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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of report (Date of earliest event reported): January 4, 1999
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SATCON TECHNOLOGY CORPORATION
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(Exact Name of Registrant as Specified in Charter)
Delaware 001-11512 04-2857552
- ---------------------- ----------- ------------------
(State or Other (Commission (IRS Employer
Jurisdiction of File Number) Identification No.)
Incorporation)
161 First Street, Cambridge, Massachusetts 02142
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (617) 661-0540
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Not Applicable
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(Former Name or Former Address, if Changed Since Last Report)
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Item 5. Other Events
On January 4, 1999, K&D MagMotor Corp. ("K&D"), a wholly-owned subsidiary
of SatCon Technology Corporation (the "Company"), acquired substantially all of
the assets and assumed certain of the liabilities of Inductive Components, Inc.
("Inductive") and Lighthouse Software, Inc. ("Lighthouse," and together with
Inductive, the "Sellers") pursuant to the terms of an Asset Purchase Agreement
(the "Asset Purchase Agreement"), dated as of January 4, 1999, among K&D, the
Company, Inductive, Lighthouse and Thomas Glynn, the sole stockholder of
Inductive and the majority stockholder of Lighthouse (the "Stockholder"). The
aggregate consideration paid by the Company for the acquired assets of the
Sellers consisted of (i) 100,000 shares (the "Shares") of the Company's common
stock, $.01 par value per share; and (ii) the repayment of $250,000 of debt owed
by the Sellers to a third-party bank. The Company does not intend to register
the Shares under the Securities Act of 1933, as amended (the "Securities Act").
The terms of the Agreement were determined on the basis of arms-length
negotiations. Prior to the execution of the Asset Purchase Agreement, neither
the Company nor K&D had any material relationship with Inductive, Lighthouse or
the Stockholder.
Inductive is a value-added supplier of systems in the machine tool and
semi-conductor industry and will be consolidated into the Company's MagMotor
division in Worcester, Massachusetts. Lighthouse designs and develops software
for the industrial machine tool industry and will be consolidated into the
Company's Technology Center in Cambridge, Massachusetts. The Company currently
intends to continue to use the acquired assets constituting plant, equipment or
other physical property substantially in the same manner in which they were used
by the Sellers immediately prior to the acquisition.
This report may contain forward-looking statements within the meaning of
Section 27A of the Securities Act and Section 21E of the Securities Exchange Act
of 1934, as amended, which reflect the Company's current judgment on certain
issues. Because such statements apply to future events, they are subject to
risks and uncertainties that could cause the actual results to differ
materially. Important factors which could cause actual results to differ
materially are described in the Company's reports on Forms 10-K and 10-Q on file
with the Securities and Exchange Commission.
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Item 7. Financial Statements and Exhibits
(a) Financial statements.
None.
(b) Pro forma financial information.
None.
(c) Exhibits.
The Exhibit to this report is listed in the Index to Exhibits set
forth on page 4 hereof.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
SATCON TECHNOLOGY CORPORATION
Date: January 11, 1999 By: /s/ David B. Eisenhaure
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David B. Eisenhaure
President, Chief Executive Officer and
Chairman of the Board of Directors
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INDEX TO EXHIBITS
EXHIBIT
NUMBER EXHIBIT
- ------- -------
10.20 Asset Purchase Agreement, dated as of January 4, 1999, among K&D
MagMotor Corp., the Registrant, Inductive Components, Inc., Lighthouse
Software, Inc. and Thomas Glynn.
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Exhibit 10.20
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ASSET PURCHASE AGREEMENT
by and among
K & D MAGMOTOR CORP.
SATCON TECHNOLOGY CORPORATION
LIGHTHOUSE SOFTWARE, INC.
INDUCTIVE COMPONENTS, INC.
and
THOMAS GLYNN
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TABLE OF CONTENTS
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Section Page
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1. Sale and Delivery of the Assets.......................... 1
1.1 Delivery of the Assets........................... 1
1.2 Further Assurances............................... 3
1.3 Purchase Price................................... 3
1.4 Assumption of Liabilities; Etc. ................. 4
1.5 Income Tax Treatment of Transaction.............. 5
1.6 The Closing...................................... 5
2. Representations of the Sellers and the Stockholder....... 6
2.1 Organization..................................... 6
2.2 Capitalization of the Seller..................... 6
2.3 Authorization.................................... 6
2.4 Ownership of the Assets.......................... 7
2.5 Financial Statements............................. 7
2.6 Absence of Undisclosed Liabilities............... 8
2.7 Litigation....................................... 8
2.8 Insurance........................................ 9
2.9 Inventory........................................ 9
2.10 Fixed Assets..................................... 9
2.11 Change in Financial Condition and Assets......... 10
2.12 Tax Matters...................................... 10
2.13 Books and Records................................ 12
2.14 Contracts and Commitments........................ 12
2.15 Compliance with Agreements and Laws.............. 14
2.16 Employee Relations............................... 14
2.17 Absence of Certain Changes or Events............. 15
2.18 Customers........................................ 16
2.19 Suppliers........................................ 17
2.20 Intellectual Property............................ 17
2.21 Employee Benefit Plans........................... 18
2.22 Acquired Assets Complete......................... 20
2.23 Regulatory Approvals............................. 20
2.24 Indebtedness to and from Officers, Directors
and Shareholders................................. 20
2.25 Powers of Attorney and Suretyships............... 20
2.26 Disclosure....................................... 20
2.27 Securities Representations....................... 20
3. Representations of the Buyer and the Parent............... 22
3.1 Organization and Authority....................... 22
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Section Page
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3.2 Authorization...................................... 22
3.3 Regulatory Approvals............................... 23
3.4 The Shares......................................... 23
3.5 Disclosure......................................... 23
4. Access to Information; Public Announcements............... 23
4.1 Access to Management, Properties and Records....... 23
4.2 Confidentiality.................................... 23
4.3 Public Announcements............................... 24
5. Pre-Closing Covenants of the Seller and Stockholder....... 24
5.1 Conduct of Business................................ 24
5.2 Absence of Material Changes........................ 24
5.3 Taxes.............................................. 26
5.4 Communication with Customers and Suppliers........ 26
5.5 Compliance with Laws............................... 26
5.6 Continued Truth of Representations and
Warranties of the Seller and Stockholder........... 27
5.7 Continuing Obligation to Inform.................... 27
5.8 Exclusive Dealing.................................. 27
5.9 Outstanding Indebtedness........................... 27
6. Best Efforts to Obtain Satisfaction of Conditions......... 27
7. Conditions to Obligations of the Buyer and the Parent..... 27
7.1 Continued Truth of Representations and
Warranties of the Sellers and the Stockholder;
Compliance with Covenants and Obligations.......... 28
7.2 Corporate Proceedings.............................. 28
7.3 Governmental Approvals............................. 28
7.4 Consents of Lenders, Lessors and
Other Third Parties................................ 28
7.5 Adverse Proceedings................................ 28
7.6 Board of Directors and Stockholder................. 28
Approval...........................................
7.7 Due Diligence...................................... 28
7.8 The Acquired Assets................................ 29
7.9 Update............................................. 29
7.10 Bank Consent....................................... 29
7.11 Employment Contracts............................... 29
7.12 Assignment of Insurance Policies................... 29
7.13 Tax Lien Waivers................................... 29
7.14 Material Adverse Change............................ 29
7.15 Closing Deliveries................................. 30
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Section Page
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8. Conditions to Obligations of the Sellers and
the Stockholder........................................... 31
8.1 Continued Truth of Representations and
Warranties of the Buyer and the Parent;
Compliance with Covenants and Obligations.......... 31
8.2 Corporate Proceedings.............................. 31
8.3 Governmental Approvals............................. 31
8.4 Adverse Proceedings................................ 31
8.5 Closing Deliveries................................. 31
9. Indemnification........................................... 32
9.1 By the Buyer and Parent............................ 32
9.2 By the Sellers and the Stockholder................. 32
9.3 Claims for Indemnification......................... 34
9.4 Defense by Indemnifying Party...................... 34
9.5 Payment of Indemnification Obligation.............. 34
9.6 Survival of Representations; Claims for
Indemnification.................................... 35
10. Post-Closing Agreements................................... 35
10.1 Proprietary Information............................ 35
10.2 Non-Competition Agreement.......................... 35
10.3 Sharing of Data.................................... 36
10.4 Use of Name........................................ 36
10.5 Cooperation in Litigation.......................... 37
10.6 Product Claims and Returns......................... 37
10.7 Cooperation with Reporting Requirements............ 37
10.8 Collection of Accounts Receivable.................. 37
10.9 Continuation of Representation by
Servo Components & Systems, Inc. .................. 38
11. Termination of Agreement.................................. 38
11.1 Termination by Lapse of Time....................... 38
11.2 Termination by Agreement of the Parties............ 38
11.3 Termination by Reason of Breach.................... 38
12. Transfer and Sales Tax.................................... 39
13. Brokers................................................... 39
13.1 For the Sellers.................................... 39
13.2 For the Buyer...................................... 39
14. Notices................................................... 39
15. Successors and Assigns.................................... 40
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Section Page
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16. Entire Agreement; Amendments; Attachments................. 41
17. Expenses.................................................. 41
18. Legal Fees................................................ 41
19. Governing Law............................................. 41
20. Section Headings.......................................... 41
21. Severability.............................................. 42
22. Counterparts.............................................. 42
Schedules to be provided by the Seller
1.4 - Assumed Liabilities
2.2 - Capitalization
2.3 - Third Party Consents
2.4 - Encumbrances
2.6 - Undisclosed Liabilities
2.8 - Insurance
2.9 - Inventory
2.10 - Fixed Assets
2.11 - Changes in Financial Condition
2.12 - Tax Matters
2.13 - Accounts Receivable
2.15 - Contracts
2.16 - Permits
2.17 - Employee Relations
2.18 - Certain Changes or Events
2.19 - Customer List
2.20 - Suppliers
2.21 - Bank Accounts
2.22 - Prepayments and Deposits
2.23 - Intellectual Property
2.24 - Employee Plans
2.26 - Regulatory Approvals
2.27 - Affiliated Indebtedness
2.28 - Powers of Attorney and Suretyships
Schedules to be provided by the Buyer
3.2 - Third Party Consents
Exhibits
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A - Instrument of Assumption
B - Employment Contract
C - Bill of Sale
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ASSET PURCHASE AGREEMENT
------------------------
Agreement made as of the 4th day of January, 1999, among K & D MagMotor
Corp., a Delaware corporation (the "Buyer") and a wholly owned subsidiary of
SatCon Technology Corporation, a Delaware Corporation (the "Parent"), the
Parent, Inductive Components, Inc., a New Hampshire corporation ("Inductive"),
Lighthouse Software, Inc., a Maine corporation ("Lighthouse" and together with
Inductive, the "Sellers") and Thomas Glynn, the sole stockholder of Inductive
and the majority Stockholder of Lighthouse (the "Stockholder").
Preliminary Statement
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The Buyer desires to purchase, and the Sellers desires to sell,
substantially all of their respective assets and business of the Sellers (the
"Business"), for the consideration set forth below and the assumption of certain
of the Sellers' liabilities set forth below, subject to the terms and conditions
of this Agreement.
NOW, THEREFORE, in consideration of the mutual promises hereinafter set
forth and other good and valuable consideration, the receipt of which is hereby
acknowledged, the parties hereby agree as follows:
1. Sale and Delivery of the Assets
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1.1 Delivery of the Assets.
----------------------
(a) Subject to and upon the terms and conditions of this
Agreement, at the closing of the transactions contemplated by this Agreement
(the "Closing"), each Seller shall sell, transfer, convey, assign and deliver to
the Buyer, and the Buyer shall purchase from each Seller, the following
properties, assets and other claims, rights and interests existing as of the
Closing (collectively, the "Acquired Assets"):
(i) all inventories of raw materials, work in process,
finished goods, office supplies, maintenance supplies, packaging materials,
spare parts and similar items of each Seller (collectively, the "Inventory");
(ii) all rights of each Seller under the contracts,
agreements, leases, licenses and other instruments set forth on Schedule 1.1
------------
attached hereto (collectively, the "Contract Rights");
(iii) all books, records and accounts, correspondence,
production records, technical, accounting, manufacturing and procedural manuals,
customer lists, employment records, studies, reports or summaries relating to
any environmental conditions or consequences of any operation, present or
former, as well as all studies, reports or summaries relating to any
environmental aspect or the
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general condition of the Acquired Assets, and any confidential information which
has been reduced to writing relating to or arising out of the Business;
(iv) all rights of each Seller under express or implied
warranties from the suppliers of such Seller;
(v) the motor vehicles and other rolling stock owned by each
Seller to the extent used in the Business;
(vi) except for the furniture, fixtures and equipment listed
on Schedule 1.1(b)(vi) thereto, all of the machinery, equipment, tools,
-------------------
production reels and spools, tooling, dies, production fixtures and maintenance
machinery and equipment owned by each Seller whether or not reflected as capital
assets in the accounting records of such Seller (collectively, the "Fixed
Assets");
(vii) all of each Seller's right, title and interest in and
to all intangible property rights, including but not limited to inventions,
discoveries, trade secrets, processes, formulas, know-how, United States and
foreign patents, patent applications, trade names, including the names
"Inductive Components," "Lighthouse Software" or any derivation thereof,
trademarks, trademark registrations, applications for trademark registrations,
copyrights, copyright registrations, owned or, where not owned, used by a Seller
in its business and all licenses and other agreements to which a Seller is a
party (as licensor or licensee) or by which a Seller is bound relating to any of
the foregoing kinds of property or rights to any "know-how" or disclosure or use
of ideas (collectively, the "Intangible Property"); and
(viii) except as specifically provided in Subsection 1.1(b)
hereof, all other assets, properties, claims, rights and interests of each
Seller which exist on the Closing Date, of every kind and nature and
description, whether tangible or intangible, real, personal or mixed.
(b) Notwithstanding the provisions of paragraph (a) above, the
Acquired Assets shall not include the following assets (the "Excluded Assets"):
(i) all real property of a Seller, together with all
buildings, fixtures and improvements located on or attached thereto, including
each Seller's right, title and interest in and to all leases, subleases,
franchises, licenses, permits, easements and rights-of-way which are appurtenant
to said real property (collectively, the "Real Property");
(ii) all accounts, accounts receivable, notes and notes
receivable existing on the Closing Date which are payable to a Seller including
but not limited to that certain accounts receivable dated December __, 1998 from
MTI Corporation to Lighthouse in the amount of $118,800, payment of which is
scheduled
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as follows (it being represented and warranted by Sellers and Stockholder that
Sellers have performed prior to the Closing Date all obligations to earn such
amounts):
$39,960 - January 1999
$14,600 - February 19999
$14,960 - March 1999
$14,960 - April 1999
$34,320 - June 1999
(iii) all prepaid expenses, deposits, bank accounts and
other similar assets of each Seller existing on the Closing Date, including the
cash represented by such assets;
(iv) the corporate charter, qualifications to conduct
business as a foreign corporation, arrangements with registered agents relating
to foreign qualifications, taxpayer and other identification numbers, seals,
minute books, stock transfer books and other documents relating to the
organization and existence of a Seller as a corporation;
(v) the furniture, fixtures and equipment owned by Servo
Components & Systems, Inc. at 53 Stiles Road, Salem, New Hampshire, and listed
on Schedule 1.1(b)(viii) attached hereto; and
---------------------
(vi) any of the rights of the Sellers under this Agreement
or the agreements and instruments delivered by or to the Sellers pursuant to
this Agreement.
1.2 Further Assurances. At any time and from time to time after the
------------------
Closing, at the Buyer's request and without further consideration, each Seller
and the Stockholder promptly shall each execute and deliver such instruments of
sale, transfer, conveyance, assignment and confirmation, and take such other
action as the Buyer may reasonably request to more effectively transfer, convey
and assign to the Buyer, and to confirm the Buyer's rights to, title in and
ownership, all of the Acquired Assets, to put the Buyer in actual possession and
operating control thereof, to assist the Buyer in exercising all rights with
respect thereto and to carry out the purpose and intent of this Agreement.
1.3 Purchase Price.
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(a) The aggregate purchase price for the Acquired Assets shall be
the repayment by the Buyer of $250,000 of debt owed by Sellers to Citizens Bank,
New Hampshire and 100,000 shares (the "Shares") of common stock, par value $0.01
per share (the "Common Stock") of the Parent (the "Purchase Price"), of which
30,000
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shares shall be issued with respect to Lighthouse and 70,000 shares shall
be issued with respect to Inductive. The Purchase Price shall be payable in the
manner described in paragraph (b) of this Subsection 1.3.
(b) The Sellers and the Stockholder agree that the Shares issued
pursuant to this Agreement shall be distributed by the Sellers to their
stockholders immediately upon the Closing and that no Shares shall be
distributed to any other person or sold, transferred, pledged or otherwise
disposed of or encumbered by a Seller. Pursuant to the foregoing, (i)
Lighthouse directs the Buyer and Parent to have 10,000 of the Shares issuable to
it registered in the name of Robert P. Caron, (ii) Lighthouse directs that
20,000 of the Shares issuable to it be registered in the name of Thomas J. Glynn
and (iii) Inductive directs the Buyer to have the 70,000 Shares issuable to
Inductive registered in the name of Thomas J. Glynn.
1.4 Assumption of Liabilities; Etc.
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(a) At the Closing, the Buyer shall execute and deliver an Instrument
of Assumption of Liabilities (the "Instrument of Assumption") substantially in
the form attached hereto as Exhibit A, pursuant to which it shall assume and
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agree to perform, pay and discharge all obligations of the Sellers arising after
the Closing under the contracts set forth on Schedule 1.4 attached hereto which
------------
become due and payable after the Closing Date (the "Assumed Liabilities").
(b) The Buyer shall not at the Closing assume or agree to perform, pay
or discharge, and each Seller shall remain unconditionally liable for, all
obligations, liabilities and commitments, fixed or contingent, of such Seller
other than the Assumed Liabilities (collectively, the "Retained Liabilities").
The Retained Liabilities shall include, without limitation, the following:
(i) all account and trade payables of the Sellers and all other
liabilities arising out of this contract of the Business prior to the Closing
Date.
(ii) all liabilities of each Seller for income, transfer,
sales, use or other Taxes (as defined in Section 2.12) which are incurred as a
direct result of the consummation of the transactions contemplated by this
Agreement (including without limitation any income Taxes arising as a result of
the transfer by such Seller to the Buyer of the Acquired Assets) or out of the
conduct of the Business prior to the Closing Date;
(iii) all liabilities of each Seller for costs and expenses
incurred in connection with this Agreement or the consummation of the
transactions contemplated by this Agreement;
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(iv) all obligations of each Seller under any agreements,
contracts, leases or licenses which are not Assigned Contracts, and all
liabilities of any breach, act or omission by a Seller prior to the Closing
giving rise to a third party claim or defense under any Assigned Contract;
(v) any liability of each Seller under any loan, bank
borrowing or other form of indebtedness;
(vi) all liabilities or obligations resulting from the
termination of employment of any employee of a Seller at or prior to, or in
connection with, the Closing that arose under any Law or Regulation (as defined
in Subsection 2.3) or under any employee benefit plan established or maintained
by a Seller;
(vii) any warranty claims or product liability claims
relating to services rendered by a Seller prior to the Closing Date and any
warranty claims or product liability claims relating to, or returns of, products
of a Seller which (a) were sold and shipped by a Seller prior to the Closing
Date, (b) were in the finished goods inventory of a Seller as of the Closing
Date, or (c) were work in process and more than fifty percent (50%) completed by
the Closing Date; provided, however, if Stockholder contests in good faith any
warranty claim prior the payment thereof, the warranty claim shall be subject to
the provisions of Section 10.6 hereof.
(vi) all liabilities and obligations of any nature whatsoever of a
Seller to any stockholder or Affiliate;
(ix) all liabilities and obligations of either Seller arising out of
an event, conduct, or condition existing or occurring on or prior to the Closing
Date that constitute or allegedly constitute an infringement in violation of, or
constitute or allegedly constitute a misappropriation of, any Intellectual
Property rights or any other person or entity;
(x) all obligations of either Seller under the lease for the premises
located at 53 Stiles Road, Salem, New Hampshire; and
(xi) all liabilities or obligations of either Seller under any
employee benefit plans or policies.
1.5 Income Tax Treatment of Transaction. It is intended that the
-----------------------------------
sale of assets contemplated by this Agreement shall constitute a reorganization
within the meaning of Section 368(a)(1)(C) of the Internal Revenue Code of 1986,
as amended (the "Code").
1.6 The Closing. The Closing shall take place at the offices of the
-----------
Buyer, 161 First Street, Cambridge, Massachusetts at 4:00 p.m., Boston time, on
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December 29, 1998 or at such other place, time or date as may be mutually agreed
upon in writing by the parties hereto. The transfer of the Acquired Assets by
the Sellers to the Buyer shall be deemed to occur at 9:00 a.m., Boston time, on
the date of the Closing (the "Closing Date").
2. Representations of the Sellers and the Stockholder
--------------------------------------------------
Each Seller and the Stockholder jointly and severally represent and warrant
on the date hereof and on the Closing Date to the Buyer that:
2.1 Organization. Each Seller is a corporation duly organized,
------------
validly existing and in good standing under the laws of the state of its
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 Seller is
duly qualified to do business and is in good standing in all jurisdictions in
which its ownership of property or the character of its business requires such
qualification. Certified copies of the Certificate of Incorporation and Bylaws
of each Seller, each as amended to date, have been previously delivered to the
Buyer, are complete and correct, and no amendments have been made thereto or
have been authorized since the date thereof. Each Seller does not own any
capital stock of or other equity interest in any corporation, partnership or
other entity.
2.2 Capitalization of the Seller. Each Seller's authorized and
----------------------------
outstanding capital stock is set forth in Schedule 2.2. All outstanding shares
------------
of capital stock of each Seller are held of record and beneficially by the
Stockholder. All of such shares have been duly and validly issued and are fully
paid and nonassessable.
2.3 Authorization.
-------------
(a) The execution and delivery of this Agreement by each Seller, and
the agreements provided for herein, and the consummation by each Seller of all
transactions contemplated hereby and thereby, have been duly authorized by all
requisite corporate and shareholder action. This Agreement and all such other
agreements and obligations entered into and undertaken in connection with the
transactions contemplated hereby to which a Seller is a party constitute the
valid and legally binding obligations of such Seller, enforceable against such
Seller in accordance with their respective terms. The execution, delivery and
performance by each Seller of this Agreement and the agreements provided for
herein, and the consummation by the Buyer of the transactions contemplated
hereby and thereby, will not, with or without the giving of notice or the
passage of time or both, (a)
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violate in any material respect the provisions of any federal, state, local or
foreign law, rule or regulation, ordinance, permit or order (collectively, "Laws
and Regulations") applicable to the Sellers or the Stockholder; (b) violate the
provisions of the Certificate of Incorporation or Bylaws of a Seller; (c)
violate any judgment, order, writ, prohibition, injunction, decree or award of
any federal, state, county, municipal, foreign or local court, arbitrational
tribunal, administrative agency, department, bureau or commission or other
governmental or regulatory body, authority or agency (a "Governmental Entity")
applicable to a Seller or the Stockholder; (d) require on the part of any Seller
any filing with, or any permits, authorization, consent or approval of, any
Governmental Entity; or (e) 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 Security Interest (as defined
below) upon the properties or assets of either Seller pursuant to, any
indenture, mortgage, deed of trust or other instrument or agreement to which a
Seller is a party or by which the Seller or any of its properties is or may be
bound. Schedule 2.3 attached hereto sets forth a true, correct and complete list
------------
of all consents and approvals of third parties that are required in connection
with the consummation by either Seller of the transactions contemplated by this
Agreement.
(b) For purposes of this Agreement, the term "Security Interest" means
any mortgage, pledge, security interest, encumbrance, charge or other lien
(whether arising by contract or by operation of law).
2.4 Ownership of the Assets. Except as set forth on Schedule 2.4,
----------------------- ------------
each Seller is the true and lawful owner of the Acquired Assets to be sold by it
pursuant to this Agreement. At Closing, the Sellers will be the true and lawful
owners of the Acquired Assets and will have the right to sell and transfer to
the Buyer good, clear, record and marketable title to the Acquired Assets, free
and clear of all Security Interests, liabilities and equities of any kind. The
delivery to the Buyer of the instruments of transfer of ownership contemplated
by this Agreement will vest good and marketable title to the Acquired Assets in
the Buyer, free and clear of all Security Interests, liabilities, restrictions,
prior assignments, encumbrances and claims of any kind or nature whatsoever.
2.5 Financial Statements.
--------------------
(a) Inductive has previously delivered to the Buyer the balance sheets
of Inductive as of September 30, 1996 and 1997 (the "Inductive Balance Sheets")
and the related statements of operations and retained earnings, statements of
cash flows and schedule of selling, general and administrative expenses of
Inductive for the fiscal years then ended (collectively, including the Inductive
Balance Sheets, the "Inductive Financial Statements"). The Inductive Financial
Statements have been compiled by Feeley & Discoll, P.C., in accordance with the
Statement on Standards for Accounting and Review Services issued by the
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American Institute of Certified Pubic Accountants and except for the absence of
footnotes have been prepared in accordance with generally accepted accounting
principles applied consistently with past practice.
(b) Lighthouse has previously delivered to the Buyer the balance
sheets of Lighthouse as of December 31, 1996 and 1997 (the "Inductive Balance
Sheet") and the related statements of operations and retained earnings,
statements of cash flows and schedule of selling, general and administrative
expenses of Lighthouse for the fiscal periods then ended (collectively,
including the Lighthouse Balance Sheets, the "Lighthouse Financial Statements").
The Lighthouse Financial Statements have been compiled by Feeley & Discoll,
P.C., in accordance with the Statement on Standards for Accounting and Review
Services issued by the American Institute of Certified Pubic Accountants and
except for the absence of footnotes have been prepared in accordance with
generally accepted accounting principles applied consistently with past
practice.
(c) The Inductive Financial Statements and Lighthouse Financial
Statements each fairly present, as of their respective dates, the financial
condition, retained earnings, assets and liabilities of the Inductive and
Lighthouse and the results of operations of the Business for the periods
indicated; with respect to the contracts and commitments for the sale of goods
or the provision of services by either Seller, the Lighthouse and Inductive
Financial Statements contain and reflect adequate reserves, which are consistent
with previous reserves taken, for all reasonably anticipated material losses and
costs and expenses.
2.6 Absence of Undisclosed Liabilities. Except as and to the extent
----------------------------------
(a) reflected and reserved against in the most recent Inductive Balance Sheets
or the Lighthouse Balance Sheets, (b) set forth on Schedule 2.6 attached hereto
------------
or (c) incurred in the ordinary course of business after the date of the most
recent Inductive Balance Sheet or Lighthouse Balance Sheets, as the case may be,
and not material in amount, either individually or in the aggregate, neither
Seller has any liability or obligation, secured or unsecured, whether accrued,
absolute, contingent, unasserted or otherwise, affecting the Acquired Assets.
For purposes of this Subsection 2.6, "material" means any amount in excess of
$10,000.
2.7 Litigation. Neither of the Sellers nor the Stockholder is a
----------
party to, or to the Sellers' or Stockholder's best knowledge threatened with or
has received notice of, and none of the Acquired Assets are subject to, any
litigation, suit, action, investigation, proceeding or controversy before any
Governmental Entity relating to or affecting the Acquired Assets or the Business
or condition (financial or otherwise) of either Seller. Neither Seller is in
violation of or in default with respect to any judgment, order, writ,
injunction, decree or rule of any Governmental Entity or any regulation of any
administrative agency or Governmental Entity.
-8-
<PAGE>
2.8 Insurance. Schedule 2.8 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 insuring the Acquired Assets
or the Business (other than any life insurance policies maintained by a Sellers
or the Stockholder on the lives of an employee of either Seller), specifying the
type of coverage, the amount of coverage, the premium, the insurer and the
expiration date of each such policy (collectively, the "Insurance Policies") and
all claims made under such Insurance Policies since January 1, 1994. True,
correct and complete copies of all of the Insurance Policies have been
previously delivered by the Sellers to the Buyer. The Insurance Policies are in
full force and effect and are in amounts and of a nature which are adequate and
customary for the Business. All premiums due on the Insurance Policies or
renewals thereof have been paid and there is no default under any of the
Insurance Policies. Except as set forth on Schedule 2.8 attached hereto,
------------
neither Seller nor the Stockholder have received any notice or other
communication from any issuer of the Insurance Policies since January 1, 1998
cancelling or materially amending any of the Insurance Policies, materially
increasing any deductibles or retained amounts thereunder, or materially
increasing the annual or other premiums payable thereunder, and, to the best
knowledge of the Sellers and the Stockholder, no such cancellation, amendment or
increase of deductibles, retainages or premiums is threatened.
2.9 Inventory. Schedule 2.9 attached hereto sets forth a true,
--------- ------------
correct and complete list of the Inventory as of the date hereof, including a
description and the book value thereof. Schedule 2.9, as updated pursuant to
------------
Subsection 7.9 hereof, shall set forth a true, correct and complete list of the
Inventory as of the Closing Date, including a description and valuation thereof.
Such Inventory consists of items of a quality and quantity which are usable or
saleable without discount in the ordinary course of the business conducted by
the Sellers. The value of all items of obsolete materials and of materials of
below standard quality has been written down to realizable market value, and the
values at which such Inventory is carried reflect the normal inventory valuation
policy of the Sellers of stating the Inventory at the lower of cost or market
value in accordance with generally accepted accounting principles.
2.10 Fixed Assets. Except as set forth in Schedule 2.10 attached
------------ -------------
hereto, the Fixed Assets as of the date hereof include all fixed assets
currently used in the Business. Schedule 2.10, as updated pursuant to
-------------
Subsection 7.9 hereof, shall set forth a true, correct and complete list of all
Fixed Assets as of the Closing Date which are not used in the business,
including a description and valuation thereof. Except as set forth on Schedule
--------
2.10, all of the Fixed Assets are in good operating condition and repair, normal
- ----
wear and tear excepted, are currently used by a Seller in the ordinary course of
business and in the production of products of a Seller and
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<PAGE>
normal maintenance has been consistently performed with respect to such Fixed
Assets.
2.11 Change in Financial Condition and Assets. Except as set forth on
----------------------------------------
Schedule 2.11 attached hereto, since the date of the most recent Balance Sheet
- -------------
delivered to the Buyer by a Seller, there has been no change which materially
and adversely affects the Business, or the assets, condition (financial or
otherwise) or prospects of a Seller. Neither Seller has any knowledge of any
existing or threatened occurrence, event or development which, as far as can be
reasonably foreseen, could have a material adverse effect on such Seller or the
Business, or the assets, condition (financial or otherwise) or prospects of such
Seller.
2.12 Tax Matters.
-----------
(a) Within the times and in the manner prescribed by law, each Seller
has filed all returns, declarations, reports, statements and other documents
required to be supplied to a Taxing authority by the Seller in connection with
Taxes (as defined below) (the "Returns").
(b) Each Seller has paid all federal, state, local, foreign and other
net income, gross income, gross receipts, sales, use, ad valorem, transfer,
franchise, profits, license, lease, service use, withholding, payroll,
employment, excise, severance, stamp, occupation, premium, property, windfall
profits, customs, duties or other taxes, fees, assessments or charges of any
kind whatever, together with interest and any penalties, additions to tax or
additional amounts with respect thereto ("Taxes") imposed upon them or for which
they could be liable, whether to Taxing authorities (as, for example, under law)
or to other persons or entities (as, for example, under Tax allocation
agreements), with respect to all Taxable periods or portions of Taxable periods
ending on or before the Closing Date to the extent such amounts are due on or
before the Closing Date.
(c) All Taxes that either Seller is or was required by law to withhold
or collect have been duly withheld or collected and, to the extent required,
have been paid to the proper Governmental Entity.
(d) All Returns filed by either Seller constitute complete and
accurate representations of the Tax liabilities of the Seller for such years.
(e) Neither Seller has waived or extended any applicable statute of
limitations relating to the assessment of Taxes which waiver is now in effect.
(f) Neither Seller has filed a consent pursuant to Section 341(f) of
the Code relating to collapsible corporations nor has the Seller agreed to has
-10-
<PAGE>
Section 341(f)(2) of the Code apply to any disposition of a subsection (f) asset
(as such term is defined in Section 341(f)(4) of the Code).
(g) Neither Seller has participated in or cooperated with an
international boycott, within the meaning of Section 999 of the Code, and has
the Seller had operations which are or may hereafter become reportable under
Section 999 of the Code.
(h) There are no liens for Taxes (other than for current Taxes
not yet due and payable) upon the assets of either Seller.
(i) Neither Seller is a party to or bound by any Tax indemnity,
Tax sharing or Tax allocation agreement.
(j) Neither Seller has been a member of an affiliated group of
corporations within the meaning of Section 1504 of the Code filing consolidated
Returns (a "Consolidated Group").
(k) Neither Seller is a party to any agreement, contract, arrangement
or plan that has resulted or would result, separately or in the aggregate, in
the payment of any "excess parachute payments" within the meaning of Section
280G of the Code.
(l) No stockholder of either Seller is a person other than a
United States person within the meaning of the Code.
(m) Neither Seller is and 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)(1)(A)(ii) of the Code.
(n) Neither Seller has agreed to make nor is required to make any
adjustment under Section 481 of the Code by reason of a change in accounting
method or otherwise.
(o) Neither Seller has had a permanent establishment in any foreign
country, as defined in any applicable treaty or convention between the United
States and such foreign country. Neither Seller is a party to any joint
venture, partnership or other arrangement or contract that could be treated as a
partnership for federal income Tax purposes.
(p) Each Seller (and each "predecessor corporation" within the meaning
of Treasury Regulation Section 1.1374-1(e)) has qualified as an "S Corporation"
within the meaning of Section 1361(a)(i) of the Code, and any
-11-
<PAGE>
comparable provision under applicable state law, for all periods from and after
its formation until the Closing.
(q) Schedule 2.12 attached hereto sets forth those Taxable years for
-------------
which the Returns of the Sellers have been reviewed or audited by applicable
federal, state, local and foreign Taxing authorities and those Tax years for
which said Returns have received clearances or other indications of approval
from applicable federal, state, local and foreign Taxing authorities. Schedule
--------
2.12 further sets forth all material Tax elections that are currently in effect
- ----
for either Seller and that, absent revocation, will remain in effect for Taxable
years ending on or after the Closing Date. No issue or issues have been raised
in connection with any prior or pending review or audit of said Returns which
Sellers reasonably believes may be expected to be raised in the future by such
Taxing authorities in connection with the audit or review of the Returns of the
Sellers.
2.13 Books and Records. The general ledgers and books of account of
-----------------
each Seller, all federal, state and local income, franchise, property and other
Tax returns filed by a Seller, with respect to the Acquired Assets, and all
other books and records of the Seller are in all material respects complete and
correct and have been maintained in accordance with good business practice and
in accordance with all applicable procedures required by Laws and Regulations.
2.14 Contracts and Commitments.
-------------------------
(a) Schedule 2.14 attached hereto contains a true, complete and
-------------
correct list and description of the following contracts and agreements, whether
written or oral (collectively, the "Contracts"):
(i) all loan agreements, indentures, mortgages and guaranties to which
a Seller is a party or by which a Seller or any of its property is bound;
(ii) all pledges, conditional sale or title retention
agreements, security agreements, equipment obligations, personal property leases
and lease purchase agreements relating to any of the Acquired Assets to which a
Seller is a party or by which a Seller or any of its property is bound;
(iii) all contracts, agreements, commitments, purchase orders
or other understandings or arrangements to which a Seller is a party or by which
a Seller or any of its property is bound which (A) involve payments or receipts
by a Seller of more than $10,000 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
-12-
<PAGE>
(B) which may materially adversely affect the condition (financial or otherwise)
or the properties, assets, business or prospects of either Seller;
(iv) all collective bargaining agreements, employment and
consulting agreements, executive compensation plans, bonus plans, deferred
compensation agreements, pension plans, retirement plans, employee stock option
or stock purchase plans and group life, health and accident insurance and other
employee benefit plans, agreements, arrangements or commitments to which either
Seller is a party or by which either Seller or any of its property is bound;
(v) all agency, distributor, sales representative and
similar agreements to which either Seller is a party;
(vi) all contracts, agreements or other understandings or
arrangements between either Seller or Affiliate of the Sellers;
(vii) all leases, whether operating, capital or otherwise,
under which either Seller is lessor or lessee;
(vi) all contracts, agreements and other documents or
information relating to past disposal of waste (whether or not hazardous); and
(ix) any other material agreement or contract entered into
by a Seller relating to the Business or the Acquired Assets.
(b) Except as set forth on Schedule 2.14 attached hereto:
-------------
(i) each Contract is a valid and binding agreement of the Seller
which is a party thereto, enforceable against such Seller in accordance with its
terms, and the Sellers do not have any knowledge that any Contract is not a
valid and binding agreement of the other parties thereto;
(ii) the Seller which is a party thereto has fulfilled all
material obligations required pursuant to the Contracts to have been performed
by such Seller on its part prior to the date hereof, and the Sellers have no
reason to believe that they will not be able to fulfill, when due, all of their
respective obligations under the Contracts which remain to be performed after
the date hereof;
(iii) neither Seller is in breach of or default under any
Contract, and no event has occurred which with the passage of time or giving of
notice or both would constitute such a default, result in a loss of rights or
result in the creation of any lien, charge or encumbrance, thereunder or
pursuant thereto;
-13-
<PAGE>
(iv) to the best knowledge of the Sellers and the Stockholder, there
is no existing breach or default by any other party to any Contract, and no
event has occurred which with the passage of time or giving of notice or both
would constitute a default by such other party, result in a loss of rights or
result in the creation of any lien, charge or encumbrance thereunder or pursuant
thereto;
(v) neither Seller is restricted by any Contract from carrying on the
Business anywhere in the world; and
(vi) neither Seller has written or oral Contracts to sell products or
perform services which are expected to be performed at, or to result in, a loss.
(c) Except as set forth on Schedule 2.3 or Schedule 2.14, the
------------ -------------
continuation, validity and effectiveness of each Contract will not be affected
by the transfer thereof to Buyer under this Agreement and all such Contracts are
assignable to Buyer without any consent.
(d) True, correct and complete copies of all Contracts have
previously been delivered by the Sellers to the Buyer.
2.15 Compliance with Agreements and Laws. Each Seller has all
-----------------------------------
requisite licenses, permits and certificates, including environmental, health
and safety permits, from Governmental Entities necessary to conduct its business
and own and operate its assets (collectively, the "Permits"). Schedule 2.15
-------------
attached hereto sets forth a true, correct and complete list of all such
Permits, copies of which have previously been delivered by the Sellers to the
Buyer. Neither Seller is in violation of any Law or Regulation (including,
without limitation, laws, regulations or ordinances relating to building,
zoning, environmental, disposal of hazardous substances, land use or similar
matters) relating to its properties. The business of the Sellers does not
violate any Law or Regulation (including, but not limited to, any law,
regulation or order relating to employment discrimination, occupational safety,
environmental protection, hazardous waste (as defined in the Resource
Conservation and Recovery Act, as amended, and the regulations adopted pursuant
thereto), conservation, or corrupt practices). Except as set forth on Schedule
--------
2.15 attached hereto, neither Seller has since January 1, 1994 received any
- ----
notice or communication from any Governmental Entity, non-governmental entity or
otherwise of any such violation or noncompliance.
2.16 Employee Relations.
------------------
(a) Each Seller is in compliance with all Laws and Regulations
respecting employment and employment practices, terms and conditions of
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<PAGE>
employment, and wages and hours, and is not engaged in any unfair labor
practice, and there are no arrears in the payment of wages or social security
taxes.
(b) Except as set forth on Schedule 2.16 attached hereto:
-------------
(i) none of the employees of either Seller is represented by
any labor union;
(ii) there is no unfair labor practice complaint against
either Seller pending before the National Labor Relations Board or any state or
local agency;
(iii) there is no pending labor strike or other material
labor trouble affecting either Seller (including, without limitation, any
organizational drive);
(iv) there is no material labor grievance pending against
either Seller;
(v) there is no pending representation question respecting
the employees of either Seller; and
(vi) there are no pending arbitration proceedings arising
out of or under any collective bargaining agreement to which either Seller is a
party, or to the best knowledge of either Seller, any basis for which a claim
may be made under any collective bargaining agreement to which either Seller is
a party.
(c) Schedule 2.16 attached hereto sets forth a true, correct and
-------------
complete list of (a) the employee benefits provided by the Sellers to their
respective employees and all contracts or agreements between each Seller and its
employees, and (b) the Seller's current payroll, including the job descriptions
and salary or wage rates of each of its employees, showing separately for each
such person who received an annual salary in excess of $20,000 the amounts paid
or payable as salary and bonus payments for the year ended December 31, 1997.
(d) For purposes of this Subsection 2.16, the term "employee" shall be
construed to include sales agents and other independent contractors who spend a
majority of their working time on the Sellers' business.
2.17 Absence of Certain Changes or Events. Except as set forth on
------------------------------------
Schedule 2.17 attached hereto, since the most recent date as of which a balance
- -------------
sheet was delivered pursuant to Section 2.5, neither Seller 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 Seller has:
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<PAGE>
(a) Incurred any material obligation or liability for borrowed money
or increased the outstanding indebtedness to Citizens Bank, New Hampshire;
(b) Discharged or satisfied any lien or encumbrance or paid any
obligation or liability other than current liabilities reflected in the most
recent Balance Sheet referred to in Section 2.5;
(c) Mortgaged, pledged or subjected to a Security Interest any of
the Acquired Assets;
(d) Sold or purchased, assigned or transferred any of its tangible
assets or cancelled any debts or claims, except for inventory sold and raw
materials purchased in the ordinary course of business;
(e) Made any material amendment to or termination of any Contract or
done any act or omitted to do any act which would cause the breach of any
Contract;
(f) Suffered any losses, whether insured or uninsured, and whether or
not in the control of the Seller, in excess of $10,000 in the aggregate, or
waived any rights of any value;
(g) Made any changes in compensation of its officers, directors
or employees;
(h) Authorized or issued recall notices for any of its products
or initiated any safety investigations;
(i) Received notice of any litigation, warranty claim or products
liability claims; or
(j) Made any material change in the terms, status or funding condition
of any Employee Plan, as defined in Subsection 2.21 hereof.
2.18 Customers. Schedule 2.18 attached hereto sets forth a true,
--------- -------------
correct and complete list of the names and addresses of all customers of each
Seller which accounted for more than 1% of a Seller's total sales in the fiscal
year ended December 31, 1997 and any material additional customers added during
the current calendar year. None of such customers has notified either Seller
that it intends to discontinue its relationship with, or decrease the rate of
buying materials, products or services from, such Seller.
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<PAGE>
2.19 Suppliers. Schedule 2.19 attached hereto sets forth a true,
--------- -------------
correct and complete list of the names and addresses of the ten suppliers of the
Seller which accounted for the largest dollar volume of purchases by either
Seller for the fiscal year ended December 31, 1997 and any material additional
suppliers added during the current calendar year. None of such suppliers has
notified either Seller that it intends to discontinue its relationship.
Schedule 2.19 sets forth the names and addresses of those suppliers of Sellers
- -------------
which the Sellers believes may not desire to continue to sell to Parent or Buyer
following the Closing.
2.20 Intellectual Property.
---------------------
(a) Each Seller owns or has the right to use all Intellectual Property
(as defined below) incorporated in its products or necessary for, or used in,
the operation of its business as presently conducted (the "Sellers' Intellectual
Property"). Each item of Sellers' Intellectual Property will be owned or
available for use by the Buyer on substantially identical terms and conditions
immediately following the Closing. Neither the Stockholder nor any family
member or affiliate of the Stockholder owns any intellectual property used by
either Seller. Each Seller and the Stockholder have taken all reasonable
measures to protect the proprietary nature of each item of Sellers' Intellectual
Property, and to maintain in confidence all trade secrets and confidential
information, that it owns or uses. To the knowledge of the Seller or the
Stockholder, (a) no other person or entity has any rights to any of the Seller's
Intellectual Property owned by a Seller (except pursuant to agreements or
licenses specified in Schedule 2.20), and (b) no other person or entity is
-------------
infringing, violating or misappropriating any of the Sellers' Intellectual
Property. For purposes of this agreement, "Intellectual Property" means all
(i) patents and patent applications, (ii) copyrights and registrations thereof,
(iii) mask works and registrations and applications for registration thereof,
(iv) computer software, data and documentation, (v) trade secrets and
confidential business information, whether patentable or unpatentable and
whether or not reduced to practice, know-how, manufacturing and production
processes and techniques, research and development information, copyrightable
works, financial, marketing and business data, pricing and cost information,
business and marketing plans and customer and supplier lists and information,
(vi) trademarks, service marks, trade names and applications and registrations
therefor and (vii) other proprietary rights relating to any of the foregoing.
(b) Schedule 2.20 attached hereto sets forth a true, correct and
-------------
complete list of each patent, patent application, copyright registration, mask
work registration or application therefor, and trademark or service mark
registration or application therefor of either Seller. True, correct and
complete copies of all licenses and other agreements relating to the
Intellectual Property have been previously delivered by the Sellers to the
Buyer. The Sellers have made available to the Buyer complete and accurate
copies of all written documentation in either Seller's
-17-
<PAGE>
possession relating to claims or disputes known to the Seller or the Stockholder
concerning any item of Sellers' Intellectual Property.
(c) None of the activities or business presently conducted by either
Seller infringes or violates, or constitutes a misappropriation of, any
Intellectual Property rights of any person or entity. Neither the Sellers nor
the Stockholder has received any complaint, claim or notice alleging any such
infringement, violation or misappropriation and no such claim has been
threatened by any third party.
(d) Schedule 2.20 identifies each license or other agreement (or type
-------------
of license or other agreement) pursuant to which either Seller has licensed,
distributed or otherwise granted any rights to any third party with respect to,
any of Sellers' Intellectual Property.
(e) Schedule 2.20 identifies each item of Sellers' Intellectual
-------------
Property that is owned by a party other than a Seller, and the license or
agreement pursuant to which a Seller uses it (excluding off-the-shelf software
programs licensed by a Seller pursuant to "shrink wrap" licenses).
(f) Neither Seller has not disclosed the source code for any of the
software owned by such Seller and incorporated in its products or necessary for
the operation of its business as presently conducted (the "Software") or other
confidential or proprietary information constituting, embodied in or pertaining
to the Software to any person or entity and has taken reasonable measure to
prevent such disclosure.
(g) All of the Software has been created by employees of a Seller
within the scope of their employment by such Seller or by independent
contractors of a Seller who have executed agreements expressly assigning all
right, title and interest in the Software to such Seller. No portion of the
Software was jointly developed with any third party.
2.2 Employee Benefit Plans.
----------------------
(a) Employee Plans. Schedule 2.21 attached hereto contains a true,
-------------- -------------
correct and complete list of all pension, benefit, profit sharing, retirement,
deferred compensation, welfare, insurance, disability, bonus, vacation pay,
severance pay and other similar plans, programs and agreements, whether reduced
to writing or not, relating to either Seller's employees, or maintained at any
time since January 1, 1994 by a Seller or by any other member (hereinafter,
"Affiliate") of any controlled group of corporations, group of trades or
businesses under common control, or affiliated service group (as defined for
purposes of Section 414(b), (c) and (m), respectively, of the Code) (the
Employee Plans") and, except as set forth on
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<PAGE>
Schedule 2.21 attached hereto, neither Seller has obligations, contingent or
- -------------
otherwise, past or present, under applicable law or the terms of any Employee
Plan.
(b) Copies of Employee Plans and Related Documents. Each Seller has
----------------------------------------------
previously delivered to the Buyer true, correct and complete copies of all
Employee Plans which have been reduced to writing and written descriptions of
all Employee Plans which have not been reduced to writing, and all agreements,
including trust agreements and insurance contracts, related to such Employee
Plans, and the Summary Plan Description and all modifications thereto for each
Employee Plan communicated to employees. With respect to each Employee Plan
that is a "defined benefit plan," as such term is defined in Section 3(35) of
ERISA (the "Defined Benefit Plans"), true, correct and complete copies of (i)
the annual actuarial valuation reports for the last five years, (ii) the Form
5500 and Schedule A or B thereto, or both, filed for the last five years and
(iii) any filings made with the Pension Benefit Guaranty Corporation ("PBGC"),
Internal Revenue Service or Department of Labor, or any correspondence with or
from such agencies, regarding the termination of any such Defined Benefit Plan,
have been delivered to the Buyer.
(c) No Implied Rights. Nothing expressed or implied herein shall
-----------------
confer upon any past or present employee of either Seller, his or her
representatives, beneficiaries, successors and assigns, nor upon any collective
bargaining agent, any rights or remedies of any nature, including, without
limitation, any rights to employment or continued employment with the Sellers,
the Buyer, or any successor or affiliate.
(d) COBRA. No current or former employee of either Seller has elected
-----
to exercise rights under, and neither Seller does not have any liabilities
under, the Consolidated Omnibus Budget Reconciliation Act of 1984, as amended
("COBRA").
(e) Liabilities. The Buyer does not assume, and neither it nor the
-----------
Acquired Assets will be subject to, any liabilities with respect to any Employee
Plan, 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 PBGC.
(f) Warn Act. The Worker Adjustment and Retraining Notification Act,
--------
29 U.S.C. (S) 2101. et sec. and the regulations applicable thereto, 20 C.F.R.
(S) 639 et sec. (collectively the "WARN Act") do not apply to the transactions
contemplated by this Agreement. Neither Seller has any affiliated companies,
Sellers employ less than one hundred (100) employees, and no single site
operated by a Seller employees more than twenty-five (25) employees.
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<PAGE>
2.22 Acquired Assets Complete. The Acquired Assets are, when utilized
------------------------
by a labor force substantially similar to that employed by the Sellers on the
date hereof, adequate to conduct the business operations currently conducted by
the Sellers.
2.23 Regulatory Approvals. All consents, approvals, authorizations
--------------------
and other requirements prescribed by any Law or Regulation which must be
obtained or satisfied by either Seller and which are necessary for the execution
and delivery by a Seller of this Agreement and the documents to be executed and
delivered by a Seller in connection herewith are set forth on Schedule 2.23
-------------
attached hereto and have been, or will be prior to the Closing Date, obtained
and satisfied.
2.24 Indebtedness to and from Officers, Directors and Shareholders.
-------------------------------------------------------------
Except as set forth on Schedule 2.24 attached hereto, neither Seller is
-------------
indebted, directly or indirectly, to any person who is an officer, director or
shareholder of either Seller or any Affiliate of any such person in any amount
whatsoever other than for salaries for services rendered or reimbursable
business expenses or indebtedness that shall be satisfied on the Closing Date,
and no such officer, director, shareholder or affiliate is indebted to either
Seller, except for advances made to employees of a Seller in the ordinary course
of business to meet reimbursable business expenses anticipated to be incurred by
such obligor.
2.25 Powers of Attorney and Suretyships. Except as set forth on
----------------------------------
Schedule 2.25 attached hereto, neither Seller has any general or special powers
- -------------
of attorney outstanding (whether as grantor or grantee thereof) and has no
obligation or liability (whether actual, accrued, accruing, contingent or
otherwise) as guarantor, surety, co-signor, endorser, co-maker, indemnitor or
otherwise in respect of the obligation of any person, corporation, partnership,
joint venture, association, organization or other entity, except as endorser or
maker of checks or letters of credit, respectively, endorsed or made in the
ordinary course of business.
2.26 Disclosure. No representation or warranty by a Seller or the
----------
Stockholder in this Agreement or in any Exhibit hereto, or in any list,
statement, document or information set forth in or attached to any Schedule
delivered or to be delivered pursuant to this Agreement, contains or will
contain any untrue statement of a material fact or omits or will omit any
material fact necessary in order to make the statements contained therein not
misleading. The Sellers and the Stockholder have disclosed to the Buyer all
material facts pertaining to the Sellers, the Business and the transactions
contemplated by this Agreement.
2.27 Securities Representations.
--------------------------
(a) Each Seller and the Stockholder are "accredited investors" within
the meaning of the Securities Act. Each of the Sellers and the Stockholder has
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<PAGE>
knowledge and experience in financial and business matters such that it is
capable of evaluating the merits and risks of the investment in the Common Stock
issued to the Sellers in the name of the Stockholder by the Parent pursuant to
this Agreement and is financially able to undertake the risks involved in such
an investment. Each of the Sellers and the Stockholder further understands that
(i) the shares of Common Stock issued pursuant to this Agreement have not been
registered under the Securities Act, or any state securities law by reason of
their issuance in a transaction exempt from the registration requirements of the
Securities Act pursuant to Section 4(2) and Regulation D promulgated thereunder
and an exemption under the applicable state securities law and (ii) such shares
must be held indefinitely unless a registration statement covering the resale of
such shares is effective under the Securities Act and such state law or unless
an exemption from registration under the Securities Act and such state law is
available.
(b) Each Seller and the Stockholder agree that Shares shall not be
sold or transferred unless either (i) they first shall have been registered
under the Securities Act of 1933, as amended (the "Act"), or (ii) the Parent
first shall have been furnished with an opinion of legal counsel, reasonably
satisfactory to the Parent and which may be counsel to the Parent, to the effect
that such sale or transfer is exempt from the registration requirements of the
Act. Each certificate representing 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 1933, 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 securities are registered under such
Act or an opinion of counsel satisfactory to SatCon Technology
Corporation is obtained to the effect that such registration is
not required."
(c) The Parent has granted the Sellers and the Stockholder and their
attorneys or other representatives access to all information about the Parent
which the Sellers and the Stockholder have requested; and the Sellers, the
Stockholders and their attorneys or other representatives have had the
opportunity to ask questions of, and receive answers from, representatives of
the Parent concerning such information and the Parent's financial condition and
prospects.
(d) The principal office of the Sellers and the place at which the
decision by the Sellers and the Stockholder to participate in this Agreement and
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the transactions contemplated hereby was made is located at the address
appearing next to the Seller's and the Stockholders' names in Section 14 hereof.
3. Representations of the Buyer and the Parent
-------------------------------------------
The Buyer and the Parent jointly and severally represents and warrants to
the Sellers and the Stockholders as follows:
3.1 Organization and Authority. Each of the Parent and the Buyer is
--------------------------
a corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of incorporation, and has requisite power and authority
(corporate and other) to own its properties and to carry on its business as now
being conducted. Each of the Parent and the Buyer has full power to execute and
deliver this Agreement and the Instrument of Assumption of Liabilities and to
consummate the transactions contemplated hereby and thereby. Certified copies
of the Articles of Organization and the Bylaws of the Buyer, as amended to date,
have been previously delivered to the Sellers, are complete and correct, and no
amendments have been made thereto or have been authorized since the date
thereof.
3.2 Authorization. The execution and delivery of this Agreement by
-------------
the Buyer and the Parent, and the agreements provided for herein, and the
consummation by the Buyer and the Parent of all transactions contemplated
hereby, have been duly authorized by all requisite corporate action. This
Agreement and all such other agreements and written obligations entered into and
undertaken in connection with the transactions contemplated hereby constitute
the valid and legally binding obligations of the Buyer and the Parent,
enforceable against the Buyer and the Parent in accordance with their respective
terms. The execution, delivery and performance of this Agreement and the
agreements provided for herein, and the consummation by the Buyer 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 Buyer or the Parent; (b)
violate the provisions of the Buyer's or the Parent's Articles of Organization
or Bylaws; (c) violate any judgment, decree, order or award of any Governmental
Entity applicable to the Buyer or the Parent; 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 Security
Interest upon the properties or assets of the Buyer pursuant to, any indenture,
mortgage, deed of trust or other agreement or instrument to which it or its
properties is a party or by which the Buyer is or may be bound. Schedule 3.2
------------
attached hereto sets forth a true, correct and complete list of all consents and
approvals of third parties that are required in connection with the consummation
by the Buyer or the Parent of the transactions contemplated by this Agreement.
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3.3 Regulatory Approvals. All consents, approvals, authorizations
--------------------
and other requirements prescribed by any Law or Regulation which must be
obtained or satisfied by the Buyer or the Parent and which are necessary for the
consummation of the transactions contemplated by this Agreement have been, or
will be prior to the Closing Date, obtained and satisfied.
3.4 The Shares. The Shares, when issued pursuant to this Agreement,
----------
shall be duly authorized, validly issued and non-assessable and shall constitute
"voting stock" within the meaning of Section 368(a)(1)(C) of the Code.
3.5 Disclosure. No representation or warranty by the Buyer or the
----------
Parent in this Agreement or in any Exhibit hereto, or in any list, statement,
document or information set forth in or attached to any Schedule delivered or to
be delivered pursuant hereto by the Buyer or the Parent, contains or will
contain any untrue statement of a material fact or omits or will omit any
material fact necessary in order to make the statements contained therein not
misleading.
4. Access to Information; Public Announcements
-------------------------------------------
4.1 Access to Management, Properties and Records.
--------------------------------------------
(a) From the date of this Agreement until the Closing Date, the Seller
and the Stockholder shall afford the officers, attorneys, accountants and other
authorized representatives of the Buyer and the Parent free and full access upon
reasonable notice and during normal business hours to all management personnel,
offices, properties, books and records of the Sellers, so that the Buyer and the
Parent may have full opportunity to make such investigation as it shall desire
to make of the management, business, properties and affairs of the Sellers, and
the Buyer and the Parent shall be permitted to make abstracts from, or copies
of, all such books and records. The Sellers shall furnish to the Buyer such
financial and operating data and other information as to the Acquired Assets and
the business of the Sellers as the Buyer shall reasonably request.
(b) Each Seller and the Stockholder shall authorize the release to the
Buyer and the Parent of all files pertaining to the Sellers, the Acquired Assets
or the business or operations of the Sellers held by any Governmental Entity.
4.2 Confidentiality. All information not previously disclosed to the
---------------
public or generally known to persons engaged in the respective businesses of the
Sellers, the Buyer or the Parent which shall have been furnished by the Buyer,
the Stockholder, the Seller or the Parent to the other party in connection with
the transactions contemplated hereby or as provided pursuant to this Section 4
shall not be disclosed to any person other than their respective employees,
directors, attorneys, accountants or financial advisors or other than as
contemplated herein. In
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the event that the transactions contemplated by this Agreement shall not be
consummated, all such information which shall be in writing shall be returned to
the party furnishing the same, including, to the extent reasonably practicable,
all copies or reproductions thereof which may have been prepared, and neither
party shall at any time thereafter disclose to third parties, or use, directly
or indirectly, for its own benefit, any such information, written or oral, about
the business of the other party hereto.
4.3 Public Announcements. The parties agree that prior to the
--------------------
Closing Date, except as otherwise required by Law or Regulation, any and all
public announcements or other public communications concerning this Agreement
and the purchase of the Acquired Assets by the Buyer shall be subject to the
approval of the Parent, which approval shall not be unreasonably withheld.
5. Pre-Closing Covenants of the Seller and Stockholder
---------------------------------------------------
From and after the date hereof and until the Closing Date:
5.1 Conduct of Business. Except as set forth in Schedule 5.1
------------------- ------------
attached hereto, each Seller shall carry on its business diligently and
substantially in the same manner as heretofore and shall not make or institute
any unusual or new methods of manufacture, purchase, sale, shipment or delivery,
lease, management, accounting or operation, and shall not ship or deliver any
quantity of products in excess of normal shipment or delivery levels, except as
agreed to in writing by the Buyer. All of the property of each Seller shall be
used, operated, repaired and maintained in a normal business manner consistent
with past practice.
5.2 Absence of Material Changes. Without the prior written consent
---------------------------
of the Buyer, neither Seller shall:
(a) Take any action to amend its Certificate of Incorporation or
Bylaws;
(b) Issue any stock, bonds or other corporate securities or grant
any option or issue any warrant to purchase or subscribe to any of such
securities or issue any securities convertible into such securities;
(c) Incur any obligation or liability (absolute or contingent),
except current liabilities incurred and obligations under contracts entered into
in the ordinary course of business;
(d) Declare or make any payment or distribution to its
shareholders with respect to their stock or purchase or redeem any shares of its
capital stock, except that a Seller may declare and make a distribution to the
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Stockholder for the purpose (i) of satisfying the requirements of the Code
applicable to such Seller's status as "S Corporations" for the period ending on
the Closing Date or (ii) distributing to the Stockholder any Excluded Assets,
such amount to be agreed upon by the Buyer and the Sellers;
(e) Mortgage, pledge, or subject to any Security Interest any of
the Acquired Assets;
(f) Sell, assign, or transfer any of the Acquired Assets, except
for inventory sold in the ordinary course of business, at a normal profit
margin, and for not less than replacement cost;
(g) Cancel any debts or claims, except in the ordinary course of
business;
(h) Merge or consolidate with or into any corporation or other
entity;
(i) Make, accrue or become liable for any bonus, profit sharing
or incentive payment, except for accruals under existing plans, if any, or
increase the rate of compensation payable or to become payable by it to any of
its officers, directors or employees, other than increases in the ordinary
course of business consistent with past practice;
(j) Make any election or give any consent under the Code or the
Tax statutes of any state or other jurisdiction or make any termination,
revocation or cancellation of any such election or any consent or compromise or
settle any claim for past or present Tax due;
(k) Waive any rights of material value;
(l) Modify, amend, alter or terminate any of its executory
contracts of a material value or which are material in amount;
(m) Take or permit any act or omission constituting a breach or
default under any contract, indenture or agreement by which it or its properties
are bound;
(n) Fail to (i) preserve the possession and control of its assets
and business, (ii) keep in faithful service its present officers and key
employees, (iii) preserve the goodwill of its customers, suppliers, agents,
brokers and others having business relations with it, and (iv) keep and preserve
its business existing on the date hereof until after the Closing Date;
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<PAGE>
(o) Fail to operate its business and maintain its books, accounts and
records in the customary manner and in the ordinary or regular course of
business and maintain in good repair its business premises, fixtures, machinery,
furniture and equipment;
(p) Enter into any leases, contracts, agreements or understandings
other than those entered into in the ordinary course of business calling for
payments which in the aggregate do not exceed $10,000 for each such lease,
contract, agreement or understanding;
(q) Engage any employee other than in the ordinary course of business
and whose wage earnings are commensurate with the wage earnings of employees of
a Seller on the date hereof performing such similar services for such Seller;
(r) Materially alter the terms, status or funding condition of
any Employee Plan; or
(s) Commit or agree to do any of the foregoing in the future.
5.3 Taxes. Each Seller will, on a timely basis, file all Tax returns
-----
for and the Stockholder shall pay any and all Taxes which shall become due or
shall have accrued (a) on account of the operation of the business of a Seller
or the ownership of the Acquired Assets on or prior to the Closing Date or (b)
on account of the sale of the Acquired Assets (including a pro-rata portion of
all personal property and excise taxes payable with respect to the Acquired
Assets by a Seller).
5.4 Communication with Customers and Suppliers.
------------------------------------------
(a) Unless instructed otherwise by the Buyer in writing, each Seller
will accept customer orders in the ordinary course of business and consistent
with past practice as the Buyer's agent for all products offered by a Seller but
expected to be shipped by the Buyer after the Closing Date.
(b) Each Seller, the Stockholder and the Buyer will cooperate in
communication with suppliers and customers to accomplish the transfer of the
Acquired Assets to the Buyer on the Closing Date.
5.5 Compliance with Laws. Each Seller will comply with all Laws and
--------------------
Regulations which are applicable to it, its ownership of the Acquired Assets or
to the conduct of its business and will perform and comply with all contracts,
commitments and obligations by which it is bound.
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<PAGE>
5.6 Continued Truth of Representations and Warranties of the Seller
---------------------------------------------------------------
and Stockholder. Neither of the Sellers nor the Stockholder will take any
- ---------------
actions which would result in any of the representations or warranties set forth
in Section 2 hereof being untrue.
5.7 Continuing Obligation to Inform. From time to time prior to the
-------------------------------
Closing, each Seller and the Stockholder will deliver or cause to be delivered
to the Buyer supplemental information concerning events subsequent to the date
hereof which would render any statement, representation or warranty in this
Agreement or any information contained in any Schedule inaccurate or incomplete
in any material respect at any time after the date hereof until the Closing
Date.
5.8 Exclusive Dealing. Neither of the Sellers nor the Stockholder
-----------------
shall, directly or indirectly, through any officer, director, agent or
otherwise, (a) solicit, initiate or encourage submission of proposals or offers
from any person relating to any acquisition or purchase of all or a material
portion of the Acquired Assets, or any equity interest in, either Seller or any
equity investment, merger, consolidation or business combination with either
Seller, or (b) participate in any discussions or negotiations regarding, or
furnish to any other person, any non-public information with respect to, or
otherwise cooperate in any way with, or assist or participate in, facilitate or
encourage, any effort or attempt by any other person to do or seek any of the
foregoing. Each Seller and the Stockholder shall promptly notify the Buyer if
any such proposal or offer, or any inquiry or contact with any person with
respect thereto, is made.
5.9 Outstanding Indebtedness. Between the date of this Agreement and
------------------------
the Closing Date, each Seller shall make all regularly scheduled payments on its
existing indebtedness and shall not incur any additional indebtedness other than
in the ordinary course of business.
6. Best Efforts to Obtain Satisfaction of Conditions
-------------------------------------------------
Each of the Sellers, the Stockholder and the Buyer covenant and agree
to use their best efforts to obtain the satisfaction of the conditions specified
in this Agreement.
7. Conditions to Obligations of the Buyer and the Parent
-----------------------------------------------------
The obligations of the Buyer and 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
Buyer:
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7.1 Continued Truth of Representations and Warranties of the Sellers
----------------------------------------------------------------
and the Stockholder; Compliance with Covenants and Obligations. The
- --------------------------------------------------------------
representations and warranties of the Sellers and the Stockholder shall be true
on and as of the Closing Date as though such representations and warranties were
made on and as of such date, except for any changes permitted by the terms
hereof or consented to in writing by the Buyer. The Sellers and the Stockholder
shall have performed and complied with all terms, conditions, covenants,
obligations, agreements and restrictions required by this Agreement to be
performed or complied with by each of them prior to or at the Closing Date.
7.2 Corporate Proceedings. All corporate and other proceedings
---------------------
required to be taken on the part of either Seller to authorize or carry out this
Agreement and to convey, assign, transfer and deliver the Acquired Assets shall
have been taken.
7.3 Governmental Approvals. All Governmental Entities and similar
----------------------
bodies, the consent, authorization or approval of which is necessary under any
applicable Law or Regulation for the consummation by either Seller of the
transactions contemplated by this Agreement and the operation of the Business by
the Buyer, shall have consented to, authorized, permitted or approved such
transactions.
7.4 Consents of Lenders, Lessors and Other Third Parties. Each
----------------------------------------------------
Seller shall have received all requisite consents and approvals of all lenders,
lessors and other third parties whose consent or approval is required in order
for the Sellers to consummate the transactions contemplated by this Agreement,
including, without limitation, those set forth on Schedule 2.3 attached hereto.
------------
7.5 Adverse Proceedings. No action or proceeding by or before any
-------------------
Governmental Entity shall have been instituted or threatened by any Governmental
Entity or person whatsoever which shall seek to restrain, prohibit or invalidate
the transactions contemplated by this Agreement or which might affect the right
of the Buyer to own or use the Acquired Assets after the Closing.
7.6 Board of Directors and Stockholder Approval. Each of the Board
-------------------------------------------
of Directors of the Sellers and the Stockholder shall have duly authorized the
transactions contemplated by this Agreement.
7.7 Due Diligence. Each Seller and the Stockholder shall have
-------------
provided to the Buyer and the Parent access to all material and information
requested by the Buyer or the Parent to conduct a thorough due diligence review
of all aspects of the Business and the Acquired Assets. The Buyer and the
Parent shall in their sole discretion be satisfied with such review, both in
scope and substance.
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7.8 The Acquired Assets. At the Closing the Buyer shall receive
-------------------
good, clear, record and marketable title to the Acquired Assets, free and clear
of all Security Interests and encumbrances of any nature whatsoever.
7.9 Update. The Sellers shall have provided the Buyer with a true,
------
correct and complete list and amount, as of the Closing Date, of:
(a) the Inventory;
(b) the Fixed Assets;
(c) all unfilled customer orders; and
(d) all shipments made during the period from the date of this
Agreement to the Closing Date,
none of which information shall be materially different from the information
supplied by the Sellers as of the date hereof on Schedules 2.9, 2.10, and 2.18
------------- ---- ----
attached hereto.
7.10 Bank Consent. The Buyer shall have received approval of
------------
BankBoston for the consummation of the transactions contemplated by this
Agreement.
7.11 Employment Contracts. On or prior to the Closing Date, the Buyer
--------------------
shall have executed employment contracts with Thomas Glynn upon substantially
the terms set forth in Exhibit B attached hereto.
---------
7.12 Assignment of Insurance Policies. On or prior to the Closing
--------------------------------
Date, the Sellers shall have assigned to the Buyer any and all insurance
policies extending warranty or products liability coverage to a Seller for
products manufactured by a Seller with respect to the Business prior to the
Closing Date or for claims made on or prior to the Closing Date.
7.13 Tax Lien Waivers. On or prior to the Closing Date, each Seller
----------------
shall have obtained and delivered to the Buyer Tax lien waivers from all
jurisdictions in which Acquired Assets are located and which provide such Tax
lien waivers.
7.14 Material Adverse Change. There shall not have occurred a
-----------------------
material adverse change, or an event involving a prospective material adverse
change, in the Acquired Assets or in the business, properties, operations,
conditions (formal or otherwise), prospects, assets or liability of either
Seller since the date of the most recent balance sheet provided pursuant to
Section 2.5 hereto.
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7.15 Closing Deliveries. The Buyer shall have received at or prior to
------------------
the Closing each of the following documents:
(a) a bill of sale substantially in the form attached hereto as
Exhibit C;
- ---------
(b) such instruments of conveyance, assignment and transfer, in
form and substance satisfactory to the Buyer, as shall be appropriate to convey,
transfer and assign to, and to vest in, the Buyer, good, clear, record and
marketable title to the Acquired Assets;
(c) all technical data, formulations, product literature and
other documentation relating to the Business, all in form and substance
satisfactory to the Buyer;
(d) such contracts, files and other data and documents pertaining
to the Acquired Assets or the Business as the Buyer may reasonably request;
(e) copies of the general ledgers and books of account of each
Seller, and all federal, state and local income, franchise, property and other
Tax returns filed by the Sellers with respect to the Acquired Assets since
incorporation;
(f) such certificates of each Seller's officers and such other
documents evidencing satisfaction of the conditions specified in Section 7 as
the Buyer shall reasonably request;
(g) certificates of the Secretaries of State of the States of New
Hampshire and Maine as to the legal existence and good standing (including Tax)
of each Seller in its respective state of incorporation;
(h) certificates of the Secretary of each Seller attesting to the
incumbency of each Seller's officers, respectively, the authenticity of the
resolutions authorizing the transactions contemplated by the Agreement, and the
authenticity and continuing validity of the charter documents delivered pursuant
to Subsection 2.1;
(i) a current UCC-1 search confirming the absence of any UCC
Financing Statements or other liens affecting the Acquired Assets;
(j) cross receipt executed by the Buyer and the Sellers; and,
(k) such other documents, instruments or certificates as the
Buyer may reasonably request.
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8. Conditions to Obligations of the Sellers and the Stockholder
------------------------------------------------------------
The obligations of the Sellers and the Stockholder under this Agreement are
subject to the fulfillment, at the Closing Date, of the following conditions
precedent, each of which may be waived in writing at the sole discretion of the
Sellers:
8.1 Continued Truth of Representations and Warranties of the Buyer
--------------------------------------------------------------
and the Parent; Compliance with Covenants and Obligations. The representations
- ---------------------------------------------------------
and warranties of the Buyer and the Parent 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 Sellers. The Buyer and the Parent shall have performed and complied with all
terms, conditions, obligations, agreements and restrictions required by this
Agreement to be performed or complied with by them prior to or at the Closing
Date.
8.2 Corporate Proceedings. All corporate and other proceedings
---------------------
required to be taken on the part of the Buyer and the Parent to authorize or
carry out this Agreement shall have been taken.
8.3 Governmental Approvals. All Governmental Entities, and similar
----------------------
bodies, the consent, authorization or approval of which is necessary under any
applicable Law or Regulation for the consummation by the Buyer and the Parent of
the transactions contemplated by this Agreement shall have consented to,
authorized, permitted or approved such transactions.
8.4 Adverse Proceedings. No action or proceeding by or before any
-------------------
Governmental Entity shall have been instituted or threatened by any Governmental
Entity or person whatsoever which shall seek to restrain, prohibit or invalidate
the transactions contemplated by this Agreement or which might affect the right
of a Seller to transfer the Acquired Assets.
8.5 Closing Deliveries. The Sellers shall have received at or prior
------------------
to the Closing each of the following documents:
(a) such certificates of the Buyer's and Parent's officers and such
other documents evidencing satisfaction of the conditions specified in this
Section 8 as the Sellers shall reasonably request;
(b) a certificates of the Secretary of the State of Delaware as to the
legal existence and good standing of the Buyer and the Parent in Delaware;
(c) a certificate of the Secretary of the Buyer and Parent attesting
to the incumbency of the Buyer's and Parent's officers, the authenticity of
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the resolutions authorizing the transactions contemplated by this Agreement, and
the authenticity and continuing validity of the charter documents delivered
pursuant to Subsection 3.1;
(d) Instrument of Assumption of Liabilities executed by the Buyer
and accepted by the Sellers;
(e) the Shares and the cash consideration;
(f) cross receipt executed by the Buyer and the Sellers; and
(g) such other documents, instruments or certificates as the
Sellers may reasonably request.
9. Indemnification
---------------
9.1 By the Buyer and Parent. The Buyer and the Parent shall jointly
-----------------------
and severally indemnify and hold harmless each of the Sellers and the
Stockholder 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) reasonably incurred by the Sellers and the Stockholder in
connection with each and all of the following:
(a) Any breach by the Buyer or the Parent of any representation
or warranty in this Agreement;
(b) Any breach of any covenant, agreement or obligation of the
indemnifying party contained in this Agreement or any other agreement,
instrument or document contemplated by this Agreement; and
(c) Any misrepresentation contained in any statement, certificate
or schedule furnished by the indemnifying party pursuant to this Agreement or in
connection with the transactions contemplated by this Agreement.
9.2 By the Sellers and the Stockholder. Each Seller and the
----------------------------------
Stockholder, jointly and severally, each shall indemnify and hold harmless the
Buyer and the Parent from and against any and all claims, damages, losses,
liabilities, costs and expenses (including, without limitation, settlement costs
and any legal, accounting or other expenses for investigating or defending any
actions or threatened actions) reasonably incurred by the Buyer or the Parent,
in connection with each and all of the following:
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(a) Any breach by a Seller or Stockholder of any representation
and warranty in this Agreement;
(b) Any breach of any covenant, agreement or obligation of a Seller or
any Stockholder contained in this Agreement or any other agreement, instrument
or document contemplated by this Agreement;
(c) Any misrepresentation contained in any statement, certificate or
schedule furnished by a Seller or any Stockholder pursuant to this Agreement or
in connection with the transactions contemplated by this Agreement;
(d) Any claims against, or liabilities or obligations of, a Seller or
against the assets not specifically assumed by the Buyer pursuant this
Agreement;
(e) The failure of the Buyer to obtain the protections afforded by
compliance with the notification and other requirements of the bulk sales laws
in force in the jurisdictions in which such laws may be applicable to either of
the Sellers or the transactions contemplated by this Agreement;
(f) Any violation by a Seller of, or any failure by a Seller to comply
with, any Law or Regulation applicable to such Seller, the Acquired Assets or
its business, whether or not any such violation or failure to comply has been
disclosed to the Buyer, including any costs incurred by the Buyer (i) in order
to bring the Acquired Assets into compliance with environmental laws as a
consequence of noncompliance with such laws on the Closing Date or (ii) in
connection with the transfer of the Acquired Assets;
(g) Any warranty claim or product liability claim relating to, or
returns of, products of a Seller which (a) were sold or shipped by a Seller
prior to the Closing Date, (b) were in the finished goods inventory as of the
Closing Date or (c) were work in progress and more than fifty percent (50%)
completed by the Closing Date provided that the Buyer has complied with Section
10.6;
(h) Any liability arising out of or in connection with the Sellers'
business or operations except for the liabilities assumed by the Buyer pursuant
to Section 1.4 hereto;
(i) Any Tax liabilities or obligations of the Sellers or the
Stockholder; and
(j) Any claims against, or liabilities or obligations of, a Seller
with respect to obligations under Employee Plans or under COBRA.
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9.3 Claims for Indemnification. Whenever any claim shall arise for
--------------------------
indemnification hereunder, the party seeking indemnification (the "Indemnified
Party") shall promptly notify the party from whom indemnification is sought (the
"Indemnifying Party") of the claim and, when known, the facts constituting the
basis for such claim. In the event of any such claim for indemnification
hereunder resulting from or in connection with any claim or legal proceedings by
a third-party, the notice to the Indemnifying Party shall specify, if known, the
amount or an estimate of the amount of the liability arising therefrom. The
Indemnified Party shall not settle or compromise any claim by a third party for
which it is entitled to indemnification hereunder without the prior written
consent of the Indemnifying Party, which shall not be unreasonably withheld,
unless suit shall have been instituted against it and the Indemnifying Party
shall not have taken control of such suit after notification thereof as provided
in Subsection 9.4 of this Agreement.
9.4 Defense by Indemnifying Party. In connection with any claim
-----------------------------
giving rise to indemnity hereunder resulting from or arising out of any claim or
legal proceeding by a person who is not a party to this Agreement, the
Indemnifying Party at its sole cost and expense may, upon written notice to the
Indemnified Party, assume the defense of any such claim or legal proceeding if
it acknowledges to the Indemnified Party in writing its obligations to indemnify
the Indemnified Party with respect to all elements of such claim. The
Indemnified Party shall be entitled to participate in (but not control) the
defense of any such action, with its counsel and at its own expense. If the
Indemnifying Party does not assume the defense of any such claim or litigation
resulting therefrom within 30 days after the date such claim is made, (a) the
Indemnified Party may defend against such claim or litigation, in such manner as
it may deem appropriate, including, but not limited to, settling such claim or
litigation, after giving notice of the same to the Indemnifying Party, on such
terms as the Indemnified Party may deem appropriate, and (b) the Indemnifying
Party shall be entitled to participate in (but not control) the defense of such
action, with its counsel and at its own expense. If the Indemnifying Party
thereafter seeks to question the manner in which the Indemnified Party defended
such third party claim or the amount or nature of any such settlement, the
Indemnifying Party shall have the burden to prove by a preponderance of the
evidence that the Indemnified Party did not defend or settle such third party
claim in a reasonably prudent manner.
9.5 Payment of Indemnification Obligation. All indemnification
-------------------------------------
amounts payable to any party in connection with a claim for indemnification
pursuant to Section 9 hereof shall be effected by payment of cash or delivery of
a cashier's or certified check in the amount of the indemnification liability or
in the case of an amount payable by the Sellers or the Stockholder, at the
option of the Buyer by cancellation of Shares issued pursuant to this Agreement
and held by the Sellers or the Stockholder. In determining the number of Shares
to be cancelled, the Shares shall be valued at their fair market value on the
Closing Date.
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9.6 Survival of Representations; Claims for Indemnification. All
-------------------------------------------------------
representations and warranties made by the parties herein or in any instrument
or document furnished in connection herewith shall survive the Closing and any
investigation at any time made by or on behalf of the parties hereto. All such
representations and warranties shall expire on the second anniversary of the
Closing Date, except for claims, if any, asserted in writing prior to such
second anniversary, which shall survive until finally resolved and satisfied in
full. All claims and actions for indemnity pursuant to this Section 9 or
Section 13 for breach of any representation or warranty shall be asserted or
maintained in writing by a party hereto on or prior to the expiration of such
three-year period.
10. Post-Closing Agreements
-----------------------
The Sellers and the Stockholder agree that from and after the Closing Date:
10.1 Proprietary Information.
-----------------------
(a) Each of the Sellers and the Stockholder shall hold in confidence,
and use its best efforts to have all of its officers, directors and personnel
hold in confidence, all knowledge and information of a secret or confidential
nature with respect to the Business and shall not 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 Seller or the Stockholder.
(b) Each of the Sellers and the Stockholder 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 Non-Competition Agreement.
-------------------------
(a) For a period of five years (5) after the Closing Date, neither of
the Sellers nor the Stockholder shall directly or indirectly (i) manufacture,
market or sell any product which has the same or substantially the same form,
function and primary application as any existing or proposed product
manufactured by a Seller on or prior to the Closing Date or (ii) engage in any
business competitive with the Business as conducted on the date hereof or on the
Closing Date, in the United States or any other country in which a Seller
conducted its business during the five years (5) 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 10.2 are reasonable.
In the event that any court determines that the duration or the
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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 Sellers and the Stockholder agree that damages are an inadequate
remedy for any breach of this provision and that the Buyer shall, whether or not
it is pursuing any potential remedies at law, be entitled to equitable relief in
the form of preliminary and permanent injunctions without bond or other security
upon any actual or threatened breach of this non-competition provision.
10.3 Sharing of Data.
---------------
(a) The Sellers and the Stockholder shall have the right for a period
of three years (3) following the Closing Date to have reasonable access to such
books, records and accounts, including financial and Tax information,
correspondence, production records, employment records and other similar
information as are transferred to the Buyer pursuant to the terms of this
Agreement for the limited purposes of concluding their involvement in the
business of the Sellers prior to the Closing Date and for complying with their
obligations under applicable securities, Tax, environmental, employment or other
Laws and Regulations. The Buyer and the Parent shall have the right for a
period of three years (3) following the Closing Date to have reasonable access
to those books, records and accounts, including financial and Tax information,
correspondence, production records, employment records and other records which
are retained by a Seller and the Stockholder pursuant to the terms of this
Agreement to the extent that any of the foregoing relates to the business of a
Seller transferred to the Buyer hereunder or is otherwise needed by the Buyer in
order to comply with its obligations under applicable securities, Tax,
environmental, employment or other Laws and Regulations.
(b) Each Seller and the Stockholder and the Buyer and the Parent agree
that from and after the Closing Date they shall cooperate fully with each other
to facilitate the transfer of the Acquired Assets from the Sellers to the Buyer
and the operation of the Business by the Buyer.
10.4 Use of Name. Each of the Sellers and the Stockholder agrees not
-----------
to use the name "Inductive Components," "Lighthouse Software" or any derivation
thereof after the Closing Date.
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10.5 Cooperation in Litigation. Each party hereto will fully
-------------------------
cooperate with the other in the defense or prosecution of any litigation or
proceeding already instituted or which may be instituted hereafter against or by
such party relating to or arising out of the conduct of the business of a Seller
prior to or after the Closing Date (other than litigation arising out the
transactions contemplated by this Agreement). The party requesting such
cooperation shall pay the out-of-pocket expenses (including legal fees and
disbursements) of the party providing such cooperation and of its officers,
directors, employees and agents reasonably incurred in connection with providing
such cooperation, but shall not be responsible to reimburse the party providing
such cooperation for such party's time spent in such cooperation or the salaries
or costs of fringe benefits or similar expenses paid by the party providing such
cooperation to its officers, directors, employees and agents while assisting in
the defense or prosecution of any such litigation or proceeding.
10.6 Product Claims and Returns. Each Seller and the Stockholder
--------------------------
shall be jointly and severally responsible for customer claims relating to
services rendered by a Seller prior to the Closing Date, and customer claims
relating to, or returns of, products of a Seller which (a) were sold and shipped
by a Seller prior to the Closing Date, (b) were in the finished goods inventory
of a Seller as of the Closing Date, or (c) were work in process and more than
fifty percent (50%) completed by the Closing Date. If a customer makes a claim
or seeks a return and, in the judgment of the Buyer, the claim or return is
proper, Buyer may replace or repair, as the case may be, the services rendered
or product purchased at the Buyer's then generally prevailing prices and labor
rates. Such repairs or returns shall be for the account of the Seller which
produced such product or service and such Seller (or the Stockholder if the
Seller shall fail to promptly do so) shall promptly reimburse Buyer for the
amounts thereof. Notwithstanding the foregoing, if, but only to the extent,
such claims exceed $2,500 in any calendar quarter, the Stockholder shall be
entitled to prior notice of the proposed payment of any such claim. If the
Stockholder objects in good faith to the payment of such claim after such $2,500
threshold has been exceeded, the Buyer and Stockholder shall use their best
efforts to agree upon whether such claim is valid and the amount to be
reimbursed by the Sellers with respect thereto. Any reimbursement owed by the
Sellers pursuant to this Section 10.6 shall be paid within ten (10) days of the
end of the calendar quarter in which such reimbursable claim was paid.
10.7 Cooperation with Reporting Requirements. Each Seller and the
---------------------------------------
Stockholder agree to fully cooperate with the Buyer and Parent in order to
enable the Parent to comply with its reporting obligations under the Securities
Act and the Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder, as such obligations relate to the Business
and the Acquired Assets.
10. Collection of Accounts Receivable.
---------------------------------
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(a) Following the Closing, the Buyer shall use its reasonable efforts
to collect the Sellers' accounts receivable (the "Accounts Receivable")
provided, however, that the Buyer shall have no liability to the Sellers or the
Stockholder for the failure to collect any Account Receivable and the Buyer
shall not have any obligation to pursue the collection of, or to take any action
with respect to, the Accounts Receivables that the Buyer does not take in the
ordinary course of its business.
(b) The Buyer shall furnish to the Stockholder within 15 days after
the end of each month a statement setting forth the Accounts Receivable
collected during such month and a trial balance of the uncollected Accounts
Receivable show the aging thereof as of the end of such month.
(c) The Sellers hereby authorize the Buyer to open mail addressed to a
Seller (if delivered to the Buyer) if received on or after the Closing Date and
hereby grants to the Buyer a power of attorney to endorse and cash any checks or
instruments made payable or endorsed to a Seller or its order and received by
the Buyer.
(d) The Buyer shall remit the proceeds of Accounts Receivable in the
manner and at such time as shall be mutually agreed by the Sellers, the
Stockholder and the Buyer.
10.9 Continuation of Representation by Servo Components & Systems,
-------------------------------------------------------------
Inc. Following the Closing, the Buyer shall appoint Servo Components & Systems,
- ----
Inc. as its exclusive sale representative for New England.
11. Termination of Agreement
------------------------
11.1 Termination by Lapse of Time. This Agreement shall terminate at
----------------------------
5:00 p.m., Boston time, on January 31, 1999, if the transactions contemplated
hereby have not been consummated, unless such date is extended by the written
consent of all of the parties hereto.
11.2 Termination by Agreement of the Parties. This Agreement may be
---------------------------------------
terminated by the mutual written agreement of the parties hereto. In the event
of such termination by agreement, neither the Buyer nor the Parent shall have
any further obligation or liability to the Sellers or the Stockholder under this
Agreement, and neither the Sellers nor the Stockholder shall have any further
obligation or liability to the Buyer or the Parent under this Agreement.
11.3 Termination by Reason of Breach. This Agreement may be
-------------------------------
terminated by the Sellers or the Stockholder, if at any time prior to the
Closing there
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shall occur a breach of any of the representations, warranties or covenants of
the Buyer or the failure by the Buyer to perform any condition or obligation
hereunder, and may be terminated by the Buyer, if at any time prior to the
Closing there shall occur a breach of any of the representations, warranties or
covenants of a Seller or the Stockholder or the failure of a Seller or the
Stockholder to perform any condition or obligation hereunder.
12. Transfer and Sales Tax
----------------------
Notwithstanding any provisions of law imposing the burden of such
Taxes on the Seller or the Buyer, as the case may be, each Seller (or failing
payment thereof by a Seller, the Stockholder) shall be responsible for and shall
pay (a) all sales, use and transfer taxes, and (b) all governmental charges, if
any, upon the sale or transfer of any of the Acquired Assets hereunder. If the
Seller shall fail to pay such amounts on a timely basis, the Buyer may pay such
amounts to the appropriate governmental authority or authorities, and the Seller
(or failing payment thereof by a Seller, the Stockholder) shall promptly
reimburse the Buyer for any amounts so paid by the Buyer.
13. Brokers
-------
13.1 For the Sellers. Each Seller and the Stockholder represents and
---------------
warrants that it has not engaged any broker or finder or incurred any liability
for brokerage fees, commissions or finder's fees in connection with the
transactions contemplated by this Agreement. Each Seller and the Stockholder
agrees to indemnify and hold harmless the Buyer and the Parent against any
claims or liabilities asserted against it by any person acting or claiming to
act as a broker or finder on behalf of a Seller or the Stockholder.
13.2 For the Buyer. The Buyer agrees to pay all fees, expenses and
-------------
compensation owed to any person, firm or corporation who has acted in the
capacity of broker or finder on its behalf in connection with the transactions
contemplated by this Agreement. The Buyer agrees to indemnify and hold harmless
the Seller against any claims or liabilities asserted against it by any person
acting or claiming to act as a broker or finder on behalf of the Buyer.
14. Notices
-------
Any notices or other communications required or permitted hereunder
shall be sufficiently given if delivered personally or sent by telex, Federal
Express or other nationally recognized overnight courier service ("Overnight
Courier Service"), registered or certified mail, postage prepaid, addressed as
follows or to such other address of which the parties may have given notice:
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To the Sellers or the
Stockholder: Thomas J. Glynn
Inductive Components, Inc.
53 Stiles Road, Suite C2
Salem, New Hampshire 03079
With a copy to: W. Terence Jones, Esq.
Maselan, Jones & Stanzler
50 Milk Street
Boston, MA 02109
To the Buyer and Parent: SatCon Technology Corporation
161 First Street
Cambridge, MA 02142
Attention: Michael Turmelle
Tel.: (617) 661-0540
Fax: (617) 661-3373
With copies to: Hale and Dorr LLP
60 State Street
Boston, MA 02109
Attention: Jeffrey Carp
Tel.: (617) 526-6000
Fax: (617) 526-5000
Unless otherwise specified herein, such notices or other communications shall be
deemed received (a) on the date delivered, if delivered personally; (b) the next
business day after being sent, if sent by Overnight Courier Service for next
business day delivery; or (c) three business days after being sent, if sent by
registered or certified mail.
15. Successors and Assigns
----------------------
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns, except that no party
may assign its obligations hereunder without the prior written consent of the
other parties; provided, however, that the Buyer may assign this Agreement, and
its rights and obligations hereunder, to a subsidiary or affiliate. Any
assignment in contravention of this provision shall be void. No assignment
shall release the Buyer from any obligation or liability under this Agreement.
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16. Entire Agreement; Amendments; Attachments
-----------------------------------------
(a) This Agreement, all Schedules and Exhibits hereto, and all
agreements and instruments to be delivered by the parties pursuant hereto
represent the entire understanding and agreement between the parties hereto with
respect to the subject matter hereof and supersede all prior oral and written
and all contemporaneous oral negotiations, commitments and understandings
between such parties. The parties hereto may amend or modify this Agreement, in
such manner as may be agreed upon, by a written instrument executed by the
Buyer, the Parent, the Sellers and the Stockholder.
(b) If the provisions of any Schedule or Exhibit to this Agreement are
inconsistent with the provisions of this Agreement, the provision of the
Agreement shall prevail. The Exhibits and Schedules attached hereto or to be
attached hereafter are hereby incorporated as integral parts of this Agreement.
17. Expenses
--------
Except as otherwise expressly provided herein, the Buyer, the Parent,
the Sellers and the Stockholder shall each pay their own expenses in connection
with this Agreement and the transactions contemplated hereby.
18. Legal Fees
----------
In the event that legal proceedings are commenced by the Buyer or the
Parent against the Sellers or the Stockholder, or by the Sellers or the
Stockholder against the Buyer or the Parent, in connection with this Agreement
or the transactions contemplated hereby, the party or parties which do not
prevail in such proceedings shall pay the reasonable attorneys' fees and other
costs and expenses, including investigation costs, incurred by the prevailing
party in such proceedings.
19. Governing Law
-------------
This Agreement shall be governed by and construed in accordance with
the laws of the Commonwealth of Massachusetts without giving effect to the
conflict of laws principles.
20. Section Headings
----------------
The section headings are for the convenience of the parties and in no
way alter, modify, amend, limit, or restrict the contractual obligations of the
parties.
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21. Severability
------------
The invalidity or unenforceability of any provision of this Agreement
shall not affect the validity or enforceability of any other provision of this
Agreement.
22. Counterparts
------------
This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original, but all of which shall be one and the
same document.
[End of page]
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IN WITNESS WHEREOF, this Agreement has been duly executed by the parties
hereto as of and on the date first above written.
K&D MAGMOTOR CORP.
By: /s/ David B. Eisenhaure
--------------------------------
Name: David B. Eisenhaure
Title: President
SATCON TECHNOLOGY CORPORATION
By: /s/ David B. Eisenhaure
--------------------------------
Name: David B. Eisenhaure
Title: Chairman, President and Chief
Executive Officer
INDUCTIVE COMPONENTS, INC.:
By: /s/ Thomas J. Glynn
--------------------------------
Name: Thomas J. Glynn
Title: President
LIGHTHOUSE SOFTWARE, INC.:
By: /s/ Robert P. Caron
--------------------------------
Name: Robert P. Caron
Title: President
STOCKHOLDER:
/s/ Thomas J. Glynn
--------------------------------
Name: Thomas J. Glynn
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Omitted Schedules
-----------------
Pursuant to Item 601(b)(2) of Regulation S-K promulgated by the Securities
and Exchange Commission (the "Commission") under the Securities Act of 1933, as
amended, and the Securities Exchange Act of 1934, as amended, SatCon Technology
Corporation has, with respect to the Asset Purchase Agreement, dated as of
January 4, 1999, among K&D MagMotor Corp., SatCon Technology Corporation,
Inductive Components, Inc., Lighthouse Software, Inc. and Thomas Glynn, omitted
to file the schedules listed in the table of contents herewith. These schedules
will be supplementally furnished to the Commission upon request.
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