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
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.
- 17 -
(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.
- 18 -
(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
- 19 -
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 transactio
