ASSET PURCHASE
AGREEMENT
ACQUISITION OF THE ASSETS
OF
BLACKMAN UHLER,
LLC
BY
GREENVILLE COLORANTS,
LLC
DATED: December 23,
2004
ASSET PURCHASE AGREEMENT
AGREEMENT
entered into as of the 23rd day of December, 2004, by and among
GREENVILLE COLORANTS, LLC, a New Jersey limited liability company
("Buyer"), the individual principals of Buyer who are signatories
to this Agreement (the "Buyer Principals"), BLACKMAN UHLER, LLC, a
Delaware limited liability company with its principal place of
business in Spartanburg, South Carolina ("Seller"), SYNALLOY
CORPORATION, a Delaware corporation, the principal member of Seller
(the "Member").
RECITALS:
WHEREAS, Buyer
wishes to acquire certain assets of Seller and assume certain
limited obligations of Seller, and Seller wishes to convey such
assets to Buyer and Buyer desires to assume such limited
obligations, subject to such limited obligations and subject to the
terms and conditions set forth in this Agreement;
NOW, THEREFORE,
in consideration for the mutual agreements contained herein and for
other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, in order to consummate said sale,
the parties hereto agree as follows:
ARTICLE 1. PURCHASE AND SALE
OF ASSETS .
1.1
Sale of Assets .
(a)
Subject to the provisions of this Agreement and except for those
assets expressly excluded in paragraph (b) (the "Excluded Assets"),
Seller agrees to sell and Buyer agrees to purchase, at the Closing
(as defined in Section 1.5 hereto), all of the properties, assets
and business of Seller described as follows which are used by the
Seller in the manufacture and sale of dyes (the
"Business"):
i.
all
inventory of Seller as agreed upon on the Closing Inventory
Schedule (as hereinafter defined);
(ii)
all rights under outstanding purchase orders for inventory which
will be listed on the Closing Inventory Schedule;
(iii)
all vendor and customer contracts listed on Schedule 1.1(a)(iii)
(the "Assigned Contracts"), all customer lists, customer records,
customer files and customer histories related to the Business (the
"Customer Records");
i.
all of
Seller's goodwill and intangible assets related to the Business
including, without limitation, all trademarks, service marks, trade
secrets, product formulations and methods of synthesis (including
Azoic formulations and synthesis), brochures, color library, both
electronic and paper, and intangible assets necessary or desirable
to continue the Business of Seller, excluding data processing or
similar services purchased by Seller from Member (the "Intangible
Assets"). Seller will change its corporate name from BU, LLC at
Closing so that Buyer will have the ability to change its name to
BU, LLC; and
ii.
the
equipment set forth on Schedule 1.1(a)(v) which will be conveyed to
Buyer in an "as is" condition, free and clear of all liens and
encumbrances.
The assets and property of
Seller to be sold to and purchased by Buyer under this Agreement
are hereinafter sometimes referred to as the "Subject
Assets."
(b)
Excluded from the Subject Assets are all assets of the Seller other
than those being sold under subsection (a) above.
1.2
Assumption of Liabilities . Buyer agrees to assume the
following liabilities and obligations incurred in or by the Seller
in connection with the Business which are existing on the Closing
Date: (a) all obligations of the Seller incurred in connection with
the Business which arise in the ordinary course of Business after
Closing under the Purchase Orders and Assigned Contracts; and (b)
all obligations of the Seller expressly set forth on Schedule 1.2.
Notwithstanding the generality of the foregoing or anything in this
Agreement or the Schedules to the contrary, Buyer shall not assume
and shall not be responsible for any payables associated with
inventory listed on the Closing Inventory Schedule.
Except as provided above, Buyer shall not assume and shall not be
liable for any debt, obligation, responsibility or liability of
Seller, or any Affiliate, or any claim against any of the
foregoing, whether known or unknown, contingent or absolute,
asserted or unasserted, or otherwise and regardless of whether or
not disclosed herein or in a Schedule hereto. The foregoing
limitation shall include any liability and/or obligation arising
out of activities, events, facts or circumstances occurring or
existing prior to the Closing or the operation of Seller's
businesses prior to or after the Closing.
1.3
Purchase Price and Payment .
(a)
In consideration of the sale, transfer, conveyance, assignment and
delivery of the Subject Assets by Seller to Buyer, and in reliance
upon the representations and warranties made herein by Seller and
Member, Buyer will, in full payment therefore, pay to Seller a
total purchase priced (the "Purchase Price") of Four Million Nine
Hundred Fifty Thousand Dollars ($4,950,000) consisting of the
following:
i.
One
Hundred Thousand Dollars ($100,000) which has previously been paid
to Seller in the form of a non-refundable deposit;
(ii)
Four Hundred Thousand Dollars ($400,000) by check on the signing of
this Agreement which will be held by Seller (the "Deposit") ;
provided, however, that in the event that the transaction shall not
close, the Deposit shall be paid as provided in Section 10.5
hereof;
(iii) By
delivery at the Closing of Three Million Six Hundred Thousand
Dollars ($3,600,000) in immediately available funds; and
(iv)
By payment of one percent (1%) of the monthly gross receipts,
exclusions of freight, insurance and taxes of the Buyer and its
Affiliates beginning in the month of October 2005, and continuing
until the earlier of (i) June 2008, or (ii) the payments under this
subsection (iv) totaling Eight Hundred Fifty Thousand Dollars
($850,000). Buyer's accountant will provide Seller with a monthly
report as to the monthly receipts. The obligation of the Buyer
under this subparagraph shall be secured by a security interest in
the Buyer's assets, which interest Seller and Member agree, if
requested, to subordinate to any working capital or other borrowing
of Buyer from third party financial institutions. The obligations
under this subsection shall be unconditional and not subject to
set-off or Buyer withhold related to any obligation or dispute
which may exist between Buyer and Seller. Payments shall be made on
or before the 10 th day of the following month. In the
event that Buyer shall fail to make timely payment of any monthly
payment, after ten days written notice thereof, the difference
between the amount paid to date under this subsection and $800,000
shall be immediately due and payable. Buyer recognizes and agrees
that the ongoing obligations that it owes under this subsection
will be pledged and assigned to the Seller and Member's lender(s)
as collateral for the obligations owed by Seller and Member to
their lender(s). Seller and Member shall have the right, upon three
(3) business days written notice and at its cost to inspect the
records of Buyer and its Affiliates related hereto during normal
business hours to verify the computation of gross receipts
(excluding freight, insurance and taxes).
1.4
Adjustment of Purchase Price . The Purchase Price is based
in part on the Seller selling to Buyer inventory of a total cost
value equal to that set forth on the Base Inventory Schedule (using
the same landed cost valuation methods employed in determining the
values set forth on the Base Inventory Sheet). In the event that
the inventory delivered to Buyer at Closing as reflected on the
Closing Inventory Schedule (including purchase orders for inventory
in transit which will paid by Seller) varies by more than one
percent (1%) from the value set forth on the Base Inventory
Schedule, the Purchase Price will be adjusted, dollar for dollar,
for the total amount of such variance from the values set forth on
the Base Inventory Schedule. In the event that the variance results
in a decrease of the Purchase Price, the decreased amount shall be
refunded to Buyer by Seller from payments due under Section
1.3(a)(iii) above. In the event that the variance results in an
increase of the Purchase Price, the increased amount shall be
payable at Closing. The parties agree that a physical inventory
will be taken on the two (2) days preceding Closing and on the day
prior Closing, the parties will agree to the adjustment, if any, to
the Purchase Price. Such agreed upon inventory (including purchase
orders for inventory in transit which will be paid by Seller) will
be in a Schedule which shall be a condition of Closing (the
"Closing Inventory Schedule").
1.5
Time and Place of Closing . The closing of the purchase and
sale provided for in this Agreement (herein called the "Closing")
shall be held at the offices of Leatherwood Walker Todd & Mann,
P.C., 300 E. McBee Avenue, Suite 500, Greenville, South Carolina
29601 at 10:00 o'clock a.m. on January 28, 2005, (the "Closing
Date") or at such other place, date or time as may be fixed by
mutual agreement of the parties.
1.6
Transfer of Subject Assets . At the Closing, Seller shall
deliver or cause to be delivered to Buyer good and sufficient
instruments of transfer transferring to Buyer title to all the
Subject Assets including bills of sale, assignments of leases, and
such other instruments of transfer as may be required. Such
instruments of transfer (i) shall be in the form and will contain
the warranties, covenants and other provisions (not inconsistent
with the provisions hereto) which are usual and customary for
transferring title to the type of property involved under the laws
of the jurisdictions applicable to such transfers, (ii) shall be in
the form and substance satisfactory to counsel for Buyer, and (iii)
except as expressly provided herein, shall effectively vest in
Buyer good and marketable title to all the Subject Assets, free and
clear of all liens, restrictions and encumbrances, except liens for
taxes not yet due and payable. At all times after Closing, Buyer
shall have the right to remove all or portions of the purchased
inventory from Seller's place of business. Seller shall be
responsible for assembling such inventory at its facility for
transport by Buyer at Buyer's cost. Buyer will remove any inventory
from Seller's facility within two (2) weeks of the end of the
tolling agreement specified in Section 1.13.
1.7
Delivery of Records and Contracts . At the Closing, Seller
shall deliver or cause to be delivered to Buyer originals of all of
Seller's contracts, commitments and rights related to the Business,
with such assignments thereof and consents to assignments as are
necessary to assure Buyer of the full benefit of the same. Seller
shall take all requisite steps to put Buyer in actual possession
and operating control of the Subject Assets being transferred in
connection herewith. After the Closing, each party shall afford to
the other and its accountants and attorneys reasonable access to
the books and records respect to the Business and shall permit the
other to make extracts and copies therefrom for any proper
purpose.
1.8
Further Assurances . Seller from time to time after the
Closing at the request of Buyer and without further consideration
shall execute and deliver further instruments of transfer and
assignment (in addition to those delivered under Section 1.7) and
take such other action as Buyer may reasonably require to more
effectively transfer and assign to, and vest in, Buyer each of the
Subject Assets. To the extent that the assignment of any contract,
commitment or right shall require the consent of other parties
thereto, this Agreement shall not constitute an assignment thereof
except to the extent such consent is obtained; however, Seller
shall use its best efforts before and after the Closing to obtain
any necessary consents or waivers to assure Buyer of the benefits
of such contracts, commitments or rights. Seller shall cooperate
with Buyer to permit Buyer to enjoy Seller's rating and benefits
under the workman's compensation laws and unemployment compensation
laws of applicable jurisdictions, to the extent permitted by such
laws. Nothing herein shall be deemed a waiver by Buyer of its right
to receive at the Closing an effective assignment of each of the
contracts, commitments or rights of Seller.
1.9
Allocation of Purchase Price. The Purchase Price payable by
Buyer for the Subject Assets pursuant to Section 1.3 and the face
amount of the Assumed Liabilities assumed pursuant to Section 1.2
shall represent payment for the Subject Assets at the prices shown
on a memorandum to be prepared by Buyer and acceptable to Seller,
initialed by the parties and delivered by Buyer at the Closing or
as soon thereafter as required information is made available. The
prices reflected in said memorandum shall represent the fair market
values of the Subject Assets at the Closing, to the best of the
knowledge and belief of parties and the parties hereto agree that
they will not take a position inconsistent with such allocation for
Federal income tax purposes.
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Right to Hire
Employees . During such time as Seller
is manufacturing for Buyer under the tolling relationship described
in Section 1.13, Seller shall use its reasonable efforts to make
available to Buyer, Seller's employees whose work was predominately
with respect to the Business for hire at or after the Closing.
Seller shall be responsible for all wages, benefits, severance
obligations, vacation and sick leave accruals and other obligations
for such employees up to the date such employee is no longer an
employee of Seller.
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Non-Competition
Agreement . At the Closing, Seller,
Member and Buyer shall enter into a Non-Competition Agreement in
substantially the form attached as Exhibit 1.11 which
prohibits Member or Seller and their Affiliates from directly or
indirectly participating in the business of selling dyes. Such
non-compete shall permit the Member and its Affiliates to continue
to sell dyes (i) directly to end users in the rug and floor
covering industries for their own use, (ii) directly to the
customers (and successors to all of the business of such customers)
of the Member and its Affiliates that are scheduled on Schedule
1.11 for their own use or for resale for use in the rug and floor
industry only and upon the occurrence of certain events, Azoic
products.
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License
Agreement . At the Closing the Member
shall grant to Buyer a paid-up, royalty free, exclusive, assignable
worldwide license to Buyer to use the Blackman Uhler name and
applicable product trade names in connection with the Business and
for so long as the Business continues in operation by Buyer or its
successors or assigns pursuant to a License Agreement in
substantially the form attached as Exhibit 1.12 . Such
License Agreement shall provide that Seller and Member shall not
have the right to use or otherwise license the Blackman Uhler name
to sell dyes which compete against Buyer or its affiliates, but
shall have the right to use and license the Blackman Uhler name in
all other industries than the Business.
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Interim Tolling
Agreement . At the Closing, Seller,
Member and Buyer shall enter into a tolling agreement which shall
terminate on March 31, 2005, unless renewed by the parties which
shall contain the following provisions:
a.
Seller
will toll convert Buyer's products for a blending charge of $.20
per pound, a bagging charge of $.25 per pound, a repacking charge
of $.15 per pound, and/or $.05 a pound for shipping.
b.
Seller
will not pay any shipping costs or provide any inventory, including
packaging.
c.
Buyer
will be responsible for quality control related to the products by
maintaining laboratory personnel on the Spartanburg site and will
be responsible for approving the quality of any raw materials
and/or finished goods utilized in the toll conversion and/or
shipped to customers
d.
Seller
will deliver to Buyer copies of the bill of ladings and other
documents necessary for Buyer's records.
e.
Buyer
will be responsible for taking customer orders and communicating to
Seller production and shipping requirements, including payment of
carriers, providing sufficient time for Seller to meet customer
requirements.
f.
Seller
will keep Buyer's inventory maintained at the Spartanburg site
segregated and insured and will provide Buyer with documentation of
applicable inventory balances and transactions. Raw material, work
in process and finished goods inventory shall at all times be owned
by and titled in the name of Buyer.
g.
Buyer
may terminate the tolling agreement anytime with two weeks
notice.
h.
Invoices for tolling fees will
be submitted to Buyer at the end of each month and will be due ten
(10) days after the end of each month.
Such Tolling Agreement shall
be in substantially the form attached as Exhibit 1.13
.
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Long-Term
Tolling Agreement . At Closing, Seller, Member
and Buyer will enter into a tolling agreement (the "Long-Term
Tolling Agreement") regarding Azoic products for a period of three
(3) years at a price of $.82 per pound. Such agreement shall be
cancelable by Buyer on ninety (90) days' written notice. Such
agreement shall provide that Seller and its Affiliates may
manufacture and sell such products in the event that Buyer fails to
continue this line as a part of its operations, other than as a
result of the sale or transfer of the applicable part of the
business. Such Long-Term Tolling Agreement shall be in
substantially the form attached as Exhibit 1.14.
1.15 Right of
First Refusal . Member and Seller jointly and severally agree
that for a period of ten (10) years following the closing, prior to
any sale of all or any portion of the equipment used by Seller in
the Business which is not purchased by the Buyer which constitutes
blending equipment (the "Blending Equipment"), Seller and Member
shall give written notice to Buyer detailing the Blending Equipment
to be sold, the proposed buyer, the price and the payment terms for
such equipment. Buyer shall have thirty (30) days to inspect the
equipment proposed to be sold and an additional fifteen (15) days
to agree in writing to acquire the Blending Equipment (or portion
thereof) upon the terms described in the notice. Any such closing
shall occur upon thirty (30) days of Buyer's notice of intent to
purchase. At closing, Seller and Member shall provide good and
marketable title to the equipment free and clear of all liens and
encumbrances and evidence satisfactory to Buyer of the foregoing.
All of the assets which Member and/or Seller currently own which
constitute "Blending Equipment" is set forth as Schedule
1.15 .
1.16
Collection of Accounts Receivable . All accounts receivable
of the Seller generated prior to the Closing are not Subject
Assets. Buyer shall provide Seller with such reasonable assistance
as Seller may request in collecting such receivables. In the event
that either party receives payment from a customer related to the
accounts of the other party, the party receiving such payment shall
forward payments to the other party within three (3) days of their
receipt. Neither Buyer or Seller will request or suggest that any
customer make or refrain from making any specific allocation or
designation. Buyer will not settle or compromise any amounts owed
to Seller by an account debtor without the consent of Seller. Title
to the accounts receivable existing prior to Closing will remain
with the Seller.
ARTICLE 2. REPRESENTATIONS
AND WARRANTIES OF SELLER AND MEMBER .
Seller and Member, jointly and severally, hereby represent and
warrant to Buyer as follows (all representations and warranties
related to the business of Seller or Member relate solely to the
Business):
2.1
Organization and Qualification of Seller . Seller is a
limited liability company duly organized, validly existing and in
good standing under the laws of the State of Delaware with full
power and authority to own, lease and operate its properties and to
conduct its business in the manner and in the places where such
properties are owned or leased or such business is conducted by it.
The copies of Seller's Articles of Organization, certified by the
Secretary of State of the State of Delaware and of Seller's
Operating Agreement as amended to date, certified by Seller's
Secretary (or the equivalent), previously delivered to Buyer's
counsel, are, and will be at the Closing, complete and correct.
Seller is duly qualified as a foreign corporation in the State of
New Jersey and State of South Carolina. Seller is not qualified to
do business as a foreign corporation in any other jurisdiction and,
to the knowledge of Seller and Member, is not required to be
licensed or qualified to conduct its business or own its property
in any other jurisdiction where the failure to be so qualified or
in good standing would have a material adverse effect upon the
business, business prospects, assets, operations or condition
(financial or otherwise) of Seller (a "Material Adverse
Effect").
2.2
Ownership of Seller . Schedule 2.2 lists each Member
of Seller and the percentage financial and voting rights
attributable to each. There are no (i) outstanding or authorized
subscriptions, warrants, options or other rights granted by Seller
or Member to purchase or acquire membership interests of Seller or
(ii) other securities of Seller directly or indirectly convertible
into or exchangeable for membership interests of Seller.
2.3
Subsidiaries . Seller does not own, directly or indirectly,
any capital stock of any corporation and has no subsidiaries.
Seller does not own securities issued by any other business
organization or governmental authority and Seller is not a partner
or participant in any joint venture or partnership of any
kind.
2.4
Authorization of Transaction . Seller has the full power and
authority to execute, deliver and perform this Agreement and to
carry out the transactions contemplated hereby. All necessary
action, corporate or otherwise, including receipt of unanimous
approval of the members of Seller, has been taken by Seller to
authorize the execution, delivery and performance of this
Agreement, and the transactions contemplated hereby, and the
Agreement is the legal, valid and binding obligation of Seller and
Member, enforceable against Seller and Member in accordance with
its terms.
2.5
Present Compliance with Obligations and Laws . Seller is
not: (a) in violation of its Articles of Organization or Operating
Agreement; (b) in default in the performance of any obligation,
agreement or condition of any debt instrument which (with or
without the passage of time or the giving of notice) afford to any
person the right to accelerate any indebtedness or terminate any
right; (c) in default of or breach of (with or without the passage
of time or the giving of notice) any other contract to which it is
a party or by which it or any of its assets are bound; or (d) in
violation of any law, regulation, administrative order or judicial
order, decree or judgment applicable to it or its business or
assets or to which it is subject or by which any of its assets or
business may be bound, where any such violation or default could
have a Material Adverse Effect.
2.6
No Conflict of Transaction With Obligations and Laws .
Except as disclosed in Schedule 2.6 , neither the execution,
delivery and performance of this Agreement, nor the performance of
the transactions contemplated hereby, will: (i) constitute a breach
or violation of any provision of the Articles of Organization or
Operating Agreement of Seller; (ii) require any consent, approval
or authorization of or declaration, filing or registration with any
person or governmental authority, (iii) conflict with or constitute
(with or without the passage of time or the giving of notice) a
breach of, or default under, any debt instrument by Seller and to
which Seller is a party, or give any person the right to accelerate
any indebtedness or terminate, modify or cancel any right; (iv)
constitute (with or without the passage of time or giving of
notice) a default under or breach by Seller or either Member of any
other agreement, instrument or obligation to which Seller or either
Member is a party or by which it or he or any of their respective
assets are bound; (v) result in a violation of any law, regulation,
administrative order or judicial order applicable to Seller or its
business or assets or to which it is subject, or by which its
assets or business may be bound; (vi) invalidate or adversely
affect any permit, license or authorization used in Seller's
business or (vii) result in the creation of any lien upon any of
the assets of Seller.
2.7
Financial Statements.
(a)
Attached as Schedule 2.7 hereto are the following financial
statements (the "Financial Statements") of Seller, all of which
statements are complete and correct and fairly present in all
material respects the financial position of Seller on the date of
such statements and the results of its operations on the applicable
basis for the periods covered thereby, and such Financial
Statements have, except as set forth on Schedule 2.7 , been
prepared in accordance with generally accepted accounting
principles consistently applied throughout the periods involved and
prior periods:
i.
Income
Statement and Statement of Cash Flows for the 9-month period ending
October 2, 2004.
ii.
Balance
Sheet as of October 2, 2004.
The balance sheet dated October 2, 2004, included in the Financial
Statements is sometimes referred to hereinafter as the "Base
Balance Sheet."
(b)
The books of account of Seller delivered by the Seller to the Buyer
fairly reflect the financial position of Seller in all material
respects, and have been maintained on a consistent
basis.
2.8
Absence of Certain Changes . Except as set forth on
Schedule 2.8 hereto, since the date of the Base Balance
Sheet there has not been:
(a)
any contingent liability incurred by Seller as guarantor or
otherwise with respect to the obligations of others or any other
contingent or fixed obligations or liabilities incurred by
Seller;
(b)
any mortgage, encumbrance or lien placed on any of the properties
of Seller which will remain in existence at the time of
Closing;
(c)
any obligation or liability incurred by Seller other than
obligations and liabilities incurred in the ordinary course of
business;
(d)
any purchase, sale or other disposition, or any agreement or other
arrangement for the purchase, sale or other disposition, of any of
the properties or assets of Seller other than in the ordinary
course of business or any purchase of any capital asset costing
more than $1,000;
(e)
any damage, destruction or loss, whether or not covered by
insurance, materially and adversely affecting the properties,
assets or business of Seller;
(f)
any non-cash declaration, setting aside or payment of any dividend
on, or the making of any other non-cash distribution in respect of,
the capital stock of Seller or any direct or indirect non-cash
redemption, purchase or other non-cash acquisition by Seller of its
own capital stock;
(g)
any representation elections, arbitration proceedings, labor
strikes, slowdowns or stoppages, or claims of discrimination or
unfair labor practices involving Seller and any entrance into any
employment contract, consulting agreement or any change in the
compensation payable or to become payable by Seller to any of its
officers, employees or agents;
(h)
any material change with respect to the business organization,
management, or supervisory personnel of Seller;
(i)
any payment or discharge of a material lien, claim, obligation or
liability of Seller which was not shown on the Base Balance Sheet
or incurred in the ordinary course of business
thereafter;
(j)
any write-down of the value of any inventory (including write-downs
by reason of shrinkage or mark-down) or any write-offs as
uncollectible of any notes or accounts receivable except for
write-downs and write-offs that are in the aggregate less than
$1,000 or incurred in the ordinary course of business;
(k)
any termination, cancellation, limitation or material modification
or material change in any business relationship with any material
supplier or customer;
a.
any
change in any method of accounting or accounting
practice;
b.
any
write-down of the value of any inventory (including write-downs by
reason of shrinkage or mark-down) or any write-offs as
uncollectible of any notes or accounts receivable except for
write-downs and write-offs that are in the aggregate less than
$1,000 or incurred in the ordinary course of business;
c.
any
change in the type, kind, amount or issuer of insurance in effect
and maintained by Seller except to the extent such change resulted
in equivalent insurance with a substitute insurer acceptable to
Buyer;
d.
any
termination, cancellation, limitation or material modification or
material change in any business relationship with any material
supplier or customer;
e.
any
change in the financial condition, working capital, earnings,
reserves, properties, assets, liabilities, business or operations
of Seller which change by itself or in conjunction with all other
such changes, whether or not arising in the ordinary course of
business, has had a Material Adverse Effect with respect to
Seller;
f.
any
change in any method of accounting or accounting
practice;
g.
to the
knowledge of Seller and Member, any disposal or lapse of any rights
to the use of any trademark, trade name, copyright, or disposal of
or disclosure to any person other than Buyer of any trade secret,
formula, process or know-how not theretofore a matter of public
knowledge other than pursuant to confidentiality
agreements;
h.
any
change in the type, kind, amount or issuer of insurance in effect
and maintained by Seller except to the extent such change resulted
in equivalent insurance with a substitute insurer acceptable to
Buyer;
i.
any
agreement, whether in writing or otherwise, to take any action
described in this Section 2.8;
j.
to the
knowledge of Seller and Member, any disposal or lapse of any rights
to the use of any trademark, trade name, copyright, or disposal of
or disclosure to any person other than Buyer of any trade secret,
formula, process or know-how not theretofore a matter of public
knowledge other than pursuant to confidentiality
agreements;
k.
any
change in the financial condition, working capital, earnings,
reserves, properties, assets, liabilities, business or operations
of Seller which change by itself or in conjunction with all other
such changes, whether or not arising in the ordinary course of
business, has had a Material Adverse Effect with respect to Seller;
or
l.
any
agreement, whether in writing or otherwise, to take any action
described in this Section 2.8.
2.9
Title to Premises; Liens: Condition of Properties . Seller
has and shall at Closing convey to Buyer good title to all of the
Subject Assets. The Subject Assets will be transferred to Buyer
free and clear of all liens, security interests and encumbrances of
every kind and nature except for property taxes not yet due and
payable.
2.10
Inventories . At Closing, the Closing Inventory Schedule
will contain a complete and accurate list of all inventory of
Seller. All goods contained in the inventories of Seller reflected
on the Closing Inventory Schedule will be of a quality and quantity
consistent with the business of Seller as historically conducted.
The cost, value, aging and product mix of the inventory shown on
the Closing Inventory Schedule will not be materially different
than that shown on the Schedule of Inventory dated September 20,
2004 and attached as Schedule 2.10 (the "Base Inventory Schedule").
Purchase commitments for raw materials and parts are not in excess
of normal requirements, and, to the knowledge of Seller and Member,
none are at prices materially in excess of current market
prices.
2.11
Intellectual Property Rights .
(a)
A true and complete list of all patents, patent applications,
trademarks, service marks, trademark and service mark applications,
trade names, and copyrights presently owned or held by Seller and
any license of or right related thereto, related to the Business is
set forth on Schedule 2.11 hereto and a general description
of all trade secrets has been delivered to Buyer (all of the
foregoing collectively referred to as "Intellectual Property").
Schedule 2.11 lists the owner of each item of Intellectual
Property. Seller owns or has a written license for all of the
Intellectual Property necessary to the conduct of its Business as
presently conducted and after the Closing, Buyer will possess (by
ownership or license) all such Intellectual Property Rights free
and clear on liens and encumbrances (other than those granted by
Buyer).
(b)
Seller has the right to use, free and clear of claims or rights of
others, all trade secrets, customer lists and processes used by it
in connection with its business and is not using any confidential
information or trade secrets of any former employer of any of its
past or present employees. Seller has at all times used
commercially reasonable efforts to maintain the confidentiality of
its trade secrets.
(c)
Copies of all forms of nondisclosure or confidentiality agreements
utilized by Seller to protect trade secrets have been provided to
Buyer. To Seller's and Member's knowledge, the business as
presently conducted or as proposed to be conducted by Seller (to
the extent such proposed conduct of the business has been disclosed
to Buyer) does not and will not cause Seller to infringe or violate
any Intellectual Property rights of any other person.
(d)
The execution, delivery and performance of this Agreement and
consummation of the transactions contemplated hereby will not
trigger any severance payment obligation under any contract or
at-law or any notice requirement under any Federal or State Plant
Closing law as a result of which Buyer may be liable.
2.12
Contracts and Commitments
(a)
Each of the Assigned Contracts is valid, binding and enforceable in
accordance with its terms against Seller and, to the knowledge of
Seller and Member, against the other parties thereto, is subsisting
and (subject to obtaining required consents) fully assignable, and
no default by Seller, or to the knowledge of Seller and Member, by
any other party exists thereunder.
(b)
Except for contracts, commitments, plans, agreements,
understandings and licenses, whether written or oral, described in
Schedule 2.12(b) hereto (the "Contracts"), Seller is not a
party to or subject to:
(i)
any contract or agreement for the purchase of any commodity,
material (other than raw materials used in the manufacture and/or
resale of end-products equipment or asset, except purchase orders
in the ordinary course for less than One Thousand Dollars ($1,000)
each, such orders not exceeding in the aggregate of Five Thousand
Dollars ($5,000);
(ii)
any other contracts or agreements creating any obligations of
Seller after the date of the Base Balance Sheet of $1,000 or more
with respect to any such contract or agreement, other than sales
and purchase commitments in the ordinary course of
business;
(iii)
any contract or agreement providing for the purchase of all or
substantially all of its requirements of a particular product from
a supplier;
(
