Exhibit 2.1
ASSET PURCHASE
AGREEMENT
by and among
SPECTRUM MICROWAVE,
INC.
and
SATCON ELECTRONICS,
INC.
and
SATCON TECHNOLOGY
CORPORATION
Dated: September 25,
2008
ASSET PURCHASE
AGREEMENT
THIS ASSET PURCHASE
AGREEMENT dated
September 25, 2008 is by and among SPECTRUM MICROWAVE,
INC. , a Delaware corporation with its principal place of
business at 2707 Black Lake Place, Philadelphia, Pennsylvania 19154
( “Buyer” ); SATCON ELECTRONICS,
INC. a Delaware corporation with its principal place of
business at 165 Cedar Hill Street, Marlborough, Massachusetts
01752 ( “Seller” ); SATCON TECHNOLOGY
CORPORATION , a Delaware corporation with its principal place
of business at 27 Drydock Avenue, Boston,
Massachusetts 02210 ( “Shareholder”
).
RECITALS:
A.
Seller is engaged in the business of
designing and manufacturing high performance, high reliability and
long-life microelectronics, with product offerings including:
hybrid microcircuits for power conversion; radio frequency custom
and analog signal processing; and a full line of thin film
substrates and resistors.
B.
Shareholder is the sole shareholder
of Seller.
C.
Buyer desires to purchase and accept
from Seller, and Seller desires to sell and transfer to Buyer,
substantially all of the assets of the Business upon the terms and
conditions contained in this Agreement.
NOW, THEREFORE
, in consideration of the mutual
covenants and promises contained in this Agreement, and for other
valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties agree as follows:
ARTICLE 1
DEFINITIONS
1.1
Defined
Terms . As used in this
Agreement, the following terms have the following
meanings:
(a)
“Accounts
Payable” means all bona fide accounts
payable of Seller related to the Business as of the Closing Date,
but shall not include any accounts payable owed to Affiliates of
the Shareholder.
(b)
“Accounts
Receivable” means all bona fide accounts
receivable, notes receivable, and other amounts payable to Seller
in connection with the Business, but shall not include any accounts
receivable due from Affiliates of the Shareholder.
(c)
“Accrued
Liabilities” means all accrued expenses of
Seller related to the Business including vacation pay, sick pay and
paid time off to the extent such obligations relate to Hired Active
Employees (as such term is hereinafter defined) earned or accrued
prior to the Closing Date or as a consequence of the Closing and
all of Seller’s deferred revenue and other
accrued expenses accrued at or prior to the
Closing Date, in each case whenever payable, but shall not include
any accrued liabilities of Seller owed to Affiliates of the
Shareholder.
(d)
“Affiliate” means, as to any Person, any
other Person who directly or indirectly controls, is under common
control with or is controlled by such Person. As used in this
definition, “control” (including, with its correlative
meanings, “controlled by” and “under common
control with”) means possession, directly or indirectly, of
power to direct or cause the direction of management or policies
(whether through ownership of securities or partnership or other
ownership interests, by contract or otherwise).
(e)
“Agreement” means, unless the context
otherwise requires, this Asset Purchase Agreement together with the
Schedules and Exhibits attached hereto, and the certificates and
instruments to be executed and delivered in connection
herewith.
(f)
“Assumed
Contracts” means the Contracts
identified on Schedule 1.1(f)(1) ;
“Excluded
Contracts” means the Contracts
identified on Schedule 1.1(f)(2) .
(g)
“Assumed
Liabilities ” means (i) the
Accounts Payable, (ii) the Accrued Liabilities,
(iii) liabilities under the Assumed Contracts arising or to be
paid or performed after the Closing Date (other than any liability
which results from, arises out of or relates to any breach of
contract, tort, infringement or violation of law with respect to
periods prior to the Closing Date) and (iv) the Warranty
Obligations.
(h)
“Business”
means the design
and manufacture of high performance, high reliability and long-life
microelectronics, with product offerings including: hybrid
microcircuits for power conversion; radio frequency custom and
analog signal processing; and a full line of thin film substrates
and resistors.
(i)
“Business
Records” means originals or true
copies of all operating data and records of Seller relating to the
Business, including financial, accounting and bookkeeping books and
records, purchase and sale orders and invoices, sales and sales
promotional data, advertising materials, marketing analyses, past
and present price lists, past and present customer service files,
credit files, written operating methods and procedures, other
information related to the Purchased Assets, reference catalogues,
insurance files, personnel records, records relating to potential
acquisitions and other records, on whatever media, pertaining to
the Business, or to customers or suppliers of, or any other parties
having contracts or other business relationships with, the
Business.
(j)
“Cash”
means all cash
and cash equivalents of the Seller.
(k)
“Closing
Date” means the date that the
Closing occurs as determined by the mutual agreement of the
parties, but in any event not later than September 26,
2008.
(l)
“Code”
means the
Internal Revenue Code of 1986, as amended, and the rules and
regulations promulgated thereunder.
(m)
“Confidential
Information” has the meaning set forth in
Section 6.10(b).
(n)
“Contracts” means all contracts and other
agreements, whether written or oral, which are currently in effect
and to which Seller is a party or by which Seller is bound relating
to or affecting the Business, including:
(i)
any agreement (or
group of related agreements with the same Person or its Affiliates)
for the lease of real or personal property;
(ii)
any agreement (or
group of related agreements with the same Person or its Affiliates)
for the purchase or sale of supplies, products or other personal
property, or for the furnishing or receipt of services;
(iii)
any agreement
concerning the Seller’s ownership of any capital stock of any
corporation or the Seller’s membership in a limited liability
company, partnership, joint venture or similar
arrangement;
(iv)
any agreement (or
group of related agreements with the same Person or its Affiliates)
under which Seller has created, incurred or assumed any
indebtedness;
(v)
any agreement
under which there has been imposed an Encumbrance on any of the
Purchased Assets;
(vi)
any letter of
credit or performance bond;
(vii)
any
confidentiality or non-competition agreement;
(viii)
any agreement
with any Affiliate of Seller or with any Related
Person;
(ix)
any profit
sharing, deferred compensation, severance or other plan or
arrangement for the benefit of the Seller’s current or former
shareholders, directors, officers or employees or any other direct
or indirect beneficial owners;
(x)
any collective
bargaining agreement;
(xi)
any agreement for
the employment of any individual on a full-time, part-time,
consulting or other basis;
(xii)
any agreement or
instruments reflecting outstanding loans or advances from Seller to
its directors, officers or employees;
(xiii)
any agreement for
the prospective acquisition of any business or product line of
Seller or any other Person;
(xiv)
any sales
representative, agency or franchise agreement;
(xv)
any Intellectual
Property license or royalty agreement;
(xvi)
any independent
contractor agreement;
(xvii)
any agreement
providing for indemnification by Seller other than indemnification
agreements contained in any agreement constituting a Contract under
any other provision of this subsection; and
(xviii)
any other
contract, agreement or commitment.
(o)
“Customer
Lists” means all past and current
customer lists and lists of potential customers of the
Business.
(p)
“Encumbrance”
means any claim,
lien, pledge, option, charge, easement, security interest,
right-of-way, encroachment, reservation, restriction, encumbrance,
or other right of any Person, or any other restriction or
limitation of any nature whatsoever, affecting title to any of the
Purchased Assets.
(q)
“Enforceability
Limitations” means (i) bankruptcy,
insolvency, reorganization, moratorium or similar laws now or
hereafter in effect relating to creditors’ rights and
(ii) the discretion of the appropriate Governmental Authority
with respect to specific performance, injunctive relief or other
terms of equitable remedies.
(r)
“Environmental
Claims” means any notice of
violation, notice of potential or actual responsibility or
liability, or written Proceeding (including those for contribution
and/or indemnity) by any Governmental Authority or other Person
directed against Buyer or any Buyer Indemnitee for any damage
(including personal injury, tangible or intangible property damage,
natural resource damage, indirect or consequential damages,
investigative costs, removal, response or remediation costs,
nuisance, pollution, contamination or other adverse effects on the
environment or for fines, penalties or restrictions or conditions
on environmental Permits) resulting from or relating to the
following conditions, circumstances or acts existing or occurring
before the Closing Date: (i) the presence of, a Release or
threatened Release into the environment of, or exposure to, any
Hazardous Substances, at, in, by or from the Facility,
(ii) the generation, manufacture, processing, distribution,
use, handling, transportation, storage, treatment or disposal of
any Hazardous Substances at or in connection with the operation of
the Facility, (iii) the violation, or alleged violation, of
any Environmental Laws at or in connection with the operation of
the Facility, or (iv) the non-compliance or alleged
non-compliance with any Environmental Laws at or in connection with
the operation of the Facility.
(s)
“Environmental
Laws” means any applicable
Governmental Requirements and any licenses, permits, notices or
other requirements issued pursuant thereto, enacted, promulgated or
issued by any Governmental Authority in any jurisdiction, in effect
as of the Closing Date, relating to pollution or protection of
public health or the environment (including any air, surface water,
groundwater, land surface or sub-surface strata, whether outside,
inside or under any structure), or to the identification,
reporting, generation, manufacture, processing, distribution, use,
handling, treatment, storage, disposal, transporting, presence,
Release or threatened Release of, any Hazardous Substances.
Without limiting the generality of the foregoing, Environmental
Laws include the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended, the Toxic Substances Control
Act, as amended, the Hazardous Materials Transportation Act, as
amended, the Resource
Conservation and Recovery Act, as amended, the
Clean Water Act, as amended, the Safe Drinking Water Act, as
amended, the Clean Air Act, as amended, the Occupational Safety and
Health Act, as amended and all similar or analogous laws enacted,
promulgated or lawfully issued by any Governmental
Authority.
(t)
“ERISA”
means the
Employee Retirement Income Security Act of 1974, as amended, and
the rules and regulations promulgated thereunder.
(u)
“ERISA
Affiliate” means a trade or business,
whether or not incorporated, which is deemed to be in common
control or affiliated with the Seller within the meaning of ERISA
Section 4001 or Code Sections 414(b), (c), (m) or
(o).
(v)
“Excluded
Assets” means the following assets of
the Seller:
(i)
any bank
accounts;
(ii)
any Cash and any
accounts receivable due from Affiliates of the
Shareholder;
(iii)
any rights of
Seller under this Agreement and the other Transaction
Documents;
(iv)
the corporate
books and records of Seller described on Schedule 1.1(v)(v)
;
(v)
any Tax records
of Seller;
(vi)
any Insurance of
Seller;
(vii)
any rights
specifically relating to Excluded Contracts, the Employee Benefit
Plans or assets specifically relating to the Excluded Liabilities,
and the documents evidencing or otherwise relating to the
foregoing;
(viii)
deposits for
income or franchise taxes;
(ix)
any tax credits
and tax refunds owing to Seller for the period of time prior to the
Closing Date;
(x)
any Permits which
are not lawfully transferable to the Buyer; and
(xi)
any rights of
Seller to trademarks and trade names which include the term
“SatCon”.
(w)
“Excluded
Liabilities” means any liability or
obligation of every nature of Seller or its Affiliates other than
the Assumed Liabilities.
(x)
“Facility”
means the Real
Property.
(y)
“Financial
Statements” means (a) the unaudited
financial statements of Seller for the period ended
December 31, 2007 with a comparative statement to the period
ended December 31, 2006 (consisting of a statement of assets,
liabilities and stockholder’s equity-income tax basis and a
statement of revenue-income tax basis) and (b) an internally
prepared income statement and balance sheet of Seller for the
period ended August 30, 2008, all as delivered to
Buyer.
(z)
“GAAP”
means, with
respect to all accounting matters and issues, generally accepted
accounting principles as in effect from time to time in the United
States applied (to the extent applicable) consistent with the
Financial Statements.
(aa)
“Goodwill”
means the
goodwill of the Business.
(bb)
“Governmental
Authority” means any federal, state,
local or foreign government, or any political subdivision of any of
the foregoing, or any court, agency or other entity, body,
organization or group, exercising any executive, legislative,
judicial, quasi-judicial, regulatory or administrative function of
government, or any supranational body.
(cc)
“Governmental
Requirement” means any published law,
statute, regulation, ordinance, rule, directive, code, order,
judgment, writ, injunction, decree or award of any Governmental
Authority now in effect.
(dd)
“Hazardous
Substances” means any pollutants,
contaminants, substances, hazardous and/or toxic chemicals,
carcinogens, wastes, and any ignitable, corrosive, reactive, toxic
or other hazardous substances or materials, whether solids, liquids
or gases (including petroleum and its derivatives, PCBs, asbestos,
radioactive materials, waste waters, sludge, slag and any other
substance, material or waste), as defined in or regulated by any
Environmental Laws or as determined by any Governmental
Authority.
(ee)
“Independent
Accountants” means Ernst & Young,
LLP, or any successor thereof.
(ff)
“Insurance” means any fire, product
liability, automobile liability, general liability, worker’s
compensation, medical insurance stop-loss coverage or other form of
insurance of the Business, and any tail coverage purchased with
respect thereto.
(gg)
“Intellectual
Property” means all intellectual
property used to conduct the Business, including (i) all
inventions (whether patentable or unpatentable and whether or not
reduced to practice), all improvements thereto and all patents,
patent applications and patent disclosures, together with all
reissuances, continuations, continuations-in-part, revisions,
extensions and re-examinations thereof, (ii) all trademarks,
service marks, trade dress, logos, trade names and corporate names
(excluding the name “SatCon”), together with all
translations, adaptations, derivations and combinations thereof and
including all goodwill associated therewith, and all applications,
registrations and renewals in connection therewith, (iii) all
copyrightable works, copyrights and all applications, registrations
and renewals in connection therewith, (iv) all mask works and
all applications, registrations and renewals in connection
therewith, (v) all trade secrets and confidential business
information (including ideas, know-how,
compositions, supplier lists, pricing and cost
information and business and marketing plans and proposals),
(vi) all computer software (including data and related
documentation and software installed on hard disk drives) other
than off-the-shelf computer software subject to shrinkwrap or
clickwrap licenses and (vii) all copies and tangible
embodiments of any of the foregoing (in whatever form or
medium).
(hh)
“Inventory” means all raw material,
work-in-process and finished goods inventories of the Business,
wherever located.
(ii)
“Knowledge” means the knowledge,
information or belief, as appropriate to the context of the
statement in which the term is used, of any officer or director of
Seller or of the Shareholder, or the knowledge, information or
belief which any such individual would have after (i) having
made a review of documents in files of Seller and (ii) having
made reasonable inquiry of those executive, management or
supervisory employees under their direct supervision.
(jj)
“Losses”
means all losses,
liabilities, deficiencies, damages (including indirect or
consequential damages), encumbrances, fines, penalties, claims,
costs and expenses (including all fines, penalties and other
amounts paid pursuant to a judgment, compromise or settlement),
court costs and reasonable legal and accounting fees and
disbursements.
(kk)
“Net Working Capital
Obligations” means the difference between
(i) the total of Accounts Payable and Accrued Liabilities as
of the Closing Date, minus (ii) the Accounts Receivable
(less the amount of any provision or reserve therefore set forth in
the Closing Statement) as of the Closing Date, calculated in the
manner set forth on Schedule 2.4 .
(ll)
“Notes
Payable” means any notes payable of
the Seller.
(mm)
“Notes
Receivable” means any notes receivable of
the Seller.
(nn)
“Other Current
Assets” means all current assets of
the Business other than Accounts Receivable, prepaid Taxes and
prepaid expenses relating to any Income Tax Liability, but
excluding any prepayment or similar asset that would not, in
Buyer’s reasonable judgment, benefit Buyer following the
Closing.
(oo)
“Owned Intellectual
Property” means all Intellectual
Property of the Business owned by the Seller.
(pp)
“Owned Tangible Personal
Property” means all Tangible Personal
Property of the Business owned by the Seller.
(qq)
“Permits”
means all
permits, licenses, consents, franchises, approvals and other
authorizations required from any Governmental Authority or other
Person in connection with the operation of the Business and
necessary to conduct the Business as presently
conducted.
(rr)
“Person”
means any
Governmental Authority, individual, association, joint venture,
partnership, corporation, limited liability company, trust or other
entity.
(ss)
“Predecessor”
means a Person,
if any, whose status or activities could give rise to an
Environmental Claim against Seller as a successor in interest to
such Person.
(tt)
“Proceeding” means any claim, demand,
action, suit, litigation, dispute, inquiry, order, writ,
injunction, judgment, assessment, decree, grievance, arbitral
action, investigation or other proceeding.
(uu)
“Prohibited
Transaction” has the meaning set forth in
ERISA Section 406 and Code Section 4975.
(vv)
“Purchased
Assets” means all right, title and
interest of Seller in and to all of the assets of Seller relating
to the Business of whatsoever nature, tangible or intangible, real
or personal, including the following (except to the extent an
Excluded Asset):
(i)
the Accounts
Receivable;
(ii)
the Assumed
Contracts;
(iii)
the Business
Records;
(iv)
the Customer
Lists;
(v)
the
Goodwill;
(vi)
the Other Current
Assets;
(vii)
the Owned
Intellectual Property;
(viii)
the Owned
Tangible Personal Property;
(ix)
the Permits (to
the extent assignable); and
(x)
the
Inventory.
(ww)
“Purchase
Price” means the purchase price for
the Purchased Assets which is an amount equal to $5,000,000, less
the Net Working Capital Obligations Adjustment. By way of
example, if the Net Working Capital Obligations Adjustment is
positive by $100,000 then the Purchase Price would be $4,900,000
and if the Net Working Capital Obligations Adjustment is negative
by $100,000 then the Purchase Price would be
$5,100,000.
(xx)
“Real
Property” means the real property
leased by Seller located at 165 Cedar Hill Street,
Marlborough, Massachusetts 01752.
(yy)
“Related
Person” means the Shareholder and any
director, officer or employee of Seller or Shareholder and any
Person related to any such director, officer or employee by blood
or marriage, or any limited liability company, partnership,
corporation, trust or other entity in which any such person has a
substantial interest as a member, partner, shareholder, trustee or
otherwise.
(zz)
“Release”
means any
spilling, leaking, pumping, pouring, emitting, emptying,
discharging, injecting, escaping, leaching, migrating, dumping or
disposing into the environment which could give rise to an
Environmental Claim or which is required to be reported pursuant to
40 C.F.R. 302 or 355, or any analogous Environmental
Law.
(aaa)
“Representative”
means any
officer, director, principal, attorney, accountant, agent, employee
or other representative of any Person.
(bbb)
“Seller’s
Accountants” means those accountants at
the firm of Vitale, Caturano & Company, Ltd.
(ccc)
“Subsidiaries”
means an
affiliate controlled by the Seller, directly or indirectly, through
one or more intermediaries.
(ddd)
“Tangible Personal
Property” means all tangible personal
property of the Business owned or leased by Seller or in which
Seller has any interest, including computer hardware, furniture and
fixtures, leasehold improvements, supplies and other tangible
assets, together with any transferable manufacturer or vendor
warranties related thereto.
(eee)
“Target Net Working Capital
Obligations” means $260,000.
(fff)
“Tax”
means any
federal, state, local or foreign income, gross receipts, license,
payroll, employment, excise, severance, startup, occupation,
premium, windfall profits, environmental (including taxes under
Code Section 59A), customs duties, capital stock, franchise,
profits, withholding, social security (or similar), health,
unemployment, disability, real property, personal property,
intangible property, sales, use, transfer, registration, value
added, goods and services, alternative or add-on minimum,
estimated, or other tax or similar obligation of any kind
whatsoever, including any interest, penalty or addition thereto,
whether disputed or not.
(ggg)
“Tax
Liability” means liability for any Taxes
owing by the Seller to any Governmental Authority attributable to
the operations and activities of, or otherwise incurred by or
existing with respect to, the Seller for any period ending on or
prior to the Closing Date, including Taxes computed through the day
before the Closing Date with respect to any partial year on a
closing-of-the-books basis as if such partial year ended at the
close of business on the day before the Closing Date.
(hhh)
“Tax
Return” means any return,
declaration, report, claim for refund or information return or
statement relating to Taxes, including any schedule or attachment
thereto, and any amendment thereof.
(iii)
“Transaction
Documents” means this Agreement, and the
bills of sale, assignments, instruments and other documents
described in Section 3.2(a).
(jjj)
“Net Working Capital
Obligations Adjustment” means (i) if the Net
Working Capital Obligations on the Closing Date are equal to or
greater than the Target Net Working Capital Obligations, the
amount, expressed as a positive number, by which the
Closing
Date Net Working Capital Obligations exceed the
Target Net Working Capital Obligations or (ii) if the Closing
Date Net Working Capital Obligations are less than the Target Net
Working Capital Obligations, the amount, expressed as a negative
number, by which the Closing Date Target Net Working Capital
Obligations are less than the Target Net Working Capital
Obligations. By way of clarification, a positive Net Working
Capital Adjustment will decrease the Purchase Price from $5,000,000
and a negative Net Working Capital Adjustment will increase the
Purchase Price from $5,000,000.
1.2
Other Defined
Terms . The following terms
shall have meanings defined for such terms in the sections set
forth below:
|
Term
|
|
Section
|
|
Active Employees
|
|
6.5(a)
|
|
Buyer
|
|
Introduction
|
|
Buyer Claims Period
|
|
9.1(a)(ii)
|
|
Buyer Indemnitee
|
|
9.1(b)
|
|
Cash Payment
|
|
2.4(c)
|
|
Casualty
|
|
10.2
|
|
Casualty Amount
|
|
10.2
|
|
Claims Period
|
|
9.1(a)(i)
|
|
Closing
|
|
3.1
|
|
Closing Purchase Price Reconciliation
|
|
2.5(d)
|
|
Closing Statement
|
|
2.4(a)
|
|
Covenant Period
|
|
6.10(a)
|
|
Effective Time
|
|
3.1
|
|
Employee Benefit Plans
|
|
4.13
|
|
Escrow Reserve Amount
|
|
2.4(d)
|
|
Estimated Net Working Capital
Obligations
|
|
2.4(a)
|
|
Excluded Contracts
|
|
1.1(f)
|
|
Final Net Working Capital Obligations
|
|
2.5(a)
|
|
Final Net Working Capital Obligations
Adjustments
|
|
2.5(a)
|
|
Final Net Working Capital Obligations
Statement
|
|
2.5(a)
|
|
Hired Active Employees
|
|
6.5(b)(i)
|
|
Indemnified Party
|
|
9.1(e)(i)
|
|
Indemnifying Party
|
|
9.1(e)(i)
|
|
Non-Transferable Assets
|
|
3.5
|
|
Preliminary Net Working Capital Obligations
Adjustment
|
|
2.4(a)
|
|
Restricted Activity
|
|
6.10(a)(i)
|
|
Required Consents and Filings
|
|
6.2
|
|
Seller
|
|
Introduction
|
|
Shareholder
|
|
Introduction
|
|
Tangible Personal Property List
|
|
4.8
|
|
WARN Act
|
|
6.5(b)(i)
|
|
Warranty Obligations
|
|
6.13(a)
|
1.3
Usage of
Terms . Except where the
context otherwise requires, words importing the singular number
include the plural number and vice versa. Use of the word
“including” means “including, without
limitation.”
1.4
References to
Articles, Sections, Exhibits and Schedules . All references in
this Agreement to Articles, Sections (and other subdivisions),
Exhibits and Schedules refer to the corresponding Articles,
Sections (and other subdivisions), Exhibits and Schedules of or
attached to this Agreement, unless the context expressly, or by
necessary implication, otherwise requires.
ARTICLE 2
PURCHASE AND SALE OF PURCHASED
ASSETS
2.1
Transfer of
Purchased Assets . Subject to the terms
and conditions contained in this Agreement, on the Closing Date,
Seller shall sell, convey, transfer, assign and deliver to Buyer,
and Buyer shall acquire from Seller, all of the Purchased Assets,
free and clear of any Encumbrances, and Seller shall retain the
Excluded Assets.
2.2
Assumed
Liabilities; Excluded Liabilities . On the Closing Date,
Buyer shall assume and pay or perform in accordance with their
terms the Assumed Liabilities. Notwithstanding anything to the
contrary in this Agreement or any of the Transaction Documents, and
regardless of whether such liability is disclosed in this
Agreement, in any of the Transaction Documents or on any Schedule
or Exhibit hereto or thereto, Buyer shall not assume, agree to
pay, perform, discharge, bear the economic burden of or in any way
be responsible for any of the Excluded Liabilities. Seller
shall retain and pay or perform in accordance with their terms all
of the Excluded Liabilities.
2.3
Consideration;
Allocation . As consideration for
the sale, transfer, assignment, conveyance and delivery of the
Purchased Assets, Buyer shall pay and deliver to Seller the
Purchase Price and shall assume the Assumed Liabilities. Such
consideration will be allocated as set forth on Schedule 2.3
. Unless otherwise agreed in writing by Buyer and Seller,
Buyer and Seller shall (a) reflect the Purchased Assets in
their books and for Tax reporting purposes in accordance with such
allocation, (b) file all forms required under Code
Section 1060 (including Form 8594) and all other Tax
Returns and reports in accordance with and based upon such
allocation and (c) unless required to do so in accordance with
a “determination” as defined in Code
Section 1313(a)(1), take no position in any Tax Return, Tax
Proceeding, Tax audit or otherwise which is inconsistent with such
allocation.
2.4
Payments by
Buyer .
(a)
Closing
Statement . On the day prior to
the Closing Date, Seller shall in good faith prepare and deliver to
Buyer a certificate (the “Closing Statement”
) containing a
pro forma estimate of (i) the Net Working Capital Obligations
as of the Closing Date (the “Estimated Net Working Capital
Obligations” ) and (ii) the Net
Working Capital Obligations Adjustment (the “Preliminary Net Working Capital
Obligations Adjustment” ), which will be subject to
examination and agreement by Buyer as to reasonableness. The
Estimated Net Working Capital Obligations are to be determined in
accordance with GAAP and the principles
set forth on Schedule 2.4 . Buyer
and Seller agree that the purpose of the Preliminary Net Working
Capital Obligations Adjustment is to measure changes between the
Target Net Working Capital Obligations and the Estimated Net
Working Capital Obligations. If the Estimated Net Working
Capital Obligations are less than the Target Net Working Capital
Obligations, the Purchase Price will be increased by the amount of
such difference, subject to further adjustment as provided in
Section 2.5. If the Estimated Net Working Capital
Obligations are greater than the Target Net Working Capital
Obligations, the Purchase Price will be reduced by the amount of
such excess, subject to further adjustment as provided in
Section 2.5.
(b)
Reliance on
Closing Statement . Payments required to
be made on the Closing Date pursuant to this Section 2.4 will
be determined on the basis of the Closing Statement and the
Preliminary Net Working Capital Obligations Adjustment, as provided
herein.
(c)
Payments
. At the
Closing, Buyer shall pay to Seller an aggregate amount equal to
$5,000,000, as adjusted by the Preliminary Net Working Capital
Obligations Adjustment, less the Escrow Reserve Amount (the
“Cash
Payment” ), in cash by wire transfer
to an account or accounts designated by Seller to Buyer in writing
not less than two (2) business days prior to the Closing
Date. At the Closing, Buyer shall assume the Assumed
Liabilities.
(d)
Escrow
Reserve . At the Closing, Buyer
shall deliver to the Escrow Agent $125,000 (the
“Escrow Reserve
Amount” ) by wire transfer, to be
held and disbursed by the Escrow Agent in accordance with the terms
and conditions of the Escrow Agreement.
2.5
Final Net
Working Capital Obligations Statement; Final Net Working Capital
Obligations Adjustment .
(a)
Final Net
Working Capital Obligations Statement . Within forty-five
(45) days after the Closing Date, Buyer shall cause to be prepared
and delivered to Seller a final statement of Net Working Capital
Obligations (the “Final Net Working Capital Obligations
Statement” ) setting forth the Net
Working Capital Obligations of Seller as of the Closing Date
(the “Final Net
Working Capital Obligations” ) and the Final Net Working
Capital Obligations Adjustment (the Final Net Working Capital Obligations
Adjustment” ). The Final Net
Working Capital Obligations Statement is to be prepared in
accordance with GAAP and the principles set forth on Schedule
2.4 .
(b)
Dispute
. Within
forty-five (45) days following Seller’s receipt of the Final
Net Working Capital Obligations Statement, Seller shall deliver
written notice to Buyer of any dispute Seller has with respect to
the preparation or content of the Final Net Working Capital
Obligations Statement. Such notice must describe in
reasonable detail the items contained in the Final Net Working
Capital Obligations Statement that Seller disputes and the basis
for any such dispute. If Seller does not notify Buyer of a
dispute with respect to the Final Net Working Capital Obligations
Statement within such forty-five (45-) day period, such Final Net
Working Capital Obligations Statement will be final, conclusive and
binding on the parties. In the event of a notification of a
dispute by Seller, Buyer and Seller shall negotiate in good faith
to resolve such dispute. If Buyer and Seller fail to resolve
such dispute within thirty (30) days after Seller advises Buyer of
its objections, then Buyer and Seller jointly shall engage the
Independent
Accountants to resolve such dispute. The
Independent Accountants shall only consider those items and amounts
set forth on the Final Net Working Capital Obligations Statement as
to which Buyer and Seller have disagreed within the time period
specified above and must resolve the matter in accordance with the
terms and provisions of this Agreement. Upon the agreement of
Buyer and Seller or the decision of the Independent Accountants,
the Final Net Working Capital Obligations Statement will be final,
conclusive and binding on the parties. The fees, expenses and
costs of the Independent Accountants shall be borne by Seller and
the Shareholders, on the one hand, and by Buyer, on the other hand,
in inverse proportion as they may prevail on the matters resolved
by the Independent Accountants, which proportionate allocation will
also be determined by the Independent Accountants and be included
in the final decision of the Independent Accountants. The
determination of the Independent Accountants, absent fraud, shall
be deemed a final arbitration award that is binding on each of
Buyer, Seller and the Shareholder, and no party shall seek further
recourse to courts, other tribunals or otherwise, other than to
enforce to the final decision of the Independent Accountants.
Judgment may be entered to enforce the final decision of the
Independent Accountants in any court having proper
jurisdiction.
(c)
Access
. For
purposes of complying with the terms set forth in this
Section 2.5, each party shall cooperate with and make
available to the other parties and their respective representatives
all information, records, data and working papers, and shall permit
reasonable access to its Facility and personnel, as may be
reasonably required in connection with the preparation and analysis
of the Final Net Working Capital Obligations Statement and the
resolution of any disputes thereunder.
(d)
Final Net
Working Capital Obligations Adjustment . Within five
(5) business days after determination of the Final Net Working
Capital Obligations Adjustment, Buyer or Seller, as the case may
be, shall pay to the other the amount by which the Purchase Price,
as adjusted by the Final Net Working Capital Obligations
Adjustment, is greater or less than the Purchase Price as adjusted
by the Preliminary Net Working Capital Obligations Adjustment (such
difference being the “Closing Purchase Price
Reconciliation” ). If the Closing
Purchase Price Reconciliation is positive, Buyer shall promptly pay
such difference to Seller. If the Closing Purchase Price
Reconciliation is negative, Seller shall promptly pay such
difference to Buyer. If Buyer or Seller fails to pay any
amount owing pursuant to this Section 2.5(d) within five
(5) business days, then the amount owing shall be payable on
demand and interest shall accrue on this unpaid amount from the
date due until paid at a rate equal to the lower of ten percent
(10%) per annum or the highest rate permitted by applicable
law.
2.6
Taxes;
Proration . Seller will be
responsible for the payment of any sales, use, transfer, excise,
stamp or other similar Taxes imposed by reason of the transfer of
the Purchased Assets pursuant to this Agreement and any deficiency,
interest or penalty with respect to such Taxes. All
utilities, real property taxes and other similar charges relating
to the Real Property shall be prorated as of the Closing
Date.
ARTICLE
3
CLOSING
3.1
Closing
. The
closing of the transactions contemplated by this Agreement will be
held at 10:00 a.m. local time on the Closing Date at the
offices of Seller’s counsel, Greenberg Traurig, LLP, 1
International Place, 20 th Floor, Boston, Massachusetts
02110, or any other place as Buyer, Seller and Shareholders shall
mutually agree in writing (the “Closing” ). The Closing will be
effective as of 11:59 p.m. on the Closing Date (the
“Effective
Time” ).
3.2
Conveyances at
Closing .
(a)
Instruments
and Possession . Upon the terms and
conditions contained in this Agreement, on the Closing Date, Seller
and the Shareholder shall deliver to Buyer (i) one or more
bills of sale conveying in the aggregate all of the Owned Tangible
Personal Property, (ii) one or more assignments conveying in
the aggregate all of the Assumed Contracts, (iii) one or more
assignments of the Owned Intellectual Property in recordable form,
(iv) such other instruments as are reasonably requested by
Buyer to vest in Buyer title in and to the Purchased Assets in
accordance with the provisions of this Agreement and (v) such
other documents and agreements as are contemplated by this
Agreement.
(b)
Form of
Instruments . All of such
instruments will be in form and substance, and will be executed and
delivered in a manner, reasonably satisfactory to Buyer and Seller,
but will not diminish the status of title to the Purchased Assets
required to be delivered by Seller pursuant to this
Agreement.
3.3
Assumptions at
Closing .
(a)
Upon the terms
and conditions contained in this Agreement, on the Closing Date,
Buyer will deliver to Seller and the Shareholder (i) an
assumption of the Assumed Liabilities, (ii) such other
instruments of assumption evidencing Buyer’s assumption of
the Assumed Liabilities as Seller reasonably deems necessary and
(iii) such other documents and agreements as are contemplated
by this Agreement.
(b)
All such
instruments will be in form and substance, and will be executed and
delivered in a manner, reasonably satisfactory to Seller and Buyer,
but will not increase or decrease the Assumed Liabilities required
to be assumed by Buyer pursuant to this Agreement.
3.4
Certificates
and Other Document . Each of Buyer and
Seller shall deliver or cause to be delivered the certificates and
other documents and items described in Articles 6, 7 and
8.
3.5
Non-Transferable
Assets . It is understood that
certain Purchased Assets may not be immediately transferable or
assignable to Buyer, and Buyer may in its sole discretion allow
Seller to retain certain of such assets after the Closing Date
(the “Non-Transferable Assets”
), and this
Agreement will not constitute an assignment of any such
Non-Transferable Assets. In such event, (i) Seller and
the Shareholder shall use their reasonable best efforts to obtain
any consent or authorization which may be required to transfer or
assign the Non-Transferable Assets to Buyer or to remove or
eliminate any impediment preventing the transfer or assignment of
the
Non-Transferable Assets to Buyer,
(ii) Seller shall grant to Buyer full use and benefit of its
interest in the Non-Transferable Assets to the extent permitted by
the terms of or applicable to such Non-Transferable Assets, it
being the intent of the parties that Buyer have the benefit of the
Non-Transferable Assets as though it were the sole owner thereof,
(iii) Seller and the Shareholder shall take all actions
necessary to preserve the value of the Non-Transferable Assets,
(iv) Seller shall not transfer or assign the Non-Transferable
Assets to any Person other than Buyer or Buyer’s assigns,
(v) Seller shall transfer or assign the Non-Transferable
Assets to Buyer at the earliest date, if any, on which such
transfer or assignment can be effected and (vi) Buyer will be
responsible for obligations relating to such Non-Transferable
Assets arising or occurring on or after the Closing Date as if they
had been transferred or assigned to Buyer in accordance with the
terms of this Agreement. Upon the request of Buyer, Seller
shall enforce, for the account, at the expense and on behalf of
Buyer, any rights of Seller arising under or in connection with any
Non-Transferable Asset.
ARTICLE 4
REPRESENTATIONS AND
WARRANTIES
OF SELLER AND SHAREHOLDER
Seller and Shareholder jointly and
severally represent and warrant to Buyer as follows:
4.1
Organization
and Authority of Seller to Conduct Business . Seller is duly
organized, validly existing and in good standing under the laws of
the State of Delaware. Schedule 4.1 sets forth each
jurisdiction where Seller is qualified to do business. Seller
is duly qualified and in good standing in each jurisdiction where
it is required to be qualified and where the failure to qualify
might have a material adverse effect on the Business, financial
condition or operations of Seller. Seller has no
Subsidiaries. No Affiliate of Seller or the Shareholder owns
or has any interest in any of the assets used in the
Business. Seller has full corporate power and authority to
conduct its business as it is presently being conducted and to own
and lease its properties and assets. Except as provided in
Schedule 4.1 , Seller has no stock or equity interest in any
other Person.
4.2
Power and
Authority; Binding Effect . Seller and
Shareholder have all necessary power and authority and have taken
all action necessary to authorize, execute and deliver this
Agreement, to consummate the transactions contemplated by this
Agreement, and to perform its obligations under this
Agreement. Seller and Shareholder shall deliver to Buyer at
the Closing copies of all resolutions of the board of directors and
shareholder of Seller and the Board of Directors of Shareholder
with respect to the transactions contemplated by this Agreement,
certified by an officer of Seller, in form reasonably satisfactory
to counsel for Buyer. No other corporate action on the part
of Seller or Shareholder is required to authorize the execution and
delivery of this Agreement and to consummate the transactions
contemplated hereby. This Agreement has been duly executed
and delivered by Seller and Shareholder and constitutes a legal,
valid and binding obligation of Seller and Shareholder enforceable
against each in accordance with its terms, except as such
enforcement may be limited by the Enforceability
Limitations.
4.3
Title .
(a)
Seller has good
and marketable title to all of the Purchased Assets and all of the
Purchased Assets are free and clear of any
Encumbrances.
(b)
Seller owns the
Tangible Personal Property or leases, pursuant to leases described
on Schedule 4.3(b) , all other tangible personal property
used in the Business, and owns, or otherwise has sufficient rights
with respect to, all intangible property used in connection with
the Business necessary to carry on the Business in the manner in
which it is currently operated.
4.4
No Conflict or
Violation . The execution and
delivery of this Agreement, the consummation of the transactions
contemplated by this Agreement and the fulfillment of the terms of
this Agreement do not and will not result in or constitute
(a) a violation of or conflict with any provision of the
organizational or other governing documents of Seller or
Shareholder, (b) except as set forth on
Schedule 4.4 , a breach of, a loss of rights under or
an event, occurrence, condition or act which is or, with the giving
of notice or the lapse of time, would become, a default under, or
result in the acceleration of any obligations under, any term or
provision of, any Contract or Permit, (c) a violation by
Seller or Shareholder of any Governmental Requirement, (d) an
imposition of any Encumbrance on the Purchased Assets or
(e) except as set forth on Schedule 4.4 , any right of
any Governmental Authority to revoke, suspend, cancel, terminate or
modify any of the Permits.
4.5
Consents and
Approvals . Except as otherwise
set forth on Schedule 4.5 , no consent, approval or
authorization of, or declaration, filing or registration with, any
Person is required to be made or obtained by Seller or Shareholder
in connection with the execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated by
this Agreement.
4.6
Financial
Statements; Unknown Liabilities .
(a)
Seller has
delivered to Buyer the Financial Statements. The Financial
Statements fairly present the financial condition and the results
of operations of Seller as of their respective dates and for the
periods then ended in accordance with GAAP. The books and
records of Seller from which the Financial Statements were prepared
fairly reflect the assets, liabilities and operations of Seller,
and the Financial Statements are in conformity
therewith.
(b)
Except as
disclosed on Schedule 4.6(b) , there are, and as of the
Closing Date there will be, no liabilities or obligations of any
nature, whether absolute, accrued, contingent, known, unknown,
matured, unmatured or otherwise, and whether or not required to be
disclosed or provided for in financial statements in accordance
with GAAP, of Seller except (i) liabilities and obligations
reflected in the Financial Statements, (ii) liabilities
relating to facts, circumstances or events specifically disclosed
on the Schedules, (iii) liabilities reflected in the
calculation of the Net Working Capital Obligations Adjustment as
finally determined and (iv) liabilities and obligations
incurred between the date of the Financial Statements and the
Closing Date in the ordinary course of business of Seller (none of
which results from, arises out of or
relates to any breach of contract, breach of
contractual warranty, tort, infringement or violation of
Governmental Requirement).
4.7
Tax
Matters .
(a)
(i) Seller
has filed all Tax Returns that it was required to file,
(ii) all Taxes required to have been withheld in connection
with amounts paid or owing to any employee, independent contractor,
creditor, stockholder or other third party have been withheld,
(iii) all such Tax Returns were correct and complete in all
material respects when filed, (iv) all Taxes required to have
been paid by Seller (whether or not shown on any Tax Return) have
been paid, (v) Seller is not currently the beneficiary of any
extension of time within which to file any Tax Return and
(vi) no notice has been received by Seller and no claim has
been made within the last five (5) years by any Governmental
Authority in a jurisdiction where Seller does not file Tax Returns
that it is or may be subject to taxation by that
jurisdiction. There are no Encumbrances on any of the
Purchased Assets that arose in connection with any failure (or
alleged failure) to pay any Tax.
(b)
There is no
dispute or claim concerning any Tax liability of Seller either
(i) claimed or raised by any Governmental Authority in writing
or (ii) as to which Seller or Shareholder have
Knowledge. Schedule 4.7(b) lists all income Tax
Returns filed with respect to Seller for any taxable period ended
on or after December 31, 2003, indicates those Tax Returns
which have been audited, and indicates those Tax Returns that
currently are the subject of audit. Seller has delivered to
Buyer correct and complete copies of all income Tax Returns,
examination reports and statements of deficiencies assessed against
or agreed to by Seller for any taxable period ended on or after
December 31, 2003.
4.8
Tangible
Personal Property . Seller has delivered
to Buyer (a) a depreciation list of each item of Tangible
Personal Property owned by Seller and (b) a list of each item
of Tangible Personal Property leased by Seller (hereinafter
collectively referred to as the “Tangible Personal Property
List” ). Except as set forth
in Schedule 4.8 , there is no tangible personal property
used in the operation of the Business other than the Tangible
Personal Property. All of the Tangible Personal Property is
located at the Real Property and there is no tangible personal
property used in the operation of the Business located at the Real
Property which is not owned or leased by Seller. The Tangible
Personal Property is, taken as a whole, in reasonable working order
and adequate for its intended use, ordinary wear and tear and
normal repairs and replacements excepted.
4.9
Intellectual
Property .
(a)
Except as set
forth on Schedule 4.9(a) , (i) there is no intellectual
property necessary to or used in the Business other than the Owned
Intellectual Property and (ii) Seller has taken reasonable
commercial actions to maintain and protect each item of Owned
Intellectual Property.
(b)
Except as set
forth on Schedule 4.9(b) , (i) Seller has not
interfered with, infringed upon, misappropriated or otherwise come
into conflict with any intellectual property
rights of third parties, and in the last five
(5) years, neither Seller nor the Shareholder have received
any charge, complaint, claim, demand or notice alleging any such
interference, infringement, misappropriation or violation
(including any claim that Seller must license or refrain from using
any intangible property rights of any third party) which has not
been resolved and (ii) no third party has interfered with,
infringed upon, misappropriated or otherwise come into conflict
with any of the Intellectual Property.
(c)
Schedule
4.9(c) identifies each patent
or registration which has been issued to Seller with respect to any
of the Intellectual Property, each pending patent application or
application for registration which Seller has made with respect to
any of the Intellectual Property and each license, sublicense or
other agreement which Seller has granted to any third party with
respect to any of the Intellectual Property. Seller has
delivered to Buyer correct and complete copies of all such patents,
registrations, applications, licenses and agreements (as amended to
date) and have made available to Buyer correct and complete copies
of all other written documentation evidencing ownership and
prosecution (if applicable) of each such patent, registration,
application, license or agreement. Schedule 4.9(c)
identifies each trademark, trade name or unregistered
trademark used by Seller in connection with the Business.
Except as set forth on Schedule 4.9(c) , with respect to
each item of Intellectual Property required to be identified in
Schedule 4.9(c) : (i) Seller possesses all right,
title and interest in and to the item, free and clear of any
Encumbrances or licenses and (ii) no Proceeding is pending or,
to the Knowledge of Seller or the Shareholder, threatened which
challenges the legality, validity, enforceability, use or ownership
of the item.
(d)
Schedule
4.9(d) identifies each item of
Intellectual Property that any third party owns and that Seller
uses pursuant to a license, sublicense or other agreement.
Seller has delivered to Buyer correct and complete copies of all
such licenses, sublicenses and other agreements (as amended to
date). Except as set forth on Schedule 4.9(d) , with
respect to each item of Intellectual Property required to be
identified in Schedule 4.9(d) : (i) each license,
sublicense or other agreement covering the item is enforceable,
except as may be limited by Enforceability Limitations,
(ii) following the Closing, each license, sublicense or other
agreement will continue to be enforceable on substantially similar
terms and conditions, except as may be limited by Enforceability
Limitations, (iii) neither Seller nor, to the Knowledge of
Seller and the Shareholders, any other party to a license,
sublicense or other agreement is in breach or default, and no event
has occurred which, with notice or lapse of time, would constitute
a breach or default or permit early termination, modification or
acceleration thereunder, (iv) neither Seller nor, to the
Knowledge of Seller and Shareholder, any other party to a license,
sublicense or other agreement has repudiated any provision thereof,
(v) no Proceeding is pending or, to the Knowledge of Seller
and Shareholders, threatened which challenges the legality,
validity, enforceability or use of the underlying item of
Intellectual Property and (vi) Seller has not granted any
sublicense or similar right with respect to any license, sublicense
or other agreement.
(e)
Except as set
forth on Schedule 4.9(e) , Buyer’s use of the
Intellectual Property will not interfere with, infringe upon,
misappropriate, or otherwise come into conflict with, any
intellectual property rights of third parties as a result of the
continued operation of the Business as presently conducted or as
contemplated to be conducted.
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