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Exhibit 2
Execution Copy
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
AMERICAN SUPERCONDUCTOR CORPORATION
AND
APPLIED ENGINEERING TECHNOLOGIES, LTD.
AND
XXXXX XXXXXXX
DATED AS OF JULY 30, 1997
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TABLE OF CONTENTS
Page
ARTICLE I
THE MERGER ............................................... 1
1.1 The Merger ........................................... 1
1.2 The Closing .......................................... 1
1.3 Actions at the Closing ............................... 1
1.4 Further Assurances ................................... 2
1.5 Conversion of Shares ................................. 3
1.6 No Further Right ..................................... 3
1.7 Certificate of Incorporation and By-laws ............. 3
1.8 Directors and Officers ............................... 3
ARTICLE II
AREPRESENTATIONS AND WARRANTIES REGARDING THE
STOCKHOLDER ................................................ 3
2A.1 Ownership of AET Share ................................ 3
2A.2 Authority ............................................. 4
2A.3 Noncontravention ...................................... 4
2A.4 Investment Representation ............................. 4
2A.5 Pooling Representation ................................ 5
ARTICLE IIB
REPRESENTATIONS AND WARRANTIES REGARDING AET ......... ..... 5
2B.1 Organization, Qualification and Corporate Power ...... 5
2B.2 Capitalization ....................................... 6
2B.3 Authority and Noncontravention ....................... 6
2B.4 Subsidiaries ......................................... 7
2B.5 Financial Statements and Information ................. 7
2B.6 Operation of AET Business ............................ 8
2B.7 Assets ............................................... 8
2B.8 Intellectual Property ................................ 8
2B.9 Owned Real Property .................................. 9
2B.10 Real Property Leases ................................. 9
2B.11 Contracts ............................................ 9
2B.12 Books and Records .................................... 10
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2B.13 Litigation ........................................... 10
2B.14 Permits and Legal Compliance.......................... 10
2B.15 Tax Matters .......................................... 11
2B.16 Brokers' Fees ........................................ 11
2B.17 Pooling .............................................. 11
2B.18 Disclosure ........................................... 11
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF ASC ..................... 12
3.1 Organization .......................................... 12
3.2 Capitalization ........................................ 12
3.3 Authorization ......................................... 12
3.4 Noncontravention ...................................... 12
3.5 Reports and Financial Statements ...................... 13
3.6 Litigation ............................................ 14
3.7 Form S-3 .............................................. 14
3.8 Disclosure ............................................ 14
ARTICLE IV
OTHER AGREEMENTS .......................................... 14
4.1 Stock Options ........................................ 14
4.2 Expenses ............................................. 14
4.3 Registration Rights .................................. 15
4.4 Filing Responsibility ................................ 17
4.5 Restriction on Transfer .............................. 18
4.6 Payment of Outstanding Debt .......................... 18
4.7 Publication of Financial Results ..................... 18
4.8 Payment of Tax Obligations ........................... 18
4.9 Escrow ............................................... 18
4.10 Release of Lease Guarantee ........................... 19
ARTICLE V
DEFINITIONS ............................................... 19
ARTICLE VI
INDEMNIFICATION ........................................... 20
6.1 Indemnification by the Stockholder ................... 20
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6.2 Indemnification by ASC ................................ 21
6.3 Claims for Indemnification ............................ 21
6.4 Survival .............................................. 22
6.5 Limitation ............................................ 22
ARTICLE VII
MISCELLANEOUS ............................................. 23
7.1 Press Releases and Announcements ..................... 23
7.2 No Third Party Beneficiaries ......................... 23
7.3 Entire Agreement ..................................... 23
7.4 Succession and Assignment ............................ 23
7.5 Counterparts ......................................... 23
7.6 Headings ............................................. 23
7.7 Notices .............................................. 23
7.8 Governing Law and Jurisdiction ....................... 24
7.9 Amendments and Waivers ............................... 24
7.10 Disputes ............................................. 25
SCHEDULES AND EXHIBITS
AET Disclosure Schedule
ASC Disclosure Schedule
Exhibit A - Xxxxxxx Employment Letter
Exhibit B - Xxxx Employment Letter
Exhibit C - Promissory Note
Exhibit D - Pledge Agreement
Exhibit E - Form of Release
Exhibit F - Form of Escrow Agreement
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AGREEMENT AND PLAN OF MERGER
Agreement entered into as of July 30, 1997 by and among American
Superconductor Corporation, a Delaware corporation ("ASC") and Applied
Engineering Technologies, Ltd., a Massachusetts corporation ("AET") and Xxxxx
Xxxxxxx (the "Stockholder"). ASC, AET and the Stockholder are referred to
collectively herein as the "Parties."
THIS AGREEMENT CONTEMPLATES A TAX-FREE (PURSUANT TO SECTION 368 OF THE
INTERNAL REVENUE CODE OF 1986, AS AMENDED) MERGER OF AET INTO ASC. IN SUCH
MERGER, THE STOCKHOLDER, WHO IS THE SOLE STOCKHOLDER OF AET, WILL RECEIVE COMMON
STOCK OF ASC IN EXCHANGE FOR HIS CAPITAL STOCK OF AET.
NOW, THEREFORE, IN CONSIDERATION OF THE REPRESENTATIONS, WARRANTIES AND
COVENANTS HEREIN CONTAINED AND OTHER GOOD AND VALUABLE CONSIDERATION, THE
RECEIPT AND SUFFICIENCY OF WHICH IS HEREBY ACKNOWLEDGED, THE PARTIES AGREE AS
FOLLOWS:
ARTICLE I
THE MERGER
1.1 THE MERGER. Upon and subject to the terms and conditions of this
Agreement, AET shall merge with and into ASC (with such merger referred to
herein as the "Merger") at the Effective Time (as defined below). From and after
the Effective Time, the separate corporate existence of AET shall cease and ASC
shall continue as the surviving corporation in the Merger. The "Effective Time"
shall be the time at which ASC and AET file the Certificate of Merger prepared
and executed in accordance with the relevant provisions of the Delaware General
Corporation Law (the "Certificate of Merger") with the Secretary of State of the
State of Delaware. The Merger shall have the effects set forth in Section 259 of
the Delaware General Corporation Law.
1.2 THE CLOSING. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Xxxx and Xxxx LLP
in Boston, Massachusetts, simultaneously with the execution and delivery of this
Agreement (the "Closing Date").
1.3 ACTIONS AT THE CLOSING. At the Closing:
(a) The Stockholder and ASC shall execute and deliver an Employment
Letter substantially in the form attached hereto as EXHIBIT A (the "Xxxxxxx
Employment Letter");
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(b) Xxxxx Xxxx ("Xxxx") and ASC shall execute and deliver an
Employment Letter substantially in the form attached hereto as EXHIBIT B (the
"Xxxx Employment Letter");
(c) the Stockholder shall deliver to ASC certificates evidencing the
AET Shares (as defined below) duly endorsed in blank or with stock powers duly
executed by the Stockholder;
(d) ASC shall deliver to the Stockholder certificates for 53,475
shares and 8,000 shares of the ASC Shares (as defined below) other than the
Escrow Shares (as defined below);
(e) ASC shall pay AET an aggregate of $42,000 to AET to be used in
connection with the expenses described in Section 4.8 hereof;
(f) The promissory note in the amount of $178,344.98 made by AET to
the Stockholder shall have been surrendered for cancellation to AET as a capital
contribution by the Stockholder;
(g) ASC shall make a loan to the Stockholder in the amount of $80,000
pursuant to a promissory note in the form attached hereto as EXHIBIT C, which
promissory note shall be secured by a pledge of 8,000 of the ASC Shares to the
Stockholder, such pledge to be substantially in the form attached hereto as
EXHIBIT D. The Stockholder shall contribute $54,774 of such loan proceeds to AET
immediately prior to the Closing to pay the expenses described in Section 4.8
hereof;
(h) Each of Xxxxx Xxxxxxx, Xxxxxx Xxxxxxx and Xxxxx Xxxx shall execute
a release in the form attached hereto as EXHIBIT E, acknowledging that ASC will
not be liable for back wages owed to any of them at the Closing Date;
(i) ASC shall hold the Escrow Shares in accordance with and in
anticipation of the actions described in Section 4.9 hereof;
(j) AET and ASC shall file with the Secretary of State of the State of
Delaware the Certificate of Merger;
(k) AET shall file with the Secretary of State of the Commonwealth of
Massachusetts Articles of Merger pursuant to Section 79 of Chapter 156(B) of the
Massachusetts General Laws; and
(l) ASC and the Stockholder shall deliver such closing certificates as
may be reasonably requested by the other Party.
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1.4 FURTHER ASSURANCES. At any time and from time to time after the
Closing, at ASC's request and without further consideration, the Stockholder
shall promptly execute and deliver such instruments of sale, transfer,
conveyance, assignment and confirmation and take all such other action as ASC
may reasonably request to more effectively transfer, convey and assign to ASC,
and to confirm ASC's title to, all of the AET Shares, to put ASC in actual
possession and operating control of the assets, properties and business of AET,
to assist ASC in exercising all rights with respect thereto and to carry out the
purpose and intent of this Agreement.
1.5 CONVERSION OF SHARES. At the Effective Time, by virtue of the Merger
and without any action on the part of any Party or the holder of any of the
following securities, the 51,000 shares of common stock, no par value per share,
of AET (the "AET Shares") issued and outstanding immediately prior to the
Effective Time shall be converted into and represent the right to receive 68,306
shares of common stock, $.01 par value per share, of ASC (the "ASC Shares").
1.6 NO FURTHER RIGHTS. From and after the Effective Time, no AET Shares
shall be deemed to be outstanding, and holders of certificates formerly
representing AET Shares shall cease to have any rights with respect thereto,
except as provided herein or by law.
1.7 CERTIFICATE OF INCORPORATION AND BY-LAWS. The Certificate of
Incorporation of ASC in effect at the Effective Time shall continue to be the
Certificate of Incorporation of ASC until further amended in accordance with the
provisions of applicable law. The By-laws of ASC in effect at the Effective Time
shall continue to be the By-laws of ASC until amended in accordance with the
provisions thereof and applicable law.
1.8 DIRECTORS AND OFFICERS. The members of the Board of Directors and the
officers of ASC at the Effective Time shall continue in office until the
expiration of their respective terms of office and until their successors have
been elected and qualified.
ARTICLE IIA
REPRESENTATIONS AND WARRANTIES REGARDING THE STOCKHOLDER
Except as set forth in the disclosure schedule of AET attached hereto (the
"AET Disclosure Schedule"), the Stockholder represents and warrants to ASC as
follows:
2A.1 OWNERSHIP OF AET SHARES. The Stockholder has good and marketable
title to the AET Shares, free and clear of any and all Security Interests (as
defined below). The Stockholder has the full right, power and authority to sell,
transfer,
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convey, assign and deliver to ASC at the Closing the AET Shares and, upon
consummation of the Merger contemplated hereby, ASC will acquire good and
marketable title to the AET Shares, free and clear of all Security Interests.
For purposes of this Agreement, "Security Interest" means any mortgage, pledge,
security interest, encumbrance, charge, lien, contractual restriction or
covenant, option or other adverse claim (whether arising by contract or by
operation of law).
2A.2 AUTHORITY. The Stockholder has all requisite power and authority to
execute and deliver this Agreement and the Xxxxxxx Employment Letter and to
perform the Stockholder's obligations hereunder and thereunder. This Agreement
has been duly and validly executed and delivered by the Stockholder, and
constitutes a valid and binding obligation of the Stockholder, enforceable
against the Stockholder in accordance with its terms.
2A.3 NONCONTRAVENTION. This Agreement has been duly executed by the
Stockholder. This Agreement and all other agreements and obligations entered
into and undertaken in connection with the transactions contemplated hereby to
which the Stockholder is a party, including the Xxxxxxx Employment Letter,
constitute the valid and legal binding obligations of the Stockholder,
enforceable against him in accordance with their respective terms. The
execution, delivery and performance by the Stockholder of this Agreement and the
agreements provided for herein, and the consummation by the Stockholder of the
transactions contemplated hereby and thereby, will not, with or without the
giving of notice or the passage of time or both: (i) conflict with, result in a
breach of, constitute a default under, or require any notice, consent or waiver
under, any agreement or instrument to which the Stockholder is a party or by
which the Stockholder is bound, (ii) result in the imposition of any Security
Interest upon the AET Shares or any AET asset or any asset owned by the
Stockholder which is used by AET to operate its business, or (iii) violate any
law, rule, regulation, order, writ, injunction, judgment or decree or award of
any court, governmental, regulatory or administrative agency (a "Governmental
Agency") or arbitrator applicable to the Stockholder, the AET Shares or any AET
asset.
2A.4 INVESTMENT REPRESENTATION. The Stockholder:
(a) is acquiring the ASC Shares for the Stockholder's own account for
investment only, and not with a view to, or for resale in connection with, any
distribution or public offering of the ASC Shares in violation of the Securities
Act of 1933, as amended (the "Securities Act"), or any rule or regulation under
the Securities Act, nor with any present intention of distributing or selling
the same in violation of the Securities Act or any rule or regulation
thereunder; and the Stockholder has no present or contemplated agreement,
undertaking, arrangement, obligation, indebtedness or commitment providing for
the distribution thereof;
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(b) has carefully reviewed the ASC Reports (as defined below) and the
representations concerning ASC contained in this Agreement, and has made
detailed inquiry concerning ASC, its business and its personnel; the officers of
ASC have made available to the Stockholder the opportunity to ask questions and
receive answers concerning the terms and conditions of the offering of the ASC
Shares made hereby and to obtain any additional information that ASC possesses
or can acquire without unreasonable effort or expense that is necessary to
verify the accuracy of information provided by ASC to the Stockholder, in
evaluating the suitability of an investment in ASC; and the Stockholder has not
relied upon any representations or other information (whether oral or written)
other than as set forth in this Agreement;
(c) understands that the ASC Shares have not been registered under the
Securities Act and are "restricted securities" within the meaning of Rule 144
under the Securities Act; and that the ASC Shares cannot be sold, transferred or
otherwise disposed of unless ASC has received an opinion of counsel from counsel
reasonably acceptable to ASC to the effect such shares have been registered
under the Securities Act or an exemption from registration is then available;
and
(d) acknowledges that a legend substantially in the following form
will be placed on each certificate representing the ASC Shares:
"The shares represented by this certificate have not been registered
under the Securities Act of 1933, as amended, and may not be offered,
sold, transferred or otherwise disposed of in the absence of an
effective registration statement under such Act or an opinion of
counsel satisfactory to the corporation to the effect that such
registration is not required is delivered to the corporation."
2A.5 POOLING REPRESENTATION. Since January 1, 1997, the Stockholder has not
sold, exchanged, transferred, pledged, disposed or otherwise reduced his risk
relative to any AET Shares owned by him in contemplation of this Agreement.
ARTICLE IIB
REPRESENTATIONS AND WARRANTIES REGARDING AET
Except as set forth in AET Disclosure Schedule, each of the Stockholder and
AET, jointly and severally, represent and warrant to ASC as follows:
2B.1 ORGANIZATION, QUALIFICATION AND CORPORATE POWER. AET is a corporation
duly organized, validly existing and in corporate and tax good standing under
the laws of the Commonwealth of Massachusetts. AET is duly qualified to conduct
business and is in corporate and tax good standing under the laws of each
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jurisdiction in which the nature of its businesses or the ownership or leasing
of its properties requires such qualification, except where the failure to be so
qualified or to be in good standing, individually or in the aggregate, would not
have a material adverse effect on the business, assets, results of operations or
financial condition of AET (an "AET Material Adverse Effect"). AET has all
requisite corporate power and authority to carry on the business in which it is
engaged and to own and use the properties owned and used by it. AET has
furnished to ASC true, complete and accurate copies of its Articles of
Organization and By-laws, each as amended and as in effect on the date hereof.
2B.2 CAPITALIZATION. The authorized capital stock of AET consists of
100,000 shares of AET Common Stock, of which 51,000 shares are issued and
outstanding. All of the issued and outstanding shares of AET Common Stock are
owned of record and beneficially by the Stockholder and are duly authorized,
validly issued, fully paid and nonassessable. There are no outstanding (a)
securities or obligations convertible into or exchangeable for capital stock of
AET; (b) options, warrants or other rights to purchase or subscribe for capital
stock of AET or securities or obligations convertible into or exchangeable for
capital stock of AET; or (c) agreements of any kind relating to the issuance of
any capital stock of AET, any such convertible or exchangeable securities or
obligations or any such options, warrants or rights. There are no outstanding or
authorized stock appreciation, phantom stock or similar rights with respect to
AET. There are no agreements, voting trusts, proxies, or understandings with
respect to the voting, or registration under the Securities Act, of any AET
Shares. All of the issued and outstanding shares of AET Common Stock were issued
in compliance with applicable federal and state securities laws.
2B.3 AUTHORITY AND NONCONTRAVENTION.
(a) AUTHORITY. AET has all requisite power and authority to execute
and deliver this Agreement and to perform its obligations hereunder. The
execution and delivery of this Agreement, the performance of this Agreement and
the consummation of the transactions contemplated hereby have been duly and
validly authorized by all necessary corporate action by AET. This Agreement has
been duly and validly executed and delivered by AET, and constitutes a valid and
binding obligation of AET, enforceable against AET in accordance with its terms.
(b) NONCONTRAVENTION. Subject to the filing of the Certificate of
Merger as required by the Delaware General Corporation Law, neither the
execution and delivery of this Agreement by AET, nor the consummation by AET of
the transactions contemplated hereby, will (i) conflict with or violate any
provision of the charter or By-laws of AET, (ii) require on the part of AET any
filing with, or any permit, authorization, consent or approval of, any court,
arbitrational tribunal, administrative agency or commission or other
governmental or regulatory authority
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or agency (a "Governmental Entity"), other than any filing, permit,
authorization, consent or approval which if not obtained or made would not have
a material adverse effect on the assets, business, financial condition, results
of operations or future prospects of AET or on the ability of the Parties to
consummate the transactions contemplated by this Agreement, (iii) conflict with,
result in a breach of, constitute (with or without due notice or lapse of time
or both) a default under, result in the acceleration of, create in any party the
right to accelerate, terminate, modify or cancel, or require any notice, consent
or waiver under, any contract, lease, sublease, license, sublicense, franchise,
permit, indenture, agreement or mortgage for borrowed money, instrument of
indebtedness, Security Interest or other arrangement to which AET is a party or
by which AET is bound or to which any of their assets is subject, other than any
conflict, breach, default, acceleration, termination, modification or
cancellation which individually or in the aggregate would not have an AET
Material Adverse Effect or would not affect the ability of the Parties to
consummate the transactions contemplated by this Agreement, (d) result in the
imposition of any Security Interest upon any assets of AET or (e) violate any
order, writ, injunction, decree, statute, rule or regulation applicable to AET
or any of its properties or assets.
2B.4 SUBSIDIARIES. AET does not, directly or indirectly, own any stock of,
or other equity interest in, any corporation, partnership, trust or other
business association.
2B.5 FINANCIAL STATEMENTS AND INFORMATION.
(a) AET has previously delivered to ASC (i) its unaudited balance
sheet, statement of operations and statement of cash flows as of and for the
fiscal year ended December 31, 1996, (ii) its unaudited balance sheet, statement
of operations and statement of cash flows as of and for the six-month period
ended June 30, 1997 and (iii) its unaudited balance sheet, statement of
operations and statement of cash flows as of and for the period ended July 23,
1997. For purposes of this Agreement, such financial statements shall be
referred to as the "AET Financial Statements" and the July 23, 1997 balance
sheet of AET shall be referred to as the "AET 1997 Balance Sheet." The AET
Financial Statements (i) have been prepared in accordance with generally
accepted accounting principles consistently applied ("GAAP") (except that the
unaudited interim financial statements do not contain footnotes and are subject
to normal, recurring year-end adjustments which will not be material), and (ii)
fairly present, as of the dates and for the periods therein indicated, the
financial condition and the results of operations of AET.
(b) AET has no liability or obligation whatsoever, whether accrued,
absolute, contingent or otherwise, other than (i) the liabilities shown on the
AET 1997 Balance Sheet, (ii) liabilities, similar in nature to those shown on
the AET 1997 Balance Sheet, which have arisen after the date of the AET 1997
Balance Sheet in the ordinary course of business consistent with past practice
(including with respect to
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amount) (the "Ordinary Course of Business"), (iii) contractual liabilities which
are not required to be reflected on a balance sheet under GAAP and (iv)
liabilities for the transaction expenses permitted under Section 4.2.
(c) Since July 23, 1997, there has occurred no event or development
which has had or may reasonably be foreseen to have in the future an AET
Material Adverse Effect.
2B.6 OPERATION OF AET BUSINESS. Since July 23, 1997, AET has not done, nor
has it agreed to do, any of the following:
(a) repurchased any shares of AET capital stock or any rights,
warrants or options to acquire any such shares;
(b) paid any dividend or other distribution (whether in cash, stock or
property or any combination thereof) in respect of its capital stock;
(c) created, incurred or assumed any debt (including capital lease
obligations); assumed, guaranteed, endorsed or otherwise become liable for the
obligations of any other person; or made any loans, advances or capital
contributions to, or investments in, any other person or entity;
(d) increased in any manner the compensation or fringe benefits of, or
materially modified the employment terms of, or paid any bonuses to, its
employees; or hired or fired any key employee;
(e) acquired, sold, leased, encumbered or disposed of any assets,
other than (i) purchases and sales of assets in the Ordinary Course of Business;
(f) made any capital expenditures in excess of $10,000 per item or
group of related items; or
(g) paid any obligation or liability other than payments in the
Ordinary Course of Business.
2B.7 ASSETS. AET owns or leases all tangible assets necessary for the
conduct of its business as presently conducted. Each such tangible asset is free
from material defects, has been maintained in accordance with normal industry
practice, is in good operating condition and repair (subject to normal wear and
tear and obsolescence) and is suitable for the purposes for which it presently
is used. No asset owned by AET (tangible or intangible) is subject to any
Security Interest, except as described in Section 2B.7 of the AET Disclosure
Schedule.
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2B.8 INTELLECTUAL PROPERTY. AET owns or has the enforceable right to use
all Intellectual Property (as defined below) used in or necessary for the
operation of its business as presently conducted ("AET Intellectual Property").
Each item of AET Intellectual Property will be owned or available for use by AET
on the same terms and conditions immediately following the Closing. For purposes
of this Agreement, "Intellectual Property" means all (i) patents and patent
applications, (ii) trademarks, service marks, logos, trade names and corporate
names and registrations and applications for registration thereof, (iii)
copyrights and registrations and applications for registration thereof, (iv)
computer software, data and documentation, (v) trade secrets and confidential
business information, customer and mailing lists, designs, copyrightable works,
financial, marketing and business data, pricing and cost information, business
and marketing plans, and supplier lists and information and (vi) other
proprietary rights relating to any of the foregoing.
2B.9 OWNED REAL PROPERTY. AET does not own, nor has it ever owned, any
real property.
2B.10 REAL PROPERTY LEASES. Section 2B.10 of the AET Disclosure Schedule
lists all leases or subleases of real property to which AET is a party. AET has
delivered to ASC true, complete and accurate copies of the leases and subleases
(each as amended to date) listed in Section 2B.10 of the AET Disclosure
Schedule.
2B.11 CONTRACTS. Section 2B.11 of the AET Disclosure Schedule lists each
of the following contracts to which AET is a party:
(a) any contract (or group of related contracts) for the lease of
personal property from third parties providing for lease payments in excess of
$10,000 per annum;
(b) any contract or purchase commitment (or group of related contracts
or purchase commitments) for the purchase of raw materials, commodities,
supplies, products or other personal property or for the receipt of services (i)
which calls for performance over a period of more than one year, (ii) which
involves more than the sum of $10,000, or (iii) in which AET has agreed to
purchase a minimum quantity of goods or services or has agreed to purchase goods
or services exclusively from a certain party;
(c) any contract establishing a partnership or joint venture;
(d) any contract (or group of related contracts) under which AET has
created, incurred, assumed, or guaranteed indebtedness (including capitalized
lease obligations) involving more than $10,000 or under which it has imposed a
Security Interest on any of its assets;
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(e) any contract concerning confidentiality, non-solicitation or
non-competition;
(f) any contract involving the Stockholder or his affiliates (which
for purposes of this Agreement shall mean the members of a person's immediate
family or of their spouse's immediate family (including parents, siblings and
children) or, with respect to an entity, another entity that directly or
indirectly, through one or more intermediaries controls, or is controlled by, or
is under common control with the entity);
(g) any contract under which the consequences of a default or
termination could have an AET Material Adverse Effect; and
(h) any other contract (or group of related contracts) either
involving more than $25,000 or not entered into in the Ordinary Course of
Business.
AET has delivered to ASC a true, complete and accurate copy of each
contract (as amended to date) listed in Section 2B.11 of the AET Disclosure
Schedule. With respect to each such contract: (i) the contract is legal, valid,
binding and enforceable, and is in full force and effect; (ii) the contract will
continue to be legal, valid, binding and enforceable, and in full force and
effect immediately following the Closing in accordance with the terms thereof as
in effect prior to the Closing; and (iii) except as described in Section
2B.11(iii) of the AET Disclosure Statement, neither AET nor, to the knowledge of
AET or the Stockholder, any other party to such contract is in breach or default
thereof, and, to the knowledge of AET or the Stockholder, no event has occurred
which with notice or lapse of time would constitute a breach or default or
permit termination, modification, or acceleration, under such contract.
2B.12 BOOKS AND RECORDS. The corporate minute books, financial and
accounting records and other business records of AET are true, complete and
accurate in all material respects.
2B.13 LITIGATION. There is no (a) unsatisfied judgement, order, decree,
stipulation or injunction and (b) claim, complaint, action, suit, proceeding,
hearing or investigation of or in any court or Governmental Entity or before any
arbitrator to which AET is a party or, to the knowledge of AET or the
Stockholder, is threatened to be made a party.
2B.14 PERMITS AND LEGAL COMPLIANCE. AET holds all permits, licenses,
registrations, certificates, orders or approvals from any Governmental Entity
that are required for AET to conduct its business as presently conducted, except
for those the absence of which would not, individually or in the aggregate, have
an AET Material Adverse Effect. AET, and the conduct and operations of its
business, are in compliance with all laws (including rules and regulations
thereunder) of any federal,
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state, local or foreign government or Governmental Entity which are applicable
to AET or its business, except for any violation of, or default under, a law
which would not have an AET Material Adverse Effect.
2B.15 TAX MATTERS.
(a) AET has filed on a timely basis all federal, state, local and
foreign Tax (as defined below) returns that were required to be filed, all of
which returns were accurate and complete in all material respects. AET has paid
on a timely basis all Taxes which have become due and withheld and remitted on a
timely basis any Taxes required to be withheld by it. No unsatisfied
deficiencies have been asserted or assessed against AET as a result of any audit
by the Internal Revenue Service or any state or local taxing authority, and no
examination or audit by any such authority is currently in progress or, to the
knowledge of AET or the Stockholder, threatened. "Tax" and "Taxes" mean all
taxes, charges, fees and similar assessments (including without limitation those
relating to income, receipts, excise, real property, personal property, sales,
use, transfer, withholding, employment, payroll and franchises) imposed by the
United States of America or any state, local or foreign government, or any
agency thereof.
(b) At all times since its formation through the Closing, AET has been
and will be an S Corporation as defined in Section 1361 of the Internal Revenue
Code of 1986, as amended.
(c) AET's liability for Taxes for all periods ending on or before the
Closing does not exceed any accruals or reserves (excluding any reserves,
accruals or tax assets relating to deferred taxes) for Taxes reflected on the
AET 1997 Balance Sheet.
2B.16 BROKERS' FEES. Neither AET nor the Stockholder has any liability or
obligation to pay any fees or commissions to any broker, finder or agent with
respect to the transactions contemplated by this Agreement.
2B.17 POOLING. Neither AET nor any of its affiliates, to the knowledge of
AET or the Stockholder, has through the date of this Agreement taken or agreed
to take any action that would prevent AET and ASC from accounting for the
business combination to be effected by the Merger as a "pooling of interests" in
conformity with GAAP.
2B.18 DISCLOSURE. No statement by AET or the Stockholder contained in this
Agreement, the AET Disclosure Schedule or any certificate to be delivered by or
on behalf of AET or the Stockholder pursuant to this Agreement contains or will
contain any untrue statement of a material fact or omits or will omit to state
any material fact necessary, in light of the circumstances under which it was or
will be made, in order
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to make the statements herein or therein not misleading. The Stockholder and AET
have disclosed to ASC all material facts pertaining to the transactions
contemplated by this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF ASC
Except as set forth in the disclosure schedule of ASC attached hereto (the
"ASC Disclosure Schedule"), ASC represents and warrants to the Stockholder as
follows:
3.1 ORGANIZATION. ASC is a corporation duly organized, validly existing
and in corporate good standing under the laws of the State of Delaware. ASC is
duly qualified to conduct business and is in corporate good standing under the
laws of each jurisdiction in which the nature of its businesses or the ownership
or leasing of its properties require such qualification, except where the
failure to be so qualified would not have a material adverse effect on the
business, assets, results of operations or financial condition of the ASC and
its subsidiaries, taken as a whole (an "ASC Material Adverse Effect"). ASC has
all requisite corporate power and authority to carry on the business in which it
is engaged and to own and use the properties owned and used by it. ASC has
furnished to AET true, complete and accurate copies of the Certificate of
Incorporation and By-laws of ASC, each as amended and in effect on the date
hereof.
3.2 CAPITALIZATION. The authorized capital stock of ASC consists of
20,000,000 shares of ASC Common Stock, of which 11,594,484 shares were issued
and outstanding as of the close of business on July 24, 1997. All of the issued
and outstanding shares of capital stock of ASC are, and the ASC Shares will be
when issued pursuant to this Agreement, duly authorized, validly issued, fully
paid and nonassessable and free of preemptive rights.
3.3 AUTHORIZATION. ASC has all requisite corporate power and authority to
execute and deliver this Agreement and the Xxxxxxx Employment Letter and to
perform its obligations hereunder and thereunder. The execution and delivery by
ASC of this Agreement and the Xxxxxxx Employment Letter and the performance by
ASC of its obligations hereunder and thereunder have been duly and validly
authorized by all necessary corporate action on the part of ASC. This Agreement
has been validly executed and delivered by ASC and constitutes a valid and
binding obligation of ASC, enforceable against ASC in accordance with its terms.
3.4 NONCONTRAVENTION. Subject to compliance with the applicable
requirements of the Securities Act and any applicable state securities laws, the
Securities Exchange Act of 1934, as amended, the rules and regulations of any
exchange on which the Common Stock of ASC is listed, and the filing of the
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Certificate of Merger as required by the Delaware General Corporation Law,
neither the execution and delivery of this Agreement by ASC, nor the
consummation by ASC of the transactions contemplated hereby, will (a) conflict
with or violate any provision of the charter or By-laws of ASC, (b) require on
the part of ASC or any corporation with respect to which ASC, directly or
indirectly, has the power to vote or direct the voting of sufficient securities
to elect a majority of the directors (a "Subsidiary") any filing with, or any
permit, authorization, consent or approval of, any Governmental Entity, other
than any filing, permit, authorization, consent or approval which if not
obtained or made would not have a material adverse effect on the assets,
business, financial condition, results of operations or future prospects of ASC
or on the ability of the Parties to consummate the transactions contemplated by
this Agreement, (c) conflict with, result in a breach of, constitute (with or
without due notice or lapse of time or both) a default under, result in the
acceleration of, create in any party the right to accelerate, terminate, modify
or cancel, or require any notice, consent or waiver under, any contract, lease,
sublease, license, sublicense, franchise, permit, indenture, agreement or
mortgage for borrowed money, instrument of indebtedness, Security Interest or
other arrangement to which ASC is a party or by which ASC is bound or to which
any of their assets is subject, other than any conflict, breach, default,
acceleration, termination, modification or cancellation which individually or in
the aggregate would not have an ASC Material Adverse Effect or would not affect
the ability of the Parties to consummate the transactions contemplated by this
Agreement, (d) result in the imposition of any Security Interest upon any assets
of ASC or (e) violate any order, writ, injunction, decree, statute, rule or
regulation applicable to ASC or any of its properties or assets.
3.5 REPORTS AND FINANCIAL STATEMENTS.
(a) ASC has previously furnished to the Stockholder complete and
accurate copies, as amended or supplemented, of its (a) Annual Reports on Form
10-K for the fiscal years ended March 31, 1996 and March 31, 1997, as filed with
the Securities and Exchange Commission (the "SEC"), and (b) all other reports
filed by ASC under Section 13 of the Exchange Act with the SEC since July 1,
1996 (such reports are collectively referred to herein as the "ASC Reports").
The ASC Reports constitute all of the documents required to be filed by ASC
under Section 13 of the Exchange Act with the SEC since July 1, 1996. As of
their respective dates, the ASC Reports did not contain any untrue statement of
a material fact or omit to state a material fact required to be stated herein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.
(b) The audited financial statements and unaudited interim financial
statements of ASC including the ASC Reports (i) have been prepared in accordance
with GAAP (except as may be indicated therein or in the notes thereto, and in
the case of quarterly financial statements, as permitted by Form 10-Q under the
Exchange
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Act), and (ii) fairly present, as of the dates and for the periods indicated,
the financial condition and the results of operations of ASC and its
subsidiaries, taken as a whole.
(c) ASC has no liability or obligation whatsoever, whether accrued,
absolute, contingent or otherwise, other than (i) the liabilities shown on the
ASC Reports, (ii) liabilities, similar in nature to those shown on the ASC
Reports, which have arisen after March 31, 1997 in the Ordinary Course of
Business, (iii) contractual liabilities which are not required to be reflected
on a balance sheet under GAAP and (iv) liabilities for the transaction expenses
permitted under Section 4.2.
(d) Since April 1, 1997, there has occurred no event or development
which has had or may reasonably be foreseen to have in the future an ASC
Material Adverse Effect.
3.6 LITIGATION. There is no (a) unsatisfied judgement, order, decree,
stipulation or injunction or (b) claim, complaint, action, suit, proceeding,
hearing or investigation of or in any court or Governmental Entity or before any
arbitrator, to which ASC is a party or, to the knowledge of ASC, is threatened
to be made a party, which may reasonably be expected to have an ASC Material
Adverse Effect.
3.7 FORM S-3. All requirements for use by the Company of a registration
statement on Form S-3 with respect to the resale of the ASC Shares are
satisfied.
3.8 DISCLOSURE. No statement by ASC contained in this Agreement, the ASC
Disclosure Schedule or any certificate to be delivered by or on behalf of ASC
pursuant to this Agreement contains or will contain any untrue statement of a
material fact or omits or will omit to state any material fact necessary, in
light of the circumstances under which it was or will be made, in order to make
the statements herein or therein not misleading. ASC has disclosed to the
Stockholder all material facts pertaining to the transactions contemplated by
this Agreement.
ARTICLE IV
OTHER AGREEMENTS
4.1 STOCK OPTIONS. ASC hereby agrees that following the Closing it shall
grant stock options under its 1996 Stock Option Plan to purchase an aggregate of
at least 18,000 shares of ASC Common Stock to the employees of AET designated by
the Stockholder.
4.2 EXPENSES. ASC shall be responsible for its own costs and expenses,
including counsel fees, incurred in connection with the transactions
contemplated by this Agreement. The Stockholder shall be responsible for his own
costs and expenses
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and the costs and expenses of AET incurred in connection with the transactions
contemplated by this Agreement.
4.3 REGISTRATION RIGHTS.
(a) REGISTRATION OF SHARES. ASC shall file with the SEC, as promptly
as practicable following the Closing, a registration statement on Form S-3
covering the resale to the public by the Stockholder of the ASC Shares (the
"Stockholder Registration Statement"). ASC shall use its best efforts to cause
the Stockholder Registration Statement to be declared effective by the SEC as
soon as practicable, PROVIDED that the Stockholder Registration Statement shall
not be declared effective until after financial results covering at least 30
days of combined operations of the Stockholder and ASC after the Closing shall
have been publicly released. ASC shall cause the Stockholder Registration
Statement to remain effective for at least one month after the date on which the
Stockholder Registration Statement is declared effective or such earlier time as
all of the ASC Shares covered by the Stockholder Registration Statement have
been sold pursuant thereto.
(b) LIMITATIONS ON REGISTRATION RIGHTS.
(i) ASC may, by written notice to the Stockholder, for a period
of up to 45 days from the date of written notice, except in the case of
Subsection 4.3(b)(i)(B)(z) below, for which there shall be no time limit, (A)
delay the filing or effectiveness of the Stockholder Registration Statement or
(B) suspend the Stockholder Registration Statement after effectiveness and
require that the Stockholder immediately cease sales of shares pursuant to the
Stockholder Registration Statement, in the event that (x) ASC files a
registration statement (other than a registration statement on Form S-8 or its
successor form) with the SEC for a public offering of its securities, (y) ASC is
engaged in any activity or transaction that ASC desires to keep confidential for
business reasons, if ASC determined in good faith that the public disclosure
requirements imposed on ASC under the Securities Act in connection with the
Stockholder Registration Statement would require disclosure of such activity,
transaction, preparations or negotiations or (z) ASC is ineligible for use of a
Form S-3.
(ii) If ASC delays or suspends the Stockholder Registration
Statement or requires the Stockholder to cease sales of shares pursuant to
paragraph (a) above, ASC shall, as promptly as practicable following the
termination of the circumstances which entitled ASC to do so, take such actions
as may be necessary to file or reinstate the effectiveness of the Stockholder
Registration Statement and/or give written notice to the Stockholder authorizing
him to resume sales pursuant to the Stockholder Registration Statement. If as a
result thereof the prospectus included in the Stockholder Registration Statement
has been amended to comply with the requirements of the Securities Act, ASC
shall enclose such revised prospectus with
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the notice to the Stockholder given pursuant to this paragraph (ii), and the
Stockholder shall make no offers or sales of shares pursuant to the Stockholder
Registration Statement other than by means of such revised prospectus.
(c) REGISTRATION PROCEDURES.
(i) In connection with the filing by ASC of the Stockholder
Registration Statement, ASC shall furnish to the Stockholder a copy of the
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act.
(ii) ASC shall use its best efforts to register or qualify the
ASC Shares covered by the Stockholder Registration Statement under the
securities laws of such states as the Stockholder shall reasonably request;
PROVIDED, HOWEVER, that ASC shall not be required in connection with this
paragraph (ii) to qualify as a foreign corporation or execute a general consent
to service of process in any jurisdiction.
(iii)If ASC has delivered preliminary or final prospectuses to
the Stockholder and after having done so the prospectus is amended to comply
with the requirements of the Securities Act, ASC shall promptly notify the
Stockholder and, if requested by ASC, the Stockholder shall immediately cease
making offers or sales of shares under the Stockholder Registration Statement
and return all prospectuses to ASC. ASC shall promptly provide the Stockholder
with revised prospectuses and, following receipt of the revised prospectuses,
the Stockholder shall be free to resume making offers and sales under the
Stockholder Registration Statement.
(iv) ASC shall pay the expenses incurred by it in complying with
its obligations under this Section 4.3, including all registration and filing
fees, exchange listing fees, fees and expenses of counsel for ASC, and fees and
expenses of accountants for ASC, but excluding (A) any brokerage fees, selling
commissions or underwriting discounts incurred by the Stockholder in connection
with sale xxxxxx the Stockholder Registration Statement and (B) the fees and
expenses of any counsel retained by the Stockholder.
(d) REQUIREMENTS OF THE STOCKHOLDER. ASC shall not be required to
include any ASC Shares in the Stockholder Registration Statement unless:
(i) the Stockholder furnishes to ASC in writing such information
regarding such Stockholder as ASC may reasonably request in writing in
connection with the Stockholder Registration Statement or as shall be required
in connection therewith by the SEC or any state securities law authorities;
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(ii) the Stockholder shall have provided to ASC its written
agreement:
(A) to indemnify ASC and each of its directors and officers
against, and hold ASC and each of its directors and officers harmless from, any
losses, claims, damages, expenses or liabilities (including reasonable attorneys
fees) to which ASC or such directors and officers may become subject by reason
of any statement or omission in the Stockholder Registration Statement made in
reliance upon, or in conformity with, a written statement by the Stockholder
furnished pursuant to this Section 4.3(c); and
(B) to report to ASC sales made pursuant to the Stockholder
Registration Statement.
(e) ASC agrees to indemnify and hold harmless the Stockholder against
any losses, claims, damages, expenses or liabilities to which the Stockholder
may become subject by reason of any untrue statements of a material fact
contained in the Stockholder Registration Statement or any omission to state
therein a fact required to be stated therein or necessary to make the statements
therein not misleading, except insofar as such losses, claims, damages, expenses
or liabilities arise out of or are based upon information furnished to ASC by or
on behalf of the Stockholder for use in the Stockholder Registration Statement.
ASC shall have the right to assume the defense and settlement of any claim or
suit for which ASC may be responsible for indemnification under this Section
4.3(e).
(f) ASSIGNMENT OF RIGHTS. The Stockholder may not assign any of its
rights under this Section 4.3 except in connection with the transfer of some or
all of the ASC Shares to a child or spouse, or trust for their benefit, PROVIDED
that each such transferee agrees in a written instrument delivered to ASC to be
bound by the provisions of this Section 4.3.
4.4 FILING RESPONSIBILITY.
(a) The Stockholder shall prepare and file all income tax returns for
AET for any taxable period ending on or before the Closing Date;
(b) ASC shall file all other returns with respect to AET;
(c) With respect to any tax returns for taxable periods ending before
the Closing Date, the Stockholder shall consult with ASC concerning each such
return. The Stockholder shall provide ASC with a copy of each proposed tax
return at least 15 days prior to the filing of such tax return, and ASC may
provide comments thereon, which comments shall be delivered within seven days of
receiving such copies; and
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(d) ASC and the Stockholder shall cooperate in the preparation of all
tax returns and audits for any tax periods for which one party could reasonably
require the assistance of the other party in obtaining the necessary
information.
4.5 RESTRICTION ON TRANSFER. The Stockholder will not sell, exchange,
transfer, pledge, dispose or otherwise reduce his risk relative to any ASC
Shares or any part thereof owned by him until such time after the Effective Time
as financial results covering at least thirty (30) days of the combined
operations of ASC and AET after the Closing have been filed by ASC with the
Securities and Exchange Commission or published by ASC in an Annual Report on
Form 10-K, a Quarterly Report on Form 10-Q, a Current Report on Form 8-K, a
quarterly or monthly earnings release, a press release, a registration
statement, or other public issuance which includes combined sales and income of
ASC and AET (the "Financial Results").
4.6 PAYMENT OF OUTSTANDING DEBT AND RELEASE OF GUARANTEES. Within 10
business days of the Closing, ASC shall pay and terminate, on behalf of AET,
AET's current line of credit with Eastern Bank in the amount of $50,000, AET's
current working capital loan with Eastern Bank in the amount of $19,166.67, and
AET's line of credit with American Express Small Business Service in the amount
of $10,000. ASC and the Stockholder agree to work together with Eastern Bank and
American Express Small Business Service to cancel the promissory notes and other
debt documents and release the guarantees made by the Stockholder.
4.7 PUBLICATION OF FINANCIAL RESULTS. ASC agrees to use its best efforts
to publish Financial Results by September 30, 1997.
4.8 PAYMENT OF TAX OBLIGATIONS. Within 5 business days after the Closing,
ASC will cooperate with the Stockholder to cause AET to use the proceeds
received by AET pursuant to Sections 1.3(e) and (g) to pay up to $91,092 of
federal and state payroll taxes due from AET prior to the date of the Closing
and up to $5,682 to pay AET's accounting fees and 1997 Massachusetts corporate
excise taxes. Subject to such payments, the Stockholder agrees to pay all Taxes
owed by AET with respect to periods prior to the Closing in excess of any
accruals or reserves (excluding any reserves, accruals or tax assets) for taxes
reflected on the AET 1997 Balance Sheet.
4.9 ESCROW. Upon the Closing, ASC will hold and not transfer to the
Stockholder 6,831 ASC Shares. As promptly as possible after the Closing Date,
ASC shall deposit with the Escrow Agent such ASC Shares issuable to the
Stockholder pursuant to Section 1.5 (the "Escrow Fund"), for the purpose of
securing the indemnification obligations of the Stockholder as set forth in this
Agreement. The Escrow Fund shall be held by the Escrow Agent under the Escrow
Agreement pursuant to the terms thereof. The Parties agree to execute an Escrow
Agreement substantially in the form attached hereto as EXHIBIT F with such
changes as the
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contracting parties may agree upon. The Escrow Fund shall be held as a trust
fund and shall not be subject to any lien, attachment, trustee process or any
other judicial process of any creditor of any party, and shall be held and
disbursed solely for the purposes and in accordance with the terms of the Escrow
Agreement.
4.10 RELEASE OF LEASE GUARANTEE. ASC agrees to use its best efforts to
obtain the release of the Stockholder from the Stockholder's guaranty of the
lease dated December 29, 1992 of the premises at 000-X Xxx Xxxxxx Xxxxxx,
Xxxxxx, XX as promptly as practical after the Closing Date. For so long as ASC
is unable to obtain such release, ASC agrees that it will not extend such lease
without the Stockholder's consent and it will reimburse the Stockholder for any
costs or expenses incurred by the Stockholder with respect to such guarantee for
any periods following the Closing Date, subject to the Stockholder's
indemnification obligations as set forth in Article VI.
ARTICLE V
DEFINITIONS
For purposes of this Agreement, each of the following defined terms is
defined in the Section of this Agreement indicated below.
Defined Term Section
------------ -------
AET Preliminary Statement
AET 1997 Balance Sheet 2B.5(a)
AET Disclosure Schedule Article IIB
AET Financial Statements 2B.5(a)
AET Intellectual Property 2B.10(a)
AET Material Adverse Effect 2B.1
AET Related Party Transactions 2B.26
AET Shares 1.5
ASC Preliminary Statement
ASC Common Stock Preliminary Statement
ASC Disclosure Schedule Article III
ASC Material Adverse Effect 3.1
ASC Reports 3.5
ASC Shares 1.5
Agreed Amount 5.3(a)
Certificate of Merger 1.1
Closing 1.2
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Defined Term Section
------------ -------
Closing Date 1.2
Effective Time 2A.5
Financial Results 4.5
GAAP 2B.5(a)
Governmental Entity 2B.3
Holdings 2B.12(b)
Indemnified Party 5.3(a)
Xxxxxxx Employment Letter 1.3
Merger 1.1
Ordinary Course of Business 2B.3
Parties Preliminary Statement
Permits 2B.25
Personal Property 2B.8(b)
Purchase Price 1.2
Real Property 2B.12(b)
Securities Act 2A.4(a)
Security Interest 2A.1
Stockholder Preliminary Statement
Subsidiary 3.4
Tax, Taxes 2B.15
Xxxx Employment Letter 1.4(b)
ARTICLE VI
INDEMNIFICATION
6.1 INDEMNIFICATION BY THE STOCKHOLDER. The Stockholder shall indemnify ASC
in respect of, and hold ASC harmless against, any and all debts, obligations and
other liabilities, monetary damages, fines, fees, penalties, interest
obligations, deficiencies, losses and expenses (including without limitation
amounts paid in settlement, interest, court costs, costs of investigations, fees
and expenses of attorneys, accountants, financial advisors and other experts,
and other expenses of litigation) ("Damages") incurred or suffered by ASC or any
officer or director thereof resulting from, relating to or constituting:
(a) any misrepresentation, breach of warranty or failure to perform
any covenant or agreement of AET or the Stockholder contained in this Agreement;
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(b) any failure of the Stockholder to have good, valid and marketable
title to the issued and outstanding AET Shares held by the Stockholder, free and
clear of all liens, claims, pledges, options, adverse claims or charges of any
nature whatsoever;
(c) all liabilities resulting from any claim by a stockholder or
former stockholder of AET or any other person, firm, corporation or entity,
seeking to assert, or based upon: (i) ownership or rights to ownership of any
share of stock interests of AET; (ii) any rights of a stockholder, including any
option or preemptive rights or rights to notice or to vote, but excluding
dissenter's rights; (iii) any rights under the Articles of Organization,
By-laws, or other organizational document of AET; or (iv) any claim that his,
her or its shares were wrongly repurchased by AET; or
(d) all liabilities resulting from the failure of the Stockholder to
have any back wages owed to any AET employees at the date of Closing paid in
full as of the date of Closing or to have the taxes and expenses described in
Section 4.8 hereof.
6.2 INDEMNIFICATION BY ASC. ASC shall indemnify the Stockholder in respect
of, and hold it harmless against, any and all Damages incurred or suffered by
the Stockholder or any officer or director of AET resulting from, relating to or
constituting any misrepresentation, breach of warranty or failure to perform any
covenant or agreement of ASC contained in this Agreement.
6.3 CLAIMS FOR INDEMNIFICATION.
(a) A Party entitled to indemnification under this Article VI (an
"Indemnified Party") shall give prompt written notification to the party from
which indemnification is sought (the "Indemnifying Party") of the commencement
of any action, suit or proceeding relating to a third party claim for which
indemnification pursuant to this Article VI may be sought. Within 15 days after
delivery of such notification, the Indemnifying Party may, upon written notice
thereof to the Indemnified Party, assume control of the defense of such action,
suit or proceeding with counsel reasonably satisfactory to the Indemnified
Party, provided the Indemnifying Party acknowledges in writing to the
Indemnified Party that any damages, fines, costs or other liabilities that may
be assessed against the Indemnified Party in connection with such action, suit
or proceeding constitute Damages for which the Indemnified Party shall be
entitled to indemnification pursuant to this Article VI. If the Indemnifying
Party does not assume control of such defense, the Indemnified Party shall
control such defense. The party not controlling such defense may participate
therein at its own expense; provided that if the Indemnifying Party assumes
control of such defense and the Indemnified Party reasonably concludes that the
Indemnifying Party and the Indemnified Party have conflicting interests or
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different defenses available with respect to such action, suit or proceeding,
the reasonable fees and expenses of counsel to the Indemnified Party shall be
considered "Damages" for purposes of this Agreement. The party controlling such
defense shall keep the other party advised of the status of such action, suit or
proceeding and the defense thereof and shall consider in good faith
recommendations made by the other party with respect thereto. The Indemnified
Party shall not agree to any settlement of such action, suit or proceeding
without the prior written consent of the Indemnifying Party, which shall not be
unreasonably withheld. The Indemnifying Party shall not agree to any settlement
of such action, suit or proceeding without the prior written consent of the
Indemnified Party, which shall not be unreasonably withheld.
(b) Notwithstanding the provisions of Section 6.3(a), if a third party
asserts (other than by means of a lawsuit) that ASC is liable to it for a
monetary or other obligation which may constitute or result in Damages for which
ASC may be entitled to indemnification pursuant to this Article VI, and ASC
reasonably determines that it has a valid business reason to fulfill such
obligation, then (i) if time is of the essence, ASC shall be entitled to satisfy
such obligation, without prior notice to or consent from the Stockholder
(however ASC shall use its reasonable best efforts to give notice to and consult
with the Stockholder prior to acting on the obligation, whenever practicable),
(ii) ASC may make a claim for indemnification pursuant to this Article VI in
accordance with the provisions of this Section 6.3, and (iii) ASC shall be
reimbursed, in accordance with the provisions of this Section 6.3, for any such
Damages for which it is entitled to indemnification pursuant to this Article VI
(subject to the right of the Stockholder to dispute ASC's entitlement to
indemnification or the amount for which it is entitled to indemnification).
(c) Promptly following delivery of a written notice from the
Indemnified Party which contains (i) a description of any Damages incurred by
the Indemnified Party, (ii) a statement that the Indemnified Party is entitled
to indemnification under this Article VI for such Damages and a reasonable
explanation of the basis therefor, and (iii) a demand for payment in the amount
of such Damages, the Indemnifying Party shall pay such amount to the Indemnified
Party, by check or by wire transfer.
6.4 SURVIVAL. The representations and warranties of AET and the Stockholder
set forth in this Agreement shall survive the Closing and the consummation of
the transactions contemplated hereby and continue until 365 days after the
Closing and shall not be affected by any examination made for or on behalf of
ASC or the knowledge of any of ASC's officers, directors, stockholders,
employees or agents. Notwithstanding the foregoing, the representations and
warranties contained in Section 2B.14 relating to compliance with legal matters
and 2B.15 relating to tax matters shall survive the Closing and the consummation
of the
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transactions contemplated thereby and continue until the expiration of the
applicable statute of limitations.
6.5 LIMITATIONS. Notwithstanding anything to the contrary herein, the
aggregate liability for Damages under this Article VI shall not exceed the
Escrow Fund.
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ARTICLE VII
MISCELLANEOUS
7.1 PRESS RELEASES AND ANNOUNCEMENTS. For the first press release after
the Closing, neither Party shall issue any press release or make any public
announcement relating to the subject matter of this Agreement without first
giving the other Parties the opportunity to review and comment.
7.2 NO THIRD PARTY BENEFICIARIES. This Agreement shall not confer any
rights or remedies upon any person other than the Parties and their respective
successors and permitted assigns.
7.3 ENTIRE AGREEMENT. This Agreement (including the documents referred to
herein) constitutes the entire agreement among the Parties and supersedes any
prior understandings, agreements or representations among the Parties, written
or oral, that may have related in any way to the subject matter hereof.
7.4 SUCCESSION AND ASSIGNMENT. This Agreement shall be binding upon and
inure to the benefit of the Parties named herein and their respective successors
and permitted assigns. No Party may assign either this Agreement or any of its
rights, interests, or obligations hereunder without the prior written approval
of the other Party.
7.5 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
7.6 HEADINGS. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
7.7 NOTICES. All notices, requests, demands, claims, and other
communications hereunder shall be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly delivered two
business days after it is sent by registered or certified mail, return receipt
requested, postage prepaid, or one business day after it is sent via a reputable
nationwide overnight courier service, in each case to the intended recipient as
set forth below:
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IF TO THE STOCKHOLDER: WITH A COPY TO:
At the address set forth on Xxxxxxx, Procter & Xxxx L.L.P.
the signature page hereto Xxxxxxxx Xxxxx
Xxxxxx, XX 00000
Attn: Xxxx X. Xxx, Esq.
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IF TO ASC: WITH A COPY TO:
American Superconductor Xxxx and Xxxx LLP
Corporation 00 Xxxxx Xxxxxx
0 Xxxxxxxxxx Xxxxx Xxxxxx, XX 00000
Xxxxxxxxxxx, XX 00000 Attn: Xxxxxxx X. Xxxxxxx, Esq.
Attn: President
Any Party may give any notice, request, demand, claim, or other
communication hereunder using any other means (including personal delivery,
expedited courier, messenger service, telecopy, telex, ordinary mail, or
electronic mail), but no such notice, request, demand, claim, or other
communication shall be deemed to have been duly given unless and until it
actually is received by the party for whom it is intended. Any Party may change
the address to which notices, requests, demands, claims, and other
communications hereunder are to be delivered by giving the other Parties notice
in the manner herein set forth.
7.8 GOVERNING LAW AND JURISDICTION.
(a) This Agreement shall be governed by and construed in accordance
with the internal laws (and not the law of conflicts) of the Commonwealth of
Massachusetts.
(b) Each of the Parties (i) submits to the jurisdiction of any state
or federal court sitting in Massachusetts in any action or proceeding arising
out of or relating to this Agreement, (ii) agrees that all claims in respect of
the action or proceeding may be heard and determined in any such court, and
(iii) agrees not to bring any action or proceeding arising out of or relating to
this Agreement in any other court. Each of the Parties waives any defense of
inconvenient forum to the maintenance of any action or proceeding so brought and
waives any bond, surety or other security that might be required of any other
Party with respect thereto. Any Party may make service on another Party by
sending or delivering a copy of the process to the Party to be served at the
address and in the manner provided for the giving of notices in Section 7.8.
Nothing in this Section 7.8 however, shall affect the right of any Party to
serve legal process in any other manner permitted by law.
7.9 AMENDMENTS AND WAIVERS. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by ASC
and the Stockholder. No waiver by any Party of any default, misrepresentation,
or breach of warranty or covenant hereunder, whether intentional or not, shall
be deemed to extend to any prior or subsequent default, misrepresentation, or
breach of warranty or covenant hereunder or affect in any way any rights arising
by virtue of any prior or subsequent such occurrence.
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7.10 DISPUTES. The Parties agree that, in the event of a dispute under
this Agreement, the Parties shall negotiate in good faith for a period of sixty
(60) days after written notice of such dispute has been given to the other Party
or Parties, as the case may be. In the event that such dispute is not resolved
within such 60 day period, the Parties are free to seek all other available
remedies.
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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of
the date first above written.
AMERICAN SUPERCONDUCTOR CORPORATION
By:
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Name:
Title:
APPLIED ENGINEERING TECHNOLOGIES, LTD.
By:
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Name:
Title:
THE STOCKHOLDER:
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XXXXX XXXXXXX
Address:
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