**Note: unless otherwise stated, all dollar amounts listed in Exhibits
10.24, 10.25 and 10.26 are in British Pounds.**
EXHIBIT 10.24
SALE AND PURCHASE AGREEMENT
THIS AGREEMENT is made on 22 February, 2000.
BETWEEN:
(1) WPI Group (UK), a private unlimited liability company
incorporated in England and Wales (the "Vendor");
(2) WPI Group Inc., a publicly listed company on the NASDAQ
stock exchange incorporated in New Hampshire (the
"Guarantor"); and
(3) Dynatech Nominees Limited (Company number 3925088), a
limited liability company incorporated in England and Wales
(the "Purchaser").
RECITALS
A. WPI Husky Technology Inc., a Florida corporation (the "US
Vendor") owns certain assets and businesses located within
the US.
B. The Vendor owns all of the issued share capital (the "WPI
Husky Shares") of WPI Husky Technology Ltd. ("WPI Husky"), a
limited liability company incorporated in England and Wales.
C. WPI Oyster Termiflex Ltd., a limited liability company
incorporated in England and Wales (the "UK Vendor"), owns
certain assets and businesses located in the UK.
D. The Vendor owns all of the issued share capital (the "WPI
GmbH Shares") of WPI Husky Technology GmbH, a limited
liability company incorporated in Germany and registered at
the Commercial Register of the Siegburg Local Court under
file number HRB 3396, formerly Cologne Local Court, HRB
20139.
E. The Vendor wishes to sell, and the Purchaser wishes to
purchase, the Shares (as hereinafter defined) on and subject
to the terms of this Agreement.
F. The US Vendor wishes to sell, and Itronix Corporation, a
Delaware corporation (the "US Purchaser") wishes to
purchase, certain assets and businesses on and subject to
the terms of the Asset Purchase Agreement.
G. The UK Vendor wishes to sell, and Dynatech Corporation
Limited (the "UK Purchaser") wishes to purchase, certain
assets and businesses on and subject to the terms of the UK
Asset Purchase Agreement.
NOW THEREFORE, THE PARTIES AGREE as follows:
10 Sale and Purchase of Shares
1 Subject to the terms and conditions hereof, the Vendor
agrees to sell, with full title guarantee, and the Purchaser
agrees to buy, the Shares and each right attaching to the Shares
at or after the date of this Agreement, free from any
Encumbrances, and the US Vendor will sell, and the US Purchaser
will buy, the US Assets pursuant to the Asset Purchase Agreement
and the UK Vendor will sell, and the UK Purchaser will buy, the
UK Assets pursuant to the UK Asset Purchase Agreement, for a
purchase price of US$34,612,800 payable in US dollars as set
forth in Clause 2.2 (the "Purchase Price") and subject to an
adjustment as provided in Clause 3.
2 10 The Purchase Price (including the Escrow Amount)
shall be apportioned between the Shares, the US Assets and the UK
Assets in accordance with the allocation set forth on Schedule 7.
The Purchase Price adjustment determined pursuant to Clauses
3.3(a) and 3.3(b) shall be apportioned between the Shares, the US
Assets and the UK Assets in accordance with an allocation
schedule to be prepared by the Purchaser, and provided to the
Vendor, as soon as practicable after the Completion Date or, if
later, after the resolution of any dispute with respect to the
purchase price adjustment. The allocation of the purchase price
adjustment shall be prepared in a manner that is reasonably
consistent with Schedule 7.
20 The portion of the Purchase Price that is apportioned to
(i) the US Assets pursuant to Clause 1.2(a) (after giving effect
to the Purchase Price adjustment), the Assumed Liabilities, (as
such term is defined in the Asset Purchase Agreement), and all
other relevant items shall be allocated among the US Assets and
(ii) the UK Assets pursuant to Clause 1.2(a) (after giving effect
to the Purchase Price Adjustment), the UK Assumed Liabilities and
all other relevant items shall be allocated among the UK Assets,
in each case in accordance with an allocation schedule to be
prepared by the US Purchaser and the UK Purchaser, and provided
to the US Vendor and UK Vendor, as soon as practicable after the
Completion Date or, if later, after the resolution of any dispute
with
2
respect to the purchase price adjustment. Such allocation
schedule shall be prepared by the US Purchaser in a manner that
is reasonably consistent with the requirements of applicable law
including, in the case of allocation discussed in Clause (i),
Section 1060 of the Code.
30 The Purchaser, the US Purchaser and the UK Purchaser
shall consult with the Vendor, the US Vendor and the UK Vendor in
preparing the final allocation schedules pursuant to Clauses
1.2(a) and 1.2(b), provided that absent manifest error, the
Purchaser's, the US Purchaser's and the UK Purchaser's final
determinations of such allocation schedules shall be binding on
the parties. The US Purchaser and the US Vendor shall each report
the purchase and sale contemplated hereby for all purposes
(including the filing of IRS Form 8594) in a manner consistent
with such final allocation schedules. Neither the Purchaser, the
US Purchaser, the UK Purchaser, the Vendor, the US Vendor nor the
UK Vendor shall contend or represent that any allocation set
forth in such final allocation schedules is not a correct
allocation, in any financial statement or tax return, or any
audit or other proceeding with respect to Taxes without the
express written consent of the others.
20 Completion
1 Subject to the prior satisfaction of the conditions set
out in Clause 2.4 below, Completion shall take place at the
offices of the Purchaser's Solicitors on February 22, 2000 or at
such other Business Day and time as the parties shall have agreed
to in writing (subject always to the due satisfaction, or if
applicable, waiver of all the conditions specified (or deemed to
be specified) in Clause 2.4). The date on which Completion shall
occur is hereinafter referred to as the "Completion Date".
2 At Completion the Vendor and the Purchaser shall do all
those things respectively required of them in Schedule 3 and the
Purchaser shall pay, for its own account, and for the account of
the US Purchaser and the UK Purchaser, the Purchase Price less
the Escrow Amount to the Vendor, the US Vendor and the UK Vendor,
as provided in Schedule 7 by transfer of funds for same day
value, US$31,643,824 to be paid to the following account: Fleet
Bank NH ABA Number 011-400-495 Account Number 1510352-03133,
Agency Services Wire Clearing Account, Attention: Heather
Cunningham, Reference: WPI Group Inc, US$218,496.09 to be paid to
the ANG Noteholders, to the account of Sheehan Phinney Bass &
Green Trust Account, Citizens Bank, 875 Elm Street, Manchester,
NH 03101, Account 330004-911-5, ABA:0115-0012-
3
0, US$180,000 to be paid to the Vendor's solicitors to the
account of Royal Bank of Scotland PLC, St. Anne Street,
Manchester, Account No: 11943297, Sort Code: 16-00-2, Cobbetts
Client Account and US$839,839.91 to be paid to the account of WPI
Group Inc. to the account of Fleet Bank NH ABA Number 011-400-
495, Account 9358942298.
3 Payment of the Purchase Price in accordance with Clause
2.2 shall be a good discharge to the Purchaser, the US Purchaser
and the UK Purchaser.
4 The Purchaser is not obliged to complete this Agreement
unless the following conditions are satisfied:
10 the purchase of all the Shares is completed
simultaneously;
20 the Asset Purchase Agreement is entered into between
the US Vendor and the US Purchaser prior to or on Completion;
30 the UK Asset Purchase Agreement is entered into between
the UK Vendor and the UK Purchaser prior to or on Completion;
40 completion by the Purchaser to its satisfaction of
financial, tax, legal, technical, operational and human resources
due diligence without adverse findings, provided that if the
Purchaser has not advised the Vendor in writing on or before
February 22, 2000 that the results of such due diligence exercise
are not to its satisfaction and that this condition has therefore
not been satisfied, the condition in this Clause 2.4(c) shall be
deemed to have been satisfied;
50 delivery by Fleet Bank of a duly executed release
relating to the Credit Facility provided to WPI Group Inc.
(including a release of any charges on the Shares of any Group
Company to permit the sale of Shares), in form and substance
satisfactory to the Purchaser in its sole discretion;
60 delivery of a duly executed consent and release from
each of the ANG Noteholders in form and substance satisfactory to
the Purchaser;
70 delivery of a duly executed US legal opinion from the
US Vendor's and Guarantor's US legal counsel in form and
substance satisfactory to the Purchaser;
4
80 delivery of a duly executed UK legal opinion from the
Vendor's solicitors in form and substance satisfactory to the
Purchaser;
90 written confirmation from the Vendor that all inter-
company indebtedness shall be discharged by the Vendor at or
prior to Completion in accordance with Clause 3.6.
100 delivery of a duly executed consent, waiver or
discharge, as the case may be, and evidence of any payments
thereof, each in form and substance satisfactory to the Purchaser
in respect of any other loan capital, borrowing or indebtedness
and like obligations of any Group Company or any other party
(including without limitation the guarantees and obligations to
be discharged at the Completion Date in the Disclosure Letter);
110 delivery by the Vendor to the Purchaser of the
Disclosure Letter, in form and substance satisfactory to the
Purchaser by no later than February 22, 2000;
120 delivery by the Vendor of all those items specified in
Clause 1.1 of Schedule 3;
130 receipt of all required regulatory approvals, in form
and substance satisfactory to the Purchaser;
140 receipt of any required consents in relation to any
Intellectual Property Rights which are not legally and
beneficially owned by the Vendor or any Group Company on
Completion;
150 compliance by the Vendor with all of its obligations
under this Agreement;
160 delivery of duly executed resolutions of the Vendor and
the Guarantor approving the sale and purchase of the Shares in a
form and substance satisfactory to the Purchaser;
170 delivery by the Vendor of a Deed of Change of Principal
Employer duly and validly executed in relation to The Plan,
whereby WPI Husky is substituted as Principal Employer of The
Plan; and
5
180 delivery by the Vendor of a Deed of Change of Principal
Employer duly and validly executed in relation to The Husky Plan,
whereby WPI Husky ceases to be the Principal Employer of The
Husky Plan.
5 If Completion does not take place on the Completion
Date because the Vendor fails to comply with any of its
obligations under this Clause 2, the Purchaser may by notice to
the Vendor:
10 proceed to Completion to the extent reasonably
practicable including without limitation by purchasing some, but
not all of the Shares (but if the Purchaser exercises its right
pursuant to this Clause 2.5, completion of the purchase of some
of the Shares does not affect the Purchaser's rights in
connection with the others);
20 postpone Completion to a date to be no later than 29
February.
30 terminate this Agreement.
6 If the Purchaser postpones Completion to another date
in accordance with Clause 2.6(b), the provisions of this
Agreement shall apply as if that other date is the date for
Completion.
7 The Warranties and all other provisions of this
Agreement, the Asset Purchase Agreement and the Tax Deed insofar
as the same shall not have been performed at Completion shall not
be extinguished or affected by Completion, or by any other event
or matter whatsoever (including, without limitation, any
satisfaction and/or waiver of any condition contained in
Clause 2.4, except by a specific and duly authorised written
waiver or release by the Purchaser).
8 If the Purchaser terminates this Agreement pursuant to
Clause 2.5(c), each party's further rights and obligations cease
immediately on termination, but termination does not affect a
party's accrued rights and obligations at the date of
termination.
9 If prior to Completion the Purchaser receives a
notification from the Vendor pursuant to Clause 4.6 that any of
the Warranties has, when given, or will be or would be, at
Completion (as if they had been given again at Completion) not
complied with or otherwise untrue or misleading the Purchaser
shall be entitled (in addition to and without prejudice to all
other rights or remedies available to it and its successors in
title
6
including the right to claim damages) by notice in writing to the
Vendor to terminate the Agreement. If, notwithstanding such
notification pursuant to Clause 4.6, the Purchaser elects to
complete this Agreement, the occurrence of such an event, the
subject of the notification, shall not give rise to any right to
damages or compensation for breach of Warranty. If any event
shall occur (other than an event constituting or giving rise to a
breach of any of the Warranties) which affects or is likely to
affect adversely to a material degree the financial position or
turnover or profitability of any of the Group Companies as a
whole or any of the Group Companies, not being an event affecting
or likely to affect generally all companies carrying on similar
businesses in the United Kingdom, the Purchaser shall be entitled
by notice in writing to the Vendor to terminate this Agreement
but the occurrence of such an event shall not give rise to any
right to damages or compensation.
10 The Vendor agrees with the Purchaser (for itself and as
trustee for each Group Company and their respective officers,
employees and agents) to assign to the Purchaser any rights,
remedies or claims which it may have in respect of any
misrepresentation, inaccuracy or omission in or from any
information or advice supplied or given by any Group Company or
its respective officers, employees or agents in connection with
assisting the Vendor in the making of any representation and the
giving of the Warranties or the preparation of the Disclosure
Letter and the Tax Deed.
30 Completion Accounts
1 The Completion Accounts. The Purchaser shall procure
that as soon as practicable following Completion there shall be
drawn up (a) a consolidated balance sheet of the Group Companies,
provided that (i) the US Assets and the UK Assets, the Assumed
Liabilities and the UK Assumed Liabilities shall be reflected on
such consolidated balance sheet and (ii) no items in respect of
corporation tax shall be reflected on such consolidated balance
sheet as at Completion, and (b) a calculation of the amount of
the corporation tax currently payable by the Group Companies as
at Completion (the "Current Tax Adjustment") (collectively the
"Completion Accounts") and that the same are reviewed by the
Purchaser's accountants. Any overpayment or prepayment by WPI
Husky of life assurance premiums shall be shown as an asset of
the Group Companies for the purpose of the Completion Accounts.
Except as provided above in Clauses (i) and (ii), the Completion
Accounts shall be drawn up in accordance with accountancy
principles generally accepted in the United Kingdom and (so far
as not inconsistent therewith) in
7
accordance with the principles, methods and bases used in
preparing the Accounts and so as to comply with the Companies Act
1985.
2 Preparation. 1. The Completion Accounts shall be
delivered to the Vendor by the Purchaser as soon as is
practicable following Completion and, in any event, not later
than 60 days after Completion. Prior to such delivery, the
Purchaser shall so far as is practicable consult with the Vendor
with a view to reducing the potential areas of future
disagreement.
20 In order to enable the Purchaser to prepare and the
Purchaser's accountants to review the Completion Accounts, the
Vendor shall keep up-to-date and make available to the Purchaser
and to the Purchaser's accountants its books and records relating
to the businesses of the Group Companies during normal office
hours and cooperate with them with regard to the preparation and
review of the Completion Accounts. The Vendor agrees, in so far
as it is reasonable to do so, to make available the services of
its employees to assist the Purchaser in the performance of its
duties under this Agreement.
30 If the Vendor does not within 30 days of presentation
to it of the Completion Accounts give notice to the Purchaser
that it disagrees with the Completion Accounts or any item
thereof, such written notice stating the reasons for the
disagreement in reasonable detail (the "Vendor's Disagreement
Notice"), the Completion Accounts shall be final and binding on
the parties for all purposes. If the Vendor gives a valid
Vendor's Disagreement Notice within such 30 days, the parties
shall attempt in good faith to reach agreement in respect thereof
and, if they are unable to do so within 21 days of such
notification or any other period as agreed between the parties,
either party may by notice to the other require that the
Completion Accounts be referred to the Reporting Accountants (as
defined in Clause 3.2(e) below) (an "Appointment Notice").
40 Within 21 days of the giving of an Appointment Notice,
the Purchaser may by notice to the Vendor indicate that, in the
light of the fact that the Vendor has not accepted the Completion
Accounts in their entirety, the Purchaser wishes the Reporting
Accountants to consider matters relating to the Completion
Accounts in addition to those specified in the Vendor's
Disagreement Notice, such notice stating in reasonable detail the
reasons why and in what respects the Purchaser believes that the
Completion Accounts should be altered (the "Purchaser's
Disagreement Notice").
8
50 Deloitte & Touche or such other firm of accountants the
parties may agree (the "Reporting Accountants") shall be engaged
jointly by the parties on the terms set out in this Clause 3.2(e)
and otherwise on such terms as shall be agreed provided that
neither party shall unreasonably (having regard, inter alia, to
the provisions of this Clause 3.2) refuse its agreement to terms
proposed by the Reporting Accountants or by the other party. If
the terms of engagement of the Reporting Accountants have not
been settled within 45 days of their identity having been
determined (or such longer period as the parties may agree) then,
unless one party is unreasonably refusing its agreement to those
terms, those accountants shall be deemed never to have become the
Reporting Accountants and new Reporting Accountants shall be
selected in accordance with the provisions of this Agreement.
60 Except to the extent that the parties agree otherwise,
the Reporting Accountants shall determine their own procedure
but:
10 apart from procedural matters and as otherwise set
out in this Agreement shall determine only:
(A) whether any of the arguments for an alteration
to the Completion Accounts put forward in the Vendor's
Disagreement Notice or the Purchaser's Disagreement
Notice is correct in whole or in part; and
(B) if so, what alterations should be made to the
Completion Accounts in order to correct the relevant
inaccuracy in it;
10 shall apply the principles set out in Schedule 8;
20 shall make their determination pursuant to paragraph
(i) above as soon as is reasonably practicable;
30 the procedure of the Reporting Accountants shall:
(A) give the parties a reasonable opportunity to
make written and oral representations to them;
(B) require that each party supply the other with a
copy of any written representations at the same time as
they are made to the Reporting Accountants;
9
(C) permit each party to be present while oral
submissions are being made by the other party; and
(D) for the avoidance of doubt, the Reporting
Accountants shall not be entitled to determine the scope
of their own jurisdiction.
70 The determination of the Reporting Accountants pursuant
to Clause 3.2(f) shall (i) be made in writing and made available
for collection by the parties at the offices of the Reporting
Accountants at such time as they shall determine and (ii) unless
otherwise agreed by the parties include reasons for each relevant
determination.
80 The Reporting Accountants shall act as experts and not
as arbitrators and their determination of any matter falling
within their jurisdiction shall be final and binding on the
parties save in the event of manifest error (when the relevant
part of their determination shall be void and the matter shall be
remitted to the Reporting Accountants for correction). In
particular, without limitation:
10 their determination shall be deemed to be
incorporated into the Completion Accounts, which shall then
be final and binding on the parties save as aforesaid;
20 their determination of any fact which they have
found it necessary to determine for their determination
pursuant to Clause 3.2(f)(i) shall be final and binding on
the parties for all purposes including any Warranty claim
or alleged or prospective Warranty claim or any claim or
alleged or prospective claim for indemnification.
90 The expenses of the Reporting Accountant shall be borne
as they shall direct at the time they make any determination
under Clause 3.2(f)(i) or, failing such direction, equally
between the Vendor, on the one hand, and the Purchaser, on the
other.
100 The parties shall co-operate with the Reporting
Accountants and comply with their reasonable requests made in
connection with the carrying out of their duties under this
Agreement. In particular, without limitation, the Vendor shall
keep up-to-date and, subject to reasonable notice, make available
to the Purchaser's representatives, the Purchaser's accountants
and the Reporting Accountants its books and records relating to
10
the businesses of the Group Companies during normal office hours
during the period from the appointment of the Reporting
Accountants down to the making of the relevant determination.
110 Subject to Clause 3.2(l), nothing in this Clause 3.2
shall entitle a party or the Reporting Accountants access to any
information or document which is protected by legal professional
privilege, or which has been prepared by the other party or its
accountants or other professional advisers with a view to
assessing the merits of any claim or argument.
120 A party shall not be entitled by reason of Clause
3.2(k) to refuse to supply such part or parts of documents or
summaries thereof as contain only the facts on which the relevant
claim or argument is based.
130 Each party and the Reporting Accountants shall, and
shall procure that its accountants and other advisers shall, keep
all information and documents provided to them pursuant to this
Clause 3.2 confidential and shall not use the same for any
purpose, except for disclosure or use in connection with the
preparation of the Completion Accounts, the proceedings of the
Reporting Accountants or another matter arising out of this
Agreement or in defending any claim or argument or alleged claim
or argument relating to this Agreement or its subject matter.
3 Adjustment of Consideration
10 10 If the net assets as shown in the consolidated
balance sheet constituting part of the Completion Accounts are
less than US$9,592,200, then, within 14 days of either the
Completion Accounts becoming final and binding under Clause
3.2(c) or the determination of the Reporting Accountants being
made available for collection by the parties pursuant to Clause
3.2(g), the Vendor shall pay to the Purchaser an amount equal to
such difference together with interest thereon calculated from
the Completion Date in accordance with Clause 14. If the net
assets as shown in the consolidated balance sheet constituting
part of the Completion Accounts exceed US$9,592,200, then, within
14 days of either the Completion Accounts becoming final and
binding under Clause 3.2(c) or the determination of the Reporting
Accountants being made available for collection by the parties
pursuant to Clause 3.2(g), the Purchaser shall pay to the Vendor
an amount equal to such difference together with interest thereon
calculated from the Completion Date in accordance with Clause 14.
11
20 If the Current Tax Adjustment as shown in the
Completion Accounts is more than US$1,300,000, then within 14
days of either the Completion Accounts becoming final and binding
under Clause 3.2(c) or the determination of the Reporting
Accountants being made available for collection by the parties
pursuant to Clause 3.2(g), the Vendor shall pay to the Purchaser
an amount equal to such difference together with interest thereon
calculated from the Completion Date in accordance with Clause 14.
If the Current Tax Adjustment as shown in the Completion Accounts
is less than US$1,300,000, then within 14 days of either the
Completion Accounts becoming final and binding under Clause
3.2(c) or the determination of the Reporting Accountants being
made available for collection by the parties pursuant to Clause
3.2(g), the Purchaser shall pay to the Vendor an amount equal to
such difference together with the interest thereon calculated
from the Completion Date in accordance with Clause 14.
30 The Vendor and the Purchaser acknowledge and agree
that, to the extent possible, the Purchaser shall obtain payment
of any sums owing to it, as a result of the adjustment of the
Purchase Price pursuant to Clause 3.3(a), from the Escrow Account
for same day value. For the avoidance of doubt, in the event that
the said payment cannot be satisfied in full from the monies in
the Escrow Account, the Purchaser shall be entitled to any
shortfall from the Vendor in immediately available funds.
20 10 Schedule 6 shall apply with respect to the
Coventry Property.
20 If by the End Date (as defined in Schedule 6) the
Vendor has not complied with paragraph 6 of Schedule 6 therein,
the Vendor shall forthwith pay the Purchaser US$1,000,000 in
immediately available funds. The Vendor and the Purchaser
acknowledge and agree that to the extent possible the Purchaser
shall obtain payment of the said US$1,000,000 from the Escrow
Account for same day value. For the avoidance of doubt, in the
event that the said payment cannot be satisfied in full from the
monies in the Escrow Account, the Purchaser shall be entitled to
any shortfall from the Vendor in immediately available funds.
Upon payment in accordance with the foregoing, the Vendor shall
have no further responsibility in respect of the Coventry Lease
and the Coventry Property (but without prejudice to the
warranties contained in this Agreement).
30 Notwithstanding the provisions of Clauses
3.3(b)(i) and 3.3(b)(ii), the Purchaser and WPI Husky shall
cooperate with the Vendor in any negotiations with the landlord
regarding the surrender of the Coventry Lease and the grant of a
new lease to WPI Husky as provided in paragraphs 4.6 and 4.7 of
Schedule 6 hereto.
12
30 10 If, as a result of the Group Companies setting off
their trading losses for the financial year ended 26 September
1999 against their profits for the financial year ended 27
September 1998, the Inland Revenue agrees to a reduction in the
corporation tax liability of the Group Companies (or to a refund
of corporation tax already paid by the Group Companies) in
respect of the year ended 27 September 1998, to the extent that
such reduction in liability (or refund) has not already been
taken into account in the calculation of the Current Tax
Adjustment, the Purchaser shall pay an amount equal to such
reduction in liability (or refund) to the Vendor within 30 days
of receiving the same PROVIDED THAT no such payment shall be made
before the Inland Revenue has agreed the tax computations of the
Vendor and WPI Husky for the financial year ended 26 September
1999.
20 In order that the Group Companies may have
sufficient trading losses for the financial year ended 26
September 1999 to set off against their profits for the financial
year ended 27 September 1998, the Vendor hereby agrees to
surrender for no cost its tax losses, and to procure the
surrender for no cost by WPI Oyster Termiflex Limited of its tax
losses, for the two financial years ended 26 September 1999 to
such of the Group Companies as the Purchaser may direct and to
cooperate fully with the Purchaser, on behalf of the Group
Companies, as regards the filing of the necessary documentation
with the Inland Revenue to effect such surrender.
40 It is acknowledged by the parties that WPI Husky has
made payments on account to the Inland Revenue in respect of its
anticipated tax liabilities for the financial year ending 26
September 1999 totalling (in pounds)250,000. It is anticipated that the
Accounts for certain of the Group Companies will show a trading
loss in respect of such year. The Purchaser agrees to use
reasonable endeavours to obtain the refund of such pre-payments
from the Inland Revenue and shall pay an amount equal to any such
repayment to the Vendor within 30 days of receiving the same
PROVIDED THAT no such payment shall be made before the Inland
Revenue has agreed the tax computations of the Vendor and WPI
Husky for the financial year ended 26 September 1999.
4 Currency All amounts used or calculated in this Clause
3 shall be determined in UK pounds sterling and then converted
into US dollars using the prevailing London spot rate of exchange
as reported in the Financial Times the day following February 21,
2000. All payments to be made under this Clause 3 shall be made
in U.S. dollars.
13
5 Escrow Arrangements On Completion, 5% of the Purchase
Price shall be deposited by the Purchaser for itself and on
behalf of the US Purchaser and the UK Purchaser with the Escrow
Agent, to be held, invested and distributed subject to the terms
of the Escrow Agreement. The Purchaser, the US Purchaser and the
UK Purchaser may use money in the Escrow Account to settle claims
by the Purchaser and/or the US Purchaser and/or the UK Purchaser
under or pursuant to Clause 6 of this Agreement, under or
pursuant to the Asset Purchase Agreement or under or pursuant to
the UK Asset Purchase Agreement or under the Tax Deed. The
Purchaser shall also be entitled to use money in the Escrow
Account to settle any amount due to the Purchaser from the Vendor
pursuant to Clause 3.3 of this Agreement.
6 Inter- Company Debt The Vendor agrees, at or prior to
Completion, to discharge or procure the discharge of all inter-
company indebtedness in relation to each Group Company at or
prior to Completion.
40 Warranties
1 The Vendor and Guarantor (collectively the
"Warrantors") warrant jointly and severally to the Purchaser that
each Warranty is true, accurate and not misleading at the date of
this Agreement and at Completion in accordance with Clause 4.6.
2 The Warrantors acknowledge that the Purchaser is
entering into this Agreement in reliance on each Warranty and the
undertakings of the Vendor contained in Clause 9 which have also
been given as a representation and with the intention of inducing
the Purchaser to enter into this Agreement.
3 The Purchaser may rely on the Warranties in warranting
to any subsequent purchaser of all or any of the Shares or of all
or any part of the undertaking of any Group Company.
4 The Warranties are qualified by the facts and
circumstances fairly disclosed in the Disclosure Letter. No
other knowledge regarding any Group Company (actual, constructive
or imputed) prevents or limits a claim made by the Purchaser for
breach of Clause 4.1. The Vendor shall not seek to rely on the
Purchaser's knowledge (actual, constructive or imputed) of a fact
or circumstance which might make a Warranty untrue, inaccurate or
misleading as a defence to a claim for breach of Clause 4.1.
Where a warranty is qualified by the words "so far as the Vendor
is aware", "To the best of the knowledge, information and belief
of the Vendor", it shall be deemed to be given after the
14
Vendor has made reasonable enquiry only of the senior management
of the Group Companies and for the purposes of this Clause
"senior management" shall mean Messrs. M. Tule, J. Powers, J.
Allard, K. Webb, C. Fellows, T. Blyth, R. Beyer, Ms. S.
Patterson, P. Westmoreland, C. Quivaux and M. Krodel.
5. Each Warranty is to be construed independently and
(except where this Agreement provides otherwise) is not limited
by a provision of this Agreement or another Warranty.
6. The Vendor further warrants to the Purchaser and its
successors in title that subject to Clause 4.1, each Warranty
will be true and accurate in all respects and not misleading in
any respect at Completion as if each Warranty had been given
again at Completion. If after the signing of this Agreement and
before Completion any event shall occur or matter arises which
results or may result in any Warranty being unfulfilled, untrue,
misleading or incorrect in any respect at Completion, the Vendor
shall immediately notify the Purchaser in writing thereof prior
to Completion and the Vendor (at its own cost) shall make
investigation concerning the event or matter which the Purchaser
may require.
5. Action Pending Completion
1. The Vendor shall procure that, pending Completion:
1. each Group Company will carry on business only in the
ordinary course consistent with past practice, save insofar as
agreed in writing by the Purchaser (such agreement not to be
unreasonably withheld or delayed);
2. the Purchaser and its agents will, upon reasonable
notice with the prior written agreement of the Vendor (acting by
the Chief Executive Officer, Chief Financial Officer or General
Counsel of the Guarantor), (such agreement not to be unreasonably
withheld or delayed), be allowed access to, and to take copies
of, the books and records of each Group Company including,
without limitation, the statutory books, minute books, leases,
licenses, contracts, details of receivables, Intellectual
Property, tax records, supplier lists and customer lists in the
possession or control of any Group Company;
3. such representatives and advisers as the Purchaser
reasonably requests with the prior written agreement of the
Vendor (acting by the Chief Executive Officer, Chief Financial
Officer or General Counsel of the Guarantor), (such agreement not
to be
15
unreasonably withheld or delayed), may be designated to work with
the Vendor with regard to the management and operations of any of
the Group Companies. The Vendor will consult, and will cause the
Group Companies to consult, with such representatives and
advisers with respect to any action which may materially affect
the business of any Group Company taken as a whole. The Vendor
will furnish and will cause the Group to provide to such
representatives and advisers such information as they may
reasonably request for this purpose;
4. each Group Company shall take all reasonable steps to
preserve its assets and, in particular, will maintain in force
all insurance policies currently in place and all other such
insurances normally kept in force; and
5. each Group Company shall take all reasonable steps to
preserve the validity of its Intellectual Property.
2. Without prejudice to the generality of Clause 5.1, the
Vendor shall collaborate fully with the Purchaser in relation to
all material matters concerning the running of the Group between
the date of this Agreement and Completion and during that period
shall procure that each Group Company shall not without the prior
written consent of the Purchaser:
1. incur or enter into any agreement or commitment
involving any capital expenditure in excess of 20,000 per item
and 100,000 in aggregate;
2. enter into or amend any contract or commitment which is
not capable of being terminated without compensation at any time
with three months' notice or less or which is not in the ordinary
course of business or which involves or may involve total annual
expenditure in excess of 25,000;
3. in relation to any Property:
1. apply for any planning permission or
implement any planning permission already obtained but not
implemented;
2. carry out any material structural alteration
or addition to, or materially effect any change of use of, such
Property;
16
3. terminate or serve any notice to terminate,
surrender or accept any surrender of or waive the terms of any
lease, tenancy or license which is material in the context of the
relevant Group Company;
4. agree any new rent or fee payable under any
lease, tenancy or license which is material in the context of the
relevant Group Company;
5. enter into or vary any agreement, lease,
tenancy, license or other commitment which is material in the
context of the relevant Group Company;
6. sell, convey, transfer, assign or charge any
Property or grant any rights or easements over any Property or
enter into any covenants affecting any Property or agree to do
any of the foregoing;
4. incur any additional borrowing or incur any other
indebtedness (including without limitation any overdrafts);
5. save as required by law, make any amendment to the
terms and conditions of employment (including, without
limitation, remuneration, pension entitlements and other
benefits) of any employee (other than minor increases which the
Vendor shall notify to the Purchaser as soon as reasonably
possible), provide or agree to provide any gratuitous payment or
benefit to any such person or any of their dependants, or dismiss
any employee or engage or appoint any additional employee;
6. discontinue or amend The Plan to any material extent or
commence to wind it up or cause it to cease to admit new members
or communicate to any employee any material plan, proposal or
intention to amend, wind up, terminate or exercise any discretion
in relation to The Plan;
7. pay any benefits under The Plan other than in
accordance with the terms of the documents governing such scheme
and not under any discretionary power;
8. in relation to The Husky Plan, take any action to
reverse the winding-up of The Husky Plan or to do or omit to do
anything which would alter to any extent the liability (if any)
of any Group Company in respect of The Husky Plan;
17
9. acquire or agree to dispose of or agree to dispose of
any material asset or material stocks or enter into or amend any
material contract or arrangement, in each case, involving
consideration, expenditure or liabilities in excess of 25,000;
10. take steps to procure payment by any debtor generally
in advance of the date on which book and other debts are usually
payable in accordance with the standard terms of business of any
Group Company or (if different) the period extended to any
particular debtor in which to make payment;
11. delay making payment to any trade creditors generally
beyond the date on which payment of the relevant trade debt
should be paid in accordance with credit periods authorised by
the relevant creditors (or (if different) the period extended by
creditors in which to make payment) or extend or amend any of the
terms in respect of any trade creditors outside the ordinary
course;
12. amend, to any material extent, any of the terms on
which goods, facilities or services are supplied, such supplies
being material in the context of the relevant Group Company
except where required to do so in order to comply with any
applicable legal or regulatory requirement;
13. enter into any guarantee, indemnity or other agreement
to secure any obligation of a third party or create any
Encumbrance over any of its assets or undertaking;
14. amend any insurance contract, fail to notify any
insurance claim in accordance with the provisions of the relevant
policy or settle any such claim below the amount claimed;
15. allot, issue, redeem or repurchase any share or loan
capital (or option to subscribe for the same) of any Group
Company;
16. acquire or agree to acquire any share, shares or other
interest in any company, partnership or other venture;
17. declare, make or pay any dividend or other distribution
to shareholders; or
18. make any change to its accounting practices or policies
or amend its memorandum or articles of association.
18
6. Purchaser's Rights
1. If Completion takes place and there is a Warranty
Claim, the Vendor shall pay the Purchaser on demand (at the
Purchaser's option) an amount equal to either:
1. the reduction in the value of the Shares; or
2. if:
1. the value of an asset of each Group Company
is or becomes less than the value would have been had the breach
not occurred; or
2. either Group Company is subject to or incurs
a liability or an increase in a liability which it would not have
been subject to or would not have incurred had the breach not
occurred,
the reduction in the value of the asset or, as the case may be,
the amount of the liability or increased liability.
2. The Vendor shall indemnify the Purchaser on demand
against each loss, liability and cost which the Purchaser incurs
arising (directly or indirectly) out of:
1. the settlement of a claim against the Vendor in respect
of a breach or alleged breach of any provision of this Agreement
or the enforcement of a settlement;
2. legal proceedings against the Vendor in respect of a
breach or alleged breach of any provision of this Agreement in
which judgment is given for the Purchaser or the enforcement of
the judgment;
3. any Excluded Liabilities;
4. any UK Excluded Liabilities;
and whether such loss, liability or cost is incurred before or
after the commencement of an action.
19
7. Limitations on the Vendor's Liability
1. The Vendor is not liable in respect of a Warranty Claim
unless the amount which would otherwise be recoverable from the
Vendor (but for this Clause 7.1) in respect of that Warranty
Claim exceeds 50,000.
2. The Vendor is not liable for a Warranty Claim:
1. in respect of the Warranty contained in paragraph 6 of
Schedule 4 or for any claim under the Tax Deed unless the
Purchaser has notified the Vendor of the Warranty Claim or claim
under the Tax Deed stating in reasonable detail the nature of the
Warranty Claim or claim under the Tax Deed and, if practicable,
the amount claimed not later than three months after the expiry
of the period specified by statute during which an assessment of
that liability to Tax may be issued by the relevant Tax Authority
or, if there is no such period, on or before seven years from the
date of Completion but any failure to give such notice shall not
affect the rights of the Purchaser except to the extent the
Vendor is prejudiced by such failure;
2. in respect of any other Warranty unless the Purchaser
has notified the Vendor of the Warranty Claim stating in
reasonable detail the nature of the Warranty Claim and, if
practicable, the amount claimed on or before 24 months from the
date of Completion but any failure to give such notice shall not
affect the rights of the Purchaser except to the extent the
Vendor is prejudiced by such failure;
3. if and to the extent that such Warranty Claim would
occur as a result of any legislation not in force at the date
hereof which takes effect retrospectively or occurs as a result
of any increase in the rates of Tax in force at the date hereof;
4. if and to the extent that such Warranty Claim would not
have arisen but for:-
1. any act, omission, transaction or arrangement
after Completion by the Purchaser or any Group Company otherwise
than in the ordinary course of business of any Group Company as
presently carried on occurring at the written request or with the
written approval of the Purchaser;
2. the effect of the provisions of Sections 393,
393A, 343 and/or 768 ICTA in any Group Company and/or the
Purchaser.
20
5. if and to the extent that:
1. any Group Company actually recovers a sum in
respect of the subject matter of such Warranty Claim under the
terms of any insurance policy held by any Group Company or from
any other third party in force at the date hereof;
2. the Warranty Claim relates to a claim for Tax
and the Vendor has surrendered or procured the surrender of
amounts which have offset such Warranty Claim;
3. the Warranty Claim would not have arisen or
would have been reduced or eliminated but for the failure or
omission on the part of the Purchaser to make any claim,
election, surrender or disclaimer or give any notice or consent
to do any other thing under the provisions of any enactment or
regulation relating to Tax after Completion;
4. the Warranty Claim would not have arisen but
for any winding up or cessation after Completion of, or any
change or diminution after Completion in, any trade or business
(or part thereof) carried on by any Group Company;
5. the Warranty Claim would not have arisen but
for any change in the accounting policy practice of any Group
Company introduced after Completion at the written request or
with the written approval of the Purchaser whether with
retrospective effect or not unless such change in the accounting
policy practice of any Group Company was required to comply with
applicable law, regulations, or regulatory requirements or
practice in force on or before Completion;
6. if and to the extent that any sum is received
by any Group Company which has previously been written off as
unrecoverable in the accounts of that Group Company;
7. to the extent that the matter giving rise to
the Warranty Claim was done or omitted to be done prior to
Completion by the Vendor or any Group Company at the request of
the Purchaser or its authorised representatives or any of them;
8. to the extent that the aggregate amount of the
liability of the Vendor for all Warranty Claims and all claims
under the Tax Deed would thereby exceed 50% of the Purchase
Price;
21
9. to the extent that the claim has been made
good or otherwise compensated for at no expense to the Group
Company or the Purchaser.
3. If the Purchaser becomes aware of any matter that may
give rise to a claim against the Vendor under this Agreement
notice of the fact shall be given as soon as possible to the
Vendor.
4. Without prejudice to the validity of the claim or
alleged claim in question, the Purchaser shall allow, and shall
procure that the relevant Group Companies allow the Vendor and
its accountants and professional advisers to investigate the
matter or circumstance alleged to give rise to such claim and
whether and to what extent any amount is payable in respect of
such claim and for such purpose the Purchaser shall give, and
shall procure that the relevant Group Company give, subject to
their being paid all reasonable costs and expenses as shall be
agreed with the Vendor in advance, all such information and
assistance, including access to premises and personnel, documents
and records as the Vendor or its accountants or professional
advisers may reasonably request.
5. If the claim in question is a result of or in
connection with a claim or liability to a third party then no
admission of liability shall be made by the Vendor and the claim
shall not be compromised, disposed or settled without the prior
written consent of the Purchaser.
6. The Purchaser shall be entitled at its own expense in
its absolute discretion to take such action as it deems necessary
to avoid, dispute, deny, defend, resist, appeal, compromise or
contest such claim or liability (including, without limitation,
making counter-claims or other claims against third parties), in
the name of and on behalf of the Vendor or the Group Company
concerned and to have the conduct of any related proceedings,
negotiations or appeals provided that in taking such action the
Purchaser will act in such a way to minimise as far as reasonably
practicable any damage or harm to the name of the Vendor or,
inter alia, damage or harm to the business, trading or financial
prospects of the Vendor. The provision of Clauses 7.3, 7.4, 7.5
and 7.6 shall not apply to any claim for breach of a warranty
contained in paragraph 6 of Schedule 4 and the provisions of
Clause 5 of the Tax Deed shall apply to such claims.
7. Clauses 7.1 to 7.3 do not apply in respect of a
Warranty Claim involving or relating to breach of Clause 4.1 in
respect of a Warranty contained in paragraph 3 of Schedule 4.
22
8. Nothing in this Clause 7 shall have the effect of
limiting or restricting any liability of the Vendor in respect of
a Warranty Claim arising as a result of any fraud, willful
misconduct or willful concealment by the Vendor or any officer or
employee or any of the directors of the Group Companies.
9. Any amount paid in respect of any Warranty Claim or
under the Tax Deed shall be treated as a reduction in the
consideration paid for the Shares.
10. If the Purchaser is entitled in its sole discretion
(but subject to Clause 5 of the Tax Deed) to make both a Warranty
Claim and a claim under the Tax Deed, the Warranty Claim shall be
made first.
11. All Warranties, representations, indemnifications,
covenants, agreements and obligations given or entered into by
more than one person in this Agreement are given or entered into
jointly and severally.
12. The limitations on liability of the Vendor set out in
Clause 3 of the Tax Deed shall apply to limit the liability of
the Vendor in respect of Warranty Claims under the Warranties
contained in paragraph 6 of Schedule 4 of this Agreement as if
set out herein mutatis mutandis.
7. Use of Intellectual Property Rights
The Vendor shall not with, through or as manager, adviser,
consultant or agent for a person directly or indirectly use or
authorise, encourage or assist any person to use in connection
with a business which competes, directly or indirectly, with a
business of any Group Company as operated at the date of this
Agreement, any of the Intellectual Property Rights or use in that
connection anything which is intended, or is likely to be
confused, with any of the Intellectual Property Rights.
8. Vendor's Undertakings and Guarantee
1. The Vendor undertakes to the Purchaser and its
successors in title, for itself and as agent and trustee for the
Group Companies, that it will not and will procure that any
subsidiary undertaking, fellow subsidiary undertaking or holding
company or director of the Vendor will not and will procure that
no person, firm or company carrying on with the consent of the
Vendor any business in succession to the Vendor will do any of
the following things:
23
1. for a period of 3 years starting on the date of this
Agreement through or as adviser to, or agent of, or manager for,
or any person directly or indirectly carry on or be engaged,
concerned or interested in or assist a business which competes,
directly or indirectly, with a business of any Group Company as
carried on at the date of this Agreement (whether carried on
under the name "WPI Group (UK)" or "WPI Husky Technology" or any
name likely to be confused therewith or otherwise) or at any time
in the twelve months prior to that date in a territory in which
that business is or was carried on at any such date or time
provided that this Clause 9.1(a) shall not apply to the MPSI
business and US Termiflex hand-held business currently carried on
by and on behalf of the Guarantor;
2. for a period of 3 years starting on the date of this
Agreement, do or say anything which is harmful to any Group
Company's goodwill (as subsisting at the date of this Agreement)
or which may lead a person who has dealt with any Group Company
at any time during the twelve months prior to the date of this
Agreement to cease to deal with any Group Company on
substantially equivalent terms to those previously offered or at
all;
3. for a period of 3 years starting on the date of this
Agreement, other than in the ordinary course of business of any
Group Company, on its own account or in conjunction with or on
behalf of any other person in respect of the products or services
of a business of any Group Company either seek to obtain orders
from, or do business with, or encourage directly or indirectly
another person to obtain orders from, or do business with, a
person who has been a customer of that business at any time
during the twelve months prior to the date of this Agreement for
the products or services of that business in its territory of
operation;
4. for a period of 3 years starting on the date of this
Agreement, engage, employ, solicit or contact with a view to
engagement or employment by another person, a director, officer,
employee or manager of any Group Company or a person who was a
director, employee or manager of any Group Company at any time
during the twelve months prior to the date of this Agreement, in
either case where the person in question either has Confidential
Information or know-how and would be in a position to exploit
either Company's trade connections or those of any Group Company;
or
5. for a period of 3 years starting on the date of this
Agreement, seek to contract with or engage (in such a way as to
affect adversely a business of any Group Company as carried on
at the date of this Agreement) a person who has been contracted
with or
24
engaged to manufacture, assemble, supply or deliver goods or
services to that business at any time during the twelve months
prior to the date of this Agreement.
2. Each undertaking in Clause 9.1 constitutes an entirely
independent undertaking and if one or more of the undertakings is
held to be against the public interest or unlawful or in any way
an unreasonable restraint of trade:
1. the remaining undertaking(s) shall continue to bind the
Vendor with such deletion or modification as may be necessary to
make it valid and enforceable; and
2. if such undertaking(s) would not be held to be so if
any period of time expressed therein were expressed as a shorter
period of time then such undertaking(s) shall be deemed given for
such shorter period of time.
3. On receiving the Purchaser's reasonable request the
Vendor shall (at its own cost):
1. do and execute, or arrange to be done and executed,
each act, document and thing necessary to implement this
Agreement; and
2. give to the Purchaser all information it possesses or
to which it has access relating to the business of any Group
Company and allow the Purchaser to copy any document containing
that information.
4. The Vendor agrees that the restrictions contained in
this Clause 9 are no greater than reasonable and necessary for
the protection of the interest of the Purchaser.
5. As soon as possible prior to Completion, the Vendor
shall procure that the name of WPI Husky and WPI Husky GmbH shall
be changed to names not incorporating "WPI" or "Termiflex" or any
words resembling the same.
6. Without prejudice to Clause 9.5, from the Completion
Date, the Purchaser shall not and shall procure that each Group
Company and any other company connected with the Purchaser shall
not, save as permitted in Clause 9.7 or as contemplated by Clause
9.5 adopt, use or carry on business under any name incorporating
the word "WPI" or any words resembling the same.
25
7. The Purchaser shall after Completion take all steps
necessary to remove, and shall procure that each of the Group
Companies and any other company connected with the Purchaser
removes, the name "WPI" from all business materials used in the
United Kingdom, France or Germany including without limitation,
advertising materials and all company vehicles, properties and
marketing products in the United Kingdom, France and Germany
within 3 months after Completion. Prior to the expiry of the 3
month period all advertising materials shall be overstamped with
the new names of the relevant companies.
8. The Vendor, the US Vendor, the UK Vendor and the
Guarantor agree, that immediately upon receipt by the Vendor, the
US Vendor, the UK Vendor of the Purchase Price pursuant to Clause
2.2, net of the Vendor's, the US Vendor's and the UK Vendor's
costs arising out of such transactions (the "Proceeds"), the
Vendor, the US Vendor and the UK Vendor shall, and the Guarantor
shall procure that the Vendor, the US Vendor and the UK Vendor
pay the Proceeds to each of the creditors of the Vendor, the US
Vendor and the UK Vendor.
9. In consideration of the Purchaser entering into this
Agreement the Guarantor, at the request of the Vendor, the US
Vendor and the UK Vendor, hereby unconditionally guarantees to
the Purchaser, the US Purchaser and the UK Purchaser and their
respective successors, transferees and assigns the due and
punctual performance and observance by the Vendor, the US Vendor
and the UK Vendor of all the Vendor's, the US Vendor's and the UK
Vendor's obligations and the punctual discharge by the Vendor,
the US Vendor and the UK Vendor of all the Vendor's, the US
Vendor's and the UK Vendor's liabilities to the Purchaser, the US
Purchaser and the UK Purchaser contained in or arising under this
Agreement or under the Asset Purchase Agreement or under the UK
Asset Purchase Agreement or the Tax Deed or arising from any
termination thereof.
10. If the Vendor, the US Vendor or the UK Vendor shall
make default in the payment when due of any amount payable to the
Purchaser, the US Purchaser or the UK Purchaser under this
Agreement or the Asset Purchase Agreement or the UK Asset
Purchase Agreement or arising from the termination thereof, the
Guarantor shall forthwith on demand by the Purchaser and/or the
US Purchaser and/or the UK Purchaser unconditionally pay to the
Purchaser and/or the US Purchaser and/or the UK Purchaser in the
manner prescribed in this Agreement an amount equal to the amount
payable by the Vendor, the US Vendor or the UK Vendor, as the
case may be.
26
11. As an independent and primary obligation, without
prejudice to Clause 9.9 the Guarantor hereby unconditionally and
irrevocably agrees to indemnify and keep indemnified the
Purchaser, the US Purchaser and the UK Purchaser against all and
any losses, costs, claims, liabilities, damages, demands and
expenses suffered or incurred by the Purchaser, the US Purchaser
and the UK Purchaser arising from failure of the Vendor, the US
Vendor and the UK Vendor to comply with any of its obligations or
discharge any of its liabilities under this Agreement or the
Asset Purchase Agreement or the UK Asset Purchase Agreement or
the Tax Deed or arising from the termination thereof or by reason
of the Vendor, the US Vendor or the UK Vendor not being at any
time, or ceasing to be, liable in respect of the obligations and
liabilities purported to be assumed by it in accordance with the
express terms of this Agreement or the Asset Purchase Agreement
or the UK Asset Purchase Agreement or the Tax Deed.
12. The guarantee and indemnity contained in this Clause
shall be a continuing guarantee and indemnity and shall continue
in full force and effect until all liabilities or purported
liabilities of the Vendor, the US Vendor or the UK Vendor arising
under, and all monies owing or payable or purported to be owing
or payable by the Vendor, the US Vendor or the UK Vendor under
this Agreement or the Asset Purchase Agreement or the UK Asset
Purchase Agreement or the Tax Deed or arising from any
termination thereof, have been paid, discharged or satisfied in
full and notwithstanding any insolvency of the Vendor, the US
Vendor or the UK Vendor or any change in the status of the
Vendor, the US Vendor or the UK Vendor.
13. The Guarantor shall not be exonerated or discharged nor
shall its liability be affected by any forbearance, whether as to
payment, time, performance or otherwise howsoever, or by any
other indulgence being given to the Vendor, the US Vendor or the
UK Vendor or by any variation of the terms of this Agreement or
by any act, thing, omission or means whatever which, but for this
provision, might operate to exonerate or discharge the Guarantor
from its obligations under the guarantee and indemnity contained
in Clauses 9.9 to 9.13.
14. The Vendor undertakes to indemnify and keep indemnified
the Purchaser from and against any liability, loss, damage, cost,
claim or reasonable expense of whatever kind which it may incur
arising out of or in connection with The Husky Plan up to the
Completion Date.
15. The Vendor undertakes to indemnify and keep indemnified
the Purchaser for itself and on behalf of any Group Company from
and against any liability, cost, claim or reasonable expense of
whatever kind which it may incur arising out of or in connection
27
with any claims (and for the avoidance of doubt, in connection
with and any payment made to the trustees for the time being of
The Plan under clause 48.3 of the definitive trust deed and rules
of The Plan dated September 15 1998 in respect of any such claim
being made against the trustees ) from any current or former
employees of the Group Companies relating to benefits on
termination of service with a Group Company in respect of The
Plan (or represented to have been available under The Plan) to
the extent that such claims are made by individuals who on
termination had completed less than two years' pensionable
service and are for refunds of contributions (and for the
avoidance of doubt employer's contributions) in excess of the
amounts of their own contributions (plus interest less tax where
applicable) in their personal accounts in The Plan.
16. The Vendor undertakes to indemnify and keep indemnified
the Purchaser from and against any liability, loss, damage, cost,
claim or reasonable expense of whatever kind which it may incur
arising out of or in connection with Mr. David Pink's
participation in The Plan up to the Completion Date.
17. The Vendor undertakes to indemnify and keep indemnified
the Purchaser from and against any liability, loss, damage, cost,
claim or expense of whatever kind which it may incur or may be
suffered by the Purchaser arising from the performance by WPI
Husky of the terms and conditions of the Purchase Contract of the
Owner Obligations (as defined therein) whether for itself or for
and on behalf of WPI Oyster Termiflex Ltd or arising from any non-
performance or alleged non-performance of the terms and
conditions of the Purchase Contract of such Owner Obligations.
9. Confidential Information
1. The Vendor undertakes to the Purchaser, for itself and
as agent and trustee for each Group Company, that before and
after Completion the Vendor shall not, except as required by
Clause 5, use or disclose, or permit the use or disclosure of,
any Confidential Information.
2. Clause 10.1 does not apply to disclosure of
Confidential Information:
1. to a director, officer or employee of the Purchaser or
any Group Company whose function requires him to have the
Confidential Information;
2. required to be disclosed by law, provided that the
disclosure shall be made after consultation with the Purchaser
and after taking into account the Purchaser's reasonable
requirements as to its timing, content and manner of making or
despatch; or
28
3. to an adviser for the purpose of advising the Vendor in
connection with the transactions contemplated by this Agreement
provided that such disclosure is essential for these purposes and
is on the basis that Clause 10.1 applies to the disclosure by the
adviser.
10. Announcements
Neither party may, before or after Completion, make or send
or issue a public announcement, communication or circular
concerning the transactions referred to in this Agreement unless
they have first obtained the other party's prior written consent.
This shall not affect any announcement or circular required by
law or any regulatory body or the rules of any recognised stock
exchange but the party with an obligation to make an
announcement, communication or circular shall first consult with
the other party on the form, substance and timing of such
disclosure insofar as is reasonably practicable before complying
with such obligations.
11. Competition
Notwithstanding any other provision of this Agreement, if
there are provisions of this Agreement (or of an agreement or
arrangement of which it forms part) by virtue of which
particulars of this Agreement (or of an agreement or arrangement
of which it forms part) that are, at the date of this Agreement,
required to be furnished to the Director General of Fair Trading
under the Restrictive Practices Acts 1976 and 1977:
1. the Purchaser shall ensure that particulars are duly
furnished as soon as possible and in any event within the time
specified by these Acts; and
2. those provisions do not take effect until the day after
the particulars have been duly furnished.
This Clause shall not apply if this Agreement is, or by virtue of
the Competition Act 1998, is to be treated as, a non-notifiable
agreement for the purposes of the Restrictive Trade Practices
Acts 1976 and 1977. For the purposes of this Clause 12, the term
"Agreement" shall include every other agreement which forms part
of the same arrangement.
29
12. Costs
The Vendor shall bear all costs incurred by it and the
Group in connection with the preparation, negotiation, execution
and performance by it of this Agreement, the Tax Deed and the
sale of Shares. The Purchaser shall bear all such costs incurred
by it.
13. Interest
If the Vendor, the US Vendor, the UK Vendor or the
Purchaser, the US Purchaser or the UK Purchaser default in the
payment when due or any sum payable under this Agreement, the
Asset Purchase Agreement, the UK Asset Purchase Agreement or the
Tax Deed (howsoever determined) the liability of the relevant
Vendor or the relevant Purchaser as the case may be shall be
increased to include interest on such sum from the date when such
payment is due until the date of actual payment (as well as after
or before judgment) at a rate of 3 per cent above the base rate
from time to time of Barclays Bank PLC. Such interest shall
accrue from day to day.
14. General
1. A variation of this Agreement is valid only if it is in
writing and signed by or on behalf of each party.
2. The failure to exercise or delay in exercising a right
or remedy provided with this Agreement or by law does not
constitute a waiver of the right or remedy or a waiver of other
rights or remedies. No single or partial exercise of a right or
remedy provided by this Agreement or by law prevents further
exercise of the right or remedy or the exercise of another right
or remedy.
3. The Purchaser's rights and remedies contained in this
Agreement are cumulative and not exclusive of rights and remedies
provided by law.
4. Except to the extent that they have been performed and
except where this Agreement provides otherwise, the obligations
contained in this Agreement remain in force after Completion.
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15. Assignment
The Purchaser and the UK Purchaser may assign and transfer
any of its rights under the Agreement, the UK Asset Purchase
Agreement or Tax Deed in whole or in part and without
restriction.
16. Time of the Essence
Time shall be of the essence of this Agreement both as
regards any dates and periods mentioned and as regards any dates
and periods which may be substituted for them in accordance with
this Agreement or by agreement in writing between the parties.
17. Further Assurance
At any time after the date of this Agreement, the Vendor
shall use its best endeavors to procure that any necessary third
party shall execute such documents and do such acts and things as
the Purchaser may reasonably require for the purpose of giving to
the Purchaser the full benefit of all the provisions of this
Agreement, the Asset Purchase Agreement, or the Asset Purchase
Agreement or Tax Deed.
18. Interpretation
1. In this Agreement:
"Accounts" means each Group Company's individual accounts
(as that term is used in section 226 of the CA 1985) and cashflow
statement for the financial year ended on the Reference Accounts
Date, the auditors' report on those accounts, the directors'
report for that year and the notes to those accounts;
"ANG Noteholders" means the holders of the promissory
notes, each dated as of August 3, 1998, executed by the Guarantor
in favour of the following persons or entities in the following
original principal amounts: (a) $275,000 to The Allard Children's
Trust f/b/o Lisa Dibrigida; (b) $275,000 to The Allard Children's
Trust f/b/o Kim Allard; (c) $275,000 to The Allard Children's
Trust f/b/o Michael E. Allard; (d) $275,000 to Gerald R. Allard,
trustee of The Gerald R. Allard Revocable Trust; (e) $458,150 to
David and Angella Nazarian, trustees of The Nazarian Family
Trust; (f) $458,425 to Younes Nazarian; and (g) $458,425 to David
Nazarian, trustee of The Samy Nazarian Trust;
31
"Asset Purchase Agreement" means the agreement to be
entered into between the US Vendor, the Guarantor and the US
Purchaser;
"Asset Purchase Price" means the purchase price for each of
the Shares, the UK Assets and the US Assets set forth in Schedule
7 hereto;
"Assumed Liabilities" means the liabilities to be assumed
by the US Purchaser pursuant to the terms of the Asset Purchase
Agreement;
"Business Day" means any day (other than a Saturday) when
banks are open in London for ordinary banking business;
"CA 1985" means the Companies Act 1985;
"Claim" means a claim by the Purchaser under or pursuant to
the provisions of Clause 4.1 or a claim by the Purchaser under
the Tax Deed;
"Code" means the United States Internal Revenue Code of
1986, as amended.
"Company" means WPI Husky, a company incorporated in
England and Wales (registered number 01328356), and whose
registered office is at Eden Road, Walsgrave Triangle Business
Park, Coventry, West Midlands CV2 2TB and WPI Husky GmbH,
incorporated in Germany (registered file number HRB 3396) and
whose registered office is at Auelweg 18, 53797 Lohmar, Germany;
"Completion" means completion of the sale and purchase of
the Shares in accordance with this Agreement;
"Completion Accounts" shall have the meanings set out in
Clause 3.1;
"Confidential Information" means all information which is
used in or otherwise relates to any Group Company's business,
customers or financial or other affairs, including, without
limitation, information relating to:
1. the marketing of goods or services including, without
limitation, customer names and lists and other details of
customers, sales data, prices and promotional material; or
32
2. future projects, business development or planning,
commercial relationships and negotiations;
but does not include information which is made public by,
or with the consent of, the Purchaser after the Completion Date
or which is in the public domain or becomes a part of the public
domain through no fault of the Vendor;
"Coventry Lease" means the lease of the Coventry Property
as described in Schedule 5;
"Disclosure Letter" means the letter from the Vendor to the
Purchaser in relation to the Warranties having the same date as
this Agreement, the receipt of which has been acknowledged by the
Purchaser;
"Encumbrance" means a mortgage, charge, pledge, lien,
option, restriction, right of first refusal, right of pre-
emption, third-party right or interest, other encumbrance or
security interest of any kind, or another arrangement (including,
without limitation, a title transfer or retention arrangement)
having similar effect;
"Escrow Account" means the designated account set forth in
the Escrow Agreement;
"Escrow Agent" means Citizens Bank appointed as agent under
the Escrow Agreement or Cobbetts or such other person(s) to be
appointed until the execution of the Escrow Agreement pursuant to
the side letter to be entered into between Cobbetts, the Vendor
and the Purchaser and references in this Agreement to "Escrow
Agent" shall be deemed to refer to Citizens Bank and/or Cobbetts,
as the case may be;
"Escrow Agreement" means the agreement in the agreed form
relating to the deposit of 5% of the Purchase Price with the
Escrow Agent pursuant to Clause 3.5 or such side letter in the
agreed form to be entered into between the Vendor, the Purchaser
and Cobbetts until the execution of the Escrow Agreement;
"Escrow Amount" means US$1,730,640;
"Excluded Liabilities" shall have the meaning set out in
the UK Asset Purchase Agreement;
33
"Financial Statements" means the financial statements of
the Guarantor as of September 26, 1999 included in the Annual
Report on Form 10-K for the fiscal year ending September 26,
1999;
"FRS" means a financial reporting standard adopted or
issued by the Accounting Standards Board;
"Group" or "Group Companies" means each Company and "Group
Company" means any one of them;
"ICTA" means the Income and Corporation Taxes Act 1988;
"Intellectual Property" means:
1. patents, trade marks, service marks, registered
designs, applications and rights to apply for any of those
rights, trade, business and company names, logos, internet domain
names and e-mail addresses, unregistered trade marks and service
marks, copyrights, database rights, know-how, rights in designs
and inventions, database rights and all similar rights which may
subsist in any part of the world including, where such rights are
obtained or enhanced by registration, any registration of such
rights and applications and rights to apply for such
registrations;
2. rights under licences, consents, orders, statutes or
otherwise in relation to a right in paragraph (a);3. rights of
the same or similar effect or nature as or to those in paragraphs
(a) and (b) which now or in the future may subsist; and
4. the right to sue for past infringements of any of the
foregoing rights;
"Intellectual Property Rights" means all Intellectual
Property owned, used or required to be used, by WPI Group, or any
Group Company;
"Legal Opinion" means the legal opinion to be delivered to
the Purchaser at or prior to Completion by the Vendor's
Solicitors in accordance with Clause 2.4(h);
34
"Management Accounts" means the unaudited profit and loss
account of each Company in respect of the period starting on the
date after the Reference Accounts Date and ending on 31 December,
1999 and the unaudited balance sheet of each Group Company as at
30 September, 1999;
"Permit" means:
1. a permit, licence, consent, approval, certificate,
qualification, specification, registration or other
authorisation; or
2. a filing of a notification, report or assessment,
in each case necessary for the effective operation of each
Group Company's business, its ownership, possession, occupation
or use of an asset or the execution or performance of this
Agreement;
"Property" means the property and interests set out in
Schedule 5;
"Purchaser's Accountants" means Pricewaterhouse Coopers of
9 Greyfriars Road, Reading RG1 1JG;
"Purchase Contract" means the contract for the purchase of
the Printapen 5000 dated June 7, 1999 between WPI Husky and KPR
Midlink Limited;
"Purchaser's Solicitors" means Debevoise & Plimpton of
Tower 42, International Financial Centre, Old Broad Street,
London EC2N 1HQ;
"Reference Accounts Date" means 30 September 1999;
"Shares" means 110 ordinary shares of 10p each and 100
deferred shares of 1 each, each fully paid, of WPI Husky,
comprising the entire issued share capital of WPI Husky and 1
fully paid ordinary share of 50,000 DM of WPI Husky GmbH,
comprising the entire issued share capital of WPI Husky GmbH;
"Tax" and "Taxation" has the meaning given in the Tax Deed;
"Tax Authority" has the meaning given in the Tax Deed;
35
"Tax Deed" means a Tax Deed in the agreed form between the
Vendor, the Guarantor and the Purchaser;
"TCGA" means the Taxation of Chargeable Gains Act 1992;
"The Husky Plan" means the Husky Computers Employee Benefit
Plan (1983);
"The Plan" means the WPI Group Money Purchase Plan and
where the context so requires, the trustees of The Plan;
"UK Asset Purchase Agreement" means the agreement to be
entered into between the UK Vendor and the UK Purchaser;
"UK Assets" means the assets owned by the UK Vendor to be
sold to the UK Purchaser pursuant to the UK Asset Purchase
Agreement;
"UK Assumed Liabilities" shall have the meaning set out in
the UK Asset Purchase Agreement ;
"UK Excluded Liabilities" shall have the meaning referred
to as the "Excluded Liabilities" set out in the UK Asset Purchase
Agreement;
"US Assets" means the assets owned by the US Vendor to be
sold to the US Purchaser pursuant to the Asset Purchase
Agreement;
"US Legal Opinion" means the US legal opinion to be
delivered to the Purchaser at or prior to Completion from the
Vendor's and Guarantor's legal counsel in accordance with Clause
2.4(g);
"VATA" means, in the United Kingdom, the Value Added Tax
Act 1994 and, in a jurisdiction outside the United Kingdom, any
equivalent legalisation;
"Vendor's Accountants" means Arthur Andersen, of One
Victoria Square, Birmingham B1 1BD;
"Vendor's Solicitors" means Cobbetts, of Ship Canal House,
King Street, Manchester, M2 4WB, Manchester;
36
"Warranty" means a statement contained in Schedule 4 and
"Warranties" means all those statements;
"Warranty Claim" means a claim by the Purchaser under or
pursuant to the provisions of Clause 6 or attributable to any
inaccuracy of a representation made by the US Vendor pursuant to
Section 3 of the Asset Purchase Agreement or attributable to any
claim made by the UK Purchaser under or pursuant to Clause 10 of
the UK Asset Purchase Agreement;
"WPI Group" means each of the Vendor, the Guarantor and any
of their respective subsidiaries;
"WPI Husky GmbH" means WPI Husky Technology GmbH, a limited
liability company incorporated in Germany and registered at the
Commercial Register of the Siegburg Local Court (file number HRB
3396);
"WPI France" means the French sales office of WPI Husky
located at 12, rue le Corbusier, Parc d'Affaires SILIC, Batiment
Iena B2, Rungis.
2. In this Agreement, a reference to:
1. a "subsidiary undertaking" or "parent undertaking" is
to be construed in accordance with section 258 of the CA 1985 and
to a "subsidiary" or "holding company" is to be construed in
accordance with Section 736 of the CA 1985;
2. liability under, pursuant to or arising out of (or any
analogous expression) any agreement, contract, deed or other
instrument includes a reference to contingent liability under,
pursuant to or arising out of (or any analogous expression) that
agreement, contract, deed or other instrument;
3. a document in the "agreed form" is a reference to a
document in a form approved and for the purposes of
identification signed by or on behalf of each party;
4. a statutory provision includes a reference to the
statutory provision of modified or re-enacted or both from time
to time before the date of this Agreement and any subordinate
legislation made under the statutory provisions (as so modified
or re-enacted) before the date of this Agreement;
37
5. a person includes a reference to any individual, firm,
company, corporation or other body corporate, government, state
or agency or a state or any joint venture, association or
partnership (whether or not having separate legal personality);
6. a person includes a reference to that person's legal
personal representatives and successors;
7. a Clause, paragraph or Schedule, unless the context
otherwise requires, is a reference to a Clause or paragraph of,
or Schedule to, this Agreement; and
8. any English legal term for any action, remedy, method
of judicial proceeding, legal document, legal status, court,
official or any legal concept or thing shall in respect of any
jurisdiction other than England be deemed to include what most
nearly approximates in that jurisdiction to the English legal
term and to any English statute shall be construed so as to
include equivalent or analogous laws of any other jurisdiction.
3. The headings in this Agreement do not affect its
interpretation.
19. Notices
1. A notice, claim, demand or other communication under
and in connection with this Agreement or with any arbitration
under this Agreement (a "Notice") shall be:
1. in writing
2. delivered personally or sent by first class post,
prepaid recorded delivery (and airmail if overseas) or by fax to
the party due to receive the Notice to the address set out in
Clause 20.3 or to another address, person, or fax number
specified by that party by not less than seven days' written
notice to the other party received before the Notice was
despatched.
2. Unless there is evidence that it was received earlier,
a Notice is deemed given if:
1. delivered personally, when left at the address referred
to in Clause 20.1(b);
2. sent by mail, two Business Days after posting;
3. sent by airmail, six Business Days after posting;
38
4. sent by fax, when confirmation of its transmission has
been recorded by the sender's fax machine.
3. The address referred to in Clause 20.1(b) is:
Name of Party Address Facsimile Marked for the
Number Attention of
The Vendor WPI 001 603 627 3150 Mike Tule
and the c/o 1155 Elm Street
Guarantor New Hampshire
USA
Copy to:
Cobbetts 0161 833 3030 Chris Dunn
Ship Canal House
King Street
Manchester
M2 4WB
The Purchaser 3 New England 001 781 272 2304 Mark Tremallo
Executive Park
Burlington
Massachusetts
01803 5087
USA
Copy to:
Debevoise & Plimpton 0171 588 4180 James Kiernan
Tower 42
International Financial
Centre
Old Broad Street
London EC2N 1HQ
39
20. Governing Law and Jurisdiction
1. This Agreement and the documents to be entered into
pursuant to it shall be governed by English law.
2. The courts of England have exclusive jurisdiction to
settle any dispute arising from or connected with this Agreement
and the documents to be entered into pursuant to it (a
"Dispute").
3. The parties agree that the courts of England are the
most appropriate and convenient courts to settle any Dispute and,
accordingly, they will not argue to the contrary. This
Clause 21.3 is for the benefit of the Purchaser and shall not
limit its right to take proceedings in any other court of
competent jurisdiction.
4. The parties agree that the documents which start any
such action or proceedings (the "Proceedings") and any other
documents required to be served in relation to those Proceedings
may be served on the Vendor in accordance with Clause 20. These
documents may however be served in any other manner allowed by
law. This Clause applies to all Proceedings wherever started.
21. Counterparts
This Agreement may be executed in any number of
counterparts, each of which is an original and all of which
together evidence the same Agreement. Any party may enter into
this Agreement by executing any such counterpart.
40
SCHEDULE 1
Shareholder Details
Shareholder No. of Shares Consideration
WPI Group (UK) 110 ordinary shares of US$21,204,400
10p each
100 deferred shares of
1 each
in WPI Husky
WPI Group (UK) 1 ordinary share of US$500,000
50,000 DM
in WPI Husky GmbH
41
SCHEDULE 2
PART 1
Vendor Details
1. Registered number: 03227062
2. Place of incorporation: England and Wales
3. Registered office: Walsgrave Business Triangle, Coventry, CV2
2TB
4. Type of company: Private Unlimited
5. Allotted share capital: 10,400,000 ordinary shares of 1 each
6. Issued share capital: 10,390,540 ordinary shares
7. Directors: John Raymond Allard
Michael Henry Foster
8. Secretary: Michael Bradford Tule
9. Accounting reference date: September 30
10. Auditors: Arthur Andersen
PART 2
Particulars of each Company:
WPI Husky
1. Registered number: 01328356
2. Place of incorporation: England and Wales
3. Registered office: Walsgrave Business Triangle, Coventry, CV2
2TB
42
4. Type of company: Private Limited
5. Allotted share capital: 110 ordinary shares of 10p each
100 deferred shares of 1 each
6. Issued share capital: 110 ordinary shares of 10p each
100 deferred shares of 1 each
7. Directors: John Raymond Allard
Michael Henry Foster
Richard Kantor
Karl David Webb
8. Secretary: Michael Bradford Tule
9. Accounting reference date: September 30
10. Auditors: Arthur Andersen
WPI Husky Technology GmbH
1. Registered number: HRB 3396, Amtsgericht Siegburg
2. Place of incorporation: Germany
3. Registered office: Auelweg 18, 53797 Lohmar, Germany
4. Type of company: Private Limited (GmbH)
5. Allotted share capital: 1 share of 50,000 DM
6. Issued share capital: 1 share of 50,000 DM
7. Directors: Michael Krodel
Michael Henry Foster
John Raymond Allard
43
8. Secretary: N/A
9. Accounting reference date: September 30
10. Auditors: Arthur Andersen
44
SCHEDULE 3
Completion Requirements
1.. Vendor's Obligations
1. At Completion the Vendor shall deliver to the
Purchaser:
1. duly executed transfer(s) in respect of the Shares to
the Purchaser or its nominee(s) and the share certificate(s) for
the Shares and, in the case of WPI Husky GmbH, a duly executed
notarial transfer deed;
2. any waiver, consent, release or other document
necessary to give the Purchaser or its nominee(s) full legal and
beneficial ownership of the Shares;
3. the common seal (if any) of each Group Company and each
register, minute book and other book required to be kept by each
Group Company under the CA 1985 duly written up to the date of
Completion and each certificate of incorporation and certificate
of incorporation on change of name for each Group Company the
share certificates in respect of each of the subsidiaries;
4. a copy of a letter to each Group Company from its
auditors resigning their office with effect from Completion and
containing the statement referred to in Section 394 of the CA
1985, the original of the letter having been deposited at the
registered office of the relevant company;
5. a resignation in the agreed form from the secretary of
each Group Company expressed to take effect from the end of the
meeting held pursuant to paragraph 1.2;
6. a resignation in the agreed form from each of the
directors of each Group Company expressed to take effect from the
end of the meeting held pursuant to paragraph 1.2;
45
7. the Management Accounts and all title deeds and other
documentation relating to the Properties;
8. a copy of each bank mandate of each Group Company and
copies of statements of each bank account of each Group Company
made up to a date not earlier than two Business Days before
Completion;
9. unconditional receipts for rent and other payments due
in respect of the leasehold Property;
10. all documentation relating to the Intellectual Property
Rights, including (without limitation) the original registration
and renewal certificates for each of the Intellectual Property
Rights which are registered or pending as at Completion (or
copies thereof where such original documentation is not
available);
11. evidence satisfactory to the Purchaser that the
provisions of Clause 23 of Schedule 4 ("Insider Agreements") have
been duly complied with insofar as they require certain matters
to be dealt with prior to Completion;
12. bank statements of all bank accounts of all Group
Companies as at the date of Completion;
13. the Tax Deed duly executed by the Vendor;
14. the Escrow Agreement duly executed by the Vendor, the
Guarantor, the US Vendor and the Escrow Agent;
2. The Vendor shall ensure that at Completion a meeting of
the board of directors of each Group Company is held at which the
directors:
1. vote in favour of the registration of the Purchaser or
its nominee(s) as member(s) of each Group Company in respect of
the Shares (subject to the production of properly stamped
transfers);
2. subject to the CA 1985, change each Group Company's
accounting reference date to 31 March;
3. appoint persons nominated by the Purchaser as
directors, secretary and auditors of each Group Company with
effect from the end of the meeting;
46
4. revoke each existing mandate given by each Group
Company for the operation of its bank accounts and pass the
resolutions contained in new mandate(s) giving authority to
persons nominated by the Purchaser OR with effect from the end of
the meeting, authorise the secretary to notify the specimen
signatures of the new officers of each Group Company in
connection with each existing mandate given by the Group Company
for the operation of its bank accounts;
5. accept the resignation of the secretary so as to take
effect from the end of the meeting and shall hand to the
Purchaser duly certified copies of such Resolutions;
6. accept the resignation of each director so as to take
effect from the end of the meeting and shall hand to the
Purchaser duly certified copies of such Resolutions.
3. Each of the requirements set out in Clauses 1.1 and 1.2
above shall apply equally to WPI Husky GmbH to the extent
applicable under German law.
2.. Purchaser's Obligations
1. On Completion, the Purchaser shall deliver to the
Vendor:
1. the Tax Deed duly executed duly executed by the
Purchaser; and
2. the Escrow Agreement duly executed by the Purchaser and
the US Purchaser.
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SCHEDULE 4
Warranties
1.. Capacity and Authority
1. The Vendor and each Group Company are companies duly
incorporated and validly existing under English law or the
relevant law of incorporation and have been in continuous
existence since incorporation.
2. Each Group Company has the right, power and authority
to conduct its business as conducted at the date of this
Agreement and to own or lease its properties, as now conducted,
owned or leased.
3. The Vendor's obligations under this Agreement, the Tax
Deed, the Escrow Agreement and each document to be executed at or
before Completion are, or when the relevant document is executed
will be, enforceable in accordance with their terms and will not
conflict with any other obligation of the Vendor.
2.. Information
1. All the information provided to the Purchaser or its
agents, employees or advisers is true, accurate and not
misleading, save for the information which to the knowledge of
the Purchaser is not true, accurate and not misleading.
2. The information set out in this Agreement, the Tax Deed
and the Disclosure Letter is true, accurate and not misleading.
3.. Shares and Subsidiary Undertakings
1. The Vendor is the sole legal and beneficial owner of
the number of Shares set out against his name in Schedule 1, free
from any Encumbrances.
2. The Shares comprise the entire issued share capital of
each Group Company, have been properly allotted and issued and
are fully paid or credited as fully paid. The particulars of
each Group Company set out in Schedule 2 are true and complete
and the Vendor has no other subsidiaries other than WPI Husky,
WPI Oyster Termiflex Ltd. and WPI Husky GmbH.
48
3. There is no Encumbrance, and there is no agreement,
arrangement or obligation to create or give an Encumbrance, in
relation to any of the Shares or unissued shares in the capital
of any Group Company. No person has claimed to be entitled to an
Encumbrance in relation to any of the Shares.
4. Other than this Agreement, there is no agreement,
arrangement or obligation requiring the creation, allotment,
issue, transfer, redemption or repayment of or the grant to a
person of the right (conditional or not) to require the
allotment, issue, transfer, redemption or payment of a share in
the capital of any Group Company (including, without limitation,
an option or right of pre-emption or conversion).
5. A copy of the memorandum and articles of association of
each Group Company is annexed to the Disclosure Letter and is
true, accurate and complete and has annexed thereto a copy of
every resolution or agreement as is required by law to be annexed
to it and sets out the rights and restrictions attaching to each
class of share capital in each Group Company.
6. WPI Husky GmbH does not have and has never had any
subsidiary undertaking.
7. Each Group Company has no interest in, and has not
agreed to acquire an interest in, any corporate body.
4.. Accounts
1. The Accounts have been prepared and audited on a proper
and consistent basis in accordance with the Companies Act 1985
and applicable standards, principles and practices generally
accepted in the United Kingdom.
2. No change in accounting policies has been made in
preparing the accounts of each Group Company for each of the
three financial years of each Group Company ended on the
Reference Accounts Date, except as stated in the audited
financial statements for those years.
3. The Accounts show a true and fair view of the assets,
liabilities and state of affairs of each Group Company as at the
Reference Accounts Date and of the profits and losses of each
Group Company for the financial year ended on the Reference
Accounts Date.
49
4. To the extent required by the Companies Act 1985 and
all appropriate FRS, the Accounts disclose and provide for all
bad and doubtful debts, all liabilities (actual contingent or
otherwise) and all financial commitments existing at the
Reference Accounts Date.
5. The results shown by the audited profit and loss
accounts of each Group Company for each of the three financial
years of each Group Company ended on the Reference Accounts Date
have not (except as disclosed in those accounts) been effected by
any extraordinary, exceptional or non-recurring item or by
another fact or circumstance making the profit or loss for a
period covered by any of those accounts unusually high or low.
6. The Accounts reserve or provide in accordance with
applicable standards, principles and practices generally accepted
in the United Kingdom for all Tax liable to be assessed on each
Group Company, or for which it is or may become accountable, for
all periods starting on or before the Reference Accounts Date
(whether or not each Group Company has or may have a right of
reimbursement against another person). The Accounts reserve in
accordance with applicable standards, principles and practices
generally accepted in the United Kingdom for all contingent or
deferred liabilities to Tax for all periods starting on or before
the Reference Accounts Date.
7. In the Accounts:
1. stock (except long term contract balances) was valued
in the same way as in the audited accounts of each Group Company
for the two preceding financial years and on the basis of the
lower of cost and net realisable value;
2. all redundant and obsolete stock was written off and
all sold, moving and damaged stock was written down
appropriately.
8. The basis and rates of depreciation and amortisation
used in the Accounts were the same as those used in the audited
accounts of each Group Company for the two preceding financial
years.
9. The rates of depreciation and amortisation used in the
audited accounts of each Company for the three financial years of
each Group Company ended on the Reference Accounts Date were
sufficient to ensure that each fixed asset of the Group Company
will be written down to nil by the end of its useful life.
50
10. The Management Accounts have been carefully and
properly prepared with all due care on a basis consistent with
each other and with the Accounts are not misleading with respect
to the state of assets, liabilities and affairs of the Group
Companies as at the relevant Accounts Date and of the profits or
losses for the period concerned.
11. Each Group Company's accounting records are up to date,
in its possession or under its control and are properly completed
in accordance with the law and applicable standards, principles
and practices generally accepted in the United Kingdom.
12. None of the debts receivable or due to any Group
Company which are included in the Audited Accounts or which have
subsequently arisen has been outstanding for more than three
months from its due date for payment or has been released on
terms that the debtor has paid less than the full value of his
debt and all such debts have realised or, so far as the Vendor is
aware (having made all due enquiry), will realise in the normal
course of collection their full value as included in the Audited
Accounts or in the books of the relevant Group Company after
taking into account the provision for bad and doubtful debts made
in the Audited Accounts. For the avoidance of doubt, a debt
shall not be regarded as realising its full value to the extent
that it is paid, received or otherwise recovered in circumstances
in which such payment, receipt or recovery is or may be void,
voidable or otherwise liable to be reclaimed or set aside.
13. The Guarantor has made available to the Purchaser a
complete and correct copy of the Annual Report on Form 10-K of
the Guarantor for the fiscal year ending September 26, 1999. The
Financial Statements included in such Annual Report have been
prepared in accordance with United States generally accepted
accounting principles ("GAAP") applied on a consistent basis
during the periods involved (except as otherwise noted therein)
and fairly present in all material respects the consolidated
financial position and the consolidated results of operations and
cash flows of the Guarantor and its subsidiaries on a
consolidated basis as at the dates thereof or for the periods
presented therein. Since September 26, 1999, there has not been
any material adverse change in the business, assets, condition
(financial or otherwise) or results of operations of the
Guarantor and any of its subsidiaries.
5.. Changes since the Reference Accounts Date
1. Since the Reference Accounts Date:
51
1. each Group Company's business has been operated in the
ordinary and usual course so as to maintain it as a going concern
and without any interruption or alteration in the nature, scope
or manner of its business;
2. there has been no adverse change in the financial or
trading position or turnover of each Group Company;
3. no material change has occurred in the assets and
liabilities shown in the Accounts and there has been no reduction
in the value of the net tangible assets of each Group Company on
the basis of valuation used in the Accounts; and
4. no Group Company has borrowed or raised any money or
taken any form of financial facility (whether pursuant to a
factoring arrangement or otherwise).
2. Since the Reference Accounts Date:
1. each Group Company has not, other than in the usual
course of its business:
1. acquired or disposed of or agreed to acquire or
dispose of, an asset; or
2. assumed or incurred, or agreed to assume or incur, a
liability, obligation or expense (actual or
contingent);
2. each Group Company has not factored, sold or agreed to
sell a debt;
3. each Group Company's business has not been materially or
adversely affected by the loss of any important customer
or source of supply. For these purposes, an important
customer or source of supply means a customer with a
revenue exceeding 10,000.
4. each Group Company has not:
1. made, or agreed to make, capital expenditure
exceeding in total 20,000; or
2. incurred, or agreed to incur, a commitment or
commitments involving capital expenditure exceeding
in total 20,000,
52
5. each Group Company's business has not been materially
or adversely affected by the termination of, or a change in the
terms of, an agreement or by the loss of a customer or supplier;
6. each Group Company has not declared, paid or made a
dividend or distribution (including, without limitation, a
distribution within the meaning of ICTA) except as provided in
the Accounts;
7. each Group Company has not changed its accounting
reference period;
8. no resolutions of the shareholders of any Group Company
have been passed; and
9. each Group Company has not created, allotted, issued,
acquired, repaid or redeemed share or loan capital or made an
agreement or arrangement or undertaken an obligation to do any of
those things.
10. each Group Company has not been refused any insurance
claims or settled below the amount claimed.
6. Tax
1. Each Group Company and the Vendor, save for WPI Husky
GmbH and WPI France, is and has at all times been resident only
in the United Kingdom for all Tax purposes. Each Group Company
and the Vendor is not liable to pay and has at no time incurred
any liability to Tax chargeable under the laws of any
jurisdiction other than the United Kingdom.
2. Each Group Company has paid all Tax which it has become
liable to pay and is not and has not in the six years ending on
the date of this Agreement been, liable to pay a penalty,
surcharge, fine or interest in connection with Tax.
3. Without prejudice to paragraph 6.2 each Group Company
has deducted or withheld all Tax which it has been obliged by law
to deduct or withhold from amounts paid by it, has properly
accounted to the relevant Tax Authority for all amounts of Tax so
deducted or withheld and has otherwise complied with its legal
obligations in respect of such deductions or withholdings.
53
4. Each Group Company has within applicable time limits
made all returns, provided all information and maintained all
records in relation to Tax as it is required to make, provide or
maintain and has fully complied on a timely basis with all
notices served on it and any other requirements lawfully made of
it by any Tax Authority. No return (and nothing in a return) is
disputed or is yet to be determined by, or is subject to
agreement with, a Tax Authority.
5. Each Group Company has properly operated in all
material respects the Pay-As-You-Earn system and has complied in
all material respects with each reporting obligation in
connection with benefits provided (whether by each Company or by
any other person) for each Group Company's directors, other
officers and employees.
6. So far as the Vendor is aware, having made all
reasonable enquiries, each Group Company is not and does not
expect to be involved in a dispute in relation to Tax. No Tax
Authority has investigated or indicated that it intends to
investigate each Group Company's Tax affairs.
7. Each Group Company has sufficient records to determine
the Tax consequences which would arise on a disposal or on the
realisation of each asset owned by it at the Reference Accounts
Date, or acquired since the Reference Accounts Date but before
the date of this Agreement.
8. No Tax Authority has agreed to operate any special
arrangement (that is, an arrangement which is not based on a
strict application of all relevant Tax legislation, published
extra-statutory concessions and published statements of practice)
in relation to the affairs of each Group Company. All notices
and other communications from a Tax Authority requiring or
permitting each Group Company to deal with its Tax affairs in a
particular manner or on a particular basis are in the possession
of each Group Company.
9. The Disclosure Letter contains full details of all
applications which have been made at any time by each Group
Company for any statutory consent or clearance. All particulars
and other information given to any Tax Authority in connection
with any such application for such consent or clearance were full
and accurate in all material respects and any consent or
clearance given in response to such application was valid and
effective. All transactions in respect of which such consent or
clearance was obtained have been carried into effect, and have
been undertaken strictly in accordance with the terms of the
application for the relevant consent or clearance.
54
10. Except as disclosed in the Disclosure Letter, each
Group Company is not and has not been a party to or otherwise
involved in any transaction, agreement or arrangement otherwise
than by way of a bargain at arms' length, or any transaction,
agreement or arrangement (whether or not by way of a bargain at
arms' length) under which it has been or is or may be required to
make any payment for any goods, services or facilities provided
to it which is in excess of the market value of such goods,
services or facilities or under which it has been, or is or may
be required to provide goods, services or facilities for a
consideration which is less than the market value of such goods,
services or facilities and/or in consequence of which it is or
will be liable to Tax in respect of an amount deemed for Tax
purposes to be income or gains of each Group Company but not
actually income or gains of each Group Company.
11. Each Group Company:
1. is registered for the purposes of the VATA;
2. has made, given, obtained and kept up-to-date, full and
accurate records, invoices and documents appropriate or required
for the purposes of the VATA;
3. has complied in all material respects with all other
applicable VAT legislation and in particular has filed all
returns and made all payments of VAT on a timely basis; and
4. has not been required by a Tax Authority to give
security under the VATA.
12. Each Group Company is not under a duty to make payments
on account of VAT pursuant to any order made under section 28 of
the VATA.
13. In the three years ending on the date of this Agreement
each Group Company has not been in default in respect of an
accounting period, as the terms "default" and "accounting period"
are used in section 59(1) of the VATA (the default surcharge).
14. Each Group Company is not and has not been liable to a
penalty under section 63 of the VATA.
15. No VAT Return made by each Group Company has contained
a material inaccuracy for the purposes of section 64 of the VATA.
55
16. Each Group Company is entitled under the VATA to credit
for all of its input tax.
17. The Disclosure Letter contains adequate details of any
method agreed with or directed by H M Customs and Excise or
otherwise applicable to each Group Company for determining the
allowability to that company of input tax in accordance with Part
XIV of the Value Added Tax Regulations 1995.
18. The Disclosure Letter contains details of each claim
for bad debt relief under section 36 of the VATA (bad debts) or
section 22 of the Value Added Tax Act 1983 (refund of tax in
cases of bad debts) made by each Group Company.
19. No Group Company owns any asset which is a capital
item, the input tax on which may be subject to adjustment in
accordance with Part XV of the Value Added Tax Regulations 1995
(capital goods scheme).
20. No Group Company, nor a company of which any Group
Company is a relevant associate within the meaning of paragraph
3(7) of Schedule 10 to the VATA (election to waive exemption),
has elected to waive exemption under paragraph 2 of Schedule 10
in relation to any land owned by it at Completion except as
disclosed in the Disclosure Letter. Each such election disclosed
in the Disclosure Letter has effect. Where any such election has
been made, no supplies in relation to the relevant land will be
taken by virtue of paragraph 2(3AA) of Schedule 10 to the VATA to
be supplies other than taxable supplies. Each Group Company does
not have an interest in any land supplies in relation to which,
if an election to waive exemption under paragraph 2 of Schedule
10 to the VATA were to be made by each Group Company (or by a
company of which any Group Company is a relevant associate within
the meaning of paragraph 3(7) of Schedule 10 to the VATA), would
be taken by virtue of the said paragraph 2(3AA) to be supplies
other than taxable supplies.
21. No Group Company has received a notice of and to the
best of the Vendor's knowledge, information and belief there is
nothing which indicates that the grant to any Group Company of an
interest in or right over land owned by a Group Company at
Completion or of a licence to occupy land owned by a Group
Company at Completion will not be an exempt supply because of an
election under Schedule 10 to the VATA (election to waive
exemption).
56
22. No event, transaction, act or omission has occurred by
reason or in consequence of which any Group Company may be deemed
to make a taxable supply under paragraph 1 of Schedule 10 to the
VATA or under the Value Added Tax (Self-Supply of Construction
Services) Order 1989.
23. No tenancy, lease or licence to which any Group Company
is a party is or may become a developmental tenancy,
developmental lease or developmental licence for the purposes of
Group 1 of Schedule 9 to the VATA.
24. No Group Company is and has not been a party to any
transaction or arrangements in respect of which a direction has
been or could be made under paragraphs 1 or 2 of Schedule 6 or
paragraph 1 of Schedule 7 to the VATA.
25. No Group Company is, nor has it, agreed to become an
agent, manager or factor for the purposes of section 47 of the
VATA (agents, etc.) of a person not resident in the United
Kingdom.
26. No Group Company has been a party to any transactions
in respect of which a direction under the provisions of Schedule
9A to the VATA has been or may be made.
27. All value added tax payable on the import of goods and
all customs duties and duties of excise payable to a Tax
Authority in respect of any asset (including, without limitation,
trading stock) imported or owned by each Company have been paid.
28. No Group Company has been a close company for the
purposes of ICTA.
29. All documents by virtue of which any Group Company has
any right or in the enforcement of which any Group Company is
interested have been duly stamped.
7. Assets
1. Each asset included in the Accounts or acquired by any
Group Company since the Reference Accounts Date (other than stock
disposed of in the usual course of business) and each asset used
by any Group Company or which is in the reputed ownership of any
Group Company is:
57
1. legally and beneficially owned solely by each Group
Company free from any Encumbrance; and
2. where capable of possession, in the possession or under
the control of each Group Company.
2. Each Group Company owns or has a right to use each
asset necessary for the effective operation of its business as
currently conducted.
3. All plant, machinery, vehicles and equipment owned,
possessed or used by each Group Company are in good condition and
working order and have been regularly and properly maintained.
None is in need of renewal or replacement or surplus to each
Group Company's requirements.
4. Each Group Company's asset registers comprise a
complete and accurate record of all the plant, machinery,
equipment, vehicles and other assets owned, possessed or used by
it.
5. Maintenance contracts are in force for each asset of
each Group Company which it is normal to have maintained by
independent or specialist contractors and for each asset which
each Group Company is obliged to maintain or repair under a
leasing or similar agreement. Those assets have been regularly
maintained to a good technical standard and in accordance with:
1. safety regulations required to be observed in relation
to them; and
2. the provision of any applicable leasing or similar
agreement.
6. No Group Company is a party to, nor is liable under, a
lease or hire, hire purchase, credit sale or conditional sale
agreement.
7. No charge in favour of any Group Company is void or
voidable for want of registration.
8. Each Group Company's stock is of satisfactory quality
and saleable in the usual course of its business in accordance
with its current price list.
9. No Group Company has supplied, or agreed to supply,
defective or unsafe goods or goods which fail to comply with
their terms of sale.
58
10. No goods in a state ready for supply by each Group
Company are defective or unsafe or will fail to comply with terms
of sale similar to terms of sale on which similar goods have
previously been sold by any Group Company.
11. Each Group Company's level of stock is reasonable
having regard to current and anticipated demand.
12. No debt shown in the Accounts, the Management Accounts
or any Group Company's accounting records is overdue by more
than 12 weeks or is the subject of an arrangement other than of
the kind, particulars of which are set out in the Disclosure
Letter.
13. No Group Company has released a debt shown in the
Accounts, the Management Accounts or its accounting records so
that the debtor has paid or will pay less than the debt's book
value. None of the debts shown in the Accounts, the Management
Accounts or any Group Company's accounting records has been
deferred, subordinated or written off or become irrecoverable to
any extent. To the best of the Vendor's knowledge, information
and belief, each of those debts will realise its book value in
the usual course of collection.
14. No Group Company has acquired or agreed to acquire any
material asset on terms that property thereon does not pass until
full payment is made.
8. Year 2000
1. Each item of equipment and software programme used by
any Group Company (a "Company System") in the course of its
business has been produced, tested and/or amended in a manner
which ensures that:
1. a change of, reference to or use of a date before,
on or after 31 December 1999 in the operation of that Company
System, whether alone or in conjunction with each other Company
System, will not have an adverse effect on, nor give rise to
inconvenience in, the operation of that Company System; and
2. the inclusion of a date or dates before, on or after 31
December 1999 in the date information exchanged with any item of
equipment and software programme which is not a Company System
but with which that Company System exchanges date information in
59
the course of the Company's business will not have an adverse
effect on, nor give rise to inconvenience in, that exchange of
date information or the subsequent use of that date information.
2. Each product and service sold by each Group Company
(the "Product and Service") both now and at any time within the
last six years has ensured that a change of, reference to or use
of a date before, on or after 31 December 1999 in the operation
of the Product and Service will not have an adverse effect on,
nor give rise to inconvenience in, the operation of that Product
and Service.
3. Each Company System and Product and Service will, in
responding to two-digit date input and providing date output,
resolve an ambiguity as to century in a manner which is
consistent, clearly defined and apparent to the user.
9. Intellectual Property
1. Each of the Intellectual Property Rights is:
1. valid and enforceable and nothing has been done or
omitted to be done by which it may cease to be valid and
enforceable;
2. legally and beneficially owned by and validly granted
to each Group Company alone, free from any licence, Encumbrance,
restriction on use or disclosure obligation (or is lawfully used
with the consent of the owner under a licence); and
3. not, and will not be, the subject of a claim or
opposition from a person (including, without limitation, an
employee of each Company) as to title, validity, enforceability,
entitlement or otherwise.
2. The Disclosure Letter contains details of all the
Intellectual Property Rights in respect of which each Group
Company is a registered or beneficial owner or applicant for
registration including full correct and up-to-date information in
relation to each registration and application.
3. All renewal and maintenance fees and taxes due and
payable prior to completion in respect of each of the pending and
registered Intellectual Property Rights have been paid in full.
Each other action required to maintain and protect the pending
and registered Intellectual Property Rights has been taken.
60
4. Nothing has been done or omitted to be done and no
circumstances exist by which a person is or will be able to seek
cancellation, rectification or other modification of a
registration of any of the Intellectual Property Rights.
5. There is and during the two years ending on the date of
this Agreement has been, no civil, criminal, arbitration,
administrative or other proceeding or dispute in any jurisdiction
concerning any of the Intellectual Property Rights. No civil,
criminal, arbitration, administrative or other proceeding or
dispute concerning any of the Intellectual Property Rights is
pending or threatened. To the best of the Vendor's knowledge,
information and belief, no fact or circumstance exists which
might give rise to a proceeding of that type.
6. No Group Company has granted and nor is obliged to
grant a licence, assignment, consent, undertaking, security
interest, or other right in respect of any of the Intellectual
Property Rights.
7. There are no, and never have been, any outstanding
claims against any Group Company for an infringement or
unauthorised use of any of the Intellectual Property Rights. No
Group Company has received any written claim that any of the
Intellectual Property is invalid.
8. The activities, processes, methods, products, services
or Intellectual Property used, manufactured, dealt in or supplied
on or before the date of this Agreement by each Company:
1. are not, at the date of this Agreement, nor were they
at the time used, manufactured, dealt in or supplied, subject to
licence, consent or permission of, or payment to, another person;
2. to the best of the Vendor's knowledge, information and
belief, do not at the date of this Agreement, nor did they at the
time used, manufactured, dealt in or supplied, infringe, misuse
or embody the subject matter of any rights in the Intellectual
Property (including, without limitation, moral rights) of another
person;
3. to the best of the Vendor's knowledge, information and
belief, have not given, and will not give, rise to a claim
against any Group Company.
9. No party to an agreement relating to the use:
61
1. by each Group Company of Intellectual Property owned by
another person; or
2. of any Intellectual Property Rights owned by each Group
Company by another person
is, or has at any time been, in breach of the agreement
and no circumstances exist which would give rise to any breach of
any such agreement or to any such agreement being terminated,
suspended, varied or revoked without each Group Company's consent
(other than termination without cause upon notice in accordance
with the terms of the agreement).
10. All the Confidential Information is adequately and
properly documented to enable the Purchaser to acquire and retain
its full benefit.
11. Each Group Company has not disclosed and is not obliged
to disclose any Confidential Information to any person other than
its employees who are bound by obligations of confidence or
except in the ordinary and usual course of business and then only
on condition that the disclosure is to be treated as being of a
confidential nature. The Vendor is not aware of any such
confidentiality having been breached.
12. The Intellectual Property Rights and each Group
Company's ownership, licence or rights in them will not be
adversely affected by the transaction contemplated by this
Agreement.
13. The Intellectual Property Rights comprise all the
Intellectual Property necessary for each Group Company to operate
its business, and for the business to continue to operate, as it
has been operated during the two year period ending on the date
of this Agreement.
14. Each Group Company is not a party to a confidentiality
or other agreement and is not otherwise subject to any duty which
restricts the free use or disclosure of information or of any of
the Intellectual Property Rights.
15. Each Group Company does not use or operate its business
under a name other than its corporate name.
62
16. The maximum liability of WPI Husky, to the Vendor's
knowledge, is not in excess of 60,000 at the date of this
Agreement with respect to the overdue royalty payments due to
Teology Networks, Inc.
10. Insurance
1. Each insurable asset of each Group Company has at all
material times been and is at the date of this Agreement insured
to its full replacement value (with no provision for deduction or
excess) against each risk normally insured against by a person
operating the types of business operated by each Group Company.
2. Each Group Company has at all material times been and
is at the date of this Agreement adequately insured against
accident, damage, injury, third party loss (including, without
limitation, product liability), credit risk, loss of profits and
all other risks to which a person operating the types of business
operated by each Group Company is exposed.
3. The Disclosure Letter contains a list of each current
insurance and indemnity policy in respect of which each Group
Company has an interest (including any active historic policies
which provide cover on a losses occurring basis) (together the
"Policies") and sets out, in relation to each of the Policies, a
summary including details of the parties, cover, deductibles,
limits, exclusions, conditions and premium payable.
4. Each of the Policies is valid and enforceable and is
not void or voidable and will be maintained in full force and
effect without alteration pending Completion and all premiums
will be paid on times.
5. No Group Company has done anything or omitted to do
anything which might:
1. make any of the Policies void or voidable; or
2. prejudice the ability to effect insurance on the same
or better terms in the future.
6. No insurer under any of the Policies has disputed, or
given any indication that they intend to dispute, the validity of
any of the Policies on any grounds.
63
7. To the best of the Vendor's knowledge, information and
belief, there is nothing which could vitiate any of the Policies
or prejudice the ability to effect insurance on the same or
better terms in the future.
8. No insurer has ever canceled or refused to accept or
continue any insurance in relation to each Group Company.
9. No claims have been made, no claim is outstanding and
no fact or circumstance exists which might give rise to a claim
under any of the Policies.
10. No event, act or omission has occurred which requires
notification under any of the Policies.
11. None of the insurers under any of the Policies has refused,
or given any indication that it intends to refuse, indemnity in
whole or in part in respect of any claims under the Policies.
12. Nothing has been done or omitted to be done, and there is
nothing, which might entitle the insurers under any of the
Policies to refuse indemnity in whole or in part in respect of
any claims under the Policies.
13. All premiums which are due under the Policies have been
paid.
14. No Group Company has not done anything or omitted to do
anything, and there is nothing, which might result in an increase
in the premium payable under any of the Policies.
11. Real Property
1. The Property comprises all land and premises owned,
occupied or used by, or in the possession of, each Group Company.
2. There is appurtenant to the Property each right and
easement necessary for its proper and existing use including,
without limitation, emergency escape routes. No right or
easement is restricted in any way (including, without limitation,
a restriction on hours of use) or is capable of being lawfully
interrupted or terminated by any person.
3. Each Group Company holds each right or easement
appurtenant for a term not less than the unexpired term of the
lease, tenancy or licence.
64
4. Each service necessary for the Property's existing use
(including, without limitation, electricity, gas and water
supplies, sewerage and telecommunications lines) is available to
each Group Company.
5. Each Group Company's access to the Property is
sufficient for the existing use of the Property and is by means
of a road adopted by the local highway authority and maintainable
at public expense.
6. The Property is not subject to outgoings other than the
uniform business rate, water and sewerage rates, rent, service
charge and insurance premiums.
7. Neither the Property nor any of its title deeds is
subject to an Encumbrance, agreement, obligation, condition,
right, easement, exception, reservation, or other interest.
8. There is no person in possession or occupation of, or
who has or claims a right or interest of any kind, in the
Property adversely to each Company's interest and each Group
Company is entitled to and has exclusive vacant possession of the
Property.
9. No fact or circumstance exists which materially and
adversely affects the Property's value or the use or enjoyment of
the Property or casts doubt on each Group Company's right or
title to the Property.
10. Each Group Company has performed or complied with each
Property Permit, obligation, condition, restriction, agreement
(including, without limitation, the term of any lease) and legal
and administrative requirement affecting the Property, or its
respective ownership, occupation, possession or existing use.
11. There is, and during the two years ending on the date of
this Agreement has been, no civil, criminal, arbitration,
administrative, or other proceeding or dispute concerning the
Property. No civil, criminal, arbitration, administrative or
other proceeding concerning the Property is pending or
threatened. To the best of the Vendor's knowledge, information
and belief, no fact or circumstance exists which might give rise
to a proceeding of that type. There is no outstanding notice
affecting the Property.
12. There is no resolution or proposal for compulsory
acquisition of the Property by a local or other authority.
65
13. The Property's existing use as hitech/light industrial with
associated offices is the lawful use permitted under applicable
town and country planning legislation and such permission is not
temporary or personal.
14. Any permission necessary for the Property's existing use,
construction and any subsequent alteration has been obtained and
is in force, unimpeachable and unconditional or subject only to a
condition that has been satisfied (and nothing more remains to be
done under the condition).
15. To the best of the Vendor's knowledge, information and
belief there is no material deficiency which requires correction
in the state or condition of any building or other structure on
or forming part of the Property.
16. No flooding, subsidence or other material defect of any kind
(including, without limitation, a design or construction defect)
which affects or has affected the Property.
17. No building or other structure on or forming part of the
Property contains a deleterious substance or a substance which is
not at the date of this Agreement used in generally accepted good
building practice.
18. There is no fact or circumstance (and, to the best of the
Vendor's knowledge, information and belief, no fact or
circumstance will within six months starting on the date of this
Agreement occur or arise) which:
(a) could entitle or require a person (including, without
limitation, a landlord or licensor) to forfeit or enter on, or
take possession of, or occupy, the Property;
(b) could restrict or terminate each Group Company's
continued and uninterrupted possession or occupation of the
Property; or
(c) could prevent or restrict the Property's development
for which planning permission has been or is expected to be
obtained.
19. A rent or fee payable in respect of the Property is not at
the date of this Agreement being reviewed and cannot be reviewed
before Completion.
20. No person (including, without limitation, a landlord or
licensor) has elected to waive, or indicated an intention to
waive, an exemption from payment by each Group Company of value
added tax in respect of a payment made under the Lease.
66
21. The documents disclosed relating to the Property are all
those that are relevant and are complete copies.
22. No Group Company has any contingent liability or other
liability as original tenant, landlord, assignee or otherwise in
respect of any real property or interest in real property except
the Property.
23. No Group Company has any contingent liability or other
actual liability as original tenant, landlord, assignee or
otherwise except in respect of the Coventry Lease.
12. Environmental Matters, Health and Safety and Products
Liability
1. The operation of each Group Company's business does not
involve and has never involved the use, or the release or
discharge of a hazardous substance or article, waste, sewage or
other pollutant or contaminant.
2. No land or other asset owned, occupied, possessed or
used by each Group Company on or at any time before the date of
this Agreement:
(A) contains or has contained (in the case of land, above
or below ground) a hazardous substance or article, waste or other
pollutant or contaminant;
(B) is or has been used for the deposit, storage, treatment
or disposal of waste or sewage; or
(C) is referred to or listed in a register of polluted or
contaminated land and no fact or circumstance exists which might
give rise to an entry in such a register.
3. No Group Company has sold, supplied or provided a
defective product or services in the course of its business on or
prior to the date hereof.
4. No Group Company has manufactured, sold or supplied any
product or service which:
(A) is, was or will become, in any material respect, faulty
or defective; or
(B) does not comply in any material respect with any
warranty or representation, express or implied, made by or on
behalf of any Group Company in respect of it or with all laws,
regulations, standards and requirements applicable to it; or
67
(C) was sold or supplied on terms that any Group Company
accepts an obligation to service or repair or replace such
products after delivery.
5. No Group Company has received a prohibition notice, a
notice to warn or a suspension notice under the Consumer
Protection Act 1987 in relation to any of its products at any
time within the last 3 years.
6. Each Group Company has in relation to its plant and
machinery and other fixed assets, and the Premises and its
employees, complied with all legal requirements relating to
health and safety including, but not limited to, those imposed by
the Health and Safety at Work etc. Act 1974 and all regulations
made thereunder, and no action has been taken by any entering
authority in relation to any actual or alleged breach of such
requirements and neither is any Group Company in receipt of any
claim by any officer or employee or any past officer or employee
in relation to any such breach and the Vendor is not aware of any
circumstances which may lead to such action or claim.
7. (A) For the purpose of this Warranty, Environmental
Laws shall mean any existing laws (local or national) or
regulations having application to the operation of the business
of any Group Company including, without limitation, directives,
regulations, rules, codes of practice and guidance notes made
thereunder relating to environmental and health & safety matters.
(B) Each Group Company is and to the Vendor's knowledge
always has been in full compliance with all Environmental Laws
and the existence and the use of the Premises, machinery and
other property of any Group Company has been and is in accordance
with all Environmental Laws.
(C) No written notice, written demand or written request
for information has been issued or made and no investigation or
review is or has been threatened or is pending by any
governmental authority or other person with respect to any
alleged violation by any Group Company of any Environmental Law
or liability thereunder.
(D) No Group Company owns or has in the past owned or had
any interest in land which has been used for a contaminative use
or upon which toxic, radioactive, caustic or other hazardous
substances (of whatever kind) have been stored or processed in a
manner inconsistent with any Environmental Laws.
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13. Agreements
1. To the best of the Vendor's knowledge, information and
belief no fact or circumstance exists which might invalidate or
give rise to a ground for termination, avoidance or repudiation
of an agreement, arrangement or obligation of which each Group
Company is a party. No party with whom each Group Company has
entered into an agreement, arrangement or obligation has given
notice of its intention to terminate, or has sought to repudiate
or disclaim, the agreement, arrangement or obligation.
2. No Group Company nor any party with whom each Group
Company has entered into an agreement, arrangement or obligation
is in material breach of the agreement, arrangement or
obligation. To the best of the Vendor's knowledge, information
and belief, no fact or circumstance exists which might give rise
to a breach of this type.
3. No Group Company is a party to and is not liable under
a long-term, onerous or unusual legally binding agreement,
arrangement or obligation including, without limitation:
(A) an agreement, arrangement or obligation entered into
other than in the usual course of its business;
(B) an agreement, arrangement or obligation entered into
other than by way of a bargain at arms length;
(C) an agreement, arrangement or obligation restricting
each Group Company's freedom to operate the whole or part of its
business or to use or exploit any of its assets;
(D) a sale or purchase, option or similar agreement,
arrangement or obligation affecting an asset owned, occupied,
possessed or used by each Group Company or by which each Group
Company is bound;
(E) a material agreement, arrangement or obligation with
which each Group Company cannot comply on time or without undue
or unusual expenditure of money or effort;
69
(F) a contract for the sale of shares or assets comprising
a business undertaking which contains warranties or indemnities
under which any Group Company still has a remaining liability or
obligation or can be terminated as a result of any change in the
underlying ownership or control of any Group Company, or would be
materially affected by such change; or
(G) an agreement, arrangement or obligation which is in any
way otherwise than in the ordinary course of any Company's
business.
4. Each Group Company is not:
(A) a member of a joint venture, consortium, partnership or
association (other than the bona fide trade association); or
(B) a party to a distributorship, agency, franchise or
management agreement or arrangement.
14. Terms of Trade and Business
1. Each Group Company has paid its creditors within the
times agreed with them. No debt owing by it has been due for more
than 30 days.
2. During the year ending on the date of this Agreement,
no substantial supplier or customer of each Group Company has:
(A) stopped, or indicated an intention to stop, trading
with each Company;
(B) reduced, or indicated an intention to reduce, trading
with each Company; or
(C) changed or indicated an intention to change,
substantially the terms on which it is prepared to trade with
each Group Company.
3. To the best of the Vendor's knowledge, information and
belief no substantial supplier or customer of each Group Company
is likely to:
(A) stop trading with each Group Company;
70
(B) reduce substantially its trading with each Group
Company; or
(C) change substantially the terms on which it is prepared
to trade with each Group Company.
4. To the best of the Vendor's knowledge, information and
belief, the attitude of customers, suppliers and employees with
regard to each Group Company will not be prejudicially affected
by the execution or performance of this Agreement or any document
to be executed at or before Completion.
5. No Group Company has entered into an agreement or
arrangement with a supplier or customer in terms materially
different to its standard terms of business.
6. No person (either individually or jointly with another
person) has bought from or sold to each Company, either in the
financial year of each Group Company ended on the Reference
Accounts Date or since the Reference Accounts Date, more than
five per cent of the total amount of all purchases or sales made
by each Group Company in that period.
7. No Group Company has outstanding any bid, tender, sale
or service proposal.
8. None of the records, systems, data or information of
each Group Company is recorded, stored, maintained, operated or
otherwise wholly or partly dependent on or held or accessible by
any means (including, without limitation, any electronic,
mechanical or photographic process, computerised or not) which
are not under the exclusive ownership and direct control of each
Group Company.
9. Each Group Company has at all times complied with the
Data Protection Acts 1984 and 1998 (including, for the avoidance
of doubt, the data protection principles set out in Schedule 1 to
the Data Protection Act 1984 and the Telecommunications (Data
Protection and Privacy) (Direct Marketing) Regulations 1998.
15. Effect of Sale
Neither the execution nor the performance of this Agreement
or any document to be executed at or before Completion will
result in any Group Company losing the benefit
71
of any licence, consent, permit, approval or authorisation
(public or private) necessary for carrying on each Group
Company's business in the places and in the manner currently
carried on or any asset, grant, subsidy, right or privilege which
it enjoys at the date of this Agreement or will:
(A) conflict with;
(B) result in the breach of;
(C) give rise to an event of default under;
(D) require the consent of a person under;
(E) enable a person to terminate; or
(F) relieve a person from an obligation under
any agreement or arrangement to which any Group Company is a
party or any legal or administrative requirement by which any
Group Company is bound or result in any present or future
indebtedness of any Group Company becoming due or capable of
being declared due and payable prior to its stated maturity.
16. Employees
1. There is no employment or other contract of engagement
between any Group Company and any of its directors or other
officers. No Group Company is a party to a consultancy contract.
2. There is no employment contract between any Group
Company and any its employees which cannot be terminated by any
Group Company by three months notice or less without giving rise
to a claim for damages or compensation (other than a statutory
redundancy payment or statutory compensation for unfair
dismissal).
3. There is no employment or consultancy contract or other
contract of engagement between any Group Company and any person
which is in suspension or has been terminated but is capable of
being revised or enforced and in respect of which each Company
has a continuing obligation.
72
4. The Disclosure Letter contains details of :
(A) the total number of Group Company's employees including
those who are on maternity leave or absent because of disability
or other long-term leave of absence and who have or may have a
right to return to work with each Group Company.
(B) the name, date of start of employment, period of
continuous employment, salary and other benefits, grade and age
of each employee of each Group Company and, where an employee has
been continually absent for more than one month, the reason for
the absence; and
(C) the terms of the contract of each director, other
officer and employee of each Group Company entitled to
remuneration at an annual rate or an average annual rate, or an
average annual rate over the last three financial years, of more
than 10,000.
5. The basis of the remuneration payable to each Group
Company's directors, other officers and employees is the same as
that in force at the Reference Accounts Date. Each Group Company
is not obliged to increase, nor has it made provision to
increase, the total annual remuneration payable to its directors,
other officers and employees by more than five per cent.
6. No Group Company owes any amount to a present or former
director, other officer or employee of each Group Company (or his
dependent) other than for accrued remuneration or reimbursement
of business expenses.
7. There is no agreement or arrangement between each Group
Company and an employee or former employee with respect to his
employment, his ceasing to be employed or his retirement which is
not included in the written terms of his employment or previous
employment. No Group Company has provided, or agreed to provide,
a gratuitous payment or benefit to a director, officer or
employee or to any of their dependents.
8. Each Group Company has maintained up-to-date, full and
accurate records regarding the employment of each of its
employees (including, without limitation, details of terms of
employment, payments of statutory sick pay and statutory
maternity pay, income tax and social security contributions,
disciplinary and health and safety matters), and termination of
employment.
73
9. Except as disclosed in the Accounts, no Group Company
has:
(A) incurred a liability for breach or termination of an
employment contract including, without limitation, a redundancy
payment, protective award and compensation for wrongful
dismissal, unfair dismissal and failure to comply with an order
for the reinstatement or re-engagement of an employee;
(B) incurred a liability for breach or termination of a
consultancy agreement; or
(C) made or agreed to make a payment or provided or agreed
to provide a benefit to a present or former director, other
officer or employee of each Company or to any of their dependents
in connection with the actual or proposed termination or
suspension of employment or variation of an employment contract.
10. Each Group Company has complied with:
(A) each obligation imposed on it by, and each order and
award made under, statute, regulation, code for conduct and
practice, collective agreement, custom and practice relevant to
relations between it and its employees or a trade union or the
terms of employment of its employees; and
(B) each recommendation made by the Advisory, Conciliation
and Arbitration Service and each award and declaration made by
the Central Arbitration Committee.
11. Within the year ending on the date of this Agreement, no
Group Company has:
(A) given notice of redundancies to the relevant Secretary
of State or started consultations with a trade union under
Chapter II of Part IV of the Trade Union and Labour Relations
(Consolidation) Act 1992 or failed to comply with its obligations
under Chapter II of Part IV of that Act; or
(B) been a party to a relevant transfer (as defined in the
Transfer of Undertakings (Protection of Employment Regulations
1981) or failed to comply with a duty to inform and consult a
trade union under those Regulations.
12. No Group Company has any arrangement with and does not
recognise a trade union, works council, staff association or
other body representing any of its employees.
74
13. No Group Company is involved in, and no fact or circumstance
exist which might give rise to, a dispute with a trade union,
works council, staff association or other body representing any
of its employees.
14. No Group Company has and is not proposing to introduce a
share incentive, share option, profit sharing, bonus or other
incentive scheme for any of its directors, other officers or
employees.
15. There is not and has not been a training scheme, arrangement
or proposal in relation to each Company in respect of which a
levy may become payable by each Company under the Industrial
Training Act 1982.
17. Pensions and Other Benefits
1. Save in respect of The Plan, the Group Companies have
no obligation (whether legally binding or not) to provide
"relevant benefits" (within the meaning of Section 612 ICTA 1988)
to, or in respect of any person who is now or has been an officer
or employee of any Group Company or spouse or dependent of such
officer or employee;
2. Full and accurate details and particulars of The Plan
have been disclosed in the Disclosure Letter together with
accurate, up-to-date and complete copies of all documents
relating to The Plan including a list of investments held for The
Plan and there is no obligation to provide benefits under The
Plan other than as revealed in such documents and particulars;
3. The Plan is an "exempt approved scheme" (within the
meaning of Chapter I of Part XIV ICTA 1988) and, to the best of
the Vendor's knowledge and awareness, there is no reason why
approval of the Board of Inland Revenue should be withdrawn;
4. Other than benefits on death as disclosed, The Plan
provides only money purchase benefits as defined in Section 181
Pension Schemes Act 1993. No person who is now or has been an
officer or employee has been promised that he or his dependents
will receive benefits on his retirement, death or leaving service
other than money purchase benefits as defined above.
5. During the Vendor's period of ownership of the
Companies, the provisions of The Plan has never discriminated
between male and female members.
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6. All premiums payable under contracts of insurance
relating to payment of benefits on death before normal pension
age in respect of any officer or employee of any Group Company
have been paid and all contributions to, and expenses of, The
Plan which have fallen due for payment have been paid.
7. Except as fairly disclosed in the Disclosure Letter,
there is no dispute with regard to the benefits payable under The
Plan or any other payments or benefits referred to in paragraph
17.1. Except as fairly disclosed in the Disclosure Letter, no
legal proceedings in connection with The Plan are pending,
threatened or expected nor is there any fact or circumstance
likely to give rise to any such proceedings.
8. The Plan has at all times complied with and been
administered in accordance with the provisions governing it and
all applicable laws, regulations and requirements, including the
requirements of the Inland Revenue for continued approval as an
exempt approved scheme, and of trust law.
9. The Group Companies have at all times complied with all
the provisions of The Plan which apply to it.
10. The Plan is not a contracted out plan within the meaning of
the Pension Schemes Act 1993.
18. Liabilities
1. Except as disclosed in the Accounts or in the
Disclosure Letter, no Group Company has any outstanding and has
not agreed to create or incur loan capital, borrowing or
indebtedness in the nature of borrowing.
2. No Group Company is a party to and is not liable under
a guarantee, indemnity or other agreement to secure or incur a
financial or other obligation with respect to another person's
obligation.
3. No part of the loan capital, borrowing or indebtedness
in the nature of borrowing of each Group Company is dependent on
the guarantee or indemnity of, or security provided by, another
person.
76
4. No event has occurred or been alleged to have occurred
which:
(A) constitutes an event of default, or otherwise gives
rise to an obligation to repay, under an agreement relating to
borrowing or indebtedness in the nature of borrowing (or will do
so with the giving of notice or lapse of time or both) or
(B) will lead to an Encumbrance constituted or created in
connection with borrowing or indebtedness in the nature of
borrowing, a guarantee, an indemnity or other obligation of each
Group Company becoming enforceable (or will do so with the giving
of notice or lapse of time or both).
5. No Group Company is liable to repay an investment or
other grant or subsidy made to it by a body (including, without
limitation, the Department of Trade and Industry or its
predecessor).
6. No fact or circumstance (including, without limitation,
execution and performance of this Agreement) exists which might
entitle a body to require repayment of, or refuse an application
by each Group Company for, the whole or part of a grant or
subsidy.
7. No subsidiary or affiliate of the Guarantor is a
creditor of the Guarantor.
8. No subsidiary or affiliate of the Vendor is a creditor
of the Vendor.
9. The Guarantor has no liabilities or obligations of any
nature, whether known or unknown, absolute, accrued, contingent
or otherwise and whether due or to become due, arising out of or
relating to the business and operations of the Guarantor as
previously or currently conducted or contemplated to be conducted
except (a) as and to the extent disclosed or provided for in the
Financial Statements and (b) for liabilities and obligations that
(i) were incurred after the date of the Financial Statements in
the ordinary course of business consistent with past practice;
(ii) individually and in the aggregate would not have a material
adverse effect; and (iii) do not and will not materially impair
the ability of the Guarantor to perform its obligations hereunder
or under any document, instrument, certificate or agreement
necessary to transfer to the Purchaser good and valid title to
the Shares, free and clear of any and all Encumbrances thereon,
at the Completion Date, or the ability of the Purchaser to
conduct the business and operations of the Company from and after
the Completion Date.
77
10. The Vendor has no liabilities or obligations of any nature,
whether known or unknown, absolute, accrued contingent or
otherwise and whether due or to become due, arising out of
relating to the business and operations of the Vendor as
previously or currently conducted or contemplated to be conducted
except (a) as and to the extent disclosed or provided for in the
Accounts and (b) for liabilities and obligations that (i) were
incurred after the Reference Accounts Date in the ordinary course
of business consistent with past practice; (ii) individually and
in the aggregate would not have a material adverse effect; and
(iii) do not and will not materially impair the ability of the
Vendor to perform its obligations hereunder or under any
document, instrument, certificate or agreement necessary to
transfer to the Purchaser good and valid title to the Shares,
free and clear of any and all Encumbrances thereon, at the
Completion Date, or the ability of the Purchaser to conduct the
business and operations of the Company from and after the
Completion Date.
19. Permits
1. Each Group Company has obtained and has complied with
the terms and conditions of each Permit.
2. Details of each Permit are set out in the Disclosure
Letter.
3. Each Permit is in force, unimpeachable and
unconditional or subject only to a condition that has been
satisfied. No expenditure or work is or will be necessary to
comply with, maintain or obtain a Permit. To the best of the
Vendor's knowledge, information and belief, no Permit will be
revoked, suspended, canceled or varied or not renewed.
4. Each action required for the renewal or extension of
each Permit has been taken.
5. No Permit will be revoked, suspended, canceled, varied
or not renewed as a result of the execution or performance of
this Agreement or any document to be executed at or before
Completion and there is no circumstances which indicate that any
such Permit is likely to be revoked, suspended, canceled, varied
or not renewed or that any of them will expire within a period of
one year from the date of this Agreement.
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20. Insolvency
1. No order has been made, petition presented or
resolution passed for the winding up of any Group Company or for
the appointment of a provisional liquidator to any Group Company
and no administration order has been made in respect of each
Group Company.
2. No receiver or manager has been appointed of the whole
or part of any Group Company's business or assets.
3. No voluntary arrangement has been proposed under
Section 1 of the Insolvency Act 1986 in respect of any Group
Company. No compromise or arrangement has been proposed, agreed
to or sanctioned under section 425 of the CA 1985 in respect of
each Group Company.
4. No Group Company is insolvent or unable to pay its
debts within the meaning of Section 123 of the Insolvency Act
1986.
5. No Group Company has stopped paying its debts as they
fall due.
6. No distress, execution or other process has been levied
on an asset of each Group Company or action taken to repossess
goods in each Group Company's possession which has not been
satisfied in full.
7. There is no unsatisfied judgment or court order
outstanding against any Group Company.
8. No floating charge created by any Group Company has
crystallized and, so far as the Vendor is aware, there are no
circumstances likely to cause such floating charge to
crystallize.
9. No action has been taken by the Registrar of Companies
to strike any Group Company off the register under section 652 of
the CA 1985.
10. No Group Company has at any time during the two years
immediately prior to the date of this Agreement:
79
(A) entered into a transaction with any person at an
undervalue (as referred to in Section 238(4) of the Insolvency
Act 1986) or
(B) been given a preference by any person (as referred to
in section 239(4) of the Insolvency Act 1986).
11. No event analogous to any of the foregoing has occurred in
or outside England.
21. Competition
1. No Group Company has any liability under, and is not a
party to, any agreement or arrangement
(A) particulars of which have been furnished to the
Director General of Fair Trading under the Restrictive Trade
Practices Acts 1976 and 1977;
(B) which is prohibited by any competition law.
2. No Group Company has given an undertaking or written
assurance (legally binding or not) to a governmental authority or
an authority of the European Communities or European Economic
Area under the Fair Trading Act 1973, Competition Act 1980,
Restrictive Trade Practices Acts 1976 and 1977, Resale Prices Act
1976, Treaty of Rome, Agreement on the European Economic Area or
any other statute or legal instrument. No Group Company is
affected by an order or regulation made under the Fair Trading
Act 1973 or the Competition Act 1980 or by a decision of the
Commission of the European Communities, EFTA Surveillance
Authority or a competition or governmental authority of another
jurisdiction.
3. No Group Company has received a communication or
request for information relating to any aspect of each Group
Company's business from or by the Director General of Fair
Trading, Competition Commission, Secretary of State for Trade and
Industry, Commission of the European Communities or EFTA
Surveillance Authority or a competition or governmental authority
of another jurisdiction. No agreement, arrangement or conduct
(by omission or otherwise) of each Group Company is or has been
the subject of an investigation, report or decision by any of
those persons or bodies and none is pending or threatened. To
the best of the Vendor's knowledge, information and belief, no
fact or circumstance exists which might give rise to an
investigation, report or decision by any of those persons or
bodies.
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22. Litigation and Compliance with Law
1. No Group Company nor a person for whose acts or
defaults each Group Company may be vicariously liable is
involved, or has during the two years ending on the date of this
Agreement been involved, in a civil, criminal, arbitration,
administrative or other proceedings. No civil, criminal,
arbitration, administrative or other proceeding is pending or
threatened by or against each Group Company or a person for whose
acts or default each Group Company may be vicariously liable.
2. To the best of the Vendor's knowledge, information and
belief, no fact or circumstance exists which might give rise to a
civil, criminal, arbitration, administrative or other proceeding
involving each Group Company or a person for whose acts or
defaults each Group Company may be vicariously liable.
3. There is no outstanding judgment, order, decree,
arbitral award or decision of the court, tribunal, arbitrator or
governmental agency against each Group Company or a person for
whose acts or defaults each Group Company may be vicariously
liable.
4. Each Group Company has, in the Vendor's reasonable
knowledge, conducted its business and dealt with its assets in
all material respects in accordance with all applicable legal and
administrative requirements.
5. There is not and has not been any governmental or other
investigation, inquiry or disciplinary proceeding concerning each
Group Company and none is pending or threatened. To the best of
the Vendor's knowledge, information and belief no fact or
circumstance exits which might give rise to an investigation,
inquiry or proceeding of that type.
6. No Group Company or any person for whose acts or
defaults each Group Company may be vicariously liable has:
(a) induced a person to enter into an agreement or
arrangement with any Group Company by means of a unlawful or
immoral payment, contribution, gift or other inducement;
(b) offered or made an unlawful or immoral payment,
contribution, gift or other inducement to a government official
or employee; or
(c) directly or indirectly made an unlawful contribution to
a political activity.
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23. Insider Agreements
There is not, and during the three years ending on the date
of this Agreement, there has not been, any agreement or
arrangement (legally enforceable or not) to which any Group
Company is or was a party and in which any of the Vendor, a
director or former director of any Group Company or a person
connected with any of them is or was interested in any way. For
this purpose, "connected" has the meaning given by section 839 of
ICTA, except that in construing section 839 "control" has the
meaning given by section 840 or section 416 of ICTA so that there
is control wherever either section 840 or 416 requires.
24. Miscellaneous
1. Each Group Company is operating and has always operated
its business in all respects in accordance with its memorandum
and articles of association at the relevant time.
2. Each register, minute book and other book which the CA
1985 requires each Group Company to keep has been properly kept
and contains a complete and accurate record of the matters which
it is required by the CA 1985 to record. No notice has been
received or allegation made that a register or book is incorrect
or should be rectified.
3. All returns, particulars, resolutions and other
documents required to be delivered by each Group Company to the
Registrar of Companies and other governmental or other authority
or agency have been properly prepared and delivered.
4. No Group Company has not given a power of attorney or
other authority by which a person my enter into an agreement,
arrangement or obligation on any Group Company's behalf (other
than an authority for a director, other officer or employee to
enter into an agreement in the usual course of that person's
duties).
25. Brokerage or Commission
No person is entitled to receive a finder's fee, brokerage
or commission from any Group Company in connection with this
Agreement.
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SCHEDULE 5
Properties
1. The Coventry Property - Premises at Coventry Walsgrave
Triangle, Hinckley Road, Coventry more particularly described
in a lease dated January 24, 1992 between Ashford Developments
Limited (1) and Husky Computers Limited (2) (the "Coventry
Lease"). Leasehold - for a term of 25 years from December 16,
1991 (registered at HM Land Registry under title no:
WK340933).
2. 30, rue du Morvan, Batiment G, Rungis.
Leasehold - for a term of 9 years from April 15, 1989 between
SILIC and the French Office of WPI Husky.
12, rue Le Corbusier, Parc d'Affaires SILIC, Batiment Iena B2,
Rungis.
Leasehold - for a term of 9 years from June 1, 1998 between
SILIC and the French Office of WPI Husky.
3. Leasehold - for a term of 5 years from April 1995 until March
28, 2000 (automatic renewal for 5 years unless terminated)
between WPI Husky GmbH and Helmut Hermes Verpachtungen.
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SCHEDULE 6
Property Provisions
Terms of Sale and Leaseback or Surrender and New Lease of the
Coventry Property
Section 1
1..The Vendor agrees with the Purchaser to accept or procure the
acceptance by one of its affiliates of an assignment
("Assignment") of the Coventry Lease and the Purchaser agrees
to grant or procure the grant of the Assignment (and where
reference in this Schedule is made to WPI Husky it shall mean
the Purchaser or at its direction WPI Husky) upon the
following provisions of this part of this Schedule.
2..Insofar as the same are applicable and are not consistent
with or varied by the express terms of this Agreement, the
foregoing agreement relating to the Assignment shall
incorporate the Standard Conditions of Sale (Third Edition)
("Conditions") as varied in the manner set out below and for
the avoidance of doubt for the purposes of the Conditions the
seller is the Purchaser or at its discretion WPI Husky and
the Vendor is the buyer.
1. In paragraphs (a) and (b) of Condition 1.3.6 the words
"unless returned undelivered" shall be added after the word
"posting".
2. Paragraph (c) of Condition 3.1.2 shall be amended to read
those of which the seller does not have actual knowledge
and the following paragraph (f) shall be added to the
Condition:
"(f) all other matters disclosed or reasonably to be expected
to be disclosed by searches and as a result of enquiries made
by or for the buyer or which a prudent buyer ought to make".
3. In Condition 3.1.3 the words "of which he receives actual
knowledge" shall be inserted after the words "new public
requirement" and shall also be substituted for the words
"which he learns about".
4. Condition 4.3.2 shall not apply.
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5. Conditions 5.1.1 and 5.2.1 shall not apply and the risk of
damage to or destruction of the Coventry Property passes to
the Vendor from the date of this Agreement save that the
Purchaser shall continue to comply with the insurance
provisions of the Coventry Lease.
6. The following proviso shall be added at the end of Condition
6.6:
"PROVIDED that the production of such receipt shall not be
a condition of completion but if the seller is unable to
produce the same then the Vendor shall furnish such other
evidence (if any) as may be available in respect thereof"
and in paragraph (a) of Condition 8.3.2 the words "but the
Seller shall not be obliged to pay a premium for such
consent" shall be added after the words "obtain it".
7. The Coventry Lease is sold together with all easements,
rights and licences attaching or appurtenant thereto and all
buildings, structures and fixed and non-severable plant,
machinery and equipment thereon except:
(A) property belonging to the suppliers of gas, water,
electricity, telecommunications or other services; and
(B) landlord's fixtures and fittings; and
(C) tenant's and trade fixtures and fittings on any part of
the Coventry Property which are owned by the Purchaser
or WPI Husky
but subject to the easements, rent charges, covenants,
restrictions, leases, tenancies (including statutory
tenancies), licences, agreements, overriding interests (as
defined in Section 70(1) of the Land Registration Act 1925)
and also are sold subject also to the rents, covenants and
conditions reserved by or contained in the leases under which
the same are respectively held.
The Vendor shall raise no requisitions nor make any objection
in respect of any of the above.
8. The Assignment shall be made without title guarantee.
9. The Vendor (as the transferee) will covenant with WPI Husky
(as the transferor) as follows:
85
"The Assignee hereby covenants with the Assignor that the
Assignee and the Assignee's successors in title will
henceforth during the continuance of the term of the Lease
pay the rents reserved thereby and observe and perform the
lessee's covenants and the conditions contained therein and
will indemnify the Assignor and the successors in title of
the Assignor from and against all actions, proceeds, costs,
claims, expenses and liability for or on account of (i) any
future breach, non-observance or non-performance thereof and
(ii) any breach, non-observance or non-performance of any
covenants concerning the state or condition of the Property".
10.The Vendor is deemed to buy with knowledge in all respects of
the authorised uses of the Coventry Property for the purposes
of the enactments from time to time in force relating to town
and country planning.
11.Upon the actual completion of the sale and purchase of the
Coventry Property the Vendor shall simultaneously grant and
WPI Husky shall accept the New Sublease of the Coventry
Property.
3..Consents to Transfer of Coventry Property and New Sublease
1. WPI Husky shall (or at the request of the Vendor, permit the
Vendor to):
(A) apply at the expense of the Vendor for consent to assign
the Coventry Property to the Vendor and for the grant of
the New Sublease to WPI Husky by the Vendor; and
(B) use all reasonable endeavours to obtain such consent;
(C) keep the Vendor fully informed of all progress made with
regard to the obtaining of such consent;
(D) enter into a direct covenant with the landlord for the
New Sublease as reasonably required by the Coventry
lease.
2. The Vendor shall in connection with obtaining the consents
referred to in paragraph 3.1.1 above:
(A) provide all information and references reasonably
required by the landlord;
86
(B) enter into direct covenants and provide such other
security as required under the Coventry lease or as the
landlord may otherwise require.
Section 24.
1. The Vendor may, if it appears that the Landlord will not
grant such consents, request that negotiations be had with
the Landlord for the Landlord to take a surrender from WPI
Husky of the Coventry Lease (at a premium or otherwise) and
the simultaneous grant of a new lease by the Landlord to WPI
Husky upon the same terms as the New Sublease.
2. WPI Husky, as tenant under the Coventry Lease, shall
authorise in writing Mike Tule of the Vendor to conduct all
negotiations with the Landlord but he shall have no authority
to bind or commit WPI Husky or the Purchaser and all
negotiations shall be on a subject to contract and without
prejudice basis.
3. Mr. Tule shall keep WPI Husky fully informed of the progress
of any negotiations, invite WPI Husky to attend any meetings,
and copy them in on all correspondence.
4. Any negotiations by the Vendor and/or Mr. Tule under this
Schedule shall be at the cost of the Vendor and any costs and
expenses required by the landlord (including legal) in
connection with such negotiations and the completion of any
documentation shall also be at the cost of the Vendor and the
Purchaser and WPI Husky shall be indemnified by the Vendor in
respect of such costs.
5. In the event that a surrender of the Coventry Lease and grant
of a new lease to WPI Husky can be negotiated, the Vendor
shall pay and indemnify, in addition to the costs and
expenses of the Landlord, any premium or other consideration
required by the Landlord for such Surrender including VAT
thereon and all stamp duty payable on the new lease.
6. WPI Husky shall retain the discretion as to whether the terms
proposed by the Landlord for the surrender or a new lease are
acceptable to the Purchaser provided that the Purchaser shall
if the following conditions are fulfilled procure that WPI
Husky effects such surrender and accepts a new lease.
7. The conditions referred to in the foregoing paragraph are:
(A) Any premium demanded by the Landlord is paid by the
Vendor;
87
(B) All costs are met by the Vendor;
(C) The terms of the surrender do not impose any post
completion obligations on WPI Husky and all pre-
completion obligations are observed or performed by the
Vendor at the Vendor's costs;
(D) The terms of the new lease offered by the Landlord are
those of the New Sublease.
Section 3
5. In this Schedule:-
"New Sublease" means a sublease of the whole of the Coventry
Property to be granted by the Vendor as Transferee of the
Coventry Lease at the passing rent currently payable under
the Coventry Lease for a term of five years commencing on the
date of the Assignment with a rent review at 25/12/2001
substantially in the form of the Coventry Lease except that
the Tenant shall not be liable to keep the premises the
subject of the demise in a better state or condition than at
the date of this Agreement and the Lease shall contain an
option for the Tenant upon giving not less than 6 months'
notice before the end of the term for a further lease for a
term expiring 10 years after the date of the Assignment with
a review as at 25.12.2006.
Section 4
6..The Vendor shall by the End Date either:
1. Complete the Assignment and the grant of the New
Sublease; or
2. Complete the Surrender and procure the grant of a
new lease.
7..In paragraph 6 the End Date means 90 days after the date of
this Agreement.
88
SCHEDULE 7
Purchase Price Apportionment
Purchase Price apportioned to the Shares: U.S. $20,704,400
Purchase Price apportioned to the US Assets: U.S. $10,908,400
Purchase Price apportioned to the UK Assets: U.S. $3,000,000
Total Purchase Price U.S. $34,612,800
89
SCHEDULE 8
Accounting Principles
UK GAAP
SIGNED BY )
on behalf of )
DYNATECH NOMINEES ) MARK TREMALLO
LIMITED in the presence of:- )
Witness: ALLAN M. KLINE
Signature:
Address:
Occupation: DIRECTOR
SIGNED BY JOHN ALLARD )
for and on behalf of )
WPI GROUP (UK) ) JOHN ALLARD
in the presence of:- )
Witness: LINDA M. RACETTE
Signature:
Address: 54 MAPLE LANE, MANCHESTER, NH 03109
Occupation: LEGAL ASSISTANT
90
SIGNED BY JOHN ALLARD )
for and on behalf of ) JOHN ALLARD
WPI GROUP INC. )
in the presence of:- )
Witness: LINDA M. RACETTE
Signature:
Address: 54 MAPLE LANE, MANCHESTER, NH 03109
Occupation: LEGAL ASSISTANT
91
TABLE OF CONTENTS
1 Sale and Purchase of Shares 2
2 Completion 3
3 Completion Accounts 6
4 Warranties 12
5 Action Pending Completion 13
6 Purchaser's Rights 16
7 Limitations on the Vendor's Liability 17
8 Use of Intellectual Property Rights 20
9 Vendor's Undertakings and Guarantee 20
10 Confidential Information 24
11 Announcements 25
12 Competition 25
13 Costs 26
14 Interest 27
15 General 27
16 Assignment 27
17 Time of the Essence 27
18 Further Assurance 27
i
19 Interpretation 28
20 Notices 34
21 Governing Law and Jurisdiction 35
22 Counterparts 35
SCHEDULE 1 36
SCHEDULE 2 37
SCHEDULE 3 39
SCHEDULE 4 42
SCHEDULE 5 73
SCHEDULE 6 74
SCHEDULE 7 79
SCHEDULE 8 80
ii
WPI Group (UK)
and
WPI Group Inc.
and
Dynatech Nominees Limited
AGREEMENT FOR THE SALE AND PURCHASE
OF SHARES IN
WPI HUSKY TECHNOLOGY LTD AND WPI
HUSKY TECHNOLOGY GMBH
EXHIBIT 10.25
BUSINESS SALE AGREEMENT
THIS AGREEMENT is made on 22 February, 2000
BETWEEN:
(1) WPI Oyster Termiflex Limited (registered in England
and Wales under Company Number 01167923) the registered office
of which is at Eden Road, Walsgrave Triangle Business Park,
Coventry, West Midlands CV2 2TB (the "Vendor"); and
(2) Dynatech Corporation Limited (registered in England
and Wales under Company Number: 02475549) the registered
office of which is at Marlborough House, 3-5 Worton Drive,
Worton Grange, Reading, Berkshire, RG2 0TG (the "Purchaser").
RECITALS
A. WPI Group (UK), WPI Group Inc. and Dynatech Nominees
Ltd. are parties to an agreement of even date herewith for the
sale and purchase of shares in WPI Husky Technology Ltd. and
WPI Husky Technology GmbH (each a "Group Company" and together
the "Group Companies") (the "Share Purchase Agreement").
B. The Vendor is a wholly-owned subsidiary of WPI Group
(UK) and the Purchaser owns the entire issued share capital of
Dynatech Nominees Ltd.
C. The Business is now and has for some time past been
carried on by the Vendor as beneficial owner.
D. The Vendor has agreed to sell and transfer and the
Purchaser has agreed to purchase the Business (together with
the Assets) as a going concern on the terms and conditions of
this Agreement and in particular on the basis of the
representations, warranties, undertakings, agreements and
indemnities set out in this Agreement.
IT IS AGREED as follows:
1. Definitions and Interpretation.
1.1 Unless the context requires otherwise, in this
Agreement capitalised terms shall have the meaning given to them
in the Share Purchase Agreement and as applied to this Agreement,
except that the following words shall have the following
meanings:
"Assets" means the assets of the Business agreed to be sold
and purchased pursuant to this Agreement as described in
Clause 2.1;
"Assumed Liabilities" means the liabilities of the Business
assumed by the Purchaser pursuant to Clause 2.2;
"Book Debts" means all trade and other debts including pre-
payments owing to the Vendor on the Transfer Date to the
extent taken into account in the Completion Accounts;
"Business" means the business of WPI Oyster Termiflex Ltd.
carried on by the Vendor at the Transfer Date;
"Business Contracts" means the Customer Contracts, Supplier
Contracts, Computer Contracts, IP Licenses, and the
Leasing/Hire Agreements including without limiting the
generality of the foregoing words, all those contracts
particulars of which are set out in Schedule 3;
"Business Information" means all information, know-how and
techniques (whether or not confidential and in whatever form
held) which in any way relates to: (i) all or any part of the
Business and Assets; (ii) any products manufactured and/or
sold or services rendered by the Business; (iii) any formulas,
designs, specifications, drawings, data, manuals or
instructions; (iv) the operations, management, administration,
or financial affairs of the Business (including any business
plans or forecasts, information relating to future business
development or planning information relating to litigation or
legal advice); and (v) the sale or marketing of any of the
products manufactured and/or sold or services rendered by the
Business, including, but without limiting the generality of
the foregoing words, all customer names and lists, sales and
marketing information (including but not limited to targets,
sales and market share statistics, market surveys and reports
on research);
"Business Intellectual Property" means all Intellectual
Property owned, used or enjoyed by the Vendor or any member of
the Vendor Group in connection with the Business as carried on
at the Transfer Date (including, without limiting the
generality
2
of the foregoing words, those specified in Schedule 5)
together with any Intellectual Property which is or has been
used in the Business or which is needed to fulfil any Customer
Contracts;
"Completion" means the completion of the sale and purchase
of the Business and the Assets in accordance with Clause 6 and
Schedule 1;
"Completion Date" means the date of Completion of this
Agreement;
"Computer Contracts" means all arrangements and agreements
pursuant to which any third party, including any member of the
Vendor Group, provides any element of the Computer System to
the Business;
"Computer System" means all computer hardware, software and
networks owned or used by the Business including all
arrangements relating to the provision of maintenance and
support, security, disaster recovery, facilities management,
bureau and on-line services to the Business;
"Connected" means connected as defined in Section 839,
Income and Corporation Taxes Act 1988;
"Consideration" means the total purchase price payable by
the Purchaser to the Vendor for the Business and Assets
pursuant to Clause 5;
"Creditors" means all trade and other debts, accrued
charges and all other amounts owing by the Vendor in
connection with the Business on the Transfer Date to the
extent taken into account in the Completion Accounts but for
the avoidance of doubt, excluding the Excluded Liabilities;
"Customer Cash" means all cash sums belonging or referable
to customer or potential customers of the Business which are
held by or deposited with the Vendor as deposits for, or
advance or instalment payments in relation to, any Business
Contract or so held or deposited in relation to any future
contract or order which any such customer may place with the
Business in the future;
"Customer Contracts" means all those contracts, engagements
or orders entered into on or prior to the Transfer Date by or
on behalf of the Vendor with customers for the sale, loan or
hire of goods or equipment or provision of services by the
Vendor in
3
connection with and in the ordinary course of Business which
at the Transfer Date remain to be performed in whole or in
part by the Vendor;
"Employees" means the persons employed in the Business at
the date of this Agreement (whose names and addresses are set
out in Schedule 4 together with certain particulars of their
respective employments);
"Excluded Assets" means the assets referred to in Clause
3.1 as being excluded from the sale pursuant to this
Agreement;
"Excluded Liabilities" means the liabilities referred to in
Clause 3.2 as being excluded from the sale pursuant to this
Agreement;
"Fixtures and Fittings" means the fixtures (other than the
Plant and landlords' fixtures) and the fittings (other than
landlords' fittings), plant and machinery (other than the
Plant), furniture, utensils, templates, implements, chattels
and equipment wherever situate belonging to the Vendor and
used in connection with the Business;
"Goodwill" means the goodwill custom and connection of the
Vendor in relation to the Business together with the exclusive
right of the Purchaser and its successors and assigns to the
use of the name "Oyster" (but for the avoidance of doubt
excluding the name "Termiflex") and to represent themselves as
carrying on the Business in succession to the Vendor;
"IP Licenses" means any licences, authorisations and
permissions in any form whatsoever whether express or implied,
pertaining to the use, enjoyment and exploitation by (i) the
Vendor or any member of the Vendor Group of any Intellectual
Property or Business Information in connection with the
Business as carried on at the Transfer Date, and (ii) any
third party of any Business Intellectual Property or Business
Information;
"Leasing/Hire Agreements" means all those contracts,
engagements or orders entered into on or prior to the Transfer
Date by or on behalf of the Vendor in relation to the leasing,
lease purchase or hire of goods or equipment for use in and in
the ordinary course of the Business which on the Transfer Date
remain to be performed in whole or in part;
"Motor Vehicles" means those motor vehicles, details of
which are set out in Schedule 6;
4
"Permit" means:
(a) a permit, licence, consent, approval, certificate,
qualification, specification, registration or other
authorisation; or
(b) a filing of a notification, report or assessment,
in each case necessary for the effective operation of the
Vendor's Business and Assets as currently conducted;
"Plant" means all plant, equipment and machinery wherever
situate belonging to the Vendor and used in connection with
the Business;
"Premises" means the Coventry Property;
"Records" means the books, accounts, lists of customers,
credit reports, price lists, cost records, work tickets,
catalogues, advertising and all the other documents, papers
and records (however stored) (including VAT records) of the
Vendor relating to the Business or any of the Assets;
"RTPA" means the Restrictive Trade Practices Act 1976;
"Security Interest" means and includes encumbrance,
mortgage, charge, assignment for the purpose of security,
pledge, lien, right of set-off, retention of title or
hypothecation for the purpose, or which has the effect, of
granting security interest of any kind whatsoever and any
agreement, whether conditional or otherwise, to create any of
the foregoing;
"Stock" means the stock-in-trade of the Business at the
Transfer Date including (without limitation) raw materials,
goods and other assets purchased for resale, stores, component
parts, work in progress, together with finished products and
packaging and promotional material, all of which is owned or
agreed to be bought by the Vendor in connection with the
Business at the Transfer Date (including any items which,
although subject to reservation of title by the sellers, are
under the control of the Vendor);
"Supplier Contracts" means all contracts, engagements or
order entered into on or prior to the Transfer Date by or on
behalf of the Vendor for the supply or sale of
5
goods to the Vendor in connection with and in the ordinary
course of the Business which at the Transfer Date remain to be
performed;
"The Plan" means the WPI Group Money Purchase Plan and
where the context so requires, the trustees of the Plan;
"Transfer Date" shall mean the date of Completion;
"Tintern House" means the freehold property known as
Tintern House, Llantarnam, Cwmbran, Newport, Wales, NP44 3AB
and registered in the name of the Vendor (Title no: WA827883);
"VAT" means Value Added Tax or any similar tax from time to
time replacing it or performing a similar fiscal function;
"Vendor Group" means the Vendor, its holding company and
all companies and undertakings which now or in the future
become subsidiaries or subsidiary undertakings of the Vendor
or of any such holding company (excluding the Group
Companies);
"Warranties" means the warranties, representations and
undertakings set out in Clause 9 and Schedule 7.
1.2 References to Clauses or Schedules are to Clauses or
Schedules to this Agreement and references to sub-clauses are to
sub-clauses of the relevant Clause, and the Schedules are deemed
to be incorporated in this Agreement, and a reference to "this
Agreement" includes a reference to the Schedules.
1.3 In this Agreement:
1.3.1 the index and the clause headings are included for
convenience only and shall not affect the construction of this
Agreement;
1.3.2 words denoting the singular shall include the plural
and vice versa;
1.3.3 words denoting any gender shall include a reference
to each other gender;
1.3.4 references to persons shall be deemed to include
references to natural persons, firms, partnerships, companies,
corporations, associations, organisations,
6
foundations and trusts (in each case whether or not having
separate legal personality); and
1.3.5 words and expressions defined in the Companies Act
1985 shall, where the context so admits, bear the same
meanings in this Agreement.
1.4 References in this Agreement to statutory provisions
shall (where the context so admits and unless otherwise expressly
provided) be construed as references to those provisions as
respectively amended, consolidated, extended or re-enacted as at
the date of this Agreement and at the Completion Date (as the
context requires) and to any orders, regulations, instruments or
other subordinate legislation made under the relevant statutes.
1.5 References to documents in Agreed Form shall mean a
document in a form agreed by the parties and initialed by each of
these for the purpose of identification.
2. Agreement to Sell and Purchase.
2.1 The Vendor shall sell with full title guarantee and
transfer or procure the sale and transfer (which expression shall
where appropriate include an assignment or novation) and the
Purchaser (relying on the Warranties, representations and
undertakings in this Agreement) shall purchase with effect from
the Transfer Date the Business as a going concern free from all
claims, liens, equities, charges and encumbrances together with
the following assets:
2.1.1 the Goodwill;
2.1.2 the Plant;
2.1.3 the Fixtures and Fittings;
2.1.4 the Stock;
2.1.5 the Motor Vehicles;
2.1.6 the benefit (subject to the burden) of the Business
Contracts;
2.1.7 the Business Intellectual Property;
7
2.1.8 the Business Information;
2.1.9 the Computer System;
2.1.10 the Book Debts;
2.1.11 the Customer Cash;
2.1.12 the Records;
2.1.13 all (if any) other assets, property or rights of
the Vendor relating to or connected with or belonging to or
required for or used in the Business or in or on the Premises
and which are not described in the foregoing sub-clauses but
not the Excluded Assets; and
2.1.14 all the Vendor's rights against third parties
including all rights under any of the warranties, conditions,
guarantees or indemnities or under the Sale of Goods Act 1979
relating to any of the Assets and the benefit of all sums to
which the Vendor is entitled from third parties or insurers in
respect of damage to the Assets (save to the extent a
provision in respect of such damage is made in calculating the
Completion Accounts).
2.2 Subject to the provisions of this Agreement, at
Completion the Purchaser shall assume and agree to pay, honour
and discharge when due all liabilities, obligations and
commitments relating exclusively to the Business or the Assets
(other than the Excluded Liabilities) outstanding on or accrued
or referable to the period up to and including the Transfer Date,
to the extent reflected and adequately provided for in the
Completion Accounts (the "Assumed Liabilities").
2.3 Title in each of the Assets will pass to the Purchaser
on Completion.
2.4 Subject to the Purchaser's rights under Clause 6.2,
the sale and purchase of each of the Assets is interdependent and
shall be completed simultaneously.
2.5 The parties shall act reasonably and in good faith to
agree the apportionment of the Consideration between the Assets,
such agreement to be reached within 45 days of Completion.
8
2.6 For the avoidance of doubt the Purchaser shall be
entitled to the benefit of all contracts placed by any customer
with the Vendor on or after Completion and any payment relating
to or connected with any such contract that is or has been
received by the Vendor shall be paid to the Purchaser forthwith.
3. Assets and Liabilities Not Included in the Sale.
3.1 The following assets are expressly excluded from the
sale and purchase of the Business and the Assets:
3.1.1 Tintern House;
3.1.2 any amount due or recoverable in respect of Tax
relating to the Business attributable to periods or
transactions completed before the Transfer Date;
3.1.3 all the Vendor's cash in hand or at the bank or at
any other financial institution other than Customer Cash;
3.1.4 the Vendor's accounts and accounting records which
do not relate exclusively or primarily to the Business or the
Group Companies
(together the "Excluded Assets").
3.2 The following liabilities are expressly excluded from
the sale and purchase of the Business and Assets:
3.2.1 all the taxation liabilities (actual or contingent)
or obligations relating to the Business or Assets and
outstanding on or accrued or referable to the period up to and
including the Transfer Date or arising by virtue of the sale
and purchase recorded by this Agreement, including but not
limited to any and all liabilities in respect of National
Insurance, PAYE, VAT or other Taxation attributable to the
Vendor in respect of the Business, the Assets or the Employees
in respect of the period ending on the Transfer Date and all
bank and other overdrafts and loans owing by the Vendor but
excluding the Creditors;
3.2.2 any liabilities (actual or contingent) incurred by
the Purchaser which arise out of any complaint or failure by
the Vendor to comply with the Vendor's legal obligations to
inform, consult or notify any Employees, trade unions, works
councils or Employee representatives in relation to the
transaction contemplated by this Agreement;
9
3.2.3 the Oyster Terminals Limited Executive Pension
Scheme, the Oyster Terminals Unapproved Retirement Scheme and
the Oyster Terminals Limited Staff Pension Scheme (1988) and
all liabilities (actual or contingent) in connection
therewith; and
3.2.4 all borrowings and amounts in the nature of
borrowings (including principal and interest) owing from, or
payable by, the Vendor to any third party or any member of the
Vendor Group;
3.2.5 all liabilities (actual or contingent) in respect of
Tintern House or any other real property, now or formerly
owned, let or occupied by the Vendor whether as landlord,
tenant, assignee, guarantor or otherwise or charged or imposed
upon the Purchaser as owner or occupier including without
limitation uniform business rates, water rates, VAT and other
taxes and outgoings;
3.2.6 all liabilities (actual or contingent) relating to
the business of Oyster Termiflex Inc; and
3.2.7 all liabilities (actual or contingent) arising out
of or in connection with (i) the Vendor's ownership and / or
disposal of title and rights to Printapen 5000 and (ii) all
assets owned or used in connection therewith (including
without limitation all intellectual property rights); and
3.2.8 all liabilities to be retained by the Vendor pursuant
to the provisions of this Agreement
(together the "Excluded Liabilities").
4. Conditions Precedent.
4.1 Completion of this Agreement is conditional upon
completion of the Share Purchase Agreement.
4.2 If the above mentioned condition is not satisfied on
or before 29 February 2000 (or such other date as the Vendor and
the Purchaser in their absolute discretion may agree in writing)
this Agreement shall become null and void and neither party shall
be entitled to make a claim against the other party in connection
with this Agreement.
10
5. Consideration.
5.1 The Consideration shall be such amount of the Purchase
Price as is apportioned to the Assets pursuant to schedule 7 of
the Share Purchase Agreement.
5.2 The Consideration shall be paid in accordance with
clause 2.2 of the Share Purchase Agreement. Such delivery shall
be a good discharge of the Purchaser's obligations under this
Clause 5.
6. Completion.
6.1 Completion will take place in accordance with
Schedule 1 at the offices of the Purchaser's Solicitors on the
Completion Date when the business described in Schedule 1 will be
transacted.
6.2 If on the Completion Date either the Vendor or the
Purchaser fails or has failed to comply in any material respect
with the provisions of Schedule 1 then the other party may:
6.2.1 proceed to Completion so far as practicable but
without prejudice to its rights hereunder; or
6.2.2 rescind this Agreement.
7. Adjustment to the Consideration.
The provisions of Clause 3 of the Share Purchase Agreement
shall apply in respect of any adjustment to the Consideration.
8. Value Added Tax.
8.1 It is intended that the Business shall be transferred
to the Purchaser as a going concern with effect from Completion
and that the provisions of Article 5 of the Value Added Tax
(Special Provisions) Order 1995 (SI 1995/1268) shall apply to
such transfer and the sale and purchase of the Assets and each
party shall use its reasonable endeavours to procure that the
sale of the Business is treated as neither a supply of goods nor
a supply of services under that Article.
11
8.2 The Vendor and the Purchaser shall within 30 days of
Completion give notice of such transfer to the appropriate office
of H.M. Commissioners of Customs and Excise in accordance with
such regulations and requirements as may be applicable.
8.3 The Purchaser undertakes to the Vendor that:
8.3.1 after Completion the Business will be carried on by
it as a going concern and the Assets will be used by it in
carrying on the Business or a business of the same kind; and
8.3.2 the Purchaser is already or will as a result of such
transfer of the Business immediately on Completion become a
taxable person (as defined in Section 3 of the Value Added Tax
Act 1994).
8.4 The Consideration is exclusive of VAT and in the event
that H.M. Commissioners of Customs and Excise determine that any
VAT is payable on the sale of the Business or the Assets,
following receipt of a valid VAT invoice, such amount shall be
payable by the Vendor.
8.5 VAT payable in respect of goods and services supplied
or deemed to be supplied by the Vendor prior to the Completion
Date and all interest payable and penalties attributable to such
VAT shall be paid to H.M. Commissioners of Customs and Excise by
the Vendor.
8.6 The Vendor and the Purchaser intend that Section 49 of
the Value Added Tax Act 1994 shall apply to the transfer of the
Business under this Agreement and accordingly:
8.6.1 on Completion the Vendor shall deliver to the
Purchaser all records referred to in such Section 49;
8.6.2 the Vendor shall not make any request to H.M.
Customs & Excise for the records referred to in Clause 8.6.1
to be preserved by the Vendor rather than the Purchaser; and
8.6.3 the Purchaser shall preserve the records referred to
in Clause 8.6.1 for such period as may be required by law and
during that period permit the Vendor reasonable access to such
records for the purpose of inspection or copying (at the
Vendor's expense).
12
8.7 If Part XV of the Value Added Tax Regulations 1995
(SI 1995/2518) is applicable to any of the Assets the parties
agree that, as against the Vendor, the Purchaser shall take the
benefit of, and the Vendor agrees to indemnify the Purchaser
against the burden of any deductions and payments under such
Part XV which relate to intervals subsequent to that ending under
Regulation 114 of such Part XV on the day of the transfer of the
relevant asset under this Agreement, and accordingly:
8.7.1 the Vendor shall promptly account to the Purchaser
for any such deduction received by it (whether by payment or
credit) from H.M. Customs & Excise;
8.7.2 the Vendor agrees to fully indemnify and keep
indemnified the Purchaser in respect of any such payment due
to H.M. Customs & Excise; and
8.7.3 the Vendor shall, on request (and at the Vendor's
cost (if any)), promptly make available to the Purchaser
information, and allow the Purchaser reasonable access to any
documents in the Vendor's possession or control, reasonably
required to establish whether and when a deduction arises and
the amount of such deduction or any payment.
8.8 The Vendor agrees to fully indemnify and keep
indemnified the Purchaser (for itself and as trustee for all
other persons allocated with the registration number previously
allocated to the Vendor) in respect of any VAT payable in
relation to goods and services supplied or deemed to be supplied
prior to the Completion Date and all interest payable and
penalties attributable to such VAT.
9. Warranties and Indemnities
9.1 The Vendor warrants to the Purchaser that each
Warranty is true, accurate and not misleading at the date of this
Agreement and at Completion in accordance with Clause 9.6.
9.2 The Warrantor acknowledges that the Purchaser is
entering into this Agreement in reliance on each Warranty and the
undertakings of the Vendor contained in Clause 19 which have also
been given as a representation and with the intention of inducing
the Purchaser to enter into this Agreement.
9.3 The Purchaser may rely on the Warranties in warranting
to any subsequent purchaser of all or any of the Assets.
13
9.4 The Warranties are qualified by the facts and
circumstances fairly disclosed in the Disclosure Letter. No
other knowledge regarding the Business or any of the Assets
(actual, constructive or imputed) prevents or limits a claim made
by the Purchaser for breach of Clause 9.1. The Vendor shall not
seek to rely on the Purchaser's knowledge (actual, constructive
or imputed) of a fact or circumstance which might make a Warranty
untrue, inaccurate or misleading as a defence to a claim for
breach of Clause 9.1. Where a warranty is qualified by the words
"so far as the Vendor is aware," "To the best of the knowledge,
information and belief of the Vendor," it shall be deemed to be
given after the Vendor has made reasonable enquiry only of the
senior management of the Business and for the purposes of this
Clause "senior management" shall mean Messrs. M. Tule, J. Powers,
J. Allard, K. Webb, C. Fellows, T. Blyth, R. Beyer, Ms. S.
Patterson, P. Westmoreland, C. Quivaux and M. Krodel.
9.5 Each Warranty is to be construed independently and
(except where this Agreement provides otherwise) is not limited
by a provision of this Agreement or another Warranty.
9.6 The Vendor further warrants to the Purchaser and its
successors in title that subject to Clause 9.1, each Warranty
will be true and accurate in all respects and not misleading in
any respect at Completion as if each Warranty had been given
again at Completion. If after the signing of this Agreement and
before Completion any event shall occur or matter arises which
results or may result in any Warranty being unfulfilled, untrue,
misleading or incorrect in any respect at Completion, the Vendor
shall immediately notify the Purchaser in writing thereof prior
to Completion and the Vendor (at its own cost) shall make
investigation concerning the event or matter which the Purchaser
may require.
9.7 The Vendor undertakes to indemnify and keep indemnified
the Purchaser from and against any liability, loss, damage, cost,
claim or reasonable expense of whatever kind which it may incur
arising out of or in connection with:
9.7.1 Mr. Pink's participation in The Plan up to the
Completion Date;
9.7.2 any employees transferring with the Business other
than the Employees; and
9.7.3 any claims (and for the avoidance of doubt, in
connection with any payment made to the trustees of The Plan
under clause 48.3 of the definitive trust deed
14
and rules of The Plan dated September 15 1998 in respect of any
such claim being made against the said trustees) from any current
or former employees of the Vendor relating to benefits on
termination of service with the Vendor in respect of The Plan (or
represented to have been available under The Plan) to the extent
that such claims are made by individuals who on termination had
completed less than two years' pensionable service and are for
refunds of contributions (and for the avoidance of doubt
employer's contributions) in excess of the amounts of their own
contributions (plus interest and less tax where applicable) in
their personal accounts in The Plan.
10. Purchasers's Remedies
10.1 If prior to Completion the Purchaser receives a
notification from the Vendor pursuant to Clause 9.6 that any of
the Warranties has, when given, or will be or would be, at
Completion (as if they had been given again at Completion) not
complied with or otherwise untrue or misleading, the Purchaser
shall be entitled (in addition to and without prejudice to all
other rights or remedies available to it and its successors in
title including the right to claim damages) by notice in writing
to the Vendor to terminate the Agreement. If, notwithstanding
such notification pursuant to Clause 9.6, the Purchaser elects to
complete this Agreement, the occurrence of such an event, the
subject of the notification, shall not give rise to any right to
damages or compensation for breach of Warranty. If any event
shall occur (other than an event constituting or giving rise to a
breach of any of the Warranties) which affects or is likely to
affect adversely to a material degree the financial position or
turnover or profitability of the Business, not being an event
affecting or likely to affect generally all businesses carrying
on similar businesses in the United Kingdom, the Purchaser shall
be entitled by notice in writing to the Vendor to terminate this
Agreement but the occurrence of such an event shall not give rise
to any right to damages or compensation.
10.2 If Completion takes place and there is a Warranty
Claim under this Agreement, the Vendor shall pay to the Purchaser
on demand (at the Purchaser's option) either:
10.2.1 an amount sufficient to put the Purchaser into the
position which would have existed if the Warranties had been true
or not misleading when given or repeated;
10.2.2 an amount equal to the diminution thereby caused in
the value of the Assets.
15
10.3 The Vendor shall indemnify the Purchaser on demand
against each loss, liability and cost which the Purchaser incurs
arising (directly or indirectly) out of:
10.3.1 the settlement of a claim against the Vendor in
respect of a breach or alleged breach of any provision of this
Agreement or the enforcement of a settlement;
10.3.2 legal proceedings against the Vendor in respect of
a breach or alleged breach of any provision of this Agreement
in which judgment is given for the Purchaser or the
enforcement of the judgment; or
10.3.3 any Excluded Liabilities
and whether such loss, liability or cost is incurred before or
after the commencement of an action.
10.4 All sums payable by the Vendor to the Purchaser for
breach of any of the Warranties shall be paid free and clear of
all deductions or withholdings whatsoever, save only as may be
required by law.
10.5 If any deduction or withholding in respect of Tax or
otherwise is required by law to be made from any of the sums
payable as mentioned in Clause 10.4, the Vendor shall be obliged
to pay the Purchaser such greater sum as will, after such
deduction or withholding as is required to be made has been made,
so as to leave the Purchaser with the same amount as it would
have been entitled to receive in the absence of any such
requirement to make a deduction or withholding.
10.6 If any sum ("the first sum") payable by the Vendor to
the Purchaser as mentioned in Clause 10.4 shall be subject to Tax
in the hands of the Purchaser, then the Vendor shall pay to the
Purchaser (as often as shall be necessary) such additional sum or
sums as will after such Tax (and any Tax on such additional sum
or sums) leave the Purchaser with an amount equal to the first
sum.
11. Limitations on the Vendor's Liability
11.1 The Vendor is not liable in respect of a Warranty
Claim unless the amount which would otherwise be recoverable from
the Vendor (but for this Clause 11.1) in respect of that Warranty
Claim exceeds 50,000.
16
11.2 The Vendor is not liable for a Warranty Claim:
11.2.1 in respect of the Warranty contained in paragraph 6
of Schedule 7 unless the Purchaser has notified the Vendor of
the Warranty Claim stating in reasonable detail the nature of
the Warranty Claim and, if practicable, the amount claimed not
later than three months after the expiry of the period
specified by statute during which an assessment of that
liability to Tax may be issued by the relevant Tax Authority
or, if there is no such period, on or before seven years from
the date of Completion but any failure to give such notice
shall not affect the rights of the Purchaser except to the
extent the Vendor is prejudiced by such failure;
11.2.2 in respect of any other Warranty unless the
Purchaser has notified the Vendor of the Warranty Claim
stating in reasonable detail the nature of the Warranty Claim
and, if practicable, the amount claimed on or before 24 months
from the date of Completion but any failure to give such
notice shall not affect the rights of the Purchaser except to
the extent the Vendor is prejudiced by such failure;
11.2.3 if and to the extent that such Warranty Claim would
occur as a result of any legislation not in force at the date
hereof which takes effect retrospectively or occurs as a
result of any increase in the rates of Tax in force at the
date hereof;
11.2.4 if and to the extent that such Warranty Claim would
not have arisen but for:-
(i) any act, omission, transaction or arrangement after
Completion by the Purchaser otherwise than in the ordinary
course of the Business as presently carried on occurring at
the written request or with the written approval of the
Purchaser;
(ii) the effect of the provisions of Sections 393,
393A, 343 and/or 768 ICTA on the Business and/or the
Purchaser.
11.2.5 if and to the extent that:
(i) the Purchaser actually recovers a sum in respect of
the subject matter of such Warranty Claim under the terms
of any insurance policy held by the Purchaser or from any
other third party in force at the date hereof;
17
(ii) the Warranty Claim would not have arisen or would
have been reduced or eliminated but for the failure or
omission on the part of the Purchaser to make any claim,
election, surrender or disclaimer or give any notice or
consent to do any other thing under the provisions of any
enactment or regulation relating to Tax after Completion;
(iii) the Warranty Claim would not have arisen but for
any winding up or cessation after Completion of, or any
change or diminution after Completion in, the Business, as
previously carried on by the Vendor;
(iv) the Warranty Claim would not have arisen but for
any change in the accounting policy practice as applied to
the Business introduced after Completion at the written
request or with the written approval of the Purchaser
whether with retrospective effect or not unless such change
in the accounting policy practice as applied to the
Business was required to comply with applicable law,
regulations, or regulatory requirements or practice in
force on or before Completion;
(v) if and to the extent that any sum is received by
the Purchaser which has previously been written off as
unrecoverable in the accounts of the Business;
(vi) to the extent that the matter giving rise to the
Warranty Claim was done or omitted to be done prior to
Completion by the Vendor at the request of the Purchaser or
its authorized representatives or any of them;
(vii) to the extent that the aggregate amount of the
liability of the Vendor for all Warranty Claims would
thereby exceed 50% of the Purchase Price (as defined in the
Share Purchase Agreement);
(viii) to the extent that the claim has been made good
or otherwise compensated for at no expense to the
Purchaser.
11.3 If the Purchaser becomes aware of any matter that may
give rise to a claim against the Vendor under this Agreement,
notice of the fact shall be given as soon as possible to the
Vendor.
11.4 Without prejudice to the validity of the claim or alleged
claim in question, the Purchaser shall allow the Vendor and its
accountants and professional advisers to investigate the matter
or circumstance alleged to give rise to such claim and whether
and
18
to what extent any amount is payable in respect of such claim and
for such purpose the Purchaser shall give, subject to its being
paid all reasonable costs and expenses as shall be agreed with
the Vendor in advance, all such information and assistance,
including access to premises and personnel, documents and records
as the Vendor or its accountants or professional advisers may
reasonably request.
11.5 If the claim in question is a result of or in
connection with a claim or liability to a third party then no
admission of liability shall be made by the Vendor and the claim
shall not be compromised, disposed or settled without the prior
written consent of the Purchaser.
11.6 The Purchaser shall be entitled at its own expense in
its absolute discretion to take such action as it deems necessary
to avoid, dispute, deny, defend, resist, appeal, compromise or
contest such claim or liability (including, without limitation,
making counter-claims or other claims against third parties), in
the name of and on behalf of the Vendor as relates to the
Business concerned and to have the conduct of any related
proceedings, negotiations or appeals provided that in taking such
action the Purchaser will act in such a way to minimize as far as
reasonably practicable any damage or harm to the name of the
Vendor or, inter alia, damage or harm to the business, trading or
financial prospects of the Vendor. The provisions of Clauses
11.3, 11.4, 11.5 and 11.6 shall not apply to any claim for breach
of a Warranty contained in paragraph 6 of Schedule 7 and the
provisions of Clause 5 of the Tax Deed shall apply to such
claims.
11.7 Nothing in this Clause 11 shall have the effect of
limiting or restricting any liability of the Vendor in respect of
a Warranty Claim arising as a result of any fraud, wilful
misconduct or wilful concealment by the Vendor or any officer or
employee or any of the directors of the Group Companies.
11.8 Any amount paid in respect of any Warranty Claim
shall be treated as a reduction in the consideration paid for the
Assets.
120 Vendor's Obligations Prior to Completion
12.1 The Vendor undertakes to the Purchaser that pending
Completion:
12.1.1 the Business will continue to be carried on in the
same manner as it is presently carried on as regards the
nature, scope and manner of conducting it and so
19
as to maintain it as a going concern and will be conducted in
a diligent and prudent manner in full consultation with the
Purchaser;
12.1.2 the Goodwill of and relationship with all customers
and suppliers of the Business will be retained and preserved;
12.1.3 the full benefit of the Business Intellectual
Property will be retained;
12.1.4 the Vendor will not do or omit or permit to be done
any act or thing or permit the omission of any act or thing
which is intended to or may impair or have an adverse effect
upon the Business or any part of it or the Assets;
12.1.5 no long term, onerous or unprofitable contracts
will be entered into by the Business;
12.1.6 the Vendor will not dismiss any of the Employees or
engage or employ any person in the Business other than the
Employees without the Purchaser's prior written consent; and
12.1.7 the Vendor shall not take any other action which is
inconsistent with the provisions of this Agreement or which
is, or might constitute or result in, a breach of any of the
Warranties or which would or might make any of the Warranties
misleading or inaccurate.
12.2 The Vendor forthwith shall disclose to the Purchaser
in writing any matter or thing which arises or may arise or
become known to it before Completion which has or is likely to
have a material and adverse effect upon the Business as presently
conducted or upon the financial or trading position or prospects
of the Business or which is otherwise material to be known by a
purchaser of the Business or the Assets.
12.3 The Vendor shall procure that until Completion the
Purchaser and its advisers shall be given promptly on request
such facilities and information (including access to Employees)
regarding the Business or the Assets as they or any of them may
reasonably require.
130 Intellectual Property
13.1 The provisions of paragraph 1.1.3 of Schedule 1 shall
apply to the Business Intellectual Property.
20
140 Risk
14.1 Pending the Transfer Date, possession of the Assets
shall be retained by the Vendor.
14.2 Subject to the provisions of Clause 12, the Vendor
shall continue to carry on the Business for its own benefit and
at its own risk up to the Transfer Date. The Assets shall be at
the risk of the Purchaser as from the Transfer Date.
14.3 All profits and receipts of the Business (other than
profits earned or receivable in respect of work in progress) and
all losses and outgoings incurred or payable by the Business up
to the Transfer Date shall belong to, and be paid and discharged
by, the Vendor.
14.4 All profits and receipts of the Business and all
losses and outgoings incurred or payable by the Business as from
the Transfer Date shall belong to, and be paid and discharged by,
the Purchaser.
150 Employees
15.1 The Vendor and the Purchaser agree that, by virtue of
the Transfer of Undertakings (Protection of Employment)
Regulations 1981 ("the Employment Regulations"), the Employees'
contracts of employment (save to the extent that they relate to
any occupational pension scheme) shall have effect after
Completion as if originally made between the Purchaser and the
Employees or, in the case of a collective agreement in respect of
the Employees, between the Purchaser and the relevant trades
union (as the case may be). As soon as possible after Completion,
the Vendor and the Purchaser shall jointly issue the Employees
with a notice in the Agreed Form marked "A".
15.2 The Vendor shall perform and discharge for its own
account all its obligations towards the Employees for the period
up to and including Completion (including paying all their
remuneration and other costs (including accrued holiday pay),
paying any amounts agreed or determined to be paid to any
Employee whether in contract or in tort or by way of remedy for
unfair dismissal, redundancy, sex or race discrimination or other
breach of statute in respect of his employment before Completion,
and discharging all the Vendor's obligations towards the
Employees under the Employment Regulations) and shall indemnify
the Purchaser against all liabilities arising from the Vendor's
performance and discharge of those obligations (including any
failure by the Vendor to inform and/or consult the Employees'
representatives before the transfer of their employment to the
Purchaser).
21
15.3 Nothing in this Clause 15 shall have the effect of
imposing on the Vendor any liability to the Purchaser in respect
of any claim by an Employee in respect of the termination of his
employment by the Purchaser on or after Completion unless the
particulars relating to that Employee in Schedule 4 are incorrect
or the Vendor has been in breach of any duty or obligation owed
to or in relation to that Employee.
15.4 If any contract of employment of a person other than
an Employee, or any collective agreement not disclosed in writing
to the Purchaser, has effect following Completion as if
originally made between the Purchaser and that person or between
the Purchaser and the relevant trades union, as the case may be:-
15.4.1 the Purchaser may terminate the contract or the
collective agreement within 30 days after becoming aware of that
effect; and
15.4.2 the Vendor shall indemnify the Purchaser against
any liabilities arising out of such termination and against any
sum payable to or in respect of that person or any liabilities
incurred to or on behalf of the relevant trades union.
15.4.3 The Vendor shall use its reasonable endeavours to
procure that the Purchaser is given the benefit of the Vendor's
employment liability insurance policy in relation to the
Employees in respect of the period of employment up to
Completion.
160 Business Contracts
16.1 Subject to Completion taking place the Purchaser
undertakes to the Vendor with effect from the Transfer Date to
assume the obligations and become entitled to the benefits of the
Vendor under the Business Contracts and the Purchaser undertakes
to carry out and perform and complete all the obligations and
liabilities created by or arising under the Business Contracts
(except for any obligations or liabilities attributable to a
breach on the part of the Vendor or its employees, agents or sub-
contractors) and shall indemnify the Vendor and keep it fully
indemnified against all liabilities losses, actions, proceedings,
costs, claims, demands and expenses brought or made against or
incurred by the Vendor in respect of the non-performance or
defective or negligent performance by the Purchaser of the
Business Contracts after the Transfer Date.
16.2 The Vendor undertakes with effect from the Transfer
Date to assign to the order of the Purchaser or to procure the
assignment to the order of the Purchaser all the Business
Contracts which are capable of assignment without the consent of
other parties.
22
16.3 In so far as any of the Business Contracts are not
assignable to the Purchaser without the agreement of or novation
by or consent to the assignment from another party, this
Agreement shall not constitute an assignment or attempted as
signment if such assignment or attempted assignment would
constitute a breach of such Business Contracts. In the event
that consent or novation is required to such assignment:
16.3.1 the Vendor at the Purchaser's request shall use all
reasonable endeavors with the co-operation of the Purchaser to
procure such novation or assignment as aforesaid;
16.3.2 unless and until any such Business Contract shall
be novated or assigned as aforesaid, the Vendor shall continue
its corporate existence and shall hold such Business Contract
on trust for the Purchaser and its successors in title
absolutely and the Purchaser shall (if such sub-contracting is
permissible and lawful under the Business Contract in
question) as the Vendor's sub-contractor perform all the
obligations of the Vendor under such Business Contract;
16.3.3 unless and until any such Business Contract shall
be novated or assigned the Vendor will (so far as it lawfully
may) give all such assistance to the Purchaser as the
Purchaser may reasonably require to enable the Purchaser to
enforce its rights under such Business Contract and (without
limitation) will provide access to all relevant books,
documents and other information in relation to such Business
Contract as the Purchaser may require from time to time.
16.4 If such consent or novation is refused or otherwise
not obtained on terms reasonably satisfactory to the Purchaser
within 60 Business Days of the Completion Date, the Purchaser
shall be entitled at its sole discretion to require the Vendor to
serve proper notice to terminate that Business Contract and the
Vendor shall indemnify and keep indemnified the Purchaser from
and against all losses, damages, costs, actions, proceedings,
claims, demands, liabilities and expenses (including, without
limitation, legal and other professional fees and expenses) which
the Purchaser may suffer, sustain, incur, pay or be put to by
reason or on account of or arising from the termination of such
Business Contract.
16.5 To the extent that any payment is made to the Vendor
in respect of the Business Contracts on or after the Transfer
Date, the Vendor shall receive the same as trustee, shall record
such payment separately in its books and shall account to the
Purchaser for the same on the Transfer Date or if received
thereafter within seven Business Days of receipt.
23
170 Obligations of the Vendor after Completion
17.1 The Vendor undertakes to pass to the Purchaser
forthwith upon receipt any orders or enquiries in relation to the
Business which it may receive at any time after Completion.
17.2 On and at any time after Completion, the Vendor will
give or procure to be given to the Purchaser all such information
and other assistance (including, without limitation, particulars
of customers, suppliers and others who have dealt with the Vendor
in connection with the Business) as the Purchaser may reasonably
require for the conduct of the Business and for the purpose of
implementing the provisions of this Agreement.
17.3 The Vendor will give to the Purchaser reasonable
access to the books, accounts, records and returns of the Vendor
relating to or in connection with the Business as the Purchaser
may require (including the right to take copies and extracts on
reasonable advance notice) and will keep them in good order.
17.4 During the period of six years after Completion (and
without prejudice to any of the Warranties) if any Business
Information is not in the possession of the Purchaser or readily
discoverable by the Purchaser but is in the possession or under
the control of or available to the Vendor or any other member of
the Vendor Group, the Vendor shall procure that such Business
Information is provided to the Purchaser promptly on request.
180 Book Debts
18.1 The Purchaser shall be responsible for and shall pay
or discharge the Creditors in accordance with the usual practice
of the Business at the date of this Agreement save that the
Purchaser shall not be obliged to pay or discharge any Creditor
where the amount in question is the subject matter of a genuine
dispute and, save as aforesaid, in respect of such Creditors will
indemnify the Vendor and keep the Vendor indemnified against all
proceedings, costs, claims, demands, expenses and liabilities
which the Vendor may suffer, sustain or incur by reason of the
Purchaser's failure to comply with its obligations under this
Clause.
190 Restrictive Covenants
19.1 The Vendor undertakes to the Purchaser and its
successors in title, that it will not and will procure that any
subsidiary undertaking, fellow subsidiary undertaking or
24
holding company or director of the Vendor will not and will
procure that no person, firm or company carrying on with the
consent of the Vendor any business in succession to the Vendor
will do any of the following things:
19.1.1 for a period of 3 years starting on the date of
this Agreement through or as adviser to, or agent of, or
manager for, or any person directly or indirectly carry on or
be engaged, concerned or interested in or assist a business
which competes, directly or indirectly, with the Business or
at any time in the twelve months prior to that date in a
territory in which the Business is or was carried on at any
such date or time provided that this Clause 19.1.1 shall not
apply to the MPSI business and US Termiflex hand-held business
currently carried on by and on behalf of WPI Group Inc;
19.1.2 for a period of 3 years starting on the date of
this Agreement, do or say anything which is harmful to the
Goodwill or which may lead a person who has dealt with the
Business at any time during the twelve months prior to the
date of this Agreement to cease to deal with the Business on
substantially equivalent terms to those previously offered or
at all;
19.1.3 for a period of 3 years starting on the date of
this Agreement, other than in the ordinary course of business
of any Group Company, on its own account or in conjunction
with or on behalf of any other person in respect of the
products or services of the Business either seek to obtain
orders from, or do business with, or encourage directly or
indirectly another person to obtain orders from, or do
business with, a person who has been a customer of the
Business at any time during the twelve months prior to the
date of this Agreement for the products or services of that
business in its territory of operation;
19.1.4 for a period of 3 years starting on the date of
this Agreement, engage, employ, solicit or contact with a view
to engagement or employment by another person, a director,
officer, employee or manager of the Business or a person who
was a director, employee or manager of the Business at any
time during the twelve months prior to the date of this
Agreement, in either case where the person in question either
has Business Information or know-how and would be in a
position to exploit the Business' trade connections; or
19.1.5 for a period of 3 years starting on the date of
this Agreement, seek to contract with or engage (in such a way
as to affect adversely the Business as carried on at the date
of this Agreement) a person who has been contracted with or
engaged
25
to manufacture, assemble, supply or deliver goods or services
to that business at any time during the twelve months prior to
the date of this Agreement.
19.2 Each undertaking in Clause 19.1 constitutes an
entirely independent undertaking and if one or more of the
undertakings is held to be against the public interest or
unlawful or in any way an unreasonable restraint of trade:
19.2.1 the remaining undertaking(s) shall continue to bind
the Vendor with such deletion or modification as may be
necessary to make it valid and enforceable; and
19.2.2 if such undertaking(s) would not be held to be so
if any period of time expressed therein were expressed as a
shorter period of time then such undertaking(s) shall be
deemed given for such shorter period of time.
19.3 On receiving the Purchaser's reasonable request, the
Vendor shall (at its own cost):
19.3.1 do and execute, or arrange to be done and executed,
each act, document and thing necessary to implement this
Agreement; and
19.3.2 give to the Purchaser all information it possesses
or to which it has access relating to the Business and allow
the Purchaser to copy any document containing that
information.
19.4 The Vendor agrees that the restrictions contained in
this Clause 19 are no greater than reasonable and necessary for
the protection of the interest of the Purchaser.
19.5 From the Completion Date, the Purchaser shall not
adopt, use or carry on the Business under any name incorporating
the word "WPI" or "Termiflex" or any words resembling the same.
19.6 The Purchaser shall after Completion take all steps
necessary to remove the name "WPI" and "Termiflex" from all
business materials used in the United Kingdom including without
limitation, advertising materials and all company vehicles,
properties and marketing products in the United Kingdom, France
and Germany within 3 months after Completion. Prior to the
expiry of the 3 month period all advertising materials shall be
overstamped with the new names of the relevant companies.
26
200 Application of Sale and Purchase Agreement
The provisions of Clauses 10 (Confidential Information), 11
(Announcements), 12 (Competition), 13 (Costs), 14 (Interest), 15
(General), 16 (Assignment), 17 (Time of the Essence), 18 (Further
Assurance), 20 (Notices), 21 (Governing Law and Jurisdiction) and
22 (Counterparts) of the Share Purchase Agreement shall apply to
this Agreement as though the references therein to WPI Group (UK)
and Dynatech Nominees Ltd. were references to the Vendor and the
Purchaser respectively.
210 Stamp Duty
Notwithstanding anything in this Agreement to the contrary,
the Vendor shall reimburse the Purchase in respect of all stamp
duty payable on the transfers contemplated under this Agreement,
in excess of 9,375, such amounts to be paid from any available
funds within the Escrow Agreement or if no such funds are
available, within 30 days of receipt of a written request from
the Purchaser.
27
AS WITNESS the hands of the parties to this Agreement or their
duly authorised representatives on the date written on page 1 of
this Agreement.
SIGNED by JOHN ALLARD
for and on behalf of
WPI Oyster Termiflex Ltd.
in the presence of: LINDA M. RACETTE
SIGNED by ALLAN M. KLINE
for and on behalf of
Dynatech Corporation Limited
in the presence of: MARK TREMALLO
28
SCHEDULE 1
COMPLETION REQUIREMENTS
10 Obligations of the Vendor.
1.1 The Vendor shall deliver to or procure delivery to the
Purchaser of:
1.1.1 physical possession of all the Assets capable of
passing by delivery with the intent that title in such Assets
shall pass by and upon such delivery;
1.1.2 all documents of title and certificates for the
lawful operation and use of, and all service documents
pertaining to, the Plant, the Fixtures and Fittings and the
Stock;
1.1.3 duly executed assignments and licenses of the
Business Intellectual Property in a form to be agreed between
the parties;
1.1.4 all documents of title, certificates, deeds,
licenses, agreements and other documents relating to the
Business Intellectual Property and all manuals, drawings,
plans, documents and other materials and media on which the
Business Information is recorded;
1.1.5 the logbooks and test certificates of the Motor
Vehicles;
1.1.6 the Business Contracts and the books, accounts,
reference lists of customers, credit reports, price lists,
cost records, work tickets, catalogues, advertising and all
other documents, papers and records in the possession or under
the control of the Vendor relating to the Business or any of
the Assets duly written up to the Completion Date;
1.1.7 all such records as are referred to in Section 49 of
the Value Added Tax Act 1994;
1.1.8 releases duly executed by the chargee in a form
acceptable to the Purchaser in respect of all Security
Interests on or affecting any of the Assets;
1.1.9 the Records;
29
1.1.10 a written acknowledgment executed as a deed from
the Vendor and each member of the Vendor Group that all
arrangements to which the Vendor and any such member is a
party and which affect the Business or Assets other than the
Business Contracts have been cancelled by mutual agreement and
without any compensation or damages being payable by either
party to the other;
1.1.11 all national Insurance PAYE records fully completed
in respect of the Employees and showing that payments are up
to date and all records required to be kept under the Working
Time Regulations 1998;
1.1.12 a copy of the minutes of a meeting of the directors
of the Vendor in the agreed form authorising the execution by
that party of this Agreement and of any other documentation
that may be necessary or desirable arising out of or in
connection with this Agreement or the transactions
contemplated thereby and appointing the relevant signatory or
signatories to sign this Agreement and any such other
documentation on its behalf endorsed with a certificate by the
company secretary of that party that such copy minutes are a
true and accurate record of the relevant meeting and that the
authority conferred remains valid and outstanding as at
Completion.
20 Action after Completion.
2.1 Each of the Vendor and the Purchaser shall issue a
statement in agreed form to the customers of and suppliers to the
Business (and any other persons mutually agreed upon by the
parties) informing them of the transfer of the Business to the
Purchaser.
2.2 All correspondence, information, orders, enquiries and
other documentation and items and all money relating to or
connected with the Business or the Assets received by the Vendor
or by any member of the Vendor's Group on or after Completion
shall be immediately passed or paid (as the case may be) to the
Purchaser or as it may direct.
SCHEDULE 2
APPORTIONMENT OF CONSIDERATION TO ASSETS
Not applicable
30
SCHEDULE 3
THE BUSINESS CONTRACTS
1. Contracts between the Vendor and the following parties:
Domino
Beninger
Royal Mail
Strand
Renishaw
Scancomp
Playsafe
Nortel
Imaje
Creschic
Bastide
Miel
KPR
Klockner
ITW
Perel
Hess
_oclain
ERS
Eurodis
Kent
Light & Sound
IFR
IOCS
Siemens
31
SCHEDULE 4
THE EMPLOYEES
Name and Date of Salary Pension Bonus Holidays
address commencement (in pounds)
of employment
Tracy Jones 1 May 1995 13,500 No No 17 days
47 Vivian Road
Newport
Gwent NO9 0ER
Trevor Aitken 20 July 1992 35,360 Yes
7 Garwoods
Seaward
Road
Swanage
BH19 1LP
32
SCHEDULE 5
INTELLECTUAL PROPERTY
Trademark/ Owner Country Registration
Servicemark Certificate
Oyster WPI Oyster France Registered
Terminals 08/26/91
Limited
Reg. No.
1689549
Oyster WPI Oyster Germany Registered
Terminals 06/04/92
Limited
Reg. No.
2015085
Oyster WPI Oyster Italy Registered
Terminals 12/03/93
Limited
Reg. No.
610278
Oyster WPI Oyster UK Registered
Terminals 08/30/84
Limited
Reg. No.
1225580
33
SCHEDULE 6
THE MOTOR VEHICLES
The parties hereby agree to act reasonably and in good faith in
order to identify those motor vehicles will transfer with the
Business.
34
SCHEDULE 7
WARRANTIES
10 Capacity and Authority
1.1 The Vendor is a company duly incorporated and validly
existing under English law and has been in continuous existence
since incorporation.
1.2 The Vendor has the right, power and authority to conduct the
Business as conducted at the date of this Agreement.
1.3 The Vendor's obligations under this Agreement, the Escrow
Agreement and each document to be executed at or before
Completion are, or when the relevant document is executed will
be, enforceable in accordance with their terms and will not
conflict with any other obligation of the Vendor.
20 Information
2.1 All the information provided to the Purchaser or its agents,
employees or advisers is true, accurate and not misleading, save
for the information which to the knowledge of the Purchaser is
not true, accurate and not misleading.
2.2 The information set out in this Agreement and the Disclosure
Letter is true, accurate and not misleading.
30 Accounts
3.1 The Accounts in connection with the Business have been
prepared and audited on a proper and consistent basis in
accordance with the Companies Act 1985 and applicable standards,
principles and practices generally accepted in the United Kingdom
and have at all times been fully, properly and accurately
maintained and are properly written up to date and will be so
kept up to Completion and all returns and payments for the
purposes of VAT have been made.
3.2 The Records duly and accurately record all materials
required by law to be entered therein and accurately present and
reflect in accordance with generally accepted
35
accounting principles and standards all transactions entered into
in relation to the Business.
3.3 No change in accounting policies has been made in preparing
the accounts of the Vendor for each of the three financial years
of the Vendor ended on the Reference Accounts Date, except as
stated in the audited financial statements for those years.
3.4 The Accounts show a true and fair view of the assets,
liabilities and state of affairs of the Vendor as at the
Reference Accounts Date and of the profits and losses of the
Vendor for the financial year ended on the Reference Accounts
Date.
3.5 To the extent required by the Companies Act 1985 and all
appropriate FRS, the Accounts disclose and provide for all bad
and doubtful debts, all liabilities (actual contingent or
otherwise) and all financial commitments existing at the
Reference Accounts Date.
3.6 The results shown by the audited profit and loss accounts of
the Vendor for each of the three financial years of the Vendor
ended on the Reference Accounts Date have not (except as
disclosed in those accounts) been effected by any extraordinary,
exceptional or non-recurring item or by another fact or
circumstance making the profit or loss for a period covered by
any of those accounts unusually high or low.
3.7 The Accounts reserve or provide in accordance with
applicable standards, principles and practices generally accepted
in the United Kingdom for all Tax liable to be assessed on the
Vendor, or for which it is or may become accountable, for all
periods starting on or before the Reference Accounts Date
(whether or not the Vendor has or may have a right of
reimbursement against another person). The Accounts reserve in
accordance with applicable standards, principles and practices
generally accepted in the United Kingdom for all contingent or
deferred liabilities to Tax for all periods starting on or before
the Reference Accounts Date.
3.8 In the Accounts:
(a) stock (except long term contract balances) was valued
in the same way as in the audited accounts of the Vendor for the
two preceding financial years and on the basis of the lower of
cost and net realisable value;
36
(b) all redundant and obsolete stock was written off and
all sold, moving and damaged stock was written down
appropriately.
3.9 The basis and rates of depreciation and amortisation used in
the Accounts were the same as those used in the audited accounts
of the Vendor for the two preceding financial years.
3.10 The rates of depreciation and amortisation used in the
audited accounts of each Company for the three financial years of
the Vendor ended on the Reference Accounts Date were sufficient
to ensure that each fixed asset of the Vendor will be written
down to nil by the end of its useful life.
3.11 The Management Accounts have been carefully and properly
prepared with all due care on a basis consistent with each other
and with the Accounts are not misleading with respect to the
state of assets, liabilities and affairs of the Vendor as at the
relevant Accounts Date and of the profits or losses for the
period concerned.
3.12 The Vendor's accounting records are up to date, in its
possession or under its control and are properly completed in
accordance with the law and applicable standards, principles and
practices generally accepted in the United Kingdom.
3.13 None of the debts receivable or due to any Vendor which are
included in the Audited Accounts or which have subsequently
arisen has been outstanding for more than three months from its
due date for payment or has been released on terms that the
debtor has paid less than the full value of his debt and all such
debts have realised or, so far as the Vendor is aware (having
made all due enquiry), will realise in the normal course of
collection their full value as included in the Audited Accounts
after taking into account the provision for bad and doubtful
debts made in the Audited Accounts. For the avoidance of doubt,
a debt shall not be regarded as realising its full value to the
extent that it is paid, received or otherwise recovered in
circumstances in which such payment, receipt or recovery is or
may be void, voidable or otherwise liable to be reclaimed or set
aside.
3.14 The Guarantor has made available to the Purchaser a complete
and correct copy of the Annual Report on Form 10-K of the
Guarantor for the fiscal year ending September 26, 1999. The
Financial Statements included in such Annual Report have been
prepared in accordance with United States generally accepted
accounting principles ("GAAP") applied on a consistent basis
during the periods involved (except as otherwise noted therein)
and fairly present in all material respects the consolidated
financial position and the
37
consolidated results of operations and cash flows of the
Guarantor and its subsidiaries on a consolidated basis as at the
dates thereof or for the periods presented therein. Since
September 26, 1999, there has not been any material adverse
change in the business, assets, condition (financial or
otherwise) or results of operations of the Guarantor and any of
its subsidiaries.
40 Changes since the Reference Accounts Date
4.1 Since the Reference Accounts Date:
(a) the Business of the Vendor has been operated in the
ordinary and usual course so as to maintain it as a going concern
and without any interruption or alteration in the nature, scope
or manner of the Business;
(b) there has been no adverse change in the financial or
trading position or turnover of the Vendor;
(c) no material change has occurred in the assets and
liabilities shown in the Accounts and there has been no reduction
in the value of the net tangible assets of the Vendor on the
basis of valuation used in the Accounts; and
(d) the Vendor has not borrowed or raised any money or
taken any form of financial facility (whether pursuant to a
factoring arrangement or otherwise).
(e) the Business has not been adversely affected by the
loss or material reduction in orders from any customer or the
loss of a material reduction in any source of supply or by any
abnormal factor not affecting similar business to a like extent
and after making due and careful enquiries the Vendor is not
aware of any facts which are likely to give rise to any such
adverse effects.
4.2 Since the Reference Accounts Date:
(a) the Vendor has not, other than in the usual course of
its business:
(i) acquired or disposed of or agreed to acquire or
dispose of, an asset; or
(ii) assumed or incurred, or agreed to assume or incur,
a liability, obligation or expense (actual or
contingent);
(b) the Vendor has not factored, sold or agreed to sell a
debt;
38
(c) the Business has not been materially or adversely
affected by the loss of any important customer or source of
supply. For these purposes, an important customer or
source of supply means a customer with a revenue exceeding
10,000.
(d) the Vendor has not:
(i) made, or agreed to make, capital expenditure
exceeding in total 20,000; or
(ii) incurred, or agreed to incur, a commitment or
commitments involving capital expenditure exceeding in
total 20,000,
(e) the Business has not been materially or adversely
affected by the termination of, or a change in the terms of, an
agreement or by the loss of a customer or supplier;
(f) the Vendor has not declared, paid or made a dividend or
distribution (including, without limitation, a distribution
within the meaning of ICTA) except as provided in the Accounts;
(g) the Vendor has not changed its accounting reference
period;
(h) no resolutions of the Vendor have been passed; and
(i) the Vendor has not created, allotted, issued, acquired,
repaid or redeemed share or loan capital or made an agreement or
arrangement or undertaken an obligation to do any of those
things.
(j) the Vendor has not been refused any insurance claims or
settled below the amount claimed.
(k) no alterations have been made in the terms of the
employment or condition of service of any employee or in the
pension or other benefits of any employee or any past officer or
employee of the Business or any other dependant;
(l) none of the fixed assets of the Business shown in the
Accounts and none acquired by the Vendor since the Accounting
Reference Date have been lost, damaged or destroyed.
39
50 Assets
5.1 The Assets comprise all assets now used in the Business and
which are necessary for the continuation of the Business now
carried on. Each Asset or each asset acquired by the Vendor
since the Reference Accounts Date (other than stock disposed of
in the usual course of business) and each Asset used by the
Vendor or which is in the reputed ownership of the Vendor is:
(a) legally and beneficially owned solely by the Vendor
free from any Encumbrance; and
(b) where capable of possession, in the possession or under
the control of the Vendor.
5.2 The Vendor owns or has a right to use the Assets necessary
for the effective operation of its business as currently
conducted.
5.3 All plant, machinery, vehicles and equipment owned,
possessed or used by the Vendor necessary for the continuation of
the Business are in good condition and working order and have
been regularly and properly maintained. None is in need of
renewal or replacement or surplus to the Vendor's requirements.
5.4 The Vendor's asset register comprises a complete and
accurate record of all the plant, machinery, equipment, vehicles
and other assets owned, possessed or used by it.
5.5 Maintenance contracts are in force for each asset of the
Vendor which it is normal to have maintained by independent or
specialist contractors and for each asset which the Vendor is
obliged to maintain or repair under a leasing or similar
agreement. Those assets have been regularly maintained to a good
technical standard and in accordance with:
(a) safety regulations required to be observed in relation
to them; and
(b) the provision of any applicable leasing or similar
agreement.
5.6 The Vendor is not a party to, nor is liable under, a lease
or hire, hire purchase, credit sale or conditional sale
agreement.
5.7 No charge in favour of the Vendor is void or voidable for
want of registration.
40
5.8 The Vendor's stock is of satisfactory quality and saleable
in the usual course of its business in accordance with its
current price list.
5.9 The Vendor has not supplied, or agreed to supply, defective
or unsafe goods or goods which fail to comply with their terms of
sale.
5.10 No goods in a state ready for supply by the Vendor are
defective or unsafe or will fail to comply with terms of sale
similar to terms of sale on which similar goods have previously
been sold by the Vendor.
5.11 The Vendor's level of stock is reasonable having regard to
current and anticipated demand.
5.12 No debt shown in the Accounts, the Management Accounts or
accounting records is overdue by more than 12 weeks or is the
subject of an arrangement other than of the kind, particulars of
which are set out in the Disclosure Letter.
5.13 The Vendor has not released a debt shown in the Accounts,
the Management Accounts or its accounting records so that the
debtor has paid or will pay less than the debt's book value.
None of the debts shown in the Accounts, the Management Accounts
or accounting records has been deferred, subordinated or written
off or become irrecoverable to any extent. To the best of the
Vendor's knowledge, information and belief, each of those debts
will realise its book value in the usual course of collection.
5.14 The Vendor has not acquired or agreed to acquire any
material asset on terms that property thereon does not pass until
full payment is made.
60 Tax
6.1 The Vendor has not at any time been, nor does it expect to
be, involved in any dispute with, or the subject of any enquiry
by, any branch of the Inland Revenue, HM Customs & Excise or
other UK or foreign taxation authorities in relation to the
Business other than routine enquiries of a minor nature following
the submission of computations and returns.
6.2 The Vendor has duly, and within any appropriate time limits,
made all returns, given all notices and supplied all other
information required to be supplied to the relevant taxation
authorities in relation to the Business; all such information was
and remains complete and accurate in all material respects and
all such returns and notices were and remain complete and
accurate in all material respects.
41
6.3 The Vendor has complied with all its reporting and
accounting obligations to the relevant authorities in connection
with payments (including notional payments) and benefits provided
to employees, sub-contractors or workers supplied by agencies in
respect of taxation, national insurance and social security
contributions.
6.4 The amount of tax chargeable on the Vendor during any
accounting period ending on or within 6 years before the
Reference Accounts Date has not, to any material extent, depended
on any concession, agreement or other formal or informal
arrangement with any taxation authority relating to the Business.
6.5 The Vendor is a registered and taxable person for the
purposes of the VATA 1994.
6.6 The provisions of Part XV of the Value Added Tax Regulations
1995 (capital goods scheme) do not apply to any of the Assets.
6.7 No election has been nor will before Completion be made
pursuant to paragraph 2 of Schedule 10 to the VATA 1994 in
relation to any of the Premises, Tintern House or any part of any
of them.
6.8 All documents (other than those which have ceased to have
any legal effect) to which the Vendor or any member of the
Vendor's Group is a party and which are material to the title to
the Assets have been duly stamped and no such documents which are
outside the UK would attract stamp duty if they were brought into
the UK.
6.9 There is no unsatisfied liability to capital transfer tax or
inheritance tax attached or attributable to the Assets and the
Assets are not subject to an Inland Revenue charge as mentioned
in Section 237 Inheritance Tax Act 1984.
6.10 No person is liable to capital transfer tax or inheritance
tax attributable to the value of the Assets and in consequence no
person has the power under Section 212 Inheritance Tax Act 1984
to raise the amount of such tax by the sale or mortgage of or by
a terminable charge on any of the Assets.
6.11 All value added tax payable upon the importation of goods,
and all excise duties payable to HM Customs & Excise payable in
respect of the Assets (including the Stock), have been paid in
full, and none of the Assets is liable to confiscation,
forfeiture or distress.
42
6.12 The Disclosure Letter contains particulars of each of the
Assets in respect of which industrial buildings allowances within
Part 1 Capital Allowances Act 1990 have been claimed. Such
particulars are sufficient to enable the Purchaser to claim such
industrial allowances which so far as the Vendor is aware are
available.
6.13 No Asset will qualify as a long life asset for the purposes
of Chapter IVA of Part II Capital Allowances Act 1990.
7. Business Contracts
7.1 None of the Business Contracts is ultra vires the Vendor.
7.2 All the Business Contracts are in full force and effect and
have been duly complied with and nothing has occurred whereby any
of them is or could be subject to early termination or which has
given or may give rise to any claim under any of them by any
party to any of them.
7.3 Neither the Vendor nor any persons Connected with the Vendor
has any direct or indirect interest in any business which has a
close trading relationship with the Business or which is or is
likely to become competitive with the Business.
8. Year 2000
8.1 Each item of equipment and software programme used by the
Vendor (a "Company System") in the course of its business has
been produced, tested and/or amended in a manner which ensures
that:
(a a change of, reference to or use of a date before, on
or after 31 December 1999 in the operation of that Company
System, whether alone or in conjunction with each other Company
System, will not have an adverse effect on, nor give rise to
inconvenience in, the operation of that Company System; and
(b the inclusion of a date or dates before, on or after 31
December 1999 in the date information exchanged with any item of
equipment and software programme which is not a Company System
but with which that Company System exchanges date information in
the course of the Company's business will not have an adverse
effect on, nor give rise to inconvenience in, that exchange of
date information or the subsequent use of that date information.
43
8.2 Each product and service sold by the Vendor (the "Product
and Service") both now and at any time within the last six years
has ensured that a change of, reference to or use of a date
before, on or after 31 December 1999 in the operation of the
Product and Service will not have an adverse effect on, nor give
rise to inconvenience in, the operation of that Product and
Service.
8.3 Each Company System and Product and Service will, in
responding to two-digit date input and providing date output,
resolve an ambiguity as to century in a manner which is
consistent, clearly defined and apparent to the user.
9. Intellectual Property
9.1 Each of the Intellectual Property Rights is:
(a valid and enforceable and nothing has been done or
omitted to be done by which it may cease to be valid and
enforceable;
(b legally and beneficially owned by and validly granted
to the Vendor alone, free from any licence, Encumbrance,
restriction on use or disclosure obligation (or is lawfully used
with the consent of the owner under a licence); and
(c not, and will not be, the subject of a claim or
opposition from a person (including, without limitation, an
employee of the Vendor) as to title, validity, enforceability,
entitlement or otherwise.
9.2 The Disclosure Letter contains details of all the
Intellectual Property Rights in respect of which the Vendor is a
registered or beneficial owner or applicant for registration
including full correct and up-to-date information in relation to
each registration and application.
9.3 All renewal and maintenance fees and taxes due and payable
prior to completion in respect of each of the pending and
registered Intellectual Property Rights have been paid in full.
Each other action required to maintain and protect the pending
and registered Intellectual Property Rights has been taken.
9.4 Nothing has been done or omitted to be done and no
circumstances exist by which a person is or will be able to seek
cancellation, rectification or other modification of a
registration of any of the Intellectual Property Rights.
44
9.5 There is and during the two years ending on the date of this
Agreement has been, no civil, criminal, arbitration,
administrative or other proceeding or dispute in any jurisdiction
concerning any of the Intellectual Property Rights. No civil,
criminal, arbitration, administrative or other proceeding or
dispute concerning any of the Intellectual Property Rights is
pending or threatened. To the best of the Vendor's knowledge,
information and belief, no fact or circumstance exists which
might give rise to a proceeding of that type.
9.6 The Vendor has not granted and nor is obliged to grant a
licence, assignment, consent, undertaking, security interest, or
other right in respect of any of the Intellectual Property
Rights.
9.7 There are no, and never have been, any outstanding claims
against the Vendor for an infringement or unauthorised use of any
of the Intellectual Property Rights. The Vendor has not received
any written claim that any of the Intellectual Property is
invalid.
9.8 The activities, processes, methods, products, services or
Intellectual Property used, manufactured, dealt in or supplied on
or before the date of this Agreement the Vendor:
(a are not, at the date of this Agreement, nor were they
at the time used, manufactured, dealt in or supplied, subject to
licence, consent or permission of, or payment to, another person;
(b to the best of the Vendor's knowledge, information and
belief, do not at the date of this Agreement, nor did they at the
time used, manufactured, dealt in or supplied, infringe, misuse
or embody the subject matter of any rights in the Intellectual
Property (including, without limitation, moral rights) of another
person;
(c to the best of the Vendor's knowledge, information and
belief, have not given, and will not give, rise to any claim
against the Vendor.
9.9 No party to an agreement relating to the use:
(a by the Vendor of Intellectual Property owned by another
person; or
(b of any Intellectual Property Rights owned by the Vendor
by another person
is, or has at any time been, in breach of the agreement and
no circumstances exist which would give rise to any breach of any
such agreement or to any such agreement
45
being terminated, suspended, varied or revoked without the
Vendor's consent (other than termination without cause upon
notice in accordance with the terms of the agreement).
9.10 All the Confidential Information is adequately and properly
documented to enable the Purchaser to acquire and retain its full
benefit.
9.11 The Vendor has not disclosed and is not obliged to disclose
any Confidential Information to any person other than its
employees who are bound by obligations of confidence or except in
the ordinary and usual course of business and then only on
condition that the disclosure is to be treated as being of a
confidential nature. The Vendor is not aware of any such
confidentiality having been breached.
9.12 The Intellectual Property Rights and the Vendor's ownership,
licence or rights in them will not be adversely affected by the
transaction contemplated by this Agreement.
9.13 The Intellectual Property Rights comprise all the
Intellectual Property necessary for the Vendor to operate its
business, and for the business to continue to operate, as it has
been operated during the two year period ending on the date of
this Agreement.
9.14 The Vendor is not a party to a confidentiality or other
agreement and is not otherwise subject to any duty which
restricts the free use or disclosure of information or of any of
the Intellectual Property Rights.
9.15 The Vendor does not use or operate the Business under a name
other than its corporate name.
10. Insurance
10.1 Each insurable asset of the Vendor has at all material times
been and is at the date of this Agreement insured to its full
replacement value (with no provision for deduction or excess)
against each risk normally insured against by a person operating
the types of business operated by the Vendor.
10.2 The Vendor has at all material times been and is at the date
of this Agreement adequately insured against accident, damage,
injury, third party loss (including, without limitation, product
liability), credit risk, loss of profits and all other risks to
which a person operating the types of business operated by the
Vendor is exposed.
46
10.3 The Disclosure Letter contains a list of each current
insurance and indemnity policy in respect of which the Vendor has
an interest (including any active historic policies which provide
cover on a losses occurring basis) (together the "Policies") and
sets out, in relation to each of the Policies, a summary
including details of the parties, cover, deductibles, limits,
exclusions, conditions and premium payable.
10.4 Each of the Policies is valid and enforceable and is not
void or voidable and will be maintained in full force and effect
without alteration pending Completion and all premiums will be
paid on times.
10.5 The Vendor has not done anything or omitted to do anything
which might:
(a make any of the Policies void or voidable; or
(b prejudice the ability to effect insurance on the same
or better terms in the future.
10.6 No insurer under any of the Policies has disputed, or given
any indication that they intend to dispute, the validity of any
of the Policies on any grounds.
10.7 To the best of the Vendor's knowledge, information and
belief, there is nothing which could vitiate any of the Policies
or prejudice the ability to effect insurance on the same or
better terms in the future.
10.8 No insurer has ever canceled or refused to accept or
continue any insurance in relation to the Vendor.
10.9 No claims have been made, no claim is outstanding and no
fact or circumstance exists which might give rise to a claim
under any of the Policies.
10.10 No event, act or omission has occurred which requires
notification under any of the Policies.
10.11 None of the insurers under any of the Policies has
refused, or given any indication that it intends to refuse,
indemnity in whole or in part in respect of any claims under the
Policies.
10.12 Nothing has been done or omitted to be done, and there
is nothing, which might entitle the insurers under any of the
Policies to refuse indemnity in whole or in part in respect of
any claims under the Policies.
47
10.13 All premiums which are due under the Policies have been
paid.
10.14 The Vendor has not done anything or omitted to do
anything, and there is nothing, which might result in an increase
in the premium payable under any of the Policies.
11. Environmental Matters, Health and Safety and Products
Liability
11.1 The operation of the Business does not involve and has never
involved the use, or the release or discharge of a hazardous
substance or article, waste, sewage or other pollutant or
contaminant.
11.2 No land or other asset owned, occupied, possessed or used by
the Vendor on or at any time before the date of this Agreement:
(a contains or has contained (in the case of land, above
or below ground) a hazardous substance or article, waste or other
pollutant or contaminant;
(b is or has been used for the deposit, storage, treatment
or disposal of waste or sewage; or
(c is referred to or listed in a register of polluted or
contaminated land and no fact or circumstance exists which might
give rise to an entry in such a register.
11.3 The Vendor has not sold, supplied or provided a defective
product or services in the course of its business on or prior to
the date hereof.
11.4 The Vendor has not manufactured, sold or supplied any
product or service which:
(a is, was or will become, in any material respect, faulty
or defective; or
(b does not comply in any material respect with any
warranty or representation, express or implied, made by or on
behalf of the Vendor in respect of it or with all laws,
regulations, standards and requirements applicable to it; or
(c was sold or supplied on terms that the Vendor accepts
an obligation to service or repair or replace such products after
delivery.
11.5 The Vendor has not received a prohibition notice, a notice
to warn or a suspension notice under the Consumer Protection Act
1987 in relation to any of its products at any time within the
last 3 years.
48
11.6 The Vendor has in relation to its plant and machinery and
other fixed assets, and the premises and its employees, complied
with all legal requirements relating to health and safety
including, but not limited to, those imposed by the Health and
Safety at Work etc. Act 1974 and all regulations made thereunder,
and no action has been taken by any entering authority in
relation to any actual or alleged breach of such requirements and
neither is the Vendor in receipt of any claim by any officer or
employee or any past officer or employee in relation to any such
breach and the Vendor is not aware of any circumstances which may
lead to such action or claim.
11.7 (a For the purpose of this Warranty, "Environmental Laws"
shall mean any existing laws (local or national) or regulations
having application to the operation of the business of any Vendor
including, without limitation, directives, regulations, rules,
codes of practice and guidance notes made thereunder relating to
environmental and health & safety matters.
(b The Vendor is and to the Vendor's knowledge always has
been in full compliance with all Environmental Laws and the
existence and the use of the premises, machinery and other
property of the Vendor has been and is in accordance with all
Environmental Laws.
(c No written notice, written demand or written request
for information has been issued or made and no investigation or
review is or has been threatened or is pending by any
governmental authority or other person with respect to any
alleged violation by the Vendor of any Environmental Law or
liability thereunder.
(d The Vendor does not own or has in the past owned or had
any interest in land which has been used for a contaminative use
or upon which toxic, radioactive, caustic or other hazardous
substances (of whatever kind) have been stored or processed in a
manner inconsistent with any Environmental Laws.
12. Agreements
12.1 To the best of the Vendor's knowledge, information and
belief no fact or circumstance exists which might invalidate or
give rise to a ground for termination, avoidance or repudiation
of an agreement, arrangement or obligation of which the Vendor is
a party. No party with whom the Vendor has entered into an
agreement, arrangement or obligation has given notice of its
intention to terminate, or has sought to repudiate or disclaim,
the agreement, arrangement or obligation.
49
12.2 Neither the Vendor nor any party with whom the Vendor has
entered into an agreement, arrangement or obligation is in
material breach of the agreement, arrangement or obligation. To
the best of the Vendor's knowledge, information and belief, no
fact or circumstance exists which might give rise to a breach of
this type.
12.3 The Vendor is not a party to and is not liable under a long-
term, onerous or unusual legally binding agreement, arrangement
or obligation including, without limitation:
(a an agreement, arrangement or obligation entered into
other than in the usual course of its business;
(b an agreement, arrangement or obligation entered into
other than by way of a bargain at arms length;
(c an agreement, arrangement or obligation restricting the
Vendor's freedom to operate the whole or part of its business or
to use or exploit any of its assets;
(d a sale or purchase, option or similar agreement,
arrangement or obligation affecting an asset owned, occupied,
possessed or used by the Vendor or by which the Vendor is bound;
(e a material agreement, arrangement or obligation with
which the Vendor cannot comply on time or without undue or
unusual expenditure of money or effort;
(f a contract for the sale of shares or assets comprising
a business undertaking which contains warranties or indemnities
under which any Vendor still has a remaining liability or
obligation or can be terminated as a result of any change in the
underlying ownership or control of the Vendor, or would be
materially affected by such change; or
(g an agreement, arrangement or obligation which is in any
way otherwise than in the ordinary course of any Company's
business.
12.4 The Vendor is not:
(a a member of a joint venture, consortium, partnership or
association (other than the bona fide trade association); or
(b a party to a distributorship, agency, franchise or
management agreement or arrangement.
50
13. Terms of Trade and Business
13.1 The Vendor has paid its creditors within the times agreed
with them. No debt owing by it has been due for more than 30
days.
13.2 During the year ending on the date of this Agreement, no
substantial supplier or customer of the Vendor has:
(a stopped, or indicated an intention to stop, trading
with the Vendor;
(b reduced, or indicated an intention to reduce, trading
with the Vendor; or
(c changed or indicated an intention to change,
substantially the terms on which it is prepared to trade with the
Vendor.
13.3 To the best of the Vendor's knowledge, information and
belief no substantial supplier or customer of the Vendor is
likely to:
(a stop trading with the Vendor;
(b reduce substantially its trading with the Vendor; or
(c change substantially the terms on which it is prepared
to trade with the Vendor.
13.4 To the best of the Vendor's knowledge, information and
belief, the attitude of customers, suppliers and employees with
regard to the Vendor will not be prejudicially affected by the
execution or performance of this Agreement or any document to be
executed at or before Completion.
13.5 The Vendor has not entered into an agreement or arrangement
with a supplier or customer in terms materially different to its
standard terms of business.
13.6 No person (either individually or jointly with another
person) has bought from or sold to the Vendor, either in the
financial year of the Vendor ended on the Reference Accounts Date
or since the Reference Accounts Date, more than five per cent of
the total amount of all purchases or sales made by the Vendor in
that period.
13.7 The Vendor does not have outstanding any bid, tender, sale
or service proposal.
51
13.8 None of the records, systems, data or information of the
Vendor is recorded, stored, maintained, operated or otherwise
wholly or partly dependent on or held or accessible by any means
(including, without limitation, any electronic, mechanical or
photographic process, computerised or not) which are not under
the exclusive ownership and direct control of the Vendor.
13.9 The Vendor has at all times complied with the Data
Protection Acts 1984 and 1998 (including, for the avoidance of
doubt, the data protection principles set out in Schedule 1 to
the Data Protection Act 1984 and the Telecommunications (Data
Protection and Privacy) (Direct Marketing) Regulations 1998.
14. Effect of Sale
Neither the execution nor the performance of this Agreement or
any document to be executed at or before Completion will result
in the Vendor losing the benefit of any licence, consent, permit,
approval or authorisation (public or private) necessary for
carrying on the Business in the places and in the manner
currently carried on or any asset, grant, subsidy, right or
privilege which it enjoys at the date of this Agreement or will:
(a conflict with;
(b result in the breach of;
(c give rise to an event of default under;
(d require the consent of a person under;
(e enable a person to terminate; or
(f relieve a person from an obligation under
any agreement or arrangement or Business Contract to which the
Vendor is a party or any legal or administrative requirement by
which the Vendor is bound or result in any present or future
indebtedness of the Vendor becoming due or capable of being
declared due and payable prior to its stated maturity.
52
15. Employees
15.1 There is no employment contract or other contract of
engagement between the Vendor and any of its directors or other
officers (whether under a contract of service or contract for
services) other than in respect of the Employees and the
Employees are all employed directly by the Vendor and each of the
Employees is employed exclusively in the Business. The Vendor is
not a party to a consultancy contract.
15.2 The Vendor has disclosed copies of all service contracts and
contracts for services and full particulars of the current terms
of employment or engagement of all Employees and agents to the
Business (including all information required by law to be
included in particulars of terms of employment) and all such
particulars are true and accurate and complete in all respects.
15.3 The Vendor has not offered any contract of employment or
contract for services to any person (except to any of the
Employees) and there is not outstanding any contract of service
or for services with any of the Employees or agents of the
Business which cannot be terminated by the Vendor by three
month's notice or less without giving rise to a claim for damages
or compensation (other than a statutory redundancy payment or
statutory compensation for unfair dismissal).
15.4 There is no employment or consultancy contract or other
contract of engagement between the Vendor and any person which is
in suspension or has been terminated but is capable of being
revised or enforced and in respect of which each Company has a
continuing obligation.
15.5 The Vendor has not offered, promised or agreed for the
future variation in any contract of employment or any contract
for service in respect of the Employees or any other person
employed by the Vendor in respect of whom liability is deemed by
the Transfer Regulations to pass to the Purchaser.
15.6 The Disclosure Letter contains details of :
(a the total number of the Vendor's Employees including
those who are on maternity leave or absent because of disability
or other long-term leave of absence and who have or may have a
right to return to work with the Vendor.
(b the name, date of start of employment, period of
continuous employment, salary and other benefits, grade and age
of each Employee of the Vendor and, where an
53
Employee has been continually absent for more than one month, the
reason for the absence; and
(c the terms of the contract of each director, other
officer and employee of the Vendor entitled to remuneration at an
annual rate or an average annual rate, or an average annual rate
over the last three financial years, of more than 10,000.
15.7 The basis of the remuneration payable to the Vendor's
directors, other officers and employees is the same as that in
force at the Reference Accounts Date. The Vendor is not obliged
to increase, nor has it made provision to increase, the total
annual remuneration payable to its directors, other officers and
employees by more than five per cent.
15.8 The Vendor does not owe any amount to a present or former
director, other officer or employee of the Vendor (or his
dependant) other than for accrued remuneration or reimbursement
of business expenses.
15.9 There is no agreement or arrangement between the Vendor and
Employees or former employee with respect to his employment, his
ceasing to be employed or his retirement which is not included in
the written terms of his employment or previous employment. The
Vendor has not provided, or agreed to provide, a gratuitous
payment or benefit to a director, officer or employee or to any
of their dependants.
15.10 The Vendor has maintained up-to-date, full and accurate
records regarding the employment of each of its employees
(including, without limitation, details of terms of employment,
payments of statutory sick pay and statutory maternity pay,
income tax and social security contributions, disciplinary and
health and safety matters), and termination of employment.
15.11 Except as disclosed in the Accounts, the Vendor has
not:
(a incurred a liability for breach or termination of an
employment contract including, without limitation, a redundancy
payment, protective award and compensation for wrongful
dismissal, unfair dismissal and failure to comply with an order
for the reinstatement or re-engagement of an employee;
(b incurred a liability for breach or termination of a
consultancy agreement; or
(c made or agreed to make a payment or provided or agreed
to provide a benefit to a present or former director, other
officer or employee of the Vendor or to any of their
54
dependants in connection with the actual or proposed termination
or suspension of employment or variation of an employment
contract.
15.12 The Vendor has complied with:
(a each obligation imposed on it by, and each order and
award made under, statute, regulation, code for conduct and
practice, collective agreement, custom and practice relevant to
relations between it and its employees or a trade union or the
terms of employment of its employees; and
(b each recommendation made by the Advisory, Conciliation
and Arbitration Service and each award and declaration made by
the Central Arbitration Committee.
15.13 Within the year ending on the date of this Agreement,
the Vendor has not:
(a given notice of redundancies to the relevant Secretary
of State or started consultations with a trade union under
Chapter II of Part IV of the Trade Union and Labour Relations
(Consolidation) Act 1992 or failed to comply with its obligations
under Chapter II of Part IV of that Act; or
(b been a party to a relevant transfer (as defined in the
Transfer of Undertakings (Protection of Employment Regulations
1981) or failed to comply with a duty to inform and consult a
trade union under those Regulations.
15.14 The Vendor does not have any arrangement with and does
not recognise a trade union, works council, staff association or
other body representing any of its employees.
15.15 The Vendor is not involved in, and no fact or
circumstance exist which might give rise to, a dispute with a
trade union, works council, staff association or other body
representing any of its employees.
15.16 The Vendor does not and is not proposing to introduce a
share incentive, share option, profit sharing, bonus or other
incentive scheme for any of its directors, other officers or
employees.
15.17 There is not and has not been a training scheme,
arrangement or proposal in relation to each Company in respect of
which a levy may become payable by each Company under the
Industrial Training Act 1982.
55
15.18 The Vendor has paid to the Inland Revenue and any other
appropriate taxation authority all taxes, National Insurance
contributions and other levies due in respect of the Employees in
respect of their employment by the Vendor up to the Completion
Date.
16. Pensions and Other Benefits
16.1 Save in respect of The Plan, the Vendor has no obligation
(whether legally binding or not) to provide "relevant benefits"
(within the meaning of Section 612 ICTA 1988) to, or in respect
of any person who is now or has been an officer or employee of
the Vendor or spouse or dependant of such officer or employee;
16.2 Full and accurate details and particulars of Plan have been
disclosed in the Disclosure Letter together with accurate, up-to-
date and complete copies of all documents relating to Plan
including a list of investments held for Plan and there is no
obligation to provide benefits under Plan other than as revealed
in such documents and particulars;
16.3 The Plan is an "exempt approved scheme" (within the meaning
of Chapter I of Part XIV ICTA 1988) and, to the best of the
Vendor's knowledge and awareness, there is no reason why approval
of the Board of Inland Revenue should be withdrawn;
16.4 Other than benefits on death as disclosed, The Plan provides
only money purchase benefits as defined in Section 181 Pension
Schemes Act 1993. No person who is now or has been an officer or
employee has been promised that he or his dependants will receive
benefits on his retirement, death or leaving service other than
money purchase benefits as defined above.
16.5 During the Vendor's period of ownership, provisions of The
Plan have never discriminated between male and female members.
16.6 All premiums payable under contracts of insurance relating
to payment of benefits on death before normal pension age in
respect of any officer or employee of the Vendor have been paid
and all contributions to, and expenses of, The Plan which have
fallen due for payment have been paid.
16.7 Except as fairly disclosed in the Disclosure Letter, there
is no dispute with regard to the benefits payable under the
Pension Plans or any other payments or benefits referred to in
paragraph 17.1. Except as fairly disclosed in the Disclosure
Letter, no legal proceedings in connection with The Plan is
pending, threatened or expected nor is there any fact or
circumstance likely to give rise to any such proceedings.
56
16.8 The Plan has at all times complied with and been
administered in accordance with the provisions governing it and
all applicable laws, regulations and requirements, including the
requirements of the Inland Revenue for continued approval as an
exempt approved scheme, and of trust law.
16.9 The Vendor has at all times complied with all the provisions
of The Plan which apply to it.
16.10 The Plan is not a contracted out plan within the
meaning of the Pension Schemes Act 1993.
17. Liabilities
17.1 Except as disclosed in the Accounts or in the Disclosure
Letter, the Vendor does not have any outstanding and has not
agreed to create or incur loan capital, borrowing or indebtedness
in the nature of borrowing.
17.2 The Vendor is not a party to and is not liable under a
guarantee, indemnity or other agreement to secure or incur a
financial or other obligation with respect to another person's
obligation.
17.3 No part of the loan capital, borrowing or indebtedness in
the nature of borrowing of the Vendor is dependent on the
guarantee or indemnity of, or security provided by, another
person.
17.4 No event has occurred or been alleged to have occurred
which:
(a constitutes an event of default, or otherwise gives
rise to an obligation to repay, under an agreement relating to
borrowing or indebtedness in the nature of borrowing (or will do
so with the giving of notice or lapse of time or both) or
(b will lead to an Encumbrance constituted or created in
connection with borrowing or indebtedness in the nature of
borrowing, a guarantee, an indemnity or other obligation of the
Vendor becoming enforceable (or will do so with the giving of
notice or lapse of time or both).
17.5 The Vendor is not liable to repay an investment or other
grant or subsidy made to it by a body (including, without
limitation, the Department of Trade and Industry or its
predecessor).
57
17.6 No fact or circumstance (including, without limitation,
execution and performance of this Agreement) exists which might
entitle a body to require repayment of, or refuse an application
by the Vendor for, the whole or part of a grant or subsidy.
17.7 No subsidiary or affiliate of the Guarantor is a creditor of
the Guarantor.
17.8 No subsidiary or affiliate of the Vendor is a creditor of
the Vendor.
17.9 The Guarantor has no liabilities or obligations of any
nature, whether known or unknown, absolute, accrued, contingent
or otherwise and whether due or to become due, arising out of or
relating to the business and operations of the Guarantor as
previously or currently conducted or contemplated to be conducted
except (a) as and to the extent disclosed or provided for in the
Financial Statements and (b) for liabilities and obligations that
(i) were incurred after the date of the Financial Statements in
the ordinary course of business consistent with past practice;
(ii) individually and in the aggregate would not have a material
adverse effect; and (iii) do not and will not materially impair
the ability of the Guarantor to perform its obligations hereunder
or under any document, instrument, certificate or agreement
necessary to transfer to the Purchaser good and valid title to
the Shares, free and clear of any and all Encumbrances thereon,
at the Completion Date, or the ability of the Purchaser to
conduct the business and operations of the Company from and after
the Completion Date.
17.10 The Vendor has no liabilities or obligations of any
nature, whether known or unknown, absolute, accrued contingent or
otherwise and whether due or to become due, arising out of
relating to the business and operations of the Vendor as
previously or currently conducted or contemplated to be conducted
except (a) as and to the extent disclosed or provided for in the
Accounts and (b) for liabilities and obligations that (i) were
incurred after the Reference Accounts Date in the ordinary course
of business consistent with past practice; (ii) individually and
in the aggregate would not have a material adverse effect; and
(iii) do not and will not materially impair the ability of the
Vendor to perform its obligations hereunder or under any
document, instrument, certificate or agreement necessary to
transfer to the Purchaser good and valid title to the Shares,
free and clear of any and all Encumbrances thereon, at the
Completion Date, or the ability of the Purchaser to conduct the
business and operations of the Company from and after the
Completion Date.
58
18. Permits
18.1 The Vendor has obtained and has complied with the terms and
conditions of each Permit, necessary or desirable for the
continuation of the Business.
18.2 Details of each Permit are set out in the Disclosure Letter.
18.3 Each Permit is in force, unimpeachable and unconditional or
subject only to a condition that has been satisfied. No
expenditure or work is or will be necessary to comply with,
maintain or obtain a Permit. To the best of the Vendor's
knowledge, information and belief, no Permit will be revoked,
suspended, canceled or varied or not renewed.
18.4 Each action required for the renewal or extension of each
Permit has been taken.
18.5 No Permit will be revoked, suspended, canceled, varied or
not renewed as a result of the execution or performance of this
Agreement or any document to be executed at or before Completion
and there is no circumstances which indicate that any such Permit
is likely to be revoked, suspended, canceled, varied or not
renewed or that any of them will expire within a period of one
year from the date of this Agreement.
19. Insolvency
19.1 No order has been made, petition presented or resolution
passed for the winding up of the Vendor or for the appointment of
a provisional liquidator to the Vendor and no administration
order has been made in respect of the Business or Assets or any
of them.
19.2 No receiver or manager has been appointed of the whole or
part of the Vendor's Business.
19.3 No voluntary arrangement has been proposed under Section 1
of the Insolvency Act 1986 in respect of the Vendor. No
compromise or arrangement has been proposed, agreed to or
sanctioned under section 425 of the CA 1985 in respect of the
Vendor.
19.4 The Vendor is not insolvent or unable to pay its debts
within the meaning of Section 123 of the Insolvency Act 1986.
19.5 The Vendor has not stopped paying its debts as they fall
due.
59
19.6 No distress, execution or other process has been levied on
an asset of the Vendor or action taken to repossess goods in the
Vendor's possession which has not been satisfied in full in
respect of the whole or any part of the Business or the Assets.
19.7 There is no unsatisfied judgment or court order outstanding
against the Vendor.
19.8 No floating charge created by the Vendor has crystallized
and, so far as the Vendor is aware, there are no circumstances
likely to cause such floating charge to crystallize over the
Business or the Assets or any of them or any charge created by it
to become enforceable over the Business or the Assets or any of
them nor has such crystalisation occurred as in such enforcement
in process.
19.9 No action has been taken by the Registrar of Companies to
strike the Vendor off the register under section 652 of the CA
1985.
19.10 The Vendor has not at any time during the two years
immediately prior to the date of this Agreement:
(a entered into a transaction with any person at an
undervalue (as referred to in Section 238(4) of the Insolvency
Act 1986) or
(b been given a preference by any person (as referred to
in section 239(4) of the Insolvency Act 1986).
19.11 No event analogous to any of the foregoing has occurred
in or outside England.
20. Competition
20.1 The Vendor has no liability under, and is not a party to,
any agreement or arrangement
(a particulars of which have been furnished to the
Director General of Fair Trading under the Restrictive Trade
Practices Acts 1976 and 1977;
(b which is prohibited by any competition law.
20.2 The Vendor has not given an undertaking or written assurance
(legally binding or not) to a governmental authority or an
authority of the European Communities or
60
European Economic Area under the Fair Trading Act 1973,
Competition Act 1980, Restrictive Trade Practices Acts 1976 and
1977, Resale Prices Act 1976, Treaty of Rome, Agreement on the
European Economic Area or any other statute or legal instrument.
No Vendor is affected by an order or regulation made under the
Fair Trading Act 1973 or the Competition Act 1980 or by a
decision of the Commission of the European Communities, EFTA
Surveillance Authority or a competition or governmental authority
of another jurisdiction.
20.3 The Vendor has not received a communication or request for
information relating to any aspect of the Vendor's business from
or by the Director General of Fair Trading, Competition
Commission, Secretary of State for Trade and Industry, Commission
of the European Communities or EFTA Surveillance Authority or a
competition or governmental authority of another jurisdiction.
No agreement, arrangement or conduct (by omission or otherwise)
of the Vendor is or has been the subject of an investigation,
report or decision by any of those persons or bodies and none is
pending or threatened. To the best of the Vendor's knowledge,
information and belief, no fact or circumstance exists which
might give rise to an investigation, report or decision by any of
those persons or bodies.
21. Litigation and Compliance with Law
21.1 Neither the Vendor nor a person for whose acts or defaults
the Vendor may be vicariously liable is involved, or has during
the two years ending on the date of this Agreement been involved,
in a civil, criminal, arbitration, administrative or other
proceedings in relation to the Business or the Assets or any of
them. No civil, criminal, arbitration, administrative or other
proceeding is pending or threatened by or against the Vendor or a
person for whose acts or default the Vendor may be vicariously
liable which affect or might affect any of the Assets.
21.2 To the best of the Vendor's knowledge, information and
belief, no fact or circumstance exists which might give rise to a
civil, criminal, arbitration, administrative or other proceeding
involving the Vendor or a person for whose acts or defaults the
Vendor may be vicariously liable.
21.3 There is no outstanding judgement, order, decree, arbitral
award or decision of the court, tribunal, arbitrator or
governmental agency against the Vendor or a person for whose acts
or defaults the Vendor may be vicariously liable.
21.4 The Vendor has, in the Vendor's reasonable knowledge,
conducted the Business and dealt with the Assets in all material
respects in accordance with all applicable legal and
administrative requirements (including VAT).
61
21.5 There is not and has not been any governmental or other
investigation, inquiry or disciplinary proceeding concerning the
Vendor and none is pending or threatened. To the best of the
Vendor's knowledge, information and belief no fact or
circumstance exits which might give rise to an investigation,
inquiry or proceeding of that type.
21.6 Neither the Vendor nor any person for whose acts or defaults
the Vendor may be vicariously liable has:
(a induced a person to enter into an agreement or
arrangement with any Vendor by means of a unlawful or immoral
payment, contribution, gift or other inducement;
(b offered or made an unlawful or immoral payment,
contribution, gift or other inducement to a government official
or employee; or
(c directly or indirectly made an unlawful contribution to
a political activity.
22. Insider Agreements
There is not, and during the three years ending on the date of
this Agreement, there has not been, any agreement or arrangement
(legally enforceable or not) to which any Vendor is or was a
party and in which any of the Vendor, a director or former
director of any Vendor or a person connected with any of them is
or was interested in any way. For this purpose, "connected" has
the meaning given by section 839 of ICTA, except that in
construing section 839 "control" has the meaning given by section
840 or section 416 of ICTA so that there is control wherever
either section 840 or 416 requires.
23. Miscellaneous
23.1 The Vendor is operating and has always operated its business
in all respects in accordance with its memorandum and articles of
association at the relevant time.
23.2 Each register, minute book and other book which the CA 1985
requires the Vendor to keep has been properly kept and contains a
complete and accurate record of the matters which it is required
by the CA 1985 to record. No notice has been received or
allegation made that a register or book is incorrect or should be
rectified.
23.3 All returns, particulars, resolutions and other documents
required to be delivered by the Vendor to the Registrar of
Companies and other governmental or other authority or agency
have been properly prepared and delivered.
62
23.4 The Vendor has not given a power of attorney or other
authority by which a person my enter into an agreement,
arrangement or obligation on the Vendor's behalf (other than an
authority for a director, other officer or employee to enter into
an agreement in the usual course of that person's duties).
24. Brokerage or Commission
No person is entitled to receive a finder's fee, brokerage or
commission from the Vendor in connection with this Agreement.
63
AGREED FORM NOTICE TO EMPLOYEES
"A"
From: WPI Oyster Termiflex Limited
and
Dynatech Corporation Limited
[Date]
Dear [Name]
Your employment with WPI Oyster Termiflex Limited ("the Vendor")
As you know, we are now writing to inform you that Dynatech
Corporation Limited ("the Purchaser") has entered into an
agreement to buy the Business and the sale and purchase of the
Business was completed today.
The Vendor and the Purchaser have been advised that the sale of
the Business to the Purchaser amounts to the transfer of part of
the business of the Vendor as a going concern. Consequently, the
contracts of employment of all employees of the Vendor working in
the Business have been automatically transferred to the Purchaser
under the Transfer of Undertakings (Protection of Employment)
Regulations 1981 ("the Regulations"). Accordingly, your contract
of employment with the Vendor has been transferred to the
Purchaser with effect from completion of the sale and purchase of
the Business.
Apart from the change in your employer and except as set out in
this letter, your terms and conditions of employment will not be
affected by the sale and purchase of the Business. All your
existing statutory employment rights are protected under the
Regulations. In particular, your period of continuous employment
by the Purchaser will be deemed to have commenced on the date on
which your continuous employment by the Vendor began.
Furthermore, the Purchaser has confirmed that it does not
currently envisage taking any measure in relation to any
transferring employees (for example, changes to terms and
conditions of employment or redundancies) following Completion.
64
If you are a member of the WPI Group Money Purchase Plan (the
"Plan"), your pension arrangements will not be altered and you
will remain a member of the Plan following Completion.
If you have any questions, please address these to Matt Gerber.
Please acknowledge receipt of this letter and confirm your
acceptance of the above by signing and returning the enclosed
copy of this letter to Matt Gerber. You should retain the
original copy of this letter for your own records.
Your sincerely
- ---------------------------- ------------------------
For and on behalf of For and on behalf of
WPI Oyster Termiflex Limited Dynatech Corporation
Limited
I acknowledge receipt of the original letter of which this is a
copy and confirm that I agree to the transfer of my contract of
employment from the Vendor to the Purchaser.
Signed:
----------------------
Date: ----------------------
65
WPI Oyster Termiflex Limited
and
Dynatech Corporation Limited
AGREEMENT FOR THE SALE AND PURCHASE
OF THE BUSINESS AND ASSETS OF
WPI OYSTER TERMIFLEX LIMITED
66
TABLE OF CONTENTS
Page
1. Definitions and Interpretation 1
2. Agreement to Sell and Purchase 7
3. Assets and Liabilities Not Included in the Sale 8
4. Conditions Precedent 10
5. Consideration 10
6. Completion 10
7. Adjustment to the Consideration 11
8. Value Added Tax 11
9. Warranties and Indemnities 13
10. Purchasers's Remedies 14
11. Limitations on the Vendor=s Liability 16
12. Vendor's Obligations Prior to Completion 18
13. Intellectual Property 19
14. Risk 20
15. Employees 20
16. Business Contracts 21
17. Obligations of the Vendor after Completion 23
i
18. Book Debts 23
19. Restrictive Covenants 23
20. Application of Sale and Purchase Agreement 25
21. Stamp Duty 26
Schedules
1. Completion Requirements
2. Apportionment of Consideration
3. The Business Contracts
4. The Employees
5. Intellectual Property
6. The Motor Vehicles
7. Warranties
ii
EXHIBIT 10.26
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT, dated as of February 11,
2000, among Itronix Corporation, a Delaware corporation (the
"Buyer"), WPI Husky Technology, Inc., a Florida corporation (the
"Seller"), and WPI Group Inc., a New Hampshire corporation and
parent of Seller ("Parent").
W I T N E S S E T H:
WHEREAS, WPI Group (UK), a private unlimited liability
company incorporated in England and Wales, Parent and Dynatech
Nominees Limited, a limited liability company incorporated in
England and Wales, are parties to an Agreement for the Sale and
Purchase of Shares in WPI Husky Technology Ltd. and WPI Husky
Technology GMBH, dated as of February 23, 2000 (the "UK Stock
Purchase Agreement"), pursuant to which the parties hereto shall
enter this Agreement;
WHEREAS, WPI Group (UK) and Dynatech Corporation
Limited, a
company incorporated in England and Wales, are parties to an
Agreement for the Sale and Purchase of the Business and Assets of
WPI Oyster Termiflex Ltd., a company incorporated in England and
Wales, dated as of February 23, 2000;
WHEREAS, (a) the Buyer wishes to purchase or acquire
from the Seller, and the Seller wishes to sell, assign and
transfer to the Buyer the Assets and the Business (as such term
and each other capitalized term used herein without definition is
defined in Section 7.1) other than the Excluded Liabilities and
(b) the Buyer has agreed to assume the Assumed Liabilities, all
for the purchase price and upon the terms and subject to the
conditions hereinafter set forth; and
WHEREAS, Parent owns all of the outstanding shares of
capital stock of the Seller and desire to cause the Seller to
sell the Business and Assets to the Buyer.
NOW, THEREFORE, in consideration of the mutual
covenants, representations and warranties made herein, and of the
mutual benefits to be derived hereby, the parties hereto agree as
follows:
ARTICLE I
SALE AND PURCHASE OF THE ASSETS
I.1. Assets Transferred by the Seller. Subject to and
upon the terms and conditions set forth in this Agreement, at the
Closing the Seller will sell, transfer, convey,
assign and deliver to the Buyer, and the Buyer will purchase and
acquire from the Seller, all right, title and interest of the
Seller in and to the properties, assets and rights of every
nature, kind and description, tangible and intangible (including
goodwill), whether real, personal or mixed, whether accrued,
contingent or otherwise, whether or not reflected on the
Financial Statements and whether now existing or hereinafter
acquired relating to, used or held for use in connection with the
Business as such properties, assets and rights may exist on the
Closing Date, other than the Excluded Assets (collectively, the
"Assets"), including, without limitation, those items in the
following categories that conform to the definition of the term
"Assets":
(a) all machinery, equipment, furniture, furnishings,
vehicles, parts and similar property (including, but not
limited to, any of the foregoing purchased subject to any
conditional sales or title retention agreement, in favor of
any other Person);
(b) all inventories of packaging materials, work in
progress, raw materials, finished products, goods, spare
parts, replacement and component parts, and office and other
supplies (collectively, the "Inventories"), including
Inventories held at any location controlled by the Seller
and Inventories previously purchased and in transit to the
Seller at such location;
(c) all rights (including but not limited to any and
all Intellectual Property rights) in and to the products
sold or leased and in and to any products or other
Intellectual Property rights under research or development
prior to or on the Closing Date;
(d) all of the rights of the Seller under all
contracts, arrangements, licenses, leases and other
agreements, including, without limitation, any right to
receive payment for products sold or services rendered, and
to receive goods and services, pursuant to such agreements
and to assert claims and take other rightful actions in
respect of breaches, defaults and other violations of such
contracts, arrangements, licenses, leases and other
agreements and otherwise;
(e) all credits, prepaid expenses, deferred charges,
advance payments, security deposits and prepaid items;
(f) all notes receivable, all accounts receivable, and
all notes, bonds and other evidences of indebtedness of and
rights to receive payment from any Person held by the
Seller;
(g) all Intellectual Property and all rights
thereunder or in respect thereof primarily relating to or
used or held for use in connection with the Business,
2
including, but not limited to, rights to sue for and
remedies against past, present and future infringements
thereof, and rights of priority and protection of interests
therein under the laws of any jurisdiction worldwide and all
tangible embodiments thereof (together with all Intellectual
Property rights included in the other clauses of this
Section 1.1, the "Intellectual Property Assets");
(h) all electronic information and data related to the
Business wherever located (collectively, the "Electronic
Data");
(i) all right, title and interest of Seller in or to
any prototypes, enhancements, improvements, or other
tangible work product, technology or process developed,
created or otherwise acquired in connection with the design,
research and development, implementation, market research or
marketing of products of the Business;
(j) all of the Seller's books, records, manuals and
other materials in any form or medium wherever located,
including, without limitation, procurement and customer
specifications, advertising matter, catalogues, price lists,
correspondence, mailing lists, lists of present and
prospective customers, credit records, distribution lists,
photographs, production data, sales and promotional
materials and records, purchasing materials and records,
personnel records, quality control records and procedures,
blueprints, Intellectual Property disclosures, media
materials and plates, accounting records, Tax Returns and
records other than Income Tax Returns, sales order files and
litigation files;
(k) to the extent their transfer is permitted by law,
all Governmental Approvals, including all applications
therefor;
(l) all Real Property and all licenses, permits,
approvals and qualifications relating to any Real Property
issued to the Seller by any Governmental Authority;
(m) all rights to causes of action, lawsuits,
judgments, claims and demands of the Seller with respect to
the Business or the ownership, use, function or value of any
Asset, whether by way of counterclaim or otherwise;
(n) all guarantees, warranties, indemnities or similar
rights in favor of the Seller; and
(o) all goodwill associated with the Business or the
Assets, together with the right to represent to third
parties that Buyer is the successor to the Business.
3
The Assets shall be transferred or otherwise conveyed
to the Buyer free and clear of all liabilities, obligations,
commitments and Liens excepting only Assumed Liabilities and
Permitted Liens (other than the Liens set forth on Schedule 7.1).
I.2. Excluded Assets. The Seller will retain, and the
Seller will not transfer, and the Buyer will not purchase or
acquire, the following assets (collectively, the "Excluded
Assets"):
(a) all cash of the Seller;
(b) all intercompany receivables, other than
intercompany receivables from WPI Husky Technology Ltd. and
WPI Oyster Termiflex Ltd. which are offset by intercompany
payables to WPI Husky Technology Ltd. and WPI Oyster
Termiflex Ltd.; and
(c) any and all assets set aside for purposes of
funding any of the Employee Liabilities and any plan,
program, contract or other arrangement related thereto.
ARTICLE II
THE CLOSING
II.1. Place and Date. The closing of the sale and
purchase of the Assets (the "Closing") shall take place at 10:00
A.M. New York time on February 23, 2000 at the offices of
Debevoise & Plimpton, 875 Third Avenue, New York, New York, or
such other time and place upon which the parties may agree. (The
day on which the Closing actually occurs is herein sometimes
referred to as the "Closing Date.")
II.2. Assumption of Liabilities. (a) Subject to the
terms and conditions set forth herein, at the Closing the Buyer
shall assume and agree to pay, honor and discharge when due any
and all liabilities, obligations and commitments relating
exclusively to the Business or the Assets to the extent reflected
and adequately reserved for on the Balance Sheet, but excluding
all liabilities for borrowed money regardless of whether or not
reflected on the Balance Sheet (collectively, the "Assumed
Liabilities").
(b) At the Closing, the Buyer shall assume the Assumed
Liabilities by executing and delivering to the Seller an
assumption agreement in a form reasonably satisfactory to Seller
(the "Assumption Agreement").
II.3. Excluded Liabilities. Notwithstanding the
provisions of Section 2.2 or any other provision hereof or
Transfer Document or any Schedule or Exhibit hereto or thereto
and regardless of any disclosure to the Buyer, the Buyer shall
not assume any
4
liabilities, obligations or commitments of any nature, whether
known or unknown, absolute, accrued, contingent or otherwise and
whether due or to become due, relating to or arising out of the
operation of the Business or the ownership of the Assets prior to
the Closing or otherwise other than the Assumed Liabilities,
including, but not limited to:
(a) all intercompany payables, other than intercompany
payables due to WPI Husky Technology Ltd. and WPI Oyster
Termiflex Ltd. which are offset by intercompany receivables
from WPI Husky Technology Ltd. and WPI Oyster Termiflex
Ltd.;
(b) all Taxes of the Seller or any Affiliate thereof,
or any other Taxes relating to the Business or the Assets,
except for Covered Taxes that are the responsibility of the
Buyer pursuant to Section 4.8;
(c) all amounts due and owing to Fleet Bank-NH arising
under a certain Credit Agreement dated as of August 3, 1998;
and
(d) any and all claims, liabilities, losses or damages
(the "Employee Liabilities") arising from or related to the
employment by Seller of any persons prior to the Closing
(including, but not limited to, unpaid compensation, claims
arising under any employee benefit plan (within the meaning
of Section 3(3) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA")), any obligation to
provide continuation coverage in accordance with Section 601
et. seq. of ERISA, and any obligations to employees who are
not actively at work on the Closing),
(all such liabilities, obligations and commitments, the "Excluded
Liabilities").
II.4. Consent of Third Parties. Notwithstanding
anything to the contrary herein, this Agreement shall not
constitute an agreement to assign or transfer any interest in any
Contract or Government Approval if an assignment or transfer
without the consent of a third party would constitute a breach
thereof or affect adversely the rights of the Buyer or the Seller
thereunder; and any transfer or assignment to the Buyer by the
Seller that requires the consent of a third party shall be made
subject to such consent or approval being obtained. In the event
any such consent or approval is not obtained on or prior to the
Closing Date and the Closing occurs, the Seller shall, and Parent
shall cause the Seller to, continue to use its best efforts to
obtain any such approval or consent after the Closing Date until
such time as such consent or approval has been obtained, and the
Seller will, and Parent shall cause the Seller to, cooperate with
the Buyer in any lawful and economically feasible arrangement to
provide that the Buyer shall receive the interest of the Seller
in the benefits under any such Contract or Government Approval,
provided, that, the Buyer shall undertake to pay or satisfy the
corresponding liabilities for the enjoyment of such benefit to
the extent the Buyer would have been responsible therefor
hereunder if such consent or approval had been obtained.
5
ARTICLE III
REPRESENTATIONS AND WARRANTIES
III.1. Representations and Warranties of the Seller.
As of the date hereof and as of the Closing Date, the Seller and
Parent, jointly and severally, represent and warrant to the Buyer
as follows:
III.1.1. Authorization, etc. Each of Parent and the
Seller has full power and authority to execute and deliver this
Agreement and the Transfer Documents to which it will be a party,
to perform fully its obligations hereunder and thereunder, and to
consummate the transactions contemplated hereby and thereby. The
execution and delivery of this Agreement, and the consummation of
the transactions contemplated hereby, have been, and on the
Closing Date the Transfer Documents will have been, duly
authorized by Parent and by all requisite corporate action of the
Seller. Each of Parent and the Seller has duly executed and
delivered this Agreement and on the Closing Date will have duly
executed and delivered the Transfer Documents to which it is a
party. This Agreement is, and on the Closing Date each of such
Transfer Documents will be, legal, valid and binding obligations
of the Seller and Parent party thereto, enforceable against the
Seller or Parent in accordance with their respective terms.
III.1.2. Corporate Status. (a) The Seller is a
corporation duly organized, validly existing and in good standing
under the laws of the State of Florida, with full corporate power
and authority to carry on the Business and to own or lease and to
operate its properties as and in the places where such Business
is conducted and such properties are owned, leased or operated.
(b) The Seller is duly qualified or licensed to do
business and is in good standing in each of the jurisdictions in
which the operation of the Business or the character of the
properties owned, leased or operated by it in connection with the
Business makes such qualification or licensing necessary, other
than those jurisdictions in which the failure to be so qualified
would not, individually or in the aggregate, have a Material
Adverse Effect.
(c) The Seller has delivered to the Buyer complete and
correct copies of the certificate of incorporation and by-laws as
amended and in effect on the date hereof. The Seller is not and
never has been in violation of any of the provisions of its
certificate of incorporation or by-laws. The minute books of the
Seller, which have heretofore been made available to the Buyer,
correctly reflect (i) all corporate actions taken by the
shareholders that the shareholders were required by Applicable
Law to take, (ii) all corporate actions taken by the directors
that the board of directors of the Seller was required by
Applicable Law to take, and (iii) all other corporate actions
taken by the shareholders and directors (including actions by any
committee of the board of directors of the Seller).
6
(d) The Seller has no Subsidiaries and the Seller has
no equity or other ownership interest in any Person.
(e) The authorized capital stock of the Seller
consists of 1,000 shares of common stock, par value $1.00 per
share ("Common Stock"), of which 100 shares are validly issued,
fully paid and nonassessable. Parent owns beneficially and of
record 100 shares of Common Stock, free and clear of any Liens.
The Seller has no other authorized, issued or outstanding shares
of Common Stock, other capital securities or securities
convertible into or exchangeable for, or warrants, options or
other rights to acquire, shares of Common Stock or other capital
securities of the Seller.
III.1.3. No Conflicts, etc. (a) The execution, deliv
ery and performance by each of the Seller and Parent of this
Agreement and the Transfer Documents to which it will be a party,
and the consummation of the transactions contemplated hereby and
thereby, do not and will not conflict with or result in a
violation of or a default under or give rise to a right of
acceleration, termination, vesting, decreased right or increased
obligation under (in each case with or without the giving of
notice or the lapse of time or both) or require approval under
(i) any Applicable Law, (ii) the certificate of incorporation or
by-laws (or similar organizational documents) of the Seller or
(iii) except as set forth in Schedule 3.1.3(a), any Contract or
Plan to which the Seller or Parent or any Affiliate thereof is a
party or by which the Seller or Parent or such Affiliate or any
of their respective properties or assets, including but not
limited to the Assets, may be bound or affected.
(b) Except as specified in Schedule 3.1.3(b), no
Governmental Approval or other Consent is required to be obtained
or made by the Seller or Parent in connection with the execution
and delivery of this Agreement and the Transfer Documents or the
consummation of the transactions contemplated hereby and thereby.
III.1.4. Financial Statements. (a) The Seller has
delivered to the Buyer complete and correct copies of the balance
sheet, statement of income and retained earnings, and the
statement of cash flows of the Seller as of or for the fiscal
years ending September 26, 1999 and September 27, 1998
(collectively, the "Financial Statements"). The Financial
Statements are attached hereto as Schedule 3.1.4(a).
(b) The Financial Statements are complete and correct
in all respects and have been derived from the accounting books
and records of the Seller. The balance sheets included in the
Financial Statements present fairly the financial position of the
Seller as at the respective dates thereof, and the statements of
income and retained earnings and the consolidated statements of
cash flows included in such Financial Statements present fairly
the results of operations and cash flows of the Seller for the
respective periods indicated. Except as disclosed in Schedule
3.1.4(b), since September 26, 1999, there has not been any
material adverse change in the business, assets, condition
(financial or otherwise) or results of operations of the Seller
and its subsidiaries.
7
III.1.5. Absence of Undisclosed Liabilities. The
Seller has no liabilities or obligations of any nature, whether
known or unknown, absolute, accrued, contingent or otherwise and
whether due or to become due, arising out of or relating to the
Business, except (a) as set forth in Schedule 3.1.5, (b) as and
to the extent disclosed or provided for in the Financial
Statements of the Seller as of September 26, 1999 and (c) for
liabilities and obligations that (i) were incurred after the date
of the Financial Statements in the ordinary course of business
consistent with past practice; (ii) individually and in the
aggregate would not have a Material Adverse Effect; and (iii) do
not and will not materially impair the ability of the Seller to
perform its obligations hereunder or under any Transfer Document,
or the ability of the Buyer to conduct the Business from and
after the Closing.
III.1.6. Taxes. (a) Except as specified in Schedule
3.1.6(a), (i) the Seller has duly and timely filed all Returns
relating to the Business or the Assets required to be filed on or
before the Closing Date, (ii) the Seller has paid all Taxes on or
with respect to the Business or the Assets due and payable on or
before the Closing Date, (iii) all Employment and Withholding
Taxes have been duly and timely paid to the proper Governmental
Authorities and set aside in accounts for such purpose or accrued
and entered upon the books of the Business, (iv) there is no Lien
for Taxes on any of the Assets, except for such Lien for Taxes
that are not yet due and payable and (v) no claims are being
asserted against the Seller by any Governmental Authority that
could lead to the imposition of a Tax Lien with respect to any of
the Assets.
.
(b) Except as set forth on Schedule 3.1.6(b),
(i) there are no Taxes on or with respect to the Business or the
Assets or Employment and Withholding Taxes asserted in writing by
any Governmental Authority to be due, (ii) no issue has been
raised in writing by any Governmental Authority in the course of
any audit with respect to Taxes on or with respect to the
Business or the Assets or Employment and Withholding Taxes, (iii)
no Taxes on or with respect to the Business or the Assets and no
Employment and Withholding Taxes are currently under audit by any
Governmental Authority, (iv) neither the IRS nor any Governmental
Authority is now asserting or, to the knowledge of the Seller,
threatening to assert against the Seller any deficiency or claim
for additional Taxes or Employment and Withholding Taxes or any
adjustment of such Taxes and there is no reasonable basis for any
such assertion of which the Seller is or reasonably should be
aware and (v) there is no litigation or administrative appeal
pending or, to the best knowledge of the Seller, threatened
against or relating to the Seller in connection with Taxes on or
with respect to the Assets or the Business or Employment and
Withholding Taxes..
(c) The Buyer will not be required to deduct and
withhold any amount pursuant to section 1445(a) of the Code upon
the transfer of the Business and the Assets to the Buyer.
8
(d) No agreement or other document extending, or
having the effect of extending, the period of assessment or
collection of Taxes on or with respect to the Assets or the
Business or Employment and Withholding Taxes has been filed with
the IRS or any other Governmental Authority.
III.1.7. Absence of Changes. Except as set forth in
Schedule 3.1.7, since September 26, 1999, the Seller has
conducted the Business only in the ordinary course consistent
with prior practice and has not, on behalf of, in connection with
or relating to the Business or the Assets:
(a) suffered any Material Adverse Effect;
(b) incurred, forgiven, canceled, compromised, waived
or released any obligation or liability except current
liabilities for trade or business obligations incurred in
connection with the purchase of goods or services in the
ordinary course of business consistent with prior practice;
(c) discharged or satisfied any Lien, other than those
required to be discharged or satisfied, or paid any
obligation or liability, absolute, accrued, contingent or
otherwise, whether due or to become due, other than (i)
current liabilities shown on the Balance Sheet, and (ii)
current liabilities incurred since the date thereof in the
ordinary course of business consistent with past practice;
(d) subjected any of the Assets to any Lien other than
any Permitted Lien;
(e) sold, transferred, leased to others or otherwise
disposed of any of the Assets, except for inventory sold in
the ordinary course of business consistent with past
practice, or canceled or compromised any debt or claim, or
waived or released any right of substantial value;
(f) modified any existing Contract or received any
notice of termination of any Contract or suffered any
damage, destruction or loss (whether or not covered by
insurance);
(g) changed in any respect its book, tax or other
accounting practices, policies or principles;
(h) made or committed to make any capital expenditures
in excess of an aggregate of $25,000;
(i) instituted, settled or agreed to settle any
litigation, action or proceeding before any Governmental
Authority relating to the Business or the Assets;
9
(j) redeemed, declared, set aside, made or paid any
dividend or other distribution in respect of its capital
stock; and
(k) taken any action or omitted to take any action
that would result in the occurrence of any of the foregoing.
III.1.8. Litigation. Except as set forth on Sched
ule 3.1.8(a), there is no action, claim, demand, suit, proceed
ing, arbitration or investigation pending or, to the knowledge of
the Seller or Parent, threatened against or relating to the
Seller or Parent in connection with the Assets or the Business
(or against any employee or former employee of the Seller
relating to the Seller, the Business or the Assets), or against
or relating to the transactions contemplated by this Agreement
and the Seller does not know of any basis for the same. Except
as set forth on Schedule 3.1.8(b), no citations, fines or
penalties have been asserted against the Seller with respect to
the Business under any Environmental Law or any Applicable Law
relating to occupational health or safety.
III.1.9. Compliance with Laws; Governmental Approvals
and Consents; Governmental Contracts. Schedule 3.1.9(a) sets
forth all Governmental Approvals and other Consents necessary
for, or otherwise material to, the conduct of the Business. All
such Governmental Approvals and Consents have been duly obtained
and are in full force and effect and Seller is in compliance
therewith in all material respects. Except as set forth on
Schedule 3.1.9(b), the Seller has complied in all material
respects with all Applicable Laws (including, without limitation,
escheat and unclaimed property laws) in connection with the
operation of the Business and the Assets. Seller has not
received any notice alleging any conflict, violation, breach or
default that has not been cured or waived.
III.1.10. Assets. The Seller has good title to, valid
leasehold interests in or valid rights under Contract to use all
of its Assets, in each case free and clear of any and all Liens
other than Permitted Liens. No Affiliate of the Seller has title
to any of the Assets. The Assets comprise all assets required
for the continued conduct of the Business by the Buyer after the
Closing in the manner the Business is now being conducted by the
Seller. The Assets are adequate for the purposes for which such
Assets are currently used or are held for use, and are in good
operating condition (subject to normal wear and tear) and, to the
knowledge of the Seller or Parent, there are no facts or
conditions affecting the Assets which could, individually or in
the aggregate, interfere in any material respect with the uses,
occupancy or operation thereof as currently used, accepted or
operated, or their adequacy for such use.
III.1.11. Contracts. (a) Schedule 3.1.11(a) contains
a complete and correct list of all of the following types of
agreements, contracts, licenses, commitments, instruments,
understandings and arrangements, whether written or oral, in each
case as amended, supplemented, waived or otherwise modified
(each, a "Contract") by which the
10
Business or any of the Assets are bound or to which the Seller is
a party or by which it is bound in connection with the Business
or the Assets (the "Material Contracts"):
(i) Contracts, franchises, insurance policies and
Governmental Approvals, in each case concerning or relating
to real property;
(ii) employment, severance, change of control,
consulting, agency, collective bargaining and other similar
Contracts (including, without limitation, loans from the
Seller) relating to or for the benefit of any current or
former shareholder, officer, other employee, director, sales
representative, distributor, dealer, agent, independent
contractor or consultant;
(iii) asset purchase agreements or other acquisition
or divestiture Contracts, including, but not limited to, any
Contracts relating to the sale, lease or disposal of any
Assets (other than sales of inventory in the ordinary course
of business consistent with past practice) or involving
continuing indemnity or other obligations;
(iv) Contracts involving the expenditure by any party
of more than $25,000 or requiring performance by any party
thereto for more than six months;
(v) (A) loan agreements, indentures, mortgages,
security agreements, pledge agreements, deeds of trust,
bonds, notes, guarantees, keep well agreements and other
Contracts, agreements, instruments and arrangements relating
to the borrowing of money, overdraft arrangements, or
obtaining of or extension of credit or the guarantee of
liabilities, obligations and commitments and (B) letters of
credit and surety, indemnity, performance and similar bonds
(other than in each of the clauses (A) and (B), any of such
items with respect to which the Seller is not an obligor and
does not have a reimbursement obligation);
(vi) sales agency, manufacturer's representative,
marketing or distributorship agreements;
(vii) capitalized lease or sale-leaseback or
conditional sale agreements;
(viii) Contracts relating to membership in any buying
or selling group or cooperative arrangements;
(ix) obligations evidenced by orders and other
Contracts for the purchase or sale of inventories,
materials, supplies, products or services (including,
without limitation, buying group or cooperative
arrangements, fuel supply and delivery fleet maintenance
Contracts), each of which involves the aggregate annual
payment or potential payment by or to the Seller in excess
of $25,000; and
11
(x) any other Contracts that are material to the
Business.
(b) The Seller has delivered to the Buyer complete and
correct copies of all written Material Contracts and accurate
descriptions of all material terms of all oral Material
Contracts, set forth or required to be set forth in
Schedule 3.1.11(a).
(c) All Material Contracts are in full force and
effect and enforceable against each party thereto and no event of
default or event or condition exists that, after notice or lapse
of time or both, would constitute a violation, breach or event of
default thereunder on the part of the Seller or, to the knowledge
of the Seller or Parent, any other party thereto. Except as set
forth in Schedule 3.1.11(c), no Consent of any third party is
required under any Contract as a result of or in connection with,
and the enforceability of any Contract will not be affected in
any manner by, the execution, delivery and performance of this
Agreement, Transfer Documents, or the consummation of the
transactions contemplated hereby or thereby.
(d) The Seller is not restricted by any Contract with
any other Person from carrying on the Business anywhere in the
world. The Seller does not employ any employee in a manner that
would violate any Contract to which such employee is a party or
is bound.
III.1.12. Customers. To the knowledge of the Seller
and Parent, no customer of the Seller has ceased or reduced
substantially, or will cease or reduce substantially its business
with the Seller. No basis exists for any customer to make a
claim against the Seller for an increase in any Rebate paid to
such customer by the Seller prior to or as of the Closing Date.
III.1.13. Intellectual Property. (a) Title. Sched
ule 3.1.13(a) contains a complete and correct list of all
Intellectual Property that is owned by the Seller. The Seller
owns or has the exclusive right to use pursuant to license, subli
cense, agreement or permission all Intellectual Property Assets,
free from any Liens (other than Permitted Liens) and, except as
disclosed on Schedule 3.1.13(d), free from any requirement of any
past, present or future royalty payments, license fees, charges
or other payments, or conditions or restrictions whatsoever. The
Intellectual Property Assets comprise all of the Intellectual
Property necessary for the Buyer to conduct and operate the
Business as now being conducted by the Seller.
(b) Transfer. Immediately after the Closing, Buyer
will own all of the Intellectual Property Assets and will have a
right to use all other Intellectual Property Assets, free from
any Liens (other than Permitted Liens) and on the same terms and
conditions as in effect prior to the Closing.
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(c) No Infringement. The conduct of the Business
does not infringe or otherwise conflict with any rights of any
Person in respect of any Intellectual Property. To the knowledge
of the Seller after due inquiry, none of the Intellectual
Property Assets is being infringed or otherwise used or available
for use, by any other Person.
(d) Licensing Arrangements. Schedule 3.1.13(d) sets
forth all agreements, arrangements or laws (i) pursuant to which
the Seller has licensed Intellectual Property Assets to, or the
use of Intellectual Property Assets is otherwise permitted
(through non-assertion, settlement or similar agreements or
otherwise) by, any other Person and (ii) pursuant to which the
Seller has had Intellectual Property licensed to it, or has
otherwise been permitted to use Intellectual Property (through
non-assertion, settlement or similar agreements or otherwise).
All of the agreements or arrangements set forth on Schedule
3.1.13(d) (x) are in full force and effect in accordance with
their terms and no default exists thereunder by the Seller, or to
the knowledge of the Seller after due inquiry, by any other party
thereto, (y) are free and clear of all Liens, and (z) do not
contain any change in control or other terms or conditions that
will become applicable or inapplicable as a result of the consum
mation of the transactions contemplated by this Agreement. The
Seller has delivered to the Buyer true and complete copies of all
licenses and arrangements (including amendments) set forth on
Schedule 3.1.13(d). All royalties, license fees, charges and
other amounts payable by, on behalf of, to, or for the account
of, the Seller in respect of any Intellectual Property are
disclosed on Schedule 3.1.13(d).
(e) No Intellectual Property Litigation. No claim
or demand of any Person has been made nor is there any proceeding
that is pending, or to the knowledge of the Seller after due
inquiry, threatened, nor is there a reasonable basis therefor,
which (i) challenges the rights of the Seller in respect of any
Intellectual Property Assets, (ii) asserts that the Seller is
infringing or otherwise in conflict with, or is, except as set
forth in Schedule 3.1.13(d), required to pay any royalty, license
fee, charge or other amount with regard to, any Intellectual
Property, or (iii) claims that any default exists under any
agreement or arrangement listed on Schedule 3.1.13(d). None of
the Intellectual Property Assets is subject to any outstanding
order, ruling, decree, judgment or stipulation by or with any
court, arbitrator, or administrative agency, or has been the
subject of any litigation within the last five years, whether or
not resolved in favor of the Seller.
(f) Due Registration, Etc. The Owned Intellectual
Property has been duly registered with, filed in or issued by, as
the case may be, the United States Patent and Trademark Office,
United States Copyright Office or such other filing offices,
domestic or foreign, and the Seller has taken such other actions,
to ensure full protection under any applicable laws or
regulations, and such registrations, filings, issuances and other
actions remain in full force and effect, in each case to the
extent material to the Business.
13
(g) Software. The Seller has valid licenses to all
copies of all Software that is utilized by it in connection with
the conduct of the Business that is not owned by the Seller
("Commercial Software"), and the use by the Seller of such
Commercial Software, including without limitation all
modifications and enhancements thereto (whether created by Parent
or the Seller or by a third party) is in full compliance with the
terms and provisions of such licenses (except for noncompliance
that, individually or in the aggregate, could not have a Material
Adverse Effect). The Seller owns all right, title and interest
in and to all Software marketed or licensed by it to its
customers or held for use or in development for marketing and
licensing to the Seller's customers (collectively, the "Owned
Software"), including but not limited to all Intellectual
Property rights therein and thereto, except for Commercial
Software identified on Schedule 3.1.13(g) as Software
incorporated into the Owned Software. Schedule 3.1.13(g) sets
forth a full and complete list of (i) the Owned Software and (ii)
all Commercial Software utilized by the Seller in connection with
the conduct of its business except for mass marketed,
"shrinkwrap" Software having a retail price less than $500 per
copy. None of the Commercial Software or Owned Software, and no
use thereof by the Seller or permitted use by its licensees,
infringes upon or violates any patent, copyright, trade secret or
other Intellectual Property right of any person or entity, and no
claim or demand with respect to any such infringement or
violation has been made or threatened. To the best of Seller's
knowledge, there are no Viruses in the Owned Software. There are
no defects in the Owned Software that would prevent such Software
from performing in all material respects the tasks and functions
that it was intended to perform.
(h) Calendar Function. Except as set forth on
Schedule 3.1.13(h), all Owned Software and Software used in the
Business that contain or call on a calendar function, including
but not limited to any function that is indexed to a computer pro
cessing unit clock, provides specific dates or calculates spans
of dates, is able to record, store, process and provide true and
accurate dates and calculations for dates and spans of dates
including and following January 1, 2000.
III.1.14. Environmental Matters. Except as disclosed
in Schedule 3.1.14, (i) the Seller is in compliance, and at all
times in the past has complied, with all applicable Environmental
Laws, (ii) the Seller has all Governmental Approvals required
under Environmental Laws for the operation of the Business as
presently conducted and (iii) the Seller has not received any
notices from any Governmental Authority or any other Person that
remain outstanding and assert that the Seller may be in violation
of, or liable under, any Environmental Law. No underground
storage tank currently exists on, under or about any of the Real
Property, and any underground storage tank previously existing on
or under any such property has been removed in compliance with
all applicable Environmental Law. Neither the Seller nor Parent
knows of any underground storage tank that currently exists on,
under or about any of the formerly Owned Property or formerly
Occupied Property, and neither the Seller nor Parent knows of any
underground
14
storage tank previously existing on or under any such property
that has not been removed in compliance with all applicable
Environmental Law. Except as set forth on Schedule 3.1.14, no
Hazardous Substances currently or have at any time been present,
used, generated, manufactured, stored, treated, transported,
Released, or disposed of in, on or under, or migrating to or
from, any of the Real Property or, to the knowledge of the Seller
or Parent, any of the formerly Owned Property or the formerly
Occupied Property, in violation of any applicable Environmental
Law. The Seller and Parent have disclosed and provided to the
Buyer and its agents and representatives all relevant
information, including without limitation, all studies, analyses
and test results relating to (i) the environmental conditions in,
on, under or about the Real Property, the formerly Owned Property
or the formerly Occupied Property, and (ii) the use or operation
of the properties or assets used in or held for use in connection
with the Business.
III.1.15. Employees, Labor Matters, etc. (a) The
Seller has complied with all applicable provisions of Applicable
Law pertaining to the employment or termination of employment of
employees and independent contractors, including, without
limitation, all such Applicable Laws relating to labor relations,
equal employment, fair employment practices, entitlements,
prohibited discrimination, immigration status, Employment and
Withholding Taxes or other similar employment practices or acts.
(b) The consummation of the transactions contemplated
by this Agreement will not result in an increase in the amount of
or any entitlement to compensation or benefits or the
acceleration of the vesting or timing of payment of any
compensation or benefits payable to or in respect of any
Employee.
(c) No Employee is or will become entitled to post-
employment benefits of any kind by reason of employment with the
Seller, including, without limitation, death or medical benefits
(whether or not insured), other than (x) coverage mandated by
section 4980B of the Code, (y) retirement benefits payable under
any Plan qualified under section 401(a) of the Code or (z) the
amount of deferred compensation accrued as a liability on the
Closing Balance Sheet.
III.1.16. Receivables. All of the Seller's accounts
receivable which have arisen in connection with the Business and
which are reflected on the Balance Sheet shall have arisen only
from bona fide transactions in the ordinary course of business
consistent with past practice. Schedule 3.1.16 accurately lists
as of December 31, 1999 all receivables arising out of or
relating to the Business in excess of $500, the amount owing and
the aging of each such receivable, the name of the party from
whom such receivable is owing, and any security in favor of the
Seller for the repayment of such purported receivable. The
receivables set forth on the Balance Sheet will be collectable by
the Buyer in the ordinary course of the business (assuming the
Buyer utilizes the same level of effort in collection of
receivables as utilized by the Seller prior to the Closing Date),
subject to any reserve established therefor on the Balance Sheet.
15
III.1.17. Affiliate Transactions. Schedule 3.1.17
contains an accurate and complete list of all Contracts, trans
fers of assets or liabilities or other transactions, whether or
not entered into in the ordinary course of business consistent
with prior practice, whether written or oral, to or by which the
Seller, on the one hand, and any Affiliate, on the other hand,
are or have been a party or otherwise bound or affected, and that
(i) are currently pending or in effect and relate to or affect
the Business or (ii) involve continuing liabilities and obliga
tions in excess of $500 per month in any individual case or
$5,000 in the aggregate. Except as disclosed in Schedule 3.1.17,
each Contract, transfer of assets or liabilities or other
transaction set forth or required to be set forth in
Schedule 3.1.11(a) was on terms and conditions as favorable to
the Seller as would have been obtainable by them at the time in a
comparable arm's-length transaction with a Person other than such
Affiliate.
III.1.18. Real Estate. (a) Owned Real Property. The
Company has no Owned Real Property.
(b) Leases. Schedule 3.1.18 contains a complete and
correct list of all Leases setting forth the address and landlord
for each Lease. The Sellers have delivered to the Buyer correct
and complete copies of the Leases. Each Lease is legal, valid,
binding, in full force and effect and enforceable against each
party thereto. Each Lease grants the tenant under the Lease the
exclusive right to use and occupy the premises and rights demised
and intended to be demised thereunder. The Company enjoys
peaceful and undisturbed possession under its respective Leases
for the Leased Real Property.
(c) No Proceedings. There are no proceedings in
eminent domain or other similar proceedings pending or, to the
knowledge of the Seller, threatened affecting any portion of the
Real Property. There exists no writ, injunction, decree, order
or judgment outstanding, nor any Litigation, pending or
threatened, relating to the ownership, lease, use, occupancy or
operation by any Person of any Real Property.
(d) Current Use. The use and operation of the Real
Property in the conduct of the Business does not violate any
instrument of record or agreement affecting the Real Property.
There is no violation of any covenant, condition, restriction,
easement or agreement or order of any Governmental Authority that
affects the Real Property or the ownership, operation, use or
occupancy thereof. No material damage or destruction has
occurred with respect to any of the Real Property.
(e) Real Property Taxes. Each parcel included in the
Real Property is assessed for real estate tax purposes as a
wholly independent tax lot, separate from any adjoining land or
improvements not constituting a part of that parcel.
III.1.19. Insurance. The Seller has delivered to the
Buyer complete and correct copies of all insurance policies main
tained by the Seller for the benefit of or in
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connection with the Assets or the Business together with all
riders and amendments thereto. Such policies are in full force
and effect, and all premiums due thereon have been paid. The
Seller has complied in all material respects with the terms and
provisions of such policies. The insurance coverage provided by
such policies is adequate and customary for the Business. In the
opinion of the Seller, reasonably formed and held, there is no
basis on which a claim should or could be made under any such
policy with respect to it.
III.1.20. Disclosure. No representation or warranty
by or on behalf of the Seller contained in this Agreement nor any
of the statements or certificates furnished or to be furnished at
the Closing by or on behalf of the Seller to the Buyer or its
representatives in connection herewith or pursuant hereto
contains or will contain any untrue statement of a material fact,
or omits or will omit to state any material fact required to make
the statements contained herein or therein not misleading. There
is no fact (other than matters of a general economic or political
nature which do not affect the Business uniquely) known to the
Seller that has not been disclosed by the Seller to the Buyer
that might reasonably be expected to have or result in a Material
Adverse Effect.
III.1.21. Creditors. (a) Except as set forth on
Schedule 3.1.21(a), no Subsidiary or Affiliate of the Seller is a
creditor of the Seller.
(b) Except as set forth on Schedule 3.1.21(b), no
Subsidiary or Affiliate of Parent is a creditor of Parent.
III.1.22. Solvency. Immediately after the Closing,
and after giving effect to the transactions contemplated by this
Agreement and any other transactions contemplated in connection
therewith, the Seller shall not (a) be insolvent or (b) have
unreasonably small capital with which to engage in its business.
III.2. Representations and Warranties of the Buyer.
The Buyer represents and warrants to the Seller as follows:
III.2.1. Corporate Status; Authorization, etc. The
Buyer is a corporation duly formed, validly existing and in good
standing under the laws of the State of Delaware. The Buyer has
the corporate power and authority to execute and deliver this
Agreement to perform its obligations hereunder and to consummate
the transactions contemplated hereby. The execution and delivery
of this Agreement, and the consummation of the transactions
contemplated hereby, have been duly authorized by all requisite
corporate action of the Buyer. The Buyer has duly executed and
delivered this Agreement. This Agreement is valid and legally
binding obligations of the Buyer, enforceable against the Buyer
in accordance with its terms.
17
III.2.2. No Conflicts, etc. The execution, delivery
and performance by the Buyer of this Agreement, and the
consummation of the transactions contemplated hereby, do not and
will not conflict with or result in a violation of or a default
under or give rise to a right of acceleration, termination or
vesting under (with or without the giving of notice or the lapse
of time, or both) (i) the certificate of incorporation or by-laws
of the Buyer, (ii) any Applicable Law applicable to the Buyer or
any Affiliate thereof or any properties or assets of such Buyer
or Affiliate or (iii) any contract, agreement or other instrument
applicable to the Buyer or any Affiliate thereof or any of their
respective properties or assets.
III.2.3. Litigation. There is no action, claim, suit,
proceeding, arbitration or investigation pending or, to the
knowledge of the Buyer, threatened against or relating to the
transactions contemplated by this Agreement, and the Buyer does
not know of any basis for the same.
ARTICLE IV
COVENANTS
IV.1. Conduct of Business. From the date hereof to
the Closing, except as expressly permitted or required by this
Agreement or as otherwise consented to by the Buyer in writing,
the Seller will, and Parent will cause the Seller to, (i) carry
on the Business in the ordinary course, in substantially the same
manner as heretofore conducted, and use best efforts to preserve
intact its present business organization, maintain its properties
in good operating condition and repair, keep available the
services of its present officers and significant employees, and
preserve its relationship with customers, suppliers and others
having business dealings with it; and (ii) not take any action or
omit to take any action, which action or omission would result in
a breach of any of the representations and warranties of the
Seller or Parent set forth herein, including in Section 3.1.7.
IV.2. Access and Information. From the date hereof to
the Closing, the Seller will, and Parent shall cause the Seller
to, give the Buyer and the Buyer's accountants, counsel,
consultants, employees and agents, full, complete and timely
access during normal business hours to, and furnish them with all
documents, records, work papers, Tax Returns and information with
respect to, all of the Seller's properties, Assets, books,
Contracts, reports, records and senior management personnel, in
each case, relating to the Business, as the Buyer shall from time
to time reasonably request. The Seller shall, and Parent shall
cause the Seller to, keep the Buyer and its representatives
informed as to the affairs of the Business and shall consult with
the representatives of the Buyer on important matters pertaining
to the Business.
18
IV.3. Public Announcements. Prior to the Closing,
except as required by Applicable Law, no party shall, nor shall
permit its Affiliates to, make any public announcement in respect
of this Agreement or the transactions contemplated hereby without
the prior written consent of the other party.
IV.4. Further Actions. (a) From the date hereof to
the Closing each party agrees to use its best efforts to take all
actions and to do all things necessary or appropriate to
consummate the transactions contemplated hereby as promptly as
possible, including, without limitation: (i) filing or supplying
all applications, notifications and information required to be
filed or supplied by it pursuant to Applicable Law, (ii)
obtaining all Consents and Governmental Approvals necessary to be
obtained by it in order to consummate transactions contemplated
hereby and thereby, and (iii) coordinating and cooperating with
the other party in exchanging such information and supplying such
reasonable assistance as may be reasonably requested by the other
party.
(b) At all times prior to the Closing, each party
shall promptly notify the other party in writing of any fact,
condition, event or occurrence that will or is reasonably likely
to result in the failure of any of the conditions contained in
Section 5.1, 5.2 or 5.3 to be satisfied.
IV.5. Further Assurances and Access to Records. (a)
Following the Closing, the Seller shall, and Parent will cause
the Seller to, execute and deliver such additional instruments,
documents, conveyances or assurances and take such other actions
as shall be necessary, or otherwise reasonably requested by the
Buyer, to confirm and assure the rights and obligations provided
for in this Agreement and the Transfer Documents, and render
effective the consummation of the transactions contemplated
hereby and thereby. Prior to the Closing, Parent shall return or
deliver, or cause to be returned or delivered, to the Seller's
offices any and all corporate records in their possession or
under their control pertaining to the Business other than
Excluded Assets.
(b) Following the Closing, the Buyer shall, upon
reasonable notice from the Seller or Parent, provide to the
Seller or Parent or either of their agents, attorneys or
accountants, reasonable access during normal business hours to
the books and records of the Seller transferred to the Buyer
pursuant to this Agreement or any of the Transfer Documents made
in connection with the transaction relating to periods prior to
the Closing Date, provided, that, such access is requested and
exercised with due regard to minimizing interference with the
operations of the business of the Buyer. The access granted to
the Seller or Parent shall include the right to make copies of
such documents or produce originals in any court or
administrative proceeding necessary to protect the legitimate
interests of the Seller or Parent, in any such case, at the
Seller's or Parent's expense. Upon the completion of the
utilization of any original records pursuant to this paragraph,
the Seller or Parent shall return the same to Buyer.
19
IV.6. Liability for Transfer Taxes, Certificates of
Taxing Authorities. (a) The Seller shall be responsible for the
timely payment of, and shall indemnify and hold harmless the
Buyer against, all sales (including, without limitation, bulk
sales), use, value added, documentary, stamp, gross receipts,
registration, transfer, conveyance, excise, recording, license
and other similar Taxes and fees ("Transfer Taxes"), arising out
of or in connection with or attributable to the transactions ef
fected pursuant to this Agreement and the Transfer Documents.
The Seller shall prepare and timely file all Tax Returns required
to be filed in respect of Transfer Taxes (including, without limi
tation, all notices required to be given with respect to bulk
sales taxes), provided, that, the Buyer shall be permitted to
prepare any such Tax Returns that the Buyer is permitted to file
under applicable law. The Buyer's preparation of any such Tax Re
turns shall be subject to the Seller's prior review and approval,
which approval shall not be withheld unreasonably.
(b) On or before the Closing Date, the Seller shall
provide to the Buyer copies of certificates from the appropriate
taxing authority stating that no Taxes are due to any state or
other taxing authority for which the Buyer could have liability
to withhold or pay Taxes with respect to the transfer of the
Assets or the Business. If the Seller shall fail to provide such
certificates, the Buyer shall withhold or, where appropriate,
escrow such amount as necessary based upon the Buyer's reasonable
estimate of the amount of such potential liability, or as deter
mined by the appropriate taxing authority, to cover such Taxes
until such time as certificates are provided. The Seller shall
indemnify the Buyer against (a) any liability arising from the
Buyer's failure to withhold such Taxes and (b) all payments of
such Taxes made by the Buyer in excess of amounts withheld or
escrowed pursuant to this Section 4.6(b). The Buyer shall pay
over to the Seller all amounts withheld or escrowed pursuant to
this Section 4.6(b) in excess of the aggregate payments of such
Taxes made by the Buyer.
IV.7. Continuing Disclosure. Each of Parent and
Seller covenants that until the Closing, it shall promptly advise
Buyer with respect to any matter hereafter arising or discovered
that, if existing or known at the date of this Agreement, would
have been required to be set forth or described in a schedule to
this Agreement, or that constitutes a breach or prospective
breach of this Agreement by Seller or Parent. The delivery of
any such notice shall not affect Buyer's remedies hereunder.
IV.8. Covered Taxes. (a) The Buyer shall, for all
Returns with respect to Covered Taxes that have not been filed on
or before the Closing Date ("Covered Returns"), prepare or cause
to be prepared all items which relate to Covered Taxes on such
Returns. The Buyer shall determine the content of all such items
on such Returns. The Buyer shall submit a draft of any such
Return to the Seller for the Seller's reasonable review and
approval of items relating to any taxable period beginning prior
to the Closing Date up until the Closing Date, at least 20 days
prior to the date of any such Return that is not required to be
filed within 30 days following the Closing Date, and as soon as
practicable prior to the due date of any such Return that is
required to be filed within 30
20
days following the Closing Date. The Seller shall complete all
items, if any, on such Returns which do not relate to Covered
Taxes. The Buyer shall be responsible for all Covered Taxes
shown as due on any Covered Return that are allocable to the
portion of any taxable period beginning after the Closing Date.
The Seller shall be responsible for any Taxes shown as due on any
Covered Return, other than Covered Taxes that the Buyer is
responsible for. For purposes of this Section 4.8(a), Covered
Taxes shall be allocated between the portion of the relevant
taxable period ending on the Closing Date and the portion of the
such taxable period beginning after the Closing Date in
proportion to the number of days in each such portion.
(b) The Buyer shall consult with the Seller concerning
which Person or Persons shall be responsible, under the relevant
Tax law, for filing or joining in each Covered Return, in each
case where (in the reasonable judgment of the Buyer) the Seller
may be such a responsible Person. The Buyer shall give written
notice to the Seller, at least 20 days prior to the date of any
such Return that is not required to be filed within 30 days
following the Closing Date, and as soon as practicable prior to
the due date of any such Return that is required to be filed
within 30 days following the Closing Date, if the Buyer has
determined that the Seller is such a responsible Person.
(c) The Buyer and the Seller shall timely file or join
in each Covered Return (including, without limitation, causing
the relevant officers of the Seller to sign such Return). For
each Covered Return that the Seller is responsible to file under
applicable law, the Buyer shall pay to the Seller an amount equal
to Covered Taxes that the Buyer is responsible for pursuant to
Section 4.8(a) shown in such Return at least two days prior to
the due date of such Return, and the Seller shall pay to the
relevant Governmental Authority the amount of Taxes shown as due
on such Return. For each Covered Return that the Buyer is
responsible to file under applicable law, the Seller shall pay to
the Buyer an amount equal to Taxes that the Seller is responsible
for pursuant to Section 4.8(a) shown in such Return at least two
days prior to the due date of such Return, and the Buyer shall
pay to the relevant Governmental Authority the amount of Taxes
shown as due on such Return.
(d) The Buyer shall administer all claims and suits,
and other proceedings (or a portion thereof) with respect
thereto, involving disputes relating to Covered Taxes. In the
event that any refund of Covered Taxes is received by either the
Seller or the Buyer, such refund shall be apportioned between the
Seller and the Buyer on the same basis that such Covered Taxes
were borne by the Seller and the Buyer, and the party that
receives such refund shall promptly pay the other party the
portion of such refund apportioned to such other party pursuant
to this Section 4.8(d).
(e) The Buyer and the Seller shall each provide the
other with such cooperation and assistance as each may reasonably
request in connection with the matters dealt with pursuant to
this Section 4.8. Such cooperation and assistance shall include
21
providing any records or information relevant to such matters and
making employees available to the requesting party or its counsel
at and for reasonable times during regular business hours.
IV.9. Use of Proceeds. Immediately upon receipt by
the Seller of the proceeds of the transactions contemplated by
this Agreement, net of the Seller's costs arising out of such
transactions, the Seller will, and Parent will cause the Seller
to, pay those obligations of the Seller not assumed by the Buyer.
ARTICLE V
CONDITIONS PRECEDENT
V.1. Conditions to Obligations of Each Party. The
obligations of the parties to consummate the transactions
contemplated hereby shall be subject to the fulfillment on or
prior to the Closing Date of the following conditions:
V.1.1. No Injunction, etc. Consummation of the
transactions contemplated hereby shall not have been restrained,
enjoined or otherwise prohibited by any Applicable Law. No
Governmental Authority shall have determined any Applicable Law
to make illegal the consummation of the transactions contemplated
hereby or by the Collateral Agreements, and no proceeding with
respect to the application of any such Applicable Law to such
effect shall be pending.
V.1.2. UK Stock Purchase Agreement Closing. The
transactions contemplated under the UK Stock Purchase Agreement
shall have been consummated.
V.2. Conditions to Obligations of the Buyer. The
obligations of the Buyer to consummate the transactions con
templated hereby shall be subject to the fulfillment (or waiver
by the Buyer) on or prior to the Closing Date of the following
additional conditions, which the Seller and Parent agree to use
best efforts to cause to be fulfilled:
V.2.1. Representations, Performance, etc. The
representations and warranties of the Seller and Parent contained
herein (i) shall be true and correct in all respects (in the case
of any representation or warranty containing any materiality
qualification) or in all material respects (in the case of any
representation or warranty without any materiality qualification)
at and as of the date hereof, and (ii) shall be repeated and
shall be true and correct in all respects (in the case of any
representation or warranty containing any materiality
qualification) or in all material respects (in the case of any
representation or warranty without any materiality qualification)
on and as of the Closing
22
Date with the same effect as though made on and as of the Closing
Date. The Seller and Parent shall have duly performed and
complied with all agreements and conditions required by this
Agreement to be performed or complied with by them prior to or on
the Closing Date.
V.2.2. Consents. The Seller and Parent shall have
obtained and shall have delivered to the Buyer copies of (i) all
Governmental Approvals required to be obtained by the Seller and
Parent in connection with the execution and delivery of this
Agreement and the Transfer Documents, and the consummation of the
transactions contemplated hereby or thereby; (ii) all Consents
necessary to be obtained in order to consummate the sale and
transfer of the Assets pursuant to this Agreement and the
consummation of the other transactions contemplated hereby,
unless the failure to obtain such Consent would not, individually
or in the aggregate, have a Material Adverse Effect; and (iii) a
duly executed Consent from each of the ANG Noteholders
substantially in the form attached as Exhibit A hereto.
V.2.3. No Material Adverse Effect. No event,
occurrence, fact, condition, change, development or effect shall
have occurred, exist or come to exist since September 26, 1999
that, individually or in the aggregate, has constituted or
resulted in, or could be expected to constitute or result in, a
Material Adverse Effect.
V.2.4. Documentation. The Seller shall have delivered
to the Buyer at the Closing all documents, instruments, certif
icates and agreements necessary to transfer to the Buyer good and
valid title to the Assets, free and clear of any and all Liens
thereon, other than Permitted Liens, (collectively, the "Transfer
Documents").
V.2.5. FIRPTA Affidavit. The Buyer shall have
received an affidavit of the Seller, as contemplated under and
meeting the requirements of section 1.1445-2(b)(2)(i) of the
Treasury Regulations, to the effect that it is not a foreign
person within the meaning of the Code and applicable Treasury
Regulations.
V.2.6. Opinion of Counsel. The Buyer shall have
received an opinion, addressed to it and dated the Closing Date,
from Nixon Peabody LLP, counsel to the Seller, in form and
substance satisfactory to the Buyer, substantially in the form of
Exhibit B.
V.3. Conditions to Obligations of the Seller. The
obligation of the Seller to consummate the transactions
contemplated hereby shall be subject to the fulfillment (or
waiver by the Seller), on or prior to the Closing Date, of the
following additional conditions, which the Buyer agrees to use
best efforts to cause to be fulfilled.
V.3.1. Representations, Performance, etc. The
representations and warranties of the Buyer contained herein (i)
shall be true and correct in all respects (in the
23
case of any representation or warranty containing any materiality
qualification) or in all material respects (in the case of any
representation or warranty without any materiality qualification)
at and as of the date hereof and (ii) shall be repeated and shall
be true and correct in all respects (in the case of any
representation or warranty containing any materiality
qualification) or in all material respects (in the case of any
representation or warranty without any materiality qualification)
on and as of the Closing Date with the same effect as though made
at and as of the Closing Date. The Buyer shall have duly
performed and complied in all material respects with all
agreements and conditions required by this Agreement to be
performed or complied with by it prior to or on the Closing Date.
ARTICLE VI
TERMINATION
VI.1. Termination. This Agreement may be terminated
at any time prior to the Closing Date:
(a) by the written agreement of the Buyer and the
Seller;
(b) by the Buyer by written notice to the Seller if
any of the conditions set forth in Section 5.1 or 5.2 (including
with respect to any representations and warranties) shall not
have been, or if it becomes apparent that any of such conditions
will not be, fulfilled by 5:00 p.m. New York City time on
February 23, unless such failure shall be due to the failure of
the Buyer to perform or comply with any of the covenants, agree
ments or conditions hereof to be performed or complied with by it
prior to the Closing; or
(c) by the Seller by written notice to the Buyer if
any of the conditions set forth in Section 5.1 or 5.3 (including
with respect to any representations and warranties) shall not
have been, or if it becomes apparent that any of such conditions
will not be, fulfilled by 5:00 p.m. New York City time on
February 23, unless such failure shall be due to the failure of
the Seller to perform or comply with any of the covenants, agree
ments or conditions hereof to be performed or complied with by it
prior to the Closing.
VI.2. Effect of Termination. In the event of the
termination of this Agreement pursuant to the provisions of
Section 6.1, this Agreement shall become void and have no effect,
without any liability to any Person in respect hereof or of the
transactions contemplated hereby on the part of any party hereto,
or any of its directors, officers, employees, agents,
consultants, representatives, advisers, stockholders or
Affiliates, except as specified in Sections 4.8 and 7.4 and
except for any liability resulting from such party's breach of
this Agreement.
24
ARTICLE VII
DEFINITIONS, MISCELLANEOUS
VII.1. Definition of Certain Terms. The terms defined
in this Section 7.1, whenever used in this Agreement (including
in the Schedules), shall have the respective meanings indicated
below for all purposes of this Agreement (each such meaning to be
equally applicable to the singular and the plural forms of the
respective terms so defined). All references herein to a
Section, Article or Schedule are to a Section, Article or Sched
ule of or to this Agreement, unless otherwise indicated.
Affiliate: of a Person means a Person that directly or
indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, the first
Person. "Control" (including the terms "controlled by" and
"under common control with") means the possession, directly
or indirectly, of the power to direct or cause the direction
of the management policies of a Person, whether through the
ownership of voting securities, by contract or credit ar
rangement, as trustee or executor, or otherwise.
Agreement: this Asset Purchase Agreement, including
the Schedules hereto, as the same may be amended from time
to time.
ANG Noteholders: the holders of the promissory notes,
each dated as of August 3, 1998, executed by Parent in favor
of the following persons or entities in the following
original principal amounts: (a) $275,000 to The Allard
Children's Trust f/b/o Lisa Dibrigida; (b) $275,000 to The
Allard Children's Trust f/b/o Kim Allard; (c) $275,000 to
The Allard Children's Trust f/b/o Michael E. Allard; (d)
$275,000 to Gerald R. Allard, trustee of The Gerald R.
Allard Revocable Trust; (e) $458,150 to David and Angella
Nazarian, trustees of The Nazarian Family Trust; (f)
$458,425 to Younes Nazarian; and (g) $458,425 to David
Nazarian, trustee of The Samy Nazarian Trust.
Applicable Law: to the extent applicable to the
Business, the Assets, the Seller or Parent, all applicable
provisions of all (i) statutes, laws, rules, regulations,
ordinances, codes or orders of any Governmental Authority,
(ii) Governmental Approvals and (iii) orders, decisions,
injunctions, judgments, awards and decrees of or agreements
with any Governmental Authority.
Assets: as defined in Section 1.1.
Assumed Liabilities: as defined in Section 2.2(a).
Assumption Agreement: as defined in Section 2.2(b).
25
Balance Sheet: the balance sheet of the Seller as of
September 26, 1999 included in the Financial Statements.
Business: the business and operation of the Seller as
previously or currently conducted or contemplated to be
conducted.
Business Day: shall mean a day other than a Saturday,
Sunday or other day on which commercial banks in The City of
New York are authorized or required to close.
Buyer: as defined in the first paragraph of this
Agreement.
CERCLA: the Comprehensive Environmental Response,
Compensation and Liability Act, as amended, 42 U.S.C. Section 9601
et seq.
Closing: as defined in Section 2.1.
Closing Balance Sheet: the unaudited balance sheet of
the Seller as of the Closing Date (without giving effect to
the sale and purchase of the Assets or any subsequent
transaction contemplated hereby), provided, that, the
Closing Balance Sheet shall reflect (i) accruals, pro-rated
for the portion of the 2000 fiscal year of the Seller ended
on the Closing Date, for all year-end adjustments that would
be reflected in the audited consolidated balance sheet of
the Seller as of the end of such fiscal year and (ii)
accruals for Taxes attributable to, arising from or relating
to all taxable periods (or portions thereof) ending on or
prior to the Closing Date.
Closing Date: as defined in Section 2.1.
Code: the Internal Revenue Code of 1986, as amended.
Commercial Software: as defined in Section 3.1.13(g).
Common Stock: as defined in Section 3.1.2(e).
Consent: any consent, approval, waiver, agreement,
license, or report or notice to, any Person.
Contract: as defined in Section 3.1.11(a).
Covered Taxes: all real, personal property or other
similar Taxes for any taxable period beginning on or prior
to the Closing Date and ending after the Closing Date.
Electronic Data: as defined in Section 1.1(h).
26
Employee Liabilities: as defined in Section 2.3(d).
Employees: all current or former employees or
consultants employed or retained or formerly employed or
retained in the operation of the Business and/or the
beneficiaries or dependents of any such current or former
employees or consultants.
Employment and Withholding Taxes: any federal, state,
provincial, local, foreign or other employment, unemployment
insurance, social security, disability, workers'
compensation, payroll, health care or other similar tax,
estimated tax, duty or other governmental charge or
assessment or deficiencies thereof and all Taxes required to
be withheld by or on behalf of the Seller in connection with
amounts paid or owing to any employee, independent con
tractor, creditor or other party, in each case, on or in
respect of the Business or the Assets (including all
interest and penalties thereon and additions thereto,
whether disputed or not).
Environmental Laws: all Applicable Laws relating to
the protection of the environment, to human health and
safety, or to any use, sale, manufacture, treatment,
generation, processing, storage, disposal, abatement,
existence, Release, threatened Release, transportation or
handling of any Hazardous Substance, including, without
limitation, (i) CERCLA, the Resource Conservation and
Recovery Act, and the Occupational Safety and Health Act,
(ii) all other requirements pertaining to reporting, licens
ing, permitting, investigation or remediation of Releases or
threatened Releases of Hazardous Substances into the air,
surface water, groundwater or land, or relating to the
manufacture, processing, distribution, use, sale, treatment,
receipt, storage, disposal, transport or handling of
Hazardous Substances, and (iii) all other requirements
pertaining to the protection of the health and safety of
employees or the public.
Environmental Liabilities: all liabilities,
obligations and commitments, whether direct or indirect,
known or unknown, current or potential, past, present or
future, imposed by, under or pursuant to any Environmental
Law (including, without limitation, all liabilities,
obligations and commitments related to Remedial Actions)
based on, arising out of or otherwise in respect of: (i)
the ownership or operation of the Business or the Assets, in
each case, prior to the Closing; (ii) the environmental
conditions existing on the Closing Date on, under, above, or
about any Real Property, (iii) the activities or omissions
of the Seller prior to the Closing Date; or (iv) actions
necessary to cause any Real Property, or any aspect of the
Business that is not in compliance with all applicable
Environmental Laws as of the Closing Date to come into
compliance with any and all requirements of Environmental
Laws including, without limitation, all Governmental
Approvals issued under or pursuant to such Environmental
Laws and required for the operation of the Business.
27
ERISA: as defined in Section 2.3(d).
Excluded Assets: as defined in Section 1.2.
Excluded Liabilities: as defined in Section 2.3.
Financial Statements: as defined in Section 3.1.4(a).
FIRPTA: the Foreign Investment in Real Property Tax
Act of 1980, as amended.
GAAP: generally accepted accounting principles as in
effect in the United States.
Governmental Approval: any consent, approval,
authorization, waiver, permit, concession, franchise,
agreement, license, exemption or order of, declaration or
filing with, or report or notice to, any Governmental
Authority, provided, that, Governmental Approval shall not
be deemed to include any consent with regard to a customer
contract to which a Governmental Authority is a party.
Governmental Authority: any Federal, state, local or
foreign court, arbitrator or governmental agency, authority,
instrumentality or regulatory body.
Hazardous Substances: any substance that: (i) is or
contains asbestos, urea formaldehyde foam insulation,
polychlorinated biphenyls, petroleum or petroleum-derived
substances or wastes, radon gas or related materials,
(ii) requires investigation, removal or remediation under
any Environmental Law, or is defined, listed or identified
as a "hazardous waste" or "hazardous substance" thereunder,
or (iii) is toxic, explosive, corrosive, flammable,
infectious, radioactive, carcinogenic, mutagenic, or
otherwise hazardous and is regulated by any Governmental
Authority or Environmental Law.
Income Tax: any federal, state, provincial, local,
foreign or other income, alternative, minimum, accumulated
earnings, personal holding company, franchise, capital
stock, net worth, capital, profits or windfall profits Tax
and any other similar Tax, estimated Tax, duty or other
governmental charge or assessment or deficiencies thereof
(including all interest and penalties thereon and additions
thereto whether disputed or not).
Intellectual Property: any and all United States and
foreign: (a) patents (including design patents, industrial
designs and utility models) and patent applications
(including docketed patent disclosures awaiting filing,
reissues, divisions,
28
continuations-in-part and extensions), patent disclosures
awaiting filing determination, inventions and improvements
thereto; (b) trademarks, service marks, trade names, trade
dress, logos, business and product names, slogans, and regis
trations and applications for registration thereof; (c) copy
rights (including Software) and registrations thereof;
(d) inventions, processes, designs, formulae, trade secrets,
know-how, industrial models, confidential and technical
information, manufacturing, engineering and technical
drawings, product specifications and confidential business
information; (e) mask work and other semiconductor chip
rights and registrations thereof; (f) intellectual property
rights similar to any of the foregoing; and (g) copies and
tangible embodiments thereof (in whatever form or medium,
including electronic media).
Intellectual Property Assets: as defined in Section
1.1(g).
Inventories: as defined in Section 1.1(b).
IRS: the Internal Revenue Service.
Leased Real Property: all interests leased pursuant to
Leases.
Leases: the real property leases, subleases, licenses
and occupancy agreements pursuant to which the Seller is the
lessee, sublessee, licensee or occupant.
Lien: any mortgage, pledge, hypothecation, right of
others, claim, security interest, encumbrance, lease,
sublease, license, occupancy agreement, adverse claim or
interest, easement, covenant, encroachment, burden, title
defect, title retention agreement, voting trust agreement,
interest, equity, option, lien, right of first refusal,
charge or other restrictions or limitations of any nature
whatsoever, including but not limited to such as may arise
under any Contracts.
Material Adverse Effect: any event, occurrence, fact,
condition, change or effect that (i) is materially adverse
to the business, operations, results of operations,
condition (financial or otherwise), prospects, properties,
assets or liabilities of the Business or (ii) would
materially impair the ability of the Seller to perform its
obligations hereunder or under any Transfer Document.
Material Contracts: as defined in Section 3.1.11(a).
Occupied Property: any real property used or held by
the Seller that is not owned by the Seller.
29
Other Leases: the leases, subleases, licenses and
occupancy agreements pursuant to which the Seller is a
lessor, sublessor or licensor of any part of the Real
Property.
Owned Real Property: the real property owned by the
Seller, together with all structures, facilities,
improvements, fixtures, systems, equipment and items of
property presently or hereafter located thereon, attached or
appurtenant thereto or owned by the Seller and all
easements, licenses and rights relating to the foregoing.
Owned Software: as defined in Section 3.1.13(g).
Parent: as defined in the first paragraph of this
Agreement.
Permitted Liens: (i) Liens provided for in the Closing
Balance Sheet, to the extent so reserved, that do not
materially interfere with the use of the property subject
thereto or extend to or cover any assets of any other
Affiliate of the Buyer upon consummation of the transactions
contemplated by this Agreement, (ii) Liens for Taxes not yet
due and payable, (iii) Liens that, individually and in the
aggregate, do not and would not materially detract from the
value of any of the property or assets of the Business or
materially interfere with the use thereof as currently used
or proposed to be used or (iv) Liens on Excluded Assets.
Person: any natural person, firm, partnership,
association, corporation, company, trust, business trust,
Governmental Authority or other entity.
Real Property: the Owned Real Property, the Leased
Real Property and the other Occupied Property.
Rebates: rebates, refunds, incentives, allowances or
other similar benefits or payments.
Release: any releasing, disposing, discharging,
injecting, spilling, leaking, leaching, pumping, dumping,
emitting, escaping, emptying, seeping, dispersal, migration,
transporting, placing and the like, including without
limitation, the moving of any materials through, into or
upon, any land, soil, surface water, ground water or air, or
otherwise entering into the environment.
Remedial Action: all actions required to (i) clean up,
remove, treat or in any other way remediate any Hazardous
Substance; (ii) prevent the Release of Hazardous Substances
so that they do not migrate or endanger or threaten to
endanger public health or welfare or the environment; or
(iii) perform studies, investigations and care related to
any such Hazardous Substances.
30
Return: any return, report, declaration, form, claim
for refund or information return or statement relating to
Taxes, including any schedule or attachment thereto, and
including any amendment thereof.
Seller: as defined in the first paragraph of this
Agreement.
Software: all computer software, including all source
code and object code versions thereof, in any and all forms
and media, whether recorded on paper, magnetic media or
other electronic or non-electronic media (including data and
related documentation, user manuals, training materials,
flow charts, diagrams, descriptive tests and programs,
computer print-outs, underlying tapes, computer databases
and similar items) and computer applications and operating
programs.
Subsidiaries: each corporation or other Person in
which a Person owns or controls, directly or indirectly,
capital stock or other equity interests representing at
least 50% of the outstanding voting stock or other equity
interests.
Tax: any federal, state, provincial, local, foreign or
other income, alternative, minimum, accumulated earnings,
personal holding company, franchise, capital stock, net
worth, capital, profits, windfall profits, gross receipts,
value added, sales (including, without limitation, bulk
sales), use, goods and services, excise, customs duties,
transfer, conveyance, mortgage, registration, stamp,
documentary, recording, premium, severance, environmental
(including, without limitation, taxes under section 59A of
the Code), real property, personal property, ad valorem,
intangibles, rent, occupancy, license, occupational, employ
ment, unemployment insurance, social security, disability,
workers' compensation, payroll, health care, withholding,
estimated or other similar tax, levy, impost, fee, duty or
other governmental charge or assessment or deficiencies
thereof (including all interest and penalties thereon and
additions thereto, whether disputed or not) imposed by any
Governmental Authority or other taxing authority.
Transaction Expenses: as defined in Section 7.3.
Transferred Employees: Employees of the Seller that
are offered and accept employment with the Buyer effective
as of the Closing Date.
Transfer Documents: as defined in Section 5.2.4.
Transfer Taxes: as defined in Section 4.6(a).
Treasury Regulations: the regulations prescribed under
the Code.
UK Stock Purchase Agreement: as defined in the
recitals to this Agreement.
31
Viruses: computer program that replicates itself
on a computer or network of computers and thereby damages
other computer programs or data located on such computer or
network or otherwise causes a defect in the operation of
such computer or network.
VII.2. Survival. The representations and warranties
contained in this Agreement shall survive the execution and
delivery of this Agreement, any examination by or on behalf of
the parties hereto and the completion of the transactions
contemplated herein, but only to the extent specified below:
(a except as set forth in clauses (b) and (c) below,
the representations and warranties contained in Section 3.1
and Section 3.2 shall survive for a period of three years
following the Closing Date.
(b the representations and warranties contained in
Sections 3.1.1, 3.1.2, 3.1.3 and 3.2.1 shall survive without
limitation; and
(c the representations and warranties of the Seller
contained in Section 3.1.6 shall survive as to any Tax
covered by such representations and warranties for so long
as any statute of limitations for such Tax remains open, in
whole or in part, including without limitation by reason of
waiver of such statute of limitations and for an additional
120 days following the expiration of such statute of
limitations.
VII.3. Expenses. Except as provided in Section 4.6,
the Seller and Parent, on the one hand, and the Buyer, on the
other hand, shall bear their respective expenses, costs and fees
(including attorneys' and auditors') in connection with the
transactions contemplated hereby, including the preparation,
execution and delivery of this Agreement and the Transfer
Documents, and compliance herewith and therewith (the
"Transaction Expenses"), whether or not the transactions
contemplated hereby shall be consummated, and any Transaction
Expenses of the Seller shall be paid by the Seller or reflected
on the Closing Balance Sheet.
VII.4. Severability. If any provision of this Agree
ment is inoperative or unenforceable for any reason, such
circumstances shall not have the effect of rendering the
provision in question inoperative or unenforceable in any other
case or circumstance, or of rendering any other provision or
provisions herein contained invalid, inoperative, or
unenforceable to any extent whatsoever. The invalidity of any
one or more phrases, sentences, clauses, Sections or subsec
tions of this Agreement shall not affect the remaining portions
of this Agreement.
VII.5. Notices. All notices and other communications
made in connection with this Agreement shall be in writing and
shall be deemed to have been duly given if (a) mailed by first-
class, registered or certified mail, return receipt requested,
postage pre
32
paid, (b) transmitted by hand delivery, (c) sent by next-day or
overnight mail or delivery or (d) sent by fax, telecopy or
telegram, addressed as follows:
(i) if to the Buyer,
Dynatech Corporation
3 New England Executive Park
Burlington, Massachusetts 01803
Telecopy: (781) 272-6100
Telephone: (781) 229-8850
Attention: General Counsel
with copies to:
Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Telecopy: (212) 909-6836
Telephone: (212) 909-6000
Attention: Franci J. Blassberg, Esq.
(ii) if to the Seller or Parent,
WPI Group, Inc.
1155 Elm Street
Manchester, New Hampshire 03101
Telephone: (603) 627-3500
Telecopy: (603) 627-3150
Attention: Michael Tule, Esq., General Counsel
with a copy to:
Nixon Peabody LLP
889 Elm street
Manchester, New Hampshire 03101
Telecopy: (603) 628-4040
Telephone: (603)628-4000
Attention: Philip B. Taub, Esq.
or, in each case, at such other address as may be specified in
writing to the other party hereto.
VII.6. Miscellaneous.
33
VII.6.1. Entire Agreement. This Agreement (including
the Schedules hereto) and Transfer Documents (when executed and
delivered) constitute the entire agreement and supersede all
prior agreements and understandings, both written and oral, be
tween the parties with respect to the subject matter hereof.
VII.6.2. Counterparts; Headings. This Agreement may
be executed in several counterparts, each of which shall be
deemed an original and all of which shall together constitute one
and the same instrument. The headings contained in this Agree
ment are for purposes of convenience only and shall not affect
the meaning or interpretation of this Agreement.
VII.6.3. Governing Law, etc. (a) This Agreement
shall be governed in all respects, including as to validity,
interpretation and effect, by the internal laws of the State of
Delaware without giving effect to the conflict of laws rules
thereof. Each party hereby irrevocably submits to the
jurisdiction of the courts of the State of Delaware and the
federal courts of the United States of America located in the
county of New Castle solely in respect of the interpretation and
enforcement of the provisions of this Agreement and of the
documents referred to in this Agreement, and in respect of the
transactions contemplated hereby and thereby. Each party hereby
waives and agrees not to assert, as a defense in any action, suit
or proceeding for the interpretation and enforcement hereof, or
any such document or in respect of any such transaction, that
such action, suit or proceeding may not be brought or is not
maintainable in such courts or that the venue thereof may not be
appropriate or that this Agreement or any such document may not
be enforced in or by such courts. Each party hereby consents to
and grants any such court jurisdiction over the person of such
parties and over the subject matter of any such dispute and agree
that the mailing of process or other papers in connection with
any such action or proceeding in the manner provided in Section
7.5 or in such other manner as may be permitted by law, shall be
valid and sufficient service thereof.
(b Each party acknowledges and agrees that any
controversy which may arise under this Agreement is likely to
involve complicated and difficult issues, and therefore each
party hereby irrevocably and unconditionally waives any right
such party may have to a trial by jury in respect or any
litigation directly or indirectly arising out of or relating to
this Agreement, or the breach, termination or validity of this
Agreement, or the transactions contemplated by this Agreement.
Each party certifies and acknowledges that (i) no
representative, agent or attorney of any other party has
represented, expressly or otherwise, that such other party would
not, in the event of litigation, seek to enforce the foregoing
waiver, (ii) each such party understands and has considered the
implications of this waiver, (iii) each such party makes this
waiver voluntarily, and (iv) each such party has been induced to
enter into this Agreement by, among other things, the mutual
waivers and certifications in this Section 7.6.3(b).
34
VII.6.4. Binding Effect; No Third Party Beneficiaries.
This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective heirs, successors and per
mitted assigns.
VII.6.5. Assignment. This Agreement shall not be as
signable by either party without the prior written consent of the
other party, provided, that, the Buyer may assign this Agreement
to any lender as security for obligations to such lender.
VII.6.6. Amendment; Waivers, etc. No amendment, modi
fication or discharge of this Agreement, and no waiver hereunder,
shall be valid or binding unless set forth in writing and duly
executed by the party against whom enforcement of the amendment,
modification, discharge or waiver is sought. Any such waiver
shall constitute a waiver only with respect to the specific
matter described in such writing and shall in no way impair the
rights of the party granting such waiver in any other respect or
at any other time. Neither the waiver by any of the parties
hereto of a breach of or a default under any of the provisions of
this Agreement, nor the failure by any of the parties, on one or
more occasions, to enforce any of the provisions of this
Agreement or to exercise any right or privilege hereunder, shall
be construed as a waiver of any other breach or default of a simi
lar nature, or as a waiver of any of such provisions, rights or
privileges hereunder. The rights and remedies of any party based
upon, arising out of or otherwise in respect of any inaccuracy or
breach of any representation, warranty, covenant or agreement or
failure to fulfill any condition shall in no way be limited by
the fact that the act, omission, occurrence or other state of
facts upon which any claim of any such inaccuracy or breach is
based may also be the subject matter of any other representation,
warranty, covenant or agreement as to which there is no
inaccuracy or breach. The representations and warranties of the
Seller shall not be affected or deemed waived by reason of any
investigation made by or on behalf of the Buyer (including but
not limited to by any of its advisors, consultants or represen
tatives) or by reason of the fact that the Buyer or any of such
advisors, consultants or representatives knew or should have
known that any such representation or warranty is or might be
inaccurate.
VII.6.7. Specific Performance. The parties hereto
acknowledge that the covenants to be performed under Article IV
hereof are unique and that damages would be an inadequate remedy
for breach thereof and accordingly agree that the party to whom
performance is owed under any such section, in addition to any
other rights and remedies available under this Agreement or
otherwise, shall be entitled to an injunction to be issued or
specific enforcement to be required (without the necessity of the
posting of any bond) restricting the party breaching or
threatening breach of any such provision from committing or
continuing any such breach.
35
IN WITNESS WHEREOF, the parties have duly executed this
Agreement as of the date first above written.
ITRONIX CORPORATION
By: /s/ ALLAN M. KLINE
-------------------
Name: ALLAN M. KLINE
Title: VICE PRESIDENT AND TREASURER
WPI HUSKY TECHOLOGY, INC.
By: /s/JOHN R. ALLARD
-----------------
Name: JOHN R. ALLARD
Title: PRESIDENT AND CEO
WPI GROUP, INC.
By: /s/ JOHN R. ALLARD
------------------
Name: JOHN R. ALLARD
Title: PRESIDENT AND CEO
36
TABLE OF CONTENTS
Page
ARTICLE I SALE AND PURCHASE OF THE ASSETS
1.1. Assets Transferred by the Seller 2
1.2. Excluded Assets 4
ARTICLE II THE CLOSING
2.1. Place and Date 4
2.2. Assumption of Liabilities 4
2.3. Excluded Liabilities 4
2.4. Consent of Third Parties 5
ARTICLE III REPRESENTATIONS AND WARRANTIES
3.1. Representations and Warranties of the Seller 6
3.1.1. Authorization, etc. 6
3.1.2. Corporate Status 6
3.1.3. No Conflicts, etc. 7
3.1.4. Financial Statements 7
3.1.5. Absence of Undisclosed Liabilities 8
3.1.6. Taxes 8
3.1.7. Absence of Changes 9
3.1.8. Litigation 10
3.1.9. Compliance with Laws; Governmental Approvals and
Consents; Governmental Contracts 10
3.1.10. Assets 10
3.1.11. Contracts 11
3.1.12. Customers 12
3.1.13. Intellectual Property. 12
3.1.14. Environmental Matters. 14
3.1.15. Employees, Labor Matters, etc 15
3.1.16. Receivables 15
3.1.17. Affiliate Transactions 16
3.1.18. Real Estate 16
3.1.19. Insurance 17
3.1.20. Disclosure 17
i
3.1.21. Creditors 17
3.1.22. Solvency 17
3.2. Representations and Warranties of the Buyer 17
3.2.1. Corporate Status; Authorization, etc. 17
3.2.2. No Conflicts, etc. 18
3.2.3. Litigation. 18
ARTICLE IV COVENANTS
4.1. Conduct of Business 18
4.2. Access and Information 18
4.3. Public Announcements 19
4.4. Further Actions 19
4.5. Further Assurances and Access to Records 19
4.6. Liability for Transfer Taxes, Certificates of
Taxing Authorities 20
4.7. Continuing Disclosure 20
4.8. Covered Taxes 20
4.9. Use of Proceeds 22
ARTICLE V CONDITIONS PRECEDENT
5.1. Conditions to Obligations of Each Party 22
5.1.1. No Injunction, etc 22
5.1.2. UK Stock Purchase Agreement Closing 22
5.2. Conditions to Obligations of the Buyer 22
5.2.1. Representations, Performance, etc. 22
5.2.2. Consents 23
5.2.3. No Material Adverse Effect 23
5.2.4. Documentation 23
5.2.5. FIRPTA Affidavit 23
5.2.6. Opinion of Counsel 23
5.3. Conditions to Obligations of the Seller 23
5.3.1. Representations, Performance, etc. 24
ARTICLE VI TERMINATION
6.1. Termination 24
6.2. Effect of Termination 24
ii
ARTICLE VII DEFINITIONS, MISCELLANEOUS
7.1. Definition of Certain Terms 25
7.2. Survival. 32
7.3. Expenses 32
7.4. Severability 32
7.5. Notices 33
7.6. Miscellaneous 34
7.6.1.Entire Agreement 34
7.6.2.Counterparts; Headings 34
7.6.3.Governing Law, etc. 34
7.6.4.Binding Effect; No Third Party Beneficiaries 35
7.6.5.Assignment 35
7.6.6.Amendment; Waivers, etc. 35
7.6.7.Specific Performance 36
iii
Exhibit A - Consent of ANG Noteholders
Exhibit B - Opinion of the Seller's Counsel
iv
SCHEDULES
Schedule 3.1.3(a) Conflicts
Schedule 3.1.3(b) Governmental Approvals
Schedule 3.1.4(a) Financial Statements
Schedule 3.1.4(b) Financial Statements - Material
Adverse Change
Schedule 3.1.5 Undisclosed Liabilities
Schedule 3.1.6(a) Contested Property Taxes
Schedule 3.1.6(b) Current Audits and Deficiencies
Schedule 3.1.7 Absence of Changes
Schedule 3.1.8(a) Litigation
Schedule 3.1.8(b) Penalties
Schedule 3.1.9(a) and (b) Governmental Approvals and
Other Consents
Schedule 3.1.11(a) Contracts
Schedule 3.1.11(c) Defaults and Consents under
Contracts
Schedule 3.1.13(a) Owned Intellectual Property
Schedule 3.1.13(d) Intellectual Property Licenses
Schedule 3.1.13(g) Software
Schedule 3.1.13(h) Calendar Function
Schedule 3.1.14 Environmental Matters
Schedule 3.1.16 Receivables
Schedule 3.1.17 Affiliate Transactions
Schedule 3.1.18 Leased Property and Occupied
Property
Schedule 3.1.21(a) Creditors of the Seller
Schedule 3.1.21(b) Creditors of Parent
v
ASSET PURCHASE AGREEMENT
Among
ITRONIX CORPORATION,
WPI HUSKY TECHNOLOGY, INC.
and the
WPI GROUP INC.
Dated as of February 11, 2000