Exhibit 2.1
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ASSET PURCHASE AGREEMENT
By and Among
SIELOX, LLC
and
CHECKPOINT SYSTEMS, INC.
Dated as of November 4, 2005
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TABLE OF CONTENTS
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PAGE
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ARTICLE I
DEFINITIONS.......................................................................................................1
1.1
Definitions.....................................................................................1
ARTICLE II
PURCHASE AND SALE OF SELLER'S
ASSETS..............................................................................1
2.1
Purchased
Assets................................................................................1
2.2
Excluded
Assets.................................................................................4
2.3
Assumed and Excluded
Liabilities................................................................4
2.4
Nonassignable
Assets............................................................................6
ARTICLE III
PAYMENT OF PURCHASE
PRICE.........................................................................................6
3.1
Purchase
Price..................................................................................6
3.2
Accounts Receivable
Adjustment..................................................................7
3.3
Inventory Count and Determination of Inventory
Valuation........................................7
3.4
Estimated Closing Balance
Sheet.................................................................7
3.5
Closing Balance
Sheet...........................................................................8
3.6
Post-Closing Working Capital
Adjustments........................................................8
3.7
Allocation of Purchase
Price....................................................................9
ARTICLE IV
CLOSING...........................................................................................................9
4.1
Closing.........................................................................................9
4.2
Transactions on the Closing
Date................................................................9
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF
SELLER.........................................................................11
5.1
Organization; Standing;
Qualification..........................................................11
5.2
Authority Relative to this
Agreement...........................................................11
5.3
Consents and Approvals; No
Violations..........................................................12
5.4
Title and Condition of Purchased
Assets........................................................12
5.5
Intangible
Rights..............................................................................14
5.6
Contracts......................................................................................14
5.7
Restrictions on Division Business
Activities...................................................15
5.8
Financial
Information..........................................................................15
5.9
Absence of Changes or
Events...................................................................15
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5.10
Taxes..........................................................................................16
5.11
Employee Benefit
Plans.........................................................................16
5.12
Compliance with Law;
Permits...................................................................16
5.13
Insurance......................................................................................16
5.14
Litigation.....................................................................................17
5.15
Suppliers and
Customers........................................................................17
5.16
Product
Warranties.............................................................................17
5.17
Absence of Certain Business
Practices..........................................................17
5.18
Brokers and
Finders............................................................................18
5.19
Disclosure.....................................................................................18
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF
PURCHASER......................................................................18
6.1
Organization; Standing;
Qualification..........................................................18
6.2
Authority Relative to this
Agreement...........................................................18
6.3
Consents and Approvals; No
Violations..........................................................19
6.4
Brokers and
Finders............................................................................19
ARTICLE VII
COVENANTS OF THE
PARTIES.........................................................................................19
7.1
Access to Information;
Confidentiality.........................................................19
7.2
Public
Announcements...........................................................................19
7.3
Certain Tax
Matters............................................................................19
7.4
Non-Compete and
Non-Solicitation...............................................................20
7.5
Employees......................................................................................21
7.6
Litigation.....................................................................................22
7.7
Collection of Accounts
Receivable..............................................................22
7.8
Preserve Accuracy of Representations and
Warranties............................................22
7.9
Operations Prior to Closing
Date...............................................................22
7.10
Schedule
Update................................................................................22
ARTICLE
VIII.....................................................................................................23
CONDITIONS TO OBLIGATIONS OF THE
PARTIES.........................................................................23
8.1
Conditions to Obligations of
Purchaser.........................................................23
8.2
Conditions to Obligations of
Seller............................................................24
ARTICLE IX
SURVIVAL OF REPRESENTATIONS;
INDEMNIFICATION.....................................................................25
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9.1
Survival of Representations and
Covenants......................................................25
9.2
Indemnification................................................................................25
9.3
Conditions of
Indemnification..................................................................26
9.4
Disclosure.....................................................................................28
ARTICLE X
TERMINATION OF
AGREEMENT.........................................................................................28
10.1
Events of
Termination..........................................................................28
10.2
Effect of
Termination..........................................................................29
10.3
Waiver.........................................................................................29
ARTICLE XI
MISCELLANEOUS....................................................................................................29
11.1
Further
Assurances.............................................................................29
11.2
Entire
Agreement...............................................................................29
11.3
Successors and
Assigns.........................................................................30
11.4
Governing
Law..................................................................................30
11.5
Severability...................................................................................30
11.6
Waiver of
Compliance...........................................................................30
11.7
Amendments and
Waivers.........................................................................31
11.8
Counterparts...................................................................................31
11.9
Captions.......................................................................................31
11.10
Certain
References.............................................................................31
11.11
Interpretation.................................................................................31
11.12
Notices........................................................................................31
11.13
Expenses.......................................................................................32
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EXHIBITS
A
Definitions
B
Assignment and Assumption Agreement
C
Bill of Sale
D
Patent Assignment and Assumption Agreement
E
Trademark Assignment and Assumption Agreement
F
Escrow Agreement
G
Transition Services Agreement
H
Intellectual Property License Agreement
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ASSET PURCHASE
AGREEMENT
THIS ASSET
PURCHASE AGREEMENT
(the "Agreement") is made as of November 4,
2005 by and
between Checkpoint Systems, Inc., a Pennsylvania corporation
("Seller") and Sielox, LLC, a Delaware limited liability company
("Purchaser").
RECITALS
WHEREAS,
Purchaser is a
wholly-owned
subsidiary
of LQ Corporation, a
Delaware corporation ("Parent"); and
WHEREAS,
Seller is in the business of manufacturing and marketing
technology-driven
integrated solutions
for retail security, labeling, and
merchandising; and
WHEREAS,
Seller operates a division of its business known as "Access
Control" which
develops, markets and
sells electronic
access control
systems
(the "Division Business"); and
WHEREAS,
Seller desires to sell to Purchaser,
and Purchaser desire to
purchase from Seller, certain Purchased Assets (as hereinafter
defined) used in,
held by or relating to the Division Business, and Purchaser has
agreed to assume
certain specified
liabilities
pertaining to the
Division Business
described
herein, in each case
upon the terms and subject to the conditions set forth in
this Agreement.
NOW,
THEREFORE,
in consideration of the foregoing and of the
representations,
warranties, covenants,
agreements and
conditions
contained
herein, the parties
hereto, intending to be legally
bound hereby, agree as
follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. Unless otherwise provided herein, capitalized
terms used herein
without definition
shall have the meanings ascribed to them in Exhibit A
attached hereto.
ARTICLE II
PURCHASE AND SALE OF SELLER'S ASSETS
2.1 Purchased Assets.
(a) Subject to the terms and conditions set forth herein, at the
Closing (as defined in Section 4.1 hereof), Seller shall sell,
assign, transfer,
convey and deliver to
Purchaser, and
Purchaser shall purchase, receive and
accept from Seller,
the following assets and rights owned by, leased to or
otherwise used or
usable by Seller in the operation of the Division
Business,
wherever located, whether tangible or intangible, real, personal or mixed (each
a "Purchased Asset," and collectively, the "Purchased Assets"):
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(i) Assumed
Contract Rights. All of Seller's rights, title and
interest
after the Closing Date in and to the Assumed Contracts (as
defined in
Section 5.6 hereof)
which Seller
shall assign to Purchaser
pursuant
to the Assignment and Assumption Agreement;
(ii) Equipment.
Only the machinery, equipment, mechanical and
electrical
tools, sales and
support tools,
software development
tools,
dedicated
manufacturing
test equipment, test hardware, furniture and
fixtures,
trade show booths,
office equipment and supplies, telephone
equipment,
communications
equipment,
computers,
software and related
equipment,
maintenance and repair
equipment,
spare parts,
accessories,
boxes,
miscellaneous
inventories,
stores and other items of tangible
personal
property described on Schedule 2.1(a)(ii) hereto, together with
all
operating manuals pertaining thereto (the "Equipment");
(iii) Permits.
All licenses,
certificates,
permits, franchises,
registrations and
authorizations of any Governmental Authority, and all
permits,
qualifications,
certifications and
licenses, which are
held by
Seller
and are used solely in connection with the operation of the
Division
Business or the ownership of the Purchased Assets and are
required
for or otherwise
relate solely to the
operation of the Division
Business
or the ownership of
the Purchased
Assets, including, without
limitation, those listed on Schedule 5.12 hereto (the "Permits"),
but only
to the
extent such Permits may be transferred as a matter of law (but if
any Permit
cannot be transferred as a matter of law, Seller agrees to
cooperate
with and reasonably assist Purchaser in obtaining such Permit
in
accordance
with the provisions of Section 2.4);
(iv) Intangible
Rights. Seller's
right, title and interest only as
set
forth on Schedule 5.5 in and to all trademarks, trademark
applications, service
marks, trade names, copyrights, patents and patent
applications,
including all
federal, state and foreign registrations
thereof,
and all technology, trade secrets, product designs and
specifications,
software programs,
inventions,
methods,
processes,
systems,
know how, customer and
supplier lists, pricing policies, market
plans,
business and
development
plans and other
intangible
rights and
confidential or proprietary information that relate solely to, or
are used
solely in,
the conduct and operation of the Division Business which shall
be
assigned pursuant to the Patent Assignment and Assumption Agreement
and
the
Trademark Assignment and Assumption Agreement, and the other
intangible
rights listed on Schedule 5.5 hereto (collectively, the
"Intangible Rights"),
and all rights to sue for past or on-going
infringement or
misappropriation of
any of the Intangible
Rights and to
seek and retain
any recoveries resulting therefrom;
(v) Inventory. All of Seller's inventory of raw materials
(including
packaging),
work-in-process, and
finished goods,
which are used in,
or
relate to,
the conduct and
operation of the Division Business, wherever
located,
as set forth
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in
Schedule 2.1(a)(v) (the "Inventory"); provided, however, that
Inventory
shall not
include any Hazardous Substances;
(vi) Prepaid Expenses.
All of Seller's prepaid expenses, deposits,
charges,
sums and fees in
respect of the Division Business or any of the
Purchased
Assets;
(vii) Warranties. All
of Seller's rights under manufacturers' and
vendors'
warranties,
and all similar rights against third parties,
relating
to items included in
the Purchased
Assets, to the full extent
such
rights are transferable (the "Warranties");
(viii) Books and Records. Originals or, where not available,
copies,
of the
books and records
(including all
computerized
records and other
storage
media and the software
used in connection therewith) of Seller
directly
and solely relating to the Division Business, including but not
limited to
all contracts, leases
and other agreements
and documentation
which
relate to or are a part of the Purchased Assets, books and records
relating
to accounts receivable
of the Division Business, accounting and
financial
information
of the Division Business, customer and supplier
lists of
the Division Business
and customer and supplier files of the
Division
Business (the "Books and Records"), but not including (i) the
corporate
minute books, capital stock books or tax returns
of Seller or
(ii) any
books and records
directly pertaining to
the Excluded Assets or
any
business activity of Seller other than the Division Business;
(ix)
Accounts Receivable.
All of Seller's
accounts receivable
and
other
amounts due from third parties arising out of the conduct of
the
Division
Business, as set forth
on Schedule 2.1(a)(ix), other than those
accounts
receivable
set forth on Schedule 2.2(d) (the "Accounts
Receivable");
(x) Advertising Materials. All promotional and advertising
materials
relating
to the Division
Business and the products and services thereof,
including
but not limited to, catalogs, brochures, handbooks, manuals and
other such
materials;
(xi) Goodwill.
The goodwill of the Division Business as a going
concern,
including specifically the goodwill
associated with
Intangible
Rights;
and
(xii) Insurance
Proceeds. All insurance proceeds (except to the
extent
relating to an Excluded Asset) for damage to, or the destruction
or
loss of
any of the Purchased Assets.
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2.2 Excluded Assets.
It is understood
and agreed between the
parties that the
following assets (the "Excluded Assets") shall not be included in
the Purchased
Assets and shall be excluded therefrom:
(a) the corporate minute books, capital stock books and tax
returns
of
Seller;
(b) any and all rights
to causes of action,
lawsuits, judgments,
claims and
demands of any nature
available to or being
pursued by Seller
with
respect to income tax
liabilities or
withholding taxes
relating to
the
Division Business accruing prior to the Closing Date;
(c) any assets or
properties owned,
leased or otherwise held by
Seller
which do not
relate to, or are not used in the
conduct of, the
Division
Business; and
(d) those accounts receivable set forth on Schedule 2.2(d).
2.3 Assumed and Excluded Liabilities.
(a) At the Closing
and except as otherwise provided in Section
2.3(c), Purchaser
shall assume and agree
to pay, honor and
discharge when due
the following liabilities (collectively, the "Assumed
Liabilities"):
(i) all Assumed
Contract Obligations relating to Assumed
Contracts;
(ii) all trade
payables of Seller
incurred in the
ordinary
course of the conduct of the Division Business and listed by item
and amount on Schedule 2.3(a)(ii) hereto;
(iii) all current liabilities of Seller incurred in the
ordinary course of the
conduct of Division
Business and listed
by
item and amount on Schedule 2.3(a)(iii) hereto;
(iv) all obligations
of Seller to provide
its customers who
have purchased
software with
modifications to correct any problems
with such software that have been published within the twelve (12)
month period of the date of shipment of such software; and
(v) all obligations
of Seller with
respect to any
warranty
claims for defective
invoiced products pursuant to the Assumed
Contracts.
(b) Other than the Assumed Liabilities, Purchaser shall not assume,
and the parties
do not intend for Purchaser to assume, pursuant to this
Agreement or
otherwise,
any liabilities or obligations of Seller, its
shareholders or Affiliates of any kind or nature whatsoever, whether accrued,
absolute,
contingent or
otherwise,
known or unknown, including, without
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limitation, any of the
Excluded Liabilities (as defined in Section 2.3(c)
hereof). Seller shall
faithfully pay, honor,
perform and discharge as and when
due all of the Excluded Liabilities.
(c) Purchaser
shall not assume and shall not be liable for any
liabilities of Seller
other than the Assumed Liabilities, and the Assumed
Liabilities
specifically exclude
the following liabilities (the "Excluded
Liabilities"):
(i) any debts, liabilities or obligations, litigations,
proceedings,
claims and
all other liabilities of any kind
whatsoever, whether
known or unknown, to the extent (A) not
pertaining to the Division Business or the Purchased
Assets or (B)
arising from or relating to the Division Business or the Purchased
Assets on or prior to the Closing Date;
(ii) any debts or
liabilities of Seller (other than the trade
payables set
forth on Schedule 2.3(a)(ii) and the current
liabilities set forth on Schedule 2.3(a)(iii)) including, without
limitation, any
amounts or
obligations
due or arising
under any
financing documents or equipment financing arrangements,
bank debt,
accounts payable,
indebtedness to Affiliates and any other debts or
liabilities;
(iii) the expenses
of Seller referred to in Section 11.13
hereof;
(iv) any obligations
that arise under any
guaranty or surety
arrangement made by Seller or any of its shareholders;
(v) (A) any Taxes
incurred or
payable with respect to the
Division Business
and the Purchased Assets on or prior to the
Closing Date including, without limitation, any taxes due pursuant
to the transactions
contemplated
by this Agreement, and (B) any
liability of
Seller for Taxes (including pursuant to the
transactions contemplated by this Agreement);
(vi) (A) any debts,
liabilities or obligations arising out of
Seller's payroll
obligations or Employee Benefit Plans, and (B) any
debts, liabilities or
obligations arising
out of the employment or
termination of employment of any employees of Seller, whether or
not
arising from the transactions contemplated herein;
(vii) any product
liability or warranty claim, other than as
set forth in the Assumed Contracts, with respect to any products
or
services sold by Seller in connection with the conduct of the
Division Business on or prior to the Closing Date; and
(viii) any
debts, liabilities or obligations, known or
unknown, contingent or
liquidated or
otherwise, pertaining
to the
Excluded Assets.
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2.4
Nonassignable
Assets. Anything
in this Agreement to the contrary
notwithstanding, this
Agreement shall not constitute an Agreement to sell,
assign, transfer,
convey or sublease any
Purchased Asset, including any Permit
and any Assumed Contract, if an attempted sale, assignment,
transfer, conveyance
or sublease
thereof without the consent of another Person or Persons is
prohibited by any applicable Law or would constitute a breach of, or in any
way
affect the rights of Seller or Purchaser with respect to, such
Purchased Asset
(any such Purchased Asset being referred to as a "Nonassignable
Asset"). Seller
shall use reasonable
efforts, and Purchaser
shall cooperate with Seller in all
reasonable respects,
to obtain and
satisfy all consents and to resolve all
impracticalities of sale, assignment, transfer, conveyance or
sublease necessary
to sell, assign,
transfer, convey or
sublease any and all Nonassignable Assets
(or any interest therein) in accordance with this Agreement. If any
such consent
is not obtained and is required to effectively assign a Purchased
Asset, Seller
will use its
reasonable
efforts to provide, or cause to be provided, to
Purchaser the full
claims, rights and
benefits of or under such Nonassignable
Assets. To the extent
that Purchaser is provided the benefits pursuant to this
Section 2.4 of any Assumed Contract, Purchaser shall perform for the
benefit of
the other Persons that are parties thereto the obligations
thereunder of
Seller
and pay, discharge and satisfy any related liabilities that, but
for the lack of
an authorization,
approval, consent or waiver to assign such
liabilities
to
Purchaser, would be Assumed Liabilities.
ARTICLE III
PAYMENT OF PURCHASE PRICE
3.1 Purchase Price.
(a) The consideration
to be paid by
Purchaser to Seller for the
Purchased Assets (the
"Purchase Price") is the aggregate of (1) Six Hundred
Thousand Dollars
(US$600,000),
as may be adjusted pursuant to Section 3.2
hereof, (2) the amount
of the Estimated
Net Working
Capital (subject to the
adjustments set
forth in Sections 3.5 and 3.6 hereof) (collectively, the
"Closing Date Cash Payment") and (3) the assumption and/or
discharge the Assumed
Liabilities. The Closing Date Cash Payment shall be paid as set
forth below:
(i) At the Closing,
Purchaser shall pay by
wire transfer of
immediately available
funds to such
account as is specified by
Seller at least two (2) Business Days prior to such date, the sum
of
(A) Five Hundred Thousand Dollars (US$500,000) and (B) the amount
of
the Estimated Net Working Capital.
(ii) At the Closing,
Purchaser shall pay by
wire transfer of
immediately available
funds the sum of One Hundred Thousand Dollars
(US$100,000) (the
"Escrow Amount") to
Herrick, Feinstein LLP
(the
"Escrow Agent")
which amount shall be
held in escrow by the Escrow
Agent pursuant to the terms and provisions of the escrow
agreement
in the form attached hereto as Exhibit F (the "Escrow
Agreement").
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3.2 Accounts Receivable Adjustment. Purchaser shall use commercially
reasonable
efforts to collect the Accounts Receivable for the six (6) period
immediately
following the Closing Date. On the date that is six (6) months
after the Closing
Date (or as soon as is
practicable
thereafter), Purchaser
shall deliver to
Seller an initial report (the "Initial Report") setting forth the amount
of the
Accounts Receivable
that have not been collected by Purchaser (the "AR
Shortfall"). Seller
shall have ten (10)
Business Days from the
receipt of the
Initial Report to review the same. For the purpose of such review,
the Purchaser
agrees to permit, or to cause Purchaser's accountant to permit, the Seller and
its accountants
access to examine all invoices, records, working papers,
schedules and other
documentation related
to the Accounts
Receivable. In the
event of any
discrepancy of the AR
Shortfall set forth on the Initial Report,
the Seller may dispute such discrepancy and Purchaser and Seller agree to
work
diligently to resolve such discrepancy within ten (10) Business
Days of the date
Seller asserts such discrepancy. Upon resolution of any
discrepancies, Purchaser
shall circulate
a revised report (the "Final Report") setting forth the AR
Shortfall which reflects the resolution of all discrepancies. If
Seller does not
dispute the Initial
Report, the Initial
Report shall be deemed to be the Final
Report. Seller
shall refund to Purchaser the amount of such AR Shortfall
by
causing an amount
equal to the AR
Shortfall to be
disbursed from the Escrow
Amount in accordance
with the Escrow
Agreement,
and to the extent the
Escrow
Amount is insufficient
to cover such
amount, Seller shall make a payment in
immediately available
funds to Purchaser for the unpaid portion of the AR
Shortfall amount. Notwithstanding anything to the contrary
contained herein, the
calculation of
the AR Shortfall shall exclude any uncollected Accounts
Receivable which were taken into consideration in the calculation
of the Closing
Balance Sheet (as
hereinafter defined).
Purchaser shall return to Seller all
uncollected Accounts
Receivable
which comprise the AR Shortfall or which
are
taken into
consideration in the
calculation of the
Closing Balance Sheet (the
"Returned AR").
Seller shall then have
the right to collect all of any unpaid,
or the unpaid portion of, any Accounts Receivable for which Seller has
refunded
to Purchaser the AR Shortfall.
3.3 Inventory Count and Determination of Inventory Valuation. As close to, but
prior to, the Closing Date as reasonably possible, Purchaser and Seller shall
jointly conduct a physical review of the Inventory, during which they shall (i)
complete a count of the Inventory (the "Inventory Count"), (ii) determine and
agree to the Inventory Valuation as of the Closing Date in
accordance with GAAP,
as consistently
applied with past practices, net of reserves, at the lower of
cost or market on a first-in first-out basis, and (iii) jointly prepare and
execute a statement setting forth the Inventory Count and the Inventory
Valuation.
3.4 Estimated Closing
Balance Sheet. Seller,
in consultation
with Purchaser,
shall prepare an estimated balance sheet of the Division Business
conveyed as of
the Closing Date (the "Estimated Closing Balance Sheet"), and shall
deliver such
Estimated Closing Balance Sheet to Purchaser not later than three
(3) days prior
to the Closing Date.
The Estimated Closing
Balance Sheet shall be
prepared in
accordance with GAAP
pursuant to the procedures set forth on Schedule 3.4
hereto. Accompanying
the Estimated
Closing Balance Sheet shall be a
schedule
prepared by Seller
consistent with the Estimated Closing Balance Sheet setting
forth the calculations of the estimated Net Working Capital based on the
Estimated Closing
Balance Sheet as of the Closing
Date (the "Estimated Net
Working Capital"). For purposes of preparing the
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Estimated Closing
Balance Sheet and calculating the Estimated Net Working
Capital (i)
the value of the Inventory shall be the Inventory Valuation
determined pursuant to
Section 3.3 and (ii) accounts receivable shall be valued
net of an allowance for doubtful accounts determined in accordance
with GAAP, it
being understood and agreed that any receivable uncollected within one hundred
twenty (120) days after the invoice date shall be considered a
doubtful account.
3.5 Closing Balance Sheet.
(a) Purchaser shall prepare a balance sheet of the Division
Business
conveyed as of the Closing Date (the "Closing Balance Sheet"), and
shall deliver
such Closing
Balance Sheet to Seller not later than
sixty (60) days after the
Closing. The Closing Balance Sheet shall be prepared in accordance
with GAAP and
reviewed by Purchaser's independent auditors. Accompanying the Closing
Balance
Sheet shall be a schedule prepared by Purchaser consistent with the Closing
Balance Sheet setting
forth the calculation
of Net Working
Capital as of the
Closing Date. The
Closing Balance Sheet
and the Net Working
Capital as of the
Closing Date shall be prepared and calculated in accordance
with the
procedures
set forth in Section 3.4.
(b) The Closing
Balance Sheet and the
calculation
of Net Working
Capital based on the Closing Balance Sheet shall be conclusive
and binding upon
the parties hereto
unless Seller objects
in writing to any item or items shown
thereon or omitted
therefrom within
twenty (20) Business
Days after
delivery
thereof to Seller. If
Seller shall have timely delivered to Purchaser a
notice
disputing one or more
such items,
specifying
in reasonable detail each of
Seller's objections,
the parties shall each use commercially reasonable efforts
through authorized
officers to resolve
the objections in good faith. If no
resolution is reached
within twenty (20) Business Days after the notice of
objection is given,
then the issues that
remain in dispute
shall be promptly
submitted to Deloitte
& Touche or, if such firm does not accept the engagement
to make such determination, another nationally recognized
independent accounting
firm to be agreed upon by the parties hereto (the "Independent
Accountant") for
review and resolution.
The Independent
Accountant shall determine all items in
dispute and deliver its written report thereon to the parties
within twenty (20)
Business Days after
such dispute is
submitted to it, and
such written
report
shall be conclusive and binding upon the parties (absent
manifest error). The
fees and expenses
of the Independent Accountant shall be shared equally by
Purchaser and Seller.
3.6 Post-Closing
Working Capital Adjustments. The Purchase Price shall be
subject to adjustment after the Closing Balance Sheet and the
calculation of Net
Working Capital
based on the Closing
Balance Sheet becomes conclusive and
binding upon the parties as follows:
(a) In the event that Net Working Capital as calculated based on
the
Closing Balance
Sheet is less than the
Estimated Net Working Capital, then
Seller shall be required to pay Purchaser the amount of such shortfall, plus
interest thereon
from the Closing Date through and including the date of
determination at the rate publicly announced by Citibank, N.A. as
its prime rate
in effect as of the date of such determination ("Interest"). In the event that
the Net Working
Capital as calculated
based on the Closing
Balance Sheet is
equal to the Estimated Net
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Working Capital then
no payments shall be
required to be made pursuant to this
Section 3.6(a). In the event that the Net Working Capital as
calculated based on
the Closing Balance
Sheet is greater than the Estimated Net Working Capital,
then Purchaser shall
be required to pay Seller the amount of such excess, plus
Interest.
(b) Any payment due pursuant to the provisions of Sections 3.6(a)
hereof shall be made
within five (5)
Business Days after
the Closing
Balance
Sheet and the
calculations of Net
Working Capital based on the Closing Balance
Sheet become
conclusive and binding upon the parties, in cash by wire transfer
of immediately
available funds to
such account as Purchaser or Seller, as the
case may be, shall designate in writing.
3.7 Allocation of Purchase Price. The Purchase Price shall be
allocated to the
Purchased Assets as agreed by Purchaser and Seller and as set forth
prior to the
Closing on Schedule 3.7 hereto (the "Allocation"), subject to any adjustment in
the Closing Date Cash
Payment pursuant to
the provisions
of Sections 3.5
and
3.6. Purchaser and
Seller agree (i) to file Internal Revenue Service Form 8594,
and all other required federal, state, local and foreign tax
returns and forms,
in accordance with the
Allocation, (ii) to
provide the other promptly with any
other information
required to complete
Form 8594 and with a
copy of such form
after it is filed and (iii) not to take a position for financial reporting or
tax purposes
(including
before any
Governmental
Authority charged with the
collection of any tax, or in any judicial hearing) that is
inconsistent with the
Allocation, unless otherwise required by applicable Law following
written notice
to the other party.
ARTICLE
IV
CLOSING
4.1 Closing. The closing of the transactions contemplated by this
Agreement (the
"Closing") shall
take place at the law offices of Herrick, Feinstein LLP,
located at 2 Penn Plaza, Newark, New Jersey 07105 at 10:00
a.m., local time, no
later than ten (10) days after satisfaction or waiver of all other
conditions to
the obligations
of the parties as set
forth in Article VIII,
or at such other
place or at such
other time or on such other date as the Seller and the
Purchaser may mutually
agree upon in writing
(the "Closing Date");
provided,
however, that the
Closing shall be deemed effective as of 11:59 p.m. on the day
preceding the Closing Date.
4.2 Transactions on the Closing Date.
(a) Deliveries by Seller. At or prior to the Closing,
Seller shall
deliver or cause to be delivered to Purchaser (unless delivered
previously) the
following:
(i) the Bill of Sale duly executed by Seller;
(ii) the Assignment and Assumption Agreement duly executed by
Seller;
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(iii) the Patent
Assignment and
Assumption
Agreement duly
executed by Seller;
(iv) the Trademark
Assignment and
Assumption Agreement
duly
executed by Seller;
(v) the License Agreement duly executed by Seller;
(vi) the Escrow Agreement;
(vii) a transition
services agreement by
and between Seller
and Purchaser,
dated as of the date
hereof in the form attached
hereto as Exhibit G (the "Transition Services Agreement"); and
(viii) the Books and Records;
(ix) an incumbency and
specimen signature
certificate
with
respect to the officers of Seller executing the Agreement and the
Other Agreements;
(x) a certificate from the secretary of the Board of Directors
of Seller indicating
that the Board of Directors has authorized the
execution, delivery
and performance of this Agreement and the Other
Agreements;
(xi) proof of the
satisfaction and
discharge of any and
all
Encumbrances on the Purchased Assets;
(xii) such
other deeds, bills of sale, endorsements,
assignments,
affidavits, and other
good and sufficient instruments
of sale, assignment,
transfer and
conveyance in form and substance
satisfactory to
Purchaser which are
required to
effectively vest
Purchaser with
good and marketable title in and to all of the
Purchased Assets; and
(xiii) the
agreements,
certificates
and other documents
required to be delivered pursuant to Section 8.01.
(b) Deliveries by Purchaser. At the Closing, Purchaser shall
deliver
or cause to be delivered (unless delivered previously) to Seller
the following:
(i) the Purchase
Price, in the manner set forth in Section
3.1(a) hereof;
(ii) the Bill of Sale duly executed by Purchaser;
(iii) the Assignment and Assumption Agreement duly executed by
Purchaser;
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<PAGE>
(iv) the Patent
Assignment and
Assumption
duly executed by
Purchaser;
(v) the Trademark
Assignment and Assumption duly executed by
Purchaser;
(vi) the License Agreement duly executed by Purchaser;
(vii) the Escrow Agreement;
(viii) the Transition Services Agreement;
(ix) an incumbency and
specimen signature
certificate
with
respect to the officers of Purchaser executing the Agreement and
the
Other Agreements;
(x) a copy of the
resolutions
of the member of Purchaser
authorizing the execution, delivery and performance of the
Agreement
and the Other Agreements; and
(xi) the agreements, certificates and other documents required
to be
delivered pursuant to Section 8.02.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller
hereby represents and
warrants to Purchaser as of the date of this
Agreement, as follows:
5.1 Organization;
Standing;
Qualification.
Seller is a corporation duly
organized, validly
existing and in good standing under the laws of the State of
Pennsylvania and has
all requisite
corporate power and authority to own the
Purchased Assets and
to carry on the Division Business as now conducted and
as
proposed to be conducted. Seller is duly qualified to
transact business and
is
in good standing
as a foreign corporation in the jurisdictions listed on
Schedule 5.1 hereto,
which are the only jurisdictions in which the character of
the Purchased
Assets or the nature
of the Division
Business transacted by
it
makes such qualification necessary.
5.2 Authority Relative to this Agreement.
Seller has all
necessary corporate
power and authority to
execute
and deliver this Agreement, the Other Agreements and any other documents
to be
executed and delivered by it pursuant hereto and to consummate the
transactions
contemplated hereby
and thereby. The
execution and delivery of this Agreement,
the Other Agreements
and any other
documents to be
executed and delivered
by
Seller pursuant hereto and the consummation of the transactions contemplated
hereby and
thereby have been duly and validly authorized by Seller. This
Agreement and the
documents and instruments to be executed and delivered
by
Seller pursuant
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<PAGE>
hereto have been and will be duly and validly executed and delivered by Seller
and, subject to the due authorization, execution and delivery by
the other party
or parties thereto, this Agreement, the Other Agreements and any
other documents
and instruments to be
executed and delivered by it pursuant hereto constitute
valid and binding agreements of Seller enforceable against Seller in accordance
with their terms
except to the extent
such enforceability may be limited by
bankruptcy laws and
other laws affecting
creditors'
rights and under
general
principles of equity.
5.3 Consents and Approvals; No Violations. The execution and delivery by
Seller
of this Agreement, the
Other Agreements and any other documents and instruments
to be executed and delivered by Seller pursuant hereto,
and the consummation
of
the transactions
contemplated hereby and thereby, either individually or in the
aggregate, do not and
will not (i) require any further corporate proceedings on
the part of Seller, (ii) violate or conflict with the Articles of
Incorporation,
Bylaws or other
charter documents
applicable
to Seller,
(iii) require any
consent, waiver,
approval, authorization or permit of, or filing with or
notification to,
any Governmental Authority, (iv) except as set forth on
Schedule 5.6(b),
conflict in any material respect with, require consent under,
result in a material
violation or breach of, or constitute (with or without due
notice or lapse of time or both) a default or give rise to any right of
termination,
amendment,
acceleration,
cancellation,
suspension,
impairment,
forfeiture or nonrenewal under, any of the terms, conditions or provisions of
any of the Assumed Contracts, Intangible Rights, Permits, Warranties, or any
other agreement, instrument or obligation by which Seller is bound
in respect of
the Division Business
or by which any of the
Purchased Assets may
be bound or
affected or result in the imposition of any Encumbrance on the
Purchased Assets,
or (v) result in a violation in any material respect of any Law or any Order
of
any Governmental
Authority by which
Seller or any of the
Purchased Assets
is
bound.
5.4 Title and Condition of Purchased Assets.
(a) The Seller has good, valid and marketable title to all of the
Purchased Assets (other than any leased assets included
therein, which are the
subject of Section 5.4(b) hereto, and any licensed assets, which
are the subject
of Section 5.5 hereto), free and clear of all
Encumbrances, and at
the Closing
will convey good,
valid and marketable
title to all such
Purchased Assets
to
Purchaser, free
and clear of all Encumbrances. The Purchased Assets (i)
constitute all of the
assets used in or required to carry on the Division
Business as presently
conducted, except as
set forth on Schedule 5.4(a), (ii)
are adequate for the purposes for which such Purchased Assets are
currently used
or held for use and (iii) conform in all material respects to all applicable
Laws,
ordinances,
Orders,
regulations or
governmental
or contractual
requirements relating
to their operation, and (b) the Equipment is in good
working order and has
been properly used and
maintained
in accordance with
commercially
reasonable and
prudent policies and practices as followed by
companies in the same business as the Division Business.
(b) Schedule
5.4(b) hereto sets forth a list of every lease
agreement to which
Seller is a party
relating to any of the
Purchased Assets
(the "Leases").
Except as set forth on
Schedule 5.4(b), Seller has good and
valid leasehold
interests in all items of personal property
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<PAGE>
subject to the Leases,
free and clear of all
Encumbrances, and at
the Closing
will convey good and
valid leasehold
interests in all such items of personal
property, free and clear of all Encumbrances. Seller has provided
to Purchaser a
complete and accurate copy of each Lease, including all amendments and
exhibits
thereto, each of which
is in full force and
effect. Seller
has not received
notice of any event of default under any of the Leases.
Except as set forth
in
Schedule 5.4(b),
none of such
leased Purchased Assets are subject to any
sublease, sublicense
or other agreement
granting to any other Person any right
to the use, occupancy or enjoyment of such property or any portion
thereof. All
personal property
leased pursuant to the Leases is in all material respects in
the condition
required of such
property by the terms
of the Lease
applicable
thereto.
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<PAGE>
5.5 Intangible Rights.
(a) Schedule 5.5(a) is
a true and complete
list of all
Intangible
Rights held or used in connection with the Division Business and
which are owned
by or licensed to Seller (with an indication as to whether
Seller is a
licensor
or licensee in respect thereof, if applicable). Except as set forth on
Schedule
5.5(a): (i) Seller is the sole and exclusive owner or licensee of
the Intangible
Rights and has the sole and exclusive right to use the Intangible
Rights in the
same manner in which it has been or is now using them, (ii) there
are no claims,
demands or proceedings pending or, to the Knowledge of Seller,
threatened, that
pertain to or challenge the validity or effectiveness of the Intangible Rights
or the right of Seller to own or use the Intangible Rights, (iii)
Seller has not
granted, and has no
obligation
to grant, any licenses or other rights with
respect to the
Intangible
Rights, (iv) Seller has not sold, and has no
obligation to
sell, any of the Intangible Rights or any other intangible
property or rights
previously
owned by Seller,
and (v) to the
Knowledge of
Seller, the Intangible
Rights are not being infringed upon by any other person.
The operation of the
Division Business,
and the use of any of
the Intangible
Rights in connection with the Division Business, does not violate
any license or
agreement with any
third party or, to the
Knowledge of Seller,
infringe any
rights of any third party.
(b) Except as set forth on Schedule 5.5(b), the Intangible Rights
which are being
transferred to
Purchaser hereunder
and the rights granted
to
Seller pursuant to the terms and conditions of the License
Agreement represent
all the intellectual
property used by
Seller in connection with the conduct of
the Division Business
and constitute all of the intellectual property assets,
rights and interests necessary to conduct the Division Business in
substantially
the same manner as conducted by Seller prior to the Closing
Date.
(c) Following the consummation of the transactions contemplated by
this Agreement, and
except as set forth on Schedule 5.5(a) or Schedule 5.5(b),
Purchaser shall have good and valid title, free and clear of all Encumbrances,
or possess adequate
licenses or other
rights to use, all of
the intellectual
property owned by or
licensed to Seller which is used in, or necessary for the
operation of, the Division Business as a going concern in the
manner in which it
is currently conducted.
(d) There are no royalties, honoraria, fees or other payments
payable by Seller to any Person in connection with the conduct of the
Division
Business or the
ownership of the Purchased Assets, other than as set forth in
the contracts listed in Schedule 5.5(d).
5.6 Contracts.
(a) Except for the
Assumed Contracts
or as set forth in
Schedule
5.6(a) hereto,
Seller is not a party
to or bound by any
agreement,
contract,
arrangement, lease,
license, understanding, commitment or instrument that
affects or is related to the Division Business or the Purchased Assets or the
consummation of the transactions contemplated hereby. The
agreements, contracts,
arrangements, leases, licenses, understandings, commitments and
14
<PAGE>
instruments set forth on Schedule 5.6(a) are hereinafter
collectively
referred
to as the "Contracts."
(b)
Schedule 5.6(b) sets
forth a list of all of the Contracts to be
assumed by Purchaser at the Closing (the "Assumed Contracts"), and includes a
summary specifying the subject matter and material performance
obligations under
any oral contract included therein, the parties thereto and the date
and terms
thereof. Except as set
forth on Schedule 5.6(b) hereto and except to the extent
enforceability may be
limited by bankruptcy laws and other laws affecting
creditors' rights and
under general
principles of equity,
each of the Assumed
Contracts is
assignable,
valid, binding and in full force and effect, is
enforceable by the Seller in accordance with its terms and, except as set
forth
in Schedule 5.6(b) hereto, has not been modified or amended,
and there has not
been any cancellations or, to the Knowledge of Seller, threatened cancellations
of any Assumed
Contract, nor any pending or, to the Knowledge of Seller,
threatened disputes
thereunder. Except as
set forth in Schedule 5.6(b) hereto,
Seller has paid all
payments and sums due under the Assumed Contracts and
performed all
obligations
required to be
performed by it to date under such
Assumed Contracts and is not (with or without the lapse of time or
the giving of
notice, or both) in
breach or default thereunder. Except as set forth on
Schedule 5.6(b)
hereto, no consents or approvals of any person other than
of
Seller is necessary to sell, assign, convey, transfer and deliver any and
all
rights and interests
in the Assumed
Contracts. Seller has
provided Purchaser
with true and complete copies of each Assumed Contract (including
all amendments
thereto).
5.7 Restrictions
on Division Business Activities. There is no agreement,
judgment, injunction,
order, decree or other instrument binding upon Seller
which has or could
reasonably be expected to have the effect of prohibiting any
business practice of
Seller in relation to the Division Business or the conduct
of the Division
Business by Purchaser
assuming that Purchaser operates the
Division Business
after the Closing as it is currently conducted by Seller and
intended to be conducted by Seller.
5.8 Financial Information.
(a) The gross sales of the Division Business as of the
twelve-month
period ended
December 31, 2004 were $6,558,297 and the gross sales of the
Division Business as
of the eight-month
period ended
September 30, 2005
were
$4,813,800.
5.9 Absence of Changes or Events. Since December 31, 2004,
Seller has
operated
the Division Business
in the ordinary course
consistent with past practice and
no event,
circumstance,
occurrence, fact,
condition, change,
development or
effect exists or has occurred that, either individually or in the
aggregate, has
had or resulted
in, or could
reasonably
be expected to result
in, a Material
Adverse Effect. Without limiting the generality of the foregoing,
except to the
extent set forth on Schedule 5.9 hereto, since December 31, 2004
Seller has not:
(a) mort
