ASSET PURCHASE AGREEMENT

Exhibit 10.1

ASSET PURCHASE AGREEMENT

AMONG

CULP, INC.

AND

BODET & HORST USA, LP

BODET & HORST GMBH & CO. KG

DATED AS OF AUGUST 11, 2008

TABLE OF CONTENTS

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Table of Exhibits

Table of Schedules

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ASSET PURCHASE AGREEMENT

This Asset Purchase Agreement (this “ Agreement ”) is entered into on August 11, 2008, by and among CULP, INC. , a North Carolina corporation (“ Buyer ”), BODET & HORST USA, LP , a North Carolina domestic limited partnership (“ Seller ”), and with regard to § 3, § 6(c), § 6(d), § 6(e)(iii), § 6(f), § 6(g), § 6(h), 6(i), § 8 and § 10(k) (and the defined terms in § 1 associated with the foregoing) only, BODET & HORST GMBH & CO. KG (“ Shareholder ”; Seller and Shareholder collectively referred to as the “ Selling Parties ”; Buyer and Seller being referred to herein, individually, as a “ Party ” and collectively as the “ Parties ”).

WHEREAS , Seller is engaged in, among other things, the business of the sale of running meters of circular knitted double jersey plain and jacquard, circular knitted terry plain and jacquard and circular knitted velour plain and jacquard in the United States, Canada and Mexico; and

WHEREAS , Seller desires to sell, and Buyer desires to purchase and acquire all of the Purchased Assets (as hereinafter defined).

NOW, THEREFORE , in consideration of the premises and the mutual promises herein made, and in consideration of the representations, warranties, and covenants herein contained, the Parties agree as follows.

§ 1       Definitions

“ Accounting Expert ” has the meaning set forth in §2(e)(iv).

“ Acquired Assets ” means (1) all of the fixed assets of Seller described conclusively in Schedule 1 AA, (2) all Inventories related to the Business as of the Closing Date of which Schedule 1 AA includes an indicative list as of July 31, 2008, excluding for the avoidance of doubt any and all Inventories relating to the production and sale of Products to Tempurpedic and any direct or indirect supplier of Tempurpedic, and (3) all assets conclusively listed on Schedule 1 AC, Schedule 1 IP and Schedule 1 PE, but excluding for the avoidance of doubt any Excluded Assets.

“ Adverse Consequences ” means all actions, suits, proceedings, hearings, investigations, charges, complaints, claims, demands, injunctions, judgments, orders, decrees, rulings, damages, dues, penalties, fines, costs, reasonable amounts paid in settlement, liabilities, obligations, Taxes, Liens, losses, expenses, and fees, including court costs and reasonable attorneys’ fees and expenses.

“ Affiliate ” has the meaning set forth in Rule 12b-2 of the regulations promulgated under the Securities Exchange Act.

“ Agency Agreement ” has the meaning as set forth in §6(d).

“ Ancillary Agreements ” has the meaning as set forth in §2(f)(iv).

“ Assignment and Assumption Agreement ” has the meaning as set forth in §2(f)(ii).

“ Assumed Liabilities ” means (a) any and all liabilities and obligations of the Seller relating to the Business as of the Closing Date as listed indicatively in Schedule 1 AL as of July 29, 2008 and July 31, 2008 respectively or arising after the Closing Date, (b) the Boyteks Assumed Liabilities and (c) any and all liabilities and obligations of the Seller arising from and after Closing under the Assumed Contracts, however, for the avoidance of doubt, Buyer shall also assume any and all liabilities and obligations under the Assumed Contracts that arose prior to Closing, if and to the extent such liabilities and obligations are included in (a) or (b) above, excluding for the avoidance of doubt (1) any liabilities or obligations relating to the production and sale of any products, including but not limited to Products to Tempurpedic and any direct or indirect supplier of Tempurpedic, (2) any and all bank loans of the Seller, (3) any and all liabilities and obligations of the Seller to any related party or affiliate of the Seller, (4) any and all Boyteks Retained Liabilities and (5) any and all Retained Liabilities, in particular Retained Liabilities with regard to the employees of the Seller.

“ Bill of Sale ” has the meaning as set forth in § 2(f)(i).

“ Boyteks ” shall mean Boyteks A.S. or any Affiliate of Boyteks A.S. or any direct or indirect supplier of Boyteks A.S.

“ Boyteks Assumed Liabilities ” shall mean any payables of either Selling Party to Boyteks for any goods or supplies delivered from Boyteks to the Buyer, for which the Buyer has not yet made full payment to either Selling Party on the relating Boyteks Receivables.   

“ Boyteks Receivables ” shall mean any receivable of either Selling Party against the Buyer for the delivery of goods and supplies from Boyteks to the Buyer, including the commission to be paid by the Buyer to either Selling Party for such delivery.  

“ Boyteks Retained Liabilities ” shall mean any payables of either Selling Party to Boyteks not being a Boyteks Assumed Liability.

“ Break Fee ” shall mean a lump sum amount of $500,000.

“ Business ” means the sale of running meters of circular knitted double jersey plain and jacquard, circular knitted terry plain and jacquard and circular knitted velour plain and jacquard in the United States, Canada and Mexico as currently conducted by Seller but shall exclude any sales to Tempurpedic and IKEA (such exclusion to cover any indirect sales to Tempurpedic and any indirect sales to IKEA so long as such sales to IKEA are made pursuant to the Agency Agreement).

“ Business Day ” means a day other than a Saturday, Sunday, or national holiday.

“ Buyer ” has the meaning set forth in the preface above.

“ Cash ” means cash and cash equivalents (including marketable securities and short-term investments) calculated in accordance with GAAP applied on a basis consistent with the preparation of the Financial Statements.

“ Closing ” has the meaning set forth in §2(f) below.

“ Closing Balance Sheet ” has the meaning as set forth in §2(e).

“ Closing Date ” has the meaning set forth in §2(f) below.

“ Closing Net Working Capital ” has the meaning as set forth in §2(d).

“ Culp Supplier Inventory ” shall mean any and all Inventory directly or indirectly delivered to Seller by American Fibers & Yarns Company, O’Mara Incorporated or Unifi, Inc.

“ Current Assets ” means Inventories held for sale in the Business and which would be of a nature to be included in the Acquired Assets if they were held by the Seller as of the Closing Date.

“ Current Liabilities ” means current liabilities of the Seller which would be of a nature to be included in the Assumed Liabilities if they were liabilities of the Seller as of the Closing Date.

“ Disclosure Schedule ” has the meaning set forth in §3 below.

“ Environmental Laws ” means any statute, law, regulation, order, writ or judicial or administrative determination that relates to the generation, storage, handling, discharge, emission, transportation, treatment or disposal of Hazardous Substances or wastes or to the protection of human health and the environment, including CERCLA, the Superfund Amendments and Reauthorization Act of 1986, the Resource Conservation and Recovery Act, the Clean Water Act, the Federal Water Pollution Control Act, the Safe Drinking Water Act, the Toxic Substances Control Act, the Occupational Safety and Health Act, and the Hazardous Material Transportation Act, in each case as amended, and the regulations implementing such acts and the state and local equivalent of such acts and regulations, and common law.

“ Excess Net Working Capital ” has the meaning as set forth in §2(d)(iii).

“ Excess Net Working Capital Payment Amount ” has the meaning as set forth in §2(d)(iii).

“ Excluded Assets ” means any and all assets not constituting Acquired Assets, including Cash and the assets as listed indicatively as of July 28, 2008 in Schedule 1 EA.

“ ERISA ” means the Employee Retirement Income Security Act of 1974, as amended, including all regulations and other authoritative governmental authority guidance issued with respect thereto.

“ ERISA Affiliate ” means any trade or business, whether or not incorporated, that is a member of a group of corporations or of trades or businesses (whether or not incorporated) that along with the Seller are treated as a single employer under and for any of the purposes specified in Section 414(b), (c), (m) or (o) of the Code or that is a member of a controlled group within the meaning of Section 4001(a)(14) of ERISA that includes the Seller.

“ Financial Statements ” means, collectively, the Interim Balance Sheet and the audited balance sheet, income statement and statement of cash flows for the Seller dated as of June 30, 2006 and June 30, 2007 (including the notes thereto.

“ GAAP ” means United States generally accepted accounting principles as in effect from time to time, consistently applied.

“ General Partner ” means Bodet & Horst Corporation, with registered offices at 100 North Tryon Street, Suite 4700, Charlotte, NC, 28202-4003.

“ Hazardous Substance ” includes each substance identified or designated as such under CERCLA, as well as any other substance or material meeting any one or more of the following criteria:  (i) it is or contains a substance designated as a hazardous waste, hazardous substance, hazardous material, pollutant, contaminant or toxic substance under any Environmental Law, (ii) it is toxic, reactive, corrosive, ignitable, infectious, radioactive or otherwise hazardous or (iii) it is or contains, without limiting the foregoing, petroleum hydrocarbons.

“ Hired Employees ” has the meaning as set forth in §2(g)(iii).

“ IKEA ” means any entity belonging to the IKEA group companies as further identified under http://www.ikea.com/us/en/.

“ Indemnified Party ” has the meaning set forth in §8(d) below.

“ Indemnifying Party ” has the meaning set forth in §8(d) below.

“ Intellectual Property ” means the designs and related copyrights used in the operation of the Business, including all rights related thereto and all the other intellectual property set forth on Schedule 1 IP.

 “ Interim Balance Sheet ” means the unaudited balance sheet of the Seller dated as of January 31, 2008.

“ Inventories ” means all inventories owned by Seller on the Closing Date relating to the Business, wherever located, including all finished goods, work in progress, raw materials and all other materials and supplies to be used and consumed by Seller in the production of finished goods sold by the Seller in the Business (but specifically excluding inventories for sale to Tempurpedic).

“ IP Assignment Agreement ” has the meaning has set forth in §2(g)(iii).

 “ Knowledge ” means actual knowledge without independent investigation.

“ Liens ” means any mortgages, claims, liens, security interests, pledges, escrows, charges, options, easements, conditions, rights-of-way, covenants, leases, subleases, licenses and other occupancy agreements or other restrictions or encumbrances of any kind or character whatsoever.

“ Material Adverse Effect ” or “ Material Adverse Change ” means any effect or change that would be materially adverse to the Business of the Seller taken as a whole; provided that none of the following shall be deemed to constitute, and none of the following shall be taken into account in determining whether there has been, a Material Adverse Effect or Material Adverse Change:  (a) any adverse change, event, development, or effect arising from or relating to (1) general business or economic conditions, (2) national or international political or social conditions, including the engagement by the United States in hostilities, whether or not pursuant to the declaration of a national emergency or war, or the occurrence of any military or terrorist attack upon the United States, or any of its territories, possessions, or diplomatic or consular offices or upon any military installation, equipment or personnel of the United States, (3) financial, banking, or securities markets (including any disruption thereof and any decline in the price of any security or any market index), (4) changes in GAAP, (5) changes in laws, rules, regulations, orders, or other binding directives issued by any governmental entity, (6) the taking of any action contemplated by this Agreement and the other agreements contemplated hereby,  (7) any change in the sales to, ability to fulfill orders from or relationship with Tempurpedic or IKEA, (8) announcement or pendency of the consummation of this Agreement and the transactions contemplated by this Agreement either publicly or to the customers, suppliers, employees and advisors of the Seller or the Business; and (b) any existing event, occurrence, or circumstance with respect to which Buyer has Knowledge as of the date hereof, and (c) any adverse change in or effect on the business of the Seller that is cured before the earlier of (1) the Closing Date and (2) the date on which this Agreement is terminated pursuant to §7 hereof.

“ Net Working Capital ” means, as of the date of determination, (a) the sum of (i) Current Assets and (ii) Prepaid Expenses, less (b) Current Liabilities, all as associated with the Business and determined as of such date. For the avoidance of doubt, any and all liabilities to any employee of the Seller shall not be part of the Net Working Capital.

“ Net Working Capital Deficiency ” has the meaning as set forth in §2(d)(iii).

“ Net Working Capital Deficiency Payment Amount ” has the meaning as set forth in §2(e)(iii).

“ Non-Culp Supplier Inventory ” shall mean any and all Inventory not directly or indirectly delivered to Seller by American Fibers&Yarn, Omara Inc. or Unifi Manufacturing.

“ NWC Determination Date ” has the meaning as set forth in §2(d)(ii).

“ Ordinary Course of Business ” means the ordinary course of business consistent with past custom and practice (including with respect to quantity and frequency).

“ Outside Date ” has the meaning as set forth in §9(a)(ii).

“ Party ” has the meaning set forth in the preface above.

“ Permitted Liens ” means (i) the Liens for current Taxes not yet due and payable, and (ii) the Liens imposed by law, such as the Liens of carriers, warehousemen, mechanics, materialmen and landlords, and other similar Liens incurred in the Ordinary Course of Business for sums not constituting borrowed money, that are not overdue.

“ Person ” means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization, any other business entity, or a governmental entity (or any department, agency, or political subdivision thereof).

“ Plan ” means any material employee pension, retirement, profit-sharing, stock bonus, incentive, deferred compensation, stock option, employee stock ownership, hospitalization, medical, dental, vacation, insurance, sick pay, disability, severance or other plan, fund, program, policy, contract or arrangement, whether arrived at through collective bargaining or otherwise, providing employee benefits, including any “employee benefit plan” as that term is defined in Section 3(3) of ERISA, currently maintained by, sponsored in whole or in part by, or contributed to by the Seller, for the benefit of employees, retirees, directors or independent contractors of the Business and their dependents, spouses or other beneficiaries.

“ Post Closing Adjustment Amount ” has the meaning as set forth in §2(d)(iii).

“ Preliminary Purchase Price ” has the meaning as set forth in §2(c).

“ Prepaid Expenses ” shall include all expenses prepaid by the Seller prior to Closing Date, which items are described in Schedule 1 PE.  

“ Products ” means circular knitted double jersey plain and jacquard, circular knitted terry plain and jacquard, and circular knitted velour plain and jacquard if and to the extent these products shall be used in any way for the mattress industry and/or the mattress ticking industry.

“ Purchase Price ” has the meaning set forth in §2(c) below.

“ Responsible Officer ” means Gerd-Hermann Horst and Jerry Pratt.

“ Retained Liabilities ” means any all liabilities not constituting Assumed Liabilities, including (a) the liabilities as listed indicatively as of July 29, 2008 and July 31, 2008 respectively in Schedule 1 RL, (b) any liabilities associated with the matters described in § 3(l) of the Disclosure Schedule, (c) any Boyteks Retained Liabilities, (d) any professional fees for legal, tax or accounting services and (e) any liabilities associated with or related to (i) any delinquencies in any payments owed to any Hired Employee for any wages, salaries, commissions, bonuses or other compensation for any services performed by them for the Seller up to the Closing Date or amounts required to be reimbursed to such employees for such services, (ii) any loans or other obligations payable or owing by the Seller to any officer, director or employee of the Seller with respect to the Business, however, for the avoidance of doubt, excluding any liabilities of the Seller to the Hired Employees which shall be the responsibility of the Buyer according to §6(e).

“ Seller ” has the meaning set forth in the preface above.

“ Seller Contracts ” means the contracts and other agreements listed in Schedule 1 AC.

“ Seller’s Accounting Practices ” means GAAP, subject to being on a consistent basis with the accounting policies and practices used by the Seller in the preparation of its audited financial statements for fiscal year ended June 30, 2007.

“ Statement of Objection ” has the meaning set forth in §2(d)(ii) below.

“ Survival Period ” shall mean, with respect to any representation or warranty contained in §3 or §4 hereof, a period of one (1) year starting on and including the Closing Date except for the guarantee of the Buyer under §4(e) hereof, for which the period shall not lapse before the determination of the Closing Balance Sheet and the Closing Net Working Capital is final and binding between the Parties (provided, however, that no matters involving fraud shall be subject to any Survival Period).

“ Tangible Personal Property ” means all machinery, equipment, tools, furniture, office equipment, fixtures, computer hardware, supplies, materials, vehicles and other items of tangible personal property (other than Inventories) of every kind included in Schedule 1 AA (which schedule is intended to set forth all such types of property relating to the operation of the Business).

“ Tempurpedic ” means any entity belonging to the Tempurpedic International, Inc group companies as further identified under http://www.tempurpedic.com.

“ Territory ” means USA, Canada and Mexico.

“ Transfer Date ” has the meaning set forth in §6(d)(ii) below.

“ Transfer Employees ” has the meaning set forth in §6(e)(iii) below.

“ Third-Party Claim ” has the meaning set forth in §8(d) below.

§ 2       Basic Transaction

(a) Purchase and Sale of Assets .  On and subject to the terms and conditions of this Agreement, Buyer agrees to purchase from Seller, and Seller agrees to sell, transfer, convey, and deliver to Buyer, all of the Acquired Assets at the Closing for the consideration specified below in this §2. For the avoidance of doubt the Parties wish to clarify that any and all receivables of the Seller shall not be transferred to the Buyer, but shall remain with the Seller and that as far as receivables of the Seller against the Buyer are concerned, the Buyer shall settle these receivables in the Ordinary Course of Business, including any and all outstanding Boyteks Receivables.  

The Acquired Assets specified in §3(d) of the Disclosure Schedule are encumbered by liens of RBC Bank, 200 Providence Road Suite 300, Charlotte, NC 28207 (“RBC Bank”). RBC Bank will release the liens upon payment of an amount equal to US$ 204,900.08 according to the confirmation of RBC Bank attached hereto as Schedule 2(a) or any other amount as indicated from the Seller to the Buyer on or prior to Closing in writing (it being understood that any such amounts paid at Closing to RBC Bank by Buyer will be deducted from the amount received by Seller at Closing).

(b) Assumption of Liabilities .  On and subject to the terms and conditions of this Agreement, Buyer agrees to assume, discharge, perform and be responsible for all of the Assumed Liabilities at the Closing.  Buyer will not assume discharge, perform or be responsible, however, with respect to any other obligation or liability of Seller that is not expressly included within the definition of Assumed Liabilities, it being understood that such other obligations and liabilities (referred to herein as “ Retained Liabilities ”) will be retained by the Seller.

(c)  Preliminary Purchase Price .

The consideration paid by the Buyer for the Acquired Assets will consist of the following:

(i)       the payment of US$10,500,000 (the “ Preliminary Purchase Price ”), as may be adjusted pursuant to §2(d) below (as so adjusted, the “ Purchase Price ”);

 (ii)     the assumption of the Assumed Liabilities.   

Post-Closing Purchase Price Adjustment .

(i)                           Closing Statement .  As soon as reasonably practicable following the Closing Date, and in any event within thirty (30) days after the Closing Date, Seller shall prepare and deliver to Buyer:  (i) an unaudited consolidated balance sheet for the Business (“ Closing Balance Sheet ”) as of the end of the day on the Closing Date and (ii) a calculation of the combined Net Working Capital (the “ Closing Net Working Capital ”) as determined from the Closing Balance Sheet.  The Closing Balance Sheet shall be prepared on a consistent basis with the Sellers’ Accounting Practices.  

In the event Inventories need to be written off according to Sellers’ Accounting Practices or applicable accounting rules on the Closing Balance Sheet, such write offs shall not be reflected in the Closing Net Working Capital.

(ii)                          Adjustment to and Final Closing Net Working Capital; Resolution of Disputes .  If the Buyer disagrees with the calculation of the Closing Net Working Capital or any element of a Closing Balance Sheet relevant thereto, Buyer shall notify Seller of such disagreement in writing (the “ Statement of Objection ”), setting forth in reasonable detail the particulars of such disagreement and providing its calculation in reasonable detail of the Closing Net Working Capital within thirty (30) days after its receipt of the Closing Balance Sheet.   In the event Buyer does not provide such Statement of Objection within such thirty (30) day period (or earlier provides written notice of its acceptance of the calculations of Closing Net Working Capital prepared by Seller), Buyer shall be deemed to have accepted the Closing Balance Sheets and the calculation of the Closing Net Working Capital delivered by Seller, which shall, in the absence of fraud or manifest error, be final, binding and conclusive for purposes of this §2(d).  In the event any Statement of Objection is timely provided, Seller and Buyer shall use commercially reasonable efforts for a period of fifteen (15) days (or such longer period as they may mutually agree) to resolve any disagreements with respect to the calculation of Closing Net Working Capital.  If, at the end of such period, they are unable to resolve such disagreements, then all issues having a bearing on such disagreement shall be referred to the Accounting Expert for resolution in accordance with §2(d)(iv).  The date on which the Closing Net Working Capital is finally determined in accordance with this §2(d) is hereinafter referred to as the “ NWC Determination Date .”

(iii)                         Working Capital Adjustment Calculation .  In the event that Closing Net Working Capital is not equal to the estimated closing net working capital and as set forth on Schedule 2 NWC attached hereto (“ Estimated Closing Net Working Capital ”), there shall be calculated a “ Post Closing Adjustment Amount ”, equal to the difference between (x) the Closing Net Working Capital and (y) the Estimated Closing Net Working Capital.

(A)                                    In the event that the Closing Net Working Capital is greater than the Estimated Closing Net Working Capital, such excess is referred to herein as the “ Excess Net Working Capital .”

(B)                                    In the event that the Closing Net Working Capital is less than the Estimated Closing Net Working Capital, such deficiency is referred to herein as the “ Net Working Capital Deficiency .”

(C)                                    If there is a Net Working Capital Deficiency, within five (5) Business Days of the NWC Determination Date, Seller shall pay to Buyer one hundred percent (100%) of any Net Working Capital Deficiency (such amount shall be referred to herein as the “ Net Working Capital Deficiency Payment Amount ”).  Any such Net Working Capital Deficiency Payment Amount shall be paid by wire transfer of immediately available funds to the account(s) designated in writing by Buyer.

(D)                                    If there is Excess Net Working Capital, within five (5) Business Days of the Determination Date, Buyer shall pay to Seller one hundred percent (100%) of any Excess Net Working Capital (such amount shall be referred to herein as the “ Excess Net Working Capital Payment Amount ”).  Any such Excess Net Working Capital Payment Amount shall be paid by wire transfer of immediately available funds to the account(s) designated in writing by Seller.  

(iv)                          Resolution of Adjustment Disputes .  The “ Accounting Expert ” means, for the purposes of this Agreement, McGladrey & Pullen, or in the event that such firm is unable or unwilling to take on such assignment, such other accounting firm as is mutually agreed to by Seller and Buyer.  The Accounting Expert shall, in resolving any disagreements referred to it pursuant to §2(d), act as an expert and not an arbitrator.  The parties will reasonably cooperate with the Accounting Expert during the period of the Accounting Expert’s engagement.  The Accounting Expert shall determine as promptly as practicable (but in no event later than thirty (30) days following its engagement), and as applicable depending on which (if any) matters are referred to it pursuant to §2(d), whether with respect to Closing Net Working Capital (A) the Buyer’s preparation of the Closing Balance Sheet or calculations of the Closing Net Working Capital was in accordance with GAAP or the Seller’s Accounting Practices, (B) the amounts set forth in the Closing Balance Sheets or the Closing Net Working Capital were obtained from and in accordance with the books and records of the Buyer relating to the Acquired Assets and Assumed Liabilities and in a manner consistent with the Sellers’ Accounting Practices, and/or (C) there were any errors of fact or mathematical errors in the Closing Balance Sheet or the Closing Net Working Capital.  In resolving a disputed item, the Accounting Expert may not assign a value to any particular item greater than the greatest value for such item claimed by either Party to the dispute or less than the smallest value for such item claimed by either such Party, in each case as presented in writing to the Accounting Expert.  Within fifteen (15) days after the engagement of the Accounting Expert, Seller and Buyer shall present their respective positions with respect to the items set forth in the Statement of Objections in the form of a written binder of supporting materials to the Accounting Expert and the other Party to the dispute and no ex parte conferences, oral examinations, testimony, depositions, discovery or other form of evidence gathering or hearings shall be conducted or allowed; provided that, at the Accounting Expert’s request, or as mutually agreed by Seller and Buyer, Seller and Buyer may meet with the Accounting Expert so long as representatives of both Seller and Buyer are present.  The supporting binders shall set forth the arguments supporting the applicable Party’s position, along with such supporting materials and other information (including facts and figures) as such Party shall desire.  Seller and Buyer will also furnish to the Accounting Expert such other work papers, documentation and information directly relating to the disputed items as the Accounting Expert may reasonably request.  The Buyer may require that the Accounting Expert enter into a customary form of confidentiality agreement with respect to the work papers and other documents and information regarding the Acquired Assets and Assumed Liabilities provided to the Accounting Expert pursuant to this § 2(d)(iv).  Seller and Buyer will each use their commercially reasonable efforts to cause the Accounting Expert to deliver to Seller and Buyer its determination in writing within thirty (30) days following its engagement, which determination shall be made subject to the definitions and principles set forth in this Agreement and shall be binding on both Seller and Buyer (i) consistent with either the position of Seller or Buyer or (ii) between the positions of Seller and Buyer.  In the absence of fraud or manifest error, the determination of the Accounting Expert shall be final, conclusive and binding on the Parties.  The fees and expenses of the Accounting Expert shall be allocated ratably among Seller, on the one hand, and Buyer, on the other hand, in the same proportion that the aggregate dollar amount of items unsuccessfully disputed by each such party (as finally determined by the Accounting Expert) bears to the aggregate dollar amount of all disputed items submitted to the Accounting Expert.  With respect to other costs, Seller, on one hand, and Buyer, on the other hand, shall pay their own costs in connection with the determination made pursuant to this §2(e)(iv), including the fees and expenses of their respective attorneys and accountants, if any.  

(v)                           Adjustments to Purchase Price .  The purpose of §2(d) is to determine the Purchase Price to be paid by the Buyer under this Agreement.  Accordingly, any adjustment pursuant to such section will neither be deemed to be an indemnification pursuant to Article 8, nor preclude the Buyer from exercising any indemnification rights pursuant to Article 8.  Any payment made pursuant to §2(d) will be treated by the parties for all purposes as an adjustment to the Preliminary Purchase Price.

(e) The Closing .  The closing of the transactions contemplated by this Agreement (the “ Closing ”) shall take place on date of signing of this Agreement or such other date as the Parties may mutually determine (the “ Closing Date ”).

Deliveries at the Closing by Seller .  At the Closing Seller will deliver to Buyer:

(i)                          a bill of sale in the form of Exhibit A for all of the Acquired Assets that are tangible personal property (the “ Bill of Sale ”), executed by Seller;

(ii)                         an assignment and assumption agreement in the form of Exhibit B for all of the Acquired Assets that are intangible personal property (other than Intellectual Property) (which assignment will also contain Buyer’s undertaking and assumption of the Assumed Liabilities) (the “ Assignment and Assumption Agreement ”), executed by Seller;

(iii)                        an assignment agreement in the form of Exhibit C for Intellectual Property (“ IP Assignment Agreement ”) included in the Acquired Assets, executed by Seller;

(iv)                         the Consulting and Development Agreement, Leasehold Assignment and Release Agreement, Agency Agreement and Authorized Dealer Termination Agreement in the forms as Exhibits D through G (collectively referred to as “ Ancillary Agreements ”), executed by Seller or the other applicable party thereto;

Deliveries at the Closing by Buyer.   At the Closing, Buyer will

(i)                          pay (x) USD 10,295,099.92 by wire transfer to the Seller to a bank account specified by Seller and (y) USD 204,900.08 or any other amount as indicated by Seller in writing to the Buyer according to §2(a) hereof to the account of RBC Bank as indicated in Schedule 2(a); for the avoidance of doubt, the Seller shall be entitled to demand payment from the Buyer of the amount indicated by RBC Bank in writing required for the release of the liens on the Acquired Assets specified on §3(d) of the Disclosure Schedule only to RBC Bank;

(ii)                         deliver the Ancillary Agreements, executed by Buyer;

(iii)                        deliver evidence satisfactory to Seller that Buyer has offered employment to the persons specified on §3(k) of the Disclosure Schedule (the “Hired Employees”) on substantially the same employment terms and with substantially the same benefits as such Hired Employees receive from Seller (it being acknowledged that, for purposes of the foregoing, the Buyer’s existing benefits are substantially the same as the Seller’s).

(iv)                         a delivery notice duly signed by the Buyer in the form as set forth in Exhibit H (“Delivery Notice”).

(h) Consents to Assignment .  Seller Contracts requiring the consent of a third-party in order to assign the same are so indicated on Schedule 1 AC.  To the extent that the assignment of any Seller Contract requires the consent of another person, this Agreement will not constitute an agreement to assign such Seller Contract if an attempted assignment would constitute a breach thereof.  Buyer will use all reasonable efforts to obtain any required consents to the assignment of each Seller Contract. If and as long as a required consent to the assignment of a Seller Contract is not obtained, Seller and Buyer will put each other in a position they would be if such Seller Contract had been validly assigned to the Buyer on the Closing Date.  Seller will cooperate with Buyer to provide for Buyer the risks and benefits associated with such Seller Contract, including enforcement, at the cost of and for the benefit of Buyer, of any and all rights of Seller against any other party.  The Buyer shall indemnify the Seller for all and any liabilities under Seller Contracts that become due on or after the Closing Date.  The Seller will exercise all rights under such Seller Contracts according to the instructions and at the costs of the Buyer.  The Seller is entitled to duly terminate such Seller Contract if the Buyer fails in obtaining the consent of all other parties to the assignment of the respective Seller Contract within 6 (six) months after the Closing Date.  

(i) Allocation . Seller shall prepare an allocation of the Purchase Price (and all other capitalized costs) among the Acquired Assets in accordance with Code §1060 and the Treasury regulations thereunder. Such amounts will be adjusted in accordance with Section 1060 of the Code and the Treasury Regulations promulgated thereunder as a result of any adjustments to the Preliminary Purchase Price pursuant to §2(d) hereof or any other provision of this Agreement.  Seller shall deliver such proposed allocation to Buyer within 60 days after the Closing Date. Such proposal shall be subject to the approval of the Buyer, which approval shall be timely and not unreasonably withheld.  Upon such approval, Seller and Buyer and its Affiliates shall report, act and file Tax Returns (including, but not limited to Internal Revenue Service Form 8594) in all respects and for all purposes consistent with such allocation as is agreed upon. Buyer shall timely and properly prepare, execute, file and deliver all such documents, forms and other information as Seller may reasonably request to prepare such allocation. The Seller and the Buyer (x) will be bound by the allocation contained in the allocation schedule for purposes of determining any and all consequences with respect to taxes of the transactions contemplated herein, (y) will prepare and file all tax returns to be filed with any tax au