FORM 8-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities and Exchange Act of 1934
Date of Report (Date of earliest event reported): December 22, 1999
WPI GROUP, INC.
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(Exact name of registrant as specified in its charter)
New Hampshire 0-19717
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(State or other (Commission File Number)
jurisdiction of incorporation)
02-0218767
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(I.R.S. Employer Identification Number)
1155 Elm Street, Manchester, New Hampshire 03101
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(Address of principal executive offices)(Zip Code)
Registrant's telephone number, including area code: (603) 627-3500
NONE
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(Former Name, former address, and former fiscal year, if changed
since last report)
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WPI GROUP, INC.
FORM 8-K
ITEM 1. CHANGES IN CONTROL OF REGISTRANT.
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None.
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
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On December 22, 1999, WPI Group, Inc. completed the sale of WPI
Power Systems, Inc. and WPI Electronics, Inc. to Warner Power,
LLC, a private investment group, for approximately $9.3 million
in cash plus the assumption of certain liabilities.
A more complete description of the transaction is contained in
the Asset Purchase and Sale Agreement which is Exhibit 10.24 to
this report and is incorporated herein by reference.
ITEM 3. BANKRUPTCY OR RECEIVERSHIP.
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None.
ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT.
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None.
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WPI GROUP, INC.
FORM 8-K
ITEM 5. OTHER EVENTS.
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None.
ITEM 6. RESIGNATIONS OF REGISTRANT'S DIRECTORS.
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None.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
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Financial: The financial statements required to be filed (if
any) are currently not available and will be filed
under Form 8 within the time specified by Item 7(a)(4)
of Form 8-K.
Exhibits: 10.24 - Asset Purchase and Sale Agreement dated
December 22, 1999
ITEM 8. CHANGE IN FISCAL YEAR.
Not applicable.
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WPI GROUP, INC.
FORM 8-K
Pursuant to the requirements of the Securities and Exchange
Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned hereunto duly authorized.
WPI GROUP, INC.
Dated: January 4, 2000 By:/s/ John W. Powers
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John W. Powers
Vice President and CFO
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Exhibit 10.24
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is made as
of December 22, 1999, by and among Warner Power, LLC, a New
Hampshire limited liability company, and Warner Power Conversion,
LLC, a New Hampshire limited liability company (collectively
referred to as "Purchaser"), WPI Power Systems, Inc., a New
Hampshire corporation, WPI Electronics, Inc., a New Hampshire
corporation, and WPI Group, Inc., a New Hampshire corporation
(collectively referred to as "Seller"). Capitalized terms used
in this Agreement without definition shall have the meanings set
forth or referenced in Article VIII.
WITNESSETH:
WHEREAS, Seller is engaged in the manufacture, sale and
distribution of power conversion products, including power
systems and ballasts (the "Business");
WHEREAS, WPI Group, Inc. is the sole record and beneficial
owner of all of WPI Power Systems, Inc.'s and WPI Electronics,
Inc.'s issued and outstanding capital stock and is willing to
execute this Agreement;
WHEREAS, Purchaser wishes to purchase the Acquired Assets
(as defined in Section 1.1) and to assume, satisfy and discharge
the Assumed Liabilities (as defined in Section 1.4) of Seller, it
being the intention of Purchaser to employ the Acquired Assets as
part of its own business and not to continue Seller's enterprise
as such, it being understood that Purchaser shall not be deemed
to be a successor to, or continuation of, Seller; and
WHEREAS, subject to the foregoing, the Seller desires to
sell and Purchaser desires to purchase the Acquired Assets on the
terms and conditions herein set forth.
NOW, THEREFORE, the parties hereto hereby agree as follows:
ARTICLE I
PURCHASE AND SALE
1.1 Agreement to Purchase and Sell. Subject to the terms and
conditions of this Agreement, at the Closing, Seller shall grant, sell,
convey, assign, transfer and deliver to Purchaser all right, title and
interest of Seller in and to all of the assets identified in Section 1.2
(the "Acquired Assets"), free and clear of all Liens.
1.2 Acquired Assets. The Acquired Assets shall include all right,
title and interest of Seller as of the Closing Date in and to the assets
used and useful in the Business, wherever located, owned, used or
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held by Seller, except as otherwise expressly identified in
Section 1.3 as an Excluded Asset, including the following, but
only to the extent used and useful in the Business:
(a) all of Seller's cash and cash equivalents as set forth on
Schedule 1.2(a);
(b) all of Seller's accounts, notes and other receivables;
(c) all of Seller's raw materials and supplies, manufactured and
purchased parts, work-in-process, finished goods and other items
of inventory, including, without limitation, all such inventory
which may be in transit or in the possession of any third party;
(d) all of Seller's machinery, equipment, furniture and
furnishings, office equipment, office machines, computer hardware
and peripheral equipment, goods, vehicles, leasehold
improvements, and other tangible personal property;
(e) all of Seller's Proprietary Rights, goodwill associated
therewith, licenses and sublicenses granted and obtained with
respect thereto, and rights thereunder, including, without
limitation, all remedies for infringements thereof and rights to
protection of interests therein under the laws of all
jurisdictions;
(f) all of Seller's rights to and interests in computer software
owned by or licensed to Seller;
(g) all of Seller's agreements, contracts, purchase and sales
orders and other similar arrangements, including, without
limitation, those (i) set forth on Schedule 2.1(n) and (ii) not
set forth on Schedule 2.1(n) due solely to the specific dollar
threshold contained in Section 2.1(n), in each case to the extent
transferable (the "Assumed Agreements"), but not including
agreements described in Sections 1.3(b), 1.3(c), 1.3(d) and
2.1(n)(i);
(h) all of Seller's prepayments and deposits to the extent any
benefit therefrom inures to Purchaser after the Closing;
(i) all of Seller's claims, refunds, rights of recovery, rights
of set off and rights of recoupment of any kind other than those
described in Section 1.3(e);
(j) all of Seller's franchises, approvals, permits, licenses,
orders, registrations, certificates, variances, grandfathered
practices and similar rights obtained from Governmental
Authorities, to the extent transferable to Purchaser;
(k) all of Seller's rights to receive mail and other
communications addressed to Seller and relating to the Business
(including, without limitation, mail and communications from
customers, suppliers, distributors, agents and others and
payments with respect to the Acquired Assets);
(l) all of Seller's books, records (including maintenance
records, product tracing records, quality assurance records and
quality control records, but not including corporate records
listed in Section 1.3(c)), ledgers, files, documents, surveys,
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plans, order files, catalogs, technical information, pricing
sheets, instructions and manuals, employee handbooks,
correspondence, customer and supplier lists, drawings,
specifications, display, advertising and promotional materials,
studies, reports, data and other printed, written or
electronically-stored materials of whatever nature;
(m) all of Seller's rights with respect to legal actions and
causes of action relating to the Business or the Acquired Assets;
(n) all of Seller's right to use the telephone numbers,
telecopier numbers, internet website domain names and e-mail
addresses used by or for Seller in connection with the Business,
which items are set forth on Schedule 1.2(n), attached hereto;
and
(o) all other property owned by Seller or in which Seller has an
interest as of the Closing Date which is used or useful in the
Business and is not an Excluded Asset.
The purchase and sale of the Acquired Assets is sometimes
hereinafter referred to as the "Asset Purchase."
1.3 Excluded Assets. Notwithstanding the foregoing, Purchaser
shall not purchase the following assets of Seller (collectively, the
"Excluded Assets"):
(a) Seller's assets set forth on Schedule 1.3(a);
(b) the corporate charter, qualifications to conduct business as
a foreign corporation, arrangements with registered agents,
taxpayer and other identification numbers, seals, minute books,
stock transfer books, blank stock certificates and other
documents relating to the organization, maintenance and existence
of Seller as a corporation;
(c) Seller's rights under this Agreement; and
(d) Seller's rights to refunds of Taxes related to periods prior
to the Closing.
1.4 Liabilities. Notwithstanding anything to the contrary contained
in this Agreement, Purchaser shall not assume any Liabilities of Seller
whatsoever, except for the following obligations (collectively,
the "Assumed Liabilities"):
(a) all of Seller's obligations under the Assumed Agreements,
but only to the extent such obligations arise after, or relate to
the period after, the Closing Date, and excluding any Liability
for any breach of any such Assumed Agreement occurring on or
prior to the Closing Date; and
(b) all of Seller's liabilities, obligations, debts and expenses
reflected on the Closing Balance Sheet as current liabilities,
except as set forth on Schedule 1.4(b).
Except for the Assumed Liabilities, Seller hereby
acknowledges that it is retaining all of its Liabilities
(collectively, the "Retained Liabilities"), and Seller covenants
that it shall pay, discharge and perform each of the Retained
Liabilities promptly when due, except to the extent contested by
Seller in good faith and in a manner which will not subject
Purchaser to any Losses.
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1.5 Purchase Price. In consideration for the Acquired Assets,
Purchaser agrees to assume the Assumed Liabilities from Seller, and
to pay to Seller the amount of $9,308,824, plus or minus (i) any Purchase
Price Adjustment and (ii) prorations and adjustments pursuant to the
Real Estate Purchase Agreement (as adjusted, the "Purchase
Price").
1.6 Payment and Allocation of the Purchase Price
(a) Initial Payment. On the Closing Date, subject to Section
1.9, Purchaser shall pay to Seller $6,558,824, subject to
adjustment pursuant to Section 1.7 (the "Initial Payment"), by
wire transfer of immediately available funds in accordance with
Seller's wire transfer instructions delivered in writing to
Purchaser at least two (2) Business Days prior to the Closing
Date.
(b) Real Estate Payment. On the Closing Date, Purchaser shall
pay to Seller $2,750,000, plus or minus prorations and
adjustments, for the real estate assets pursuant to the Real
Estate Purchase Agreement (as defined herein).
(c) Allocation of Purchase Price. The Purchase Price shall be
allocated among the Acquired Assets as determined by Purchaser
with the consent of Seller, such consent not to be unreasonably
withheld. Seller and Purchaser each hereby covenants and agrees
that it will not take a position on any income Tax Return
(including, without limitation, Internal Revenue Service Form
8594) or with any Governmental Authority that is in any way
inconsistent with the terms of this Section 1.6(c) or the
allocation agreed upon by the Parties. Seller and Purchaser
shall inform each other promptly of any challenge by any
Governmental Authority to the allocation determined pursuant to
this Section 1.6(c) and no party shall agree to any adjustment
asserted by such Governmental Authority without the prior written
consent of the other party, which consent shall not be
unreasonably withheld. Seller and Purchaser agree to cooperate
with each other in preparing Internal Revenue Service Form 8594
for filing by each of them and to furnish the other party with a
copy of Internal Revenue Service Form 8594 within a reasonable
period before its filing due date.
1.7 Purchase Price Adjustment. In the event Seller's Adjusted
Net Assets (as hereinafter defined) as reflected on the balance sheet
of Seller as of the Closing Date prepared in accordance with Section 1.8
(the "Closing Balance Sheet") is greater than or less than $5,757,178
Seller's Adjusted Net Assets as reflected on the WPI Power
Systems, Inc. and WPI Electronics, Inc. balance sheet as of
November 21, 1999 (the "Reference Balance Sheet Date"), attached
hereto as Schedule 1.7-1 (the "Reference Balance Sheet"), the
Purchase Price shall be increased or decreased, as the case may
be, by the amount of the difference (the "Purchase Price
Adjustment"). For purposes hereof, "Adjusted Net Assets" means
the amount equal to (a) the total assets of Seller (excluding
cash, cash equivalents and overdrafts) as reflected on the
Reference Balance Sheet or the Closing Balance Sheet, as the case
may be, provided that (i) receivables from WPI Group, Inc. or any
Affiliate thereof, (ii) inventory listed on Schedule 1.3(a),
(iii) tuition receivables from terminated employees and (iv) the
Supervision receivable listed on Schedule 1.3(a) shall not be
included as assets on the Reference Balance Sheet or the Closing
Balance Sheet, less (b) the total current liabilities of Seller
as reflected on the Reference Balance Sheet or the Closing
Balance Sheet, as the case may be, provided that payables to WPI
Group, Inc. or any Affiliate thereof shall not be included as
liabilities on the Reference Balance Sheet or the Closing Balance
Sheet. Schedule 1.7-2 sets forth the calculation of Adjusted Net
Assets as of the Reference Balance Sheet Date, which amount is
equal to $5,757,178. In the event of an increase, Purchaser
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shall pay the amount thereof to Seller, within five (5) Business
Days after the Purchase Price Adjustment has finally been
determined in accordance with Section 1.8. In the event of a
decrease, Seller shall pay the amount thereof to Purchaser within
five (5) Business Days after the Purchase Price Adjustment has
finally been determined in accordance with Section 1.8. In
either case, payment shall be made by wire transfer of
immediately available funds to an account designated in writing
by the payee.
1.8 Closing Balance Sheet. Within thirty (30) days after the
Closing Date, Purchaser shall deliver to Seller the Closing Balance Sheet,
which shall be prepared in accordance with generally accepted accounting
principles and in the same manner as the Reference Balance Sheet,
except that Seller's inventory shall be valued in the manner set
forth in Section 1.9 and other adjustments related to allowance
for doubtful accounts, warranty reserves and other similar
adjustments. The Closing Balance Sheet and the calculation of the
Purchase Price Adjustment based thereon shall be valid and
binding upon the parties unless Seller notifies Purchaser in
writing of any dispute with respect thereto within thirty (30)
days following the delivery thereof. Seller shall have full
access to all financial records and transaction details of
Purchaser in order to review the values reflected on the Closing
Balance Sheet as prepared by Purchaser. If Seller and Purchaser
are unable to resolve any dispute with respect to the Closing
Balance Sheet within ten (10) days following delivery of Seller's
written notice to Purchaser thereof, the dispute shall be
submitted for resolution to a Certified Public Accounting firm
mutually agreed upon by the parties hereto, or in default of such
Agreement, to be selected by Agreement of each of the parties'
independent Public Accountants (the "Evaluator"). The Evaluator
shall act as an expert and not as an arbitrator to determine any
such disputes based solely on presentations by Purchaser and
Seller and not by independent review. The Evaluator's
determination shall be made within twenty (20) days after the
submission of the dispute, shall be in accordance with this
Agreement, shall be set forth in writing and shall be final and
binding on the parties. Purchaser and Seller shall each pay one-
half of the fees and expenses of the Evaluator. Purchaser and
Seller shall pay their own costs incurred in preparing or
reviewing the Closing Balance Sheet and preparing presentations
for the Evaluator.
1.9 Post-Closing Inventory. Within five (5) days after the
Closing Date, Purchaser shall conduct a physical count of its inventory.
Seller and its representatives shall be entitled to observe the physical
count and shall be afforded the opportunity to make such reasonable
investigations of the inventory as they shall desire. The value
of the inventory on the Closing Balance Sheet shall be based on
such physical count in conformity with generally accepted
accounting principles ("GAAP") and specifically include adequate
reserves for excess and obsolete inventory and any changes in the
inventory between the date of such physical count and the Closing
Date.
1.10 Delivery of Assets. Seller shall take all action necessary
or advisable to put Purchaser in possession of the Acquired Assets
promptly following the Closing. The parties may agree, at or prior
to the Closing, that delivery of Seller's cash and cash equivalents
to Purchaser may be accomplished by deducting the amount thereof from the
Initial Payment.
1.11 Transfer of Contracts. Nothing in this Agreement shall be
construed as an attempt to assign any Acquired Asset which by its terms
or by Law is nonassignable without the consent of the other party or parties
thereto, unless such consent shall have been given or as to which
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all the remedies for the enforcement thereof enjoyed by Seller
would, as a matter of Law, pass to Purchaser as an incident of
the assignments provided for by this Agreement. In the event (a)
any Acquired Asset either does not permit or expressly prohibits
the assignment by Seller of its rights and obligations
thereunder, or (b) subject to Section 4.2(f), Seller has not
obtained the necessary consent to an assignment of an Acquired
Asset prior to the Closing, Purchaser shall perform the
obligations with respect to such Acquired Asset for and on behalf
of Seller but for the account of Purchaser and Seller shall hold
the benefits and privileges of such Acquired Asset arising after
the Closing Date in trust for Purchaser and cooperate with
Purchaser in any reasonable arrangement designed to provide for
Purchaser the benefits with respect to such Acquired Asset. Such
arrangements shall include, but not be limited to, the
appointment of Purchaser as attorney in fact for Seller. After
the Closing, Seller shall continue to use commercially reasonable
efforts to obtain the consent to assignment of such Acquired
Asset.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.1 Representations and Warranties of Seller. Seller hereby
represents and warrants to Purchaser (but only with respect to matters
related to the Business or the Acquired Assets), as of the date hereof
and as of the Closing Date, as follows:
(a) Organization, Standing and Qualification. Seller is a
corporation duly incorporated, validly existing and in good
standing under the Laws of the State of New Hampshire. Seller is
duly qualified to do business and is in good standing as a
foreign corporation in each jurisdiction, as set forth on
Schedule 2.1(a), where the nature of its activities or the
character of the properties owned, leased or operated by it
requires such qualification, except where such failure to qualify
will not have a material adverse effect on the Business. Seller
has the corporate power, authority and the requisite legal
capacity, to execute, deliver and perform this Agreement and each
of the other agreements, certificates, instruments and documents
contemplated hereby (collectively, the "Ancillary Documents") to
which Seller is a party. The execution, delivery and performance
of this Agreement and any such Ancillary Document by Seller has
been duly authorized by all necessary corporate and shareholder
action. WPI Group, Inc. owns, of record and beneficially, all of
the outstanding shares of capital stock of WPI Power Systems,
Inc. and WPI Electronics, Inc.
(b) No Conflicts. Except as set forth on Schedule 2.1(b), the
execution, delivery and performance by Seller of this Agreement
and each of the Ancillary Documents to which Seller is a party
and the consummation of the transactions contemplated hereby and
thereby do not and will not violate, conflict with or result in a
breach of any term, condition or provision of, or require the
consent of any Governmental Authority or any other Person under,
or give rise to the right to accelerate or terminate, or result
in the creation or right to create any Lien upon the assets of
Seller (including the Acquired Assets) under, (i) any Law to
which Seller or its assets (including the Acquired Assets) is
subject, (ii) any judgment, order, writ, injunction, decree, or
award of any Governmental Authority which is applicable to
Seller, or its assets (including the Acquired Assets), (iii) the
certificate of incorporation, by-laws or other governing
instruments of Seller or (iv) any license, agreement, commitment
or other instrument or document to which Seller is a party or by
which Seller or its assets (including the Acquired Assets) is
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otherwise bound. No authorization, approval or consent of, and
no registration or filing with, any Governmental Authority is
required in connection with the execution, delivery or
performance of this Agreement by Seller.
(c) Binding Effect. This Agreement and each of the Ancillary
Documents has been duly executed and delivered by Seller and
constitutes the legal, valid and binding obligation of Seller,
enforceable against Seller in accordance with its terms, except
as enforceability hereof and thereof may be limited by applicable
bankruptcy, insolvency, reorganization or other similar Laws
affecting creditors' rights generally or by general principles of
equity.
(d) No Interest in Other Entities. Except as set forth on
Schedule 2.1(d), WPI Group, Inc. has no subsidiaries other than
WPI Power Systems, Inc. and WPI Electronics, Inc. WPI Power
Systems, Inc. and WPI Electronics, Inc. do not have any
subsidiaries. Except as set forth in the two (2) previous
sentences, Seller does not own any shares of capital stock of any
corporation or any ownership or other security or investment
interest, either of record, beneficially or equitably, in any
association, partnership, joint venture, limited liability
company or other legal entity.
(e) Financial Statements. Seller has previously delivered to
Purchaser true and correct copies of: (i) the unaudited balance
sheets of WPI Power Systems, Inc. and WPI Electronics, Inc. as of
September 27, 1998, September 28, 1997 and September 29, 1996,
and the related statements of income and cash flows, which were
included without material adjustments in the audited balance
sheets of WPI Group, Inc. and the related statements of income,
retained earnings and cash flows for the years then ended; (ii)
the unaudited balance sheets of WPI Power Systems, Inc. and WPI
Electronics, Inc. as of June 27, 1999, and related statement of
income and cash flows for the nine-month period then ended; and
(iii) the unaudited balance sheets of WPI Power Systems, Inc. and
WPI Electronics, Inc. as of November 21, 1999, and related
statements of income and cash flow for the two month period then
ended (collectively, the "Financial Statements"). The Financial
Statements have been prepared from and are consistent with the
books, records and accounts of Seller, have been prepared in
accordance with GAAP consistently applied throughout the periods
indicated (subject, in the case of the interim financial
statements, to normal year-end adjustments (consisting only of
normal recurring accruals) and the absence of statements of cash
flows and shareholders' equity and information which would
normally be contained in footnotes to financial statements) and
fairly present, as of the dates and for the periods referred to
therein, Seller's and the Business' financial position and
results of operations. The books and records of Seller fully and
fairly reflect all material transactions, properties, assets
(including the Acquired Assets) and liabilities of Seller during
the periods covered by the Financial Statements and since
September 27, 1998.
(f) Absence of Undisclosed Liabilities. The Seller does not
have any Liabilities or obligations, except (a) to the extent
reflected or taken into account in the Reference Balance Sheet
and not heretofore paid or discharged, (b) liabilities incurred
in the ordinary course of business consistent with Past Practice
since the date of the Reference Balance Sheet (none of which
relates to breach of contract, breach of warranty, tort,
infringement or violation of law, or which arose out of any
action, suit, claim, governmental investigation or arbitration
proceeding), (c) normal accruals, reclassifications, and audit
adjustments which would be reflected on an audited financial
statement and which would not be material in the aggregate and
(d) as specifically disclosed on the Schedules to this Agreement.
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(g) Ordinary Course. Since the Reference Balance Sheet Date,
and except as otherwise disclosed on Schedule 2.1(g), Seller has
operated its business in the ordinary course consistent with Past
Practice and Seller has not made or instituted, or agreed to make
or institute, any material change in its methods of production,
purchase, sale, lease, management, marketing, distribution,
accounting, account payments, investment of funds or operations
and, in particular, has not:
(i) amended its articles of incorporation or by-laws;
(ii) declared, paid or made any dividend or other distribution or
payment in respect of shares of its capital stock or purchased,
retired or redeemed, or obligated itself to purchase, retire or
redeem, any shares of its capital stock;
(iii) made any investment of a capital nature in excess of
$10,000, individually, or $50,000 in the aggregate;
(iv) entered into any new agreement or series of related
agreements (A) involving the purchase of supplies or inventory
except in the ordinary course of business, or (B) except as
permitted under subclause (A) above, either involving the payment
by it of more than $10,000 or for a term or expected duration of
more than one year;
(v) waived, forfeited or otherwise failed to assert any rights
of significant value (which individually or in the aggregate will
not have a material adverse effect on the Business) or made any
payment of any material Liability before the same came due in
accordance with its terms;
(vi) amended, terminated, received notice of termination of, made
any modification to, or defaulted under, any Material Agreement
(or any agreement that would have been a Material Agreement if it
had not been terminated);
(vii) created, incurred or assumed any Liability for borrowed
money except Liabilities incurred under existing credit
facilities to fund normal operations in the ordinary course of
business;
(viii) made any material change in the amounts or scope of
coverage of insurance policies;
(ix) merged or consolidated with any other Person, acquired any
capital stock or other securities of any other Person, or
acquired all or a significant portion of the assets of any other
Person;
(x) assumed or guaranteed any Liability or responsibility
(whether primarily, secondarily, contingently or otherwise) for
the obligations of any other Person, except for the endorsement
for collection by Seller of instruments in the ordinary course of
business;
(xi) made any loan or advance (including, without limitation, any
loan or advance to any Affiliate, shareholder, officer, director
or employee of Seller);
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(xii) sold, transferred, leased to others, granted Liens
against, or otherwise disposed of any of its material assets,
whether tangible or intangible, except for inventory sold in the
ordinary course of business;
(xiii) increased in any manner the compensation or benefits of
any of its employees or paid any pension or retirement allowance
not required by any existing Employee Benefit Plan or agreement,
or became a party to or amended any Employee Benefit Plan or
employment agreement; provided, however, that the provisions of
this subclause (xiii) shall not include an increase to the
compensation of non-officer employees of Seller when such
increase is in conjunction with annual performance and salary
reviews of such non-officer employee;
(xiv) to the best of Seller's knowledge, permitted any lapse
to occur, failed to take any actions to protect, or suffered any
adverse change in respect of any of its Proprietary Rights;
(xv) to the best of Seller's knowledge engaged in any other
transaction that is not in Seller's normal course of business
consistent with Past Practice;
(xvi) agreed or committed, in writing or otherwise, to take
any of the actions described in the foregoing subclauses (i)
through (xiii); or
(xvii) to the best of Seller's knowledge, agreed or committed,
in writing or otherwise, to take any of the actions described in
the foregoing subclauses (xiv) or (xv).
(h) Title to Assets. Except as disclosed on Schedule 2.1(h),
Seller has good and marketable title to the Acquired Assets, free
and clear of any Liens. Seller owns, leases or otherwise has the
contractual right to use all of the assets used in or necessary
for the conduct of the Business as currently conducted. Seller
has delivered to Purchaser a schedule of the fixed assets of
Seller dated not less than ten (10) days prior to the date hereof
(which schedule shall be updated to a date not less than three
(3) days prior to the Closing Date).
(i) Receivables. (i) Seller's receivables reflected on its
Reference Balance Sheet or arising since the Reference Balance
Sheet Date (collectively, the "Receivables"), represent valid
obligations arising from sales actually made or services actually
performed and have arisen or were acquired in the ordinary course
of business consistent with Past Practice; (ii) Seller's
provision for doubtful accounts reflected on its Reference
Balance Sheet or reserved on its books since the Reference
Balance Sheet Date has been determined in accordance with GAAP
consistently applied, and fully and fairly reflect such
provisions for doubtful accounts; and (iii) since the Reference
Balance Sheet Date, Seller has not canceled, reduced, discounted,
credited or rebated or agreed to cancel, reduce, discount, credit
or rebate, in whole or in part, any Receivables except in the
ordinary course of business consistent with Past Practice. Seller
has provided to Purchaser a schedule of aged Receivables as of a
date which is within ten (10) days of the date hereof (which
schedule shall be updated to a date not less than three (3) days
prior to the Closing Date).
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(j) Inventories. (i) Seller's inventories which are reflected
on its Reference Balance Sheet or which have been acquired since
the Reference Balance Sheet Date were acquired in the ordinary
course of business consistent with Past Practice; (ii) except to
the extent of any reserve for obsolete or slow moving inventory,
the inventories consist solely of quantities and qualities usable
and salable by Seller in the ordinary course of business, and are
maintained at normal levels consistent with Seller's Past
Practice and current needs of the Business; (iii) the terminal
products sub-assemblies and finished goods inventory are free
from design defects; and (iv) no inventory is held by Seller on
consignment from other Persons or is held by other Persons on
consignment from Seller.
(k) Tangible Assets. Except as disclosed on Schedule 2.1(k), to
the best of Seller's knowledge, the tangible personal property
owned, leased or used by Seller (i) is in good operating
condition and repair, reasonable wear and tear excepted; (ii) is
usable in the ordinary course of business; (iii) conforms in all
material respects to all applicable Laws relating to its
construction, use or operation; and (iv) is located at Seller's
premises listed on Schedule 2.1(l)(i).
(l) Real Property.
(i) Schedule 2.1(l) lists all real property owned, leased or
otherwise used by Seller, including, without limitation, any
warehousing or off-site storage facilities, identifying the
lessor or other owner thereof (and, in the case of a land trust,
the beneficial owners thereof if known by Seller) (collectively,
the "Real Property").
(ii) Seller has obtained, possesses, and is in compliance with
all licenses, permits, approvals, certificates, and other
authorizations required by applicable Laws for the use and
occupancy of the Real Property as it is currently being utilized,
including, without limitation, zoning variances.
(iii) The Seller has not received any notice from any
Governmental Authority concerning, or has any knowledge of (A)
any special Tax or other assessment to be levied against any of
the Real Property or (B) any change in the Tax assessment of any
of the Real Property.
(iv) Except as set forth on Schedule 2.1(l) Seller has not
granted any other Person any right to use or occupy any portion
of the Real Property and no other Person is using or occupying
the same.
(m) Proprietary Rights.
(i) Seller owns or possesses licenses or other rights to use all
trademarks, trade and business names, internet domain names,
service marks, service names, copyrights, patents, processes,
methods of production, industrial designs, trade secrets and
inventions (whether or not patentable) (collectively,
"Proprietary Rights") necessary for the conduct of the Business
as currently conducted.
(ii) Schedule 2.1(m) sets forth a true and complete list of all
trademarks, trade and business names, service marks, service
names, internet domain names, copyrights and patents included in
the Proprietary Rights of Seller (identifying which are owned and
which are licensed), including all United States, state and
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foreign registrations or applications for registration thereof
and all agreements relating thereto.
(iii) Except as disclosed on Schedule 2.1(m), Seller is not
required to pay any royalty, license fee or similar compensation
in connection with the use of its Proprietary Rights.
(iv) Except as disclosed on Schedule 2.1(m), to the best of
Seller's knowledge, Seller has not interfered with, infringed
upon, misappropriated or otherwise come into conflict with the
Proprietary Rights of any other Person or committed any acts of
unfair competition and no claims have been asserted by any Person
alleging such interference, infringement, misappropriation,
conflict or act of unfair competition.
(v) Except as disclosed on Schedule 2.1(m), to the best of
Seller's knowledge, no Person is infringing upon Seller's
Proprietary Rights, and Seller has not notified any Person that
it believes that such Person is interfering with, infringing,
misappropriating or otherwise acting in conflict with Seller's
Proprietary Rights or engaging in any act of unfair competition
or has done any of the foregoing.
(vi) Except as disclosed on Schedule 2.1(m), there are no
Proprietary Rights developed by Seller or any current or former
director, officer, consultant or employee of Seller that are used
in the Business and that have not been duly and validly
transferred to, or are not owned free and clear of any Liens by,
Seller.
(n) Material Agreements. Schedule 2.1(n) sets forth a true and
complete list, and Seller has provided to Purchaser true and
complete copies (including all amendments and extensions thereof
and all waivers thereunder) or, if oral, an accurate and complete
description, of each of the following agreements which are
related to the Business or the Acquired Assets, whether written
or oral, to which Seller is a party or is otherwise bound (each,
a "Material Agreement"):
(i) all loan agreements, indentures, mortgages, notes,
installment obligations, factoring arrangements, capital leases
or other agreements or instruments relating to the borrowing of
money (or guarantees thereof);
(ii) all contracts, open purchase orders or commitments for the
purchase or sale of assets, goods or services, excluding
contracts involving payments, cost of performance or receipts by
Seller following the date hereof of less than $10,000;
(iii) all contracts with any Governmental Authority;
(iv) all leases, subleases or other agreements under which Seller
has the right or a license to use any real property;
(v) all leases, subleases, licenses or any other agreements
under which Seller has the right or license to use any personal
property, whether tangible or intangible, owned or licensed by
another Person;
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(vi) all agreements under which any other Person has the right or
license to use any real property or personal property, whether
tangible or intangible, owned or licensed by Seller;
(vii) all agreements limiting the ability of Seller to
conduct its business or to otherwise compete, including as to
manner or place;
(viii) all confidentiality agreements that either restrict
Seller's use or disclosure of information or restrict the use or
disclosure of Seller's confidential information by others;
(ix) all joint venture, "partnering" or similar agreements;
(x) all sales representative, distributor or dealer agreements,
or practices;
(xi) all contracts relating to the consignment of assets to any
Person or pursuant to which Seller has possession of any assets
consigned to it by any Person;
(xii) all collective bargaining, union, employment,
consulting, non-competition, retainer or similar agreements; and
(xiii) all other contracts, without regard to monetary amount,
which were not entered into in the ordinary course of business or
which are material to the conduct of the Business and not listed
above.
Except as disclosed on Schedule 2.1(n), neither Seller nor,
to the best of Seller's knowledge, any other party is in default
under any Material Agreement and, to the best of Seller's
knowledge, no event has occurred or is reasonably expected to
occur which (after notice or lapse of time or both) would become
a breach or default under, or would otherwise permit
modification, cancellation, acceleration or termination of, any
Material Agreement or would result in the creation of or right to
obtain any Lien upon, or any Person obtaining any right to
acquire, any assets, rights or interests of Seller. Except as
disclosed on Schedule 2.1(n), (i) each Material Agreement is in
full force and effect and is valid and legally binding against
Seller, and, to the best of Seller's knowledge, each of the other
parties thereto; (ii) there are no material unresolved disputes
with respect to any Material Agreement; and (iii) to the best of
Seller's knowledge, no party to a Material Agreement has notified
Seller that it intends either to modify, cancel or terminate a
Material Agreement or to refuse to renew a Material Agreement on
substantially equivalent terms upon the expiration of the term
thereof.
(o) Litigation. Except as disclosed on Schedule 2.1(o), there
is no claim, legal action, suit, arbitration, investigation by
any Governmental Authority or other proceeding pending or, to the
best of Seller's knowledge, threatened against or relating to
Seller, related to the Business or the Acquired Assets, which, if
adversely determined, would have a material adverse effect on the
business, operations, financial condition or results of
operations of Seller, or would otherwise prevent, hinder or delay
consummation of the transactions contemplated herein. Neither
Seller nor any of its assets is subject to any outstanding
judgment, order, writ, injunction or decree of any Governmental
Authority.
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(p) Compliance with Law. Seller has obtained, possesses and is
in compliance with all material licenses, permits, approvals,
certificates and other authorizations from all applicable
Governmental Authorities necessary for the conduct of its
business as currently conducted. Schedule 2.1(p) hereto sets
forth a true and complete list of all such licenses, permits and
other authorizations obtained by Seller, each of which is in full
force and effect. Seller is in material compliance, and has
complied in all material respects, with all Laws applicable to it
and has not received any notice of any violation thereof which
has not been completely cured.
(q) Warranties. Except for Seller's standard warranties as set
forth on Schedule 2.1(q) (which Schedule sets forth all
warranties used by Seller during the past two (2) years), and
except as further disclosed on Schedule 2.1(q), Seller has not
made any warranty or representation in respect of any products or
services supplied or agreed to be supplied by it.
(r) Environmental Matters. Except as disclosed on
Schedule 2.1(r):
(i) Seller is in material compliance, and has complied in all
material respects, with all applicable Environmental Laws;
(ii) none of the Real Property or operations of Seller are
subject to any outstanding written order of or agreement with any
Governmental Authority or private party respecting (A) any
Environmental Laws, (B) any Remedial Actions or (C) any
Environmental Claims;
(iii) none of the Real Property or operations of Seller are
the subject of a claim, assertion or other notice of, or a
judicial or administrative proceeding alleging, a violation of
any Environmental Law or otherwise asserting an Environmental
Claim;
(iv) none of the Real Property or operations of Seller are the
subject of any investigation by any Governmental Authority
evaluating whether any Remedial Action is needed under any
applicable Environmental Law;
(v) Seller has not filed any report or notice under any
Environmental Law indicating past or present generation,
treatment, handling, recycling, use, transportation, reclamation,
storage or disposal of a hazardous waste or solid waste or
reporting a Release of a Contaminant into the environment;
(vi) Seller has no contingent liability in connection with any
Release of any Contaminant into the environment;
(vii) none of the Real Property or operations of Seller
involve, or have involved, the violation of Environmental Laws
governing the generation, treatment, handling, recycling, use,
transportation, reclamation, storage or disposal of hazardous
waste, as defined under 40 C.F.R. Parts 260-270 or any state
equivalent;
(viii) none of the operations of Seller involves, or has
involved, the past or present generation, treatment, handling,
recycling, use, transportation, reclamation, storage or disposal
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of hazardous waste, as defined under 40 C.F.R. Parts 260-270 or
any state equivalent, in violation of applicable Environmental
Laws;
(ix) Seller has not disposed of any Contaminant by placing it in,
at, on or under the ground, surface waters, groundwater, or other
environmental medium of any premises owned, leased or used by
Seller and, to the best of Seller's knowledge, no such disposal
has been made by any lessor, prior owner or prior lessee or other
Person;
(x) no underground storage tanks or surface impoundments are or
ever have been located on any premises owned, leased or used by
Seller;
(xi) no Lien based on (i) any Environmental Laws or (ii) damages
arising from or costs incurred by any Governmental Authority in
response to a Release of a Contaminant into the environment, has
been filed against or attached to any assets of Seller;
(xii) there are no PCBs, lead paint, asbestos (of any type or
form), or materials, articles or products containing PCBs, lead
paint or asbestos, located in, at, on, under, a part of, or
otherwise related to the Real Property (including, without
limitation, any building, structure, or other improvement that is
a part of the Real Property); and
(xiii) no on-site sources of water for human consumption or
other human contact in or at the Real Property, and no subsurface
waters under the Real Property, contain a Contaminant at a level
exceeding a level which is established or recommended in
Environmental Laws.
For purposes of this Agreement, the terms set forth below
shall have the following meanings:
"Contaminant" shall mean any waste or other substance that
is listed, defined, designated, or classified as, or otherwise
determined to be, hazardous, radioactive, or toxic, or a
pollutant or a contaminant, under or pursuant to any
Environmental Laws, including any admixture or solution thereof,
and specifically including petroleum and all derivatives thereof
or synthetic substitutes therefor and asbestos or asbestos-
containing materials.
"Environmental Claim" shall mean any notice of violation,
claim, demand, abatement or other order or direction (conditional
or otherwise) by any Person, tangible or intangible property
damage, damage to the environment, nuisance, trespass, pollution,
contamination, other adverse effects on the environment, clean-up
costs, remediation, removal, other response costs (which shall
include, but not be limited to, costs to come into compliance
with Environmental Laws), or investigation costs (including, but
not limited to, fees of consultants, counsel and other experts in
connection with any environmental investigation, testing, audits
or studies), and/or fines, penalties, losses, liabilities
(including any actual or punitive damages under any statutory or
common law cause of action, regardless of whether the liabilities
are imposed through operation of strict liability or otherwise),
or restrictions, resulting from, based upon or related to (a) the
existence, or the continuation of the existence, of a Release or
threatened Release (including, but not be limited to, sudden or
non-sudden, accidental or non-accidental Releases) of, or
exposure to, any Contaminant or other Release or emission in, on
or under the environment (including, but not limited to, the air,
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soil, subsurface strata, groundwater, surface water or any
sediments associated with any water body), (b) the environmental
aspects of the transportation, storage, treatment, disposal,
generation, recycling, reclamation, use or other handling of any
Contaminants or other materials, or (c) any provision of
Environmental Law, or any judgment, order, writ, decree, permit
or injunction.
"Environmental Laws" shall mean any laws relating to
environmental, health and safety issues, or the regulation of or
imposition of standards of conduct concerning Releases or
threatened Releases of Contaminants or hazardous or toxic
wastes, hazardous materials, whether as matter or energy, into
ambient air, water or land, or otherwise relating to the
manufacture, processing, generation, distribution, use,
treatment, storage, disposal, cleanup, transport or handling of
pollutants, Contaminants or hazardous or toxic wastes, hazardous
substances or hazardous materials ("Regulated Activity"), under
the following laws: the Comprehensive Environmental Response,
Compensation and Liability Act (42 U.S.C. 9601 et seq.)
("CERCLA"), the Hazardous Materials Transportation Act (49 U.S.C.
5101 et seq.), the Resource Conservation and Recovery Act (42
U.S.C. 6901 et seq.), the Clean Water Act (33 U.S.C. 1251 et
seq.), the Toxic Substances Control Act (15 U.S.C. 2601 et
seq.), the Federal Insecticide, Fungicide and Rodenticide Act (7
U.S.C. 136 et seq.), the Emergency Planning and Community Right
to Know Act (42 U.S.C. 11001 et seq.), the Safe Drinking Water
Act (42 U.S.C. 300f et seq.), the Clean Air Act (42 U.S.C. 7401
et seq.), the Pollution Prevention Act (42 U.S.C. 13101 et
seq.), the Oil Pollution Act (33 U.S.C. 2701 et seq.) and the
Occupational Safety and Health Act (29 U.S.C. 651 et seq.), as
such laws have been amended or supplemented, and any analogous
state, local or foreign laws, and all rules, standards, orders
and regulations promulgated thereunder, and any common law cause
of action relating to any Regulated Activity.
"Permit" shall mean any permit, approval, authorization,
license, certificate, variance, permission or similar item
required from a Governmental Authority having jurisdiction under
any applicable Environmental Law.
"Release" shall mean any release, exposure, spill, emission,
leaking, pumping, injection, abandonment, deposit, disposal,
discharge, dispersal, leaching or migration of Contaminants
(including, but not limited to, Contaminants in barrels, drums or
other containers) into the environment, including the movement of
Contaminants through, on, under or in the air, soil, subsurface
strata, surface water or groundwater.
"Remedial Action" shall mean all actions to (a) clean up,
remove, treat, minimize the effect of or in any other way address
Contaminants in the indoor or outdoor environment; (b) prevent
the Release or threat of Release or minimize the further Release
of Contaminants so they do not migrate or endanger or threaten to
endanger public health or welfare or the indoor or outdoor
environment; or (c) perform pre-remedial studies and
investigations and post-remedial monitoring and care in respect
of actions contemplated in the preceding clauses (a) and (b).
(s) Related Party Transactions. Except as disclosed on Schedule
2.1(s), no Related Party is directly or indirectly a party to any
contract or other arrangement (whether written or oral) with
Seller providing for services (other than as an employee of
Seller), products, goods or supplies, rental of real or personal
property, or otherwise requiring payments from or to the same.
For purposes hereof, the term "Related Party" shall mean WPI
Group, Inc. or any director, officer or affiliate of Seller or,
with respect to any of the foregoing, any member of his or her
family or any corporation, partnership, other business entity or
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trust in which he or she or any member of his or her family
directly or indirectly has greater than a ten percent (10%)
interest, or of which he or she or any member of his or her
family is an officer, director, general partner, manager or
trustee.
(t) Insurance. Schedule 2.1(t) sets forth a true and complete
list of all liability (including general and product liability),
property, workers' compensation and other insurance policies
currently in effect that insure Seller, the Business or the
Acquired Assets, listing for each policy the identity of the
insurance carrier, the policy period, the limits and retentions
and any special exclusions. All of Seller's tangible assets are
insured with respect to loss due to fire and other risks in
accordance with good industry practice and in amounts and with
types of coverage adequate to insure fully against risks to which
Seller and its assets are normally exposed in the operation of
the Business. Seller has not received notice that any insurer
under any policy referred to in this Section is denying liability
with respect to a claim thereunder or defending under a
reservation of rights clause. Schedule 2.1(t) also sets forth a
true and complete description of any self-insurance arrangement
by or affecting Seller, including any reserves established
thereunder.
(u) Taxes.
(i) Seller (A) has filed when due (taking into account permitted
extensions) with the appropriate Governmental Authorities all tax
returns, estimates and reports required to be filed by it ("Tax
Returns"), all of which Tax Returns are true, correct and
complete; (B) has paid in a timely manner all requisite taxes,
levies, imposts, duties and assessments of any nature whatsoever,
including Real Property taxes and assessments, unemployment and
social security taxes and income tax withholding and interest and
penalties with respect to any of the foregoing ("Taxes"), which
have become due and payable; and (C) has or will prior to Closing
establish in accordance with its normal accounting practices and
procedures accruals and reserves that, in the aggregate, are
adequate for the payment of all Taxes not yet due and payable and
attributable to any period preceding the Closing. There are no
and will be no Tax deficiencies in respect of any period
preceding the Closing Date that, in the aggregate, would result
in any Tax Liability in excess of the amount of the reserves or
accruals maintained on the books of Seller.
(ii) Seller is not currently under audit by any Governmental
Authority for any Taxes and has not received notice of: (A) any
alleged failure to file any Tax Returns or to pay any Taxes; (B)
any alleged Liability for the Taxes of any entity which is deemed
to be a predecessor or transferor of Seller; (C) any audit
adjustment; or (D) any planned audit of Seller's Tax Returns.
Seller has not executed or filed with any Governmental Authority
any agreement or other document extending, or having the effect
of extending, the period of assessment or collection of any Taxes
or contesting the amount thereof.
(iii) Seller has in its files all documentation (including
exemption certificates from customers) necessary to support the
exemptions, deductions or special Tax rates claimed on its Tax
Returns for sales/use, excise or similar gross receipt Taxes.
(iv) Seller is not a party to, bound by, or obligated under, any
Tax sharing or similar agreement.
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(v) Schedule 2.1(u) contains a list of states, territories and
jurisdictions (whether foreign or domestic) in which Seller files
Tax Returns relating to its operations.
(v) Employee Benefit Plans.
(i) Schedule 2.1(v) lists all Employee Benefit Plans which are
or, since January 1, 1994, have been maintained or contributed to
by Seller or to which Seller has been obligated to contribute.
Except as set forth on Schedule 2.1(v), no corporation or other
entity which, under Section 4001(b) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), is under
common control with Seller (an "ERISA Affiliate") maintains, or,
since January 1, 1994, has maintained, contributed to or been
obligated to contribute to a Pension Plan subject to Title IV of
ERISA or Section 42 of the Internal Revenue Code of 1986, as
amended (the "Code"), other than a Pension Plan which has been
completely terminated in a "standard termination" meeting the
requirements of ERISA Section 4041(b). Each Employee Benefit Plan
disclosed on Schedule 2.1(v) has in all material respects been
maintained in compliance with its terms and all provisions of
ERISA and Section 412 of the Code applicable thereto (including
rules and regulations thereunder).
(ii) Each Pension Plan which is intended to be "qualified" within
the meaning of Section 401(a) of the Code has been determined by
the Internal Revenue Service (the "IRS") to be so qualified and
each trust created thereunder has been determined by the IRS to
be tax exempt under Section 501(a) of the Code as of the date of
the determination letter set forth on Schedule 2.1(v), and Seller
does not know of any fact which would indicate that the qualified
status of each such Pension Plan or the tax exempt status of each
trust created thereunder has been adversely affected. None of the
Pension Plans are currently subject to an audit or other
investigation by the IRS, the Department of Labor, the Pension
Benefit Guaranty Corporation (the "PBGC") or any other
Governmental Authority nor are any subject to any law suits,
complaints, claims or legal proceedings of any kind.
(iii) No "prohibited transaction," as such term is defined in
Section 406 of ERISA, has occurred with respect to any Pension
Plan or Welfare Plan which has resulted or may result in
Liability to Seller or its ERISA Affiliates. No breach of
fiduciary responsibility under Part 4 of Title I of ERISA has
occurred which has resulted or may result in Liability to Seller,
any trustee, administrator or fiduciary of any Pension Plan or
Welfare Plan. No ERISA Affiliate has incurred any Liability for
any penalty or Tax, nor, to the best of Seller's knowledge, does
any fact exist which would subject Seller to any penalty or Tax
under Sections 4971, 4972, 4975, 4976, 4977, 4978, 4979, 4980,
4980B, 4980D or 5000 of the Code or Section 502 of ERISA.
(iv) Each Welfare Plan has, to the extent applicable, at all
times been in material compliance with the provisions of Section
4980B of the Code and Parts 6 and 7 of Title I of ERISA. Except
as disclosed on Schedule 2.1(v), none of the Welfare Plans
provides or promises post-retirement health or life benefits to
current employees or retirees of Seller.
(v) Except as disclosed on Schedule 2.1(v), all contributions
required to be paid under the terms of each Pension Plan have
been made by the due date thereof.
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(vi) No Pension Plan or trust created thereunder has been
terminated or partially terminated by Seller, and Seller has no
knowledge of any events which would cause a voluntary or
involuntary termination of any Pension Plan.
(vii) Except as disclosed on Schedule 2.1(v), none of Seller
nor any of its ERISA Affiliates has maintained or contributed to,
or been obligated or required to contribute to, a "Multiemployer
Plan," as such term is defined in Section 4001(a)(3) of ERISA.
(w) Employee Matters.
(i) Schedule 2.1(w) sets forth an accurate and complete list of
all current employees of Seller as of the date hereof and their
hourly rates of compensation or base salaries (as applicable). In
addition, to the extent any current employees are on leaves of
absence, Schedule 2.1(w) indicates the nature of such leave of
absence (including, without limitation, leave relating to
worker's compensation, short-term or long-term disability, the
Family and Medical Leave Act of 1993 or any other type of leave
of absence) and each such employee's anticipated date of return
to active employment. Except as set forth on Schedule 2.1(w),
Seller has not received written notice that any employee of
Seller has any plans to terminate employment with Seller. Seller
has complied in all material respects with all laws, rules,
regulations, ordinances, orders, judgments and decrees relating
to the hiring of employees and the employment of labor, including
provisions thereof relating to wages, hours, equal opportunity,
collective bargaining and the withholding and payment of social
security and other Taxes.
(ii) Except as set forth on Schedule 2.1(w), (A) Seller is not
delinquent in payments to any of its employees for any wages,
salaries, commissions, bonuses or other direct compensation for
any services performed by them to date or amounts required to be
reimbursed to such employees and, upon termination of the
employment of any such employees, neither Purchaser nor Seller
will by reason of anything done prior to the Closing be liable to
any of such employees for severance pay or any other payments;
(B) there is no unfair labor practice complaint against Seller
pending before the National Labor Relations Board or any other
Governmental Authority; (C) there is no labor strike, material
dispute, slowdown or stoppage actually pending or, to the best of
Seller's knowledge, threatened against Seller; and (D) no labor
union currently represents or, to the best of Seller's knowledge,
has taken any action with respect to organizing, the employees of
Seller.
(iii) Neither the execution and delivery of this Agreement
nor the consummation of the transactions contemplated hereby will
(A) result in any payment (including, without limitation,
severance, unemployment compensation, golden parachute, bonus or
otherwise) becoming due to any officer, director or employee of
Seller, under any Employee Benefit Plan or otherwise; (B)
increase any benefits payable under any Employee Benefit Plan or
otherwise; or (C) result in the acceleration of the time of
payment or vesting of any such benefits.
(x) Material Adverse Changes. Since the Reference Balance Sheet
Date, no event, change or development has occurred which, in the
reasonable judgment of Seller, is likely to have a material
adverse effect on the business, operations, financial condition
or results of operations of Seller or the Business.
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(y) Suppliers and Customers.
(i) Schedule 2.1(y) sets forth a complete list of (A) all
suppliers that individually accounted for more than ten percent
(10%) of inventory purchases of Seller during the last two (2)
years (each, a "Material Supplier"); and (B) all customers that
individually accounted for more than five percent (5%) of the
gross revenues of Seller during the last two (2) years,
indicating the amount and percentage of gross revenues for which
each such customer was accountable (each, a "Material Customer").
(ii) Except as set forth on Schedule 2.1(y), since the Reference
Balance Sheet Date, no Material Customer or Material Supplier
has: (A) stopped, or, to the best of Seller's knowledge,
indicated an intention to stop, trading with, purchasing from or
supplying Seller; (B) reduced, or, to the best of Seller's
knowledge, indicated an intention to reduce, substantially its
trading with, purchasing from or provision of supplies to Seller;
or (C) changed, or, to the best of Seller's knowledge, indicated
an intention to change, materially the terms on which it is
prepared to trade with, purchase from or supply Seller.
(iii) Since the Reference Balance Sheet Date Seller has not
received written notice that any Material Customer or Material
Supplier is likely, as a result of the transactions contemplated
hereby, to: (A) cease trading with or supplying Seller; (B)
reduce substantially its trading with or purchasing from or
provision of supplies to Seller; or (C) change the terms on which
it is prepared to trade with or supply Seller.
(z) No Year 2000 Problem.
(i) To the best of Seller's knowledge, except as set forth on
Schedule 2.1(z), none of the computer systems used by Seller, and
none of the computer systems used by any Material Customer or
Material Supplier, or by any third party for the benefit of or in
connection with any business with Seller, including, without
limitation, any mainframe computer systems, computer networks and
personal computer systems, contains or makes use of any hardware,
operating system software, database or database interface which
would cause any computer system to be incapable of recognizing
and correctly calculating dates on or after January 1, 2000, or
which would otherwise cause any computer system to fail to
perform any of its intended functions in a proper manner in
connection with data containing any date on or after January 1,
2000 (the "Year 2000 Problem"), and no failure or disruption of
Seller's operations, financial reporting, tax reporting,
inventory management, accounts receivable systems, accounts
payable systems, invoicing, delivery, personnel management or
records, payroll, benefits records or administration, or any
other records or systems will occur as a result of the Year 2000
Problem.
(ii) Except as set forth on Schedule 2.1(z), none of the
equipment or facilities (including, without limitation, voice and
data communications systems, voicemail systems, office equipment,
processing equipment, process control systems, inventory control
equipment, heating, ventilating and air conditioning systems,
security systems, elevators, fire alarm systems and other
equipment which is computer controlled or includes an embedded
computer chip) used by Seller is incapable of recognizing and
correctly calculating dates on or after January 1, 2000, and no
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failure or disruption of any such equipment or facilities will
occur as a result of the Year 2000 Problem.
(iii) Schedule 2.1(z) lists all studies, audits, surveys,
reports and investigations conducted by or on behalf of Seller
with respect to the Year 2000 Problem, and describes Seller's
efforts to analyze, modify or replace all computer systems,
computer-controlled systems and embedded computer chips which
Seller has deemed necessary or appropriate in connection with the
Year 2000 Problem.
(aa) Brokerage Fees. Except for McFarland, Dewey & Co., Seller
has not engaged or authorized any broker, investment banker or
other Person to act on its or their behalf, directly or
indirectly, as a broker or finder who might be entitled to a fee,
commission or other remuneration in connection with the
transactions contemplated by this Agreement.
2.2 Representations and Warranties of Purchaser. Purchaser hereby
represents and warrants to Seller as of the date hereof and as of the
Closing Date, as follows:
(a) Organization. Purchaser is a limited liability company duly
formed, validly existing and in good standing under the laws of
the State of New Hampshire. Purchaser has the power and
authority to execute, deliver and perform this Agreement and each
of the Ancillary Documents to which Purchaser is a party. The
execution, delivery and performance by Purchaser of this
Agreement and any such Ancillary Document has been duly and
validly authorized by all necessary action on the part of
Purchaser.
(b) No Conflicts. The execution, delivery and performance of
this Agreement and each of the Ancillary Documents by Purchaser
and the consummation of the transactions contemplated hereby and
thereby do not and will not violate, conflict with or result in a
breach of any term, condition or provision of, or require the
consent of any Governmental Authority or any other Person under,
(i) any Law to which Purchaser or its assets is subject, (ii) any
judgment, order, writ, injunction, decree or award of any
Governmental Authority which is applicable to Purchaser or its
assets, (iii) the certificate of formation, operating agreement
or other governing instruments of Purchaser or (iv) any license,
permit, agreement, commitment or other instrument or document to
which Purchaser is a party or by which Purchaser or its assets is
otherwise bound. No authorization, approval or consent of, and no
registration or filing with, any Governmental Authority is
required in connection with the execution, delivery or
performance of this Agreement by Purchaser.
(c) Binding Effect. This Agreement and each of the Ancillary
Documents has been duly executed and delivered by Purchaser, and,
assuming the due execution and delivery hereof and thereof by
Seller, this Agreement and each of the Ancillary Documents
constitutes the legal, valid and binding obligation of Purchaser,
enforceable against Purchaser in accordance with its terms,
except as enforceability hereof and thereof may be limited by
applicable bankruptcy, insolvency, reorganization or other
similar Law affecting creditors' rights generally or by general
principles of equity.
(d) Litigation. There is no claim, legal action, suit,
arbitration or other proceeding pending or, to the best of
Purchaser's knowledge, threatened against or relating to
Purchaser which, if adversely determined, would have a material
adverse effect on the ability of Purchaser to perform its
obligations under this Agreement or any of the Ancillary
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Documents to which Purchaser is a party, or would otherwise
prevent, hinder or delay consummation of the transactions
contemplated herein or therein.
(e) Brokerage Fees. Except for Scott Rogers, LLC, Purchaser has
not engaged or authorized any broker, investment banker or other
Person to act on its behalf, directly or indirectly, as a broker
or finder who might be entitled to a fee, commission or other
remuneration in connection with the transactions contemplated by
this Agreement.
ARTICLE III
CERTAIN COVENANTS
3.1 Conduct of Seller Pending the Closing. Prior to the Closing,
except as contemplated by this Agreement, Seller shall:
(a) conduct its business in the usual, regular and ordinary
course consistent with Past Practice and with the representations
and warranties made in Section 2.1, including Section 2.1(g); and
(b) use commercially reasonable efforts to maintain and preserve
its business organization and relationships with customers,
suppliers, distributors, agents and others having business
dealings with it and retain the services of its officers and
employees.
3.2 Payment of Liabilities. At or prior to the Closing,
Seller shall obtain the release of all Liens against any of the
Acquired Assets. The outstanding amount of such Liabilities,
including accrued but unpaid interest thereon, shall be paid in
accordance with instructions and pay-off letters from each secured
lender, to be delivered by Seller to Purchaser not less than two (2)
Business Day prior to the Closing Date. Such pay-off letters shall
provide, upon payment of the amounts specified therein, for the full
release and discharge of any Liens on the Acquired Assets securing
the indebtedness being repaid and shall provide for the delivery by
the secured lender upon repayment of such Liabilities of executed UCC-3
termination statements in form satisfactory for filing.
3.3 Reasonable Efforts; Assurances. Upon the terms and subject
to the conditions of this Agreement, each of the parties hereto shall
use all reasonable efforts to take or cause to be taken all action, and
to do or cause to be done, and to assist and cooperate with the other
parties in doing, all things necessary, proper or advisable to
consummate and make effective as promptly as practicable the
transactions contemplated by this Agreement, including using
reasonable efforts to (a) obtain all consents or approvals
referred to in Section 4.2(f); (b) effect promptly all necessary
or appropriate registrations or filings with any Governmental
Authorities, and (c) fulfill or cause the fulfillment of the
conditions to Closing set forth in Article IV. The parties shall
attempt to consummate the transactions contemplated by this
Agreement on or before December 20, 1999, and agree to act in
good faith and in a spirit of fair dealing with respect to the
consummation of such transactions. In case at any time after the
Closing Date any further action is reasonably necessary or
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desirable to carry out the purposes of this Agreement, Seller and
Purchaser shall take such further action without additional
consideration.
3.4 Access and Information.
(a) Prior to the Closing, Seller shall afford to Purchaser and
its accountants, counsel and other representatives full access
upon reasonably prior notice and during normal business hours to
all of Seller's properties, books, accounts, records, contracts,
and personnel and, during such period, Seller shall, and shall
cause its accountants, counsel and other representatives to,
furnish promptly to Purchaser and its representatives all
information concerning Seller's business, properties and
personnel as Purchaser or its representatives may reasonably
request, provided that such access does not unreasonably
interfere with the operations of Seller.
(b) After the Closing, Purchaser shall afford to Seller and its
accountants, counsel and other representatives access to the
books, records and personnel of Purchaser with respect to matters
relating to the operations of the Business prior to the Closing
Date to the extent that they have a reasonable need for the same
(e.g, for Tax purposes or for purposes of defending claims) and
provided that such access does not unreasonably interfere with
the operations of Purchaser.
3.5 Notification of Certain Matters. Seller shall promptly notify
Purchaser in writing:
(a) if, subsequent to the date of this Agreement and prior to
the Closing Date, either of them becomes aware of the occurrence
of any event or the existence of any fact that renders any of the
representations and warranties made in Section 2.1 inaccurate or
untrue in any material respect;
(b) of any notice or other communication from any third party
alleging that the consent of such third party is or may be
required in connection with the transactions contemplated by this
Agreement; or
(c) of any notice or other communication from any Governmental
Authority in connection with the transactions contemplated
hereby.
3.6 Non-Competition Agreement. Concurrently with, and as
a condition to, the Closing, Seller shall enter into a Non-Competition
Agreement with Purchaser in substantially the form of Exhibit A attached
hereto (the "Non-Competition Agreement").
3.7 Real Estate Purchase Agreement. Concurrently with the
execution of this Agreement by the parties hereto, Purchaser and Seller
shall enter into that certain Real Estate Purchase Agreement for the
acquisition of the real property located at 40 Depot Street in Warner,
New Hampshire in substantially the form of Exhibit B attached hereto
(the "Real Estate Purchase Agreement").
3.8 Public Announcements. No party will issue or cause the publication
of any press release or other public announcement with respect to this
Agreement or the transactions contemplated hereby without the
prior written consent of the other party hereto; provided,
however, that nothing herein will prohibit any party from issuing
or causing the publication of any such press release or public
announcement to the extent that such party is advised by its
legal counsel that such action is required by Law, in which case
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the party making such determination will use reasonable efforts
to allow the other party reasonable time to comment on such
release or announcement in advance of its issuance.
3.9 Terminal Products Manufacturing Agreement. Concurrently with,
and as a condition to, the Closing, Purchaser and Seller (or its affiliate)
shall enter into that certain Manufacturing Agreement whereby Seller (or
its affiliate) will purchase terminal products manufactured by Purchaser in
substantially the form of Exhibit C attached hereto (the
"Manufacturing Agreement").
3.10 Employees. Purchaser shall offer employment on substantially
similar terms and conditions, effective from the Closing Date, to the
employees listed on Schedule 3.10 (the "Employees"). All other
employees (the "Other Employees") shall remain employees of
Seller. Seller shall retain responsibility and shall indemnify
Purchaser and defend and hold Purchaser harmless from and against
all Losses (including, without limitation, wrongful dismissal
claims, severance and termination pay claims at common law or
statute, and constructive dismissal claims), arising from
Purchaser's offer of employment to and the refusal of such offer
by any Employee, as well as arising from Purchaser not offering
employment to the Other Employees. Purchaser and Seller shall
exercise reasonable efforts to persuade the Employees to accept
such offers of employment. In respect of an Employee who has
accepted employment with Purchaser, Seller shall continue to bear
all costs and expenses associated with such Employee until the
Closing. Seller shall continue to bear all costs and expenses
associated with the Other Employees. Seller shall be responsible
for all notice of termination, severance and other payments or
obligations, both statutory and at common law, to the Employees
who do not accept employment with Purchaser and to all Other
Employees to whom Purchaser does not offer employment or who
otherwise claim entitlement to severance or other amounts by
reason of termination of their employment with Seller, and Seller
shall indemnify and hold Purchaser harmless in respect of all
such liabilities or obligations.
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3.11 Sales, Use and Transfer Taxes. Purchaser shall pay all sales,
use and transfer taxes, if any, in each case payable in connection with
the consummation of the transactions contemplated by this Agreement.
Notwithstanding the foregoing, Seller and Purchaser shall each pay 50% of
the New Hampshire real estate transfer tax pursuant to the terms of the
Purchase and Sale Agreement.
3.12 Compliance with Bulk Sales Laws. The parties hereby waive
compliance with the bulk sales law and any other similar laws in any
applicable jurisdiction in respect of the transactions contemplated by
this Agreement, including, but not limited to, any applicable state Tax
law that may require notification of state taxing authorities and related
actions in respect of bulk sales of assets outside of the ordinary course
of business.
3.13 Post-Closing Covenants. After the Closing, Seller shall
cooperate with the Seller in forwarding to the Purchaser any correspondence,
including electronic mail messages, pertaining to the Business which Seller
may receive. In the event that the Purchaser is unable to obtain
a Growth Power Software License prior to Closing, Seller shall
cooperate in assisting Purchaser with obtaining such license and
in transferring the Business database to the Purchaser.
3.14 Services Agreement. Concurrently with, and as a condition
to, the Closing, Seller shall enter into a services agreement
with Purchaser in substantially the form of Exhibit D attached
hereto (the "Services Agreement").
3.15 Receipt of Checks. Any checks or other forms of payment in
respect of accounts receivable or other assets which are Acquired
Assets or proceeds thereof that are received by the Seller after
the date hereof shall be endorsed, if necessary, to the Purchaser
and forwarded to the Purchaser at the address of the Purchaser
stated in Section 9.1(a) by the Seller on the date of receipt or
as soon as practicable. Until such time as and such payments
are forwarded to Purchaser in accordance herewith, they shall be
held in trust by Seller on behalf of the Purchaser and shall not
be considered property of the Seller.
ARTICLE IV
CONDITIONS TO CLOSING
4.1 Conditions to Obligation of Seller. The obligation of Seller
to consummate the transactions contemplated hereby shall be subject to
the satisfaction on or prior to the Closing of the following conditions
(any of which may be waived in writing by Seller):
(a) Purchaser shall have performed and complied in all material
respects with all obligations and agreements required to be
performed and complied with by it hereunder on or prior to the
Closing (including, without limitation, those specified in
Section 5.3);
(b) the representations and warranties of Purchaser contained in
this Agreement shall be true and correct in all material respects
as of the Closing Date as if made as of such date (other than
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those representations and warranties that address matters only as
of a particular date or only with respect to a specific period of
time, which need only be true and accurate as of such date or
with respect to such period);
(c) no action, suit, claim or proceeding by or before any
Governmental Authority shall be pending or threatened which seeks
to restrain, prevent or materially delay or restructure the
transactions contemplated hereby or which otherwise questions the
validity or legality of any such transactions; and
(d) the closing of the acquisition of the real property under
the Real Estate Purchase Agreement shall have been completed
concurrently with the Closing hereunder.
4.2 Conditions to Obligation of Purchaser. The obligation of
Purchaser to consummate the transactions contemplated hereby shall be
subject to the satisfaction on or prior to the Closing of the following
conditions (any of which may be waived in writing by Purchaser):
(a) Seller shall have performed or complied in all material
respects with all obligations and agreements required to be
performed or complied with by each of them hereunder on or prior
to the Closing (including, without limitation, those specified in
Section 5.2);
(b) the representations and warranties of Seller contained in
this Agreement shall be true and correct in all material respects
as of the Closing Date as if made as of such date (other than
those representations and warranties that address matters only as
of a particular date or only with respect to a specific period of
time, which need only be true and accurate as of such date or
with respect to such period);
(c) no action, suit, claim or proceeding by or before any
Governmental Authority shall be pending or threatened which seeks
to restrain, prevent or materially delay or restructure the
transactions contemplated hereby or which otherwise questions the
validity or legality of any such transactions;
(d) Seller shall have obtained on terms and conditions
reasonably satisfactory to Purchaser all consents and approvals
of third parties (including Governmental Authorities) that are
required (i) for the consummation of the transactions
contemplated hereby; (ii) for the release and discharge of each
of the Liens described in Section 3.2; and (iii) in order to
prevent a breach of, a default under or a termination, change in
the terms or conditions or modification of, any Material
Agreement as a result of the consummation of the transactions
contemplated hereby; and
(e) the closing of the acquisition of the real property under
the Real Estate Purchase Agreement shall have been completed
concurrently with the Closing hereunder.
ARTICLE V
CLOSING
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5.1 Closing. The closing of the transactions contemplated
hereby (the "Closing") shall take place at the offices of McLane, Graf,
Raulerson & Middleton, Professional Association, 900 Elm Street,
Manchester, New Hampshire 03101, at 9:00 a.m., on December 20,
1999, or at such other place, at such other time or on such other
date as the parties may mutually agree. The date on which the
Closing actually occurs is referred to herein as the "Closing
Date."
5.2 Deliveries by Seller. Subject to the terms and conditions
hereof, Seller shall deliver, or cause to be delivered, the following
to Purchaser at or before the Closing:
(a) such duly executed bills of sale and assignments (including
of rights to license and use Proprietary Rights); titles;
releases; estoppel certificates; duly endorsed certificates of
title to motor vehicles to be transferred; consents to the
transfer or assignment of the Assumed Agreements to the extent
required by the terms of the Assumed Agreements; endorsements;
and other good and sufficient instruments and documents of
conveyance and transfer, in form and substance reasonably
satisfactory to Purchaser and its counsel, as shall be necessary
and effective, as reasonably determined by Purchaser and its
counsel, to transfer and assign to, and vest in, Purchaser all
right, title and interest in and to the Acquired Assets;
(b) a certificate of the Secretary or Assistant Secretary of
Seller attesting to (i) due authorization of the execution and
delivery of this Agreement and the Ancillary Documents and the
consummation of the transactions contemplated hereby and thereby
by the Board of Directors of Seller and (ii) the incumbency of
Seller's officers executing this Agreement and the Ancillary
Documents delivered by Seller hereunder;
(c) evidence that Seller has obtained on terms and conditions
reasonably satisfactory to Purchaser all consents, releases and
approvals of third parties (including Governmental Authorities)
that are required under Section 4.2(e);
(d) the Non-Competition Agreement, duly executed by Seller;
(e) the Manufacturing Agreement, duly executed by Seller (or its
affiliate);
(f) a certificate of Seller, in form and substance reasonably
satisfactory to Purchaser, dated the Closing Date and signed by
the President or a Vice President of Seller, certifying
compliance with the conditions set forth in Sections 4.2(a) and
4.2(b); and
(g) an opinion of Michael B. Tule, Esquire, in a form and
substance reasonably satisfactory to Purchaser's counsel.
5.3 Actions or Deliveries by Purchaser. Subject to the terms
and conditions hereof, Purchaser shall deliver the following to Seller
at or before the Closing:
(a) the Initial Payment in accordance with Section 1.6(a);
(b) an assumption agreement, in form and substance reasonably
satisfactory to the parties hereto, executed by Purchaser;
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(c) the Non-Competition Agreement, duly executed by Purchaser;
(d) the Manufacturing Agreement, duly executed by Purchaser;
(e) a certificate of a Manager of Purchaser attesting to (i) due
authorization of the execution and delivery of this Agreement and
the Ancillary Documents and the consummation of the transactions
contemplated hereby and thereby by the Board of Directors of
Purchaser and (ii) the incumbency of the Persons executing this
Agreement and the Ancillary Documents delivered by Purchaser
hereunder;
(f) a certificate of Purchaser, in form and substance reasonably
satisfactory to Seller, dated the Closing Date and signed by a
Manager of Purchaser, certifying compliance with the conditions
set forth in Sections 4.1(a) and 4.1(b); and
(g) an opinion of McLane, Graf, Raulerson & Middleton,
Professional Association, in a form and substance reasonably
satisfactory to Seller's counsel.
5.4 Other Documents. The parties agree to execute and deliver
on or before the Closing Date all other documents that are necessary
or advisable in order to consummate the transactions contemplated hereby
or in connection herewith.
5.5 Expenses. Except as otherwise specifically provided herein,
each of Purchaser and Seller shall pay its own expenses, including, but
not limited to, attorneys', accountants', financial advisors' and
brokers' or finders' fees, incurred in connection with the
transactions contemplated hereby.
ARTICLE VI
TERMINATION
6.1 Termination. This Agreement may be terminated at any time prior
to the Closing:
(a) by mutual consent of Purchaser and Seller; or
(b) by either Purchaser or Seller if the Closing shall not have
been consummated on or before December 20, 1999 (provided that
the terminating party is not otherwise in material breach of its
obligations under this Agreement), which date may be extended by
written agreement of Purchaser and Seller.
(c) if, between the date hereof and the earlier of: (i) December
20, 1999, or (ii) the date on which Purchaser notifies Seller in
writing that Purchaser does not intend to acquire the Acquired
Assets, Seller shall accept an offer to purchase from any other
party or sell substantially all of the assets of Seller, then
Seller shall pay to Purchaser, a break-up fee in the amount of
Seventy Five Thousand Dollars ($75,000) and such break-up fee
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payment shall be Purchaser's sole remedy and recourse against
Seller.
6.2 Effect of Termination. In the event of the termination of
this Agreement in accordance with Section 6.1, this Agreement shall
thereafter become void and there shall be no liability on the part of any
party hereto or their respective directors, officers,
shareholders or agents, except that any such termination shall be
without prejudice to the rights of any party hereto arising out
of the material breach by any other party of any covenant or
agreement contained in this Agreement.
ARTICLE VII
INDEMNIFICATION
7.1 Indemnification by Seller. Subject to the terms of this Article
VII, Seller covenants and agrees to indemnify and hold harmless Purchaser
from and against any Liability, claim, demand, action, suit, proceeding,
judgments, settlement, loss, damage or expense, including,
without limitation, reasonable consulting, attorneys' and
accountants' fees (collectively, "Losses"), suffered or incurred
by Purchaser which arise out of or result from:
(a) any inaccuracy in or breach of any of the representations
and warranties made by Seller in this Agreement;
(b) any breach of any of the covenants or agreements made by
Seller in this Agreement;
(c) any Retained Liabilities;
(d) non-compliance by Seller or Purchaser with the bulk sales
laws and any similar laws as may be applicable to the purchase
and sale of the Acquired Assets pursuant to this Agreement;
(e) any claims, suits or proceedings asserted or instituted
against Purchaser as a successor to or transferee of Seller under
theories of successor or transferee liability, other than claims,
suits or proceedings based upon or arising out of the Assumed
Liabilities;
(f) any Environmental Claims to the extent that such
Environmental Claims are based upon, or otherwise relate to;
(i) any Condition in, at, on, under, a part of, involving or
otherwise related to the Real Property (including the properties,
materials, articles, products or other things included in or
otherwise a part of the Real Property), which Condition exists at
or prior to the Closing Date;
(ii) any action or failure to act by Seller, or by any prior
owner or operator of the Real Property (including any of the
properties, materials, articles, products, or other things
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included in or otherwise a part of the Real Property), which
action or failure to act occurs at or prior to the Closing Date;
(iii) the Management of any Contaminant, material, article or
product (including management of any material, article or product
containing a Contaminant) in any physical state, involving or
otherwise related to the Real Property or to any property covered
by clause (iv), which management occurs at or prior to the
Closing Date (including Management either from the Real Property
or from any property covered by clause (iv), and Management to,
at, involving or otherwise related to the Real Property or to any
property covered by clause (iv)); or
(iv) any Conditions, and any actions or failures to act, in, at,
on, under, a part of, involving or otherwise related to any
property other than the Real Property, which property was, at or
prior to the Closing Date, (A) acquired, held, sold, owned,
operated, leased, managed, or divested by, or otherwise
associated with either Seller or any predecessor or successor
organization of Seller, or (B) engaged in any tolling, contract
manufacturing or processing, or other similar activity for, with,
or on behalf of Seller.
(g) the ownership or operation of the Business on or prior to
the Closing Date (other than with respect to the Assumed
Liabilities).
Notwithstanding the foregoing, Purchaser shall not be entitled to
indemnification hereunder with respect to Losses suffered or
incurred under Section 7.1(a) until such Losses exceed $50,000 in
the aggregate (the "Indemnification Threshold"), in which case
Purchaser shall be entitled to indemnification only to the extent
such Losses exceed the Indemnification Threshold. Further, with
respect to Losses suffered or incurred under Section 7.1(a),
absent fraud, Purchaser shall not be entitled to indemnification
in an amount in excess of $5,000,000 (such limitation being
referred to as the "Indemnification Cap").
7.2 Indemnification by Purchaser. Subject to the terms of this
Article VII, Purchaser shall indemnify and hold harmless Seller from and
against any Losses suffered by Seller which arise out of or result from:
(a) any inaccuracy in or breach of any of the representations,
warranties, covenants or agreements made by Purchaser in this
Agreement;
(b) any Assumed Liabilities; or
(c) the ownership or operation of the Business following the
Closing, other than those for which Purchaser is entitled to
indemnification from Seller pursuant to Section 7.1.
7.3 Method of Asserting Third Party Claims. Promptly after the
assertion by any third party of any claim or demand against any Person
that may be entitled to indemnification under this Article VII with respect
to such claim (the "Indemnified Party"), the Indemnified Party shall promptly
notify the party from whom indemnification may be sought (the
"Indemnifying Party"), specifying the nature of such claim and
the amount or the estimated amount thereof to the extent then
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feasibly ascertainable (which estimate shall not be conclusive of
the final amount of such claim) (the "Claim Notice"). Within
thirty (30) days after receipt of a Claim Notice (the "Notice
Period"), the Indemnifying Party may assume the defense of such
claim; provided, however, that (a) the Indemnifying Party shall
retain counsel reasonably acceptable to the Indemnified Party;
and (b) the Indemnifying Party shall not, without the prior
written consent of the Indemnified Party (which shall not be
unreasonably withheld), enter into any settlement of a claim,
consent to the entry of any judgment with respect to a claim or
cease to defend a claim, if pursuant to or as a result of such
settlement, consent or cessation, injunctive or other equitable
relief shall be imposed against the Indemnified Party or if such
settlement does not expressly and unconditionally release the
Indemnified Party from all Liabilities with respect to such
claim, with prejudice. The Indemnified Party may participate in
the defense of such claim with co-counsel of its choice;
provided, however, that the fees and expenses of the Indemnified
Party's counsel shall be paid by the Indemnified Party unless
(i) the Indemnifying Party has agreed in writing to pay such fees
and expenses; (ii) the Indemnifying Party has failed to assume
the defense and employ counsel as provided herein; or (iii) a
claim shall have been brought or asserted against the
Indemnifying Party as well as the Indemnified Party, and the
Indemnified Party shall have been advised in writing by outside
counsel that there may be one or more factual or legal defenses
available to it that are in conflict with those available to the
Indemnifying Party, in which case such co-counsel shall be at the
expense of the Indemnifying Party; provided, however, that the
Indemnifying Party shall not be required to pay the fees and
expenses of more than one separate lead counsel (and any
appropriate local or specialized counsel) for all Indemnified
Parties. If the Indemnifying Party does not assume the defense of
such claim, the Indemnified Party may defend against the same in
any manner that it reasonably deems appropriate.
7.4 Method of Asserting Direct Claims. In the event an Indemnified
Party desires to assert a claim for indemnification against an Indemnifying
Party that does not involve a third party, the Indemnified Party shall promptly
send a Claim Notice with respect to such claim to the Indemnifying
Party. If the Indemnifying Party does not notify the Indemnified
Party within the Notice Period that it disputes such claim, the
amount of Losses suffered or incurred by the Indemnified Party
with respect to such claim shall be conclusively deemed a
liability of the Indemnifying Party hereunder.
7.5 Survival of Representations. All of the representations and
warranties contained in this Agreement shall survive for a period of eighteen
(18) months following the Closing Date, except that: (i) those contained in
Section 2.1(h) survive until the end of three (3) months
following the expiration of the applicable statute of limitation
with respect to the matter giving rise to the claim for
indemnification; (ii) those contained in Section 2.1(r) shall
survive for a period of five (5) years following the Closing
Date; and (iii) those contained in Sections 2.1(u) and 2.1(v)
shall survive for a period of seven (7) years and three (3)
months. No claim for indemnification may be made under this
Article VII unless a Claim Notice is given within the applicable
survival period set forth herein.
7.6 Failure to Give Timely Notice. Except as provided in Section
7.7, a failure by an Indemnified Party to give timely, complete or accurate
notice as required under Sections 7.3 or 7.4 shall not affect the rights or
obligations of any party hereunder except and only to the extent
that, as a result of such failure, any party entitled to receive
such notice was deprived of its right to recover any payment
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under its applicable insurance coverage or was otherwise damaged
or prejudiced as a result of such failure to give timely notice.
7.7 Exclusive Remedy. The rights of the parties to indemnification
under this Agreement or with respect to the transactions contemplated hereby
shall be strictly limited to those contained in this Article VII,
and such indemnification rights shall be the exclusive remedies
of the parties subsequent to the Closing Date with respect to any
matter in any way relating to this Agreement or arising in
connection herewith (but not relating to or arising in connection
with the Non-Competition Agreement).
ARTICLE VIII
DEFINITIONS
8.1 Certain Definitions. For purposes of this Agreement, the
following terms and phrases shall have the following meanings:
"Affiliate" means, with respect to any Person, (a) any
director, officer, manager or general partner of such Person, (b)
a spouse, parent, sibling or descendant of such Person and (c)
any other Person that, directly or indirectly, through one or
more intermediaries, controls, is controlled by or is under
common control with such Person. The term "control" includes,
without limitation, the possession, directly or indirectly, of
the power to direct the management and policies of a Person,
whether through the ownership of voting securities, by contract
or otherwise.
"Condition" means any physical condition which results in or
otherwise relates to any Environmental Claim.
"Employee Benefit Plan" means any (a) Pension Plan, (b)
Welfare Plan and (c) any other employee benefit, fringe benefit,
perquisite, deferred compensation, retirement, or employee stock
option, stock purchase or stock ownership plan, agreement or
arrangement, whether or not subject to ERISA and whether or not
funded.
"Governmental Authority" means any court, arbitrator,
administrative agency or commission, or governmental or
regulatory official, department, agency, body, authority or
instrumentality, whether foreign, federal, state or local.
"to the best of Seller's knowledge" or words of similar
import shall be deemed to include the knowledge of Seller's: (i)
Chairman and Chief Executive Officer; (ii) President and Chief
Operating Officer; (iii) President - Industrial Technology; (iv)
Vice President - Industrial Technology; (v) Vice President -
Chief Financial Officer; (vi) Vice President - General Counsel;
and (vii) Vice President - Human Resources, after due inquiry.
"Laws" means any federal, state, local, municipal or foreign
statute, law, ordinance, regulation, rule, code, order, other
requirement or rule of law.
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<PAGE>
"Liability" means any liability or obligation, whether known
or unknown, determinable or not, asserted or unasserted, absolute
or contingent, matured or unmatured, accrued or unaccrued,
liquidated or unliquidated and whether due or to become due,
regardless of when asserted.
"Lien" means any lien, claim, hypothecation, option, pledge,
charge, security interest, equitable interest, or other
encumbrance of any nature or kind whatsoever.
"Manage" and "Management" means generation, production,
handling, distribution, processing, use, storage, treatment,
operation, transportation, recycling, reclamation, use and/or
disposal, as those terms are defined in CERCLA, RCRA and any
other Environmental Laws (including as those terms are further
defined, construed, or otherwise used in rules, regulations,
standards, guidelines and publications issued pursuant to, or
otherwise in implementation of, Environmental Laws).
"Past Practice" means the practice of Seller since January
1, 1996.
"Pension Plan" means any qualified or non-qualified Employee
Pension Benefit Plan (including any Multiemployer Plan), as such
term is defined in Section 3(2) of ERISA.
"Person" means any individual, sole proprietorship, general
partnership, limited partnership, joint venture, trust,
unincorporated organization, association, corporation, limited
liability company, Government Authority or other entity.
"Welfare Plan" means any Employee Welfare Benefit Plan, as
such term is defined in Section 3(1) of ERISA.
8.2 Other Defined Terms. Each of the following terms have the meaning
assigned to it in the Section indicated:
Term Section
---- -------
Acquired Assets 1.1
Adjusted Net Assets 1.7
Agreement Preamble
Ancillary Documents 2.1(a)
Asset Purchase 1.2
Assumed Agreements 1.2(g)
Assumed Liabilities 1.4
Business Recitals
CERCLA 2.1(r)
Claim Notice 7.3
Closing 5.1
Closing Date 5.1
Closing Balance Sheet 1.7
Code 2.1(v)(i)
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<PAGE>
Non-Competition Agreement3.6
Contaminant 2.1(r)
Departments 3.13
Environmental Claim 2.1(r)
Environmental Laws 2.1(r)
ERISA 2.1(v)(i)
ERISA Affiliate 2.1(v)(i)
Evaluator 1.8
Excluded Assets 1.3
Financial Statements 2.1(e)
GAAP 1.9
Indemnified Party 7.3
Indemnifying Party 7.3
Initial Payment 1.6(a)
IRS 2.1(v)(ii)
Losses 7.1
Manufacturing Agreement 3.9
Material Agreement 2.1(n)
Material Customer 2.1(y)(i)
Material Supplier 2.1(y)(i)
Notice Period 7.3
PCBs 2.1(r)
Permit 2.1(r)
Proprietary Rights 2.1(m)(i)
Purchase Price 1.5
Purchase Price Adjustment 1.7
Purchaser Preamble
Real Estate Purchase Agreement 3.7
Real Property 2.1(l)(ii)
Receivables 2.1(i)
Reference Balance Sheet 1.7
Reference Balance Sheet Date 1.7
Regulated Activity 2.1(r)
Related Party 2.1(s)
Release 2.1(r)
Remedial Action 2.1(r)
Retained Liabilities 1.4
Seller Preamble
Tax Returns 2.1(u)(i)
Taxes 2.1(u)(i)
Unresolved Claim 7.5
Year 2000 Problem 2.1(z)
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<PAGE>
ARTICLE IX
MISCELLANEOUS
9.1 Notices. All notices and other communications hereunder shall
be in writing and shall be deemed to have been duly given if delivered
personally (including delivery by courier service), transmitted
by telegram or facsimile transmission, or mailed by registered or
certified mail, postage prepaid, return receipt requested, as
follows:
(a) If to Purchaser, to:
Warner Power, LLC
40 Depot Street
Warner, NH 03278
Attention: Dennis M. Deegan
Telephone: (603) 456-3111
Facsimile: (603) 456-2098
with copies to:
American Capital Strategies, Ltd.
2 Bethesda Metro Center
14th Floor
Bethesda, Maryland 20814
Attention: President
Telephone: (301) 951-6122
Facsimile: (301) 654-6714
and
McLane, Graf, Raulerson & Middleton, Professional
Association
900 Elm Street, P.O. Box 326
Manchester, NH 03105
Attention: William V. A. Zorn, Esquire
Telephone: (603) 625-6464
Facsimile: (603) 625-5650
and
Arnold & Porter
555 12th Street, N.W.
Washington, D.C. 20004
Attention: Samuel A. Flax, Esquire
Telephone: (202) 942-5730
Facsimile: (202) 942-5999
(b) If to Seller, to:
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<PAGE>
WPI Group, Inc.
1155 Elm Street
Manchester, NH 03101
Attn: Michael B. Tule, Esquire
Telephone: 603-627-3500
Facsimile: 603-627-3150
or to such other address as the Person to whom notice is to be
given may have previously furnished to the other parties in
writing in accordance herewith. Notice shall be deemed given on
the date received (or, if receipt thereof is refused, on the date
of such refusal).
9.2 Amendments and Waivers. This Agreement may not be amended,
modified or supplemented except by written agreement of the parties hereto.
No waiver by any party of any default, misrepresentation or breach of warranty
or covenant hereunder, whether intentional or not, shall be deemed to extend to
any prior or subsequent default, misrepresentation or breach of warranty or
covenant hereunder or affect in any way any rights arising by virtue of any
prior or subsequent such occurrence.
9.3 No Presumption Against Drafter. Each of the parties hereto has
participated in the negotiation and drafting of this Agreement. In the event
there arises any ambiguity or question of intent or interpretation with
respect to this Agreement, this Agreement shall be construed as if drafted
jointly by all of the parties hereto and no presumptions or
burdens of proof shall arise favoring any party by virtue of the
authorship of any of the provisions of this Agreement.
9.4 Interpretation. The headings preceding the text of Articles and
Sections included in this Agreement and the headings to Exhibits and
Schedules attached to this Agreement are for convenience only and
shall not be deemed part of this Agreement or be given any effect
in interpreting this Agreement. The use of the masculine,
feminine or neuter gender herein shall not limit any provision of
this Agreement. The use of the terms "including" or "include"
shall in all cases herein mean "including, without limitation" or
"include, without limitation," respectively. References to any
"Article," "Section," "Exhibit" or "Schedule" shall refer to an
Article or Section of, or an Exhibit or Schedule to, this
Agreement. In any case where the concept of materiality is
applied more than once to qualify any provision of this Agreement
(whether by cross-referencing or incorporation or otherwise),
such provision shall be interpreted as if only one, but the
broadest one, of such materiality qualification applied to it.
Any due diligence review, audit or other investigation or inquiry
undertaken or performed by or on behalf of a party shall not
limit, qualify, modify or amend the representations, warranties
or covenants of, or indemnities made by, any other party pursuant
to this Agreement, irrespective of the knowledge and information
received (or which should have been received) therefrom by the
investigating party and consummation of the transactions
contemplated herein by a party shall not be deemed a waiver of a
breach of or inaccuracy in any representation, warranty or
covenant or of any other party's rights and remedies with regard
thereto. Notwithstanding the foregoing, the preceding sentence
shall not apply in the case of information that is in the actual
knowledge of Dennis Deegan or Richard Longo and that Dennis
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<PAGE>
Deegan and Richard Longo fail to disclose to Seller prior to the
Closing Date, regardless of the source of such information.
9.5 Parties in Interest. This Agreement shall be binding upon
and inure solely to the benefit of the parties hereto and their respective
successors, permitted assigns and legal representatives, and nothing in this
Agreement, express or implied, is intended to confer upon any
other Person any rights or remedies of any nature.
9.6 Governing Law. All questions concerning the construction, validity
and interpretation of this Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of New Hampshire, without
regard to the conflicts of law principles of such State.
9.7 Severability. If any term or provision of this Agreement shall,
to any extent, be held by a court of competent jurisdiction to be
invalid or unenforceable, the remainder of this Agreement or the
application of such term or provision to Persons or circumstances
other than those as to which it has been held invalid or
unenforceable, shall not be affected thereby and this Agreement
shall be deemed severable and shall be enforced otherwise to the
full extent permitted by law; provided, however, that such
enforcement does not deprive any party hereto of the benefit of
the bargain.
9.8 Entire Agreement. This Agreement (including the Schedules and
Exhibits referred to herein and which form a part hereof) constitutes the
entire agreement among the parties hereto and supersedes all prior
agreements and understandings, oral and written, among the
parties hereto with respect to the subject matter hereof.
9.9 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to constitute an original and
shall become effective when one or more counterparts have been signed
by each party hereto and delivered to the other parties.
[Remainder of this page intentionally left blank.]
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<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed
and delivered by each of the parties on the date first above
written.
SELLER:
WPI Power Systems, Inc.
By:/s/Michael Tule
------------------------
Name: Michael Tule
Title: Vice President and
General Counsel
WPI Electronics, Inc.
By:/s/ Michael Tule
------------------------
Name:Michael Tule
Title: Vice President and
General Counsel
WPI Group, Inc.
By:/s/ Michael Tule
--------------------------
Name: Michael Tule
Title: Vice President and
General Counsel
PURCHASER:
Warner Power, LLC
By:/s/ Dennis Deegan
---------------------------
Name:Dennis Deegan
Title:
Warner Power Conversion, LLC
By:/s/ Dennis Deegan
----------------------------
Name:Dennis Deegan
Title:
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<PAGE>
ASSET PURCHASE AGREEMENT
by and among
WPI Power Systems, Inc.,
WPI Electronics, Inc.,
WPI Group, Inc.
and
Warner Power, LLC
and
Warner Power Conversion, LLC
Dated as of December 22, 1999
<PAGE>
Exhibits
Exhibit A - Form of Non-Competition Agreement
Exhibit B - Form of Real Estate Purchase Agreement
Exhibit C - Form of Manufacturing Agreement
Exhibit D - Form of Services Agreement
Schedules
Schedule 1.2(n) - Acquired Assets
Schedule 1.3(a) - Excluded Assets
Schedule 1.4(b) - Excluded Liabilities
Schedule 1.7-1 - Reference Balance Sheet
Schedule 1.7-2 - Calculation of Adjusted Net Assets
Schedule 2.1(a) - Organization, Standing and Qualification
Schedule 2.1(b) - No Conflicts
Schedule 2.1(d) - No Interest In Other Entities
Schedule 2.1(g) - Ordinary Course
Schedule 2.1(h) - Title to Assets
Schedule 2.1(k) - Tangible Assets
Schedule 2.1(l) - Real Property
Schedule 2.1(m) - Proprietary Rights
Schedule 2.1(n) - Material Agreements
Schedule 2.1(o) - Litigation
Schedule 2.1(p) - Compliance with Law
Schedule 2.1(q) - Warranties
Schedule 2.1(r) - Environmental Matters
Schedule 2.1(s) - Related Party Transactions
Schedule 2.1(t) - Insurance
Schedule 2.1(u) - Taxes
Schedule 2.1(v) - Employee Benefit Plans
Schedule 2.1(w) - Employee Matters
Schedule 2.1(y) - Suppliers and Customers
Schedule 2.1(z) - Year 2000 Problem
Schedule 3.10 - Other Employees
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
1.1 Agreement to Purchase and Sell 1
1.2 Acquired Assets 1
1.3 Excluded Assets 3
1.4 Liabilities 3
1.5 Purchase Price 4
1.6 Payment and Allocation of the Purchase Price 4
1.7 Purchase Price Adjustment 4
1.8 Closing Balance Sheet 5
1.9 Post-Closing Inventory 5
1.10 Delivery of Assets 5
1.11 Transfer of Contracts 6
ARTICLE II 6
2.1 Representations and Warranties of Seller 6
2.2 Representations and Warranties of Purchaser 20
ARTICLE III 21
3.1 Conduct of Seller Pending the Closing 21
3.2 Payment of Liabilities 21
3.3 Reasonable Efforts; Assurances 21
3.4 Access and Information 22
3.5 Notification of Certain Matters 22
3.6 Non-Competition Agreement 22
3.7 Real Estate Purchase Agreement 22
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<PAGE>
3.8 Public Announcements 22
3.9 Terminal Products Manufacturing Agreement 23
3.10 Employees 23
3.11 Sales, Use and Transfer Taxes 24
3.12 Compliance with Bulk Sales Laws 24
3.13 Post-Closing Covenants 24
3.14 Services Agreement 24
3.15 Receipt of Checks 24
ARTICLE IV 24
4.1 Conditions to Obligation of Seller 24
4.2 Conditions to Obligation of Purchaser 25
ARTICLE V 25
5.1 Closing 26
5.2 Deliveries by Seller 26
5.3 Actions or Deliveries by Purchaser 26
5.4 Other Documents 27
5.5 Expenses 27
ARTICLE VI 27
6.1 Termination 27
6.2 Effect of Termination 28
ARTICLE VII 28
7.1 Indemnification by Seller 28
7.2 Indemnification by Purchaser 29
7.3 Method of Asserting Third Party Claims 29
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<PAGE>
7.4 Method of Asserting Direct Claims 30
7.5 Survival of Representations 30
7.6 Failure to Give Timely Notice 30
7.7 Exclusive Remedy 31
ARTICLE VIII 31
8.1 Certain Definitions 31
8.2 Other Defined Terms 32
ARTICLE IX 33
9.1 Notices 34
9.2 Amendments and Waivers 35
9.3 No Presumption Against Drafter 35
9.4 Interpretation 35
9.5 Parties in Interest 36
9.6 Governing Law 36
9.7 Severability 36
9.8 Entire Agreement 36
9.9 Counterparts 36
iii
<PAGE>
EXHIBIT A
NON-COMPETITION AGREEMENT
THIS NON-COMPETITION AGREEMENT (this "Agreement") is made
and entered into this 22nd day of December, 1999, by and between
WPI GROUP, INC., a New Hampshire corporation, WPI ELECTRONICS,
INC., a New Hampshire corporation and WPI POWER SYSTEMS, INC., a
New Hampshire corporation (collectively "Seller") and WARNER
POWER, LLC, a New Hampshire limited liability company (the
"Company").
W I T N E S S E T H:
WHEREAS, Seller has been engaged. in the manufacture, sale
and distribution of power conversion products, including power
systems and ballasts (the "Business");
WHEREAS, the Company has concurrently herewith acquired
substantially all of the assets of Seller used and useful in the
Business pursuant to an Asset Purchase Agreement dated as of the
date hereof between the Seller and Company (the "Purchase
Agreement");
WHEREAS, WPI Group, Inc. is the sole shareholder of WPI
Power Systems, Inc. and WPI Electronics, Inc.;
WHEREAS, in order to protect the Company's interest in the
Business, the Company's obligation to consummate the Purchase
Agreement is conditioned upon Seller entering into this Agreement
and agreeing to the restrictive covenants contained herein.
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants and agreements contained herein, and for other
good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as
follows:
1. Confidentiality. Seller acknowledges that it has been
exposed to or has had access to confidential information
regarding the Business which is proprietary to the Company,
including, without limitation, the Company's manufacturing
processes, trade secrets, "know-how", customer lists or records,
supplier lists or records, information regarding independent
contractors, information and trade secrets of third parties,
marketing plans or strategies, pricing policies, product
development techniques or plans, designs and design projects,
inventions, research projects, financial records and, generally,
the confidential information of the Company which gives, or may
give, the Company an advantage in the marketplace against its
competitors (all of the foregoing being herein referred to
collectively as "Proprietary Information"). Seller acknowledges
that the Proprietary Information constitutes a proprietary and
exclusive interest of the Company and, therefore, Seller agrees
that it shall hold and keep confidential and not divulge to any
other person any of the Proprietary Information, or use the same
for its own direct or indirect benefit or for the benefit of any
other person other than the Company or its affiliates; provided,
however, that Seller may disclose Proprietary Information (i)
with the Company's express written consent, (ii) if such
information is or becomes generally known to the public other
<PAGE>
than as a result of a breach hereof or of a similar
confidentiality agreement, or (iii) as required by law or
judicial or administrative process and following prior written
notice to the Company.
2. Non-Competition. Seller agrees that for a period of three
(3) years after the date hereof (the "Non-Competition Period"),
it shall not "participate" in any business or enterprise which
manufactures, sells or distributes any products which are similar
to and competitive with the products manufactured, sold or
distributed by the Company on the date hereof and which business
or enterprise sells or distributes such products anywhere in
North America and Europe. For purposes hereof, the term
"participate" includes any direct or indirect interest in any
business or enterprise, whether as an officer, director,
employee, shareholder, partner, sole proprietor, member, agent,
representative, independent contractor, joint venturer,
consultant, franchisor, franchisee, distributor, creditor or
otherwise; provided, however, that the term "participate" shall
not include ownership of less than 3 % of the stock of a publicly-
held corporation whose stock is traded on a national securities
exchange or in the over-the-counter market, so long as Seller has
no active participation in the business of such corporation.
3. Non-Solicitation.
a. Seller agrees that the Seller shall not directly or
indirectly, (except on behalf of the Company) (i) for a period of
one (1) year after the date here (the "Employee Non-Solicitation
Period") induce or attempt to induce any employee of the Company
to leave the employ of the Company, or in any way interfere with
the relationship between the Company and any employee thereof; or
(ii) for a period of three (3) years after the date hereof (the
"Customer Non-Solicitation Period"), with respect to business
activities conducted and products manufactured, sold or
distributed on the date hereof by the Company, induce or attempt
to induce any customer, supplier, licensee, licensor, distributor
or other business relation of the Company to cease doing business
with the Company or in any way interfere with the relationship
between any such customer, supplier, licensee, distributor or
business relation and the Company, as the case may be (including,
without limitation, making any negative statements or
communications about the Company).
b. Company agrees that the Company shall not directly or
indirectly, (except on behalf of the Seller) (i) for the Employee
Non-Solicitation Period, induce or attempt to induce any employee
of the Seller to leave the employ of the Seller, or in any way
interfere with the relationship between the Seller and any
employee thereof; or (ii) for the Customer Non-Solicitation
Period, with respect to business activities conducted and
products manufactured, sold or distributed on the date hereof by
the Company, induce or attempt to induce any customer, supplier,
licensee, licensor, distributor or other business relation of the
Seller to cease doing business with the Seller or in any way
interfere with the relationship between any such customer,
supplier, licensee, distributor or business relation and the
Seller, as the case may be (including, without limitation, making
any negative statements or communications about the Seller).
c. The foregoing provisions shall not apply in the event that
an employee of either party should respond to a "general
advertisement" for an employment position with the other party,
without any direct or indirect inducement by such party to do so.
The term "general advertisement" shall mean the publication in a
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<PAGE>
newspaper of general circulation, or other media, including
electronic media, in New Hampshire advertising the availability
of employment positions with such party.
4. Revision. If, at the time of enforcement of this Agreement,
a court shall hold that the duration, scope, geographic area or
other restrictions stated herein are unreasonable under
circumstances then existing, the parties agree that the maximum
duration, scope, geographic area or other restrictions deemed
reasonable under such circumstances by such court shall be
substituted for the stated duration, scope, geographic area or
other restrictions.
5. Remedies. Seller recognizes and affirms that in the event
of a breach of Sections 1, 2 or 3 of this Agreement, money
damages would be inadequate and the Company would have no
adequate remedy at law. Accordingly, Seller agrees that the
Company shall have the right, in addition to any other rights and
remedies existing in its favor, to enforce its rights and
Seller's obligations under this Agreement not only by an action
or actions for damages, but also by an action or actions for
specific performance, injunctive and/or equitable relief, in
either case without proof of actual damages and without posting a
bond or other security, in order to enforce or prevent any
violations (whether anticipatory, continuing or future) of this
Agreement. In the event of a breach or violation by Seller of
Section 2 or 3 of this Agreement, the running of the Non-
Competition Period or Non-Solicitation Period, as the case may
be, (but not of Seller's obligations hereunder) shall be tolled
during the continuance of any actual breach or violation.
6. Binding Agreement. This Agreement shall be binding upon the
parties hereto and their respective heirs, successors, personal
representatives and assigns.
7. Entire Agreement; Amendment. This instrument contains the
entire agreement of the parties with regard to the subject matter
hereof, and may not be amended except by an agreement in writing
signed by the parties hereto.
8. Notices and Other Communications. All notices or other
communications hereunder shall be in writing and shall be deemed
to have been duly given if delivered personally (including
delivery by courier service), transmitted by telegram or
facsimile transmission, or mailed by registered or certified
mail, postage prepaid, return receipt requested, as follows:
a. If to the Company, to:
Warner Power, LLC
40 Depot Street
Warner, NH 03278
Attn: Dennis M. Deegan
Telephone: (603) 456-3111
Facsimile: (603) 456-2098
with a copy to:
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<PAGE>
McLane, Graf, Raulerson & Middleton,
Professional Association
900 Elm Street, P.O. Box 326
Manchester, NH 03105-0326
Attention: William V. A. Zorn
Telephone: (603) 625-6464
Facsimile: (603) 625-5650
b. If to Seller, to:
WPI Group, Inc.
1155 Elm Street
Manchester, NH 03101
Attn: Michael B. Tule, Esquire
Telephone: (603) 627-3500
Facsimile: (603) 627-3150
or to such other address as the party to whom notice is to be
given may have previously furnished to the other party in writing
in accordance herewith. Notice shall be deemed given on the date
receive (or if receipt thereof is refused, on the date of such
refusal).
9. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New
Hampshire, without regard to the conflict of law principles of
such State.
10. Counterpart. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but which
together shall constitute one and the same agreement.
[The remainder of this page intentionally left blank.]
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<PAGE>
IN WITNESS WHEREOF, the parties have duly executed this
Agreement on the date first above written.
COMPANY:
WARNER POWER, LLC,
a New Hampshire Limited Liability
Company
By:/s/Dennis Deegan
------------------
Name:Dennis Deegan
Title:
SELLER:
WPI GROUP, INC.,
a New Hampshire Corporation
By:/s/Michael Tule
--------------------
Name:Michael Tule
Title:Vice President and
General Counsel
WPI POWER SYSTEMS, INC.,
a New Hampshire Corporation
By:/s/Michael Tule
----------------------
Name:Michael Tule
Title:Vice President and
General Counsel
WPI ELECTRONICS, INC.,
a New Hampshire Corporation
By:/s/Michael Tule
-------------------------
Name:Michael Tule
Title:Vice President and
General Counsel
- 5 -
<PAGE>
EXHIBIT B
Table of Contents
ARTICLE I Definitions; Construction 1
Section 1.1 Definitions 1
Section 1.2 References 2
Section 1.3 Pronouns 2
ARTICLE II Agreement for Sale And Purchase 2
Section 2.1 Agreement 2
ARTICLE III Purchase Price 2
Section 3.1 Amount of Purchase Price 2
Section 3.2 Payment of Purchase Price 2
ARTICLE IV Representations and Warranties 2
Section 4.1 Representations and Warranties of Seller 3
Section 4.2 Representations and Warranties of Buyer 4
Section 4.3 Survival of Warranties 5
Section 4.4 Agreements Regarding Representations and
Warranties 5
ARTICLE V Closing Matters 5
Section 5.1 Time and Place for Closing 5
Section 5.2 Title Commitment and Policy 5
Section 5.3 Quiet Title Escrow 6
Section 5.4 Survey 6
Section 5.5 Seller's Closing Documents 6
Section 5.6 Buyer's Closing Documents 7
Section 5.7 Documentary Taxes; Recording Charges 8
Section 5.8 Form of Documents 8
Section 5.9 Possession 8
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<PAGE>
Section 5.10 Adjustments and Prorations 8
Section 5.11 Closing Statement 8
Section 5.12 Contingency 9
ARTICLE VI Casualty and Condemnation 9
Section 6.1 Casualty 9
Section 6.2 Condemnation 9
ARTICLE VII Miscellaneous 10
Section 7.1 Notices 10
Section 7.2 Entire Agreement Amendments 10
Section 7.3 Governing Law 11
Section 7.4 Headings 11
Section 7.5 Counterparts 11
Section 7.6 Binding Effect 11
Section 7.7 No Third Party Beneficiary 11
Section 7.8 Survival 11
Section 7.9 Construction 11
Section 7.10 Enforceability 11
Section 7.11 Waiver 12
Section 7.12 Expenses 12
Section 7.13 Brokerage 12
Section 7.14 Further Assurances 12
ii
<PAGE>
PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT (this "Agreement") is made
and entered into as of the 21st day of December, 1999, by and
between WPI GROUP, INC., a New Hampshire corporation, as seller
(the "Seller"), and 40 DEPOT STREET, LLC, a New Hampshire limited
liability company, as buyer (the "Buyer").
RECITALS:
WHEREAS, Seller owns certain real property and improvements
thereon located in Merrimack County, New Hampshire, and legally
described on Exhibit A attached hereto and made a part hereof
(the "Property"); and
WHEREAS, concurrently with the execution and delivery of
this Agreement, WARNER POWER, LLC, a New Hampshire limited
liability company which is the sole member of Buyer, is entering
into an Asset Purchase Agreement (the "Asset Purchase Agreement")
with Seller, WPI POWER SYSTEMS, INC., a New Hampshire
corporation, and WPI ELECTRONICS, INC., a New Hampshire
corporation, both of which are wholly owned by Seller; and
WHEREAS, in connection with and as an integral part of the
transactions contemplated by the Asset Purchase Agreement, Seller
desires to sell to Buyer, and Buyer desires to purchase from
Seller, the Property, subject to and in accordance with the terms
and conditions of this Agreement;
NOW, THEREFORE, in consideration of the foregoing Recitals
(which are incorporated herein by this reference), the mutual
covenants and conditions set forth below, and other good and
valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
Definitions; Construction
Section 1.1 Definitions. Certain capitalized words and phrases
are defined throughout this Agreement. In addition, the following terms
shall have the meanings indicated:
"Agreement" shall mean this Purchase and Sale
Agreement, the exhibits hereto and any amendments which may
hereafter be executed and delivered between Buyer and
Seller.
"Closing Documents" shall mean any instruments,
documents or certificates delivered by any party hereto in
connection with the Closing, including, without limitation,
the documents required pursuant to Sections 5.4 and 5.5
hereof.
"Permitted Exceptions" shall mean the liens,
encumbrances, restrictions, exceptions and other matters
specified in Exhibit B attached hereto and made a part
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hereof to which title to the Property may be subject on the
Closing Date and any other such matters which under the
provisions of this Agreement are expressly included as
Permitted Exceptions.
"Title Company" shall mean First American Title
Insurance Company.
Section 1.2 References. All references in this Agreement to
particular sections or articles shall, unless expressly otherwise provided or
unless the context otherwise requires, be deemed to refer to the specific
sections or articles in this Agreement. The words "herein", "hereof",
"hereunder", "hereinafter", "hereinabove" and other words of similar import
refer to this Agreement as a whole and not to any particular section,
subsection or article hereof.
Section 1.3 Pronouns. All pronouns and variations thereof used
herein shall, regardless of the pronoun actually used, be deemed to refer to
the masculine, feminine, neuter, singular or plural as the identity of the
person or persons may, in the context in which such pronoun is used, require.
ARTICLE II
Agreement for Sale And Purchase
Section 2.1 Agreement. For the consideration and subject to the
terms and conditions herein set forth, and in reliance upon the
representations, warranties, covenants and undertakings herein contained, and
subject to each of the terms, covenants and conditions herein set forth,
Seller hereby agrees to grant, sell, transfer, assign, convey, set over and
confirm the entire fee simple estate in the Property unto Buyer, and Buyer
hereby agrees to purchase the foregoing from Seller, at the Closing on the
Closing Date, free and clear of all liens, claims, charges or encumbrances of
any kind or nature other than the
Permitted Exceptions, subject, however, to the terms and conditions of this
Agreement.
ARTICLE III
Purchase Price
Section 3.1 Amount of Purchase Price. In consideration for the sale
of the Property, Buyer agrees to pay to Seller, at the Closing, the amount of
Two Million Seven Hundred Fifty Thousand Dollars ($2,750,000.00), plus or
minus prorations and adjustments provided for in this Agreement (the
"Purchase Price").
Section 3.2 Payment of Purchase Price. The full amount of the Purchase
Price shall be payable by wire transfer or delivery of certified or cashier's
checks at the Closing, subject, however, to prorations and adjustments, if any,
required upon delivery of the Closing Statement (as hereinafter defined). The
Purchase Price shall be payable to the order of Seller or as Seller shall
otherwise direct in a written instrument delivered to Buyer.
ARTICLE IV
Representations and Warranties
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Section 4.1 Representations and Warranties of Seller. Seller hereby
represents and warrants to Buyer as follows:
(a) Organization and Authority of Seller. Seller is a
corporation incorporated, validly existing and in good standing
under the laws of the State of New Hampshire, and has all
necessary power and authority to execute and deliver this
Agreement and to perform all of its obligations hereunder. This
Agreement has been duly authorized by all requisite action on the
part of Seller and represents the valid and binding obligation of
Seller, enforceable against Seller in accordance with its terms,
except as the enforceability hereof may be limited by applicable
bankruptcy, insolvency, reorganization or other similar laws
affecting creditors' rights generally or by general principles of
equity and assuming, for purposes hereof, the due authorization,
execution and delivery, and the validity and binding effect of
this Agreement as against Buyer. Seller has full right, power
and authority to sell and transfer the Property as herein
contemplated without the consent or approval of any third party,
subject, however, to the terms and conditions of the Asset
Purchase Agreement.
(b) No Resulting Breach. Neither the execution and delivery of
this Agreement by Seller, nor the performance of Seller's
obligations hereunder, will result in a breach, violation or
default by Seller of any provision of its organizational
documents or any other document to which it is bound or to which
its assets are subject, nor create or impose (or result in the
creation or imposition of) any security interest, lien or other
encumbrance upon the Property or any part thereof or interest
therein.
(c) Title to Property. Seller holds good and marketable fee
simple title to the Property, subject only to the Permitted
Exceptions.
(d) Property Contracts and Leases. There are no property
contracts or leases in effect with respect to all or any portion
of the Property which will survive the Closing (as hereinafter
defined).
(e) Violations. As of the date of this Agreement, Seller has
not received any notices of violations of any laws, ordinances,
orders or requirements of any governmental authority agency or
officer having jurisdiction against or affecting the Property
which have not previously been complied with, nor, to the best of
Seller's knowledge, do any facts or circumstances exist which, if
known to any applicable governmental agency or authority, would
constitute a violation of any such laws, ordinances, orders or
requirements.
(f) Pending Proceedings. Except for item number 10 of the
Permitted Exceptions, there are no actions, investigations, suits
or proceedings (including arbitration, grievances, judicial
proceedings, administrative proceedings and tax contests) pending
or, to the best of Seller's knowledge, threatened with respect to
the Property.
(g) Condemnation, Zoning or Other Governmental Actions. There
are no pending, nor to the best of Seller's knowledge, threatened
requests, applications or proceedings to alter or restrict the
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zoning or other use restrictions applicable to the Property, or
to condemn all or any portion of the Property by eminent domain
proceedings or otherwise.
(h) Tax Parcels. The Property comprises one or more separate
tax parcels which do not include other property.
(i) Foreign Person Affidavit. In order to induce Buyer to waive
the requirement of withholding tax under Section 1445 of the
Internal Revenue Code of 1986, as amended, Seller represents and
warrants (and will confirm by sworn affidavit delivered at the
Closing) that it is not a foreign person for purposes of said
Section 1445, and that the United States taxpayer identification
number of Seller and Seller's office address will be provided to
Buyer at Closing.
(j) Possessory Rights. No person, firm or corporation has any
possessory rights or interests in or to any part of the Property
which will survive the Closing except for rights or interests
which comprise part of the Permitted Exceptions or as otherwise
set forth on Schedule 4.1(d). Neither Seller nor any other party
has entered into, and there are no outstanding offers to enter
into, any contract, agreement or understanding regarding the
sale, transfer, lease or exchange of the Property, or any part
thereof, including, without limitation, purchase options,
contracts for sale, or rights of first refusal, which will
survive the Closing.
(k) Utilities. All utilities necessary for the operation of the
Property as the same is currently operated, including, without
limitation, water, sewer, telephone and electrical, are available
at the perimeter of the Property.
Section 4.2 Representations and Warranties of Buyer. Buyer hereby
represents and warrants to Seller as follows:
(a) Organization and Authority. Buyer is a limited liability
company duly formed, validly existing and in good standing under
the laws of the State of New Hampshire and has all necessary
power and authority to execute and deliver this Agreement and to
perform all of its obligations hereunder. This Agreement has
been duly authorized by all requisite action on the part of Buyer
and represents the valid and binding obligation of Buyer,
enforceable against Buyer in accordance with its terms, except as
the enforceability hereof may be limited by applicable
bankruptcy, insolvency, reorganization or other similar laws
affecting creditors rights generally or by general principles of
equity and assuming, for purposes hereof, the due authorization,
execution and delivery, and the validity and binding effect, of
this Agreement as against Seller. Buyer has full right, power
and authority to purchase the Property as herein contemplated
without the consent or approval of any third party.
(b) No Resulting Breach. Neither the execution and delivery of
this Agreement by Buyer, nor the performance of Buyer's
obligations hereunder, will result in a breach, violation or
default by Buyer of any provision of its organizational documents
or any other document to which it is bound or to which its assets
are subject.
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Section 4.3 Survival of Warranties. All representations and warranties
herein contained shall be deemed to have been remade and republished by Buyer
and Seller, respectively, on and as of the Closing Date, and shall be effective
for allpurposes on and as of said date. The representations and warranties
contained in Sections 4.1(e), 4.1(f) and 4.1(g) shall survive the Closing
hereunder for a period of eighteen (18) months, and shall not be deemed to have
been waived at the Closing or merged into any of the documents of conveyance or
transfer to be delivered by Seller at the Closing.
Section 4.4 Agreements Regarding Representations and Warranties.
Subject to each of the provisions of this Agreement, Seller hereby agrees to
indemnify, defend and hold Buyer (and its respective officers, directors,
shareholders, agents, and employees) completely free and harmless from and
against any losses, liabilities,claims, damages, costs or expenses (including,
without limitation, reasonable attorneys' fees and expenses) sustained by Buyer
by reason of any of the representations or warranties contained in Sections
4.1(e), 4.1(f) and 4.1(g) being untrue or incorrect in any material respect
on and as of the date hereof or on and as of the Closing
Date; provided, however, that no claim for indemnification may be made under
this Section 4.4 unless written notice thereof, specifying the nature of such
claim and the amount or estimated amount thereof to the extent then feasibly
ascertainable (which estimate shall not be conclusive of the final amount of
such claim), is delivered within
the applicable survival period set forth in Section 4.3 above.
ARTICLE V
Closing Matters
Section 5.1 Time and Place for Closing. Subject to the satisfaction of
each of the conditions precedent herein set forth, the Closing shall take place
at the time and place set forth in the Asset Purchase Agreement for the closing
of the transactions contemplated thereby, with the concurrent delivery of all
Closing Documents, including a deed, other documents of title, the delivery of
the title insurance policy or a marked commitment dated as of the Closing
Date and special endorsements described below, and the payment of the
Purchase Price in full, subject to prorations and adjustments set
forth on the Closing Statement. The date on which the transactions
contemplated hereby shall be consummated is herein referred to as the
"Closing Date" and the transactions occurring at that time are herein referred
to as "Closing".
Section 5.2 Title Commitment and Policy.
(a) Seller shall deliver to Buyer and any lender providing
financing to the Buyer for the transaction contemplated hereby
(the "Buyer's Lender"), at Buyer's sole cost and expense, (i) a
written commitment from the Title Company to issue a Title
Insurance Policy in a form acceptable to Buyer's Counsel and
Buyer's Lender's Counsel relating to the property in an amount
equal to the Purchase Price, subject only to the Permitted
Exceptions and to liens and encumbrances to secure indebtedness
which are of a definite or ascertainable dollar amount and which
Seller agrees to remove concurrently with the Closing, and (ii)
complete and legible copies of all documents referenced in such
title commitment. The title commitment delivered hereunder shall
be conclusive evidence of good and marketable title as therein
shown, subject only to those exceptions as therein stated. If
such title commitment discloses exceptions to title other than as
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herein contemplated, Seller shall have such exceptions removed or
obtain the commitment of the Title Company to provide affirmative
insurance to Buyer over such exception, in form and substance
reasonably acceptable to Buyer; provided, however, in the case of
exceptions which are of a definite and ascertainable amount and
may be removed by the payment of money, Seller shall be obligated
to cause the removal thereof at the Closing or to cause the same
to be bonded over in an amount and manner sufficient to enable
the Title Company to remove the same from its title insurance
policy or to provide Buyer with affirmative insurance against
loss or damage by reason thereof in form and substance reasonably
acceptable to Buyer. If Seller fails to have any unpermitted
exceptions removed or fails to cause the Title Company to issue
its commitment to insure over the same on or prior to the Closing
Date, Buyer may either elect to take title as it then is, with
the right to deduct from the Purchase Price liens or encumbrances
of a definite or ascertainable dollar amount, or to terminate
this Agreement and all of the rights and obligations of the
parties hereto, by delivery of notice to that effect at or prior
to the Closing Date. If Buyer shall elect to take title subject
to any unpermitted exceptions, all of such exceptions shall
thereupon become, for all purposes hereof, additional Permitted
Exceptions.
(b) At the Closing and as a condition precedent to the
obligations of Buyer hereunder, Seller shall deliver or cause to
be delivered to Buyer a title insurance policy (or marked
commitment) issued by the Title Company, together with special
endorsements containing the affirmative coverage referred to
above, in the amount of the Purchase Price and otherwise in
accordance with the Title Company's commitment therefor as set
forth above, showing fee simple title to the Property as vested
in Buyer, subject only to the Permitted Exceptions.
(c) All costs of preparation and delivery of the title
commitment and the title insurance policy required to be
delivered hereunder shall be borne and paid for by Buyer.
Section 5.3 Quiet Title Escrow. Seller agrees to pay all costs and
expenses, including legal fees, incurred by Buyer in connection with filing and
prosecuting a petition to quiet title with respect to item number
10 of the Permitted Exceptions. Buyer agrees to keep Seller
reasonably informed as to the process and status of the
proceedings related to such petition to quiet title. Five
Thousand Dollars ($5,000.00) shall be withheld from the Purchase
Price payment and held in a non-interest bearing escrow account
by the Buyer's attorney until such item is deleted as an
exception to the title insurance policy described in Section 5.2
above.
Section 5.4 Survey. On or before the Closing Date, Seller shall
deliver, at Buyer's sole cost and expense, an update of the survey dated
__________, prepared by Pierre J. Bedard, L.L.S., a copy of which
has been delivered to Buyer (the "Existing Survey"), certified to
Buyer, Seller, the Title Company and any lender identified by
Buyer. Such updated survey shall show no changes from the
Existing Survey and shall otherwise be in form and substance
sufficient to enable the Title Company to issue its special
endorsement insuring over its general exception for matters of
survey and to issue its location endorsement as aforesaid. The
costs of the survey delivered pursuant hereto shall be borne
entirely by Buyer.
Section 5.5 Seller's Closing Documents. At or prior to the Closing,
in addition to any other instruments, documents or certificates otherwise
required
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hereunder to be made and delivered by Seller, Seller shall execute and deliver,
or cause to be executed or delivered, to or at the direction of Buyer, the
following:
(a) A general warranty deed, in proper statutory form for
recording, transferring and conveying fee simple title to the
Property from Seller to Buyer subject only to the Permitted
Exceptions.
(b) Original copies, executed by or on behalf of Seller, of any
required real estate transfer tax declarations, or any similar
documentation required to evidence the payment of any tax imposed
by the state, county and/or municipality on the transactions
contemplated hereby.
(c) An affidavit stating Seller's U.S. taxpayer identification
number and that Seller is a "United States person', as defined by
Internal Revenue Code Section 1445(f)(3) and Section 7701(b).
(d) The title insurance policy (or marked commitment) required
to be delivered pursuant to Section 5.2 above.
(e) Such instruments, documents or certificates (including
certificates of public officials to the extent the same are
reasonably available) as Buyer or the Title Company may
reasonably request in order to attest to the organization and
existence of Seller, its authority to execute and deliver this
Agreement and to effect the transactions herein contemplated, and
execute attesting to the taking of all necessary corporate action
to authorize the herein contemplated transactions.
(f) Such instruments, documents or certificates, executed by or
on behalf of Seller, as may be required by the Title Company as a
condition to the issuance of its title insurance policy as herein
contemplated, which documents may, if required by the Title
Company, include, without limitation, an ALTA statement.
(g) Such other documents, instruments or agreements which Seller
is required to deliver to Buyer pursuant to the provisions of
this Agreement or which Buyer may, either at or subsequent to the
Closing, deem reasonably necessary or desirable in order to
consummate the transactions contemplated by this Agreement, or
the financing arrangements made by Buyer for the financing of the
purchase of the Property, or better to vest in Buyer title to the
Property, provided that Seller shall not, in connection with or
by virtue of the execution and delivery of any such other
documents, instruments or agreements, be obligated to incur any
liabilities or obligations in addition to those otherwise
contemplated by this Agreement.
Section 5.6 Buyer's Closing Documents. At or prior to the Closing, in
addition to any other instruments, documents or certificates otherwise required
hereunder to be made and delivered by Buyer, Buyer shall execute and deliver,
or cause to be delivered, to or at the direction of Seller, the following:
(a) The Purchase Price, plus or minus prorations and
adjustments.
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(b) Such instruments, documents or certificates (including
certificates of public officials to the extent the same are
reasonably available) as Seller or the Title Company may
reasonably request in order to attest to the organization and
existence of Buyer, its authority to execute and deliver this
Agreement and to effect the transactions herein contemplated, and
attesting to the taking of all necessary corporate action to
authorize the herein contemplated transactions.
(c) Such other documents, instruments or agreements which Buyer
may be required to deliver to Seller pursuant to the provisions
of this Agreement or which may be necessary to consummate the
transactions contemplated by this Agreement, provided that Buyer
shall not, in connection with the execution and delivery of any
such other documents, instruments or agreements, be obligated to
incur any liabilities or obligations in addition to those
otherwise herein in this Agreement contemplated.
Section 5.7 Documentary Taxes; Recording Charges. All state, county
and local documentary stamp, sales and transfer taxes payable in connection
with this transaction shall be borne and paid for equally by Seller and Buyer.
The cost of recording and registering the warranty deed(s) shall be paid by
Buyer, and Seller shall pay the cost of recording any instruments required to
remove title exceptions which are not Permitted Exceptions.
Section 5.8 Form of Documents. All documents required to be delivered
at or prior to the Closing in accordance with the provisions of this Agreement
shall be in form and substance reasonably satisfactory to each of the parties
hereto and their respective counsel. Any documents, including deeds or other
instruments of assignment or conveyance, intended to be recorded in any public
office shall be in recordable form and shall be recorded concurrently with, or
as soon as reasonably practicable after, the Closing.
Section 5.9 Possession. Seller shall deliver possession of the
Property to Buyer at the Closing.
Section 5.10 Adjustments and Prorations. Real estate, ad valorem and
personal property taxes, and other state, county and municipal taxes, charges
and assessments (collectively, the "Real Estate Taxes") shall be prorated
between Seller and Buyer at the Closing as of 11:59 p.m. on the Closing Date.
Section 5.11 Closing Statement. At Closing, Buyer and Seller will
jointly prepare a "Closing Statement", which shall show the net amount due to
seller or to Buyer as a result of the adjustments and prorations herein
required; provided, however, that such Closing may be combined with any
closing and/or settlement statements required or
permitted under the Asset Purchase Agreement.
Section 5.12 Contingency. This Agreement and the obligations of Seller
and Buyer hereunder are expressly subject to and contingent upon the
consummation of the transactions contemplated by the Asset Purchase Agreement.
If, for any reason whatsoever, the Asset Purchase Agreement is terminated,
then this Agreement shall
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automatically terminate without further action of the parties, and neither
party shall have any further right, obligation or liability hereunder except
as to any provision which by its terms expressly survives any termination of
this Agreement.
ARTICLE VI
Casualty and Condemnation
Section 6.1 Casualty. If, prior to the Closing Date, the Property is
damaged by fire or other casualty and the cost of restoring the Property is
reasonably estimated to exceed $50,000, then Buyer shall have the right,
exercisable by written notice to Seller within thirty (30)days after receipt
of notice of such fire or other casualty, to either (i) terminate this
Agreement, in which event neither party shall have my further right,
obligation or liability hereunder which does not expressly survive
termination, or (ii) take title to the Property notwithstanding the damage
caused by such fire or other casualty. If the estimated cost of restoration is
$50,000 or less, or if such estimated cost exceeds $50,000 and Buyer elects
to take title to the Property notwithstanding such damage, then Seller shall
assign to Buyer at Closing all insurance proceeds payable in connection with
such fire or other casualty and the Purchase Price shall be reduced by an
amount equal to the amount of any self-insurance or deductibles carried by
Seller. The Closing Date shall be extended, if necessary,
until five (5) days after the expiration of said thirty (30) day period.
Section 6.2 Condemnation. In the event of the actual or threatened
taking by exercise of the right of eminent domain of all or any part of the
Property of which Seller acquires knowledge on or prior to the Closing Date,
Seller will give Buyer immediate notice (a "Condemnation Notice")of such event.
If, prior to the Closing Date, the Property shall be taken or threatened to be
taken by exercise of the right of eminent domain, or there shall be taken or
threatened to be taken such a material part thereof that, in the reasonable
opinion of Buyer, the taking materially interferes or would materially
interfere with Buyer's intended operation or use of the Property,
then Buyer may elect to terminate its obligations under this Agreement by
written notice to such effect given to Seller within thirty (30) days after
receipt by Buyer of the Condemnation Notice, in which event neither party
shall have any further right, obligation or liability hereunder which does
not expressly survive Termination of this Agreement, if, under such
circumstances, Buyer does not so elect to terminate its
obligations hereunder, then the Closing of the sale hereby contemplated
shall take place as herein provided without any abatement of the
Purchase Price, and at the Closing Seller shall assign to the Buyer by
written instrument, all of Seller's right, title and interest in and to
any condemnation award which may be payable to Seller on
account of such condemnation. If, prior to the Closing Date, one or more
portions of the Property shall be taken by exercise of right of eminent
domain in a manner which does not, in the reasonable opinion of Buyer,
materially interfere with Buyer's intended operation or use of the affected
Property, then Buyer shall not have any right to
terminate its obligations hereunder by reason thereof, but at the Closing
Seller shall assign to the Buyer, by written instrument all of Seller's
right, title and interest in and to any condemnation awards which may be
payable to Seller on account of such condemnation. For purposes hereof,
the term "taking" shall include any temporary as well as permanent takings.
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ARTICLE VII
Miscellaneous
Section 7.1 Notices. All notices, demands, requests, consents,
approvals and other communications required or permitted to be given hereunder
shall be in writing and shall be deemed delivered (i) upon the receipted
delivery thereof, or (ii) on the next business day following delivery to a
reliable and recognized overnight air-freight service, or (iii) three (3)
business days following deposit thereof in the United States mail, certified
mail (return receipt requested), in each case with postage or delivery
prepaid or billed to sender and addressed as follows:
If to Seller:
WPI GROUP, INC.
1155 Elm Street
Manchester, NH 03101
Attn: Michael B. Tule, Esquire
If to Buyer:
Warner Power, LLC
40 Depot Street
Warner, NH 03278
Attn: Dennis M. Deegan
with copies to:
McLane, Graf, Raulerson & Middleton,
Professional Association
900 Elm Street, P.O. Box 326
Manchester, NH 03105-0326
Attn: William V. A. Zorn, Esquire
Either party may change its address for purposes of notice
hereunder by delivering notice thereof in the manner set forth
above.
Section 7.2 Entire Agreement Amendments. The Confidentiality
Agreement by and between Seller and Buyer dated July 30, 1999, this Agreement,
the Asset Purchase Agreement, and the Exhibits hereto and thereto constitute
the entire understanding and agreement of the parties hereto with respect to
the subject matter hereof and supersede all prior understandings or agreements
between the parties with respect to the subject matter hereof this Agreement
may not be altered, modified, extended, revised or changed,
nor may any party hereto be relieved of any of its liabilities or
obligations hereunder,
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except by written instrument duly executed by each of the parties hereto.
Any such written instrument entered into accordance with the provisions of
the preceding sentence shall be valid and enforceable notwithstanding the
lack of separate legal consideration
therefor.
Section 7.3 Governing Law. This Agreement is made pursuant to, and
shall be governed by and construed in accordance with, the laws of the State
of New Hampshire without reference to the conflicts of laws provisions
thereof.
Section 7.4 Headings. Section and article headings used herein are
for convenience and ease of reference only and are nor intended to have any
legal effect. Accordingly, no reference shall be made to any such article or
section headings for the purpose of interpreting,construing or enforcing any
of the provisions of this Agreement.
Section 7.5 Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original and all of which,
when taken together, shall be deemed to be one Agreement.
Section 7.6 Binding Effect. This Agreement shall be binding upon, and
shall inure to the benefit of, the parties hereto and their respective
successors, assigns, heirs and legal representatives.
Section 7.7 No Third Party Beneficiary. Each of the covenants,
undertakings and agreements of the parties hereto are intended solely for the
benefit of the other party and its successors in interests and assigns under
the provisions of this Agreement, and are not intended for the benefit of,
and may not be enforced by, any third party.
Section 7.8 Survival. Except as otherwise herein expressly provided,
none of the representations, warranties, covenants, indemnities, liabilities
and obligations of the parties hereto shall survive the Closing hereunder.
Section 7.9 Construction. This Agreement shall not be construed more
strictly against one party than against the other merely by virtue of the
fact that it may have been prepared by counsel for one of the parties,
it being recognized that both Seller and Buyer have contributed substantially
and materially to the preparation of this Agreement.
Section 7.10 Enforceability. In the event that any provision of this
Agreement shall be unenforceable in whole or in part, such provision shall be
limited to the extent necessary to render the same valid, or shall be excised
from this Agreement, as circumstances require, and this Agreement shall be
construed as if said provision had been incorporated herein as so limited, or
as if said provision has not been included herein, as the case may be.
Section 7.11 Waiver. Each of the parties hereto shall have the right,
in its sole and absolute discretion, but under no circumstances shall be
obligated, to waive or defer compliance by the other party with any of the
conditions precedent to their respective obligations hereunder; provided,
however, no waiver shall be effective unless set forth in a written
instrument, executed by the waiving party and delivered to the
other party. No act or circumstance, other than the delivery of a written
waiver as
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contemplated by the preceding sentence, shall be deemed to constitute a
waiver of any condition herein set forth. No waiver given on one occasion
shall obligate the waiving party to grant similar waivers or deferrals in
any other circumstance or on any other occasion.
Section 7.12 Expenses. Each party shall be responsible for the fees
and expenses of their respective counsel and their other out-of-pocket costs
and expenses, provision for which is not otherwise herein made.
Section 7.13 Brokerage. Except as disclosed in the Asset Purchase
Agreement, Seller and Buyer each hereby represent and warrant to the other
that it has not dealt with any broker or finder in connection with the
transactions contemplated hereby, and each hereby agrees to indemnify, defend
and hold the other harmless of and from any and all manner of claims,
liabilities, loss, damage, attorneys' fees and expenses incurred
by either party and arising out of, or resulting from, any claim by any
broker or finder in contravention of its representation and warranty herein
contained.
Section 7.14 Further Assurances. Seller, on the one hand, and Buyer,
on the other hand, agree, at any time and from Time to time after the
Closing, to execute, acknowledge where appropriate and deliver such further
instruments and documents (and to bear their own costs and expenses
incidental thereto) and to take such other actions as the other of them may
reasonably request in order to carry out the intents and purposes
of this Agreement; provided that neither Seller nor Buyer shall be obligated,
pursuant to this Section 7.15, to incur any expense of a material nature
and/or to incur any material obligations in addition to those set forth in
this Agreement and/or their respective Closing Documents.
Remainder of Page Intentionally Left Blank
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed on their behalf as of the day and year first
above written
.
SELLER:
WPI GROUP, INC.
a New Hampshire corporation
By:/s/Michael Tule
------------------------
Name:Michael Tule
Title:Vice President and
General Counsel
BUYER:
40 DEPOT STREET, LLC
a New Hampshire limited liability
company
By:/s/Dennis Deegan
--------------------------
Name:Dennis Deegan
Title:
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Exhibit A - Legal Description
Exhibit B - Permitted Exceptions
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EXHIBIT C
TERMINAL PRODUCTS MANUFACTURING AGREEMENT
THIS TERMINAL PRODUCTS MANUFACTURING AGREEMENT (this
"Agreement") is made as of December 22, 1999, by and among
Warner Power, LLC, a New Hampshire limited liability company
("Supplier"), WPI Group, Inc., a New Hampshire corporation and
WPI Oyster Termiflex, Inc., a New Hampshire corporation
(collectively referred to as "Customer").
WITNESSETH:
WHEREAS, Supplier and WPI Group, Inc. are parties to the
Asset Purchase Agreement dated December 22, 1999 whereby
Supplier purchased certain of the assets and assumed certain
liabilities of WPI Group, Inc. and WPI Power Systems, Inc. and
WPI Electronics, Inc., which are wholly-owned subsidiaries of
WPI Group, Inc. (the "Asset Purchase Agreement");
WHEREAS, as part of the Asset Purchase Agreement,
Supplier has purchased certain terminal products inventory
(the "Initial Terminal Products Inventory") which WPI Group,
Inc. has agreed to purchase for use by its wholly-owned
subsidiary WPI Oyster Termiflex, Inc. pursuant to the terms of
this Agreement;
WHEREAS, Supplier will also sell to Customer, and
Customer agrees to purchase from Supplier, fully assembled,
tested and packaged terminal products manufactured by Supplier
in accordance with the specifications and definitions provided
to Supplier by Customer pursuant to this Agreement and as set
forth on Attachment A (which along with the Initial Terminal
Products Inventory are referred to as the "Goods"); and
WHEREAS, subject to the foregoing, the Supplier desires
to sell and Customer desires to purchase the Goods on the
terms and conditions herein set forth.
NOW, THEREFORE, in consideration of the mutual
representations, warranties, covenants and agreements
contained herein, the parties hereto, intending to be legally
bound, hereby agree as follows:
1. Term of Agreement
1.1 The term of the agreement shall be three (3) years from
the date set forth in the preamble (the "Term").
1.2 At the expiration of the Term, the Supplier shall have
the right (along with such other parties as Customer may
select) to bid on a manufacturing agreement on such terms as
Customer may specify.
1.3 This Agreement may not be terminated by Customer during
the Term, except as otherwise provided for herein.
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1.4 Upon expiration or termination of the Agreement, the
Supplier shall complete any outstanding purchase orders which
purchase orders shall be honored by the Customer.
2. Sole Supplier of Goods
2.1 The Supplier shall be the sole supplier of the Goods.
3. Forecasting and Ordering
3.1 Orders will be placed in accordance with the procedures
in Attachment B, which Attachment may be amended from time to
time by mutual written agreement of the parties.
3.2 The Customer will cover the cost of purchase of all
components procured by the Supplier in accordance with:
3.2.1 Firm orders placed by the Customer.
3.2.2 Any other cover that may be agreed formally by the
Customer and the Supplier to meet unanticipated demand,
including but not limited to the finished, tested PCB's.
3.2.3 The cover of any components that, by virtue of long
procurement lead times are outside the period covered by
formal purchase order instruction or three (3) month forecast,
that have been identified as such and with the written
agreement of the Customer.
3.3 For the avoidance of doubt, the Customer agrees to pay
for the cost of components as set forth in Section 3.2 in the
event that any such orders are cancelled. Supplier shall, to
the extent possible, repurchase any such components for use in
future orders. In addition, Supplier shall utilize such
portions of the Initial Terminal Products Inventory, to the
extent possible, before purchasing inventory for firm orders.
4. Delivery
4.1 Unless specifically agreed in writing the lead time from
receipt of order to delivery of the Goods to the Customer
shall be in accordance with Section 6.1.1 of Attachment B.
4.2 Where circumstances are such that a delivery cannot be
made within the lead-time specified and agreed in Section
6.1.1 of Attachment B, the Supplier shall advise the Customer
in writing to that effect within a reasonable period of time
after learning delivery cannot be made at such time. Supplier
shall use commercially reasonable efforts to expedite delivery
if it is unable to make the specified lead-time.
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4.3 Deliveries shall be made in accordance with Sections
6.1.4-6.1.9 of Attachment B.
4.4 Notwithstanding anything in this Agreement, at a minimum,
Customer agrees to purchase from Supplier, and Supplier agrees
to sell to Customer, the entire quantity of the Initial
Terminal Products Inventory during the 1st year of this
Agreement. Exhibit 4.4 sets forth the Initial Terminal
Products Inventory and the procedure for calculating a
schedule of delivery of and payment for the Initial Terminal
Products Inventory.
5. Pricing and Invoicing
5.1 Supplier and Customer agree to prices based upon the
ultimate selling price that the Customer charges to their
customers for each order, and as detailed in Exhibit 5.1.
All information pertaining to the calculation of the quoted
prices shall be held available for audit by the Supplier. Such
audits may take place no more than once each quarter. The
Supplier shall conduct such audits during normal business
hours and upon no less than 5 days notice to the Customer.
All parties participating in such audit will be bound by a
confidentiality agreement, the form of which shall be agreed
and executed prior to each audit.
5.2 Where the Supplier can demonstrate that additional costs
have been incurred: (i) due to extraordinary fluctuations in
component prices due to unforeseen world wide shortages of
components, (ii) due to minimum quantity purchase
requirements, or (iii) due to purchase of components inside
agreed lead times at the Customer's request; then the Supplier
may request a formal price review by the Customer.
Where such circumstances prevail, the Supplier shall, as soon
as practicable, advise the Customer in writing to that effect,
giving the amount of any such price amendment, ascertained and
determined at the same method of pricing as that contained in
the original and agreed quotation.
The Customer shall consider such request in good faith. In
the event that Customer and Supplier cannot reach a mutually
agreeable price amendment in a reasonable period of time, then
either party may request that the matter be resolved at the
senior executive level. In such event, the Chief Executive
Officer or Chief Operating Officer of the Customer and
Supplier shall negotiate in good faith to reach a mutually
agreeable price amendment.
6. Non-Warranty Repairs
6.1 Supplier shall provide all Customer non-warranty terminal
product repairs.
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6.2 Supplier shall invoice for non-warranty repair orders in
conformance with the price list and procedures as set forth on
Exhibit 6.2, which price list and procedures shall be reviewed
annually and may be revised by mutual written agreement of
Customer and Supplier. The parties shall handle the non-
warranty repairs as handled by the Customer and WPI
Electronics, Inc. prior to the date of this Agreement. The
Customer has the right at any time to direct the Supplier to
cease dealing with Customer's clients and Customer shall
assume responsibility for billing its clients. In such event,
the Supplier shall bill Customer directly in an amount equal
to eighty per cent (80%) of the prices set forth on Schedule
6.2.
7. Passing of Property and Risk to the Customer
7.1 The Goods shall be shipped by Supplier F.O.B. Supplier's
manufacturing facility which is presently in Warner, New
Hampshire.
7.2 The property and risk in Free Issue Material (as defined
below) shall remain with the Customer
8. Acceptance
8.1 The Customer may not reject any Goods which were included
in the Initial Terminal Products Inventory which have not been
altered by Supplier after the effective date of this
Agreement. In the case of Goods in excess of the Initial
Terminal Products Inventory shipped by the Supplier that do
not conform to this Agreement, whether by reason of failure to
meet the Customer's Specification, quality issues or by reason
of over quantities shipment, the Customer shall have the right
to reject such Goods within fourteen (14) days of their
delivery.
8.2 Payment shall not prejudice the Customer's right of
rejection.
9. Engineering Change Requests ("ECR")
9.1 The Supplier shall not alter any of the Goods except as
directed in writing by the Customer but the Customer shall
have the right, from time to time during the Term, by notice
in writing to direct the Supplier to add or to omit, or
otherwise vary, the Goods. The Supplier shall carry out such
variations and be bound by the same conditions, so far as is
applicable, as though the variations were stated in the
Agreement.
9.2 Where the Supplier receives any such direction from the
Customer which would occasion an amendment to the formula
price set forth in section 5, the Supplier shall, as soon as
practicable, and before implementing such ECR advise the
Customer in writing to that effect, giving the amount of any
such price change, ascertained and determined at the same
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method of pricing as that contained in the original and agreed
quotation. The Supplier shall submit such statement to the
Customer in the form attached as Attachment C. The parties
shall negotiate in good faith to reach agreement on the
amendment to the formula price. The parties shall also
negotiate in good faith with regard to the coverage of certain
costs incurred in connection with such ECR, including obsolete
inventory, retooling costs, rework costs and technical file
modifications. In the event that the parties cannot reach a
mutually agreeable amendment in a reasonable period of time,
then either party may request that the matter be resolved at
the senior executive level. In such event, the Chief
Executive Officer or Chief Operating Officer of the Customer
and Supplier shall negotiate in good faith to reach a mutually
agreeable amendment.
The Supplier shall not implement the ECR before an agreement
is reached by the Supplier and the Customer on the amended
price and the coverage of certain costs (if any) as mentioned
here above.
10. Free Issue Material, Tooling and Test Equipment
10.1 The Customer has provided the Supplier with the tooling
set forth on Exhibit 10.1. Where the Customer, for the
purposes of the Agreement, pays the Supplier the entire cost
of the provision of any other tooling or test equipment
necessary for the performance of the Agreement the property
and risk in tooling or test equipment shall pass to the
Customer when the manufacture of the tooling or supply of the
test equipment is complete and has been satisfactorily tested.
The Supplier shall maintain such tooling or test equipment in
good order and condition, subject to fair wear and tear, and
unless authorized in writing by the Customer, shall use such
tooling or test equipment solely in connection with the
Agreement. Upon termination of Supplier's obligations to
Customer pursuant to the Agreement, the Supplier shall make
available to Customer such tooling or test equipment to be
removed from Supplier's facility at the sole expense of the
Customer.
10.2 If test equipment provided by the Customer is utilized by
the Supplier solely in support of the Agreement, the Customer
agrees to pay the maintenance costs of the test equipment.
Where the Supplier is authorized to use the test equipment for
purposes other than the Agreement, these costs will be shared
between the Supplier and the Customer, in proportion to their
utilization.
10.3 Where the Customer, for the purposes of the manufacture
of Goods pursuant to the Agreement, issues materials free of
charge to the Supplier ("Free Issue Materials"), such
materials shall remain the property and risk of the Customer.
The Supplier shall maintain all such materials in good order
and condition. The Supplier shall use such material solely in
connection with the Agreement. Waste of such materials arising
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from bad workmanship or negligence of the Supplier shall be
made good at the Supplier's expense. Upon the termination of
Supplier's obligations pursuant to the Agreement, the Supplier
shall deliver such materials, whether further processed by the
Supplier or not, to the Customer on demand.
10.4 On receipt of such Free Issue Materials, the Supplier
shall carry out a reasonable visual examination to check that
the materials are free from defects or deficiency and accord
with the Agreement. The Supplier shall notify the Customer as
soon as is practicable, but in any case, within seven (7) days
where any such defects or deficiencies are discovered. In the
event that the Supplier notifies the Customer of any such
deficiencies, Supplier may return such defective or deficient
materials to Customer at Customer's sole expense.
10.5 The Supplier agrees to introduce and maintain such
systems and processes as may be necessary to accurately
control the stock holding, movement and analysis of such Free
Issue Materials. The Supplier agrees to provide to Customer,
within seven (7) days of demand, such information pertaining
to such material as may be reasonably requested by the
Customer.
10.6 For the purposes of the Agreements the Customer shall
provide the Supplier, for the Term of the Agreement the
tooling and test equipment shown in Exhibit 10.1 to the
Agreement. The tooling and test equipment listed shall remain
the property and risk of the Customer. Upon termination of
Supplier's obligations to Customer pursuant to the Agreement,
the Supplier shall make available to Customer such tooling and
test equipment to be removed from Supplier's facility at the
sole expense of the Customer.
11. Quality Systems
11.1 The Supplier shall demonstrate and maintain a suitable
Quality Assurance system. The Supplier agrees to disclose all
quality assurance information, in relation to the manufacture
of the Goods, at any time, as may be reasonably requested by
the Customer.
11.2 The Supplier agrees to maintain appropriate records
pertaining to the efficiency and reliability of the production
processes. These records will include , inventory accuracy
measures, production volumes achieved, and quantity of
rejections.
11.3 The Customer shall have right of access for inspection of
records or processes at any reasonable time and reserves the
right to inspect by appointment.
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12. Assignment and Sub-Contracting
12.1 Neither the Supplier nor Customer shall assign the
Agreement in whole or in part and shall not sub-contract any
part or process without the formal, written approval of the
other party to this Agreement, provided, however, that
Supplier may sub-contract any part or process consistent with
the manufacturing process historically employed by WPI
Electronics, Inc. in the manufacture of the Goods.
12.2 Notwithstanding the provisions of Section 12.1, in the
event of a Change of Control of Customer, the Customer shall
assign the Agreement in conjunction with the Change in Control
and shall cause any entity that succeeds to a majority of
assets of Customer as a result of a Change of Control of
Customer to assume this Agreement and is bound by its terms.
It is the express intent of the parties that this Agreement
may not be excluded from any event that gives rise to a change
in control. For the purposes of this Agreement, a "Change in
Control of Customer" shall mean the disposition of a majority
of the voting securities or assets of WPI Group, Inc., and/or
a sale of WPI Oyster Termiflex, Inc., either alone or in
conjunction with WPI Husky Computers, Limited and/or WPI Husky
Computers, Inc., by stock or asset purchase, merger or
otherwise.
13. Payment Terms
13.1 The Customer shall make payment to Supplier for all Goods
sold to it and services rendered to it by or on behalf of
Supplier within thirty (30) days from the date of invoice.
13.2 All payments shall be made in United States currency by
check or wire transfer to an account specified by Supplier.
14. Warranty
14.1 The Supplier warrants that the Goods will conform
substantially to the specifications provided by the Customer
and will be of satisfactory quality and free from defects in
quality and workmanship.
14.2 The Supplier's liability shall be restricted to defects
proved to its reasonable satisfaction to have arisen from
Supplier's manufacturing and testing process or workmanship or
defects in materials (which does not include Free Issue
Materials).
14.3 The Supplier shall promptly and at its own expense remedy
(by means of a refund or replacement or repair at the
reasonable option of the Supplier) all defects in the Goods
appearing within twelve (12) months of the date of delivery of
the Goods by the Supplier to the Customer.
14.4 The Customer may return (at its own risk and expense) the
defective Goods or defective components thereof to the
Supplier, who shall return to the Customer (at its own risk
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and expense) the repaired or replacement Goods, within fifteen
(15) working days of the receipt of the Goods by the Supplier,
subject to the availability of components.
14.5 THIS WARRANTY SPECIFICALLY EXCLUDES MERCHANTABILITY AND
FITNESS FOR A PARTICULAR PURPOSE. The Supplier will have no
obligation under the warranty if the defect is caused by
catastrophe or accident, the negligence of the Customer or any
third party, improper installation, use or maintenance of the
Products in a manner for which they were not designed, or
defects caused by any repair or modification made by any party
who is not an authorized Customer business partner, or is not
authorized by the Supplier, or if the defect is caused by Free
Issue Material, as that term is defined in section 10, which
defect was incapable of detection by normal, incoming
inspection procedures.
14.6 The warranty terms of all Goods delivered by Supplier to
Customer pursuant to this Agreement shall be governed by this
section and shall explicitly override the warranty terms of
the Supplier's standard purchase order.
14.7 Notwithstanding anything in this Agreement, any of the
Goods which are delivered to Customer which were included as
part of the Initial Terminal Products Inventory shall be
deemed to conform to the Customer's specifications and
quality, and conform to the warranties as set forth in this
Agreement, unless such Goods have been altered by Supplier
after the effective date of this Agreement.
15. Confidentiality
15.1 The Supplier shall keep confidential all information
obtained from the Customer in connection with the performance
of the Agreement and all information in relation to the
Customer's affairs, business or business practices, which
comes to the Supplier's knowledge during the period of the
Agreement.
15.2 The Supplier shall not be bound by the above provisions
of this condition in relation to information that is:
15.2.1 published or comes into the public domain otherwise
than by a breach of the Agreement;
15.2.2 lawfully known to the Supplier before the
commencement of the Agreement;
15.2.3 lawfully obtained from a third party which is free
to divulge that information; or
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15.2.4 responsive to a legitimate inquiry from a government
agency, or required to be disclosed by Supplier in
conjunction with litigation.
15.3 The provisions of this Condition shall survive the
expiration or termination of the Agreement.
16. Customer's Right of Termination
16.1 If the Supplier commits material or persistent breaches
of the Agreement, the Customer shall send written notice of
such breaches to the Supplier. The Supplier shall diligently
work within thirty (30) days to remedy such breaches to the
Customer's reasonable satisfaction. If the nature of the
breaches is such that they cannot be remedied within thirty
(30) days, the Supplier shall diligently pursue such remedy,
provided, however, that no such breaches shall exist for a
period of more than ninety (90) days from the date of
Customer's notice. If the Supplier is unable to remedy the
breaches within the times provided above, the Customer,
without prejudice to any other right it may have, shall have
the right to terminate the Agreement and any or all orders
forthwith, subject to its obligations under section 3.2 of
this Agreement, provided, however, that Customer's cover under
section 3.2 shall not include any mark-up from material cost.
16.2 Without prejudice to any other rights or remedies it may
have, the Customer shall have the right at any time to
terminate the Agreement and/or any or all orders forthwith,
if:
16.2.1 The Supplier becomes insolvent or ceases to carry on
its business as a going concern; or
16.2.2 A Bankruptcy petition or order is presented or made
against the Supplier or if a trustee is appointed in
respect of its assets and such petition or appointment
is not discharged or dismissed within sixty (60) days; or
16.2.3 A receiver or an administrative receiver is
appointed in respect of any or part of its assets and such
appointment is not discharged or dismissed within sixty
(60) days; or
16.2.4 A resolution or petition or order to wind up the
Supplier is passed or presented or made or a liquidator is
appointed (otherwise for reconstruction or amalgamation)
and such resolution or petition is not discharged or
dismissed within sixty (60) days.
16.3 Except as otherwise provided herein, termination of the
Agreement for whatsoever cause shall not release the Supplier
or the Customer from any of it's obligations under this
Agreement, which, either expressly or by implication are
intended to survive the termination of the Agreement,
including but not limited to confidentiality, warranty and
inventory cover obligations.
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17. Supplier's Right of Termination
17.1 Without prejudice to any other rights or remedies it may
have, the Supplier shall have the right at any time to
terminate the Agreement and seek Acceleration of Performance
(as defined below), if:
17.1.1 The Customer becomes insolvent or ceases to carry on
its business as a going concern; or
17.1.2 A Bankruptcy petition or order is presented or made
against the Customer or if a trustee is appointed in respect
of its assets and such petition or appointment is not
discharged or dismissed within sixty (60) days; or
17.1.3 A receiver or an administrative receiver is
appointed in respect of any or part of its assets and such
appointment is not discharged or dismissed within sixty (60)
days; or
17.1.4 A resolution or petition or order to wind up the
Customer is passed or presented or made or a liquidator is
appointed (otherwise for reconstruction or amalgamation) and
such resolution or petition is not discharged or dismissed
within sixty (60) days .
17.2 Except as otherwise provided herein, termination of the
Agreement for whatsoever cause shall not release the Supplier
or the Customer from any of it's obligations under this
Agreement, which, either expressly or by implication are
intended to survive the termination of the Agreement,
including but not limited to confidentiality, warranty and
inventory cover obligations.
17.3 In the event that Customer is more than fifteen (15) days
late in making payment on an Purchase Order made with Supplier
pursuant to this Agreement, the Supplier shall notify Customer
that payment must be made within fifteen (15) days of the date
of notice (the "Non-Payment Notice"). If Customer does not
remit payment within the fifteen (15) day notice period, the
Supplier may terminate the Agreement for non-payment and seek
Acceleration of Performance (as defined below).
18. Acceleration of Performance.
18.1 In the event that the Customer or Supplier terminates the
Agreement pursuant to sections 16 or 17 of this Agreement, the
Customer is deemed to request that Supplier accelerate the
invoicing of the remaining Initial Terminal Products Inventory
("Acceleration of Performance").
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18.2 Notwithstanding section 17.3, in the event of
Acceleration of Performance all sums owed to Supplier by
Customer for the remaining Initial Terminal Products Inventory
invoiced and all other amounts invoiced by Supplier to
Customer shall immediately become due and owing.
19. Intellectual Property
19.1 The Customer acknowledges that it is requiring the
Supplier to manufacture the Goods in compliance with the
Specifications. The Customer warrants: (i) that any Material
(including any part thereof), the Customer's Specifications,
the manufacture, the sale and the distribution, use or resale
by the Customer or its customers of Products, either
separately or as combined with or integrated into other
products do not infringe any patent, copyright or other
proprietary right of any person or entity, and (ii) that there
are no known claims or suits threatened or pending regarding
any such proprietary rights or which would adversely affect
the Agreement. The Customer agrees that this is a continuing
warranty and therefore agrees that if it is notified of any
such claim after the effective date of this Agreement, it
shall promptly inform the Supplier.
In the event of any claim of infringement hereunder, the
Customer shall defend any actions and shall indemnify and hold
harmless the Supplier from and against any and all claims,
costs, losses and damage arising from or caused thereby,
including reasonable attorney's fees. The Customer shall have
sole control over the litigation and/or settlement of any such
infringement claims.
20. Endemic Failure
20.1 Endemic design failure. If at least five percent (5%)
of the Goods manufactured in one (1) month, are confirmed to
have the same or substantially the same design defect as a
result of the Customer's design of the Goods, such defect
shall be deemed to be an endemic design failure ("Endemic
Design Failure"). It shall be the Customer's responsibility
to solve such Endemic Design Failure and to pay the Supplier's
costs directly associated with the Endemic Design Failure such
as, manufacturing stop, work in progress, finished Product in
inventory or in transit, cost of components in house or on
order, premium working and rework.
However, Supplier will provide Customer, at its request
technical support in order to correct the design failure at
Customer 's cost .
20.2 Endemic Failure due to material or workmanship defects.
Where more than ten percent (10%) of the Goods supplied by
Supplier, and which were not part of the Initial Terminal
Products Inventory, fail within any one year due to the same
failure in material or workmanship (an "Endemic Manufacturing
Failure"), the Supplier shall at its own cost and option:
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20.2.1 rectify all of the Goods that are identified as
suffering or likely to suffer from such an Endemic
Manufacturing Failure and to pay all direct costs actually
borne by the Customer due to the Endemic Manufacturing
Failure. The time period for such rework to be as agreed
between the parties hereto; or
20.2.2 replace all the Goods that are identified as
suffering or likely to suffer from such an Endemic
Manufacturing Failure and to pay all direct costs actually
borne by the Customer due to the Endemic Manufacturing
Failure. The time period for such replacement to be as agreed
between the parties hereto
20.3 The Customer shall be solely responsible for any costs
associated with any Endemic Design Failure or Endemic
Manufacturing Failure involving any Goods which are included
in the Initial Terminal Products Inventory and which have not
been altered by the Supplier after the effective date of this
Agreement.
20.4 The provisions of this section shall survive the
expiration or termination of the Agreement for a period of 12
months.
21. Liquidated and Ascertained Damages
21.1 Should the Supplier fail to deliver all or any of the
Goods by the delivery date specified in the Purchase Order, or
any extended delivery date agreed under the Purchase Order,
then the Customer shall, in addition to and without prejudice
to any other remedies available to it under the Contract, at
law and in equity have the right to require the Supplier to
pay 0% for the first week that the Goods are delayed, 2% of
the Contract price of the Goods, for the second week or part
thereof that the Goods are delayed, 3% of the Contract price
of the Goods, for the third week or part thereof that the
Goods are delayed, and 5% of the Contract price of the Goods,
for the fourth week or thereafter that the Goods are delayed,
. Damages shall be limited to the Contract price of those
items in default.
21.2 Should the Customer fail to pay for all or any of the
Goods within thirty (30) days of the date of the invoice, then
the Supplier shall, in addition to and without prejudice to
any other remedies available to it under the Agreement, at law
and in equity have the right to require the Customer to pay
1.5% of the invoice amount for each month or part thereof that
payment is delayed.
21.3 Supplier shall not manufacture or sell products which are
directly competitive with the Goods during the Term.
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22. Miscellaneous
22.1 This Agreement shall be governed and construed in
accordance with the laws of the State of New Hampshire,
without consideration to conflicts of laws principles.
22.2 Any notice required under this Agreement shall be
sufficient if communicated in writing and if sent by
telecopier with a confirmation of receipt with the original
notice sent by first class mail, duly addressed, postage
prepaid to the respective addresses as stated in this
Agreement or as subsequently changed. For the purposes of
section 3.1 only, notices sent by e-mail messages shall be
deemed to be effective when received. Any party whose address
changes during the term of this Agreement shall notify the
other party in writing as to the new address.
22.3 This Agreement together with the attached Exhibits and
Asset Purchase Agreement contain all of the agreements,
understandings, representations, conditions, warranties, and
covenants made between the parties with respect to the subject
matter hereof.
22.4 The failure of either party at any time to require
performance by the other party of any provision shall not
affect in any way the full right to require such performance
at any time, nor shall the waiver by either party of a breach
of any provision be taken or held to be a waiver of the
provision itself.
22.5 A party shall not be deemed to have defaulted or failed
to perform hereunder if that party's inability to perform or
default shall have been caused by an event or events beyond
the control and without the fault of that party, including
(without limitation) acts of government, embargoes, fire,
flood, explosions, acts of God or a public enemy, strikes,
labor disputes, vandalism, civil riots or commotions.
22.6 No modification, amendment, extension, renewal or waiver
of any of the provisions contained herein, or any future
representation, promise or condition in connection with the
subject matter hereof, shall be binding upon either party
unless in writing and signed by an officer on behalf of both
parties.
22.7 If, in a final judgment of a court of competent
jurisdiction, any provision of this Agreement is held to be
invalid, said provision shall be considered void to the extent
of such invalidity, without invalidating any of the remaining
provisions of this Agreement.
<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed
and delivered by each of the parties on the date first above
written.
SUPPLIER:
Warner Power, LLC
By:/s/Dennis Deegan
---------------------
Name:Dennis Deegan
Title:
CUSTOMER:
WPI Group, Inc.
By:/s/Michael Tule
----------------
Name:Michael Tule
Title:Vice President and
General Counsel
WPI Oyster Termiflex, Inc.
By:/s/Michael Tule
------------------------
Name:Michael Tule
Title:Vice President and
General Counsel
EXHIBIT D
SERVICES AGREEMENT
THIS SERVICES AGREEMENT ("Agreement") is made as of December 22,
1999 by and between WPI Group, Inc. ("WPI") and Warner Power, LLC
and Warner Power Conversion, LLC (collectively "Warner").
BACKGROUND
As of the date hereof, Warner is acquiring substantially all
of the assets of WPI Power Systems, Inc. and WPI Electronics,
Inc. and certain assets of WPI. Until such time as Warner can
provide the services set forth in this Agreement for itself,
Warner will receive such services from WPI. In addition, as set
forth in this Agreement Warner will require the services of
certain WPI employees and WPI will require the services of
certain Warner employees after the date hereof.
TERMS
In consideration of the terms and conditions of this Agreement
and intending to be legally bound, WPI and Warner agree as
follows:
1. Provision of Services. Upon the terms and subject to the
conditions set forth in this Agreement, with respect to each of
those services set forth in an Appendix hereto, each of which
Appendices is made a part of this Agreement, WPI will provide to
Warner the services indicated in such Appendix (hereinafter
referred to as the "Services").
2. Service Charges and Other Terms. The prices and pricing
methodology and other terms of the Services shall be those set
forth in the Appendices hereto.
3. Cooperation. Each party shall observe the normal security
and other operational procedures in place at the other party's
offices.
4. Provision of Corporate Records. In connection with the
Services, subject to applicable law and privileges, upon the
prior and reasonable request by a party for specific and
identified agreements, documents, books, records or files,
relating to or affecting such party, the other party shall
arrange, as soon as reasonably practicable following the receipt
of such request, for the provision of appropriate copies of such
records (or the originals thereof if the party making the request
has a compelling need for such originals) in the possession of
such other party, but only to the extent such items are not
already in the possession of the requesting party.
5. Access to Information. In connection with the Services,
subject to applicable law and privileges, each of WPI and Warner
shall afford to the other and its authorized accountants, counsel
and other designated representatives reasonable access, upon
reasonable prior notice during normal business hours, subject to
appropriate restrictions for classified, privileged or
confidential information, to the personnel, properties, books and
records of such party insofar as such access is reasonably
required by the other party.
<PAGE>
6. Reimbursement; Other Matters. A party providing records or
access to information to the other shall be entitled to receive
from the recipient, upon the presentation of invoices therefor,
payments for such amounts, relating to supplies, disbursements
and other out-of-pocket expenses, as may be reasonably incurred
in providing such records or access to information.
7. Indemnification. Each of the Parties hereto (each an
"Indemnifying Party") shall indemnify, defend, save and hold
harmless the other party hereto, its direct and indirect
subsidiaries, and each party's and its subsidiaries' officers,
directors, employees and agents (collectively, the "Indemnified
Parties") from and against any and all damages incurred or
sustained by the Indemnified Parties to the extent they arise out
of any (i) breach by the Indemnifying Party of any of its
covenants, agreements or obligations contained in this Agreement
or (ii) the Indemnifying Party's gross negligence, willful
misconduct or reckless disregard of its duties hereunder.
For purposes of this section, "damages" shall mean all
actions, costs, damages, disbursements, obligations,
penalties, liabilities, taxes, losses, charges, expenses,
assessments, judgments, settlements or deficiencies of any
nature whatsoever, whether foreseeable or unforeseeable
(including, without limitation, any interest, penalties,
reasonable investigation, legal, accounting and other costs
and expenses incurred in the investigation, collection,
prosecution and defense of any action, suit, proceeding or
claim and amounts paid in settlement) that may be imposed or
otherwise incurred or suffered by an Indemnified Party;
provided, however, that damages shall exclude, and WPI shall
not have liability to, the Indemnified Parties under this
Agreement for consequential, special, exemplary or punitive
damages.
8. Confidentiality. Each party and its affiliates shall not
use or permit the use of (without the prior written consent of
the party to which any confidential information relates) and
shall keep, and shall cause its consultants and advisors and
third party service providers to keep, confidential all
information concerning the other party received pursuant to or in
connection with this Agreement.
9. Disaster Backup. WPI shall provide, where applicable,
backup or disaster recovery capability for the Services provided
hereunder, or for any data, files or the documents or material
furnished by Warner to WPI hereunder.
10. Year 2000 Readiness. To the best of WPI's knowledge and
belief, the reasonably foreseeable consequences of the Year 2000
problem will not adversely effect WPI's ability to perform its
duties and obligations under this Agreement.
11. Term; Termination. Unless otherwise agreed in writing by
the parties, the term of this Agreement shall commence on the
date first set forth above and continue with respect to each
Service set forth on an Appendix hereto until such time as Warner
determines that it no longer needs to obtain such Services from
WPI, provided, that in no event will Warner continue to receive
any Services from WPI after May 31, 2000, unless WPI expressly
agrees to continue to provide such Services upon Warner's written
request.
<PAGE>
12. Upon Termination. Upon termination of this Agreement with
respect to any Services and subject to applicable law (including,
but not limited to, recordkeeping requirements of Warner and its
subsidiaries), each party, at the request of the other party,
shall promptly either return to the other party all applicable
confidential information of the other party then in its
possession or certify in writing that all such confidential
information has been destroyed. As to all other records, files,
documents or other material belonging to one party which are in
the possession of the other party at termination, the party
holding such material shall return it to the other party at its
request; provided the party requesting such return shall
reimburse the returning party the reasonable out-of-pocket
expenses, if any, incurred in implementing such return. In the
alternative, the parties may agree upon the disposition of such
material. Notwithstanding the foregoing, copies of confidential
information and other materials may be retained for legal,
accounting and other legitimate business purposes.
13. Notices. Any notices permitted or required by this
Agreement shall, unless otherwise agreed, be in writing and shall
be deemed effective when received. Effective notices may be
given and delivered by mail, by courier service or by facsimile
transmission. Notices shall be addressed as follows:
if to Warner:
Warner Power, LLC
40 Depot Street
Warner, NH 03278
Attention: Dennis M. Deegan
Telephone: (603) 456-3111
Facsimile: (603) 456-2098
if to WPI:
WPI Group, Inc.
1155 Elm Street
Manchester, NH 03101
Attn: Michael B. Tule, Esquire
Telephone: 603-627-3500
Facsimile: 603-627-3150
or to such other address as either party may by notice
hereunder advise the other as its new address for receipt of
notices.
14. Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed an original but
all of which together shall constitute one and the same
instrument.
15. No Waiver. No term or provision hereof shall be deemed
waived and no breach excused, unless such waiver or consent shall
be in writing and signed by the party claimed to have waived or
consented. Any consent by either party to, or waiver of, a
breach by the other, whether express or implied, shall not
constitute a consent to, waiver of, or excuse of any other
different or subsequent breach.
<PAGE>
16. Captions. The captions in this Agreement are provided for
convenience of reference only and in no way define or delimit any
of the provisions hereof or otherwise affect their construction
or effect.
17. Governing Law. This Agreement shall be deemed to be a
contract made in New Hampshire and governed by New Hampshire law,
without regard to principles of conflicts of laws.
18. Partial Invalidity. If any provision of this Agreement
shall be held or made invalid by a court decision, statute, rule
or otherwise, the remainder of this Agreement shall not be
affected thereby; provided, however, that if such provision
constitutes the essence of this Agreement then this Agreement
shall be deemed terminated without such termination constituting
a breach hereof.
19. Parties in Interest. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their
successors and assigns. This Agreement is not for the benefit of
any other person or entity, and there shall be no third party
beneficiaries hereof. Nothing contained in this Agreement shall
modify the rights or obligations of the parties under any other
agreement to which they are parties.
<PAGE>
IN WITNESS WHEREOF, the parties have executed
this Agreement by their duly authorized officers with the
intent of being legally bound hereby.
Warner Power, LLC
By:/s/Dennis Deegan
-----------------------
Name:Dennis Deegan
Title:
Warner Power Conversion, LLC
By: Warner Power, LLC
Its Sole Member
By:/s/Dennis Deegan
-----------------------
Name:Dennis Deegan
Title:
WPI Group, Inc.
By:/s/Michael Tule
---------------------
Name:Michael Tule
Title:Vice President and General Counsel
<PAGE>
APPENDIX TO SERVICES AGREEMENT
Computer Services
Type of Service
Until such time as Warner removes the Hewlett-Packard 917 main
frame computer from the Manchester, New Hampshire offices of WPI,
WPI agrees to provide Warner computer services from the WPI-owned
Hewlett Packard 967 main frame computer to maintain Warner's
general ledger, and related accounting and operational databases.
Warner agrees that it shall use its best efforts and shall employ
such resources as are necessary to effect a transition to its own
computer system within sixty (60) days from the date hereof.
Warner agrees to make Alan Grill available on a mutually
agreeable basis to assist WPI with computer resource projects,
including programming for WPI's Growth Power software application
and related databases. WPI agrees to make Gregory Reinert
available on a mutually agreeable basis to assist Warner with
computer resource projects, including network administration and
installation of the Warner Hewlett Packard 917 (947) main frame
computer. Warner also agrees to make Rod Perron available on a
mutually agreeable basis to assist WPI with corporate accounting
and tax matters.
Service Coordinator
John Powers shall be the service coordinator for WPI. Dennis
Deegan shall be the service coordinator for Warner.
Cost
WPI and Warner shall each bear the expenses of their respective
employees for the term of this Agreement. In the event that the
Warner Hewlett Packard 917 has not been removed from the WPI
offices in Manchester, New Hampshire within 60 days from the date
of this Agreement, Warner agrees to pay to WPI a fee of $5,000
per month in arrears for each month or pro-rated part thereof,
but in no circumstance shall WPI provide these services past May
31, 2000.
<PAGE>
Service Expectation or Objective Standard of Performance
Warner and WPI shall provide service to each other on
substantially the same basis provided for each of their own use.
Warner and WPI agree to provide access to their respective
facilities upon mutually agreeable and reasonable prior notice.
<PAGE>
