EXHIBIT 2.3
ASSET PURCHASE AGREEMENT
by and between
SATCON TECHNOLOGY CORPORATION
and
NORTHROP GRUMMAN CORPORATION
Dated as of
November 16, 1999
THIS ASSET PURCHASE AGREEMENT ("Agreement"), dated as of November 16, 1999,
by and between SATCON TECHNOLOGY CORPORATION, a Delaware corporation
("Purchaser") and NORTHROP GRUMMAN CORPORATION, a Delaware corporation
("Seller").
RECITALS
Seller owns patented and other specified and unspecified intellectual
property rights, certain contracts and related equipment and owns or is the
licensee of certain software required to carry out the work to be performed
under such contracts and has performed to date under the contracts listed in
Exhibit A, all in connection with its Power Electronics Products Business,
previously known as Seller's Electric Vehicle Group, which produces power
electronics, controllers and motors for electric and hybrid vehicle powertrains,
microturbine power generation and energy storage products (the "Business").
Seller desires to sell to Purchaser, and Purchaser desires to purchase from
Seller, the contracts and bid and proposal offers set forth in Exhibit A
("Contracts"), the accounts receivable, prepaid expenses and advance payments,
if any, set forth in Exhibit AA ("Financial Assets"), the equipment, and other
assets located in the Workspace as defined in the Transition Services Agreement
annexed hereto and as set forth in Exhibit B ("Equipment"), the raw material,
work in process and finished goods listed in Exhibit C ( "Inventory"), the
intellectual property used in the business set forth in Exhibit D (
"Intellectual Property")the designs, specifications drawings, bills of
materials, production lines and processes, shop configurations, instructions,
warnings, repair and maintenance procedures and the like as described in Exhibit
DD ("Process Related Property"), ,") the owned software listed in Exhibit E,
("Owned Software"), the customer lists, prospects, books, records, and purchase
orders listed in Exhibit F ("Other Intangible Assets") and Seller and Purchaser
also desire to license or sublicense the software set forth in Exhibit G
("Licensed Software") (all of the foregoing ,collectively, the "Assets") on the
terms, conditions, restrictions, licenses and reservations hereinafter set
forth. To the extent that any intangible property rights, other than the
Intellectual Property, arise from or relate exclusively to the activities of the
Business as conducted heretofore and to the date hereof or to the Intellectual
Property exist and are owned or licensed to Seller, such intangible property are
included in the Assets transferred or sublicensed hereunder. Intangible
property rights including intellectual property rights and those rights
described in Section 1.1(j) that have been used in and are necessary to the
products and services of the Business as conducted heretofore but that also
relate to business, assets or products of Seller that are not transferred to
Purchaser by this Agreement shall be available to Purchaser pursuant to an
unrestricted, worldwide, perpetual, irrevocable, royalty-free, fully paid up,
non-exclusive license from Seller which shall also be assignable and under which
SatCon can freely grant sublicenses and Seller hereby grants such right and
license. However, in no event does the Purchaser obtain the right within this
Agreement to sublicense or assign intangible property rights including
intellectual property for any other use than as used in the Business as defined.
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AGREEMENT
Now, therefore, Purchaser and Seller hereby agree as follows:
1. SALE AND PURCHASE OF ASSETS
1.1 Purchased Assets. In reliance upon the representations,
warranties and agreements herein contained and upon the terms and subject
to the conditions set forth in this Agreement, Seller hereby agrees to sell
(except that it agrees to license or sublicense to the extent of Seller's
right to sublicense Licensed Software or that of a Licensee), assign,
transfer, convey and deliver to Purchaser, and Purchaser hereby agrees to
purchase and acquire from Seller, on the Closing Date, all of Seller's
right, title and interest in and to the Assets described in Exhibits A, AA,
B, C, D (as and to the extent provided herein), DD, E, F and G attached
hereto, which Assets include:
(a) The Contracts listed and described in Exhibit A, and all
books and records relating to the Contracts, including attendant
vendor files, invoices with supporting documentation, business and
technical records, and correspondence, including the executory portion
of any and all sales orders, bids and quotations as set forth in
Exhibit A;
(b) Equipment- All equipment described in the attached Exhibit B;
(c) The Inventory- All raw materials, work in process and
finished goods listed and described in attached Exhibit C;
(d) (i) Licenses and permits used in the Business, the
Intellectual Property (set forth on Exhibit D) and trade secrets and
intangible property used exclusively in the Business (provided however
that to the extent any such Intellectual Property, unspecified
intellectual property rights and all other specific items referred to
in this Section 1.1(d)(i) and the items described in Section 1.1(d)
(ii) are used or usable by Seller in any respect other than in
connection with the Business or any business of Seller involving
Governmental Customers as defined below), Purchaser agrees to grant,
and does hereby grant back to Seller and Seller hereby accepts from
Purchaser a nonexclusive irrevocable, perpetual, royalty-free,
worldwide right and license -to-use such Intellectual Property for
products and/or services provided by Seller solely to Governmental
Customers ("Governmental Customers" shall mean any office, department,
agency or instrumentability of (i) the government of the United
States, (ii) any foreign government (iii) any state, country or local
government or governmental subdivision, or (iv) any state or political
subdivision of any foreign country)) including: a) all applications
for patents; b) patent disclosures; c) proprietary trade secrets and
know-how; d) any rights which Seller has with respect to potentially
patentable technology and other items on which any persons employed in
the Business have worked during and arising out of their employment
with Business for which patent applications have not yet been filed
but
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disclosures have been made to Seller's cognizant patent committee; e)
design rights relating to the Business; f) domain name of the
Business, if any; g)trademarks and trade names issued and pending
relating exclusively to the Business; source code, if any, used
exclusively in the Business: h) brochures, videos and websites, if
any, exclusively of the Business, but in all cases only those items in
subsections (d)(i) (c) through (h) that arise solely from or are used
exclusively in the Business are considered Assets as such term is used
in this Agreement; any intangible property rights including those
described in clauses (a) through (h) above that have been used in and
are necessary to the products and services of the Business as
conducted heretofore but that also relate to business, assets or
products of Seller that are not transferred outright to Purchaser by
this Agreement are hereby available to Purchaser pursuant to a
royalty-free, non-exclusive license from Seller and Seller agrees to
grant and does hereby grant to Purchaser, and Purchaser hereby accepts
from Seller, an unrestricted non-exclusive, irrevocable, perpetual,
fully paid up royalty-free, worldwide right and license to such
intangible property (which rights shall be assignable and include the
right to freely sublicense) including, not by way of limitation,
rights relating to Patent Disclosure BD-96-189 entitled "A High Power,
Low Disturbance Electronic Circuit Assembly". However, in no event
does the Purchaser obtain the right within this Agreement to
sublicense or assign intangible property rights including intellectual
property for any other use than as used in the Business as defined.
(d) (ii) All the designs, specifications drawings, bills of
materials, production lines and processes, shop configurations,
instructions, warnings, repair and maintenance procedures,
manufacturing database and the like as listed and described in Exhibit
DD, provided, however, that with respect to any item appearing in
-----------------
Exhibit DD that has or can have application to any process involving
Excluded Assets or any business of Seller involving Governmental
Customers, Seller retains the right to use, employ, sell, license,
sublicense or otherwise transfer or utilize such item in connection
with products or services provided to Governmental Customers in
Seller's sole discretion, subject only to the restrictions of Section
4.4 of this Agreement;
(e) The Owned Software listed in Exhibit E;
(f) The Other Intangible Assets listed in Exhibit F
(g) Licensed Software listed in Exhibit G, but only as and to
the extent provided in Section 2.11 of this Agreement.
(h) The worldwide, perpetual, irrevocable, freely assignable,
fully paid up, unrestricted royalty-free, non-exclusive license (with
the right to freely sublicense and assign) to the intangible property
rights that have been used in and are necessary to the products and
services of the Business as they have been produced or provided to the
date of this Agreement. However, in no event does the Pur-
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chaser obtain the right within this Agreement to sublicense or assign
intangible property rights including intellectual property for any
other use than as used in the Business as defined.
(i) Reserved
(j) The so called "Blue Bird" assets are included in the Assets.
1.2 Excluded Assets.
(i) Except as set forth in this Agreement and any related
agreement, Purchaser shall not acquire by reason of this Agreement any
right, title or interest in or to any assets owned, leased or
otherwise used by Seller or on which any persons employed in the
Business have worked during their employment with Seller other than in
the Business. Business related licenses, software, and other such
intellectual property, related or integral to those Assets described
in this Agreement and its Exhibits, and which are reasonably necessary
for Purchaser to conduct the on-going business of the Business shall,
subject to National Security Regulations be made available to
Purchaser by Seller pursuant to license as provided in Section
1.1(d)(i) and (ii) above. If and to the extent Excluded Assets owned
by Seller have been used in the Business as heretofore conducted,
Seller shall make such assets available to the extent practicable to
Purchaser and Purchaser shall reimburse Seller for Seller's actual
costs of providing such items and/or services to Purchaser.
(ii) Silicon Carbide Technology. The assets, intellectual
property and technology related to the Silicon Carbide Technology are
not contemplated in this transaction and will not be transferred or
licensed to Purchaser. To the extent Seller offers silicon carbide
products for sale to the public, Purchaser shall be entitled to
purchase such silicon carbide products on the most favorable terms and
conditions, including price, as Seller provides from time to time for
identical products in identical quantities to others.
1.3(a) Liabilities Not Assumed by Purchaser.
(i) Except as otherwise provided in this Agreement, Purchaser is
not assuming any obligations or liabilities of Seller, or any
subsidiary thereof, notwithstanding that Seller makes certain
representations and warranties with respect to such obligations or
liabilities. All of such obligations and liabilities that are not
specifically assumed by Purchaser pursuant to this Agreement are
hereinafter referred to as "Retained Liabilities". "Retained
Liabilities" shall include, without limitation all liabilities
relating in any way to the Excluded Assets and all liabilities and
obligations arising prior to or with respect to the time period prior
to the Closing Date including without limitation under the Master
Lease which is an Exhibit to the Transition Services Agreement.
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(ii) Blue Bird Corporation Litigation. Purchaser and Seller
acknowledge the existence of a contractual dispute and litigation
between Seller and Blue Bird Corporation related to contract #FHB-5019
dated May 2, 1995 between Blue Bird Corporation and Northrop Grumman
Corporation. Purchaser does not assume any liability for such
litigation, but Purchaser shall reasonably cooperate with Seller and
assist Seller in the dispute and litigation with Blue Bird. Purchaser
will make reasonably available any of the Assets which are transferred
to the Purchaser by this agreement and will make its employees
reasonably available for depositions, settlement conferences, and
court appearances. Purchaser will be reimbursed for its actual costs
and expenses, including salary reimbursement, of making such employees
available for this purpose.
(b) Liabilities Assumed by Purchaser. As part consideration for this
transaction based on the representations of Seller in Section 2.6
hereof, Purchaser agrees to assume and discharge all obligations under
the Contracts in Exhibit A, which under such Contracts are to be
performed or discharged subsequent to the Closing Date.
1.4 Closing. The Closing of such sale and purchase (the "Closing")
shall take place on November 16, 1999 or such earlier or later date as the
parties hereto shall agree in writing (the "Closing Date") at the offices
of Seller, located at Linthicum, MD, or at such other place as the parties
hereto shall agree in writing. At the Closing, Seller shall deliver to
Purchaser a duly prepared Xxxx of Sale in accordance with Exhibit H hereto
with respect to the Assets. In consideration and exchange for the Assets,
Purchaser shall simultaneously pay to Seller the Purchase Price as provided
in Section 1.5.
1.5 Purchase Price; Manner of Payment. At Closing Purchaser will
deliver to Seller Shares of Common Stock of the Purchaser equal to
$4,905,000 divided by the average of the closing prices for Purchaser's
Common Stock as reported on the NASDAQ Composite Transactions reporting
system for the ten (10) business days immediately prior to the Closing
date. For example, if the average closing price of Purchaser's Common
Stock during the ten day period is $8.75, the Purchaser would deliver
577,058 shares to Seller at the Closing ($4,905,000 divided by $8.75).
The Shares will be restricted securities and will bear a legend reflecting
such restriction. Purchaser agrees to file a registration statement with
respect to the resale of such shares of Common Stock by Seller, at
Purchaser's cost and expense, as provided herein and in the Registration
Rights Agreement annexed hereto.
1.6 Warrants. At closing Purchaser will deliver to Seller warrant to
purchase 100,000 shares of Common Stock of Purchaser and if the conditions
in Schedule 1.6 incorporated herein by reference are fulfilled within 18
months of the date of this Agreement, purchaser shall deliver to Seller
promptly upon Seller certifying to Purchaser that the conditions set forth
in Schedule 1.6 have been satisfied and Purchaser has received the assets
therein specified, immediately upon such fulfillment, warrants to purchase
an addi-
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tional 100,000 shares of Common Stock of Purchaser. The exercise price per
share of all such warrants shall be equal to the average of the closing
prices for Purchaser's Common Stock as reported on the NASDAQ Composite
Transactions reporting system for the ten (10) business days immediately
prior to the Closing Date plus $1.25 and the warrants shall provide for an
exercise period through December 31, 2006. Such warrants shall be
represented by two (2) certificates each in the form of the Warrant
Certificate annexed hereto and the shares subject to such warrants shall
upon issuance be entitled to the benefits of the Registration Rights
Agreement annexed hereto.
1.7 Allocation of Purchase Price. Seller and Purchaser shall
mutually agree to the allocation of the Purchase Price specified in Section
1.5 among the Assets in accordance with Section 1060 of the Internal
Revenue Code of 1986, as amended (the "Code"), within seventy-five (75)
days following the Closing Date. Each of the Parties agrees to report this
transaction for tax purposes in accordance with such allocation of the
Purchase Price, including, without limitation, for all purposes on any
Federal or state income or franchise tax return filed by either Party after
the Closing Date.
2. REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Purchaser as follows:
2.1 Corporate Organization and Authority. Seller is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware and has all requisite power and authority (corporate and
other) to own its properties and assets and to conduct its business as now
being conducted, including the power to enter into this Agreement and to
carry out its obligations hereunder. The execution and delivery of this
Agreement and the performance of Seller's obligations hereunder have been
duly authorized and no other corporate proceedings on the part of Seller
are necessary to authorize such execution, delivery and performance. This
Agreement has been duly executed by Seller and is the valid and legally
binding obligation of Seller, enforceable against Seller in accordance with
its terms.
2.2 Qualification. Seller is qualified or otherwise authorized as a
foreign corporation to transact business and is in good standing as such in
each jurisdiction in which the conduct of its business so requires, except
where the failure to be so qualified will not have a material adverse
effect on Seller.
2.3 No Violation. Seller has the requisite corporate power to enter
into this Agreement and to carry out its obligations hereunder. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by delegated
authority from the Seller's Board of Directors and no other corporate
proceedings on the part of Seller are necessary to authorize this Agreement
and the transactions contemplated hereby. This Agreement is a valid and
binding obligation of Seller enforceable in accordance with its terms. The
execution, delivery and performance
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by Seller of this Agreement and the consummation of the transactions
contemplated hereby do not and will not (i) violate, conflict with or
result in the breach of any provision of the charter documents or by-laws
of Seller; (ii) violate, conflict with or result in a material breach of
any of the terms, or result in a material modification of, or otherwise
give any other contracting party the right to terminate, or constitute (or
with notice or lapse of time or both constitute) a default under, any
instrument, contract or other agreement to which Seller is a party, or by
or to which Seller's assets or properties may be bound or subject ; (iii)
violate any order, writ, judgment, injunction, award or decree of any
federal, state, local or foreign court, arbitrator or governmental or
regulatory body against, or binding upon Seller or upon the assets of
Seller; (iv) violate any statute, law or regulation of any governmental or
regulatory body, which violation would have a material adverse effect
thereto, other than to the extent any violation of such federal, state,
local or foreign laws, regulations, orders or other legal requirements
would have an immaterial effect, either singly or in the aggregate, on the
Business, Purchaser or Purchaser's ability to utilize the Assets in the
conduct of the Business following the Closing.; (v) result in the creation
or imposition of any lien, charge or encumbrance of any nature or
description upon any of the properties, assets or businesses of Seller; or
(vi) violate or result in the modification, revocation or suspension of any
transferable applicable licenses, if any, that are a portion of the Assets.
2.4 Compliance with Laws. The performance of the Contracts and the
Business to date have been conducted in accordance with all federal, state,
local or foreign laws, regulations, orders and other legal requirements
applicable thereto, other than to the extent any violation of such federal,
state, local or foreign laws, regulations, orders or other legal
requirements would have an immaterial effect, either singly or in the
aggregate, on the Business, Purchaser or Purchaser's ability to utilize the
assets in the conduct of the Business following the Closing.
2.5 Liens; Tax Matters. Seller represents and warrants to Purchaser
that except as disclosed in Schedule 2.5, Seller will transfer, and
Purchaser will receive title to the Assets free and clear of all liens,
security interests, claims, charges, encumbrances or title defects of
whatever nature or description. Purchaser and Seller shall each pay one-
half of any and all transfer or use taxes or other local taxes assessed and
payable as a consequence of the Closing of this transaction. To the extent
Seller or Purchaser is legally obligated to pay any of the transfer or use
taxes as a result of the Closing of this transaction ,the Party that in
fact pays such taxes shall be reimbursed by the other Party for one-half of
such payment within thirty (30) days of receipt of evidence of payment by
the Party that in fact made the required payment. All taxes applicable to
the Business and lawfully payable by the Seller with respect to all periods
prior to and through the Closing Date will be duly and properly computed,
reported, fully paid and discharged, and there are no unpaid taxes with
respect to any period prior to the Closing Date which are or could become a
lien on the Assets, except for current taxes not yet payable which taxes
shall be timely paid by Seller.
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2.6 Absence of Undisclosed Liabilities.
(a) At the Closing Date, there are no obligations or liabilities
arising from or relating to the Contracts except for performance
pursuant to the terms and conditions of such Contracts required after
the Closing Date and the obligations formed upon the acceptance by the
recipients of the outstanding bid and proposal offers included on
Exhibit A.
(b) Except as set forth on Schedule 2.6 attached hereto:
(i) each Contract is a valid and binding agreement of the
Seller, enforceable against the Seller in accordance with its
terms, and the Seller does not have any knowledge that any
Contract is not a valid and binding agreement of the other
parties thereto;
(ii) the Seller has fulfilled all material obligations
required pursuant to the Contracts to have been performed by the
Seller on its part prior to the date hereof, and the Seller has
no reason to believe that it would not be able to fulfill, when
due, all of its obligations under the Contracts which remain to
be performed after the date hereof;
(iii) the Seller is not in breach of or default under any
Contract, and no event has occurred which with the passage of
time or giving of notice or both would constitute such a default,
result in a loss of rights or result in the creation of any lien,
charge or encumbrance, thereunder or pursuant thereto;
(iv) to the best knowledge of the Seller, there is no
existing breach or default by any other party to any Contract,
and no event has occurred which with the passage of time or
giving of notice or both would constitute a default by such other
party, result in a loss of rights or result in the creation of
any lien, charge or encumbrance thereunder or pursuant thereto;
(v) the Seller is not restricted by any Contract relating
to the Business from carrying on its business anywhere in the
world;
(vi) the Seller has with respect to the Business no written
or oral Contracts to sell products or perform services which are
expected to be performed at, or to result in, a loss; and
(vii) the continuation, validity and effectiveness of each
Contract will not be affected by the transfer thereof to
Purchaser under this Agreement, and all such Contracts are
assignable to Purchaser without a consent
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or Purchaser will be entitled to the economic benefit thereof as
provided in Section 4.2(d) of this Agreement..
2.7 Tangible Personal Property. "Tangible Personal Property" means
the Equipment, the Inventory, and other tangible personal property located
in the Workspace as defined in the Transition Services Agreement used by
the Business to perform the Contracts and owned by Seller. All items of
Tangible Personal Property pertaining to the performance of the Contracts
are owned by Seller and are free and clear of all liens, security
interests, claims, charges, encumbrances or title defects of whatever
nature or description.
2.8 Licenses and Permits. The Seller has all requisite licenses,
permits and certificates, including environmental, health and safety
permits, from federal, state and local authorities necessary to conduct the
Business and own and operate the Assets (collectively, the "Permits").
Except as disclosed on Schedule 2.8, the Seller is not in violation of any
law, regulation or ordinance (including, without limitation, laws,
regulations or ordinances relating to building, zoning, environmental,
disposal of hazardous substances, land use or similar matters) relating to
its properties, the violation of which could have a material adverse effect
on the Business, the Assets or the Purchaser. The Business of the Seller
does not violate, in any material respect, any federal, state, local or
foreign laws, regulations or orders (including, but not limited to, any of
the foregoing relating to employment discrimination, occupational safety,
environmental protection, hazardous waste (as defined in the Resource
Conservation and Recovery Act, as amended, and the regulations adopted
pursuant thereto), conservation, or corrupt practices, the enforcement of
which would have a material and adverse effect on the results of
operations, condition (financial or otherwise), assets, properties,
business or prospects of the Business, the Assets or the Purchaser. Except
as set forth on Schedule 2.8 attached hereto, the Seller has not since
January 1, 1996 received any notice or communication from any federal,
state or local governmental or regulatory authority or otherwise of any
such violation or noncompliance with respect to the Business or the
Assets.
2.9 Title to, and Sufficiency of, the Assets. Except as otherwise
noted on Schedule 2.9 hereto, Seller holds and owns full, unconditional,
good and marketable title to all of the Assets free and clear of all liens,
security interests, claims, charges, encumbrances or title defects of
whatever nature or description. The Assets are sufficient to perform the
work-orders heretofore or currently placed with the Business, but no
representation or warranty is expressed and none is implied, with respect
to the ability of Purchaser to achieve profitable production of any item
produced by the Business heretofore without adding additional assets, it
being expressly understood by Purchaser that the Business has been
conducted primarily as a prototyping and pre-production design facility.
2.10 Customers and Suppliers. With respect to the Contracts, none of
the customers or suppliers of Seller to Seller's knowledge has threatened
to terminate or change significantly its relationship with the Business on
or after the Closing Date; Seller has not granted any unusual credit or
other sales terms to customers or others; and, all customer
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orders for Products of the Contracts are bona fide and have been entered
into at arm's length in the ordinary course of business.
2.11 Software. Exhibits E and G contain a complete and correct list
of all significant application software, information systems or computer
programs used directly in the performance of the Contracts or by the
Business (collectively the "Software"). Seller is the owner of all of the
Software set forth in Exhibit E and agrees to transfer it to Purchaser.
Seller is the licensee or is otherwise entitled to use the Software set
forth in Exhibit G, and to the extent, and only to the extent, if any, that
it is able so to do, shall transfer the license or shall sublicense such
Software to Purchaser without cost for the term of such license or
sublicense; if Seller is unable to transfer or sublicense any software,
Seller shall enter into a commercially reasonable relationship to provide
Purchaser with the economic benefit of a transfer or sublicense without
additional cost or other burden to or Purchaser. Seller will deliver to
Purchaser true and complete copies of all licenses, leases and purchase
agreements related to any such Software where such licenses, leases and/or
agreements are necessary to the Purchaser's use of such Software. Seller
has no knowledge of any violation of trade secret rights or copyrights with
respect to such Software. Such software is the Software used by the Group
to perform its work. To the extent Purchaser chooses to utilize such
Software subsequent to the Closing, Purchaser will be responsible for any
recurring license fees or maintenance agreements relating to the Software
that are due after Closing (and there will be no apportionment thereof).
2.12 Suits. There is no suit, action, claim, investigation or
inquiry by any person or entity or any administrative agency or
governmental body and no legal, administrative or arbitration proceeding
pending or, to Seller's knowledge, threatened against Seller or any
affiliate Seller, or which should be reasonably known or expected by
Seller, which has or will materially affect Seller's ability to consummate
the transactions contemplated herein.
2.13 Acquisition or Disposition of Assets. There have been no
material acquisitions or dispositions of the assets of the Business by
Seller prior to the Closing Date other than in the ordinary course of
business.
2.14 Product Warranties; Infringement. Except as set forth on
Schedule 2.14 attached hereto, the Seller has not received notice of any
litigation, warranty claim or products liability claims relating to the
Business or the Assets. No claims exist that any products produced or
designed by the business through the date of this Agreement infringe upon
the patents or protected trade secrets of third parties, and there is no
basis for any such claims of infringement. The Inventory, the Intellectual
Property and the other Assets are the Assets used in the Business to the
date hereof, and have been adequate to conduct the Business as conducted to
the date hereof. As indicated in Section 2.9, no assurance is or can be
given that Purchaser will not be required to acquire other assets in order
to achieve profitable production of products. To the extent that any
intangible property rights other than the Intellectual Property, arise from
or relate exclusively to the activities of the Business as conducted
heretofore and to the date hereof exist and are
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owned by or licensed to Seller, such intangible property rights are
included in the Assets transferred or sublicensed hereunder. Seller has
received no notice of, has no knowledge of any basis for and believes there
is no basis for, a claim against it that any of the operations, activities
and products of the Business infringe on any patent, trademark, trade name,
copyright or other property right of a third party, or that it is illegally
or otherwise using the trade secrets, formulae or any property rights of
others. Seller has no disputes with or claims against any third party for
infringement by such third party of any Intellectual property of the
Seller. The Seller has taken all steps reasonably necessary in its opinion
to protect its right, title and interest in and to any intangible property
transferred hereunder. Seller owns all legal rights in the patents and
patent applications listed in Exhibit D, but Seller has not recorded an
assignment with respect to the foreign patents and applications that were
acquired from Westinghouse Electric Corporation. Seller will cooperate with
Buyer, and take such reasonable steps as are necessary, at Buyer's cost, to
cause all such foreign patents and patent applications to be filed in the
proper filing offices to perfect registration thereof.
2.15 Inventory. Exhibit C attached hereto sets forth a true and
correct list of all inventories of raw materials, work in process, finished
goods, maintenance supplies spare parts and similar items of the Business
(collectively, "Inventory") as of the date hereof, and such Inventory is of
a quality and quantity as Seller has used and such inventory is useable and
saleable in the ordinary course of the conduct of the Business.
2.16 Environmental. The Seller is not and has not been in violation
of any law, regulation or ordinance (including, without limitation, laws,
regulations or ordinances relating to building, zoning, environmental,
disposal of hazardous substances, land use or similar matters) relating to
the Business or the real estate being subleased to the Purchaser on even
date herewith. The Business does not and has not violated, in any material
respect, any federal, state, local or foreign laws, regulations or orders
relating to environmental protection and hazardous waste (as defined in the
Resource Conservation and Recovery Act, as amended, and the regulations
adopted pursuant thereto), the enforcement of which would have a material
and adverse effect on the results of operations, condition (financial or
otherwise), assets, properties, business or prospects of the Business or
the Purchaser.
2.17 Acquired Assets Complete. The Assets (other than with respect
to inventory for products) are, when utilized by a labor force
substantially similar to that historically employed by the Seller in the
Business, adequate to conduct the business operations currently and
previously conducted by the Business to the extent provided in Section 2.9
of this Agreement.
2.18 Assets. Schedule 2.18 attached hereto sets forth a true,
correct and complete list of all claims, liabilities, liens, pledges,
charges, encumbrances and equities of any kind affecting the Assets
(collectively, the "Encumbrances"). The Seller is, and at the Closing will
be, the true and lawful owner of the Assets, and will have the right to
sell and transfer to the Purchaser good, clear, record and marketable title
to the Assets, free and
11
clear of all Encumbrances of any kind, except as set forth on Schedule 2.18
attached hereto (the "Permitted Encumbrances") or as set forth on Schedule
2.18 attached hereto (the "Permitted Exceptions"). The delivery to the
Purchaser of the instruments of transfer of ownership contemplated by this
Agreement will vest good and marketable title to the Assets in the
Purchaser, free and clear of all liens, mortgages, pledges, security
interests, restrictions, prior assignments, encumbrances and claims of any
kind or nature whatsoever, except for the Permitted Encumbrances and the
Permitted Exceptions. At any time and from time to time after the Closing,
at the Purchaser's request and without further consideration, Seller
promptly shall execute and deliver such instruments of sale, transfer,
conveyance, assignment and confirmation, and take such other action, as
Purchaser may reasonably request to more effectively transfer, convey and
assign to Purchaser, and to confirm Purchaser's title to, all of the
Assets, to put the Purchaser in actual possession and operating control
thereof, to assist the Purchaser in exercising all rights with respect
thereto and to carry out the purpose and intent of this Agreement.
3. REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents, warrants and agrees as follows:
3.1 Corporate Organization. Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Delaware, and has all requisite power and authority (corporate and
other) to own its properties and assets and to conduct its business as now
conducted.
3.2 Corporate Authority. Purchaser has the corporate power to enter
into this Agreement and to carry out its obligations hereunder. The
execution and delivery of this Agreement, and the performance of
Purchaser's obligations hereunder, have been duly authorized and no other
corporate proceedings on the part of Purchaser are necessary to authorize
such execution, delivery and performance. This Agreement has been duly
executed by Purchaser and is the valid and legally binding obligation of
Purchaser, enforceable against Purchaser in accordance with its terms.
3.3 No Violation. The execution, delivery and performance by
Purchaser of this Agreement does not and will not violate any provision of
the charter documents or by-laws of Purchaser, of any agreement or
instrument to which Purchaser is a party or by which it is bound, or of any
order, judgment or decree of any court or other governmental or regulatory
authority to which Purchaser is subject.
3.4 Bulk Transfer Laws. Purchaser hereby waives compliance with the
provision of any so called bulk transfer laws of any jurisdiction in
connection with any of the transactions contemplated herein, to the extent
that failure to comply with any such law imposes an obligation or charge
upon any of the Assets, Purchaser reserves the right to claim full
indemnification and to be held harmless by Seller from such claim.
12
3.5 Suits. There is no suit, action, claim, investigation or inquiry
by any person or entity or any administrative agency or governmental body
and no legal, administrative or arbitration proceeding pending or, to
Purchaser's knowledge threatened against Purchaser or any affiliate of
Purchaser which has or will materially affect Purchaser's ability to
consummate the transactions contemplated herein.
3.6 Inspection; Knowledge. Purchaser represents and warrants that it
is knowledgeable with respect to and is thoroughly familiar with the
operations and business to which the Assets relate, and that it has caused
its employees and/or agents to examine or review the Assets. Purchaser
represents and warrants that the terms, conditions, methods and procedures
specified in Schedule 3.6 hereto govern the conditions of acceptance of the
Assets and the Business to the same extent as if set out in full herein.
This Section 3.6 shall survive the Closing indefinitely
4. COVENANTS OF SELLER
4.1 Consents and Approvals. Seller (i) shall diligently assist and
cooperate with Purchaser to obtain all necessary consents, waivers,
authorizations and approvals of all governmental and regulatory
authorities, domestic and foreign, and of all other persons, firms or
corporations required in connection with the execution, delivery and
performance by Seller of this Agreement, and (ii) shall diligently assist
and cooperate with Purchaser in preparing and filing all documents required
to be submitted by Purchaser to any governmental or regulatory authority,
domestic or foreign, in connection with such transactions and in obtaining
any governmental consents, waivers, authorizations or approvals which may
be required to be obtained by Purchaser in connection with such
transactions.
4.2 Further Assurances.
(a) Upon the request of Purchaser at any time on or after the
Closing Date, Seller will forthwith execute and deliver such further
instruments of assignment, transfer, conveyance, endorsement,
direction or authorization, other documents and records as Purchaser
or its counsel may reasonably request in order to perfect title of
Purchaser in the Assets or otherwise to effectuate the purpose of this
Agreement or for Purchaser to perform its obligations under the
Contracts.
(b) Seller shall use its best efforts to obtain all consents,
approvals, exemptions, permits, waivers and other authorizations from
third parties (including, without limitation, governmental entities),
including without limitation all necessary consents to the assignment
of all Contracts and to effect all registrations, filings and notices
with or to third parties, if any, required to be made by Seller
(including, without limitation, governmental entities) as shall be
necessary, advisable or desirable in order for the transactions
contemplated herein to be effectuated and in order for the Purchaser
after the Closing to be able to conduct the business of the Business
as it has been historically conducted by Seller prior to the Closing.
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(c) Notwithstanding Section 4.2 (b) above, but subject to the
last sentence of this Section 4.2(c), this Agreement shall not
constitute an agreement to assign any Contract, permit or other asset,
or any benefit arising thereunder or resulting therefrom, if any
attempted assignment thereof, without the consent required or
necessary for such assignment, would constitute a breach or violation
thereof or would in any way adversely affect the rights of the
Purchaser or the Seller thereunder. If such consent is not obtained,
or if any attempted assignment would be ineffective or would adversely
affect the Seller's rights thereunder so that the Purchaser would not
in fact receive substantially all of such rights, the Seller shall
cooperate in any arrangement the Purchaser may reasonably request in
writing to provide the Purchaser with the benefit of any such
Contract, permit or other asset, including enforcement for the benefit
of the Purchaser of any and all rights of the Seller against any other
party arising out of the breach or wrongful cancellation thereof by
such party. Nothing contained in this Section 4.2 (c) shall affect the
liability, if any, of the Seller pursuant to this Agreement for
failing to disclose the need for, and failing to use best efforts to
obtain, any consent, approvals, authorizations, exemptions or waivers.
(d) Until all consents, approvals and authorizations are
obtained by the Seller, as applicable, to the assignment of all
Contracts and permits to the Purchaser, the Purchaser and the Seller
shall be bound by the following subcontracting arrangement with
respect to any and all contracts, leases, agreements and commitments
(unless, on a case-by-case basis, the following arrangement would not
be permitted thereunder): (i) the Purchaser shall perform all of the
Seller's obligations arising on or after the Closing Date under such
Contracts on a prompt and punctual basis as a subcontractor for the
Seller; and (ii) Seller shall promptly and punctually pay to the
Purchaser, in consideration of the obligations of the Purchaser set
forth in this Section 4.2 (d), all of the payments received by Seller
pursuant to or under such contracts, leases, agreements and
commitments relating to goods sold or services performed by Purchaser
on or after the Closing Date.
4.3 Confidentiality. Seller shall maintain the confidentiality of the
operations, customers, all proprietary or otherwise non-public information
relating to the Business and the Intellectual Property of the Business
following the Closing with the same degree of care as it utilizes in the
maintenance of its own trade secrets.
4.4 Non-Compete. Seller covenants and agrees with Purchaser that for
a period of five (5) years following the Closing Seller will not produce
any product identical to the products currently or heretofore produced by
the Business.. Seller reserves the right pursuant to the royalty-free
license and grant-back of Intellectual Property and the rights to use the
designs, drawings, specifications and other intangible property rights and
items described in Sections 1.1(d)(i) and (ii) to manufacture, produce,
provide and sell products and/or services to Governmental Customers and to
purchase acquire products from Purchaser or from third parties
substantially similar to those of the Business for use in con-
14
nection with any contract Seller may have now or in the future with respect
to Governmental Customers, and to purchase or acquire an entity or business
that produces products in competition with the current or past products of
the Business provided such products in competition do not constitute fifty
percent (50%) or more of the revenue of such entity or business for each of
the past two (2) calendar years, and this Non-Compete Covenant shall not
apply to any assets or business activity that any entity acquiring more
than fifty percent (50%) of Seller's voting stock may transfer to Seller
subsequent to such acquisition.
4.5 Cooperation. Seller consents to Purchaser hiring the eight (8)
individuals listed in Schedule 4.5 and agrees that Purchaser may make
offers to and hire not more than fifteen additional employees of Seller;
provided however that nothing included herein shall be construed to limit
Seller's right to retain such employees. Seller covenants that it will not
make any effort out of the ordinary and usual course of business to
encourage such 8 listed individuals to reject employment with Purchaser,
and if so employed by Purchaser, Seller shall not solicit their
reemployment by Seller within the three (3) year period beginning with the
Closing Date but nothing in this Section 4.5 shall prevent Seller from
increasing salary, bonus and benefit levels for such individuals in
accordance with Sellers' standard practice. Nothing herein shall prevent a
rehire of any such listed individual by Seller if the contact and
application for reemployment is initiated solely by any such listed
individual.
5. COVENANTS OF PURCHASER; POST CLOSING PERFORMANCE
5.1 Purchaser covenants and agrees with Seller that Purchaser will
assume Seller's obligations under and perform the Contracts following the
Closing in accordance with their terms and applicable law, in a workmanlike
manner, with due regard for appropriate quality assurance procedures
5.2 Purchaser covenants and agrees that the representations and
warranties in Section 3.6 shall also constitute covenants and agreements
under this Section 5 with the same force and effect as if such Section 3.6
and Schedule 3.6 were set out herein in full and such covenants and
agreements shall survive the Closing indefinitely.
5.3 Purchaser covenants and agrees that within sixty (60) day of the
closing, the Purchaser shall file with the Securities and Exchange
Commission a Registration Statement on Form S-3 (the "Registration
Statement") covering the resale to the public by the Seller of the Shares.
The Purchaser shall use commercially reasonable efforts to cause the
Registration Statement to become effective as soon as practicable and to
keep it effective until the one year anniversary date of the closing;
provided however, the Purchaser may, by written notice to the Seller (i)
delay the filing or effectiveness of the Registration Statement or (ii)
suspend the Registration Statement after effectiveness and require that the
Seller immediately cease sales of shares pursuant thereto in the event that
(A) the Purchaser 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 and (B) the Purchaser
15
engages in any activity or transaction or preparation or negotiations for
any activity or transaction that the Purchaser desires to keep confidential
for business reasons, if the Purchaser determines in good faith that the
public disclosure requirements imposed on the Purchaser under the
Securities Act in connection with the Registration Statement covering the
Shares would require disclosure of such activity, transaction, preparations
or negotiations.
6. CONDITIONS TO OBLIGATIONS OF PURCHASER
All obligations of Purchaser under this Agreement are subject to the
fulfillment, at or prior to the Closing Date, of the following conditions:
6.1 Representations and Warranties of Seller. All representations
and warranties made by Seller in this Agreement shall be true and correct
in all material respects on and as of the Closing Date. Such
representations and warranties shall survive the Closing for a period of
one year from the date of this Agreement.
6.2 No Violation of Orders. There shall not be in effect on the
Closing Date any statute, rule, regulation, decree, execution order,
preliminary or permanent injunction or other order issued, promulgated or
enacted by any federal, state, local or foreign government, governmental or
regulatory authority or court which declares this Agreement invalid in any
respect or prevents the consummation of the transactions contemplated
hereby, or which materially and adversely affects the assets, properties,
operations, prospects, net income or financial condition of Seller; and no
action or proceeding before any federal, state, local or foreign court or
governmental or regulatory authority shall have been instituted or
threatened by any federal, state, local or foreign government or
governmental or regulatory authority, or by any other person, entity or
organization which seeks to prevent or delay the consummation of the
transactions contemplated by this Agreement or which challenges the
validity or enforceability of this Agreement or any term or provision
hereof. If pre merger notification is required under the Xxxx-Xxxx-Xxxxxx
Act, the waiting period under such Act shall have expired or been
terminated.
6.3 No Material Default or Adverse Change. During the period from the
date hereof to the Closing Date, there shall have been no material default
under or in the performance of any Contract and nothing shall have occurred
which is likely to materially and adversely affect the Business.
6.4 Legal Opinion. Purchaser shall have received the opinion of
Seller's counsel in form and substance reasonably satisfactory to
Purchaser.
6.5 Deliveries to Purchaser. Seller shall have delivered to
Purchaser all of the following documents and instruments:
16
(a) Instruments of Transfer. All of the following documents
which shall be collectively referred to as the "Instruments of
Transfer":
(i) Xxxx of Sale. A Xxxx of Sale, in the form of Exhibit H
attached hereto, selling, assigning and transferring to Purchaser
all of the Assets, and
(ii) Transition Services Agreement ("TSA"). An executed TSA
in the form of Exhibit I attached hereto, which describes the
services and cost of such services to be performed by Seller on
behalf of Purchaser during the transition period.
(b) Seller's Legal Opinion.
(c) An executed Memorandum of Understanding in the form of
Exhibit J attached hereto between Purchaser and Seller.
7. CONDITIONS TO OBLIGATIONS OF SELLER
All obligations of Seller under this Agreement are subject to the
fulfillment, at or prior to the Closing Date, of the following conditions:
7.1 Representations and Warranties of Purchaser. All representations
and warranties made by Purchaser in this Agreement shall be true and
correct on and as of the Closing Date except as otherwise specified herein.
Such representations and warranties shall survive the Closing for a period
of twelve (12) months from the Closing except as otherwise provided herein.
7.2 Performance of Purchaser's Obligations. Purchaser shall have
performed in all respects all obligations required under this Agreement to
be performed by it on or prior to the Closing Date.
7.3 No Violation of Orders. There shall not be in effect on the
Closing Date any statute, rule, regulation, decree, executive order,
preliminary or permanent injunction or other order issued by any federal,
state, local or foreign, government, governmental or regulatory authority
or court which declares this Agreement invalid or unenforceable, in any
respect or which prevents the consummation of the transactions contemplated
hereby. If pre-merger notification is required under the Xxxx-Xxxx-Xxxxxx
Act, the waiting period under such Act shall have expired or been
terminated.
7.4 Legal Opinion. Seller shall have received the opinion of
Purchaser's counsel, dated the Closing Date and addressed to Seller, in
form and substance reasonably acceptable to Seller.
17
7.5 Deliveries to Seller. Purchaser shall have delivered to Seller
all of the following:
(a) Purchaser's executed Instruments of Transfer.
(b) Transition Services Agreement ("TSA"). An executed TSA
in the form of Exhibit I attached hereto, which describes the
services and cost of such services to be performed by Seller on
behalf of Purchaser during the transition period.
(c) The Certificate(s) of Common Stock.
(d) The Warrant No. W-1 to purchase Common Stock and
Purchaser shall have executed Warrant No. W-2 to be held pending
fulfillment of the conditions specified in Schedule 1.6 for its
delivery to Seller.
(e) Other Closing Documents. Purchaser shall have delivered
to Seller such other certificates, instruments and documents in
confirmation of the representations and warranties of Purchaser
or in furtherance of the transactions contemplated by this
Agreement as Seller or its counsel may reasonably request.
(f) Purchaser's Legal Opinion.
(g) An executed Memorandum of Understanding in the form of
Exhibit J attached hereto between Purchaser and Seller.
7.6 Legal Matters. All certificates, instruments, opinions and other
documents required to be executed or delivered by or on behalf of Purchaser
under the provisions of this Agreement, and all other actions and
proceedings required to be taken by or on behalf of Purchaser in
furtherance of the transactions contemplated hereby, shall be reasonably
satisfactory in form and substance to counsel for Seller.
8. INDEMNIFICATION
8.1 Indemnification
(a) If Seller breaches (or in the event any third party alleges facts
that, if true, would mean Seller has materially breached) any of its
representations, warranties, covenants contained in this Agreement, then
Seller agrees to defend, indemnify, and hold harmless Purchaser from and
against all loss, cost, liability and expense (including but not limited to
attorneys' fees, court costs, amounts paid or to be paid in settlement or
under judgment, and interest thereon), in excess of amounts received from
insurance proceeds, incurred by Purchaser as a result of, based upon or
related to such breach or alleged
18
breach of any representation or warranty of Seller in this Agreement. In no
event shall Seller be required to defend, indemnify and hold harmless
Purchaser (or any other Person) for incidental, consequential or punitive
damages unless Purchaser is finally adjudicated to be liable to a third
party for such damages as a result of Seller's breach hereunder. The
indemnifications contained in this Paragraph 8.1(a) shall survive until the
expiration of twelve (12) months following the Closing Date.
(b) Seller agrees to defend and indemnify Purchaser from and against
any and all loss, cost, liability and expense Purchaser may suffer
resulting from, arising out of, relating to, in the nature of, or caused
by:
(i) any liability of Seller under the Contracts for work
performed or product in fact delivered on or prior to the Closing
Date; or
(ii) any work, labor or services performed for or delivered to
third parties by Seller or performed by the Business on or prior
to the Closing Date; or
(iii) Retained Liabilities;
(iv) any obligation resulting from the failure to comply with
the provisions of any applicable Bulk Transfers Law;
(v) a material breach of any covenant or agreement of Seller in
this Agreement (other than a breach of a representation or
warranty).
(c) (i) No claim for indemnification under Section 8.1(a) shall be
made by or on behalf of Purchaser if not raised by Purchaser within 12
months of the Closing Date
(ii) The obligation of Seller to defend, indemnify and hold
harmless Purchaser (including its respective directors, officers,
employees, affiliates) from loss, cost, liability and expense
relating to or arising from any liabilities set forth in Section
8.1(b) shall be absolute, unconditional and shall continue
indefinitely, except as may be otherwise provided in an
applicable covenant or agreement included within this Agreement
(including the schedules and exhibits incorporated herein).
(d) Purchaser agrees to defend, indemnify, and hold harmless Seller
(and its directors, officers, employees, affiliates and assigns) from any
and all loss, cost, liability and expense, (including but not limited to
attorney's fees, court costs, amounts paid or to be paid in settlement or
under judgment, and interest thereon) in excess of amounts received by
Seller from insurance proceeds, incurred by any of them as a result of, or
based upon a breach of Representation and Warranty by Purchaser provided
the claim for indemnification is brought by Seller within 12 months of the
Closing Date. In no event shall Purchaser be required to defend, indemnify
and hold harmless Seller (or any other such Person) for any incidental,
consequential or punitive damages.
19
8.2 Notice of Asserted Liability. Promptly after receipt by any
party of notice of any demand, claim or circumstance that, immediately or
with the lapse of time, would give rise to a claim for or the commencement
(or threatened commencement) of any action, proceeding or investigation (an
"Asserted Liability") that may result in, a loss, cost, liability and
expense subject to the defense, indemnification and hold harmless
provisions hereunder, the Party receiving such notice ("Indemnitee") shall
give notice thereof to the Party having the indemnity obligation with
respect to that matter ("Indemnitor"). The notice shall describe the
Asserted Liability in reasonable detail, and shall indicate the amount
(estimated, if necessary) of the loss, cost, liability and expense that has
been or may be suffered by Indemnitee, provided that failure to give such
notice shall have no consequence unless and to the extent the Indemnitor is
prejudiced thereby.
8.3 Indemnification Claims.
(a) A party entitled, or seeking to assert rights, to indemnification
under this Section 8 (an "Indemnified Party") shall give written
notification to the party from whom indemnification is sought (an
"Indemnifying Party") of the commencement of any suit or proceeding
relating to a third party claim for which indemnification pursuant to this
Section 8 may be sought. Such notification shall be given within 20
business days after receipt by the Indemnified Party of notice of such suit
or proceeding, and shall describe in reasonable detail (to the extent known
by the Indemnified Party) the facts constituting the basis for such suit or
proceeding and the amount of the claimed losses; provided, however, that no
delay on the part of the Indemnified Party in notifying the Indemnifying
Party shall relieve the Indemnifying Party of any liability or obligation
hereunder except to the extent of any damage or liability caused by or
arising out of such failure. Within 20 days after delivery of such
notification, the Indemnifying Party may, upon written notice thereof to
the Indemnified Party, assume control of the defense of such suit or
proceeding with counsel reasonably satisfactory to the Indemnified Party;
provided that (i) the Indemnifying Party may only assume control of such
defense if (A) it acknowledges in writing to the Indemnified Party that any
losses, fines, costs or other liabilities that may be assessed against the
Indemnified Party in connection with such suit or proceeding constitute
Losses for which the Indemnified Party shall be indemnified pursuant to
this Section 8 and (B) the ad damnum is less than or equal to the amount of
Losses for which the Indemnifying Party is liable under this Section 8 and
(ii) the Indemnifying Party may not assume control of the defense of a suit
or proceeding involving criminal liability or in which equitable relief is
sought against the Indemnified Party. If the Indemnifying Party does not so
assume control of such defense, the Indemnified Party shall control such
defense. The party not controlling such defense (the "Non-controlling
Party") may participate therein at its own expense; provided that if the
Indemnifying Party assumes control of such defense and the Indemnified
Party reasonably concludes that the Indemnifying Party and the Indemnified
Party have conflicting interests or different defenses available with
respect to such suit or proceeding, the reasonable fees and expenses of
counsel to the Indemnified Party shall be considered "losses" for purposes
of this Agreement. The party controlling such defense (the "Controlling
Party") shall keep the Non-controlling Party advised of the status of such
20
suit or proceeding and the defense thereof and shall consider in good faith
recommendations made by the Non-controlling Party with respect thereto. The
Non-controlling Party shall furnish the Controlling Party with such
information as it may have with respect to such suit or proceeding
(including copies of any summons, complaint or other pleading which may
have been served on such party and any written claim, demand, invoice,
billing or other document evidencing or asserting the same) and shall
otherwise cooperate with and assist the Controlling Party in the defense of
such suit or proceeding. The Indemnifying Party shall not agree to any
settlement of, or the entry of any judgment arising from, any such suit or
proceeding without the prior written consent of the Indemnified Party,
which shall not be unreasonably withheld or delayed. The Indemnified Party
shall not agree to any settlement of, or the entry of any judgment arising
from, any such suit or proceeding without the prior written consent of the
Indemnifying Party, which shall not be unreasonably withheld or delayed.
(b) In order to seek indemnification under this Section 8, an
Indemnified Party shall give written notification (a "Claim Notice") to the
Indemnifying Party which contains (i) a description and the amount (the
"Claimed Amount") of any losses incurred or reasonably expected to be
incurred by the Indemnified Party, (ii) a statement that the Indemnified
Party is entitled to indemnification under this Section 8 for such Losses
and a reasonable explanation of the basis therefor, and (iii) a demand for
payment (in the manner provided in paragraph (c) below) in the amount of
such losses.
(c) Within 20 days after delivery of a Claim Notice, the Indemnifying
Party shall deliver to the Indemnified Party a written response (the
"Response") in which the Indemnifying Party shall: (i) agree that the
Indemnified Party is entitled to receive all of the Claimed Amount (in
which case the Response shall be accompanied by a payment by the
Indemnifying Party to the Indemnified Party of the Claimed Amount, by check
or by wire transfer, (ii) agree that the Indemnified Party is entitled to
receive part, but not all, of the Claimed Amount (the "Agreed Amount") (in
which case the Response shall be accompanied by a payment by the
Indemnifying Party to the Indemnified Party of the Agreed Amount, by check
or by wire transfer or (iii) dispute that the Indemnified Party is entitled
to receive any of the Claimed Amount.
(d) Reserved
(e) Notwithstanding the other provisions of this Section 8, if a
third party asserts (other than by means of a lawsuit) that an Indemnified
Party is liable to such third party for a monetary or other obligation
which may constitute or result in losses for which such Indemnified Party
may be entitled to indemnification pursuant to this Section 8, and such
Indemnified Party reasonably determines that it has a valid business reason
to fulfill such obligation, then (i) such Indemnified Party shall be
entitled to satisfy such obligation, without prior notice to or consent
from the Indemnifying Party, (ii) such Indemnified Party may subsequently
make a claim for indemnification in accordance with the provisions of this
Section 8, and (iii) such Indemnified Party shall be reimbursed, in
accordance with the provisions of this Section 8, for any such losses for
which it is entitled to indemnification
21
pursuant to this Section 8 (subject to the right of the Indemnifying Party
to dispute the Indemnified Party's entitlement to indemnification, or the
amount for which it is entitled to indemnification, under the terms of this
Section 8).
8.4 Exclusive Remedy. After the Closing, except for the right to
seek injunctive relief, specific performance and other equitable remedies
the provisions for defense, indemnification and hold harmless set forth in
this Section 8 are the sole and exclusive remedies of the Parties hereto
with respect to all breaches of the terms of this Agreement.
9. MISCELLANEOUS PROVISIONS
9.1 Publicity and Non-disclosure. Except or otherwise required by
applicable law purchaser shall not make any press release or other
announcement concerning the transaction contemplated in this Agreement
without the prior review by and consent of Seller.
9.2 Successors and Assigns. This Agreement shall inure to the benefit
of, and be binding upon, the parties hereto and their respective
successors, representatives and assigns, as the case may be; provided,
however, that if and to the extent the Purchaser assigns this Agreement,
the Assignee must assume in a fully e4xecuted written instrument contained
herein.
9.3 Brokers and Finders. Seller and Purchaser each agrees to
indemnify, defend and hold harmless the other against any brokerage fee,
commission, finder's fee, or financial advisory fee due to any person, firm
or corporation acting or claiming to have acted on the indemnifying party's
or the indemnifying party's principals' or employees' behalf in connection
with the transactions contemplated by this Agreement.
9.4 Expenses. Except as otherwise provided in this Agreement, the
parties shall bear their respective expenses incurred in connection with
the preparation, execution and performance of this Agreement and the
transactions contemplated hereby, such expenses to include, without
limitation, all fees and expenses of agents, representatives, counsel and
accountants.
9.5 Notices. All notices and other communications given or made
pursuant hereto shall be in writing and shall be deemed to have been given
or made if in writing and delivered personally or sent by registered or
certified mail (postage prepaid, return receipt requested) to the parties
at the following addresses:
22
(a) if to Purchaser, to:
SatCon Technology Corporation
000 Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
ATTN: Xxxxx X. Xxxxxxxxxx
with copy to:
Xxxx & Xxxx
00 Xxxxx Xxxxxx
Xxxxxx, XX 00000
Attn. Xxxxxxx Xxxx
(b) if to Seller, to:
Northrop Grumman Corporation
0000 Xxxxxxx Xxxx Xxxx
Xxx Xxxxxxx, XX 00000
Attn: Office of the General Counsel
with copy to:
Northrop Grumman Corporation
0000 Xxxxxxx Xxxx Xxxx
Xxx Xxxxxxx, XX 00000
Attn: Corporate Vice President and Treasurer
or to such other persons or at such other addresses as shall be furnished
by any party by like notice to the other, and such notice or communication
shall be deemed to have been given or made as of the date so delivered.
9.6 Entire Agreement. This Agreement, together with the Schedules and
Exhibits attached hereto and incorporated herein by reference, including
the Memorandum of Understanding dated November 16, 1999 represent the
entire agreement and understanding of the parties hereto with reference to
the transactions set forth herein, and no representations, warranties or
covenants have been made in connection with this Agreement or the
transaction contemplated hereby other than those expressly set forth herein
and in the Schedules and Exhibits hereto, or in the certificates,
agreements and other documents delivered in accordance herewith. This
Agreement supersedes all prior negotiations, discussions, correspondence,
communications, understandings and agreements between the parties relating
to the subject matter of this Agreement and all prior drafts of this
Agreement.
9.7 Waivers, Amendments and Remedies. This Agreement may be amended,
superseded, canceled, renewed or extended, and the terms hereof may be
waived, only by
23
a written instrument signed by Purchaser and Seller or, in the case of a
waiver, by the party waiving compliance. No delay on the part of any party
in exercising any right, power or privilege hereunder shall operate as a
waiver thereof; nor shall any waiver on the part of any party of any such
right, power or privilege, nor any single or partial exercise of any such
right, power or privilege, preclude any further exercise thereof or the
exercise of any other such right, power or privilege. The rights and
remedies herein provided are cumulative, and are exclusive of any rights or
remedies that either party may otherwise have at law or in equity. The
rights and remedies of either party based upon, arising out of or otherwise
in respect of any inaccuracy in or breach of any representation, warranty,
covenant or agreement contained in this Agreement shall in no way be
limited by the fact that the act, omission, occurrence or other state of
facts upon which any claim of any such inaccuracy or breach is based may
also be the subject matter of any other representation, warranty, covenant
or agreement contained in this Agreement (or in any other agreement among
the parties) as to which there is no inaccuracy or breach.
9.8 Severability. This Agreement shall be deemed severable, and the
invalidity or unenforceability of any term or provision hereof shall not
affect the validity or enforceability of this Agreement or of any other
term or provision hereof, provided that the invalidity unenforceability of
such Term does not frustrate the purpose of a material term of the Parties
intent.
9.9 Section Headings. The Section headings contained in this
Agreement are solely for convenience of reference and shall not affect the
meaning or interpretation of this Agreement or of any term or provision
hereof.
9.10 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall be considered one and the same agreement. All references
herein to sections, clauses, and Exhibits shall be deemed references to
such parts of this Agreement, unless the context shall otherwise require.
9.11 Litigation Assistance. Seller and Purchaser agree from and after
the Closing Date to cooperate as provided herein, with each other with
respect to any action, suit, proceeding or investigation pending or
threatened against either of the parties hereto with respect to the
Contracts (other than so specified in the lease agreements included in the
Transition Services Agreement).
9.12 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware without giving effect
to the conflicts of laws or choice of laws rules of such state.
9.13 Schedules and Exhibits. The Schedules and Exhibits attached
hereto are a part of this Agreement as if fully set forth herein.
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9.14 Post-Closing Access. So long as any Contract remains executory or
there is a claim thereunder by the other party thereto, Seller and its
affiliates, accountants and agents shall have access at reasonable times
and places and upon reasonable notice to all accounting and financial books
and records of Purchaser relating to such Contract and shall be permitted
to make copies thereof, to the extent necessary, to assure that Purchaser
is adequately protecting Seller.
IN WITNESS WHEREOF, Seller and Purchaser have caused this Agreement to be signed
and attested all as of the date first written above.
Purchaser:
By: /s/ Xxxxx X. Xxxxxxxxxx
-----------------------
[attest] Its: President
----------------------
/s/ Xxxxxxx X. Xxxxxxxx
--------------------------
Name Xxxxxxx X. Xxxxxxxx
Title CFO
Seller: Northrop Grumman Corporation
By: /s/ Xxxxxx Xxxxx
---------------------------
[attest] Its: Corporate Vice President and
Treasurer
/s/ Xxxx Xxxxx
-------------------------------
Name Xxxx Xxxxx
Title Administrative Assistant
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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 by and
among Northrop Grumman Corporation and SatCon Technology Corporation, dated as
of November 16, 1999, omitted to file the related schedules (listed below).
These schedules will be supplementally furnished to the Commission upon request.
Schedules
---------
A Contracts
AA Financial Assets
B Equipment
C Inventory
D Intellectual Property
DD Process Related Property
E Owned Software
F Other Intangible Assets
G Licensed Software
2.5 Liens; Tax Matters
2.6 Absence of Undisclosed Liabilities
2.8 Licenses and Permits
2.9 Title to, and Sufficiency of, the Assets
2.14 Product Warranties
2.18 Assets
3.6 Inspection; Knowledge
