as set
forth on Schedule 3.25 attached hereto and except for intercompany indebtedness
payable among the Company and any Subsidiary or among the Subsidiaries, neither
the Company nor any of the Subsidiaries is indebted, directly or indirectly, to
any person who is an officer, director or stockholder of any of the foregoing
entities or any affiliate of any such person in any amount whatsoever other
than for salaries for services rendered or reimbursable business expenses, all
of which have been reflected on the Current Balance Sheet, and no such officer,
director, stockholder or affiliate is indebted to the Company or any of the
Subsidiaries except for advances made to employees of the Company or any of the
Subsidiaries in the ordinary course of business to meet reimbursable business
expenses anticipated to be incurred by such obligor. The total intercompany
indebtedness on the Closing Date (approximately $7,000,000) will be contributed
to the equity of the Company prior to the Closing.
3.26 Banking Facilities. Schedule 3.26 attached hereto sets forth a true,
correct and complete list of:
(a) each bank, savings and loan or similar financial institution in which
the Company or any of the Subsidiaries has an account or safety deposit box and
the numbers of the accounts or safety deposit boxes maintained by the Company
or any of the Subsidiaries thereat; and
(b) the names of all persons authorized to draw on each such account or to
have access to any such safety deposit box facility, together with a
description of the authority (and conditions thereof, if any) of each such
person with respect thereto.
3.27 Powers of Attorney and Suretyships. Except as set forth on Schedule 3.27
attached hereto, neither the Company nor any of the Subsidiaries has any
general or special powers of attorney outstanding (whether as grantor or
grantee thereof) or has any obligation or liability (whether actual, accrued,
accruing, continent or otherwise) as guarantor, surety, co-signer, 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.
3.28 Conflicts of Interest. Except as set forth on Schedule 3.28 attached
hereto and except for the existence of transactions for the supply of goods or
services between the Buyer and affiliates of the Parent, neither the Parent nor
any officer or director of the Company or any Subsidiary nor, to the best
knowledge of the Parent, any affiliate of any such person, now has or within
the last three (3) years had, either directly or indirectly:
(a) an equity or debt interest in any corporation, partnership, joint
venture, association, organization or other person or entity which furnishes or
sells or during such period furnished or sold services or products to the
Company or any of the Subsidiaries, or purchases or during such period
purchased from the Company or any of the Subsidiaries any goods or services, or
otherwise does nor during such period did business with the Company or any of
the Subsidiaries; or
(b) a beneficial interest in any contract, commitment or agreement to which
the Company or any of the Subsidiaries is or was a party or under which any of
them is or was obligated or bound or to which any of their respective
properties may be or may have been subject, other than stock options and other
contracts, commitments or agreements between the Company or any of the
Subsidiaries and such persons in their capacities as employees, officers or
directors of the Company or such Subsidiary.
3.29 Regulatory Approvals. All consents, approvals, authorizations or other
requirements prescribed by any law, rule or regulation which must be obtained
or satisfied by the Company or any of the Subsidiaries and which are necessary
for the execution and delivery by the Parent and the Company of this Agreement
or any documents to be executed and delivered by the Parent or the Company in
connection herewith are set forth on Schedule 3.29 attached hereto and have
been, or prior to the Closing Date will be, obtained and satisfied.
3.30 Year 2000 Compliance.
(a) The Company has conducted "year 2000" audits with respect to (i) all of
the Company's internal systems that are material to the business or operations
of the Company, including, without limitation, computer hardware systems,
software applications, firmware, equipment containing embedded microchips and
other embedded systems ("Internal Systems") and (ii) all of the software,
hardware, firmware and other technology ("Products") which constitute part of
the products and services manufactured, marketed or sold by the Company or
licensed by the Company to third parties. The Company has obtained "year 2000"
certifications with respect to all third-party systems that are material to the
business or operations of the Company, including without limitation systems
belonging to the Company's suppliers, service providers and customers. The
Company has furnished to the Buyer true and correct copies of all "year 2000"
audits, certifications, reports and other similar documents that have been
prepared or performed by or on behalf of the Company or any third party with
respect to the Company's business or operations.
(b) The Company has developed a remediation plan reasonably designed to
cause all of its Internal Systems and Products to be Year 2000 Compliant, and
to have such compliance tested prior to December 1999 (the "Year 2000
Program"). A complete and accurate copy of the Year 2000 Program has previously
been provided to the Buyer. Except as set forth on Schedule 3.30, the Company
is on schedule and within budget in implementing the Year 2000 Program and has
no reason to believe that the remainder of the year 2000 Program can not be
implemented and tested prior to December 1999 with no more than the budgeted
expenditures.
(c) For purposes of this Agreement, "Year 2000 Compliant" means that the
applicable system or item:
(1) will accurately receive, record, store, provide, recognize and process all
date and time data from, during, into and between the twentieth and
twenty-first centuries, the years 1999 and 2000 and all leap years;
(2) will accurately perform all date-dependent calculations and operations
(including, without limitation, mathematical operations, sorting, comparing and
reporting) from, during, into and between the twentieth and twenty-first
centuries, the years 1999 and 2000 and all leap years; and
(3) will not malfunction, cease to function or provide invalid or incorrect
results as a result of (x) the change of years from 1999 to 2000 or from 2000
to 2001, (y) date data, including date data which represents or references
different centuries, different dates during 1999 and 2000, or more than one
century or (z) the occurrence of any particular date;
in each case without human intervention, other than original data entry or
revisions to computer code that can be implemented at reasonable cost and with
reasonable effort; provided, in each case, that all applications, hardware and
other systems used in conjunction with such system or item which are not owned
or licensed by the Company correctly exchange date data with or provide data to
such system or item.
(d) Except as set forth on Schedule 3.30, the Company has not provided any
guarantee or warranty for any product sold or licensed, or service provided, by
the Company to the effect that such product or service (i) complies with or
accounts for the fact of the arrival of the year 2000, (ii) will not be
adversely affected with respect to functionality, interoperability, performance
or volume capacity (including without limitation the processing and reporting
of data) by virtue of the arrival of the year 2000 or (iii) is otherwise Year
2000 Compliant.
3.31 Disclosure. The information concerning the Company and the Subsidiaries
set forth in this Agreement, the Exhibits and Schedules attached hereto and any
document, statement or certificate furnished or to be furnished to the Buyer
pursuant hereto, does not and will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated herein or
therein or necessary to make the statements and facts contained herein or
therein, in light of the circumstances in which they are made, not false and
misleading. The Parent and the Company have disclosed to the Buyer all material
facts pertaining to the transactions contemplated by this Agreement and the
Exhibits hereto. Copies of all documents heretofore or hereafter delivered or
made available to the Buyer pursuant to this Agreement were or will be complete
and accurate copies of such documents.
3.32 Broker's Fees. Except for the fee payable by the Parent to FAC Equities,
no fees or commissions or similar payments with respect to the transactions
contemplated by this Agreement have been paid or will be payable by the Parent,
the Company or any Subsidiary to any broker, financial advisor, finder,
investment banker, or bank. The Buyer shall have no obligation with respect to
any fees or with respect to any claims made by or on behalf of other Persons
for fees of a type contemplated in this Section 3.32 that may be due in
connection with the transactions contemplated by this Agreement.
3.33 Securities Representations.
(a) Parent is an "accredited investor" within the meaning of the Securities
Act. Parent 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
SatCon Shares and is financially able to undertake the risks involved in such
an investment. Parent understands that (i) the SatCon Shares have not been
registered under the Securities Act, or any state securities law by reason for
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 and (ii)
such SatCon 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.
(b) Parent agrees that SatCon Shares shall not be sold or transferred
unless either (i) they first shall have been registered under the Securities
Act, or (ii) the Buyer first shall have been furnished with an opinion of legal
counsel, reasonably satisfactory to the Parent and which may be counsel to the
Buyer, to the effect that such sale or transfer is exempt from the registration
requirements of the Securities Act. The SatCon Shares may be pledged and
transferred to Key Bank, N.A. in connection with the Parent's credit facility.
Each certificate representing SatCon Shares shall bear a legend substantially
in the following form:
"The securities represented by this certificate
have not been registered under the Securities Act
of 1922, as amended, and may not be offered, sold
or otherwise transferred, pledged or hypothecated
without the consent of SatCon Technology Corporation
and unless and until such securites are registered
under such Act or an opinion of counsel satisfactory
to SatCon Technology Cororation is obtained to the
effect that such registration is not required."
(c) The Buyer has granted the Parent and its attorneys or other
representatives access to all information about the Buyer which Parent has
requested; and the Parent has had the opportunity to ask questions of, and
receive answers from, representatives of the Buyer to ask questions of, and
receive answers from, representatives of the Buyer concerning such information
and the Buyer's financial condition and prospects.
(d) The principal office of the Parent and the place at which the decision
by the Parent to participate in this Agreement and the transactions
contemplated hereby was made is located in New York.
Any information furnished in the schedules of the Parent, Company or U.K.
Subsidiary (a "Disclosure Schedule") shall be deemed to modify all of the
Parent's representations and warranties. The inclusion of any information in
the Disclosure Schedule shall not be deemed to be an admission or
acknowledgment, in and of itself, that such information is required by the
terms hereof to be disclosed, is material to the Disclosure Schedule, has or
would have a material adverse effect. For purposes of this Agreement, the terms
"to the best of the Company's knowledge," "to the best of the Parent's
knowledge," "known by the Company," "known to the Parent" or other words of
similar meaning shall mean the actual knowledge of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ or ▇▇▇▇▇ ▇▇▇▇▇▇▇ without any obligation of investigation, and shall not
refer to the knowledge of any other person or entity.
4. Representation and Warranties of the Buyer.
The Buyer represents and warrants to the Parent as follows:
4.1 Organization and Qualification. The Buyer is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware, with the requisite corporate power and authority to own and use
its properties and assets and to carry on its business as currently conducted.
Except for Beacon Power Corporation or ("Beacon") and as set forth on Schedule
4.1, the Buyer has no subsidiaries (collectively, the "Buyer Subsidiaries"); it
being agreed that for purpose of this Agreement Beacon is not a Buyer
Subsidiary of the Buyer. Each of the Buyer Subsidiaries (which, except as
provided in the prior sentence, for purposes of this Agreement means any entity
in which the Buyer, directly or indirectly, owns the majority of such entity's
capital stock or holds an equivalent equity or similar interest) is a
corporation duly incorporated, validly existing and in good standing under the
laws of the jurisdiction of its incorporation or organization (as applicable),
with the full corporate power and authority to own and use its properties and
assets and to carry on its business as currently conducted. Each of the Buyer
and the Buyer Subsidiaries is duly qualified as a foreign corporation to do
business and is in good standing as a foreign corporation in each jurisdiction
in which the nature of the business conducted or property owned by it makes
such qualification necessary, except where the failure to be so qualified or in
good standing, as the case may be, would not, individually or in the aggregate,
(x) adversely affect the legality, validity or enforceability of any of this
Agreement or any of the material transactions contemplated hereby, (y) have or
result in a material adverse effect on the results of operations, assets, or
financial condition of the Buyer and the Buyer Subsidiaries, taken as a whole
or (z) impair the Buyer's ability to perform in all material respects on a
timely basis its material obligations under this Agreement (any of (x), (y) or
(z), being a "Buyer Material Adverse Effect"). The Buyer has on file with the
Securities Exchange Commission true and correct copies of the Buyer's
Certificate of Incorporation, as amended and as in effect on the date hereof
(the "Certificate of Incorporation"), and the Buyer's Bylaws, as in effect on
the date hereof (the "Bylaws").
4.2 Authorization; Enforcement. The Buyer has the requisite corporate power and
authority to enter into and to consummate the transactions contemplated by this
Agreement, and otherwise to carry out its obligations hereunder and thereunder.
The execution and delivery of each of this Agreement and the consummation by it
of the transactions contemplated hereby have been duly authorized by all
necessary corporate action. This Agreement has been duly executed by the Buyer
and constitutes the valid and binding obligation of the Buyer enforceable
against the Buyer in accordance with its terms, except as such enforceability
may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium, liquidation or similar laws relating to, or affecting generally the
enforcement of, creditors' rights and remedies or by other equitable principles
of general application and except that rights to indemnification and
contribution may be limited by Federal or state securities laws or public
policy relating thereto. Neither the Buyer nor any Buyer Subsidiary is in any
material violation of any of the provisions of its respective certificate of
incorporation, bylaws or other charter documents such that any right of a
holder of the SatCon Shares would be affected.
4.3 Capitalization. As of the date hereof, the authorized capital stock of the
Buyer is as set forth in Schedule 4.3. All of such outstanding shares of
capital stock, except as disclosed in the Buyer SEC Documents (as defined in
Section 4.10) have been, or upon issuance will be, validly authorized and
issued, fully paid and nonassessable and were issued in accordance with the
registration or qualification provisions of the Securities Act, or pursuant to
valid exemptions therefrom. Except as disclosed in Schedule 4.3 or in the Buyer
SEC Documents, (i) no shares of the Buyer's capital stock are subject to
preemptive rights or any other similar rights or any liens or encumbrances
suffered or permitted by the Buyer, nor is any holder of the SatCon Common
Stock entitled to preemptive or similar rights arising out of any agreement or
understanding with the Buyer by virtue of this Agreement, (ii) there are no
outstanding options, warrants, scrip rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities or rights
convertible into or exchangeable for, or giving any Person (as defined below)
any right to subscribe for or acquire, any shares of capital stock of the Buyer
or any of its Buyer Subsidiaries, or contracts, commitments, understandings or
arrangements by which the Buyer or any of its Buyer Subsidiaries is or may
become bound to issue additional shares of capital stock of the Buyer or any of
its Buyer Subsidiaries or options, warrants, scrip rights to subscribe to,
calls or commitments of any character whatsoever relating to, or securities or
rights convertible into, any shares of capital stock of the Buyer or any of its
Buyer Subsidiaries, (iii) there are no outstanding debt securities of the Buyer
or any of its Buyer Subsidiaries, (iv) there are no agreements or arrangements
under which the Buyer or any of its Buyer Subsidiaries is obligated to register
the sale of any of their securities under the Securities Act, (v) there are no
outstanding securities of the Buyer or any of its Buyer Subsidiaries which
contain any redemption or similar provisions, and there are no contracts,
commitments, understandings or arrangements by which the Buyer or any of its
Buyer Subsidiaries is or may become bound to redeem a security of the Buyer or
any of its Buyer Subsidiaries, (vi) there are no securities or instruments
containing anti-dilution or similar provisions that will be triggered by the
issuance of the SatCon Common Stock, (vii) the Buyer does not have any stock
appreciation rights or "phantom stock" plans or agreements or any similar plan
or agreement and (viii) except for the put rights granted to the holders of the
Class D Preferred Stock of Beacon and except as specifically disclosed in the
Buyer SEC Documents, to the knowledge of the Buyer no Person (as defined below)
or group of related Persons beneficially owns (as determined pursuant to Rule
13d-3 promulgated under the Exchange Act or has the right to acquire by
agreement with or by obligation binding upon the Buyer beneficial ownership of
in excess of 5% of the Common Stock. "Person" means an individual or
corporation, partnership, trust, incorporated or unincorporated association,
joint venture, limited liability Buyer, joint stock Buyer, government (or an
agency or subdivision thereof) or other entity of any kind.
4.4 Authorization and Validity; Issuance of Shares. The SatCon Shares are duly
authorized and reserved for issuance and will be validly issued, fully paid and
non-assessable, free and clear of all liens, encumbrances and rights of first
refusal, other than Liens created by the Parent and will not be subject to any
preemptive or similar rights. Assuming the accuracy of the Parent's
representation in Section 3.34. The issuance by the Buyer of the SatCon Shares
is exempt from registration under the Securities Act.
4.5 No Conflicts. The execution, delivery and performance of this Agreement by
the Buyer and the consummation by the Buyer of the transactions contemplated
hereby do not and will not (i) conflict with or violate any provision of the
Certificate of Incorporation, Bylaws or other organizational documents of the
Buyer or any of the Buyer Subsidiaries, (ii) subject to obtaining the consents
referred to in Section 4.6, conflict with, or constitute a breach or a default
(or an event which with notice or lapse of time or both would become a default)
under, or give to others any rights of termination, amendment, acceleration or
cancellation of, any agreement, indenture, patent, patent license or instrument
(evidencing a Buyer or Buyer Subsidiary debt or otherwise) to which the Buyer
or any Buyer Subsidiary is a party or by which any property or asset of the
Buyer or any Buyer Subsidiary is bound or affected, or (iii) result in a
violation of any law, rule, regulation, order, judgment, injunction, decree or
other restriction of any court or governmental authority to which the Buyer or
any Buyer Subsidiary is subject (including Federal and state securities laws
and regulations and the rules and regulations of the principal market or
exchange on which the Common Stock is traded or listed) applicable to the Buyer
or any of its Buyer Subsidiaries (except for any shareholder approval that may
be required pursuant to the rules of the NASDAQ), or by which any material
property or asset of the Buyer or any Buyer Subsidiary is bound or affected
except, in each such case, for any violation, conflict, default or breach which
is not reasonably expected to have a Buyer Material Adverse Effect.
4.6 Consents and Approvals. Except as specifically set forth on Schedule 4.6,
neither the Buyer nor any Buyer Subsidiary is required to obtain any consent,
waiver, authorization or order of, give any notice to, or make any filing or
registration with, any court or other federal or state governmental authority,
regulatory or self regulatory agency, or other Person in connection with the
execution, delivery and performance by the Buyer of this Agreement, other than
(i) the application(s) or any letter(s) acceptable to the National Market
System of Nasdaq Stock Market ("Nasdaq") for the listing of the SatCon Common
Stock with Nasdaq (and with any other national securities exchange or market on
which the Common Stock is then listed), (ii) any filings, notices or
registrations under applicable state securities laws, (iii) the filing of a
form D with the Securities and Exchange Commission (the "Commission"), and (iv)
the approval of the Buyer's Board of Directors (together with the consents,
waivers, authorizations, orders, notices and filings referred to on Schedule
4.6, the "Buyer Required Approvals").
4.7 Litigation; Proceedings. Except as specifically set forth on Schedule 4.7,
there is no action, suit, notice of violation, proceeding or investigation
pending or, to the knowledge of the Buyer or any of its Buyer Subsidiaries,
threatened against or affecting the Buyer or any of its Buyer Subsidiaries or
any of their respective properties or assets before or by any court,
governmental or administrative agency or regulatory authority (federal, state,
county, local or foreign) which (i) adversely affects or challenges the
legality, validity or enforceability of any of this Agreement or (ii) could
reasonably be expected to, individually or in the aggregate, to have a Buyer
Material Adverse Effect.
4.8 No Default or Violation. Except as specifically set forth on Schedule 4.8,
neither the Buyer nor any Buyer Subsidiary (i) is in default under or in
violation of any indenture, loan or other credit agreement or any other
agreement or instrument to which it is a party or by which it or any of its
properties or assets is bound and which is required to be included as an
exhibit to any Buyer SEC Document (as defined in Section 4.10 hereof) or will
be required to be included as an exhibit to the Buyer's next filing under
either the Securities Act or Exchange Act, (ii) is in violation of any order of
any court, arbitrator or governmental body applicable to it, (iii) is in
violation of any statute, rule or regulation of any governmental authority to
which it is subject, (iv) is in default under or in violation of its
Certificate of Incorporation, Bylaws or other organizational documents,
respectively, or (v) is in default under or in violation of any of the listing
requirements of Nasdaq as in effect on the date hereof and is not aware of any
facts which would reasonably lead to delisting or suspension of the Common
Stock by Nasdaq in the foreseeable future except, in each such case, for any
violation or default which is not reasonably expected to have a Buyer
Materially Adverse Effect. The business of the Buyer and its Buyer Subsidiaries
is not being conducted, and has not been conducted, in violation of any law,
ordinance, rule or regulation of any governmental entity, except where such
violations have not resulted or would not reasonably result, individually or in
the aggregate, in a Buyer Material Adverse Effect. Neither the Buyer nor any of
its Buyer Subsidiaries is in breach of any agreement where such breach,
individually or in the aggregate, would have a Buyer Material Adverse Effect.
4.9 Disclosure; Absence of Certain Changes. None of this Agreement, the
Schedules to this Agreement, the Buyer SEC Documents (as amended to date)
contained as of their respective dates, any untrue statement of a material fact
or omitted to state any material fact necessary in order to make the statements
made herein and therein, in light of the circumstances under which they were
made, not misleading. Except as disclosed on Schedule 4.9 or in Buyer SEC
Documents filed on ▇▇▇▇▇ through the date hereof, since the filing of the
Buyer's quarterly report on Form 10-Q on August 16, 1999, there has been no
material adverse change and no material adverse development in the business,
properties, operations, financial condition, liabilities or results of
operations of the Buyer or the Buyer Subsidiaries. The Buyer has not taken any
steps, and does not currently expect to take any steps, to seek protection
pursuant to any bankruptcy law nor does the Buyer or any of its Buyer
Subsidiaries have any knowledge or reason to believe that its creditors intend
to initiate involuntary bankruptcy proceedings.
4.10 Buyer SEC Documents; Financial Statements. The Common Stock of the Buyer
is registered pursuant to Section 12(g) of the Exchange Act. The Buyer has
filed during its current fiscal year all reports, schedules, forms, statements
and other documents required to be filed by it with the Commission pursuant to
the reporting requirements of the Exchange Act, including pursuant to Section
13, 14 or 15(d) thereof (the foregoing materials and financial statements and
schedules thereto being collectively referred to herein as the "Buyer SEC
Documents"), on a timely basis or has received a valid extension of such time
of filing and has filed any such Buyer SEC Documents prior to the expiration of
any such extension. The Buyer has delivered to each of the Purchasers or its
representatives true, complete and accurate copies of the Buyer SEC Documents
that were not filed pursuant to ▇▇▇▇▇. As of their respective dates and giving
effect to all amendments thereto filed with the Commission, the financial
statements of the Buyer included in the Buyer SEC Documents comply as to form
in all material respects with applicable accounting requirements and the
published rules and regulations of the Commission with respect thereto as in
effect at the time of filing. Such financial statements have been prepared in
accordance with United States generally accepted accounting principles applied
on a consistent basis during the periods involved, except as may be otherwise
specified in such financial statements or the notes thereto, and fairly present
in all material respects the financial position of the Buyer as of and for the
dates thereof and the results of operations and cash flows for the periods then
ended, subject, in the case of unaudited statements, to normal, year-end audit
adjustments. The Buyer acknowledges that the Parent will be trading in the
securities of the Buyer in reliance on the foregoing representation and
warranty.
4.11 Broker's Fees. No fees or commissions or similar payments with respect to
the transactions contemplated by this Agreement have been paid or will be
payable by the Buyer to any broker, financial advisor, finder, investment
banker, or bank. Parent shall have no obligation with respect to any fees or
with respect to any claims made by or on behalf of other Persons for fees of a
type contemplated in this Section 4.11 that may be due in connection with the
transactions contemplated by this Agreement.
4.12 Form S-3 Eligibility. The Buyer is, and at the Closing Date will be,
eligible to register the SatCon Common Stock for resale with the Commission
under Form S-3 (or any successor form) promulgated under the Securities Act.
4.13 Listing and Maintenance Requirements Compliance. The principal market on
which the Buyer's Common Stock is currently traded is Nasdaq. Except as
disclosed on Schedule 4.13, the Buyer has not in the three years preceding the
date hereof received notice (written or oral) from Nasdaq (or any stock
exchange, market or trading facility on which the Common Stock is or has been
listed (or on which it has been quoted)) to the effect that the Buyer is not in
compliance with the listing or maintenance requirements of such market or
exchange. The Buyer is not aware of any facts which would reasonably lead to
delisting or suspension of the Common Stock by Nasdaq. After giving effect to
the transactions contemplated by this Agreement and the Transaction Documents,
the Buyer is and will be in compliance with all such maintenance requirements
except for any approval required under the NASD rules.
4.14 Intellectual Property Rights. To the best of the knowledge of the Buyer,
the Buyer owns or possesses, or can obtain by payment of royalties in amounts
which, in the aggregate, will not have a Buyer Material Adverse Effect, all of
the patents, trademarks, service marks, trade names, copyrights, proprietary
rights, trade secrets, and licenses or rights to the foregoing, necessary for
the conduct of the business of the Buyer as currently conducted. To the best of
the Buyer's knowledge, the business of the Buyer does not cause the Buyer to
infringe or violate any of the patents, trademarks, service marks, trade names,
copyrights, licenses or proprietary rights of any person or entity.
4.15 Registration Rights; Rights of Participation. Except as described on
Schedule 4.15 hereto, (i) the Buyer has not granted or agreed to grant to any
Person any rights (including "piggy-back" registration rights) to have any
securities of the Buyer registered with the Commission or any other
governmental authority which has not been satisfied and (ii) no Person,
including, but not limited to, current or former stockholders of the Buyer,
underwriters, brokers or agents, has any right of first refusal, preemptive
right, right of participation, or any similar right to participate in the
transactions contemplated by this Agreement.
4.16 Tax Status; Firpta. Except as set forth on Schedule 4.16, the Buyer and
each of the Buyer Subsidiaries has made or filed all federal and state income
and all other Tax Returns, reports and declarations required by any
jurisdiction to which it is subject (unless and only to the extent that the
Buyer and each of its Buyer Subsidiaries has set aside on its books provisions
reasonably adequate for the payment of all unpaid and unreported Taxes) and has
paid all Taxes and other governmental assessments and charges that are material
in amount, shown or determined to be due on such returns, reports and
declarations, except those being contested in good faith (which are set forth
on Schedule 4.16 hereof), and has set aside on it books provisions reasonably
adequate for the payment of all Taxes for periods subsequent to the periods to
which such returns, reports or declarations apply. There are no unpaid Taxes in
any material amount claimed to be due by the taxing authority of any
jurisdiction, and the officers of the Buyer know of no basis for any such
claim. The Buyer is not a United States real property holding corporation
within the meaning of Section 897(c)(2) of the Code.
4.17 Transactions With Affiliates. Except as set forth on Schedule 4.17, none
of the officers, directors, or employees of the Buyer is presently a party to
any transaction with the Buyer or any of its Buyer Subsidiaries (other than for
services as employees, officers and directors), including any contract,
agreement or other arrangement providing for the furnishing of services to or
by, providing for rental of real or personal property to or from, or otherwise
requiring payments to or from any officer, director or such employee or, to the
knowledge of the Buyer, any corporation, partnership, trust or entity in which
any officer, director, or any such employee has a substantial interest or is an
officer, director, trustee or partner.
4.18 Material Contracts. Except for this Agreement, the other agreements to be
entered into pursuant to the terms of this Agreement, contracts attached as
exhibits to the Buyer's SEC Documents and the contracts of the Buyer and its
Subsidiaries set forth on Schedule 4.18 attached hereto (collectively, the
"Contracts"), neither the Buyer nor its Subsidiaries are a party to or
otherwise bound by any written or oral:
(a) written contract for the employment of any officer, employee or other
person on a full-time or consulting basis, which is not terminable on thirty
(30) days' notice without cost or liability to the Buyer or any Subsidiary,
except normal severance arrangements and accrued vacation pay;
(b) bonus, pension, profit-sharing, retirement, hospitalization, insurance,
stock purchase, stock option or other plan, contract or understanding pursuant
to which benefits are provided to any employee of the Buyer or any Subsidiary
(other than group insurance plans applicable to employees generally);
(c) agreement or indenture relating to the borrowing of money or to the
mortgaging or pledging of, or otherwise placing a lien or security interest on,
any asset of the Buyer or Subsidiary or any agreement or instrument evidencing
any guaranty by the Buyer or any Subsidiary of payment or performance by any
other Person;
(d) voting trust or agreement, stockholders' agreement, pledge agreement,
buy-sell agreement or first refusal or preemptive rights agreement relating to
any securities of the Buyer;
(e) agreement or obligation (contingent or otherwise) to issue, sell or
otherwise distribute or to repurchase or otherwise acquire or retire any shares
of its capital stock or any of its other equity securities;
(f) agreement under which the Buyer or any Subsidiary has granted any
person any registration rights, other than this Agreement;
(g) agreement providing for disposition of the business, assets or shares
of the Buyer or its Subsidiaries, agreement of merger or consolidation to which
the Buyer or any Subsidiary is a party or letter of intent with respect to the
foregoing;
(h) agreement or letter of intent (other than the acquisition of Ling
Electronics, Inc.) with respect to the acquisition of the business, assets or
shares of any other Person.
4.19 ERISA. Set forth in Schedule 4.19 is a list and brief description of each
"employee pension benefit plan," as such term is defined in Section 3(2) of
ERISA, now or formerly maintained by the Buyer or any of their respective
Subsidiaries, to which the Buyer or any Subsidiary is now or will be obligated
to contribute. Except as described in Schedule 4.19, no event has occurred, or
to the knowledge of the Buyer or its Subsidiaries, is threatened or about to
occur, which would constitute a reportable event within the meaning of Section
4043(b) of ERISA, and no notice of termination has been filed by the plan
administrator pursuant to Section 4041 of ERISA or issued by the Pension
Benefit Guaranty Corporation (the "PBGC") pursuant to Section 4042 of ERISA
with respect to any pension benefit plan described in Schedule 4.19 subject to
ERISA. To the best knowledge of the Buyer, no prohibited transaction (as
defined in Section 4975 of the Code) has occurred with respect to any employee
benefit plan maintained by the Buyer or any of its Subsidiaries. Neither the
Buyer nor any of their respective Subsidiaries nor any of their respective
ERISA Affiliates is or has been a participant in any multiemployer plan as
defined in ERISA. "ERISA Affiliate" means with respect to any Person, any
entity that would be considered to be under common control with such person for
purposes of Title IV of ERISA.
4.20 Environmental Matters.
(a) Hazardous Materials have not at any time been generated, used, treated
or stored on any property, plants or other facilities now owned, leased, or
operated by the Buyer or any Subsidiary (or at any property, plant or other
facilities ever owned, leased or operated by any predecessor entity at such
locations), in violation of any applicable law, ordinance, rule, regulation,
order, judgment, decree or permit or which would require remedial action under
any applicable law, ordinance, rule, regulation, order, judgment, decree or
permit, and none of the Buyer, its Subsidiaries or its predecessors have
received any notice of any such violation with respect to Hazardous Materials
except for such violations that the Buyer reasonably does not expect will have
a material adverse effect on the Buyer;
(b) There has been no spill, discharge, leak, emission, injection, escape,
dumping or release of any kind onto any property now owned or leased by the
Buyer, its Subsidiaries or any predecessor (or onto any other property ever
owned or leased by it, or by any predecessor entity at any such location), or
into the environment surrounding any such property, of Hazardous Materials,
other than those releases permissible under such regulations, laws or statutes
or allowable under applicable permits and except for such violations that the
Buyer reasonably does not expect will have a material adverse effect on the
Buyer;
(c) The Buyer, its Subsidiaries or its predecessor, their operations and
any property owned by the Buyer, its Subsidiaries or its predecessor are in
material compliance with all material Environmental Laws and the material
requirements of any permits issued under such laws;
(d) There are no past, pending or, to the best of the Buyer's knowledge,
threatened Environmental Claims against the Buyer, its Subsidiaries or its
predecessor or any property now or previously owned or leased by the Buyer, its
Subsidiaries or its predecessor;
(e) To the best of the Buyer's knowledge, there is no condition or
occurrence on any property now or previously owned or leased by the Buyer, its
Subsidiaries or its predecessor or any property adjoining or in the vicinity of
any such property that could reasonably be anticipated (i) to form the basis of
an Environmental Claim against the Buyer, its Subsidiaries or its predecessor
or (ii) to cause any property of the Buyer, its Subsidiaries or its predecessor
to be subject to any restrictions on the ownership, occupancy, use or
transferability of such property under any Environmental Law.
(f) For purposes of this Agreement, "Hazardous Materials" shall refer to
(a) any petroleum or petroleum products, radioactive materials, asbestos in any
form that is or could become friable, urea formaldehyde foam insulation,
transformers or other equipment that contain dielectric fluid containing levels
of polychlorinated biphenyls, and radon gas; (b) any chemicals, materials or
substances defined as or included in the definition of "hazardous substances,"
"hazardous wastes," "hazardous materials," "extremely hazardous wastes,"
"restricted hazardous wastes," "toxic substances," "toxic pollutants,"
"contaminants" or "pollutants," or words of similar import, under any
applicable Environmental Law; and (c) any other chemical, material or substance
exposure to which is prohibited, limited or regulated by any governmental
authority; "Environmental Law" means any federal, state or local statute, law,
rule, regulation, ordinance, code, policy or rule of common law now or
hereafter in effect and in each case as amended, and any judicial or
administrative interpretation thereof, including any judicial or administrative
order, consent decree or judgment, relating to the environment, health, safety
or Hazardous Materials, including without limitation the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended
("CERCLA") 42 U.S.C. 9601 et seq.; the Hazardous Materials Transportation
Act, as amended, 49 U.S.C. 1801 et seq.; the Resource Conservation and
Recovery Act, as amended, 42 U.S.C. 6901 et seq.; the Federal Water Pollution
Control Act, as amended, 33 U.S.C. 1251 et seq.; the Toxic Substances Control
Act, 15 U.S.C. 2601 et seq.; the Clean Air Act, 42 U.S.C. 7401 et seq.; the
Safe Drinking Water Act, 42 U.S.C. 3808 et seq.; and their counterparts under
any state or local laws; "Environmental Claims" means any and all
administrative, regulatory or judicial actions, suits, demands, demand letters,
claims, liens, notices of non-compliance or violation, investigations or
proceedings relating in any way to any Environmental Law or any permit issued
under any such Law (hereafter "Claims"), including without limitation (a) any
and all Claims by governmental or regulatory authorities for enforcement,
cleanup, removal, response, remedial or other actions or damages, fines or
penalties pursuant to any applicable Environmental Law, and (b) any and all
Claims by any third party seeking damages, contribution, indemnification, cost
recovery, compensation or injunctive relief resulting from Hazardous Materials
or arising from alleged injury or threat of injury to health, safety or the
environment.
4.21 Year 2000 Matters. The Buyer's statements regarding "Year 2000 Risk" set
forth in the SEC Documents are true and correct in all material respects.
"Year 2000 Risk" means the risk that computer applications used by the Buyer
and/or its suppliers, vendors and customers may be unable to recognize and
perform without error date-sensitive functions involving certain dates prior to
and any date after December 31, 1999, including, without limitation, September
9, 1999.
4.22 Private Offering. The Buyer and all Persons acting on its behalf have not
made within the six months preceding the Closing Date, directly or indirectly,
and will not make, offers or sales of any securities or solicited any offers to
buy any security at any time within six months after the Closing Date under
circumstances that would require registration of the Securities, the Warrants
or the Warrant Shares or the issuance of such securities under the Securities
Act.
4.23 Investment Company. The Buyer is not, and is not controlled by or under
common control with an affiliate (an "Affiliate") of an "investment company"
within the meaning of the Investment Company Act of 1940, as amended.
Any information furnished in the schedules of the Buyer (a "Buyer Disclosure
Schedule") shall be deemed to modify all of the Buyer's representations and
warranties. The inclusion of any information in the Buyer Disclosure Schedule
shall not be deemed to be an admission or acknowledgment, in and of itself,
that such information is required by the terms hereof to be disclosed, is
material to the Buyer, has or would have a Buyer Material Adverse Effect. For
purposes of this Agreement, the terms "to the Buyer's knowledge," "known by the
Buyer" or other words of similar meaning shall mean the actual knowledge of
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ or ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ without any obligation of investigation,
and shall not refer to the knowledge of any other person or entity.
5. Public Announcements. The parties agree that all general public
pronouncements or other general public communications concerning this Agreement
and the transaction contemplated hereby, and the timing, manner and content of
such disclosures, shall be subject to the mutual agreement of the Parent and
the Buyer.
6. 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:
6.1 Continued Truth of Representations and Warranties of the Parent and the
Company; Compliance with Covenants and Obligations. The representations and
warranties of the Parent, the Company and the U.K. Subsidiary shall be true on
and as of the Closing Date as though such representations and warranties were
made on and as of such date (even though they purport to have been given on a
date prior to the Closing Date), except for any changes permitted by the terms
hereof or consented to in writing by the Buyer. The Parent, the Company and the
U.K. Subsidiary 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 each of them prior to or at the Closing
Date.
6.2 Performance by the Parent and the Company. At the Closing, the Parent and
the Company shall have delivered to the Buyer a certificate signed by the Chief
Financial Officer of the Company and the Parent, as the case may be, as to
their compliance with Subsection 6.01 hereof.
6.3 Governmental Approvals. All governmental agencies, department, 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 Parent, the Company or the Subsidiaries of the transactions
contemplated by this Agreement and the operation of the business of the Company
and the Subsidiaries by the Buyer shall have consented to, authorized,
permitted or approved such transactions.
6.4 Consent of Lenders, Lessors and Other Third Parties. The Parent, the
Company and the Subsidiaries 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 Parent, the Company and the Subsidiaries
to consummate the transactions contemplated by this Agreement, including
without limitation, those set forth on Schedules 3.4. In addition, except as
set forth on Schedule 6.4, there shall be no Liens on the assets of the Company
and the Company shall deliver termination statements in forms acceptable to the
Buyer with respect to each security interest or other encumbrance outstanding
in or on the assets of the Company.
6.5 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 Buyer to own the Shares or to own or operate the
business of the Company and the Subsidiaries after the Closing.
6.6 Opinion of Counsel. The Buyer shall have received an opinion of ▇▇▇▇▇▇▇▇▇
▇. ▇▇▇▇ PLLC, counsel to the Parent, the Company and the Subsidiaries, dated as
of the Closing Date, in substantially the form attached hereto as Exhibit A,
and as to such other matters as may be reasonably requested by the Buyer or its
counsel.
6.7 Employment Contracts. On or prior to the Closing Date, the Buyer shall have
executed employment contracts and other arrangements with the individuals
listed on Schedule 6.7 attached hereto, upon substantially the terms set forth
in Schedule 6.7.
6.8 Repayment of Indebtedness. On the Closing Date, the Company and the
Subsidiaries shall not have any indebtedness other than accounts payable
incurred in the ordinary course of business. In addition, on or before the
Closing Date, the Parent shall contribute the intercompany loan balance to the
Company of approximately $7,000,000, the amount of intercompany indebtedness to
be determined at the Closing.
6.9 Closing Deliveries. The Buyer shall have received at or prior to the
Closing such documents, instruments or certificates as the Buyer may reasonably
request including, without limitation:
(a) the stock certificates representing the Shares and the U.K. shares duly
endorsed in accordance with Subsection 1.01 of this Agreement (together with
any lost stock affidavits provided to the Company by the Parent);
(b) a copy of the Election to Reattribute Losses in the form executed by
the Company and the Parent;
(c) such certificates of the Company's officers and such other documents
evidencing satisfaction of the conditions specified in this Section 6 as the
Buyer shall reasonably request;
(d) a certificate of the Parent's officers and such other documents
evidencing satisfaction of the conditions specified in this Section 6 as the
Buyer shall reasonably request;
(e) a certificate of the Secretary of State of the State of California as
to the legal existence and good standing (including tax) of the Company in
California;
(f) a certificate of the Secretary of State of the State of New York as to
the legal existence and good standing (including tax) of the Parent in New
York.
(g) certificates of the Secretary of the Company attesting to the
incumbency of the Company'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 3.01;
(h) certificates of the Secretary of the Parent attesting to the incumbency
of the Parent'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
3.01;
(i) Estoppel certificates in the form attached hereto as Exhibit B from
each lessor from whom the Company or any Subsidiary leases real or personal
property consenting to the acquisition of the Shares by the Buyer and the other
transactions contemplated hereby, and representing that there are no
outstanding claims against the Company or such Subsidiary under such Lease;
provided, however, that the parties agree that such estoppel certificates may
be delivered after Closing but before November 15, 1999, if not reasonably
available at the Closing, provided that if not delivered to the Buyer by
November 15, 1999, the Parent agrees to indemnify the Buyer against any Losses
(as defined in Section 8.1) arising out of the failure of any assertions in the
form of estoppel certificate to be complete and correct.
(j) written resignations of all members of the Company's Board of
Directors;
(k) the corporate minute books of the Company and all
corporate seals; and
(l) a cross receipt executed by the Buyer and the Parent; and
(m) if requested by the Buyer, (i) the Company and the Subsidiaries will
delivery to the Buyer and to the Internal Revenue Services notices that the
Securities are not a "U.S. real property interest" in accordance with the
Treasury Regulations under Section 897 and 1445 of the Code, or (ii) the Parent
will delivery to the Buyer certificates of non-foreign status in accordance
with the Treasury Regulations under Section 1445 of the Code.
7. Conditions to Obligations of the Parent.
The obligations of the Parent 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 Parent:
7.1 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 Parent. The Buyer 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 it
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 Buyer to authorize or carry out this Agreement 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 Buyer of the transactions contemplated by this Agreement
shall have consented to, authorized, permitted or approved such transactions.
7.4 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 4.6 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
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 Parent to transfer the Shares.
7.6 Opinion of Counsel. The Parent shall have received an opinion of ▇▇▇▇ and
▇▇▇▇ LLP, counsel to the Buyer, dated as of the Closing Date, in substantially
the form attached hereto as Exhibit C.
7.7 Closing Deliveries. The Parent shall have received at or prior to the
Closing such documents, instruments or certificates as the Buyer may reasonably
request including, without limitation:
(a) such certificates of the Buyer's officers and such other documents
evidencing satisfaction of the conditions specified in this Section 7 as the
Parent 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 and bylaws delivered pursuant to
Subsection 7.01;
(d) Issuance of the SatCon Shares; and
(e) a cross receipt executed by the Buyer and the Parent.
7.8 Buyer Registration Rights Agreement. The Buyer and the Parent shall have
executed the Registration Rights Agreement, dated as of the Closing Date, in
substantially the form attached hereto as Exhibit D, pursuant to which the
Buyer shall grant certain registration rights to the Parent with respect to the
SatCon Shares.
8. Indemnification.
8.1 By the Parent and the Company. The Parent hereby indemnifies and holds
harmless the Buyer from and 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) (collectively, the "Losses") in connection with each and
all of the following:
(a) any misrepresentation or breach of any representation or
warranty made by the Parent or the Company in this Agreement;
(b) any breach of any covenant, agreement or obligation of the
Parent or the Company contained in this Agreement or any other agreement,
instrument or document contemplated by this Agreement;
(c) any material misrepresentation contained in any certificate or schedule
furnished by the Parent or the Company pursuant to this Agreement;
(d) any claim of an employee of the Company or a former employee of the
Company for payment pursuant to any bonus, change in control, stay- pay,
severance payment, deferred compensation or similar arrangement for or with
respect to any period prior to the Closing Date, or for any severance or
obligations pursuant to a contractual arrangement in effect at or prior to the
Closing; or any claim of an employee or former employee of the Company arising
out of the termination of vesting of such employee's options under the Parent's
stock option plan;
(e) any failure of the Parent to provide the Buyer good, valid and
marketable title to the Shares or Parent Warrant free and clear of all liens,
charges, encumbrances, adverse claims, restrictions or other rights; and
(f) any claim by a stockholder or former stockholder of the Company, or any
other person or entity, seeking to assert, or based upon: (i) ownership or
rights to ownership of any shares of stock of the Company; (ii) any rights of a
stockholder of the Company, including any option, preemptive rights or rights
to notice or to vote; (iii) any rights under the Certificate of Incorporation
or By-laws of the Company; or (iv) any claim that his, her or its shares were
wrongfully repurchased by the Company.
8.2 By the Buyer. The Buyer hereby indemnifies and holds harmless the Parent
from and against all Losses in connection with each and all of the following:
(a) any misrepresentation or breach of any representation or
warranty made by the Buyer in this Agreement;
(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;
(c) any claim against the Parent based on the employee's
termination from the Company after the Closing Date;
(d) any material misrepresentation contained in any certificate
or schedule furnished by the Buyer pursuant to this Agreement; and
(e) any failure of the Buyer to provide the Parent with good,
valid and marketable title to the SatCon Shares and the SatCon Warrant
free and clear of all liens, charges, encumbrances, adverse claims or
other rights.
8.3 Indemnification Claims.
(a) A party entitled, or seeking to assert rights, to indemnification under
this Section 8 (an "Indemnified Party") shall give written notification to the
party from whom indemnification is sought (an "Indemnifying Party") of the
commencement of any suit or proceeding relating to a third party claim for
which indemnification pursuant to this Section 8 may be sought. Such
notification shall be given within 20 days after receipt by the Indemnified
Party of notice of such suit or proceeding, and shall describe in reasonable
detail (to the extent known by the Indemnified Party) the facts constituting
the basis for such suit or proceeding and the amount of the claimed damages;
provided, however, that no delay on the part of the Indemnified Party in
notifying the Indemnifying Party shall relieve the Indemnifying Party of any
liability or obligation hereunder except to the extent of any damage or
liability caused by or arising out of such failure. Within 20 days after
delivery of such notification, the Indemnifying Party may, upon written notice
thereof to the Indemnified Party, assume control of the defense of such suit or
proceeding with counsel reasonably satisfactory to the Indemnified Party;
provided that (i) the Indemnifying Party may only assume control of such
defense if it acknowledges in writing to the Indemnified Party that any
damages, fines, costs or other liabilities that may be assessed against the
Indemnified Party in connection with such suit or proceeding constitute Losses
for which the Indemnified Party shall be indemnified pursuant to this Section 8
and (ii) the Indemnifying Party may not assume control of the defense of a suit
or proceeding involving criminal liability or in which equitable relief is
sought against the Indemnified Party. If the Indemnifying Party does not so
assume control of such defense, the Indemnified Party shall control such
defense. The party not controlling such defense (the "Non-controlling Party")
may participate therein at its own expense; provided that if the Indemnifying
Party assumes control of such defense and the Indemnified Party reasonably
concludes that the Indemnifying Party and the Indemnified Party have
conflicting interests or different defenses available with respect to such suit
or proceeding, the reasonable fees and expenses of counsel to the Indemnified
Party shall be considered "Losses" for purposes of this Agreement. The party
controlling such defense (the "Controlling Party") shall keep the
Non-controlling Party advised of the status of such suit or proceeding and the
defense thereof and shall consider in good faith recommendations made by the
Non-controlling Party with respect thereto. The Non-controlling Party shall
furnish the Controlling Party with such information as it may have with respect
to such suit or proceeding (including copies of any summons, complaint or other
pleading which may have been served on such party and any written claim,
demand, invoice, billing or other document evidencing or asserting the same)
and shall otherwise cooperate with and assist the Controlling Party in the
defense of such suit or proceeding. The Indemnifying Party shall not agree to
any settlement of, or the entry of any judgment arising from, any such suit or
proceeding without the prior written consent of the Indemnified Party, which
shall not be unreasonably withheld or delayed. The Indemnified Party shall not
agree to any settlement of, or the entry of any judgment arising from, any such
suit or proceeding without the prior written consent of the Indemnifying Party,
which shall not be unreasonably withheld or delayed.
(b) In order to seek indemnification under this Section 8, an Indemnified
Party shall give written notification (a "Claim Notice") to the Indemnifying
Party which contains (i) a description and the amount (the "Claimed Amount") of
any Losses incurred or reasonably expected to be incurred by the Indemnified
Party, (ii) a statement that the Indemnified Party is entitled to
indemnification under this Section 8 for such Losses and a reasonable
explanation of the basis therefor, and (iii) a demand for payment (in the
manner provided in paragraph (c) below) in the amount of such Losses.
(c) Within 20 days after delivery of a Claim Notice, the Indemnifying Party
shall deliver to the Indemnified Party a written response (the "Response") in
which the Indemnifying Party shall: (i) agree that the Indemnified Party is
entitled to receive all of the Claimed Amount (in which case the Response shall
be accompanied by a payment by the Indemnifying Party to the Indemnified Party
of the Claimed Amount, by check or by wire transfer, (ii) agree that the
Indemnified Party is entitled to receive part, but not all, of the Claimed
Amount (the "Agreed Amount") (in which case the Response shall be accompanied
by a payment by the Indemnifying Party to the Indemnified Party of the Agreed
Amount, by check or by wire transfer, or (iii) dispute that the Indemnified
Party is entitled to receive any of the Claimed Amount. If the Indemnifying
Party in the Response disputes its liability for all or part of the Claimed
Amount, the Indemnifying Party and the Indemnified Party shall follow the
procedures set forth in Section 8.03(d) for the resolution of such dispute (a
"Dispute").
(d) During the 60-day period following the delivery of a Response that
reflects a Dispute, the Indemnifying Party and the Indemnified Party shall use
good faith efforts to resolve the Dispute. If the Dispute is not resolved
within such 60-day period, the Indemnifying Party and the Indemnified Party
shall discuss in good faith the submission of the Dispute to a mutually
acceptable alternative dispute resolution procedure (which may be non-binding
or binding upon the parties, as they agree in advance) (the "ADR Procedure").
In the event the Indemnifying Party and the Indemnified Party agree upon an ADR
Procedure, such parties shall, in consultation with the chosen dispute
resolution service (the "ADR Service"), promptly agree upon a format and
timetable for the ADR Procedure, agree upon the rules applicable to the ADR
Procedure, and promptly undertake the ADR Procedure. The provisions of this
Section 8.03(d) shall not obligate the Indemnifying Party and the Indemnified
Party to pursue an ADR Procedure or prevent either such party from pursuing the
Dispute in a court of competent jurisdiction; provided that, if the
Indemnifying Party and the Indemnified Party agree to pursue an ADR Procedure,
neither the Indemnifying Party nor the Indemnified Party may commence
litigation or seek other remedies with respect to the Dispute prior to the
completion of such ADR Procedure. Any ADR Procedure undertaken by the
Indemnifying Party and the Indemnified Party shall be considered a compromise
negotiation for purposes of federal and state rules of evidence, and all
statements, offers, opinions and disclosures (whether written or oral) made in
the course of the ADR Procedure by or on behalf of the Indemnifying Party, the
Indemnified Party or the ADR Service shall be treated as confidential and,
where appropriate, as privileged work product. Such statements, offers,
opinions and disclosures shall not be discoverable or admissible for any
purposes in any litigation or other proceeding relating to the Dispute
(provided that this sentence shall not be construed to exclude from discovery
or admission any matter that is otherwise discoverable or admissible). The fees
and expenses of any ADR Service used by the Indemnifying Party and the
Indemnified Party shall be shared equally by the
Indemnifying Party and the Indemnified Party.
(e) Notwithstanding the other provisions of this Section 8.03, if a third
party asserts (other than by means of a lawsuit) that an Indemnified Party is
liable to such third party for a monetary or other obligation which may
constitute or result in Losses for which such Indemnified Party may be entitled
to indemnification pursuant to this Section 8, and such Indemnified Party
reasonably determines that it has a valid business reason to fulfill such
obligation, then (i) such Indemnified Party shall be entitled to satisfy such
obligation, without prior notice to or consent from the Indemnifying Party,
(ii) such Indemnified Party may subsequently make a claim for indemnification
in accordance with the provisions of this Section 8, and (iii) such Indemnified
Party shall be reimbursed, in accordance with the provisions of this Section 8,
for any such Losses for which it is entitled to indemnification pursuant to
this Section 8 (subject to the right of the Indemnifying Party to dispute the
Indemnified Party's entitlement to indemnification, or the amount for which it
is entitled to indemnification, under the terms of this Section 8).
8.4 Survival of Representations and Warranties. All representations and
warranties contained in this Agreement, shall (a) survive the Closing and any
investigation at any time made by or on behalf of an Indemnified Party and (b)
shall expire on the date 18 months following the Closing Date, except that (i)
the representations and warranties set forth in Sections 2, 3.1, 3.2, 3.4, 4.1,
4.2, 4.3 and 4.4 shall survive the Closing without limitation, (ii) the
representations and warranties set forth in Sections 3.14, 3.19, 4.16 and 4.19
shall survive until 30 days following expiration of all statutes of limitation
applicable to the matters referred to therein and (iii) the representation and
warranties in Section 3.20 and 4.20 shall survive for two years after the
Closing Date. If an Indemnified Party delivers to an Indemnifying Party, before
expiration of a representation or warranty, either a Claim Notice based upon a
breach of such representation or warranty, or a notice that, as a result a
legal proceeding instituted by or written claim made by a third party, the
Indemnified Party reasonably expects to incur Losses as a result of a breach of
such representation or warranty (an "Expected Claim Notice"), then such
representation or warranty shall survive until, but only for purposes of, the
resolution of the matter covered by such notice. If the legal proceeding or
written claim with respect to which an Expected Claim Notice has been given is
definitively withdrawn or resolved in favor of the Indemnified Party, the
Indemnified Party shall promptly so notify the Indemnifying Party.
8.5 Limitations.
(a) Notwithstanding anything to the contrary herein, (i) the aggregate
liability of the Parent, on the one hand, and the Buyer, on the other hand, for
Losses under this Section 8 shall not exceed $7,000,000, and (ii) the Parent
and the Buyer shall be liable under this Section 8 for only that portion of the
aggregate Losses for which they or it would otherwise be liable which exceeds
$500,000; provided that the limitation set forth in clause (ii) above shall not
apply to a claim pursuant to Section 8.1 or 8.2 relating to a breach of the
representations and warranties set forth in Section 2, 3.1, 3.2, 3.4, 3.14,
3.19, 3.20, 4.1, 4.2, 4.3, 4.4 , 4.16, 4.19 and 4.20 to a breach of the
covenants set forth in Section 10. For purposes solely of this Section 8, all
representations and warranties of the Parent and the Company in Sections 2 and
3 (other than Section 3.31 and all representations and warranties of the Buyer
in Section 4 hereof (other than Section 4.9) shall be construed as if the term
"material"(and variations thereof) were omitted from such representations and
warranties. On and after the Closing, the Parent shall have no recourse to, and
no right of contribution from the Company or any Subsidiary, with respect to
any matter whatsoever, including a breach of any representation, warranty,
covenant or agreement set forth in this Agreement.
(b) Except with respect to claims based on fraud, after the Closing, the
rights of the Indemnified Parties under this Section 8 shall be the exclusive
remedy of the Indemnified Parties with respect to claims resulting from or
relating to any misrepresentation, breach of warranty or failure to perform any
covenant or agreement contained in this Agreement.
9. Tax Matters.
9.1 Preparation and Filing of Tax Returns.
(a) The Parent shall cause to be prepared and timely filed all Tax Returns
of the Company and the Subsidiaries required to be filed prior to the Closing
Date when such filings are due (taking into account extensions).
(b) The Buyer shall prepare and timely file or shall cause to be prepared
and timely filed all other Tax Returns with respect to the Company and the
Subsidiaries or in respect of their businesses, assets or operations.
9.2 Tax Indemnification by the Parent.
(a) In addition to any indemnification provided under Section 8, the Parent
shall indemnify the Buyer in respect of, and hold the Buyer harmless, on an
after-Tax basis, against (x) Losses resulting from, relating to, or
constituting a breach of any representation contained in Section 3.14 hereof,
(y) the failure to perform any covenant or agreement set forth in this Section
9, and (z), without duplication, the following Taxes with respect to the
Company and the Subsidiaries:
(1) Any and all Taxes due and payable by the Company or any Subsidiaries for
any taxable period that ends (or is deemed pursuant to Section 9.3(b) to end)
on or before the Closing Date;
(2) Any liability of such entities for Taxes of other entities as transferee or
successor or pursuant to any contractual obligation for any period that ends
(or is deemed pursuant to Section 9.3(b) to end) on or before the Closing Date;
and
(3) Any sales, use, transfer, stamp, conveyance, value added, recording,
registration, documentary, filing or other similar Taxes and fees, whether
levied on the Buyer, the Parent, the Company, a Subsidiary or any of their
respective Affiliates, on account of this Agreement or the transactions
contemplated hereby.
(b) The amounts specified in paragraphs (i), (ii), and (iii) shall be
reduced (but not below zero) by the amount of any accruals for Tax liabilities
on the Current Balance Sheet (exclusive of any accruals for "deferred taxes" or
similar items that reflect timing differences between Tax and financial
accounting principles) and the amounts of any estimated Tax payments made on or
before the Closing Date.
(c) Amounts payable pursuant to this Section 9.2 shall be computed after
taking into account all Tax consequences to the Buyer (or its Affiliates) of
(i) the receipt of (or the right to receive) the indemnification payment and
(ii) the incurrence of the liability that gave rise to the right to receive the
indemnification payment. Thus, it is the intention of the Parties that the
Buyer be held harmless with respect to the liability that gave rise to the
right to the indemnification payment on an after-Tax basis.
(d) All claims for indemnification pursuant to this Section 9 shall be made
in accordance with Section 8 hereof.
9.3 Allocation of Certain Taxes.
(a) The Buyer and the Parent agree that if the Company or any Subsidiary is
permitted but not required under applicable foreign, state or local Tax laws to
treat the Closing Date as the last day of a taxable period, the Buyer and the
Parent shall treat such day as the last day of a taxable period.
(b) Any Taxes for a taxable period beginning before the Closing Date and
ending after the Closing Date with respect to the Company and/or the
Subsidiaries shall be apportioned for purposes of Section 9.2 between the
portion of the period ending on the Closing Date and the portion of the period
commencing on the day immediately following the Closing Date based on the
actual operations of the Company and/or the Subsidiaries, as the case may be,
during such portions of the periods, and each such portion of such period shall
be deemed to be a taxable period (whether or not it is in fact a taxable
period).
9.4 Cooperation on Tax Matters.
(a) The Buyer and the Parent and their respective Affiliates shall
cooperate in the preparation of all Tax Returns for any Tax periods for which
one party could reasonably require the assistance of the other party in
obtaining any necessary information. Such cooperation shall include, but not be
limited to, furnishing prior years' Tax Returns or return preparation packages
illustrating previous reporting practices or containing historical information
relevant to the preparation of such Tax Returns, and furnishing such other
information within such party's possession requested by the party filing such
Tax Returns as is relevant to their preparation. Such cooperation and
information also shall include without limitation provision of powers of
attorney for the purpose of signing Tax Returns and defending audits, promptly
forwarding copies of appropriate notices and forms or other communications
received from or sent to any taxing authority which relate to the Company or
the Subsidiaries, and providing copies of all relevant Tax Returns, together
with accompanying schedules and related workpapers, documents relating to
rulings or other determinations by any taxing authority and records concerning
the ownership and tax basis of property, which the requested party may possess.
(b) If the Buyer or any of the Company and the Subsidiaries (as the case
may be) on the one hand, or the Parent on the other, fails to provide any
information requested by the other party within a reasonable period, or
otherwise fails to do any act required of it under this Section 9.5, then the
party failing to provide the information or do such act shall be obligated,
notwithstanding any other provision of this Agreement, to indemnify the party
requesting the information or act and shall so indemnify the requesting party
and hold such party harmless from and against any and all costs, claims or
damages, including, without limitation, all Taxes or deficiencies thereof,
payable as a result of such failure. Notwithstanding the foregoing, the party
that failed to deliver the information or do the act requested shall in no
event be obligated to make any payments pursuant to this Section 7.5(b) if such
party used all reasonable commercial efforts to provide the requested
information or perform the requested act.
9.5 Termination of Tax-Sharing Agreements. All Tax-sharing agreements or
similar arrangements with respect to or involving the Company and the
Subsidiaries shall be terminated prior to the Closing Date and, after the
Closing Date, the Company and the Subsidiaries shall not be bound thereby or
have any liability thereunder for amounts due in respect of periods ending on
or before the Closing Date.
9.6 Certain Tax Elections. The Parent shall not elect, cause to be elected, or
participate in any election pursuant to Treasury Regulation Section 1.1502-
76(b)(2) (or any comparable provisions of foreign or state law) to allocate
items of income and expense of the Company and the Subsidiaries between the
taxable year of the Parent ending on the Closing Date and its taxable year
commencing on the day after the Closing Date on a proportionate method based on
the number of days contained in each such taxable year. The Buyer shall not
elect, cause to be elected, or participate in any election pursuant to Section
338(h)(10) or 338(g) with respect to the transactions contemplated herein. The
Buyer shall cooperate with the Parent in reallocation of the Company and the
Subsidiary Net Operating Losses.
10. Post-Closing Agreements.
The Parent and the Buyer agree that from and after the Closing Date:
10.1 Proprietary Information.
(a) The Parent and each of its affiliates (as such term is defined in the
Securities Act of 1933, as amended, and the rules and regulations promulgated
thereunder) (individually, an "Affiliate" and collectively "Affiliates") shall
hold in confidence and shall use their best efforts to have all officers,
directors and personnel who continue after the Closing to be employed by the
Parent or any Affiliate thereof to hold in confidence all knowledge and
information of a secret or confidential nature with respect to the business of
the Company and the Subsidiaries and not to disclose, publish or make use of
the 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 Parent or pursuant to subpoena or court order.
(b) If (i) the employment of an officer, director or other employee of the
Parent or any Affiliate thereof, to whom secret or confidential knowledge or
information concerning the business of the Company or the Subsidiaries has been
disclosed, is terminated and (ii) such individual is subject to an obligation
to maintain such knowledge or information in confidence after such termination,
the Parent shall, upon request by the Buyer, take all reasonable steps at their
expense to enforce such confidentiality obligation in the event of an actual or
threatened breach thereof.
(c) Parent agrees 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 and except that the Parent
may employ ▇▇▇▇▇ ▇▇▇▇▇▇▇ on a part time basis until September 30, 2003,
provided that such employment date not interfere with ▇▇. ▇▇▇▇▇▇▇ obligation to
the Buyer, neither Parent nor any Affiliate thereof (including the Parent)
shall (a) solicit any person who was an employee of the Parent or any of the
Subsidiaries on the date hereof or the Closing Date to terminate his employment
with the Buyer (or the Company or any of the Subsidiaries, as the case may be)
or to become an employee of the Parent or Affiliate, or (b) 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 five years after the Closing Date, neither Parent nor
any Subsidiary thereof shall: (i) develop, manufacture, market or sell any
product which competes with any existing or proposed product manufactured by
either the Company or any of the Subsidiaries on or prior to the Closing Date,
or (ii) engage in any business competitive with the business of the Company or
any of the Subsidiaries as conducted on the date hereof or on the Closing Date,
in the United States or any other country in which the Company or any of the
Subsidiaries 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 of competent jurisdiction 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 Parent agrees 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.
10.4 Board Representation.
(a) The Buyer agrees to nominate and recommend to its shareholders the
election to the Buyer's Board of Directors two person designated by the Parent
and acceptable to the Buyer's Board of Directors acting reasonably (it being
agreed that in acting reasonably the Buyer's Board of Directors may consider
the desirability of having two members of the Buyer's Board of Directors
affiliated with the Parent). The Buyer's obligations under this Section 10.4(a)
shall terminate if the Parent does not own five percent (5%) or more of the
Buyer's outstanding Common Stock on or before July 31, 2000 or ceases to own
five percent (5%) or more of the Buyer's outstanding Common Stock thereafter.
The initial nominee to the Buyer's Board of Directors will be ▇▇▇▇ ▇▇▇▇▇▇▇▇.
(b) The Parent agrees to nominate and recommend to its shareholders the
election to the Parent's Board of Directors one person designated by the Buyer.
The initial nominee will be ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇. The Parent's obligations under
this Section 10.4 shall terminate if the Purchaser ceases to own five percent
(5%) or more of the Buyer's outstanding Common Stock or the Buyer's obligations
under Section 3.10(a) ceases, whichever occurs first.
(c) Both parties will endeavor to have the representatives set forth above
elected or appointed to their boards as soon as possible, but in no event later
than December 1, 1999. The Parent shall have no obligation to appoint or elect
the Buyer's nominee to its Board of Directors until the Buyer has appointed or
elected the Parent's nominees to the Buyer's Board of Directors.
10.5 Benefit Transition.
Parent and Buyer shall cooperate to take whatever steps are necessary to
effect, as promptly as practicable after the Closing Date, to the extent
elected by participants, the distribution and direct rollover to Buyer's 401(k)
Plan of the accrued benefit as of the Closing Date of the Company's employees
under the 401(k) Plan. With respect to such rollover: (i) Buyer shall provide
to Parent written assurances that Buyer's 401(k) is an "eligible retirement
plan" and (ii) Parent shall provide to Buyer written assurances that Parent's
401(k) Plan are or are part of an "eligible retirement plan." For purposes of
this Section 10.5, the term "eligible retirement plan." For purpose of this
Section 10.5, the term "eligible retirement plan" shall have the meaning set
forth in Sections 401(a)(31)(D) and 402(c)(8)(B) of the Code.
10.6 Co-operation in Financial and Other Reparation.
Each of Parent and Buyer agrees to fully cooperate with each other in (i) the
preparation and audit by the Buyer and its independent public accountants of
financial statements of the Company for such periods as are necessary for the
Buyer to comply with its reporting obligations under the Exchange Act and the
rules and regulations thereunder, (ii) the preparation and audit Parent and its
independent public accountants of the financial statements of the Parent and
its consolidated subsidiaries for the fiscal year ended September 30, 1999,
(iii) preparation of Tax Returns and in connection with other audits, including
but not limited to sales tax, workers compensation and (iv) the preparation by
the Buyer of a balance sheet as of the Closing Date and a statement of income
for the period then ended. Each of Parent and Buyer agrees to take such other
steps as the other party shall reasonably request (at the expense of the
requesting party) in order to permit compliance by a party hereto with its
reporting obligations under the Exchange Act.
11. 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 Buyer:
SatCon Technology Corporation
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: President and
Chief Financial Officer
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇ and ▇▇▇▇ LLP
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. Carp, Esq.
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
To the Parent or the Company:
Mechanical Technology Incorporated
▇▇▇ ▇▇▇▇▇▇-▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Chief
Financial Officer
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇ PLLC
4 Global View
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Unless otherwise specified herein, such notices or other communications shall
be deemed received (a) on the date delivered, if delivered personally, (b)
three business days after being sent, if sent by registered or certified mail
or (c) the day after the day such notice is sent by fax or a reputable
overnight courier.
12. 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, on
the one hand, and the Parent, the Company and the Subsidiaries, on the other
hand, 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 of the Buyer. Any assignment in contravention of this
provision shall be void. No assignment shall release the Buyer, the Parent, the
Company or the Subsidiaries from any obligation or liability under this
Agreement.
13. 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.
(b) If the provisions of any Schedule or Exhibit to this Agreement are
inconsistent with the provisions of this Agreement, the provisions of the
Agreement shall prevail. The Exhibits and Schedules attached hereto or to be
attached hereafter are hereby incorporated as integral parts of this Agreement.
14. Severability.
Any provision of this Agreement which is invalid, illegal or unenforceable in
any jurisdiction shall, as to that jurisdiction, be ineffective to the extent
of such invalidity, illegality or unenforceability, without affecting in any
way the remaining provisions hereof in such jurisdiction or rendering that or
any other provision of this Agreement invalid, illegal or unenforceable in any
other jurisdiction.
15. Investigation of the Parties.
All representations and warranties contained herein which are made to the best
knowledge of a party shall require that such party make reasonable
investigation and inquiry with respect thereto to ascertain the correctness and
validity thereof.
16. Expenses.
Except as otherwise expressly provided herein, the Buyer, on the one hand, and
the Purchaser, on the other hand, will pay all of their own fees and expenses
(including, without limitation, legal and accounting fees and expenses)
incurred by them in connection with the transactions contemplated hereby. The
fees and expenses of the Company and the Subsidiaries in connection with the
transactions contemplated hereby shall be borne solely by the Parent and not by
the Company or any Subsidiary. The Parent shall be responsible for the payment
of all sales or transfer taxes arising out of the conveyance of the Shares
owned by such Stockholder.
17. Submission to Jurisdiction.
The Parent, Company and Buyer each irrevocably consent and commit themselves to
the jurisdiction of all of the federal and state courts situated in the
Commonwealth of Massachusetts and the United States District Court for the
District of Boston for any and all matters and/or disputes arising out of this
Agreement or the transactions contemplated hereby.
18. Governing Law.
This Agreement shall be governed by and construed in accordance with the laws
of the Commonwealth of Massachusetts.
19. 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.
20. 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.
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties
hereto as of and on the date first above written.
SATCON TECHNOLOGY CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Title: President
MECHANICAL TECHNOLOGY
INCORPORATED
By:/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President and CFO
LING ELECTRONICS, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Secretary/Treasurer
LING ELECTRONICS, LTD.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Member/Board of Directors