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Exhibit 2.1
EXECUTION COPY
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement ("AGREEMENT") dated December 22, 2005
is
by and among Sato International Pte. Ltd., an entity organized
under the laws of
the Republic of Singapore (and, as applicable, together with any
assignees or
designees, jointly and severally "BUYER"), and Checkpoint Systems,
Inc., a
Pennsylvania corporation ("SELLER").
RECITALS
Seller desires to sell to Buyer, and Buyer desires to purchase
from
Seller, the Acquired Business (as defined below) as a going
concern.
The parties, in consideration of the foregoing premises and the
following agreed upon terms and conditions, intending to be legally
bound, agree
as follows:
1.
DEFINITIONS AND USAGE
1.1
DEFINITIONS
"ACCOUNTS RECEIVABLE" - the accounts receivable reflected on
Final Statement of Net Operating Assets (as defined below in
Section 2.3(e)),
consisting of the trade accounts receivable and other rights to
payment from
customers of Acquired Business and the full benefit of all security
for such
accounts or rights to payment, including all trade accounts
receivable
representing amounts receivable in respect of goods shipped or
products sold or
services rendered to customers of Acquired Business.
"ACQUIRED ASSETS - as defined in Section 2.1.
"ACQUIRED BUSINESS" - means the design, manufacture and/or
sales of: (i) with respect to North America, label converting for
laser
printers, horticultural identification labeling solutions, (ii)
with respect to
the United States of America, laser solutions/printers, thermal
solutions/printers, hand-held labeling solutions and the
"Turn-O-Matic" ticket
dispensing systems, (iii) with respect to Europe, laser
solutions/printers,
thermal barcode printers and associated thermal hardware (including
track and
trace devices) and consumables (including stock/customized labels,
tags and
tickets for retail, manufacturing, logistics, industrial and
horticultural
applications), and (iv) with respect to the Asia Pacific region,
thermal
solutions/printers, custom labels to the courier industry, prime
labels to the
foodservice industry, white labels, and other specialized thermal
barcode
printing applications; provided, however, that the Acquired
Business shall not
include any labels or labels solutions that incorporate EAS, EM, RF
or RFID
technology and Service Bureau Products. The definition of Acquired
Business
shall not include the business of Checkpoint Meto Benelux B.V.,
Kimball Systems
B.V. and Checkpoint Systems France, S.A. with respect to which the
Parties
intend to enter into a separate, but similar agreement (as far as
possible under
Dutch and French law) after the necessary consultation procedures
with the
workers' representation has been conducted, and the Purchase Price
shall be
adjusted accordingly to reflect the exclusion of the assets of such
businesses
from the Assets to be sold hereunder.
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"APPURTENANCES" - all privileges, rights, easements,
hereditaments and appurtenances belonging to or for the benefit of
the Land,
including all easements appurtenant to and for the benefit of any
Land (a
"DOMINANT PARCEL") for, and as the primary means of access between,
the Dominant
Parcel and a public way, or for any other use upon which lawful use
of the
Dominant Parcel for the purposes for which it is presently being
used is
dependent, and all rights existing in and to any streets, alleys,
passages and
other rights-of-way included thereon or adjacent thereto (before or
after
vacation thereof) and vaults beneath any such streets.
"ASSUMED EMPLOYEES" - as defined in Section 10.1(a)(ii).
"ASSUMED LIABILITIES" - as defined in Section 2.4(a).
"BREACH" - any breach of, or any inaccuracy in, any
representation or warranty or any breach of, or failure to perform
or comply
with, any covenant or obligation, in or of this Agreement or any
other Contract,
or any event which with the passing of time or the giving of
notice, or both,
would constitute such a breach, inaccuracy or failure.
"BUSINESS DAY" - any day other than (a) Saturday or Sunday or
(b) any other day on which banks in the State of Delaware, U.S.A.
are permitted
or required to be closed.
"BUYER" - as defined in the first paragraph of this Agreement.
"BUYER PARTIES" - as defined in Section 11.2(a).
"RETAINED ASSETS" - as defined in Section 2.2.
"CLOSING" - as defined in Section 2.7.
"CLOSING DATE" - the date on which the Closing actually takes
place.
"COBRA - means Section 49808B of the Code (as well as its
predecessor provision, Section 162(k) of the Code) and Sections 601
through 608,
inclusive of ERISA.
"CODE" - the Internal Revenue Code of 1986, as amended.
"COMMERCIALLY REASONABLE EFFORTS" - for purposes of this
Agreement, "commercially reasonable efforts" will not be deemed to
require a
Person to undertake extraordinary or unreasonable measures,
including the
payment of amounts in excess of normal and usual filing fees and
processing
fees, if any.
"CONFIDENTIAL INFORMATION" - as defined in Section 12.1.
"CONSENT" - any approval, consent, ratification, waiver or
other authorization.
"CONVEYANCE DOCUMENTS" - as defined in Section 2.8(a)(i).
"CONTEMPLATED TRANSACTIONS" - all of the transactions
contemplated by this Agreement.
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"CONTRACT" - any written agreement, contract, lease, promise
or undertaking.
"DISCLOSURE SCHEDULES" - all of the disclosure schedules
identified in this Agreement delivered by Seller to Buyer
concurrently with the
execution and delivery of this Agreement, except as otherwise
specified herein.
"EAS" - Electronic Article Surveillance.
"EM" - means electromagnetic technology.
"EMPLOYEE PLANS" - as defined in Section 3.16(a).
"EMPLOYEES RECEIVING AN OFFER" - as defined in Section
10.1(a)(i).
"ENCUMBRANCE" - any charge, claim, condition, equitable
interest, lien, right of way, easement, encroachment, right of
first option,
right of first refusal, restriction on use, transfer, receipt of
income or
exercise of any other attribute of ownership.
"ENVIRONMENT" - soil, land surface or subsurface strata,
surface waters (including navigable waters and ocean waters),
groundwater,
drinking water supply, stream sediments, ambient air (including
indoor air),
plant and animal life and any other environmental medium or natural
resource.
"ENVIRONMENTAL, HEALTH AND SAFETY LIABILITIES" - any cost,
damages, expense, liability, obligation or other responsibility
arising from or
under any Environmental Law or Occupational Safety and Health
Law.
"ENVIRONMENTAL LAW" - any Legal Requirement that requires or
relates to: (a) advising appropriate authorities of actual Releases
of
pollutants or hazardous substances or materials, violations of
discharge limits
or other prohibitions; (b) preventing or reducing to acceptable
levels the
Release of pollutants or hazardous substances or materials into the
Environment;
(c) reducing the quantities, preventing the Release or minimizing
the hazardous
characteristics of wastes that are generated; (d) reducing to
acceptable levels
the risks inherent in the transportation of hazardous substances,
pollutants,
oil or other potentially harmful substances; or (e) cleaning up
pollutants that
have been Released or paying the costs of such clean up or
prevention.
"ERISA" - the Employee Retirement Income Security Act of 1974,
as amended.
"GOVERNING DOCUMENTS" - with respect to any particular entity,
(a) if a corporation, the articles or certificate of incorporation
and the
bylaws; (b) if a general partnership, the partnership agreement and
any
statement of partnership; (c) if a limited partnership, the limited
partnership
agreement and the certificate of limited partnership; (d) if a
limited liability
company, the articles of organization and operating agreement; (e)
if another
type of Person, any other charter or similar document adopted or
filed in
connection with the creation, formation or organization of the
Person; (f) all
equity holders' agreements, voting agreements, voting trust
agreements, joint
venture agreements, registration rights agreements or other
agreements or
documents relating to the organization, management or operation of
any Person or
relating to the rights, duties and obligations of the equity
holders of any
Person; and (g) any amendment or supplement to any of the
foregoing.
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"GOVERNMENTAL AUTHORIZATION" - any Consent, license,
registration or permit issued, granted, given or otherwise made
available by or
under the authority of any Governmental Body or pursuant to any
Legal
Requirement.
"GOVERNMENTAL
BODY" - any: (a) nation, state, county, city,
town, borough, village, district or other jurisdiction; (b)
federal, state,
local, municipal, foreign or other government; (c) governmental
or
quasi-governmental authority of any nature (including any agency,
branch,
department, board, commission, court, tribunal or other entity
exercising
governmental or quasi-governmental powers); (d) multinational
organization or
body; (e) body exercising, or entitled or purporting to exercise,
any
administrative, executive, judicial, legislative, police,
regulatory or taxing
authority or power; or (f) official of any of the foregoing.
"HAZARDOUS ACTIVITY" - the distribution, generation, handling,
importing, management, manufacturing, processing, production,
refinement,
Release, storage, transfer, transportation, treatment or use
(including any
withdrawal or other use of groundwater) of Hazardous Material in,
on, under,
about or from any of the Leased Real Property or any part thereof
into the
Environment and any other act, business, operation or thing that
increases the
danger, or risk of danger, or poses an unreasonable risk of harm,
to persons or
property on or off the Leased Real Property.
"HAZARDOUS MATERIAL" - any substance, material or waste which
is regulated by Environmental Laws enacted by any Governmental
Body.
"INDEMNIFIED PARTY" - as defined in Section 11.4.
"INDEMNIFYING PARTY" - as defined in Section 11.4.
"INTELLECTUAL PROPERTY
ASSETS" - means generally, the
intellectual property in which Seller has a proprietary interest
that is used in
the Acquired Business, such Intellectual Property Assets being the
Meto IP
Rights and the intellectual property set forth on Schedule
2.1(f).
"INVENTORIES" - all inventories of the Acquired Business
reflected on Final Statement of Net Operating Assets (as defined
below in
Section 2.3(e)), wherever located, including all finished goods,
work in
process, raw materials, spare parts and all other materials and
supplies to be
used or consumed by Acquired Business in the production of finished
goods.
"IRS" - the United States Internal Revenue Service and, to the
extent relevant, the United States Department of the Treasury.
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"KNOWLEDGE" means:
(a) With respect to Seller: the Knowledge of Seller, or words
of similar import, mean the actual knowledge and the knowledge
that
such individuals should have had in the performance of their
normal
duties on behalf of the respective employing entity in a
reasonably
prudent manner, without inquiry or investigation, of the
following
individuals: (i) George Off (Chairman and Chief Executive
Officer),
(ii) W. Craig Burns (Executive Vice President, Chief Financial
Officer
and Treasurer), (iii) John E. Davies, Jr. (President of Asia
Pacific
and Latin America), (iv) David C. Donnan (President of North
America),
(v) Per H. Levin (President of Europe), (vi) John R. Van Zile
(Senior
Vice President, General Counsel and Secretary, (vii) Arthur W.
Todd
(Vice President, Corporate Controller and Chief Accounting
Officer,
(viii) Mark Gentle (General Manager, Label Solutions Europe),
(ix)
Edmund Trossen (Director of Marketing and Sales, Checkpoint
Systems
GmbH, (x) Mark Lenhauser (Managing Director of Hirschhorn
Facility),
(xi) John Saccameno (Vice President and General Manager - North
America), (xii) Joseph Podsedly (General Manager of Romeoville
Facility), (xiii) Richard Wescott (Director of Sales Bar Code
Solutions), (xiv) Shawn Baer (Vice President and General Manager
of
Horticulture Printing Facility), (xv) Badi Ala'i (Managing
Director,
Checkpoint Australia and New Zealand), (xvi) Michael Champness
(Director of Supply Chain Solutions, Checkpoint Meto Limited),
(xvii)
Barry Lim (Managing Director, Checkpoint Malaysia), and (xviii)
Christopher Powell (Director of Manufacturing, Checkpoint Meto
Australia), or
(b) With respect to Buyer: the Knowledge of Buyer, or words of
similar import, mean the actual knowledge, without investigation,
of
the following individuals: (i) Mr. Masonori Otsuka (President and
COO
of Sato Corporation), Mr. Toshihiro Waki (Managing Director of
Sato
International Pte. Ltd.), Mr. Kazuo Matsuyama (Director and
General
Manager of Sato International Pte. Ltd., and Mr. Kiyohiko
Yoshii
(Director and Senior Manager of Sato International Pte. Ltd.).
"LAND" - all parcels and tracts of land in which Seller has an
ownership interest.
"LEASE" - any Leased Real Property agreement or any other
lease or rental agreement, license, right to use or installment and
conditional
sale agreement to which a Seller is a party and any other Seller
Contract
pertaining to the leasing or use of any Tangible Personal
Property.
"LEASED REAL PROPERTY" - any land, improvements and
Appurtenances subject to a Lease to which Seller is a party.
"LEGAL REQUIREMENT" - any legally binding federal, state,
local, municipal, foreign, international, multinational or other
constitution,
law, ordinance, principle of common law, code, regulation, statute
or treaty.
"LIABILITY" - with respect to any Person, any liability or
obligation of such Person of any kind, character or description,
whether known
or unknown, absolute or contingent, accrued or unaccrued, disputed
or
undisputed, liquidated or unliquidated, secured or unsecured, joint
or several,
due or to become due, vested or unvested, executory, determined,
determinable or
otherwise, and whether or not the same is required to be accrued on
the
financial statements of such Person.
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"LOSSES" - defined in section 11.2(a).
"MATERIAL ADVERSE CHANGE" - means a change in (or effect on)
the condition (financial or otherwise), of the properties, assets,
liabilities,
rights, obligations, operations or business of the Acquired
Business, taken as a
whole, which change (or effect) individually or in the aggregate,
is materially
adverse to such condition, properties, assets, liabilities, rights,
obligations,
operations or business of the Acquired Business taken as a whole
(it being
understood that changes in generally prevailing economic conditions
or
conditions which affect all companies in the Acquired Business'
industry in a
similar fashion do not constitute a Material Adverse Change).
"MATERIAL CONSENTS" - as defined in Section 7.3.
"MATERIAL CONTRACT" - Each Contract that relates solely to the
Acquired Business that (i) represents One Hundred Thousand Dollars
($100,000) or
more of revenues or expenses; or (ii) contains a material covenant
not to
compete or otherwise significantly restricts the Seller's ability
to conduct the
Business; or (iii) provides for the extension of credit to a
customer other than
consistent with normal credit terms; or (iv) provides for a
material guaranty or
indemnity by Seller; (v) contains a right of first refusal for any
of the
Acquired Assets; or (vi) requires Seller to buy or sell goods or
services with
respect to which there will be material losses or will be costs and
expenses
materially in excess of expected receipts (other than as provided
for or
otherwise reserved against on the most recent of the balance
sheets); or (vii)
is otherwise material to the Acquired Business.
"NET OPERATING ASSETS" - shall mean those asset line items set
forth on Schedule 2.3(b) net of the liability line items set forth
on Schedule
2.3(b), all as set forth on the Most Recent Balance Sheet (as
defined in Section
2.3).
"OCCUPATIONAL SAFETY AND HEALTH LAW" - any Legal Requirement
designed to provide safe and healthful working conditions and to
reduce
occupational safety and health hazards, including the Occupational
Safety and
Health Act, and any program, whether governmental or private (such
as those
promulgated or sponsored by industry associations and insurance
companies),
designed to provide safe and healthful working conditions.
"ORDER" - any order, injunction, judgment, decree, ruling,
assessment or arbitration award of any Governmental Body or
arbitrator.
"ORDINARY COURSE OF BUSINESS" - an action taken by a Person
will be deemed to have been taken in the ordinary course of the
Acquired
Business only if that action is consistent in nature, scope and
magnitude with
the past practices of Seller.
"PERMITTED ENCUMBRANCES" - as defined in Section 3.6.
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"PERSON" - an individual, partnership, corporation, business
trust, limited liability company, limited liability partnership,
joint stock
company, trust, unincorporated association, joint venture or other
entity or a
Governmental Body.
"PROCEEDING" - any action, arbitration, audit, hearing,
investigation, litigation or suit (whether civil, criminal,
administrative,
judicial or investigative, whether formal or informal, whether
public or
private) commenced, brought, conducted or heard by or before any
Governmental
Body or arbitrator.
"PURCHASE PRICE" - as defined in Section 2.3.
"RECORD" - information that is inscribed on a tangible medium
or that is stored in an electronic or other medium and is
retrievable in
perceivable form.
"RELEASE" - any release, spill, emission, leaking, pumping,
pouring, dumping, emptying, injection, deposit, disposal,
discharge, dispersal,
leaching or migration on or into the Environment or into or out of
any property.
"REPRESENTATIVE" - with respect to a particular Person, any
director, officer, manager, employee, agent, consultant, advisor,
accountant,
financial advisor, legal counsel or other representative of that
Person.
"RETAINED LIABILITIES" - as defined in Section 2.4(b).
"RF" - radio frequency.
"RFID" - means a radio frequency identification circuit.
"SCHEDULE" - a schedule contained in the Disclosure Schedules.
"SELLER" - means CHECKPOINT SYSTEMS, INC. or, with respect to
certain Acquired Assets owned by or vested in a Seller Local
Entity, A SELLER
LOCAL ENTITY, as required by the context of this Agreement
depending on the
actual ownership with respect to a specific Acquired Asset.
"SELLER CONTRACT" - any Contract related solely to the
Acquired Business.
"SELLER LOCAL ENTITY" - as defined in Section 2.1.4
"SERVICE BUREAU PRODUCTS" - sales, brokering, order processing
and/or production anywhere in the world, not limited to current
sales by Seller
under Check-Net(R), of the following: tags and labels with either
static and/or
dynamically changing variable data, graphic tags and labels, woven
labels, care
labels, and other retail and/or apparel trim items, excluding EM,
RF and RFID,
where customers, products, and orders are setup, received, parsed,
transmitted,
shipped, and updated by electronic means or otherwise, for sales to
the retail
and apparel markets.
"TANGIBLE PERSONAL PROPERTY" - as defined in Section 2.1(a).
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"TAX" - any income, gross receipts, license, payroll,
employment, excise, severance, stamp, occupation, premium,
property,
environmental, customs, vehicle, or other title or registration,
capital stock,
franchise, employees' income withholding, foreign or domestic
withholding,
social security, unemployment, disability, real property, personal
property,
sales, use, transfer, value added, alternative, add-on minimum and
other tax,
fee, assessment, levy, tariff, charge or duty of any kind
whatsoever and any
interest, penalty, addition or additional amount thereon imposed,
assessed or
collected by or under the authority of any Governmental Body or
payable under
any tax-sharing agreement or any other Contract.
"TAX RETURN" - any return (including any information return),
report, statement, schedule, notice, form, declaration, claim for
refund or
other document or information filed with or submitted to, or
required to be
filed with or submitted to, any Governmental Body in connection
with the
determination, assessment, collection or payment of any Tax or in
connection
with the administration, implementation or enforcement of or
compliance with any
Legal Requirement relating to any Tax.
"THIRD PARTY" - a Person that is not a party to this
Agreement.
"THIRD PARTY CLAIM" - any claim against any Indemnified Person
by a Third Party, whether or not involving a Proceeding.
"TRANSFERABLE EMPLOYEES" - as defined in Section 3.15.
"TRANSFERRED EMPLOYEES - as defined in Section 10.1(a)(ii).
2
SALE AND TRANSFER OF ACQUIRED ASSETS; CLOSING
2.1 ASSETS TO
BE SOLD
2.1.1 Upon the terms and subject to the conditions set forth
in this Agreement (including the conditions listed in this Section
2.1 below),
at the Closing, Seller shall, or Seller shall cause a Seller Local
Entity
(defined below in this Section 2.1) to, sell, convey, assign,
transfer and
deliver to Buyer or Buyer's nominee, and Buyer or Buyer's nominee
shall purchase
and acquire from Seller, free and clear of any Encumbrances other
than Permitted
Encumbrances, all of Seller's, or all of Seller Local Entity's,
right, title and
interest in and to the following assets of the Acquired Business as
a going
concern (but excluding the Retained Assets):
(a) the tangible personal property items listed or described
in Schedule 2.1.1(a), which Schedule shall be updated at
Closing
("TANGIBLE PERSONAL PROPERTY");
(b) the Inventories reflected on the Final Statement of Net
Operating Assets;
(c) the Accounts Receivable reflected on the Final Statement
of Net Operating Assets;
(d) the Seller Contracts (including the Leased Real Property)
listed or described in Schedule 2.1.1(d);
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(e) the data and Records related to the operations of the
Acquired Business, excluding all personnel Records and other
Records
that Seller is required by law to retain in its possession (copies
of
which shall be made available to Buyer on request);
(f) the Intellectual Property Assets of the Acquired Business
listed in Schedule 2.1.1(f); and
(g) pre-payments relating to the Acquired Business and other
miscellaneous assets of the Acquired Business listed on
Schedule
2.1.1(g).
2.1.2 All of the property and assets to be transferred to
Buyer under this Section 2.1 shall be herein referred to
collectively as the
"ACQUIRED ASSETS." With respect to the Schedules referenced in this
Section 2.1
("ASSET SCHEDULES"), Seller hereby provides to Buyer on the date
hereof a
current schedule of such Assets. Not later than five (5) days prior
to the
Closing Date, Seller shall deliver to Buyer final updated Asset
Schedules. Buyer
shall have an opportunity to review all such updated asset
schedules and request
that Seller provide an explanation and/or support that any assets
added to such
schedules are part of the Acquired Business. The final disposition
of the
Acquired Assets may be adjusted by the Final Statement of Net
Operating Assets
(as defined in Section 2.3(e)).
2.1.3 Notwithstanding the foregoing, the transfer of the
Acquired Assets pursuant to this Agreement shall not include the
assumption of
any Liability related to the Acquired Assets unless Buyer expressly
assumes that
Liability pursuant to Section 2.4(a).
2.1.4 Seller shall cause each applicable local subsidiary of
Seller (a "SELLER LOCAL ENTITY") in each of the jurisdictions where
the Acquired
Assets are being transferred to transfer those Acquired Assets
owned by such
Seller Local Entity to Buyer or Buyer's nominee. Seller shall cause
each Seller
Local Entity to enter into a separate written agreement (each a
"LOCAL
AGREEMENT") for the sale and transfer of the portion of the
Acquired Assets
which are being transferred from the respective Seller Local Entity
to Buyer or
a local entity of Buyer in the jurisdiction in which the assets are
being
transferred. Except for modifications required pursuant to
applicable laws of a
local jurisdiction, each Local European Agreement shall be
substantially in the
form of the German Local Agreement unless otherwise agreed upon by
the parties.
The parties agree that each Local entity shall be a third party
beneficiary
under this agreement and shall have standing to enforce any rights
and remedies
that it may have under this Agreement. To the extent this Asset
Purchase
Agreement provides for remedies of either party, the parties
acknowledge that
either party can seek remedies not only for their own damages but
also for
damages of the Seller Local Entity (with respect to the Seller) or
the Buyer
Local Entity (with respect to the Buyer).
2.1.5 In the event that the transfer of any non-material
assets from a Seller Local Entity to a nominee of Buyer cannot
occur prior to
Closing due to the need for a notice or other waiting period to
expire (such
assets not sold at Closing shall be referred to herein as the
"PENDING ASSETS"),
the parties, in their sole discretion, shall Close on all of the
transferable
Acquired Assets; provided, however, that neither party shall be
required to
Close if the waiting period applies to the Acquired Assets located
in Germany.
To the extent that there are Pending Assets at the end of Closing,
the parties
agree that the Pending Assets shall be transferred to Buyer as soon
as
practicable after such transfer is permissible under applicable
local law, and
payment by Buyer will deferred until, and until such time Seller
shall hold the
Pending Assets in escrow and the risk of loss therefor will not
pass to Buyer
until the parties execute and deliver to the other the Local
Transfer Agreement.
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2.1.6 The Local Agreements for Germany shall be in a form as
set out in Schedule 2.1.6 ("GERMAN LOCAL AGREEMENTS"). The Local
Agreements in
the remaining jurisdictions shall be as far as possible (taking
into account the
particularities of the respective jurisdiction) similar to the
German Local
Agreement. The precise nature and conditions of the Local
Agreements will depend
on the laws, regulations and practices applying within each of the
jurisdictions
concerned. Where appropriate, the Parties to this Agreement will
cause their
local subsidiaries to comply with any applicable legal requirement
prior to
entering into the Local Agreements and, in particular, any
obligation that may
exist to consult with relevant employee representation.
2.1.7 The Local Agreement of Checkpoint Systems Italia SPA
("ITALIAN LOCAL AGREEMENT") shall be based in the German Local
Agreement but
shall include the following provision:
"The respective obligations of each of the transferor/seller
and
transferee/purchaser to effect the Local Agreement shall be subject
to the
satisfaction at or prior to the Closing Date of the following
condition:
Each of the transferor/seller and transferee/purchaser shall have
(i)
duly completed the procedure of information and consultation with
trade
unions/works council set forth by Section 47 of Law No. 428 of
December 29, 1990
and (ii) duly accomplished any obligations set forth by the
applicable National
Bargaining Collective Agreement or any union agreements currently
applied in
connection with the transactions contemplated by this
Agreement."
2.1.8 The remaining Local Agreements shall be concluded as
soon as possible under the local Legal Requirements, in particular
under the
applicable local labour law regulations.
2.2 RETAINED
ASSETS
Notwithstanding anything to the contrary contained in Section 2.1
or
elsewhere in this Agreement, for purposes of clarity the following
assets of
Seller (collectively, "RETAINED ASSETS"), together with all other
assets owned
by Seller not listed as an Acquired Asset, are not part of the sale
and purchase
contemplated hereunder, are excluded from the Acquired Assets and
shall remain
the property of Seller after the Closing:
(a) all cash, cash equivalents and short-term investments
related to the Acquired Business, except for cash attributable to
any
prepaid deposits or other items of deferred revenue set forth as
an
asset on the Statement of Estimated Net Operating Assets, as
adjusted
by the Final
Statement of Net Operating Assets;
(b) all minute books, stock Records and corporate seals of the
Sellers;
(c) all intellectual property rights in the name Meto,
including, without limitation, all trade name, trademark, and
service
name rights ("METO IP RIGHTS");
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(d) all claims for refund of Taxes and other governmental
charges of whatever nature; and
(e) all rights, including intellectual property, associated
with sale of Service Bureau Products. RFID labels, tags and tickets
and
all processes associated with the design, fabrication, testing
and
implementation of RFID into consumer product, commercial and
industrial
solutions.
2.3
CONSIDERATION
(a) Purchase Price. The aggregate consideration, subject to
the application of Sections 2.6(a), 2.6(b) and 10.2 below, for
the
Acquired Assets (the "PURCHASE PRICE") shall be determined as
follows:
(i) the Estimated Net Operating Assets Amount, as
determined in Section 2.3(b), paid by Buyer to Seller on the
Closing Date, plus
(ii) the Additional Cash Purchase Price, as set forth
in Section 2.3(c), paid by Buyer to Seller on the Closing Date
net of the payment of the Escrow Amount (as defined in Section
2.3(d) below) (the Additional Cash Purchase Price together
with the Estimated Net Operating Assets Amount is referred to
herein as the "INITIAL PURCHASE PRICE"), plus or minus
(iii) the Final Net Operating Assets Adjustment (as
determined pursuant to either Section 2.3(f) or Section
2.3(g)), paid in accordance with Section 2.3(h).
(b) Estimated Net Operating Assets Amount. The "ESTIMATED NET
OPERATING ASSETS AMOUNT" shall be the amount designated as such on
the
Statement of Estimated Net Operating Assets (as defined in this
Section
2.3(b)). On the date hereof, Seller has prepared and delivered to
Buyer
the most recently internally prepared, un-audited, month-end
balance
sheet for the Acquired Business, attached hereto as Schedule
2.3(b),
which will also contain an initial statement of Net Operating
Assets
amount as of such date ("MOST RECENT BALANCE SHEET"). Not later
than
5:00 p.m. eastern United States standard time on the day
immediately
preceding the Closing Date, the Seller shall deliver to Buyer
an
internally prepared, un-audited, balance sheet as of the Closing
Date
and a statement of estimated Net Operating Assets as of the
Closing
Date ("STATEMENT OF ESTIMATED NET OPERATING ASSETS"), prepared in
a
manner consistent with the Most Recent Balance Sheet and also made
a
part of Schedule 2.3(b). The Statement of Estimated Net
Operating
Assets shall include a calculation of the Estimated Net
Operating
Assets Amount. Not later than three (3) days prior to the Closing
Date,
the Seller shall provide Buyer a preliminary pro forma calculation
of
the Statement of Estimated Net Operating Assets.
(c) Additional Cash Purchase Price. The "ADDITIONAL CASH
PURCHASE PRICE" is equal to US$8,579,000.
(d) Escrow. On the date hereof, Buyer shall initialize a wire
transfer of US$2,025,000 (an amount equal to five percent (5%) of
the
sum of: (i) the initial statement of Net Operating Assets amount
as
shown on
the Most Recent Balance Sheet plus (ii) the Additional Cash
Purchase Price) (the "ESCROW AMOUNT") to an escrow account
established
by Chicago Title and Trust Company ("ESCROW AGENT"). The balance of
the
Initial Purchase Price will be paid by Buyer to Seller on the
Closing
Date via wire transfer of immediately available funds. The
Escrow
Amount will be held and distributed by the Escrow Agent in
accordance
with the terms and provisions of an escrow agreement which will
be
executed and delivered by the parties hereof concurrently with
the
execution and delivery of this Agreement.
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(e) Seller's Preparation of Final Statement of Net Operating
Assets. As promptly as possible following the close of business on
the
Closing Date, but in no event later than forty-five (45) days after
the
Closing Date, the Seller shall prepare, at the expense of Seller,
a
final statement of Net Operating Assets ("FINAL STATEMENT OF
NET
OPERATING ASSETS"). Seller shall prepare the Final Statement of
Net
Operating Assets in a manner consistent with the Most Recent
Balance
Sheet, the Estimate Statement of Net Operating Assets and shall
include
a calculation, based upon the Final Statement of Net Operating
Assets,
of either: (i) an increase to the Estimated Net Operating Assets
Amount
or (ii) a decrease to the Estimated Net Operating Assets Amount
("FINAL
NET OPERATING ASSETS ADJUSTMENT") as part of the Final Statement of
Net
Operating Assets.
(f) Buyer's Review. Buyer shall have a period of forty-five
(45) days following delivery to it of the Final Statement of
Net
Operating Assets to review, at the expense of the Buyer, the
Final
Statement of Net Operating Assets and the calculation of the Final
Net
Operating Assets Adjustment. Seller agrees to provide to Buyer
materials or information in its possession reasonably required by
Buyer
to review the preparation of the Final Statement of Net
Operating
Assets and the calculation of the Final Net Operating Assets
Adjustment. In the event that Buyer does not provide written notice
to
Seller within such forty-five (45) day period that Buyer disagrees
with
the Final Statement of Net Operating Assets and/or the calculation
of
the Final Net Operating Assets Adjustment ("NOTICE OF
DISAGREEMENT"),
then such Final Statement of Net Operating Assets shall be
deemed
final.
(g) Independent Review. In the event Buyer provides Seller
with a Notice of Disagreement and the parties have not resolved
such
disagreement and made an appropriate payment in connection
therewith
within thirty (30) days after the date of delivery of the Notice
of
Disagreement, the parties shall submit to a KPMG LLP
("INDEPENDENT
AUDITOR") such Initial Statement, Statement of Estimated Net
Operating
Assets, the Final Statement of Net Operating Assets and calculation
of
the Final Net Operating Assets Adjustment, the Most Recent
Balance
Sheet, the Notice of Disagreement, and any other documents or
information which the parties deem, or the Independent Auditor
deems,
pertinent in order to make a final and binding determination of
any
issues as to which the parties are in disagreement. The
Independent
Auditor shall advise the parties of its decision relative to
the
controversy within sixty (60) days (or as soon as practicable)
after
its receipt of the applicable statements and other documents or
information which it has requested and at such time the Final
Net
Assets Adjustment shall be deemed final. Such firm shall be acting
as
an arbitrator and not as an auditor and shall decide only those
issues
as to which the parties are not in agreement. The fees and expenses
of
the Independent Auditor shall be equally apportioned between the
Buyer
and the Seller.
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(h)
Payment of Final Net Operating Assets Adjustment. Within
fifteen (15) days after the final determination of the Final
Net
Operating Assets Adjustment as provided in either Section 2.3(f)
or
Section 2.3(g), (i) if the Final Net Operating Assets
Adjustment
results in an increase from the Initial Purchase Price, Buyer shall
pay
to Seller by wire transfer in immediately available funds such
increase
together with interest thereon from the Closing Date to the date
of
payment thereof, at an interest rate equal to the "prime rate"
as
published in The Wall Street Journal (the "PRIME RATE") in effect
on
the date of determination of the Final Net Operating Assets
Adjustment
("ACCRUED
INTEREST"), and (ii) if the Final Net Operating Assets
Adjustment results in a decrease from the Initial Purchase
Price,
Seller shall pay to Buyer by wire transfer in immediately
available
funds such decrease together with the Accrued Interest. In the
event
that a party does not make its total payment as required by
this
Section 2.3(h), then the unpaid amount shall accrue interest at
an
annual rate equal to the Prime Rate plus five percent (5%) until
fully
paid.
2.4
LIABILITIES
(a) Assumed Liabilities. On the Closing Date, Buyer shall
assume and agree to pay, discharge or perform, as appropriate,
the
following liabilities and obligations of Seller (the "ASSUMED
LIABILITIES"):
(i) all trade accounts payable and accrued
liabilities reflected on the Final Statement of Net Operating
Assets;
(ii) any
warranty obligations of Seller under written
warranty agreements and statutory and common law warranty
obligations to customers of the Acquired Business in the
Ordinary Course of Business prior to the Closing Date; and
(iii) any obligations of Seller under the Seller
Contracts listed or described on Schedule 2.1(d) arising
subsequent to the Closing Date.
(b) Retained Liabilities. The Retained Liabilities (AS
HEREINAFTER DEFINED) shall remain the sole responsibility of and
shall
be retained, paid, performed and discharged solely by Seller.
"RETAINED
LIABILITIES" shall mean every Liability of Seller other than
the
Assumed Liabilities.
2.5
ALLOCATION
The Purchase Price shall be allocated in each jurisdiction where
a
Local Seller Entity transfers its Acquired Assets in accordance
with Schedule
2.5. In any Proceeding related to the determination of any Tax,
neither Buyer
nor Seller shall contend or represent that such allocation is not a
correct
allocation.
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2.6
POST-CLOSING ADJUSTMENTS TO THE PURCHASE PRICE
(a) Accounts Receivable. Buyer shall use its Commercially
Reasonable Efforts to collect all Accounts Receivable, but shall
not be
required to institute litigation or refer uncollectible receivables
to
any
collection agency. Any transferred Accounts Receivable which
are
not paid to Buyer within one hundred twenty (120) days of Closing
shall
be reassigned and transferred to Seller at face value and Buyer
shall
forthwith receive a payment for the amount so reassigned and
transferred. On the 60th and 90th day following Closing, Buyer
shall
provided to Seller an Accounts Receivable aging report in writing.
At
any time after the 90th day following Closing, Seller may elect to
have
any Account Receivable reassigned to Seller and Buyer shall
reassign
such Account Receivable to Seller concurrently with Seller's
payment to
Buyer therefor.
(b) Inventory. On the first anniversary of Closing, Buyer
shall prepare and deliver to Seller a written schedule of all
obsolete,
non-usable Inventory and shall reassign and transfer to Seller
such
items at an amount equal to the value assigned to such item on
the
Final Statement of Net Operating Assets and Buyer shall
forthwith
receive payment for all inventory so reassigned and
transferred.
2.7
CLOSING
The purchase and sale provided for in this Agreement (the
"CLOSING")
will take place at the offices of Buyer's counsel at 233 North
Michigan Avenue,
Suite 1720, Chicago 60601 at 10:00 a.m. (local time) on January 26,
2005, unless
Buyer and Seller otherwise agree. The Closing shall be deemed
effective at 11:59
p.m. (local time) that same day with respect to each Seller.
Subject to the
provisions of Article 9, failure to consummate the purchase and
sale provided
for in this Agreement on the date and time and at the place
determined pursuant
to this Section 2.7 will not result in the termination of this
Agreement and
will not relieve any party of any obligation under this Agreement.
In such a
situation, the Closing will occur as soon as practicable, subject
to Article 9.
2.8 CLOSING
OBLIGATIONS
In
addition to any other documents to be delivered under other
provisions of this Agreement, at the Closing:
(a) Seller shall deliver to Buyer:
(i) such bills of sale, assignment and assumption
agreements, the German Local Agreements, the Italian Local
Agreement and all other Local Agreements and other instruments
of transfer; release of lien instruments, and conveyance as
may reasonably be requested by Seller and/or Buyer, each in
form and substance satisfactory to the parties and their legal
counsel as appropriate and executed by Seller (without
limitation, "CONVEYANCE DOCUMENTS");
(ii) assignments of all intellectual property set
forth on Schedule 2.1(f) executed by Seller;
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(iii) non-competition and non-solicitation agreements
in the form of EXHIBIT 2.8(A)(iii), for the benefit of Buyer
with respect to the Acquired Assets, executed by Seller;
(iv) a certificate executed by Seller as to the
material accuracy of their representations and warranties as
of the date of this Agreement and as of the Closing in
accordance with Section 7.1 and as to their material
compliance with and performance of their covenants and
obligations to be performed or complied with at or before the
Closing in accordance with Section 7.2;
(v) a certificate of the Secretary of Seller
certifying, as complete and accurate as of the Closing,
attached copies of the Governing Documents of Seller,
certifying and attaching all requisite resolutions or actions
of Seller's board of directors (and shareholders, if required
by the Governing Documents or by any legal requirement)
approving the execution and delivery of this Agreement and the
consummation of the Contemplated Transactions and certifying
to the incumbency and signatures of the officers of Seller
executing this Agreement and any other document relating to
the Contemplated Transactions and accompanied by the requisite
documents for amending the relevant Governing Documents of
Seller required to effect such change of name in form
sufficient for filing with the appropriate Governmental Body;
(vi) the legal opinion of counsel to Seller, as to
the organization and authority of Checkpoint Systems, Inc. to
enter into this Agreement and the enforceability of this
Agreement with respect to Checkpoint Systems, Inc.
(vii) duly executed assignments of leases for each of
the Leased Real Property and all other material Leases assumed
by Buyer with applicable consents from each such lessor or
other party thereto, as applicable and where required.
(b) Buyer shall deliver to Seller as the case may be:
(i) the Initial Purchase Price to an account
specified by Seller in a writing delivered to Buyer at on the
Closing Date;
(ii) all Conveyance Documents executed by Buyer;
(iii) non-competition and non-solicitation agreements
in the form of EXHIBIT 2.8(B)(iii) (subject to completion of
the exhibits thereto), for the benefit of Seller with respect
to Seller's business not transferred hereunder, executed by
Buyer;
(iv) a certificate executed by Buyer as to the
material accuracy of its representations and warranties as of
the date of this Agreement and as of the Closing in accordance
with Section 8.1 and as to its material compliance with and
performance of its covenants and obligations to be performed
or complied with at or before the Closing in accordance with
Section 8.2; and
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(v) a certificate of the Secretary of Buyer
certifying, as complete and accurate as of the Closing,
attached copies of the Governing Documents of Buyer and
certifying and attaching all requisite resolutions or actions
of Buyer's board of directors approving the execution and
delivery of this Agreement and the consummation of the
Contemplated Transactions and certifying to the incumbency and
signatures of the officers of Buyer executing this Agreement
and any other documents relating to the Contemplated
Transactions.
2.9 Break-up Fee. In the event that the Closing of the
Contemplated
Transactions does not occur on or before February 28, 2006 due to
Buyer's
failure to materially perform its obligations under this Agreement,
where such
failure is not due to Seller's failure to materially perform its
obligations
under this Agreement, Buyer shall pay to Seller, an amount equal to
One Million
US Dollars (US $1,000,000) in immediately available funds, via wire
transfer to
an account designated by Seller, payable immediately out of the
Escrow Amount
(the "BREAK-UP FEE").
3.
REPRESENTATIONS AND WARRANTIES OF SELLER
No specific representation or warranty shall limit the generality
or
applicability of a more general representation or warranty.
Representations and
warranties of the Seller are initially made as of the date hereof.
All
representations and warranties of Seller are made subject to the
exceptions
noted in the Schedules delivered by Seller to Buyer concurrently
herewith and
incorporated herein by reference. All exceptions noted in the
Schedules are
numbered to correspond with the applicable paragraph of Article III
to which
such exception refers. All representations and warranties shall be
certified to
as of the Closing Date pursuant to Section 7.1. Except as otherwise
indicated on
the Schedules, each Seller Local Entity and Seller, jointly and
severally,
represents and warrants to Buyer as follows:
3.1
ORGANIZATION AND AUTHORITY
Each Seller is a corporation duly organized, validly existing and
in
good standing under the laws of its jurisdiction of incorporation,
with full
corporate power and authority to conduct its business as it is now
being
conducted, to own or use the properties and assets that it purports
to own or
use, and to perform all its obligations hereunder and under the
Seller
Contracts.
3.2
ENFORCEABILITY; NO CONFLICT
(a) This Agreement constitutes the legal, valid and binding
obligation of each Seller, enforceable against each Seller in
accordance with its terms. Upon the execution and delivery by
each
Seller of each agreement to be executed or delivered by any or all
of
Seller at the Closing (collectively, the "SELLER'S CLOSING
DOCUMENTS"),
each of Seller's Closing Documents will constitute the legal, valid
and
binding obligation of each Seller, enforceable against each of them
in
accordance with its terms. Each Seller has the absolute and
unrestricted right, power and authority to execute and deliver
this
Agreement and the Seller's Closing Documents to which it is a party
and
to perform its obligations under this Agreement and the
Seller's
Closing Documents and to transfer, convey and sell to Buyer at
the
Closing the Acquired Assets to be sold, and such action has been
duly
authorized by all necessary action by Seller.
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(b) Except as set forth in Schedule 3.2(b), neither the
execution and delivery of this Agreement or any of the Seller's
Closing
Documents nor the consummation or performance of any of the
Contemplated Transactions will, directly or indirectly (with or
without
notice or lapse of time, or both):
(i) Breach (A) any provision of any of the Governing
Documents of Seller, (B) any resolution currently in effect as
adopted by the board of directors or the shareholder(s) of
Seller, or (C) any Legal Requirement;
(ii) Breach any provision of, or give any Person the
right to declare a default or exercise any remedy under, or to
accelerate the maturity or performance of, or payment under,
or to cancel, terminate or modify, any material Seller
Contract; or
(iii) result in the imposition or creation of any
Encumbrance upon or with respect to any of the Acquired
Assets.
(c) Except as set forth in Schedule 3.2(c), Seller has given
all notices to or obtained every Consent from any Person in
connection
with the execution and delivery of this Agreement or, prior to or
on
Closing, any of the Seller's Closing Documents or the consummation
or
performance of any of the Contemplated Transactions, except where
the
absence of such notice or Consent would not have, either
individually
or in the aggregate, a Material Adverse Change.
3.3 FINANCIAL
STATEMENTS
Seller has delivered to Buyer the un-audited, internally prepared,
pro
forma statement of operations and statement of assets and
liabilities for the
12-month period ended December 26, 2004 and the 6-month period
ended June 26,
2005 and the 9-month period ended September 25, 2005, each attached
hereto on
Schedule 3.3(a). Since December 26, 2004, there has been no change
in the
accounting policies, practices or procedures relating to the
Acquired Business
undisclosed to the Buyer.
3.4 ACQUIRED
ASSETS
Except for the Retained Assets, the Acquired Assets, which Seller
is
selling to Buyer hereunder, constitute all of the assets, tangible
and
intangible, set forth on the Estimated Statement of Net Operating
Assets, as
adjusted by the Final Statement of Net Operating Assets, and are,
as of the date
hereof, and will be, as of the Closing Date, utilized by Seller in
the Acquired
Business.
3.5
DESCRIPTION OF LEASED REAL PROPERTY
(a) [Intentionally Omitted].
(b) Schedule 3.5(b) contains an accurate description (by
location, name of lessor, date of Lease and term expiry date) of
all
Leased Real Property to be assigned or sublet to Buyer.
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(c) Seller has been in peaceable possession since the
commencement of the original term of its Leases and is not in
material
default thereunder and no waiver, indulgence or postponement of
the
obligations of Seller under any lease has been granted by any
lessor.
Each such lease is in full force and effect and to Seller's
Knowledge,
the lessor is not in default thereof, and no occurrence, condition,
or
act, including the execution and delivery of this Agreement and
the
other agreements and transactions contemplated thereby, which (with
or
without notice or lapse of time or both) would constitute a
default
thereunder.
3.6 TITLE TO
ASSETS; ENCUMBRANCES
Seller owns good and transferable title to all of the Acquired
Assets
free and clear of any Encumbrances other than those described in
Schedule 3.6
("PERMITTED ENCUMBRANCES"). Upon consummation of the Closing, Buyer
will acquire
from each Seller legal and beneficial ownership of, and good and
marketable
title to, the Acquired Assets, free and clear of encumbrances
except the
Permitted Encumbrances.
3.7 CONDITION
OF PROPERTY
(a) Use of the Leased Real Property for the various purposes
for which it is presently being used is permitted as of right under
all
applicable zoning legal requirements and is not subject to
"permitted
nonconforming" use or structure classifications. All improvements
are
in compliance with all applicable Legal Requirements, including
those
pertaining to zoning, building and the disabled, are in good repair
and
in good condition, ordinary wear and tear excepted, and are free
from
latent and patent defects.
(b) Each item of Tangible Personal Property is suitable for
immediate use in the Ordinary Course of Business in a manner
consistent
with historical use. No item of Tangible Personal Property is in
need
of repair or replacement other than as part of routine maintenance
in
the Ordinary Course of Business. Except as disclosed in
Schedule
3.7(b), all Tangible Personal Property used in Seller's business is
in
the possession of Seller.
3.8 ACCOUNTS
RECEIVABLE
All Accounts Receivable that are reflected on the Final Statement
of
Net Operating Assets represent or will represent valid obligations
arising from
sales actually made or services actually performed by Seller in the
Ordinary
Course of Business.
3.9
INVENTORIES
All items included in the Inventories consist of a quality and
quantity
usable and, with respect to finished goods, saleable, in the
Ordinary Course of
Business of Seller.
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3.10
NO MATERIAL ADVERSE CHANGE
Since June 30, 2005 and except as set forth on Schedule 3.10, there
has
been:
(a) no Material Adverse Change with respect to the Acquired
Business or any
