ASSET PURCHASE AGREEMENT
THIS
ASSET PURCHASE AGREEMENT, dated as of February 2, 2005 (the
"Agreement"), by and between Green
Manufacturing, Inc., a
Delaware corporation
(the "Seller") and Benko Products, Inc., an
Ohio corporation (the "Buyer").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS,
the Seller
operates a division
known as the Access Division (the
"Division"), which is engaged in the business of fall protection equipment
through the sale of products under the G-RAFF product line and certain other
product lines.
WHEREAS,
the Buyer desires to purchase certain assets of the Seller
comprising the Division, and the Seller desires to sell such assets to the
Buyer, in each case upon the terms and
subject to the terms and conditions set
forth in this Agreement.
NOW,
THEREFORE,
in consideration of the foregoing and the respective
covenants and agreements hereinafter contained, the parties hereby agree as
follows:
SECTION 1. Definitions.
-----------
As used in
this Agreement, the following terms shall have the
following meanings:
"Access Products" shall have the meaning set forth in Section
3.2(a).
"Access Sales" shall have the meaning set forth in Section
3.2(a).
"Access Sales
Books" shall have the meaning set forth in Section
3.2(c).
"Account" shall have the meaning set forth in Section 9.2.
"Accounts Receivable"
means certain
debts owed to the
Seller, from
customers of the Seller from the sale of
Products by the
Division, that have
arisen in the ordinary course of business and are not
supported by
negotiable
paper as specifically described on Schedules
9.1 and 9.2 attached
hereto and
made a part hereof.
"Acquiror" shall have the meaning set forth in Section 3.2(e).
"Additional Consideration" shall have the meaning set forth in
Section
3.2(a).
"Affiliate" of any
specified Person shall mean any other Person
directly or indirectly controlling or controlled by or
under direct or indirect
common control with such specified Person.
For the purposes of
this definition,
"control", when used with respect to any
specified Person,
means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting
securities,
by contract or
otherwise;
and the terms "controlling" and "controlled"
have meanings
correlative to the
foregoing.
"Allocation" shall have the meaning set forth in Section 10.1.
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"Assigned Contracts"
shall mean the
rights of the Seller
under the
Enumerated Contracts.
"Assignment Documents"
shall have the
meaning set forth in Section
9.1.
"Assumed Liabilities" shall have the meaning set forth in Section
2.2.
"Bank" shall have the meaning set forth in Section 12.1(h).
"Benkar Guarantor"
shall have the meaning set forth in Section
12.2(e).
"Benkar Guaranty" shall have the meaning set forth in Section
12.2(e).
"Benkar Mortgage" shall have the meaning set forth in Section
12.2(o).
"Binding Quote" shall have the meaning set forth in Section
8.1(a).
"Business" shall mean the business of the Division.
"Business Day"
shall mean days other
than Saturdays, Sundays and
holidays or days on which banks in the
States of New York or Ohio are authorized
or required by law to close.
"Buyer" shall have the meaning set forth in the Recitals
hereto.
"Buyer Collateral
Agreements"
shall have the
meaning set forth in
Section 5.3(a).
"Buyer Indemnitees" shall have the meaning set forth in Section
11.1.
"Buyer Severance Policies" shall have the meaning set forth in
Section
7.2(a).
"Buyer Vacation
Policies" shall have the meaning set forth in Section
7.2(a).
"Buyer's Event of
Breach" shall have the meaning set forth in Section
11.3.
"Cancelled Purchase
Orders" shall have the meaning set forth in
Section 13(c).
"Claim Threshold" shall have the meaning set forth in Section
8.1(d).
"Closing Payment" shall have the meaning set forth in Section
3.1.
"Code" shall mean the Internal Revenue Code of 1986, as
amended.
"Collateral
Agreements" shall
mean all agreements executed and
delivered by the Seller pursuant to this Agreement or to which the Seller
is a
party or signatory and contemplated hereby,
as the case may be.
"Comprehensive
Statement" shall have the meaning set forth in Section
8.1(b).
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"Continuing Business"
shall have the meaning set forth in Section
3.2(a).
"Controlled Group"
shall mean any trade
or business (whether
or not
incorporated) under common control with the Seller within the meaning of
Sections 414(b), (c), (m) or (o) of the
Code.
"Delinquent
Receivable" shall have
the meaning set forth
in Section
9.1.
"Delinquent
Receivables Amount"
shall have the meaning
set forth in
Section 9.1.
"Determined Amount" shall have the meaning set forth in Section
3.1.
"Division Employees" shall have the meaning set forth in Section
7.1.
"Earn-Out Period" shall have the meaning set forth in Section
3.2.
"Employment and
Labor Agreements" shall mean (i) any outstanding
employment agreements or contracts
with officers or
employees of the Business;
(ii) any agreement, policy or practice that requires the Seller to pay
termination or severance pay to salaried,
non-exempt or hourly
employees of the
Business (other than as required by law);
and (iii) any
collective
bargaining
agreement or other labor union contract
applicable to employees of the Business.
"Enumerated Contracts" shall mean, collectively, the Purchase Orders,
Sales Orders and Other Contracts specifically described on Schedule 4.15
attached hereto and made a part hereof.
"Equipment" shall mean
certain equipment used by the Business and
specifically described on Schedule 4.22
attached hereto and made a part hereof.
"Excluded Assets"
shall mean all assets of the Seller (other than the
Purchased Property), including, without limitation: (i) the cash and cash
equivalents of the Seller; (ii) any contract, order, payable, commitment,
obligation, agreement, lease, or undertaking,
whether oral or
written, of the
Seller (other than the Assigned
Contracts);
(iii) any security deposits and
bonds; (iv) the name "Green Manufacturing, Inc."; (v) marketable and other
securities; (vi) all rights of the Seller
under this
Agreement and under any
agreement, instrument or document executed in connection herewith or
contemplated hereby, including,
without limitation,
the Collateral
Agreements,
the Buyer Collateral Agreements and the
Third Party Documents;
(vii) all books,
records and other assets of the Seller
relating to corporate
level activities,
including, without limitation, those
relating to filings with the Securities and
Exchange Commission and the Internal Revenue Service and those relating to
accounting and tax functions; (viii) any corporate minute books,
stock ledgers
and other corporate books and records of
the Seller; (ix) all
books and records
relating, exclusively and non-exclusively, to each and every division
and/or
line of business and/or each and every aspect of the Seller's
business other
than the Files and Records (as hereinafter
defined); (x) all books and records
relating, exclusively and non-exclusively,
to matters other than
the Purchased
Property (as hereinafter defined) or the Assumed
Liabilities;
(xi) all claims
against third parties for inventory sold
prior
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to the date of this Agreement, including, without limitation,
rights under any
manufacturer's or vendor's warranties and insurance claims and proceeds with
respect to such inventory, and all other claims against third
parties arising
from or in connection with the Division or the Purchased
Property prior to
the
date hereof; (xii) all federal, state and local income tax refunds
due to the
Seller; (xiii) title to any Real Property
(as hereinafter defined) owned by the
Seller and all buildings and other
structures located thereon, and all leasehold
interests in and to any Real Property;
(xiv) all prepaid
expenses and
rentals;
(xv) the Seller's right, title and interest in and to certain equipment
identified on Schedule A attached
hereto and made a part
hereof; and (xvi)
the
Seller's right, title and interest in and
to all intangible and tangible assets,
including, without limitation, the Retained Accounts Receivable, other than
those as specifically described on Schedule 9.1,
Schedule 4.11(a), Schedule
4.11(c), Schedule 4.12, Schedule 4.15, Schedule 4.22 and Schedule B, each
as
attached hereto and made a part hereof.
"Excluded Liabilities"
shall have the
meaning set forth in Section
2.2.
"Files and Records"
shall mean one copy of certain files and records,
whether in hard copy, computer or magnetic format, of the Seller exclusively
relating to the Division or the Purchased
Property, as specifically described on
Schedule B attached hereto and made a part
hereof.
"Financial Statements"
shall have the
meaning set forth in Section
4.6.
"Further Additional Consideration" shall have the meaning set forth
in
Section 3.2(d).
"GAAP" shall
mean United States generally accepted accounting
principles.
"Government" shall mean any agency, division, subdivision, audit
group
or procuring office of the government of the United States or any foreign
government, including the employees or
agents thereof.
"Guarantees" shall have the meaning set forth in Section
12.2(e).
"Guarantor" shall have the meaning set forth in Section
12.2(d).
"Guarantors" shall have the meaning set forth in Section
12.2(e).
"Guaranty" shall have the meaning set forth in Section 12.2(d).
"Health And
Medical Coverage" shall have the meaning set forth in
Section 7.2(a).
"Indemnification
Threshold" shall
have the meaning set forth in
Section 11.6(a).
"Information" shall
have the meaning set forth in Section 14.14.
"Intangible Assets"
shall mean certain
intangible personal
property
rights, including, without limitation, phone numbers and domain names used
exclusively in the
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Business by the Seller, in each case exclusively in connection with the
Business, and all goodwill of the Seller
exclusively relating
to the Business,
as specifically described on Schedule 4.11(c) attached hereto and made a
part
hereof.
"Intellectual Property" shall mean: (i) certain inventions
(whether
patentable or unpatentable and whether or not reduced to practice), all
improvements thereto, and all patents, patent applications and patent
disclosures related thereto, together with all reissuances, continuations,
continuations-in-part, revisions, extensions and reexaminations thereof
("Patents"); (ii) certain trademarks,
service marks, trade
dress, logos, trade
names (including the names G-RAFF and
all derivatives
thereof), together
with
all translations, adaptations, derivations and combinations thereof and
including all goodwill associated
therewith, and all applications, registrations
and renewals in connection therewith
("Trademarks"); (iii) certain copyrightable
works (including, without limitation,
certain software developed by the Seller),
certain copyrights and all applications, registrations and renewals in
connection therewith; (iv) certain mask works and all applications,
registrations and renewals in connection
therewith;
(v) certain trade
secrets
and confidential business information (including ideas, research and
development, know-how, formulas, compositions, manufacturing and production
processes and techniques, technical data, designs, drawings, specifications,
customer and supplier lists, pricing and cost information, and business and
marketing plans and proposals);
(vi) certain computer
software (including
data
and related documentation); (vii) certain other proprietary
rights, including
certain rights under agreements related to
the foregoing; and
(viii) all copies
and tangible embodiments thereof (in whatever
form or medium); with
respect to
clauses (i) through (viii) above,
inclusive, to the
extent material to and used
exclusively in the Business and as
specifically
described on Schedule
4.11(a)
attached hereto and made a part hereof.
"Inventory" shall mean (i) the finished goods, raw materials,
work in
process and inventoriable supplies of the Division
owned by the Seller on
the
date of this Agreement as set forth on Schedule C attached hereto and made a
part hereof, and (ii) any and all rights of the Seller to the warranties
received from its suppliers with respect to such inventory (to the extent
assignable) (but only to the extent related to Products sold by the Buyer
following the date hereof) and related
claims, credits,
rights of recovery
and
set-off with respect thereto.
"Lease Termination"
shall have the meaning set forth in Section
12.1(j).
"License Agreement"
shall have the meaning
set forth in Section 12.1
(i).
"License Termination"
shall have the meaning set forth in Section
12.1(g).
"Licenses and
Permits" shall have the meaning set forth in Section
4.12.
"Lien" shall
mean any mortgage, pledge, security interest,
encumbrance, lien (statutory or other) or
conditional sale agreement.
"Losses" shall have the meaning set forth in Section 11.1.
"Mortgage 1" shall have the meaning set forth in Section
12.2(f).
"Mortgage 2" shall have the meaning set forth in Section
12.2(g).
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"Mortgage 3" shall have the meaning set forth in Section
12.2(h).
"Mortgages" shall have the meaning set forth in Section
12.2(h).
"Note 1" shall mean
that certain
Promissory
Note of even date
made
payable by the Buyer to the order of the
Seller in the original principal amount
of Eight Hundred Thirty-Six Thousand Seven
Hundred Eighty-Three
and Thirty-Five
One-Hundredths ($836,783.35) Dollars.
"Note 2" shall mean
that certain
Promissory
Note of even date
made
payable by the Buyer to the order of the
Seller in the original principal amount
of One Hundred Twenty Thousand Eighty Hundred Sixty-Two and Twenty-Seven
One-Hundredths ($120,862.27) Dollars.
"Notes" shall mean Note 1 and Note 2.
"Notice" shall have the meaning set forth in Section 9.1(a).
"Occurrence" shall have the meaning set forth in Section
4.21(b).
"Option Period" shall have the meaning set forth in Section
9.1(a).
"Other Contracts"
shall mean certain
partnership
or joint venture
agreements, license agreements, service
contracts, employment,
commission and
consulting agreements, suretyship contracts, letters of credit, reimbursement
agreements, distribution agreements, contracts or commitments limiting or
restraining the Seller from engaging or competing in any lines of business
or
with any Person, documents granting the power of attorney
with respect to
the
affairs of the Seller, agreements not made
in the ordinary course of business of
the Seller, options to purchase any assets or property
rights of the
Seller,
working capital maintenance or other form of
guaranty agreements,
and certain
other agreements to which the Seller is a party and which are related
exclusively to the operation of the
Business, but excluding Employment and Labor
Agreements, Purchase Orders, Sales Orders and
Plans, and specifically described
on Schedule 4.15 attached hereto and made a
part hereof.
"Person" shall mean any individual, corporation, partnership, joint
venture, association, joint-stock company,
trust, unincorporated organization or
Government.
"Plans" shall
mean all pension, savings, retirement, health,
insurance, severance and any other employee benefit or fringe benefit plans
maintained or sponsored by the Seller or any other
member of the
Controlled
Group.
"Product Defect" shall have the meaning set forth in Section
8.1(d).
"Product Defect
Claim" shall have the meaning set forth in Section
8.1(a).
"Product Defect
Warranty Costs" shall have the meaning set
forth in
Section 8.1(a).
"Product Liability
Lawsuits" shall have the meaning set forth in
Section 4.21(a).
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"Products" shall mean,
exclusively with respect to the Business: (i)
the products manufactured, or in the process of design or development for
manufacturing by the Seller as of the date
of this Agreement (including, without
limitation, any product necessary and useful for the performance of any
Enumerated Contract); and (ii) any products manufactured or which were in
the
process of design or development for manufacturing by the Seller (or its
predecessors in interest) in the last five
years.
"Purchase Orders"
shall mean all the
Seller's outstanding
purchase
orders, contracts or other commitments to suppliers of goods and services
for
materials, supplies or other items used exclusively in the Business and
specifically described on Schedule 4.15
attached hereto and made a part hereof.
"Purchase Price" shall have the meaning set forth in Section 3.
"Purchased Property"
shall mean the Transferred Accounts Receivable,
Assigned Contracts, Files and Records,
Intangible Assets, Intellectual Property,
Inventory, Equipment, Licenses and Permits (to the
extent transferable by
the
Seller) and the Seller's right to participate as an exhibitor in the
2005 ILTA
Trade Show (the "Trade Show"); provided, however, that the term "Purchased
Property" shall not include the Excluded
Assets.
"Rate of Compensation"
shall have the
meaning set forth in Section
7.2(c).
"Real Property" means all real property owned or leased by the
Seller.
"Record Date" shall have the meaning set forth in Section 9.1.
"Reimbursement Amount"
shall have the
meaning set forth in Section
8.1(b).
"Reimbursement Period"
shall have the
meaning set forth in Section
8.1(b).
"Retained Accounts
Receivable"
shall have the
meaning set forth
in
Section 9.2.
"Retained
Accounts Receivable Schedule" shall have the meaning set
forth in Section 9.2.
"Retrofits" shall have the meaning set forth in Section
4.21(a).
"RMT" shall have the meaning set forth in Section 12.1(j).
"Sales Orders"
shall mean
certain of the Seller's sales orders,
contracts or other commitments to purchasers of goods and services of the
Business specifically described on Schedule
4.15 attached hereto and made a part
hereof.
"Schedule 7.2
Employee" shall have the meaning set forth
in Section
7.2(b).
"Section 9.1
Adjustment
Date" shall have the meaning set forth in
Section 9.1(a).
"Security Agreement"
shall have the meaning set forth in Section
12.1(a).
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"Selected Firm" shall have the meaning set forth in Section
3.2.
"Seller" shall have the meaning set forth in the Recitals
hereto.
"Seller Indemnitees" shall have the meaning set forth in Section
11.3.
"Seller Severance
Policies" shall have the meaning set forth in
Section 7.2(a).
"Seller Vacation Policies" shall have the meaning set forth in
Section
7.2(a).
"Seller's Event of Breach" shall have the meaning set forth in
Section
11.1.
"Similar Employment Terms" shall have the meaning set forth in
Section
7.1.
"Subordination
Agreement" shall have the meaning set forth in Section
12.1(h).
"Tax Returns" shall
mean any return,
report, information
return or
other document (including any related or supporting information) filed or
required to be filed with any governmental body in connection with the
determination, assessment, collection or
administration of any Taxes.
"Taxes" shall
mean for all
purposes of this Agreement all taxes
however denominated, including any interest, penalties
or additions to tax that
may become payable in respect thereof,
imposed by any
governmental body,
which
taxes shall include, without limiting the generality of the foregoing, all
income taxes, payroll and employee withholding
taxes, unemployment
insurance,
social security, sales and use taxes, excise taxes, franchise taxes, gross
receipts taxes, occupation taxes, real and
personal property taxes, stamp taxes,
transfer taxes, gains taxes, workmen's compensation taxes and
other obligations
of the same or a similar nature, whether
arising before, on or after the date of
this Agreement; and "Tax" shall mean any
one of them.
"Third Party" shall have the meaning set forth in Section
5.3(b).
"Third Party
Documents"
shall have the meaning
set forth in Section
5.3(b).
"Transfer Taxes" shall have the meaning set forth in Section
10.2.
"Transferred Accounts
Receivable" shall have the meaning set forth in
Section 9.1.
"Transferred Accounts
Receivable Schedule" shall have the meaning set
forth in Section 9.1.
"Warranty Claims" shall have the meaning set forth in Section
8.1(a).
"Warranty Costs" shall have the meaning set forth in Section
8.1(a).
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SECTION 2. Purchase and Sale of the Purchased
Property.
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Section 2.1. Transfer
of Assets. Subject to
the terms and conditions
herein set forth, except for the Excluded Assets, the Seller hereby sells,
conveys, transfers, assigns and delivers to the Buyer,
and the Buyer
hereby
purchases and accepts from the Seller,
all rights,
titles and interests
of the
Seller in and to the Purchased Property,
wherever located.
Section 2.2. Assumption of Liabilities. On and after the date of this
Agreement, the Buyer hereby assumes and the
Buyer hereby agrees to pay, perform
and discharge as and when due, those
liabilities
and obligations of the
Seller
(a) arising pursuant to, or in connection with, the terms of the Enumerated
Contracts, the Employment and Labor Agreements and/or the Trade Show; (b) as
contemplated by Section 7 with respect to the Division Employees and the
Schedule 7.2 Employees; (c) arising under and with respect
to Warranty
Claims,
subject to the provisions of Section 8.1
hereof; (d) arising in
connection with
any items of software listed on Schedule 4.22
attached hereto and made a part
hereof, and under and with respect to any license with respect to any such
software; and (e) arising under Section 8.4 hereof (each of the
foregoing as
described in clauses (a), (b), (c), (d) and (e) above, collectively, the
"Assumed Liabilities"). Without limiting the foregoing, the Buyer shall not
assume (and the term "Assumed Liabilities" shall not be deemed to include)
(i)
income Taxes of the Seller; (ii) except as provided in Section 10.2 of this
Agreement, all other Taxes attributable to periods ending on or prior to the
date of this Agreement; (iii) Taxes of any
other Person for which the Seller may
be liable by contract or otherwise; (iv) any liability of any kind due to
illegal or tortious conduct prior to the date of this
Agreement by the
Seller,
or the Seller's officers, directors or employees, whether to
employees or third
parties; (v) any liability for product
liability lawsuits arising from the sale
of any Product before the date of this
Agreement;
(vi) any liability for the
infringement of any item of Intellectual
Property in connection with the sale of
any Product before the date of this
Agreement; and (vii) any other liability not
expressly assumed by the Buyer pursuant to
this Agreement. All
the liabilities
and obligations of the Seller other than
the Assumed Liabilities are hereinafter
referred to as the "Excluded
Liabilities".
SECTION 3. Purchase Price.
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Section 3.1. Certain Consideration.
(a) The purchase
price (the "Purchase Price") for the sale and
transfer of the Purchased Property is an aggregate of (i) One Million Eight
Hundred Thirty-Seven Thousand Seven Hundred Fourteen and Sixty-Four
One-Hundredths ($1,837,714.64) Dollars (the "Determined Amount");
and (ii) the
Additional Consideration, as such term is
defined and as contemplated by Section
3.2.
(b) The Determined Amount is being paid as follows:
(i) Eight
Hundred
Eighty
Thousand
Sixty-Nine
and Two
One-Hundredths ($880,069.02) Dollars by the Buyer's execution and delivery
contemporaneously herewith to the Seller of a
certified check of the Buyer made
payable to the order of the Seller,
or at the Seller's
option, by wire transfer
of immediately available funds contemporaneously herewith to an account
designated in writing by the Seller (in
either case, the "Closing Payment"); and
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(ii) Eight Hundred Thirty-Six Thousand Seven Hundred
Eighty-Three
and Thirty-Five One-Hundredths ($836,783.35) Dollars by the Buyer's
execution
and delivery to the Seller of Note 1;
plus
(iii) One Hundred
Twenty Thousand
Eight Hundred
Sixty-Two and
Twenty- Seven One-Hundredths ($120,862.27) Dollars by the
Buyer's execution and
delivery to the Seller of Note 2.
Section 3.2 Additional Consideration.
(a) The Buyer shall
pay to the Seller an
amount equal to (i)
twenty
(20%) percent of Access Sales during each
of the two (2) successive twelve (12)
month periods commencing the date hereof
(each such twelve (12) month period, an
"Earn-Out Period") aggregating, with respect to each Earn-Out
Period, to an
amount equal to or greater than Two Million
Five Hundred Thousand
($2,500,000)
Dollars up to and including Three Million Five Hundred
Thousand ($3,500,000)
Dollars in such period, and (ii) two (2%) percent of the Access Sales
aggregating, with respect to each Earn-Out Period, to an amount in excess of
Three Million Five Hundred Thousand
($3,500,000) Dollars in such period (in each
case, the "Additional Consideration"). For
purposes of this Section 3.2, "Access
Sales" shall mean the gross sales,
whether direct or
indirect, of the Buyer
or
any subsidiary, whether direct or indirect,
or Affiliate thereof,
during each
Earn-Out Period arising in any respect from
any and all of the
following: (x)
the Business and any expansion, by acquisition or otherwise, or other
modification, of the Business, or of the
operations, product
and service lines
thereof (as so expanded or modified,
the "Continuing
Business");
(y) products
of, or services provided by or related to,
the Continuing
Business,
including,
without limitation, the Products
(collectively, "Access
Products"), or products
or services similar or related to,
replacing,
substituting
for or in any way
competitive with, any such Access Products;
and (z) intellectual property of the
Continuing Business, including, without limitation, the
Intellectual Property,
whether now owned or hereafter acquired, or products or services produced,
marketed or sold, or business conducted,
thereunder or in
connection therewith.
Access Sales shall be determined in
accordance with GAAP,
consistently
applied
to each Earn-Out Period, consistent with
the past practices of the Seller.
(b) For purposes of this Agreement, the Additional Consideration
shall
be initially determined by the Buyer. The Buyer
shall, make such
determination
and deliver a written report thereof
(together with all supporting schedules and
details of the calculation) to the Seller within
thirty (30) days following the
end of each Earn-Out Period. Simultaneously with the delivery of such
report,
the Buyer shall pay to the Seller the
Additional
Consideration
by certified
check of the Buyer made payable to the order of the
Seller, or at the
Seller's
option, by wire transfer of immediately
available funds to an account designated
in writing by the Seller.
(c) The Seller shall
have sixty (60) days
from receipt of each
such
report (and sixty (60) days from the
receipt of the Comprehensive Statement) to
object to the Buyer's calculation of the Additional
Consideration
(and/or the
Reimbursement Amount, as the case may be). In
the event that, within such sixty
(60) period, the Seller provides a written
objection to such
calculation, and
such objection is not resolved by the parties within fifteen (15) days
thereafter, all remaining disagreements with respect to such calculation of
Additional Consideration (and/or the Reimbursement Amount,
as the case may be)
shall, within five (5) days following a
written
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request from the Seller to the Buyer,
be submitted
to an accounting firm of
national reputation selected jointly by the
Seller and the Buyer; if the Seller
and the Buyer are unable to agree on an
accounting firm within such five (5) day
period, each shall, within five (5) days following a
written request from
the
Seller to the Buyer, select an accounting firm of national reputation and,
within five (5) days following the
selection of both such accounting firms, such
firms shall select a third accounting firm
of national reputation to resolve all
remaining disagreements with respect to the calculation of the Additional
Consideration (and/or the Reimbursement Amount, as the case may be). The
accounting firm so selected shall
sometimes hereinafter be referred to as
the
"Selected Firm". The Seller and the Buyer shall use their respective best
efforts to cause the Selected Firm to resolve all submitted disputes within
thirty (30) days following submission of such thereto by
delivery to the Seller
and the Buyer of a statement in writing setting forth the conclusion of the
Selected Firm as to the disputed item or items and the effect of such
conclusions on the Additional Consideration
(and/or the Reimbursement Amount, as
the case may be). The determination of the Selected Firm with respect to the
Additional Consideration (and/or the Reimbursement Amount,
as the case may be)
shall be final, conclusive and binding,
and judgment may be
entered thereon in
any court of competent jurisdiction.
Nothing contained
herein shall be deemed a
consent to arbitrate any other issue or
dispute which may hereafter arise among
the parties to this Agreement. The costs and fees of the Selected
Firm shall be
borne equally by the Seller, on the one hand, and the Buyer, on
the other hand.
At all times during the Earn-Out Periods
and for one year thereafter, the Buyer
shall (i) keep separate books and records with respect to
the Access Sales (the
"Access Sales Books"), and (ii) allow the Seller and its
representatives
full
and free access to such books and records
of the Buyer and its
subsidiaries and
Affiliates, including, without limitation, the Access Sales Books (and/or
the
books and records of the Buyer and its
subsidiaries and
Affiliates relating
to
the calculation of the Reimbursement Amount), as the Seller shall deem
necessary, appropriate or advisable, and allow the Seller to make extracts
therefrom and copies thereof of any of the same at the
Seller's own cost and
expense. In connection with its review,
the Selected Firm
shall have the right
to undertake such auditing procedures as it may deem
appropriate and to examine
all work papers utilized in the accounting
and determination
of the Additional
Consideration (and/or the Reimbursement
Amount, as the case may be).
(d) If any
further Additional Consideration ("Further Additional
Consideration") is due the Seller under
Section 3.2(c), the Buyer shall make
payment of such amount within five (5) days
following the earlier
of settlement
or the issuance of the Selected Firm's decision. Any Further Additional
Consideration shall bear interest at the Default
Rate from the date the
Buyer
delivers the report contemplated by Section
3.2(b) to the Seller until paid.
(e) During the
Earn-Out Periods, the Buyer will use commercially
reasonable efforts in good faith to
maximize the Access Sales. In the event that
the Buyer transfers or assigns all or substantially all of the business or
assets of the Continuing Business to any
other entity (whether by sale of stock,
sale of assets, merger or otherwise) (an
"Acquiror"), the Buyer
will cause the
Acquiror to assume liability for payment of the Additional Consideration
pursuant to the terms of this Agreement
(with the Buyer
remaining jointly and
severally liable). Notwithstanding the
foregoing, or any other provision of this
Agreement, the parties intend that the
business, operations, product and service
lines of the Continuing Business,
including,
without limitation,
the Division,
not be altered, fragmented, dispersed or
otherwise changed, having the effect of
diminishing the Additional Consideration.
In the event of any such change, or in
the event that
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the Buyer shall fail to use commercially reasonable efforts in good faith to
maximize the Access Sales, the parties shall use their best efforts to
calculate, and the Buyer shall pay, the
Additional Consideration consistent with
the Access Sales that would have been
produced by the
Continuing
Business in
keeping with the intent of this
Agreement.
SECTION 4. Representations and Warranties of
the Seller.
The Seller hereby
represents
and warrants to the Buyer as
follows,
which representations and warranties
shall apply exclusively to the period from
and after January 22, 2002:
Section 4.1. Corporate Organization. The Seller is a corporation
duly
organized, validly existing and in good
standing under the laws of the State of
Delaware and has all requisite corporate power and authority to own its
properties and assets and to conduct its
businesses as now conducted. Copies of
the Certificate or Articles of Incorporation and By-laws (or equivalent
documents) of the Seller, with all amendments thereto to the
date hereof, have
been furnished to the Buyer or its
representatives, and such copies are accurate
and complete as of the date hereof.
Section 4.2.
Qualification
to Do Business. The Seller is duly
qualified to do business as a foreign
corporation
and is in good
standing in
every jurisdiction in which the
character of the properties owned or leased by
it or the nature of the business conducted by it makes such qualification
necessary and in which the failure to be so qualified would have a material
adverse effect on the Business. Schedule 4.2 attached hereto and made a part
hereof sets forth all jurisdictions in which the Seller is
qualified to do
business.
Section 4.3.
Authorization and Validity of Agreement. The Seller has
all requisite corporate power and authority to
enter into this Agreement and to
carry out its obligations hereunder. The execution and delivery of this
Agreement and the performance of the Seller's
obligations
hereunder have
been
duly authorized by all necessary
corporate action by
the Board of Directors and
stockholder of the Seller, and no other
corporate proceedings on the part of the
Seller are necessary to authorize such
execution, delivery and performance. This
Agreement has been duly executed by the Seller and
constitutes
its valid and
binding obligation, enforceable against it
in accordance with its terms.
Section 4.4. No Conflict or Violation. The execution, delivery and
performance by the Seller of this Agreement do not and will not violate or
conflict with any provision of the
Certificate or Articles of Incorporation or
By-laws (or equivalent documents) of the Seller and do
not and will not violate
any provision of law, or any order, judgment or decree of any court or
other
governmental or regulatory authority, nor
(after giving effect to any applicable
consents, waivers, authorizations or approvals contemplated by Section 4.5)
violate nor will result in a breach of or
constitute
(with due notice or
lapse
of time or both) a default under any
contract, lease, loan agreement, mortgage,
security agreement, trust indenture or other agreement or
instrument to which
the Seller is a party or by which it is
bound or to which any of its properties
or assets is subject, nor will result in the creation or
imposition of any Lien
upon any of the Purchased Property, nor will result in the cancellation,
modification, revocation or suspension of
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any of the Licenses and Permits
referred to in Section
4.12, to the extent that
any of the foregoing would have a material
adverse effect on the Business.
Section 4.5. Consents and Approvals. Schedule 4.5 attached hereto
and
made a part hereof sets forth a true and
complete list of each consent, waiver,
authorization or approval of any
governmental or regulatory authority, domestic
or foreign, or of any other Person, and each declaration to or filing or
registration with any such governmental or regulatory authority, that is
required in connection with the execution and delivery of
this Agreement by the
Seller or the performance by the Seller of
its obligations
hereunder, which
if
not obtained would have a material adverse
effect on the Business.
Section 4.6. Financial
Statements.
Schedule 4.6 attached
hereto and
made a part hereof sets forth (a) the
statement of income for the Division for
the eleven (11) month period ended
November 30, 2004,
and (b) the statement
of
income for the Division for the nine (9)
month period ended
September 30, 2004
(all the financial statements referred to in clauses (a) and (b) above
being
hereinafter collectively referred to as the "Financial Statements"). The
Financial Statements, (i) present fairly
the results of operations of the Seller
with respect to the Business for the periods then
ended; and (ii) with
respect
to the Business, are complete, correct and in accordance with the books of
account and records of the Seller.
Notwithstanding
anything contained herein,
the Seller makes no representation or warranties with respect to the Accounts
Receivable or Inventory.
Section 4.7. Absence of Certain Changes or Events.
-------------------------------------------------
(a) Except as set forth on Schedule 4.7 attached hereto and made
a part hereof and as contemplated
by this Agreement,
since September 30,
2004,
there has not been:
(i) any material adverse change in the Business or Purchased
Property (financial or other) of the Seller, or any event that has had a
material adverse effect on the
foregoing;
(ii) any material loss, material damage, material
destruction or other material casualty to
the Purchased Property;
(iii) any change in any method of accounting or accounting
practice of the Business or the Seller
relating to the Business; or
(iv) any loss of the employment, services or benefits of any
key employee of Seller, who worked during such period exclusively in the
Business.
(b) Except as set forth on Schedule 4.7 and as contemplated by
this Agreement, since September 30, 2004, the
Seller has operated the Business
in the ordinary course of its business
consistent
with past practice and has
not:
(i) incurred any material obligation or material
liability
(whether absolute, accrued, contingent or otherwise)
relating to the operations
of the Business except in the ordinary
course of business
consistent with
past
practice;
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(ii) failed to discharge or satisfy any material Lien or pay
or satisfy any material obligation or material liability (whether absolute,
accrued, contingent or otherwise) arising
exclusively from the operation of the
Business, other than liabilities being contested in good faith and for
which
adequate reserves have been provided and
Liens arising in the ordinary course of
business that do not, individually or in
the aggregate,
interfere with the use,
operation, enjoyment or marketability of
any of the Purchased Property;
(iii) mortgaged,
pledged or subjected
to any material Lien
any of the Purchased Property, except for mechanics' liens and
Liens for Taxes
not yet due and payable and Liens arising in the ordinary course of business
that do not, individually or in the aggregate, interfere with the use,
operation, enjoyment or marketability of
any of the Purchased Property;
(iv) sold or transferred any of the material assets of the
Business or canceled any material debts or material claims or waived any
material rights relating exclusively to the operations of
the Business,
except
in the ordinary course of business
consistent with past practice;
(v) disposed of any material patents, material trademarks or
material copyrights or any material patent, material trademark or material
copyright applications used exclusively in
the operations of the Business;
(vi) defaulted on any material obligation relating
exclusively to the operations of the
Business;
(vii) entered
into any material transaction relating
exclusively to the Business, except in the ordinary course of business
consistent with past practice;
(viii) other
than in connection with the execution and
delivery of this Agreement, and the consummation of the transactions
contemplated hereby, incurred any material obligation
or material liability for
the payment of severance benefits; or
(ix) entered into any agreement or made any commitment to do
any of the foregoing.
Section 4.8. Tax Matters. Except as provided in Section
10.2, all Tax
Returns required to be filed before the date hereof in respect of the
Seller
have been filed, and the Seller has paid, accrued or otherwise adequately
reserved for the payment of all Taxes required to be paid in respect of the
periods covered by such returns and has
adequately reserved
for the payment of
all Taxes with respect to periods ended on or before the date hereof
for which
Tax Returns have not yet been filed.
Except as provided in
Section 10.2,
all
Taxes of the Seller have been paid or adequately provided for and the Seller
knows of no proposed additional tax assessment against it not adequately
provided for on its regularly prepared financial statements. In the ordinary
course of business, the Seller makes adequate provision on its books for the
payment of Taxes (including for the current fiscal period)
owed by the Seller.
The Seller has withheld and paid all Taxes
required to be
withheld with respect
to amounts paid or owing to any employee,
creditor, independent contractor or
other third party.
Section 4.9. [INTENTIONALLY OMITTED].
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Section 4.10. Solvency. On the date of this Agreement and at all
times
during the six (6) months immediately preceding the date of this Agreement,
except for those disputed in good faith,
the Seller is and has
been paying all
of its material debts, material liabilities and material
obligations
accruing
with respect to or resulting from the conduct of the Business
as the same shall
have become due and owing, and, except for
those disputed in good faith, none of
such payment obligations are past due or
otherwise delinquent. Immediately after
the date of this Agreement, the Seller (i)
will be solvent (i.e., the sum of its
debts will be less than all of its
property, at a fair valuation); (ii) will
have sufficient capital to conduct the business,
if any, it conducts
after the
date of this Agreement; and (iii) will be able to pay its current and
anticipated debts as such debts mature.
The Seller is
executing this Agreement
in good faith, for fair value and without
intent to hinder,
delay or to defraud
its present and future creditors.
Section 4.11.
Intellectual
Property; Intangible Assets. Schedule
4.11(a) attached hereto and made a part hereof sets
forth a listing of certain
Intellectual Property used by the Seller
exclusively
in connection with the
Business and described thereon, which listing is correct in all material
respects. The Seller owns all right, title and interest in and to, or has a
valid and enforceable license or otherwise has the right to use, in all
jurisdictions in which it carries on the
Business, all
Intellectual
Property
without, to the knowledge of the Seller,
materially
violating or
materially
conflicting with the rights of others.
Except as set forth on
Schedule 4.11(a),
to the extent that the Seller is the owner of
any Intellectual
Property, all
such owned Intellectual Property is owned by the Seller,
free and clear of
all
material Liens. All of the Seller's
Intellectual Property is valid, subsisting,
unexpired, in proper form and enforceable, and all renewal fees and other
maintenance fees that have fallen due on or
prior to the date of this Agreement
have been paid. There has not been
communicated to the
Seller the threat of any
material claim that the holder of such
Intellectual Property
is in violation or
infringement of any material Intellectual
Property right of any other Person, or
challenging the Seller's ownership or use of, or the
validity or enforceability
of, any of the Seller's Intellectual Property and, to the knowledge of the
Seller, none of the Products or operations of the Business involve any
infringement of any material proprietary right of any other
Person. Other than
with respect to the License Termination, the consummation of the
transactions
contemplated by this Agreement will not
prohibit the Buyer from using any of the
Intellectual Property in a manner substantially
similar to the Seller's current
use of such Intellectual Property in the
Business.
Except as contemplated by this Agreement, Schedule 4.11(b) attached
hereto and made a part hereof sets forth a complete list of certain: (i)
material licenses, sublicenses and other agreements
in which the Seller or any
sublicensee of the Seller has granted to any Person the right to use the
Intellectual Property exclusively with respect
to the Business; and
(ii) other
consents, indemnifications, forbearances to sue, settlement agreements and
licensing or cross-licensing arrangements to which the Seller is a party
relating to the Intellectual Property or the proprietary rights of any third
party, exclusively with respect to, and
to the extent material to, the Business
and described thereon. Except as set forth on Schedule 4.11(b) and as
contemplated by this Agreement,
the Seller is not
under any material obligation
to pay royalties or other payments in
connection with any license, sublicense or
other agreement, nor restricted from assigning its
rights under any sublicense
or agreement respecting Intellectual
Property, nor will the Seller otherwise be,
as a result of the execution and delivery
of this Agreement or
the performance
of its obligations under this Agreement, in material breach of any material
license, material sublicense or other material agreement relating to the
Intellectual Property.
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Schedule 4.11(c)
attached hereto and
made a part hereof sets forth a
complete list of certain Intangible Assets
utilized by the Seller exclusively in
the Business and described thereon. Each of the Intangible Assets is
valid and
in good standing, is not currently being
challenged, and is not
involved in any
pending or, to the knowledge of the Seller, threatened administrative or
judicial proceeding which could have a
material adverse effect on the Business,
and does not conflict with any material
rights of any other Person.
Section 4.