Exhibit 2.1
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ASSET PURCHASE AGREEMENT
By and Among
SIELOX, LLC
and
CHECKPOINT SYSTEMS, INC.
Dated as of November 4, 2005
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TABLE OF CONTENTS
PAGE
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ARTICLE I
DEFINITIONS.......................................................................................................1
1.1 Definitions.....................................................................................1
ARTICLE II
PURCHASE AND SALE OF SELLER'S ASSETS..............................................................................1
2.1 Purchased Assets................................................................................1
2.2 Excluded Assets.................................................................................4
2.3 Assumed and Excluded Liabilities................................................................4
2.4 Nonassignable Assets............................................................................6
ARTICLE III
PAYMENT OF PURCHASE PRICE.........................................................................................6
3.1 Purchase Price..................................................................................6
3.2 Accounts Receivable Adjustment..................................................................7
3.3 Inventory Count and Determination of Inventory Valuation........................................7
3.4 Estimated Closing Balance Sheet.................................................................7
3.5 Closing Balance Sheet...........................................................................8
3.6 Post-Closing Working Capital Adjustments........................................................8
3.7 Allocation of Purchase Price....................................................................9
ARTICLE IV
CLOSING...........................................................................................................9
4.1 Closing.........................................................................................9
4.2 Transactions on the Closing Date................................................................9
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SELLER.........................................................................11
5.1 Organization; Standing; Qualification..........................................................11
5.2 Authority Relative to this Agreement...........................................................11
5.3 Consents and Approvals; No Violations..........................................................12
5.4 Title and Condition of Purchased Assets........................................................12
5.5 Intangible Rights..............................................................................14
5.6 Contracts......................................................................................14
5.7 Restrictions on Division Business Activities...................................................15
5.8 Financial Information..........................................................................15
5.9 Absence of Changes or Events...................................................................15
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5.10 Taxes..........................................................................................16
5.11 Employee Benefit Plans.........................................................................16
5.12 Compliance with Law; Permits...................................................................16
5.13 Insurance......................................................................................16
5.14 Litigation.....................................................................................17
5.15 Suppliers and Customers........................................................................17
5.16 Product Warranties.............................................................................17
5.17 Absence of Certain Business Practices..........................................................17
5.18 Brokers and Finders............................................................................18
5.19 Disclosure.....................................................................................18
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF PURCHASER......................................................................18
6.1 Organization; Standing; Qualification..........................................................18
6.2 Authority Relative to this Agreement...........................................................18
6.3 Consents and Approvals; No Violations..........................................................19
6.4 Brokers and Finders............................................................................19
ARTICLE VII
COVENANTS OF THE PARTIES.........................................................................................19
7.1 Access to Information; Confidentiality.........................................................19
7.2 Public Announcements...........................................................................19
7.3 Certain Tax Matters............................................................................19
7.4 Non-Compete and Non-Solicitation...............................................................20
7.5 Employees......................................................................................21
7.6 Litigation.....................................................................................22
7.7 Collection of Accounts Receivable..............................................................22
7.8 Preserve Accuracy of Representations and Warranties............................................22
7.9 Operations Prior to Closing Date...............................................................22
7.10 Schedule Update................................................................................22
ARTICLE VIII.....................................................................................................23
CONDITIONS TO OBLIGATIONS OF THE PARTIES.........................................................................23
8.1 Conditions to Obligations of Purchaser.........................................................23
8.2 Conditions to Obligations of Seller............................................................24
ARTICLE IX
SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION.....................................................................25
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9.1 Survival of Representations and Covenants......................................................25
9.2 Indemnification................................................................................25
9.3 Conditions of Indemnification..................................................................26
9.4 Disclosure.....................................................................................28
ARTICLE X
TERMINATION OF AGREEMENT.........................................................................................28
10.1 Events of Termination..........................................................................28
10.2 Effect of Termination..........................................................................29
10.3 Waiver.........................................................................................29
ARTICLE XI
MISCELLANEOUS....................................................................................................29
11.1 Further Assurances.............................................................................29
11.2 Entire Agreement...............................................................................29
11.3 Successors and Assigns.........................................................................30
11.4 Governing Law..................................................................................30
11.5 Severability...................................................................................30
11.6 Waiver of Compliance...........................................................................30
11.7 Amendments and Waivers.........................................................................31
11.8 Counterparts...................................................................................31
11.9 Captions.......................................................................................31
11.10 Certain References.............................................................................31
11.11 Interpretation.................................................................................31
11.12 Notices........................................................................................31
11.13 Expenses.......................................................................................32
EXHIBITS
A Definitions
B Assignment and Assumption Agreement
C ▇▇▇▇ of Sale
D Patent Assignment and Assumption Agreement
E Trademark Assignment and Assumption Agreement
F Escrow Agreement
G Transition Services Agreement
H Intellectual Property License Agreement
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (the "Agreement") is made as of November 4,
2005 by and between Checkpoint Systems, Inc., a Pennsylvania corporation
("Seller") and Sielox, LLC, a Delaware limited liability company ("Purchaser").
RECITALS
WHEREAS, Purchaser is a wholly-owned subsidiary of LQ Corporation, a
Delaware corporation ("Parent"); and
WHEREAS, Seller is in the business of manufacturing and marketing
technology-driven integrated solutions for retail security, labeling, and
merchandising; and
WHEREAS, Seller operates a division of its business known as "Access
Control" which develops, markets and sells electronic access control systems
(the "Division Business"); and
WHEREAS, Seller desires to sell to Purchaser, and Purchaser desire to
purchase from Seller, certain Purchased Assets (as hereinafter defined) used in,
held by or relating to the Division Business, and Purchaser has agreed to assume
certain specified liabilities pertaining to the Division Business described
herein, in each case upon the terms and subject to the conditions set forth in
this Agreement.
NOW, THEREFORE, in consideration of the foregoing and of the
representations, warranties, covenants, agreements and conditions contained
herein, the parties hereto, intending to be legally bound hereby, agree as
follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. Unless otherwise provided herein, capitalized terms used herein
without definition shall have the meanings ascribed to them in Exhibit A
attached hereto.
ARTICLE II
PURCHASE AND SALE OF SELLER'S ASSETS
2.1 Purchased Assets.
(a) Subject to the terms and conditions set forth herein, at the
Closing (as defined in Section 4.1 hereof), Seller shall sell, assign, transfer,
convey and deliver to Purchaser, and Purchaser shall purchase, receive and
accept from Seller, the following assets and rights owned by, leased to or
otherwise used or usable by Seller in the operation of the Division Business,
wherever located, whether tangible or intangible, real, personal or mixed (each
a "Purchased Asset," and collectively, the "Purchased Assets"):
(i) Assumed Contract Rights. All of Seller's rights, title and
interest after the Closing Date in and to the Assumed Contracts (as
defined in Section 5.6 hereof) which Seller shall assign to Purchaser
pursuant to the Assignment and Assumption Agreement;
(ii) Equipment. Only the machinery, equipment, mechanical and
electrical tools, sales and support tools, software development tools,
dedicated manufacturing test equipment, test hardware, furniture and
fixtures, trade show booths, office equipment and supplies, telephone
equipment, communications equipment, computers, software and related
equipment, maintenance and repair equipment, spare parts, accessories,
boxes, miscellaneous inventories, stores and other items of tangible
personal property described on Schedule 2.1(a)(ii) hereto, together with
all operating manuals pertaining thereto (the "Equipment");
(iii) Permits. All licenses, certificates, permits, franchises,
registrations and authorizations of any Governmental Authority, and all
permits, qualifications, certifications and licenses, which are held by
Seller and are used solely in connection with the operation of the
Division Business or the ownership of the Purchased Assets and are
required for or otherwise relate solely to the operation of the Division
Business or the ownership of the Purchased Assets, including, without
limitation, those listed on Schedule 5.12 hereto (the "Permits"), but only
to the extent such Permits may be transferred as a matter of law (but if
any Permit cannot be transferred as a matter of law, Seller agrees to
cooperate with and reasonably assist Purchaser in obtaining such Permit in
accordance with the provisions of Section 2.4);
(iv) Intangible Rights. Seller's right, title and interest only as
set forth on Schedule 5.5 in and to all trademarks, trademark
applications, service marks, trade names, copyrights, patents and patent
applications, including all federal, state and foreign registrations
thereof, and all technology, trade secrets, product designs and
specifications, software programs, inventions, methods, processes,
systems, know how, customer and supplier lists, pricing policies, market
plans, business and development plans and other intangible rights and
confidential or proprietary information that relate solely to, or are used
solely in, the conduct and operation of the Division Business which shall
be assigned pursuant to the Patent Assignment and Assumption Agreement and
the Trademark Assignment and Assumption Agreement, and the other
intangible rights listed on Schedule 5.5 hereto (collectively, the
"Intangible Rights"), and all rights to ▇▇▇ for past or on-going
infringement or misappropriation of any of the Intangible Rights and to
seek and retain any recoveries resulting therefrom;
(v) Inventory. All of Seller's inventory of raw materials (including
packaging), work-in-process, and finished goods, which are used in, or
relate to, the conduct and operation of the Division Business, wherever
located, as set forth
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in Schedule 2.1(a)(v) (the "Inventory"); provided, however, that Inventory
shall not include any Hazardous Substances;
(vi) Prepaid Expenses. All of Seller's prepaid expenses, deposits,
charges, sums and fees in respect of the Division Business or any of the
Purchased Assets;
(vii) Warranties. All of Seller's rights under manufacturers' and
vendors' warranties, and all similar rights against third parties,
relating to items included in the Purchased Assets, to the full extent
such rights are transferable (the "Warranties");
(viii) Books and Records. Originals or, where not available, copies,
of the books and records (including all computerized records and other
storage media and the software used in connection therewith) of Seller
directly and solely relating to the Division Business, including but not
limited to all contracts, leases and other agreements and documentation
which relate to or are a part of the Purchased Assets, books and records
relating to accounts receivable of the Division Business, accounting and
financial information of the Division Business, customer and supplier
lists of the Division Business and customer and supplier files of the
Division Business (the "Books and Records"), but not including (i) the
corporate minute books, capital stock books or tax returns of Seller or
(ii) any books and records directly pertaining to the Excluded Assets or
any business activity of Seller other than the Division Business;
(ix) Accounts Receivable. All of Seller's accounts receivable and
other amounts due from third parties arising out of the conduct of the
Division Business, as set forth on Schedule 2.1(a)(ix), other than those
accounts receivable set forth on Schedule 2.2(d) (the "Accounts
Receivable");
(x) Advertising Materials. All promotional and advertising materials
relating to the Division Business and the products and services thereof,
including but not limited to, catalogs, brochures, handbooks, manuals and
other such materials;
(xi) Goodwill. The goodwill of the Division Business as a going
concern, including specifically the goodwill associated with Intangible
Rights; and
(xii) Insurance Proceeds. All insurance proceeds (except to the
extent relating to an Excluded Asset) for damage to, or the destruction or
loss of any of the Purchased Assets.
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2.2 Excluded Assets. It is understood and agreed between the parties that the
following assets (the "Excluded Assets") shall not be included in the Purchased
Assets and shall be excluded therefrom:
(a) the corporate minute books, capital stock books and tax returns
of Seller;
(b) any and all rights to causes of action, lawsuits, judgments,
claims and demands of any nature available to or being pursued by Seller
with respect to income tax liabilities or withholding taxes relating to
the Division Business accruing prior to the Closing Date;
(c) any assets or properties owned, leased or otherwise held by
Seller which do not relate to, or are not used in the conduct of, the
Division Business; and
(d) those accounts receivable set forth on Schedule 2.2(d).
2.3 Assumed and Excluded Liabilities.
(a) At the Closing and except as otherwise provided in Section
2.3(c), Purchaser shall assume and agree to pay, honor and discharge when due
the following liabilities (collectively, the "Assumed Liabilities"):
(i) all Assumed Contract Obligations relating to Assumed
Contracts;
(ii) all trade payables of Seller incurred in the ordinary
course of the conduct of the Division Business and listed by item
and amount on Schedule 2.3(a)(ii) hereto;
(iii) all current liabilities of Seller incurred in the
ordinary course of the conduct of Division Business and listed by
item and amount on Schedule 2.3(a)(iii) hereto;
(iv) all obligations of Seller to provide its customers who
have purchased software with modifications to correct any problems
with such software that have been published within the twelve (12)
month period of the date of shipment of such software; and
(v) all obligations of Seller with respect to any warranty
claims for defective invoiced products pursuant to the Assumed
Contracts.
(b) Other than the Assumed Liabilities, Purchaser shall not assume,
and the parties do not intend for Purchaser to assume, pursuant to this
Agreement or otherwise, any liabilities or obligations of Seller, its
shareholders or Affiliates of any kind or nature whatsoever, whether accrued,
absolute, contingent or otherwise, known or unknown, including, without
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limitation, any of the Excluded Liabilities (as defined in Section 2.3(c)
hereof). Seller shall faithfully pay, honor, perform and discharge as and when
due all of the Excluded Liabilities.
(c) Purchaser shall not assume and shall not be liable for any
liabilities of Seller other than the Assumed Liabilities, and the Assumed
Liabilities specifically exclude the following liabilities (the "Excluded
Liabilities"):
(i) any debts, liabilities or obligations, litigations,
proceedings, claims and all other liabilities of any kind
whatsoever, whether known or unknown, to the extent (A) not
pertaining to the Division Business or the Purchased Assets or (B)
arising from or relating to the Division Business or the Purchased
Assets on or prior to the Closing Date;
(ii) any debts or liabilities of Seller (other than the trade
payables set forth on Schedule 2.3(a)(ii) and the current
liabilities set forth on Schedule 2.3(a)(iii)) including, without
limitation, any amounts or obligations due or arising under any
financing documents or equipment financing arrangements, bank debt,
accounts payable, indebtedness to Affiliates and any other debts or
liabilities;
(iii) the expenses of Seller referred to in Section 11.13
hereof;
(iv) any obligations that arise under any guaranty or surety
arrangement made by Seller or any of its shareholders;
(v) (A) any Taxes incurred or payable with respect to the
Division Business and the Purchased Assets on or prior to the
Closing Date including, without limitation, any taxes due pursuant
to the transactions contemplated by this Agreement, and (B) any
liability of Seller for Taxes (including pursuant to the
transactions contemplated by this Agreement);
(vi) (A) any debts, liabilities or obligations arising out of
Seller's payroll obligations or Employee Benefit Plans, and (B) any
debts, liabilities or obligations arising out of the employment or
termination of employment of any employees of Seller, whether or not
arising from the transactions contemplated herein;
(vii) any product liability or warranty claim, other than as
set forth in the Assumed Contracts, with respect to any products or
services sold by Seller in connection with the conduct of the
Division Business on or prior to the Closing Date; and
(viii) any debts, liabilities or obligations, known or
unknown, contingent or liquidated or otherwise, pertaining to the
Excluded Assets.
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2.4 Nonassignable Assets. Anything in this Agreement to the contrary
notwithstanding, this Agreement shall not constitute an Agreement to sell,
assign, transfer, convey or sublease any Purchased Asset, including any Permit
and any Assumed Contract, if an attempted sale, assignment, transfer, conveyance
or sublease thereof without the consent of another Person or Persons is
prohibited by any applicable Law or would constitute a breach of, or in any way
affect the rights of Seller or Purchaser with respect to, such Purchased Asset
(any such Purchased Asset being referred to as a "Nonassignable Asset"). Seller
shall use reasonable efforts, and Purchaser shall cooperate with Seller in all
reasonable respects, to obtain and satisfy all consents and to resolve all
impracticalities of sale, assignment, transfer, conveyance or sublease necessary
to sell, assign, transfer, convey or sublease any and all Nonassignable Assets
(or any interest therein) in accordance with this Agreement. If any such consent
is not obtained and is required to effectively assign a Purchased Asset, Seller
will use its reasonable efforts to provide, or cause to be provided, to
Purchaser the full claims, rights and benefits of or under such Nonassignable
Assets. To the extent that Purchaser is provided the benefits pursuant to this
Section 2.4 of any Assumed Contract, Purchaser shall perform for the benefit of
the other Persons that are parties thereto the obligations thereunder of Seller
and pay, discharge and satisfy any related liabilities that, but for the lack of
an authorization, approval, consent or waiver to assign such liabilities to
Purchaser, would be Assumed Liabilities.
ARTICLE III
PAYMENT OF PURCHASE PRICE
3.1 Purchase Price.
(a) The consideration to be paid by Purchaser to Seller for the
Purchased Assets (the "Purchase Price") is the aggregate of (1) Six Hundred
Thousand Dollars (US$600,000), as may be adjusted pursuant to Section 3.2
hereof, (2) the amount of the Estimated Net Working Capital (subject to the
adjustments set forth in Sections 3.5 and 3.6 hereof) (collectively, the
"Closing Date Cash Payment") and (3) the assumption and/or discharge the Assumed
Liabilities. The Closing Date Cash Payment shall be paid as set forth below:
(i) At the Closing, Purchaser shall pay by wire transfer of
immediately available funds to such account as is specified by
Seller at least two (2) Business Days prior to such date, the sum of
(A) Five Hundred Thousand Dollars (US$500,000) and (B) the amount of
the Estimated Net Working Capital.
(ii) At the Closing, Purchaser shall pay by wire transfer of
immediately available funds the sum of One Hundred Thousand Dollars
(US$100,000) (the "Escrow Amount") to ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ LLP (the
"Escrow Agent") which amount shall be held in escrow by the Escrow
Agent pursuant to the terms and provisions of the escrow agreement
in the form attached hereto as Exhibit F (the "Escrow Agreement").
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3.2 Accounts Receivable Adjustment. Purchaser shall use commercially reasonable
efforts to collect the Accounts Receivable for the six (6) period immediately
following the Closing Date. On the date that is six (6) months after the Closing
Date (or as soon as is practicable thereafter), Purchaser shall deliver to
Seller an initial report (the "Initial Report") setting forth the amount of the
Accounts Receivable that have not been collected by Purchaser (the "AR
Shortfall"). Seller shall have ten (10) Business Days from the receipt of the
Initial Report to review the same. For the purpose of such review, the Purchaser
agrees to permit, or to cause Purchaser's accountant to permit, the Seller and
its accountants access to examine all invoices, records, working papers,
schedules and other documentation related to the Accounts Receivable. In the
event of any discrepancy of the AR Shortfall set forth on the Initial Report,
the Seller may dispute such discrepancy and Purchaser and Seller agree to work
diligently to resolve such discrepancy within ten (10) Business Days of the date
Seller asserts such discrepancy. Upon resolution of any discrepancies, Purchaser
shall circulate a revised report (the "Final Report") setting forth the AR
Shortfall which reflects the resolution of all discrepancies. If Seller does not
dispute the Initial Report, the Initial Report shall be deemed to be the Final
Report. Seller shall refund to Purchaser the amount of such AR Shortfall by
causing an amount equal to the AR Shortfall to be disbursed from the Escrow
Amount in accordance with the Escrow Agreement, and to the extent the Escrow
Amount is insufficient to cover such amount, Seller shall make a payment in
immediately available funds to Purchaser for the unpaid portion of the AR
Shortfall amount. Notwithstanding anything to the contrary contained herein, the
calculation of the AR Shortfall shall exclude any uncollected Accounts
Receivable which were taken into consideration in the calculation of the Closing
Balance Sheet (as hereinafter defined). Purchaser shall return to Seller all
uncollected Accounts Receivable which comprise the AR Shortfall or which are
taken into consideration in the calculation of the Closing Balance Sheet (the
"Returned AR"). Seller shall then have the right to collect all of any unpaid,
or the unpaid portion of, any Accounts Receivable for which Seller has refunded
to Purchaser the AR Shortfall.
3.3 Inventory Count and Determination of Inventory Valuation. As close to, but
prior to, the Closing Date as reasonably possible, Purchaser and Seller shall
jointly conduct a physical review of the Inventory, during which they shall (i)
complete a count of the Inventory (the "Inventory Count"), (ii) determine and
agree to the Inventory Valuation as of the Closing Date in accordance with GAAP,
as consistently applied with past practices, net of reserves, at the lower of
cost or market on a first-in first-out basis, and (iii) jointly prepare and
execute a statement setting forth the Inventory Count and the Inventory
Valuation.
3.4 Estimated Closing Balance Sheet. Seller, in consultation with Purchaser,
shall prepare an estimated balance sheet of the Division Business conveyed as of
the Closing Date (the "Estimated Closing Balance Sheet"), and shall deliver such
Estimated Closing Balance Sheet to Purchaser not later than three (3) days prior
to the Closing Date. The Estimated Closing Balance Sheet shall be prepared in
accordance with GAAP pursuant to the procedures set forth on Schedule 3.4
hereto. Accompanying the Estimated Closing Balance Sheet shall be a schedule
prepared by Seller consistent with the Estimated Closing Balance Sheet setting
forth the calculations of the estimated Net Working Capital based on the
Estimated Closing Balance Sheet as of the Closing Date (the "Estimated Net
Working Capital"). For purposes of preparing the
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Estimated Closing Balance Sheet and calculating the Estimated Net Working
Capital (i) the value of the Inventory shall be the Inventory Valuation
determined pursuant to Section 3.3 and (ii) accounts receivable shall be valued
net of an allowance for doubtful accounts determined in accordance with GAAP, it
being understood and agreed that any receivable uncollected within one hundred
twenty (120) days after the invoice date shall be considered a doubtful account.
3.5 Closing Balance Sheet.
(a) Purchaser shall prepare a balance sheet of the Division Business
conveyed as of the Closing Date (the "Closing Balance Sheet"), and shall deliver
such Closing Balance Sheet to Seller not later than sixty (60) days after the
Closing. The Closing Balance Sheet shall be prepared in accordance with GAAP and
reviewed by Purchaser's independent auditors. Accompanying the Closing Balance
Sheet shall be a schedule prepared by Purchaser consistent with the Closing
Balance Sheet setting forth the calculation of Net Working Capital as of the
Closing Date. The Closing Balance Sheet and the Net Working Capital as of the
Closing Date shall be prepared and calculated in accordance with the procedures
set forth in Section 3.4.
(b) The Closing Balance Sheet and the calculation of Net Working
Capital based on the Closing Balance Sheet shall be conclusive and binding upon
the parties hereto unless Seller objects in writing to any item or items shown
thereon or omitted therefrom within twenty (20) Business Days after delivery
thereof to Seller. If Seller shall have timely delivered to Purchaser a notice
disputing one or more such items, specifying in reasonable detail each of
Seller's objections, the parties shall each use commercially reasonable efforts
through authorized officers to resolve the objections in good faith. If no
resolution is reached within twenty (20) Business Days after the notice of
objection is given, then the issues that remain in dispute shall be promptly
submitted to Deloitte & Touche or, if such firm does not accept the engagement
to make such determination, another nationally recognized independent accounting
firm to be agreed upon by the parties hereto (the "Independent Accountant") for
review and resolution. The Independent Accountant shall determine all items in
dispute and deliver its written report thereon to the parties within twenty (20)
Business Days after such dispute is submitted to it, and such written report
shall be conclusive and binding upon the parties (absent manifest error). The
fees and expenses of the Independent Accountant shall be shared equally by
Purchaser and Seller.
3.6 Post-Closing Working Capital Adjustments. The Purchase Price shall be
subject to adjustment after the Closing Balance Sheet and the calculation of Net
Working Capital based on the Closing Balance Sheet becomes conclusive and
binding upon the parties as follows:
(a) In the event that Net Working Capital as calculated based on the
Closing Balance Sheet is less than the Estimated Net Working Capital, then
Seller shall be required to pay Purchaser the amount of such shortfall, plus
interest thereon from the Closing Date through and including the date of
determination at the rate publicly announced by Citibank, N.A. as its prime rate
in effect as of the date of such determination ("Interest"). In the event that
the Net Working Capital as calculated based on the Closing Balance Sheet is
equal to the Estimated Net
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Working Capital then no payments shall be required to be made pursuant to this
Section 3.6(a). In the event that the Net Working Capital as calculated based on
the Closing Balance Sheet is greater than the Estimated Net Working Capital,
then Purchaser shall be required to pay Seller the amount of such excess, plus
Interest.
(b) Any payment due pursuant to the provisions of Sections 3.6(a)
hereof shall be made within five (5) Business Days after the Closing Balance
Sheet and the calculations of Net Working Capital based on the Closing Balance
Sheet become conclusive and binding upon the parties, in cash by wire transfer
of immediately available funds to such account as Purchaser or Seller, as the
case may be, shall designate in writing.
3.7 Allocation of Purchase Price. The Purchase Price shall be allocated to the
Purchased Assets as agreed by Purchaser and Seller and as set forth prior to the
Closing on Schedule 3.7 hereto (the "Allocation"), subject to any adjustment in
the Closing Date Cash Payment pursuant to the provisions of Sections 3.5 and
3.6. Purchaser and Seller agree (i) to file Internal Revenue Service Form 8594,
and all other required federal, state, local and foreign tax returns and forms,
in accordance with the Allocation, (ii) to provide the other promptly with any
other information required to complete Form 8594 and with a copy of such form
after it is filed and (iii) not to take a position for financial reporting or
tax purposes (including before any Governmental Authority charged with the
collection of any tax, or in any judicial hearing) that is inconsistent with the
Allocation, unless otherwise required by applicable Law following written notice
to the other party.
ARTICLE IV
CLOSING
4.1 Closing. The closing of the transactions contemplated by this Agreement (the
"Closing") shall take place at the law offices of ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ LLP,
located at ▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ at 10:00 a.m., local time, no
later than ten (10) days after satisfaction or waiver of all other conditions to
the obligations of the parties as set forth in Article VIII, or at such other
place or at such other time or on such other date as the Seller and the
Purchaser may mutually agree upon in writing (the "Closing Date"); provided,
however, that the Closing shall be deemed effective as of 11:59 p.m. on the day
preceding the Closing Date.
4.2 Transactions on the Closing Date.
(a) Deliveries by Seller. At or prior to the Closing, Seller shall
deliver or cause to be delivered to Purchaser (unless delivered previously) the
following:
(i) the ▇▇▇▇ of Sale duly executed by Seller;
(ii) the Assignment and Assumption Agreement duly executed by
Seller;
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(iii) the Patent Assignment and Assumption Agreement duly
executed by Seller;
(iv) the Trademark Assignment and Assumption Agreement duly
executed by Seller;
(v) the License Agreement duly executed by Seller;
(vi) the Escrow Agreement;
(vii) a transition services agreement by and between Seller
and Purchaser, dated as of the date hereof in the form attached
hereto as Exhibit G (the "Transition Services Agreement"); and
(viii) the Books and Records;
(ix) an incumbency and specimen signature certificate with
respect to the officers of Seller executing the Agreement and the
Other Agreements;
(x) a certificate from the secretary of the Board of Directors
of Seller indicating that the Board of Directors has authorized the
execution, delivery and performance of this Agreement and the Other
Agreements;
(xi) proof of the satisfaction and discharge of any and all
Encumbrances on the Purchased Assets;
(xii) such other deeds, bills of sale, endorsements,
assignments, affidavits, and other good and sufficient instruments
of sale, assignment, transfer and conveyance in form and substance
satisfactory to Purchaser which are required to effectively vest
Purchaser with good and marketable title in and to all of the
Purchased Assets; and
(xiii) the agreements, certificates and other documents
required to be delivered pursuant to Section 8.01.
(b) Deliveries by Purchaser. At the Closing, Purchaser shall deliver
or cause to be delivered (unless delivered previously) to Seller the following:
(i) the Purchase Price, in the manner set forth in Section
3.1(a) hereof;
(ii) the ▇▇▇▇ of Sale duly executed by Purchaser;
(iii) the Assignment and Assumption Agreement duly executed by
Purchaser;
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(iv) the Patent Assignment and Assumption duly executed by
Purchaser;
(v) the Trademark Assignment and Assumption duly executed by
Purchaser;
(vi) the License Agreement duly executed by Purchaser;
(vii) the Escrow Agreement;
(viii) the Transition Services Agreement;
(ix) an incumbency and specimen signature certificate with
respect to the officers of Purchaser executing the Agreement and the
Other Agreements;
(x) a copy of the resolutions of the member of Purchaser
authorizing the execution, delivery and performance of the Agreement
and the Other Agreements; and
(xi) the agreements, certificates and other documents required
to be delivered pursuant to Section 8.02.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Purchaser as of the date of this
Agreement, as follows:
5.1 Organization; Standing; Qualification. Seller is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Pennsylvania and has all requisite corporate power and authority to own the
Purchased Assets and to carry on the Division Business as now conducted and as
proposed to be conducted. Seller is duly qualified to transact business and is
in good standing as a foreign corporation in the jurisdictions listed on
Schedule 5.1 hereto, which are the only jurisdictions in which the character of
the Purchased Assets or the nature of the Division Business transacted by it
makes such qualification necessary.
5.2 Authority Relative to this Agreement.
Seller has all necessary corporate power and authority to execute
and deliver this Agreement, the Other Agreements and any other documents to be
executed and delivered by it pursuant hereto and to consummate the transactions
contemplated hereby and thereby. The execution and delivery of this Agreement,
the Other Agreements and any other documents to be executed and delivered by
Seller pursuant hereto and the consummation of the transactions contemplated
hereby and thereby have been duly and validly authorized by Seller. This
Agreement and the documents and instruments to be executed and delivered by
Seller pursuant
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hereto have been and will be duly and validly executed and delivered by Seller
and, subject to the due authorization, execution and delivery by the other party
or parties thereto, this Agreement, the Other Agreements and any other documents
and instruments to be executed and delivered by it pursuant hereto constitute
valid and binding agreements of Seller enforceable against Seller in accordance
with their terms except to the extent such enforceability may be limited by
bankruptcy laws and other laws affecting creditors' rights and under general
principles of equity.
5.3 Consents and Approvals; No Violations. The execution and delivery by Seller
of this Agreement, the Other Agreements and any other documents and instruments
to be executed and delivered by Seller pursuant hereto, and the consummation of
the transactions contemplated hereby and thereby, either individually or in the
aggregate, do not and will not (i) require any further corporate proceedings on
the part of Seller, (ii) violate or conflict with the Articles of Incorporation,
Bylaws or other charter documents applicable to Seller, (iii) require any
consent, waiver, approval, authorization or permit of, or filing with or
notification to, any Governmental Authority, (iv) except as set forth on
Schedule 5.6(b), conflict in any material respect with, require consent under,
result in a material violation or breach of, or constitute (with or without due
notice or lapse of time or both) a default or give rise to any right of
termination, amendment, acceleration, cancellation, suspension, impairment,
forfeiture or nonrenewal under, any of the terms, conditions or provisions of
any of the Assumed Contracts, Intangible Rights, Permits, Warranties, or any
other agreement, instrument or obligation by which Seller is bound in respect of
the Division Business or by which any of the Purchased Assets may be bound or
affected or result in the imposition of any Encumbrance on the Purchased Assets,
or (v) result in a violation in any material respect of any Law or any Order of
any Governmental Authority by which Seller or any of the Purchased Assets is
bound.
5.4 Title and Condition of Purchased Assets.
(a) The Seller has good, valid and marketable title to all of the
Purchased Assets (other than any leased assets included therein, which are the
subject of Section 5.4(b) hereto, and any licensed assets, which are the subject
of Section 5.5 hereto), free and clear of all Encumbrances, and at the Closing
will convey good, valid and marketable title to all such Purchased Assets to
Purchaser, free and clear of all Encumbrances. The Purchased Assets (i)
constitute all of the assets used in or required to carry on the Division
Business as presently conducted, except as set forth on Schedule 5.4(a), (ii)
are adequate for the purposes for which such Purchased Assets are currently used
or held for use and (iii) conform in all material respects to all applicable
Laws, ordinances, Orders, regulations or governmental or contractual
requirements relating to their operation, and (b) the Equipment is in good
working order and has been properly used and maintained in accordance with
commercially reasonable and prudent policies and practices as followed by
companies in the same business as the Division Business.
(b) Schedule 5.4(b) hereto sets forth a list of every lease
agreement to which Seller is a party relating to any of the Purchased Assets
(the "Leases"). Except as set forth on Schedule 5.4(b), Seller has good and
valid leasehold interests in all items of personal property
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subject to the Leases, free and clear of all Encumbrances, and at the Closing
will convey good and valid leasehold interests in all such items of personal
property, free and clear of all Encumbrances. Seller has provided to Purchaser a
complete and accurate copy of each Lease, including all amendments and exhibits
thereto, each of which is in full force and effect. Seller has not received
notice of any event of default under any of the Leases. Except as set forth in
Schedule 5.4(b), none of such leased Purchased Assets are subject to any
sublease, sublicense or other agreement granting to any other Person any right
to the use, occupancy or enjoyment of such property or any portion thereof. All
personal property leased pursuant to the Leases is in all material respects in
the condition required of such property by the terms of the Lease applicable
thereto.
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5.5 Intangible Rights.
(a) Schedule 5.5(a) is a true and complete list of all Intangible
Rights held or used in connection with the Division Business and which are owned
by or licensed to Seller (with an indication as to whether Seller is a licensor
or licensee in respect thereof, if applicable). Except as set forth on Schedule
5.5(a): (i) Seller is the sole and exclusive owner or licensee of the Intangible
Rights and has the sole and exclusive right to use the Intangible Rights in the
same manner in which it has been or is now using them, (ii) there are no claims,
demands or proceedings pending or, to the Knowledge of Seller, threatened, that
pertain to or challenge the validity or effectiveness of the Intangible Rights
or the right of Seller to own or use the Intangible Rights, (iii) Seller has not
granted, and has no obligation to grant, any licenses or other rights with
respect to the Intangible Rights, (iv) Seller has not sold, and has no
obligation to sell, any of the Intangible Rights or any other intangible
property or rights previously owned by Seller, and (v) to the Knowledge of
Seller, the Intangible Rights are not being infringed upon by any other person.
The operation of the Division Business, and the use of any of the Intangible
Rights in connection with the Division Business, does not violate any license or
agreement with any third party or, to the Knowledge of Seller, infringe any
rights of any third party.
(b) Except as set forth on Schedule 5.5(b), the Intangible Rights
which are being transferred to Purchaser hereunder and the rights granted to
Seller pursuant to the terms and conditions of the License Agreement represent
all the intellectual property used by Seller in connection with the conduct of
the Division Business and constitute all of the intellectual property assets,
rights and interests necessary to conduct the Division Business in substantially
the same manner as conducted by Seller prior to the Closing Date.
(c) Following the consummation of the transactions contemplated by
this Agreement, and except as set forth on Schedule 5.5(a) or Schedule 5.5(b),
Purchaser shall have good and valid title, free and clear of all Encumbrances,
or possess adequate licenses or other rights to use, all of the intellectual
property owned by or licensed to Seller which is used in, or necessary for the
operation of, the Division Business as a going concern in the manner in which it
is currently conducted.
(d) There are no royalties, honoraria, fees or other payments
payable by Seller to any Person in connection with the conduct of the Division
Business or the ownership of the Purchased Assets, other than as set forth in
the contracts listed in Schedule 5.5(d).
5.6 Contracts.
(a) Except for the Assumed Contracts or as set forth in Schedule
5.6(a) hereto, Seller is not a party to or bound by any agreement, contract,
arrangement, lease, license, understanding, commitment or instrument that
affects or is related to the Division Business or the Purchased Assets or the
consummation of the transactions contemplated hereby. The agreements, contracts,
arrangements, leases, licenses, understandings, commitments and
14
instruments set forth on Schedule 5.6(a) are hereinafter collectively referred
to as the "Contracts."
(b) Schedule 5.6(b) sets forth a list of all of the Contracts to be
assumed by Purchaser at the Closing (the "Assumed Contracts"), and includes a
summary specifying the subject matter and material performance obligations under
any oral contract included therein, the parties thereto and the date and terms
thereof. Except as set forth on Schedule 5.6(b) hereto and except to the extent
enforceability may be limited by bankruptcy laws and other laws affecting
creditors' rights and under general principles of equity, each of the Assumed
Contracts is assignable, valid, binding and in full force and effect, is
enforceable by the Seller in accordance with its terms and, except as set forth
in Schedule 5.6(b) hereto, has not been modified or amended, and there has not
been any cancellations or, to the Knowledge of Seller, threatened cancellations
of any Assumed Contract, nor any pending or, to the Knowledge of Seller,
threatened disputes thereunder. Except as set forth in Schedule 5.6(b) hereto,
Seller has paid all payments and sums due under the Assumed Contracts and
performed all obligations required to be performed by it to date under such
Assumed Contracts and is not (with or without the lapse of time or the giving of
notice, or both) in breach or default thereunder. Except as set forth on
Schedule 5.6(b) hereto, no consents or approvals of any person other than of
Seller is necessary to sell, assign, convey, transfer and deliver any and all
rights and interests in the Assumed Contracts. Seller has provided Purchaser
with true and complete copies of each Assumed Contract (including all amendments
thereto).
5.7 Restrictions on Division Business Activities. There is no agreement,
judgment, injunction, order, decree or other instrument binding upon Seller
which has or could reasonably be expected to have the effect of prohibiting any
business practice of Seller in relation to the Division Business or the conduct
of the Division Business by Purchaser assuming that Purchaser operates the
Division Business after the Closing as it is currently conducted by Seller and
intended to be conducted by Seller.
5.8 Financial Information.
(a) The gross sales of the Division Business as of the twelve-month
period ended December 31, 2004 were $6,558,297 and the gross sales of the
Division Business as of the eight-month period ended September 30, 2005 were
$4,813,800.
5.9 Absence of Changes or Events. Since December 31, 2004, Seller has operated
the Division Business in the ordinary course consistent with past practice and
no event, circumstance, occurrence, fact, condition, change, development or
effect exists or has occurred that, either individually or in the aggregate, has
had or resulted in, or could reasonably be expected to result in, a Material
Adverse Effect. Without limiting the generality of the foregoing, except to the
extent set forth on Schedule 5.9 hereto, since December 31, 2004 Seller has not:
(a) mortgaged, pledged, or subjected to lien, charge, security interest or other
Encumbrance any of the Purchased Assets; (b) terminated, amended or failed to
renew or received any notice of termination, suspension, limitation, revocation,
impairment, forfeiture or
15
nonrenewal of any Assumed Contract, Permit or Intangible Right; (c) , settled or
agreed to settle any litigation, action or proceeding before any Governmental
Authority affecting the Division Business or the Purchased Assets; (d) had any
change in its relations with its employees, agents, customers or suppliers of
the Division Business, which change has had or would be reasonably likely to
have a Material Adverse Effect; (e) made any change in accounting principles or
methods, or in the manner of keeping books, accounts and records of the Division
Business, which change has had or would be reasonably likely to have a Material
Adverse Effect; (f) entered into any transaction other than in the ordinary
course of the conduct of the Division Business; or (g) entered into any
agreement or made any commitment to do any of the things described in the
preceding subsections (a) through (f) of this Section 5.9.
5.10 Taxes. Seller is not aware of any audit or other proceeding or
investigation by any tax authority, or of any position taken on a Tax Return of
Seller which position could reasonably be expected to give rise to any
Encumbrances upon any of the Purchased Assets.
5.11 Employee Benefit Plans. All required employer or employee contributions,
premiums, and Taxes under or with respect to the Employee Benefit Plans due to
be made or paid as of the date hereof have been made by Purchaser. The
respective fund or funds established under the Employee Benefit Plans are funded
in accordance with all applicable laws.
5.12 Compliance with Law; Permits. Seller is in compliance with all applicable
statutes, judgments, decrees, Laws (including, without limitation, Environmental
Laws), ordinances, rules, regulations, requirements, writs, injunctions and
Orders of any Governmental Authority relating to all operations conducted by
Seller in connection with the Division Business. Seller holds all Permits
required for the operation of the Division Business, including, without
limitation, the sale of products of the Division Business, and has provided
copies of all such Permits to Purchaser including, but not limited to, those
Permits set forth on Schedule 5.12 hereto. Except as set forth on Schedule 5.12,
all such Permits are valid, effective and in good standing, are freely
transferable to Purchaser, and the execution of this Agreement and the Other
Agreements and the consummation of the transactions contemplated hereby and
thereby will not result in any adverse consequences with respect to any such
Permit, including any suspension, modification or revocation thereof. No
communication, whether from a Governmental Authority or otherwise, has been
received by Seller and no investigation or review is, pending or, to the
Knowledge of Seller, threatened by any Governmental Authority with respect to
(a) any alleged violation by Seller of any Permit, Law, ordinance, regulation,
requirement or Order of any Governmental Authority (including, without
limitation, any applicable health, sanitation, fire, safety, zoning or building
permit law, ordinance, regulation, requirement or order) relating to the
operations of Seller in connection with the Division Business or (b) any alleged
failure to have all Permits required in connection with the operations conducted
by Seller with respect to the Division Business.
5.13 Insurance. Seller has all necessary insurance policies to adequately cover
the operations of the Division Business and the Purchased Assets as of the date
hereof. All such insurance policies are valid and binding and will remain in
full force and effect as of the date hereof, all
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premiums due thereunder have been paid in full and Seller has not received any
notice of cancellation or termination in respect of any such policy or is in
default thereunder. Schedule 5.13 hereto contains a description of the claims
experience relating to the Division Business and the Purchased Assets since
January 1, 2002 under all policies of insurance and any self-insurance programs
relating to the Division Business, whether or not now in force, in the name of
or to the benefit of Seller, including but not limited to a description of all
settled and outstanding claims thereunder.
5.14 Litigation. Except as set forth in Schedule 5.14, there has not been any
claim, action, lawsuit, governmental inquiry or investigation or legal,
administrative or arbitration action or proceeding pending or, to the Knowledge
of Seller, threatened relating to the Division Business or the Purchased Assets,
nor the Knowledge of Seller, is there any basis for any such action. No claim,
action, lawsuit, inquiry, proceeding or investigation identified on Schedule
5.14 could, if adversely decided, be expected to have a Material Adverse Effect.
Seller is not subject to any restrictions or limitations under any judgment,
Order, decree, writ, injunction or license of any Governmental Authority
pertaining to the conduct of the Division Business.
5.15 Suppliers and Customers.
(a) Schedule 5.15(a) hereto sets forth a list of the current
customers of the Division Business whose annual purchases are $25,000 or more.
Since January 1, 2004, Seller has not received any notification from any of the
customers listed on Schedule 5.15(a) hereto that any such customer is canceling
or otherwise terminating its relationship with Seller and Seller does not know
of any such customer contemplating taking any such action.
(b) Schedule 5.15(b) hereto sets forth a list of the current
suppliers of the Division Business whose annual ▇▇▇▇▇▇▇▇ are $25,000 or more.
Since January 1, 2004, Seller has not received any notification from any of the
suppliers listed on Schedule 5.15(b) hereto that any such supplier is canceling
or otherwise terminating its relationship with Seller and Seller does not know
of any such supplier contemplating taking such action.
5.16 Product Warranties. Except as set forth on Schedule 5.16, Seller has not
given or offered any warranty covering any products or services sold or
distributed by it in connection with the conduct of the Division Business, and
Seller has not extended to its customers any indemnification or guarantee.
Except for the warranties set forth in the Assumed Contracts listed on Schedule
5.16, there are no other warranties made by the Division Business to its
customers.
5.17 Absence of Certain Business Practices. Seller has not, nor, to the
Knowledge of Seller, any of its agents or any other Person associated with or
acting for or on behalf of any of it, has directly or indirectly (a) made any
contribution or gift which contribution or gift is in violation of any
applicable Law or is not consistent with past practice, (b) made any bribe,
rebate, payoff, influence payment, kickback or other payment to any Person,
private or public, regardless of form, whether in money, property or services
(i) to obtain favorable treatment in securing business, (ii) to pay for
favorable treatment for business secured, (iii) to obtain special
17
concessions or for special concessions already obtained for or in respect of
Seller or any Affiliate, or (iv) in violation of any Law or legal requirement,
or (c) established or maintained any fund or asset of Seller that has not been
recorded in the books and records of Seller.
5.18 Brokers and Finders. Neither Seller nor its Affiliates, nor any officer,
director, shareholder or employee of Seller or any such Affiliates has employed
any broker, finder or investment banker or incurred any liability for any
commission, brokerage or investment banking fee or finder's fee in connection
with the transactions contemplated by this Agreement, nor has any such person
taken any action which would result in any such fees or liabilities being the
obligation of Purchaser.
5.19 Disclosure. No representation or warranty made by Seller in this Agreement
or in any other writing furnished pursuant hereto contains an untrue statement
of a material fact or omits to state a material fact necessary to make the
statements and facts contained herein or therein, in light of the circumstances
in which they were or are made, not false or misleading.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to Seller, as of the date of this
Agreement, as follows:
6.1 Organization; Standing; Qualification. Purchaser is a limited liability
company duly organized, validly existing and in good standing under the laws of
the State of Delaware, and has all requisite power and authority to purchase,
own and operate the Purchased Assets and the Division Business as now conducted
and as proposed to be conducted. Purchaser is duly qualified to transact
business and is in good standing in each jurisdiction in which the character of
the property owned or the nature of the business transacted by it makes such
qualification necessary.
6.2 Authority Relative to this Agreement. Purchaser has all necessary power and
authority to execute and deliver this Agreement, the Other Agreements and any
other documents to be executed and delivered by it pursuant hereto and to
consummate the transactions contemplated hereby and thereby. The execution and
delivery of this Agreement, the Other Agreements and any other documents to be
executed and delivered by Purchaser pursuant hereto and the consummation of the
transactions contemplated hereby and thereby have been duly and validly
authorized by Purchaser. This Agreement and the documents and instruments to be
executed and delivered by Purchaser pursuant hereto have been and will be duly
and validly executed and delivered by Purchaser and, subject to the due
authorization, execution and delivery by the other party or parties thereto,
this Agreement, the Other Agreements and any other documents and instruments to
be executed and delivered by it pursuant hereto constitute valid and binding
agreements of Purchaser, enforceable against Purchaser in accordance with their
terms.
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6.3 Consents and Approvals; No Violations. The execution and delivery by
Purchaser of this Agreement, the Other Agreements and any other documents and
instruments to be executed and delivered by Purchaser pursuant hereto, and the
consummation of the transactions contemplated hereby and thereby, either
individually or in the aggregate, do not and will not, (i) require any further
corporate proceedings on the part of Purchaser, (ii) violate or conflict with
the constituent documents of Purchaser (iii) require any consent, waiver,
approval, authorization or permit of, or filing with or notification to, any
Governmental Authority, (iv) conflict in any material respect with, require
consent under, result in a material violation or breach of, or constitute (with
or without due notice or lapse of time or both) a default or give rise to any
right of termination, amendment, acceleration, cancellation, suspension,
impairment, forfeiture or nonrenewal under, any of the terms, conditions or
provisions of any agreement, instrument or obligation by which Purchaser or any
of its assets or properties is bound, or (v) result in a violation in any
material respect of any Laws or any Order of any Governmental Authority by which
Purchaser is bound.
6.4 Brokers and Finders. Except as set forth on Schedule 6.4, neither Purchaser
nor any of its Affiliates nor any officer, manager, member or employee of
Purchaser or any such Affiliate has employed any broker, finder or investment
banker or incurred any liability for any commission, brokerage or investment
banking fee or finder's fee in connection with the transactions contemplated by
this Agreement, nor has any such person taken any action which would result in
any such fees or liabilities being the obligation of Seller.
ARTICLE VII
COVENANTS OF THE PARTIES
7.1 Access to Information; Confidentiality. From and after the Closing Date, (a)
Seller shall keep confidential and not release or disclose to third parties
(except as required by law, compulsory legal process, or to Seller's attorneys
and other business advisors for purposes of evaluating the transaction
contemplated hereby) (i) the Purchase Price or the other material terms and
conditions of this Agreement and (ii) for a period of five (5) years from the
date hereof, all proprietary, non-public or confidential business or technical
information relating to or concerning the Division Business or the Purchased
Assets; and (b) Purchaser shall keep confidential and not release or disclose to
third parties (except as required by law, compulsory legal process, or to
Purchaser's attorneys and other business advisors for purposes of evaluating the
transaction contemplated hereby) for a period of five (5) years from the date
hereof, all proprietary, non-public or confidential business or technical
information relating to or concerning the Seller or the Excluded Assets.
7.2 Public Announcements. Except as required by applicable Law, neither party
hereto shall, nor shall it permit any of its Affiliates to, make any public
announcement in respect of this Agreement or the transactions contemplated
hereby without the prior written consent of Purchaser.
7.3 Certain Tax Matters.
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(a) Seller shall be responsible for and shall pay all Taxes relating
to the Purchased Assets and the Division Business for all taxable periods (or
portions thereof) ending on or prior to the Closing, and for the portion of the
taxable period through and including the Closing in the case of any taxable
period which includes but does not end on the Closing (a "Straddle Period")
(collectively, "Pre-Closing Taxes"). Seller shall file all Tax Returns required
to be filed with respect to Taxes relating to the Purchased Assets and the
Division Business for all taxable periods ending on or prior to the Closing.
Purchaser shall be responsible for and shall pay all Taxes relating to the
Purchased Assets and the Division Business for (i) the portion of the taxable
period from and after the Closing in the case of any Straddle Period and (ii)
any taxable period which commences after the Closing. Purchaser shall file all
Tax Returns required to be filed with respect to Taxes relating to the Purchased
Assets and the Division Business for all Straddle Periods. Taxes attributable to
a Straddle Period shall be allocated between Seller and Purchaser based, for the
Seller, on the proportion of the number of days in such period through such
Closing compared to the total number of days in such taxable period, and with
respect to Purchaser, to the number of days in such period after such Closing
compared to the total number of days in such taxable period; provided, however,
that Taxes assessed or levied on specific transactions attributable to a
Straddle Period shall be allocated to Seller or Purchaser, as the case may be,
in accordance with whether the transaction giving rise to the imposition of such
Taxes was undertaken before the Closing or after the Closing. Whenever in
accordance with this section Seller shall be required to pay to Purchaser an
amount in respect of Pre-Closing Taxes, such payment shall be made promptly
after demand therefor is made.
(b) Seller and Purchaser shall cooperate with each other and provide
each other with such assistance as reasonably may be requested by either of them
in connection with the preparation of any Tax Return or any audit or other
examination by any taxing authority, or any judicial or administrative
proceedings relating to any liability for Taxes under this Agreement. The party
requesting assistance hereunder shall reimburse the party providing assistance
for all reasonable third-party out-of-pocket expenses incurred in providing such
assistance.
(c) All sales and transfer taxes arising from the consummation of
the transactions contemplated hereby shall be borne by Seller. Seller shall
prepare and file all Tax Returns in connection with all such sales and transfer
taxes and shall provide Purchaser with copies thereof at least five (5) Business
Days before they are due to be filed.
7.4 Non-Compete and Non-Solicitation.
(a) Seller will not, and Seller will cause each of its Affiliates
not to, directly or indirectly (i) engage in any business competitive with the
Division Business in the United States (the "Geographic Region") for the six (6)
month period immediately following the Closing Date, or (ii) solicit any
employee of Purchaser or any former employee of Seller engaged in the Division
Business within the Geographic Region to terminate his or her employment with
Purchaser, for the three (3) year period immediately following the Closing Date.
Seller further agrees that during the two (2) year period immediately following
the Closing Date, in the event
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(A) Seller acquires or is acquired by a Person which is engaged in a business
competitive with that of the Division Business or (B) Seller internally develops
a business which is competitive with that of the Division Business, Seller shall
not market or sell the products or services of such business under the name,
trade name or trademark "Checkpoint", or any derivative thereof. Seller will be
deemed to be competing with Purchaser in violation of Section 7.4(a)(i) or
soliciting a customer of Purchaser, employee of Purchaser or a former employee
of Seller in violation of Section 7.4(a)(ii), as the case may be, if Seller or
any of its Affiliates engages or participates directly or indirectly in any
activity or activities described Sections 7.4(a)(i) or (a)(ii) within the
Geographic Region, whether for its own account or for that of any other Person
or as a shareholder, partner or investor controlling any such Person or as a
principal, agent, representative, proprietor or partner or in any other
capacity; provided, however, that Seller may purchase or otherwise acquire up to
4.99% of any class of securities of any Person (but may not otherwise
participate in any way in the activities of such Person) if such securities are
listed on any national or regional securities exchange and have been registered
under Section 12(g) of the Securities Exchange Act of 1934, as amended.
Notwithstanding the foregoing, Seller shall not be in violation of this Section
7.4(a) if Seller conducts any activity (other than activities relating or
similar to the Division Business) in which Seller was engaged on or prior to the
Closing Date.
(b) Seller hereby acknowledges that a violation or threatened
violation of any of the provisions of this Section 7.4 will result in Purchaser
sustaining irreparable harm, which result could not be fully redressed by the
payment of damages to Purchaser, and, therefore, in addition to any other
remedies which Purchaser may have under this Agreement or otherwise, Purchaser
shall be entitled to injunctive relief enjoining or restraining any such
violation, in addition to any other legal remedies available to Purchaser at law
or in equity for such breach, and Seller shall not object to any application or
issuance of such injunction. If for any reason any court of competent
jurisdiction shall find any of the provisions of this Section 7.4(b)
unreasonable in duration or in geographic scope or otherwise, the prohibitions
contained herein shall be restricted to such time and geographic areas as such
court determines to be reasonable. Such restriction shall apply only with
respect to the operation of such provisions in the particular jurisdiction in
which such adjudication is made.
7.5 Employees.
(a) Except as specifically set forth in Section 7.5(b) below, (i)
Purchaser is not hiring any employees of Seller or assuming any employment
contracts pursuant to this Agreement and (ii) all liabilities with respect to
any employees of Seller involved in or employed in connection with the Division
Business, including, without limitation, wages, bonuses, commissions, benefits,
workers' compensation, disability and termination or severance payments, shall
remain the responsibility of Seller and are Retained Liabilities.
(b) Purchaser agrees to consider for employment, on the same basis
as all other applicants, any employee of Seller who elects to apply for
employment with Purchaser. Purchaser intends to hire those employees of Seller
set forth on Schedule 7.5 (the "Hired Employees") as of the Closing Date. The
Hired Employees shall be at-will employees of
21
Purchaser from and after the Closing Date and shall receive such compensation
and benefits are is determined by Purchaser.
(c) During the one (1) year period immediately following the Closing
Date, Purchaser shall permit each of the Hired Employees to cooperate with
Seller in any legal or quasi-legal matter, such as governmental or private legal
actions, investigations or other proceedings. Seller shall reimburse such Hired
Employees for any pre-approved costs and expenses incurred by the Hired
Employees in connection with such cooperation.
(d) Notwithstanding anything to the contrary herein contained, no
employee or former employee is or shall be construed as a third party
beneficiary under this Section 7.5 or any other provision of this Agreement.
7.6 Litigation.
(a) Notice of Claims. Seller shall provide Purchaser with written
notice of any litigation, claim, action, investigation, suit or other proceeding
asserted against Seller after the Closing Date, which arise out of or otherwise
relate to the Division Business. Such notice shall be given by Seller within
fifteen (15) days of its knowledge of the existence of such litigation, claim,
action, investigation, suit or proceeding and shall identify the claimant, the
nature of the dispute and the remedies sought by the claimant.
(b) Settlement of Claims. Seller shall not, without the prior
written consent of Purchaser, which consent shall not be unreasonably withheld,
settle, compromise or otherwise discharge any litigation, claim, action,
investigation, suit or other proceeding, whether or not pending or threatened as
of the Closing Date or commenced hereafter, which arise out of or otherwise
relate to the Division Business, including, without limitation, any litigation
disclosed in Schedule 5.14.
7.7 Collection of Accounts Receivable. From and after the Closing, (i) Seller
shall deliver to Purchaser any checks or other forms of payment tendered to
Seller in payment of any Accounts Receivable (other than any payment of any
Returned AR) and (ii) Purchaser shall deliver to Seller any checks or other
forms of payment tendered to Purchaser in payment of any Returned AR. If any
such payments are made by a check payable to the order of Seller, then Seller
shall endorse and deliver such check to Purchaser.
7.8 Preserve Accuracy of Representations and Warranties.
Each of the parties hereto shall refrain from taking any action that would
render any representation or warranty contained herein inaccurate as of the
Closing Date. During the period from the date hereof and through the Closing
Date, each party hereto shall promptly notify each other upon becoming aware of
any facts or circumstances that cause or are reasonably likely to cause any of
such parties' disclosures set forth in any Schedule hereto to be untrue or
inaccurate.
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7.9 Operations Prior to the Closing Date.
Between the date hereof and the Closing Date, except with the prior
written approval of the Purchaser, the Seller shall operate and carry on the
Division Business only in the ordinary course and as is presently operated and
Seller shall keep and maintain the assets of the Division Business in
substantially the same operating condition and repair (normal wear and tear
excepted) as currently maintained and maintain the Division Business intact and
preserve the goodwill of the suppliers, contractors, licensors, employees,
customers and distributors of the Division Business.
7.10 Schedule Update.
On or prior to the date that is two (2) days prior to the Closing Date,
Seller shall deliver to Purchaser the following updated Schedules: Schedule
2.1(a)(v), Schedule 2.1(a)(ix), Schedule 2.2(d), Schedule 2.3(a)(ii) and
Schedule 2.3(a)(iii).
ARTICLE VIII
CONDITIONS TO OBLIGATIONS OF THE PARTIES
8.1 Conditions to Obligations of Purchaser.
The obligations of Purchaser under this Agreement to consummate the
transactions contemplated hereby shall be, at the option of Purchaser, subject
to the fulfillment, on or before the Closing Date, of each of the following
conditions (provided that Purchaser's election to close despite the
non-satisfaction of one or more of the following conditions shall not be deemed
a waiver by Purchaser of any of its rights under this Agreement or a waiver by
Purchaser of any of Seller's obligations under this Agreement):
(a) Representations and Warranties. The representations and
warranties of Seller contained in this Agreement shall have been true and
correct when made and shall be true and correct as of the Closing with the same
force and effect as if made as of the Closing (other than such representations
and warranties as are made as of another date), the covenants and agreements
contained in this Agreement and the Other Agreements to be complied with by
Seller on or before the Closing shall have been complied with.
(b) Proceedings and Documents. All corporate and other proceedings
of Seller in connection with this Agreement and the transactions contemplated
hereby and the Other Documents incident thereto shall be reasonably satisfactory
in form and substance to Purchaser, and Purchaser shall have received all such
counterpart original and certified or other copies of such documents as it may
reasonably request.
(c) Consents and Approvals. All consents, approvals, authorizations,
exemptions and waivers from third parties and Governmental Authorities that are
required by Law or which are necessary in order to enable Purchaser to
consummate the transactions
23
contemplated hereby and to operate the Division Business substantially in the
same manner in which Seller has operated the Division Business prior to the date
hereof shall have been duly obtained and effective on and as of the Closing
Date. Without limiting the generality of the foregoing, Purchaser shall have
obtained the written consent, waiver or approval to the assignment of each of
the Assumed Contracts by the counterparty thereto to the extent required
thereunder.
(d) Deliveries at Closing. Seller shall have executed and delivered
to Purchaser the Other Agreements as well as such other assignments,
registrations, endorsements, bills of sale, deeds, assignments and other
instruments of transfer and conveyance, and such other agreements, instruments,
certificates and documents, all in form and substance reasonably satisfactory to
Purchaser, as shall be effective to vest in Purchaser all of the right, title
and interest of Seller in and to the Purchased Assets free and clear of all
Encumbrances, and as shall be necessary to fully effectuate the transactions
contemplated hereby. Seller shall also deliver to Purchaser all Books and
Records, and shall use its commercially reasonable efforts to take all such
steps as may be necessary to put Purchaser in actual possession and operating
control of the Division Business and the Purchased Assets.
(e) No Adverse Changes. Between the date of this Agreement and the
Closing Date, there shall not have occurred any damage to, or destruction or
loss of, any of the Purchased Assets, whether or not covered by insurance, nor
shall there have occurred any other event or condition, any of the foregoing of
which has had or may reasonably be expected to have a material Adverse Effect.
(f) No Proceeding or Litigation. No action or legal proceeding shall
have been commenced by or before any Governmental Authority against either
Seller or Purchaser seeking to restrain or materially and adversely alter the
transactions contemplated hereby which Purchaser believes, in its sole and
absolute discretion, is likely to render it impossible or unlawful to consummate
the transactions contemplated by this Agreement or which could have a Material
Adverse Effect.
(g) Audit Opinion. Issuance of a "clean" audit opinion by ▇▇▇▇▇▇▇▇▇
▇▇▇▇, the certified public accountants engaged by Purchaser, of the (i) balance
sheets of the Division Business for the years ended 2002, 2003 and 2004 and (ii)
profits and losses statements of the Division Business for the years ended 2003
and 2004 (the "Audit Opinion").
(h) Certificate of Executive Officer of Seller. Purchaser shall have
received a certificate, dated the Closing Date, executed by the chief executive
officer of Seller, certifying that each of the conditions set forth in Section
8.1(a), (b), (e) and (f) have been satisfied.
8.2 Conditions to Obligations of Seller. The obligations of Seller under this
Agreement to consummate the transactions contemplated hereby shall be, at the
option of Seller, subject to the fulfillment, on or prior to the Closing Date,
of each of the following conditions (provided that Seller's election to close
despite the non-satisfaction of one or more of the following conditions
24
shall not be deemed a waiver by Seller of any of its rights under this Agreement
or a waiver by Seller of any of Purchaser's obligations under this Agreement):
(a) Representations and Warranties. The representations and
warranties of Purchaser contained in this Agreement shall have been true and
correct when made and shall be true and correct as of the Closing with the same
force and effect as if made as of the Closing (other than such representations
and warranties as are made as of another date), the covenants and agreements
contained in this Agreement and the Other Agreements to be complied with by
Seller on or before the Closing shall have been complied with.
(b) Proceedings and Documents. All corporate and other proceedings
of Purchaser in connection with this Agreement and the transactions contemplated
hereby and the Other Documents incident thereto shall be reasonably satisfactory
in form and substance to Seller, and Seller shall have received all such
counterpart original and certified or other copies of such documents as it may
reasonably request.
(c) No Proceeding or Litigation. No action or legal proceeding shall
have been commenced by or before any Governmental Authority against either
Seller or Purchaser seeking to restrain or materially and adversely alter the
transactions contemplated hereby which Seller believes, in its sole and absolute
discretion, is likely to render it impossible or unlawful to consummate the
transactions contemplated by this Agreement or which could have a Material
Adverse Effect.
(d) Deliveries at Closing. Purchaser shall have executed and
delivered to Seller the Other Agreement, as well as such other assignments,
registrations, endorsements, bills of sale, deeds, assignments and other
instruments of transfer and conveyance, and such other agreements, instruments,
certificates and documents, all in form and substance reasonably satisfactory to
Seller, as shall be necessary to fully effectuate the transactions contemplated
hereby.
ARTICLE IX
SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION
9.1 Survival of Representations and Covenants. Each representation and warranty
made by any party to this Agreement shall survive the Closing for a period of
eighteen (18) months following the Closing Date. Notwithstanding the foregoing,
the representations and warranties contained in Section 5.10 and Section 5.11
shall survive until sixty (60) days after the expiration of the applicable
statute of limitations and the representations and warranties contained in
Section 5.1, Section 5.2, Section 5.3 and Section 5.4 shall survive
indefinitely. Each covenant and agreement made by any party to this Agreement
shall survive the Closing indefinitely, unless a shorter period is specifically
set forth in such covenant or agreement.
9.2 Indemnification.
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(a) Seller's Agreement to Indemnify. Subject to the terms and
conditions of this Article IX, Seller hereby agrees to indemnify, defend and
hold harmless Purchaser and its members, officers, directors, employees, agents,
Affiliates, successors and permitted assigns (the "Purchaser Group"), after
consummation of the Closing, from and against any and all losses, liabilities,
costs, expenses (including reasonable attorneys' fees) penalties, fines and
damages (collectively, "Damages") incurred by any member of the Purchaser Group
to the extent arising from or attributable to (i) the breach of any
representation or warranty of Seller contained in this Agreement or any of the
Other Agreements, (ii) any breach of any covenant or agreement of Seller
contained in this Agreement or any of the Other Agreements (iii) the Excluded
Liabilities or (iv) any litigation disclosed on Schedule 5.14. Claims by any
member of the Purchaser Group under this Section 9.2(a) are referred to
individually as a "Purchaser Claim" or collectively, as "Purchaser Claims."
Notwithstanding the foregoing, Seller not have any liability under Section
9.2(a)(i) for Damages in excess of One Hundred Thousand Dollars ($100,000) (the
"Indemnity Cap"); provided, however, the Indemnity Cap shall not apply to any
fraudulent or intentionally wrongful act or omission of Seller. For the
avoidance of doubt, the Indemnity Cap is not applicable to the payment by Seller
of any AR Shortfall nor to the payment of any post-closing working capital
adjustment pursuant to Section 3.6 hereof.
(b) Purchaser's Agreement to Indemnify. Subject to the terms and
conditions of this Article IX, Purchaser hereby agrees to indemnify, defend and
hold harmless Seller and its members, officers, directors, employees, agents,
Affiliates, successors and permitted assigns (the "Seller Group"), after
consummation of the Closing, from and against any and all Damages incurred by
any member of the Seller Group to the extent arising from or attributable to (i)
the breach of any representation or warranty of Purchaser contained in this
Agreement or any of the Other Agreements, (ii) any breach of any covenant or
agreement of Purchaser contained in this Agreement or any of the Other
Agreements or (iii) the Assumed Liabilities. Claims by any member of the Seller
Group under this Section 9.2 (b) are referred to individually as a "Seller
Claim" or collectively, as "Seller Claims," and Seller Claims together with
Purchaser Claims are herein collectively referred to as "Claims" and each a
"Claim."
9.3 Conditions of Indemnification.
(a) The obligations and liabilities of an indemnifying party under
Section 9.2 hereof with respect to Purchaser Claims or Seller Claims made by
third parties shall be subject to the following terms and conditions:
(i) an indemnified party shall give written notice of a Claim
to the indemnifying party promptly after becoming aware thereof,
which notice shall specify in reasonable detail the amount, nature
and source of the Claim and include therewith copies of any notices
or other documents received from third parties with respect to such
Claim; provided, however, that failure to give such notice shall not
limit the right of an indemnified party to recover indemnity or
reimbursement except to the extent that the indemnifying party
suffers any prejudice or harm with respect to such Claim as a result
of such failure. The
26
indemnified party shall also provide the indemnifying party with
such further information concerning any such Claims as the
indemnifying party my reasonably request by written notice.
(ii) until all of the Escrow Amount has been disbursed, any
Person having a Purchaser Claim shall give all notices of claims for
indemnification, and all such Purchaser Claims shall be satisfied,
in accordance with the terms of this Agreement and the Escrow
Agreement;
(iii) in the event all of the Escrow Amount has been
disbursed, the indemnified party will give the indemnifying party
written notification of any Purchaser Claim or Seller Claim made by
third parties, and the indemnifying party shall have the right, so
long as it acts with reasonable diligence to defend such claim, to
undertake the defense thereof by counsel and other representatives
chosen by it in each case reasonably acceptable to the indemnified
party;
(iv) in the event the indemnifying party assumes the defense
of a claim, the indemnified party shall have the right to employ
counsel separate from counsel employed by the indemnifying party in
any such action and to participate therein, but the fees and
expenses of such counsel employed by the indemnified party shall be
at its expense, unless (A) the indemnified party is required to
retain separate counsel due to a conflict of interest with the
indemnifying party or (B) the indemnifying party fails to act with
reasonable diligence in defending such Claim;
(v) if the indemnifying party, within twenty (20) Business
Days after notice of any such Purchaser Claim or Seller Claim, fails
to agree in writing to defend the indemnified party against which
such Purchaser Claim or Seller Claim has been asserted or thereafter
fails to reasonably defend such indemnified party, the indemnified
party shall (upon further notice to the indemnifying party) have the
right to undertake the defense, compromise or settlement of such
Purchaser Claim or Seller Claim on behalf of and for the account and
risk of the indemnifying party (subject to the right of the
indemnifying party thereafter to assume such defense in accordance
with this Section 9.3); provided that the indemnified party shall
not, without the written consent of the indemnifying party, settle
or compromise any Purchaser Claim or Seller Claim, as the case may
be, or consent to the entry of any judgment which does not include
as an unconditional term thereof the giving by the claimant or the
plaintiff to the indemnifying party a release from any and all
liability or obligation in respect to such Purchaser Claim or Seller
Claim, as the case may be;
(vi) no Claim shall be settled without the indemnified party's
prior written consent, which consent shall not be unreasonably
withheld or delayed, unless the settlement involves only the payment
of monetary consideration by the
27
indemnifying party and includes an unconditional release of the
indemnified party; and
(vii) whether or not an indemnifying party chooses to defend a
Claim, all the parties hereto shall cooperate in the defense or
prosecution thereof and shall furnish such records, information and
testimony, and attend such conferences, discovery proceedings,
hearings, trials and appeals, as may be reasonably requested in
connection therewith.
(b) Anything in this Section 9.3 to the contrary notwithstanding,
(i) if there is a reasonable probability that a Purchaser Claim or a Seller
Claim may materially and adversely affect the indemnified party other than as a
result of money damages or other money payments, the indemnified party shall
have the right, at its own cost and expense, to defend, compromise or settle
such Purchaser Claim or Seller Claim; provided, however, that if such Purchaser
Claim or Seller Claim is settled without the indemnifying party's consent (which
consent shall not be unreasonably withheld, delayed or conditioned), the
indemnified party shall be deemed to have waived all rights hereunder against
the indemnifying party for money damages arising out of such Purchaser Claim or
Seller Claim, and (ii) with respect to any Purchaser Claims or Seller Claims
relating to Taxes, the indemnifying party shall not settle or compromise any
Purchaser Claim or Seller Claim or enter into any closing or other final
agreement with any taxing authority without the written consent of the
indemnified party.
9.4 Disclosure. No action by either party to determine the extent of indemnified
Damages, including voluntary disclosure to Governmental Authorities or potential
claimants, shall in any way affect any member of the Seller Group or the
Purchaser Group's right to indemnification hereunder, as the case may be.
ARTICLE X
TERMINATION OF AGREEMENT
10.1 Events of Termination. This Agreement may be terminated, and the
transactions contemplated hereby may be abandoned, at any time prior to Closing:
(a) by the mutual consent of Purchaser and Seller; or
(b) by the Seller on the one hand, or the Purchaser, on the other
hand, if the other party shall have materially breached or failed in any respect
to comply with any of its covenants, agreements or obligations under this
Agreement, or if any of the representations and warranties of such other party
contained in this Agreement shall have been inaccurate in any material respect
when made or become inaccurate in any respect at any time prior to the Closing;
(c) by Purchaser, if Purchaser is unable to obtain the Auditor's
Opinion by December 31, 2005;
28
(d) by the Seller or the Purchaser, if the Closing shall not have
occurred prior to December 31, 2005; provided, however, that the right to
terminate this Agreement under this Section 10.1(c) shall not be available to
any party whose failure to fulfill any covenant, obligation or agreement under
this Agreement shall have been the cause of, or shall have resulted in, the
failure of the Closing to occur prior to such date.
10.2 Effect of Termination. In the event that either party shall elect to
terminate this Agreement pursuant to any provision contained herein expressly
giving such party the right to terminate this Agreement, this Agreement shall
forthwith terminate and have no further effect and no party shall have any
further obligation or liability in respect of such termination (except with
respect to those provisions hereof which expressly survive any termination of
this Agreement), provided, that the provisions of Sections 7.1 and 11.13 shall
survive any such termination and be enforceable hereunder and provided, further,
that nothing in this Section 10.2 shall relieve either party hereto of any
liability for its breach of this Agreement.
10.3 Waiver. At any time prior to the Closing, either party hereto may (a)
extend the time for the performance of any of the obligations or other acts of
the other party hereto, (b) waive any inaccuracies in the representations and
warranties contained herein or in any document delivered pursuant hereto or (c)
waive compliance with any of the agreements or conditions contained herein. Any
such extension or waiver shall be valid if set forth in an instrument in writing
signed by the party to be bound thereby.
ARTICLE XI
MISCELLANEOUS
11.1 Further Assurances. Whenever and so often as requested by either party
hereto, the other party will promptly execute and deliver or cause to be
executed and delivered all such other and further instruments, documents or
assurances, and promptly do or cause to be done all such other and further
things, as may be necessary and reasonably required in order to further and more
fully vest in such other party all rights, interests, powers, benefits,
privileges and advantages conferred or intended to be conferred by this
Agreement. Without limiting the generality of the foregoing, Seller agrees to
hold in trust for Purchaser and promptly remit to Purchaser any payments that
Seller receives in respect of the Purchased Assets, or in respect of the
Division Business conducted with the Purchased Assets following the Closing.
11.2 Entire Agreement. This Agreement, including the Schedules and Exhibits
hereto, and the documents and instruments to be executed and delivered pursuant
hereto constitute the entire agreement among the parties with respect to the
subject matter hereof, supersede all prior agreements and understandings among
the parties with respect thereto, including, without limitation, that certain
letter of intent dated September 7, 2005 between Parent and Seller, and no party
shall be liable or bound to any other party in any manner by any promises,
conditions, warranties, representations, or covenants except as specifically set
forth herein or therein.
29
11.3 Successors and Assigns. This Agreement may not be assigned by any party
hereto without the written consent of Purchaser and Seller; provided, however,
that Purchaser may assign its rights hereunder to any Affiliate which assumes
the obligations of Purchaser hereunder, but no such assignment shall relieve
Purchaser of any such obligations. Subject to the preceding sentence, this
Agreement shall be binding upon, inure to the benefit of, and be enforceable by
the parties hereto and their respective heirs, personal representatives,
legatees, successors and permitted assigns except to the extent such
enforceability may be limited by bankruptcy laws and other laws affecting
creditors' rights and under general principles of equity. Notwithstanding
anything to the contrary set forth herein, in the event of a conveyance, sale or
other disposition of all or any portion of the Division Business and/or the
Purchased Assets, Purchaser may from time to time assign and transfer to the
purchaser thereof, all of the interest, rights and remedies of Purchaser in, to
and with respect to the indemnification obligations of Seller set forth in
Article IX. Seller and its Affiliates and their successors and assigns hereby
expressly consent to such assignment or assignments. Notwithstanding anything to
the contrary set forth herein, in the event of a conveyance, sale or other
disposition of all or substantially all of Seller's remaining business and/or
assets, Seller may assign and transfer to the Purchaser thereof, all of the
interest, rights and remedies of Seller in, to and with respect to the
indemnification obligations of Purchaser set forth in Article IX. Purchaser and
its Affiliates and their successors and assigns hereby expressly consent to such
assignment or assignments. This Agreement shall not confer any rights or
remedies upon any Person other than the parties hereto and their respective
heirs, personal representatives, legatees, successors and permitted assigns.
11.4 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New Jersey excluding its conflicts of
law principles. In the event of any controversy or claim arising out of or
relating to this Agreement or the breach or alleged breach hereof, each of the
parties hereto irrevocably (a) submits to the exclusive jurisdiction of any New
Jersey state court or any federal court sitting in the State of New Jersey, (b)
waives any objection which it may have at any time to the laying of venue of any
action or proceeding brought in any such court, (c) waives any claim that such
action or proceeding has been brought in an inconvenient forum and (d) agrees
that service of process or of any other papers upon such party by registered
mail at the address to which notices are required to be sent to such party under
Section 11.12 shall be deemed good, proper and effective service upon such
party.
11.5 Severability. If one or more provisions of this Agreement are held to be
unenforceable under applicable law, such provision shall be excluded from this
Agreement and the balance of the Agreement shall be interpreted as if such
provision were so excluded and shall be enforceable in accordance with its
terms.
11.6 Waiver of Compliance. Without limiting Purchaser's right to indemnification
pursuant to Section 9.2 for Damages incurred as a result of third party claims,
suits or proceedings, Purchaser agrees that Seller's non-compliance with any
applicable bulk transfer provisions of the Uniform Commercial Code will not be
deemed a breach or default under any representation or warranty by Seller made
under or in connection with this Agreement.
30
11.7 Amendments and Waivers. This Agreement may not be modified, nor may any
term or provision hereof be waived or discharged, except by an instrument in
writing signed by the party against whom enforcement of such modification,
waiver or discharge is sought. No such waiver or discharge shall be deemed to be
or shall constitute a waiver or discharge with respect to any other terms or
provisions of this Agreement, whether or not similar. Each such waiver or
discharge shall be effective only in the specific instance and for the purpose
for which it was given, and shall not constitute a continuing waiver or
discharge.
11.8 Counterparts. This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument. This Agreement may be executed by
facsimile or other electronic method.
11.9 Captions. The table of contents, headings and captions used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
11.10 Certain References. The term "herein," "hereof" "hereunder" or similar
terms used in this Agreement refer to this entire Agreement and not to the
particular provision in which the term is used. The word "including" shall mean
"including without limitation", whether or not expressed. Unless otherwise
stated, all references herein to Articles, Sections, subsections or other
provisions are references to Articles, Sections, subsections or other provisions
of this Agreement.
11.11 Interpretation. The parties hereto acknowledge and agree that: (i) each
party and its counsel reviewed and negotiated the terms and provisions of this
Agreement and have contributed to its revision; (ii) the rule of construction to
the effect that any ambiguities are resolved against the drafting party shall
not be employed in the interpretation of this Agreement; and (iii) the terms and
provisions of this Agreement shall be construed fairly as to all parties hereto
and not in favor of or against any party, regardless of which party was
generally responsible for the preparation of this Agreement.
11.12 Notices. All notices, requests, demands, waivers and other communications
required or permitted to be given under this Agreement shall be in writing and
shall be deemed to have been duly given if delivered personally, sent by
overnight courier, facsimile transmission (with confirmation of receipt) or
mailed (postage prepaid and by certified or registered mail, return receipt
requested):
If to Seller, to:
Checkpoint Systems, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇ ▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
31
If to Purchaser, to:
LQ Corporation, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇, CEO
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ LLP
▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
or to such other person or address as any party shall specify by notice in
writing to the other party. All such notices, requests, demands, waivers and
communications shall be deemed to have been received on the date on which so
hand-delivered or telecommunicated or delivered by overnight courier or on the
fifth business day following the date on which so mailed, except for a notice of
change of address, which shall be effective only upon receipt thereof.
11.13 Expenses. Purchaser and Seller shall bear and pay their own respective
costs and expenses incurred by them (including but not limited to counsel,
financial advisory and accounting fees and expenses) in connection with the
transactions contemplated hereby. Notwithstanding the foregoing, Purchaser shall
bear any costs incurred by Seller relating to the preparation of audited
financial statements of the Division Business for purposes of the transactions
contemplated herein.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first above written.
SIELOX, LLC
By: ____________________________
Name:
Title:
CHECKPOINT SYSTEMS, INC.
By: ____________________________
Name:
Title:
33
EXHIBIT A
DEFINITIONS
The following terms, as used in the Agreement, have the following
meanings:
"Affiliate" shall mean, with respect to a specified Person, a Person that
directly or indirectly, through one or more intermediaries, controls, is
controlled by or is under common control with, such specified Person, and also
includes any stockholder, member, officer, manager or director of such Person.
"Assignment and Assumption Agreement" shall mean the Assignment and
Assumption Agreement, dated as of the Closing Date, between Seller and
Purchaser, in the form attached hereto as Exhibit B, pursuant to which Seller
shall assign to Purchaser the Assumed Contracts Obligations and Purchaser shall
assume the Assumed Contract Obligations.
"Assumed Contract Obligations" shall mean the liabilities and obligations
arising after the Closing Date under the Assumed Contracts which Purchaser shall
assume pursuant to the Assignment and Assumption Agreement; provided that the
Assumed Contract Obligations shall not include (i) any payments required to be
made, or costs or other expenses required to be incurred, by Seller on or prior
to the Closing Date with respect to any Assumed Contract, or (ii) any
liabilities or obligations resulting from a breach by Seller of an Assumed
Contract or any of its duties or obligations thereunder on or prior to the
Closing.
"Balance Sheet" shall mean the balance sheet of Seller as it pertains to
the Division Business, as of December 31, 2004.
"▇▇▇▇ of Sale" shall mean the ▇▇▇▇ of Sale, dated as of the Closing Date,
from Seller to Purchaser in the form attached hereto as Exhibit C, pursuant to
which Seller shall transfer the Purchased Assets to Purchaser.
"Business Day" shall mean a day of the year on which banks are not
required or authorized to be closed in the State of New York.
"Code" shall mean the Internal Revenue Code of 1986, as amended, together
with all regulations issued or promulgated thereunder.
"Employee Benefit Plan" shall mean all compensation, benefit, bonus,
deferred compensation, incentive compensation, stock purchase, stock option,
employment, consulting, severance or termination pay, group insurance, death
benefit, cafeteria, dependent care, hospitalization or other medical, dental,
vision, life, supplemental unemployment benefits, vacation pay, welfare, profit
sharing, pension or retirement plan, program, agreement or arrangement, and each
other "employee benefit plan" (within the meaning of Section 3(2) of ERISA, and
the rules and regulations promulgated thereunder), that is maintained or
contributed to by Seller for the benefit of any employee of Seller (an "Employee
Benefit Plan").
"Encumbrances" shall mean any mortgages, liens, pledges, security
interests, leases, options or rights in third persons to acquire or lease,
charges, adverse interests, judgments, claims, encumbrances, restrictions or
defects of any nature whatsoever.
"Environmental Laws" shall mean any and all federal, state, local and
foreign, civil and criminal laws, statutes, rules, ordinances, codes,
regulations, permits relating to the protection of health and the environment,
worker health and safety and or governing the use, handling, storage, discharge
or disposal of Hazardous Substances, including but not limited to the
Comprehensive Environmental Response, Compensation and Liability Act, 42 USC
ss.9601 et. seq., the Resource Conservation and Recovery Act, 42 USC ss.6901 et.
seq., the Occupational Health and Safety Act, 29 USC ss.651 et. seq., the
Federal Insecticide, Fungicide and Rodenticide Act, 7 USC ss.136 et. seq.; and
the state analogues thereto, all as amended or superseded from time to time.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended, together with all regulations issued or promulgated thereunder, and all
other Laws relating to the employment and compensation of employees.
"Financial Statements" shall mean the audited balance sheet and statements
of earnings, shareholders' equity and cash flows of Seller as of, and for each
of the fiscal years ended December 31, 2004 and December 31, 2003, respectively
and the interim balance sheet and statement of earnings, shareholders' equity
and cash flows of Seller as of and for the six (6) month period ended, June 30,
2005.
"GAAP" shall mean U.S. generally accepted accounting principles,
consistently applied.
"Governmental Authority" shall mean any public body, governmental,
administrative or regulatory authority, agency, instrumentality or commission,
including courts of competent jurisdiction and arbitral tribunals, whether
Federal, state, local or foreign.
"Hazardous Substance" shall mean petroleum and petroleum products,
radioactive materials, asbestos-containing materials, radon, lead-based paint,
polychlorinated biphenyls, pesticides and any other chemicals, substances,
wastes or materials regulated by any Environmental Law.
"Inventory Valuation" shall mean the value of the Inventory as determined
in accordance with Section 3.2 hereof.
"Knowledge of Seller" means the best knowledge, after reasonable inquiry,
at any time, of Seller and the officers and directors of Seller.
"Laws" shall mean any statutes, ordinances, rules, regulations, orders,
writ or other laws of any Governmental Authority.
"License Agreement" means that Intellectual Property License Agreement,
dated as of the Closing Date, between Seller and Purchaser in the form attached
hereto as Exhibit H.
2
"Material Adverse Effect" means any material adverse effect on the
properties, operations, assets, prospects, condition (financial or otherwise),
liabilities, or results of operations of the Division Business.
"Net Working Capital" means the inventory, accounts receivable and prepaid
expenses of the Division Business included in the Purchased Assets, minus the
accounts payable and accrued expenses of the Division Business included in the
Assumed Liabilities.
"Orders" shall mean any orders, writs, injunctions, judgments, decrees or
awards of any Governmental Authority.
"Other Agreements" shall mean the ▇▇▇▇ of Sale, the Assignment and
Assumption Agreement, the Patent Assignment and Assumption Agreement, and the
Trademark Assignment and Assumption Agreement.
"Patent Assignment and Assumption Agreement" shall mean the Patent
Assignment and Assumption Agreement, dated as of the Closing Date, between
Seller and Purchaser, in the form attached hereto as Exhibit D.
"Person" means an individual, partnership, venture, unincorporated
association, organization, syndicate, corporation, limited liability company, or
other entity, trust, trustee, executor, administrator or other legal or personal
representative or any government or any agency or political subdivision thereof.
"Taxes" shall mean any domestic or foreign federal, state or local taxes,
levies, imposts, duties or other like assessments or charges of any kind
whatsoever, together with any interest or penalty, addition to tax or additional
amount imposed thereon, whether payable by reason of contract, assumption,
transferee liability, operation of law or otherwise (including any income, net
income, gross income, receipts, windfall profit, severance, property,
production, sales, use, license, excise, registration, franchise, employment,
payroll, withholding, alternative or add-on minimum, intangibles, ad valorem,
transfer, gains, stamp, estimated, transaction, title, capital, paid-up capital,
profits, occupation, premium, value-added, recording, real property, personal
property, federal highway use, commercial rent or environmental tax).
"Tax Returns" shall mean any return, declaration, report, claim for
refund, information return or other document (including any related or
supporting information) required to be filed with respect to Taxes, including
any schedule or attachment thereto, and including any amendment thereof.
"Trademark Assignment and Assumption Agreement" shall mean the Trademark
Assignment and Assumption Agreement, dated as of the Closing Date, between
Seller and Purchaser in the form attached hereto as Exhibit E.
3
EXHIBIT B
ASSIGNMENT AND ASSUMPTION AGREEMENT
4
ASSIGNMENT AND ASSUMPTION AGREEMENT
This ASSIGNMENT AND ASSUMPTION AGREEMENT (this "Agreement") is dated as of
November ___, 2005, by and between SIELOX, LLC, a Delaware limited liability
company ("Purchaser"), and CHECKPOINT SYSTEMS, INC., a Pennsylvania corporation
("Seller"). Capitalized terms used herein and not otherwise defined shall have
the meanings ascribed to such terms in that certain asset purchase agreement by
and between Seller and Purchaser (the "Asset Purchase Agreement").
W I T N E S S E T H:
WHEREAS, pursuant to Asset Purchase Agreement, dated as of the date
hereof, Seller has agreed to sell, transfer, convey, assign and deliver to
Purchaser the Purchased Assets; and
WHEREAS, the Asset Purchase Agreement requires Purchaser to assume, as of
the date hereof, and perform and discharge when due, certain liabilities and
obligations of Seller.
NOW, THEREFORE, pursuant to the terms of the Asset Purchase Agreement and
for good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties agree as follows:
1. Assumed Liabilities. Seller hereby assigns to Purchaser, and Purchaser
hereby assumes from Seller, all Assumed Liabilities specifically set forth in
Section 2.3(a) of the Asset Purchase Agreement.
2. Retained Liabilities. Other than as specifically stated in Section 1 of
this Agreement, Purchaser does not assume, and Purchaser shall not be liable or
obligated in any way for any Excluded Liabilities.
3. Amendment. This Agreement may not be amended or modified except by an
instrument in writing signed by all the parties hereto.
4. Governing Law. The interpretation and performance of this Agreement
shall be governed by and in accordance with the laws of the State of New Jersey
without regard to such State's conflicts of law principles.
5. Conflicts. This Agreement is delivered pursuant to and is subject to
the Asset Purchase Agreement. In the event that any provision hereof conflicts
with any provision of the Asset Purchase Agreement, the Asset Purchase Agreement
shall be deemed to govern and correctly evidence the intentions of the parties.
IN WITNESS WHEREOF, each party hereto has duly executed this Agreement on
the date and year first above written.
CHECKPOINT SYSTEMS, INC.
By: ____________________________
Name:
Title:
SIELOX, LLC
By: ____________________________
Name:
Title:
2
EXHIBIT C
▇▇▇▇ OF SALE
3
▇▇▇▇ OF SALE
KNOW ALL MEN BY THESE PRESENTS THAT pursuant to the Asset Purchase
Agreement dated as of November 2, 2005 (the "Asset Purchase Agreement") by and
between CHECKPOINT SYSTEMS, INC., a Pennsylvania corporation ("Seller"), and
SIELOX, LLC, a Delaware limited liability company ("Purchaser"), for good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, Seller does hereby sell, transfer, deliver and assign unto
Purchaser, the Purchased Assets as set forth in Section 2.1 of the Asset
Purchase Agreement, intending to hereby convey all of the right, title and
interest of Seller therein, free and clear of all Encumbrances.
This ▇▇▇▇ of Sale is executed and delivered in connection with the Asset
Purchase Agreement and notwithstanding anything to the contrary set forth
herein, nothing hereby shall in any way vary the express promises, agreements,
representations and warranties of Seller set forth in the Asset Purchase
Agreement.
Notwithstanding anything to the contrary set forth or implied in the
foregoing paragraphs hereof, the Excluded Assets listed in Section 2.2 of the
Asset Purchase Agreement are specifically excluded from this ▇▇▇▇ of Sale and
are not being sold to Purchaser.
The interpretation and performance of this ▇▇▇▇ of Sale shall be governed
by and in accordance with the laws of the State of New Jersey without regard to
such State's conflicts of law principles.
All capitalized terms used herein but not defined herein shall have the
meanings assigned to such terms in the Asset Purchase Agreement.
CHECKPOINT SYSTEMS, INC.
By:____________________________
Name:
Title:
EXHIBIT D
PATENT ASSIGNMENT
2
PATENT ASSIGNMENT AND ASSUMPTION
Patent Assignment ("Assignment") dated as of this ____ day of November,
2005 (the "Effective Date"), between CHECKPOINT SYSTEMS, INC., a Pennsylvania
corporation ("Assignor") and SIELOX, LLC, a Delaware limited liability company
("Assignee").
WHEREAS, Assignor and Assignee have entered into an Asset Purchase
Agreement dated November 2, 2005;
WHEREAS, Assignor owns all right, title and interest in and to the patent
applications listed in Schedule A, and the inventions disclosed therein;
WHEREAS, Assignee is desirous of acquiring said patents, and said interest
in said patent applications and inventions.
NOW, THEREFORE, in consideration of the sum of One Dollar and other good
and valuable executed consideration, the full receipt and sufficiency of all of
which are hereby acknowledged and intending to be legally bound hereby, the
undersigned Assignor, hereby agrees to sell, assign, transfer and convey and by
these presents does sell, assign, transfer and convey unto the above-named
Assignee, the whole and entire right, title and interest
in and to the inventions described in the patent applications listed in
Schedule A, for the territory of the United States and its possessions and
territories and all foreign countries;
in and to the patent applications listed in Schedule A and any and all
related United States and foreign patent applications disclosing said
inventions, including provisionals, non-provisionals, divisions and
continuations thereof, along with all rights of priority created by said
patent application under any treaty relating thereto; and
in and to all United States and foreign patents which may be granted on
any and all of said patent applications, including extensions, reissues
and reexamination certificates thereof;
said inventions, applications and patents to be held and enjoyed by the
above-named Assignee, for Assignee's own use and benefit, and for Assignee's
successors and assigns to the full end of the terms for which said patent(s) may
be granted, as fully and entirely as the same would have been held by the
undersigned Assignor had this assignment and sale not been made; and for the
aforesaid consideration Assignor hereby covenants, agrees and undertakes to
execute, whenever requested by the above-named Assignee, all patent
applications, assignments, lawful oaths and any other papers which Assignee may
deem necessary or desirable for securing to Assignee or for maintaining for
Assignee all the patent(s) hereby assigned or agreed to be assigned; all without
further compensation to the undersigned Assignor.
It is agreed that Assignor shall be legally bound, upon request and at the
expense of Assignee or its successors or assigns or a legal representative
thereof, to supply all information and evidence of which the undersigned has
knowledge or possession, relating to the making and practicing of said
invention, to testify in any legal proceeding relating thereto.
Assignor hereby warrants that no assignment, sale, agreement, or
encumbrance has been or will be made or entered into which would conflict with
this Assignment.
Signed this ____ day of November, 2005.
CHECKPOINT SYSTEMS, INC.
(Seal)
_______________________________________________________________
Name:
Title:
SIELOX, LLC
(Seal)
_______________________________________________________________
Name:
Title:
2
Schedule A
---------------------------------------------------------------------------------------------------------------------
Patent Appl. No. Filing Date Inventor(s) Title
---------------------------------------------------------------------------------------------------------------------
10/948,901 Monaco System and Method for Adjusting Access Control Level Based on
Homeland Security
---------------------------------------------------------------------------------------------------------------------
11/068,142 Monaco, System and Method for Adjusting Access Control Level Based on
(continuation ▇▇▇▇▇▇▇ and Homeland Security
in part) Clare
---------------------------------------------------------------------------------------------------------------------
3
EXHIBIT E
TRADEMARK ASSIGNMENT
4
TRADEMARK ASSIGNMENT AND ASSUMPTION
This Trademark Assignment ("Assignment") is made on this __ day of
November, 2005, between CHECKPOINT SYSTEMS, INC., a Pennsylvania corporation,
("Assignor") and SIELOX, LLC, a Delaware limited liability company ("Assignee").
WHEREAS, Assignor, and Assignee have entered into an Asset Purchase
Agreement dated November 2, 2005;
WHEREAS, Assignor is the owner of all right, title and interest in and to
the marks listed on the attached Schedule A and Schedule B, the federal
applications and registrations therefor, and the common law rights therein
(collectively, the "Marks"), together with the goodwill of the business
developed through the use of the Marks;
WHEREAS, Assignee is desirous of acquiring all of Assignor's rights in and
to the Marks, together with the goodwill of the business symbolized thereby;
WHEREAS, this Assignment and Assumption may be recorded by Assignee in its
sole discretion as it deems appropriate with the United States Patent and
Trademark Office.
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, Assignor hereby sells, assigns,
transfers and sets over to Assignee, its entire right, title, interest in and to
the Marks, and the goodwill of the business associated with the Marks, including
the right to ▇▇▇ for and receive all damages from past and future infringements
of the Marks, the same to be held and enjoyed by Assignee, its successors and
assigns. Assignor agrees that it will execute such documentation as may be
necessary in the future to effectuate this Assignment.
Signed this ___ day of November, 2005.
CHECKPOINT SYSTEMS, INC.
______________________________________
Name:
Title:
SIELOX, LLC
______________________________________
Name:
Title:
SCHEDULE A
--------------------------------------------------------------------------------------------------------------------
EAC Trademark Registration Status
--------------------------------------------------------------------------------------------------------------------
S/N, if Registration #,
# Word ▇▇▇▇ Status applied for if granted Notes, Liens
--------------------------------------------------------------------------------------------------------------------
8 FILE MASTER (R) registered 76447363 2957481 --
--------------------------------------------------------------------------------------------------------------------
1 LANLINK (TM) applied for 76613781 -- --
--------------------------------------------------------------------------------------------------------------------
9 MIRAGE (R) registered 73756996 1564238 First Union
--------------------------------------------------------------------------------------------------------------------
10 MIRAGE SG (R) registered 74352354 1841256 First Union
--------------------------------------------------------------------------------------------------------------------
16 OPTIMCOM (TM) unregistered -- -- --
--------------------------------------------------------------------------------------------------------------------
11 PERFORMA (R) registered 75620430 2349126 First Union
--------------------------------------------------------------------------------------------------------------------
2 PINNACLE (TM) applied for 76351094 -- --
--------------------------------------------------------------------------------------------------------------------
12 PROXIMITY PLUS (R) registered 76249298 2698513 --
--------------------------------------------------------------------------------------------------------------------
4 SIELOX (TM) dead 74427082 -- --
--------------------------------------------------------------------------------------------------------------------
5 SIELOX (TM) dead 73563498 1420854 **
--------------------------------------------------------------------------------------------------------------------
13 THRESHOLD (R) registered 73756121 1545229 First Union
--------------------------------------------------------------------------------------------------------------------
14 THRESHOLD 95 (R) registered 75189981 2165211 First Union
--------------------------------------------------------------------------------------------------------------------
15 THRESHOLD ENTERPRISE (R) registered 76106052 2776132 --
--------------------------------------------------------------------------------------------------------------------
3 THRESHOLDACCESS (TM) applied for 76617046 -- --
--------------------------------------------------------------------------------------------------------------------
** USPTO shows assignment to Checkpointsielox by Sielox
Schedule B
Common Law Marks
o OPTICOM
EXHIBIT F
ESCROW AGREEMENT
EXHIBIT G
TRANSITION SERVICES AGREEMENT
EXHIBIT H
IP LICENSE AGREEMENT