Back to top

ASSET PURCHASE AGREEMENT

Asset Purchase Agreement

ASSET PURCHASE AGREEMENT | Document Parties: Green Manufacturing,  Inc. | Benko Products, Inc. You are currently viewing:
This Asset Purchase Agreement involves

Green Manufacturing, Inc. | Benko Products, Inc.

. RealDealDocs™ contains millions of easily searchable legal documents and clauses from top law firms. Search for free - click here.
Title: ASSET PURCHASE AGREEMENT
Governing Law: New York     Date: 2/4/2005
Industry: Appliance and Tool     Law Firm: Certilman Balin Adler & Hyman, LLP; Jay C. Marcie & Associates, LPA     Sector: Consumer Cyclical

ASSET PURCHASE AGREEMENT, Parties: green manufacturing   inc. , benko products  inc.
50 of the Top 250 law firms use our Products every day

 

                            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.

 

<PAGE>

 

          "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).

 

 

                                        2

 

<PAGE>

 

          "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

 

 

                                       3

 

<PAGE>

 

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

 

 

                                        4

 

<PAGE>

 

 

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).

 

 

                                       5

 

<PAGE>

 

          "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).

 

 

                                       6

 

<PAGE>

 

          "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).

 

 

                                       7

 

 

<PAGE>

 

          "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).

 

 

                                       8

 

<PAGE>

 

 

SECTION 2.   Purchase and Sale of the Purchased Property.

             -------------------------------------------

 

          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.

            --------------

 

          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

 

 

                                       9

 

 

<PAGE>

 

               (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

 

 

                                       10

 

<PAGE>

 

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

 

 

                                       11

 

<PAGE>

 

 

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

 

 

                                       12

 

<PAGE>

 

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;

 

 

                                       13

 

<PAGE>

 

                    (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].

 

 

                                       14

 

<PAGE>

 

          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.

 

 

                                       15

 

<PAGE>

 

          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.


 
SITE SEARCH

AGREEMENTS / CONTRACTS

Document Title:

Entire Document: (optional)

Governing Law:(optional)


Try our advanced search >>
 

CLAUSES

Search Contract Clauses >>

Browse Contract Clause Library>>

Get Email Updates
Email:
This is only a partial view of this document. We have millions of legal documents and clauses drafted by top law firms. learn more search for free browse for free learn more