Exhibit 10.1

 

EXECUTION COPY

 

ASSET PURCHASE AND SALE AGREEMENT

 

BY AND BETWEEN

 

ACUITY CIMATRIX, INC. f/k/a ROBOTIC VISION

SYSTEMS, INC.

 

AND

 

SIEMENS ENERGY AND AUTOMATION, INC.

 

AS OF AUGUST 26, 2005

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ASSET PURCHASE AND SALE AGREEMENT

 

THIS ASSET PURCHASE AND SALE AGREEMENT (this “Agreement”) is entered into as of
this 26th day of August 2005, by and between Siemens Energy and Automation,
Inc., a Delaware corporation (“Buyer”), and Acuity CiMatrix, Inc., a Delaware
corporation f/k/a Robotic Vision Systems, Inc. (“Seller”).

 

RECITALS

 

WHEREAS, Seller has filed a voluntary petition (the “Bankruptcy Petition”) for
relief under Chapter 11 of the United States Bankruptcy Code, 11 U.S.C. § 101 et
seq. (the “Bankruptcy Code”), in the United States Bankruptcy Court for the
District of New Hampshire (the “Bankruptcy Court”), Case No. 04-14151-JMD (the
“Bankruptcy Case”);

 

WHEREAS, subject to the approval of the Bankruptcy Court and the other terms and
conditions set forth in this Agreement, Buyer desires to purchase from Seller,
and Seller desires to sell to Buyer, the properties, assets, business operations
and goodwill of Seller that are specified herein; and

 

NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants
and agreements hereinafter set forth, the parties hereto hereby agree as
follows:

 

1. SALE AND PURCHASE OF ASSETS; ASSUMPTION OF CERTAIN LIABILITIES

 

1.1. Agreement to Sell and Purchase.

 

Subject to the terms and conditions hereof and in reliance upon the
representations, warranties, covenants and agreements contained herein, at the
Closing, Seller shall sell, assign, transfer, convey and deliver the Purchased
Assets to and cause the same to be vested in Buyer, and Buyer shall purchase the
Purchased Assets from Seller, free and clear of all Liens and Liabilities, other
than Permitted Liens and Assumed Liabilities.

 

1.2. Purchased Assets.

 

For purposes of this Agreement, “Purchased Assets” means the right, title,
benefit and interest of Seller in, to and under all assets, properties, goodwill
and rights to the extent relating to or used in or held for use in connection
with the Business, as the same exist immediately prior to the Closing,
including, without limitation, the following, but excluding the Excluded Assets:

 

(a) all: (i) owned furniture, fixtures, furnishings, vehicles, machinery,
computers, equipment (mobile or otherwise), tools, supplies, personalty, office
materials and other tangible property related to, held for or used in connection
with the Business (the “Owned Machinery and Equipment”) including, without
limitation, the Owned Machinery and Equipment that are listed on Schedule
1.2(a)(i), (ii) furniture, fixtures, furnishings, vehicles, machinery,
computers, equipment (mobile or otherwise), tools, supplies, personalty, office
materials and other tangible property related to, held for or used in connection
with the Business and leased pursuant to an

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Assumed Contract (the “Leased Machinery and Equipment” and, collectively with
the Owned Machinery and Equipment, the “Machinery and Equipment”), including,
without limitation, the Leased Machinery and Equipment listed on Schedule
1.2(a)(ii) and (iii) warranties and licenses received from manufacturers,
sellers and lessors of the Machinery and Equipment;

 

(b) all leases (including, without limitation, the Leased Real Property and the
Leased Machinery and Equipment) and other Contracts of Seller (including the
Intellectual Property Contracts) entered into by or that have been assigned to
Seller that are listed on Schedule 1.2(b) (the “Assumed Contracts”), as such
schedule may be modified in accordance with Section 1.6 hereof;

 

(c) all Purchased Accounts Receivable;

 

(d) all Inventory (including Inventory in transit), Intellectual Property
Embodiments and other tangible personal property related to, used in or held for
use in connection with the Business;

 

(e) all Leased Real Property (to the extent that the underlying lease is an
Assumed Contract) of Seller;

 

(f) all lists, data and information pertaining to clients and suppliers of
Seller, trade correspondence, data storage tapes, copies of Purchased Accounts
Receivable ledgers, documents relating to invoices and all shipping records, in
each case, that is used in the Business and that relate to the Purchased Assets;

 

(g) (i) all Company Intellectual Property, including, without limitation, the
corporate name “Acuity CiMatrix, Inc.” and all related trade names, trademarks,
identifying logos, service marks and any and all goodwill associated therewith,
the Owned Intellectual Property, Owned Software, Intellectual Property
Embodiments and all Intellectual Property Contracts and all royalties relating
to the Contracts set forth on Schedule 1.6(b) paid after the Closing Date; and
(ii) rights to sue and recover any damages and profits and all other remedies
for past, present and future infringements of the foregoing;

 

(h) all books, records, accounts, checks, payment records, personnel files, Tax
records (including payroll, unemployment, real estate and other Tax records) and
other similar books, records and information relating to the Business as
maintained by Seller (the “Records”); provided, however, if Seller is required
by Applicable Law to retain any Records, Seller shall retain such records and
provide Buyer with copies of such Records subject, however, to any requirements
of Applicable Law regarding employee consent to disclosure of confidential
employee records and to any other Applicable Law requiring the confidentiality
of such Records;

 

(i) licenses, permits and approvals owned by Seller and required to operate the
Business;

 

(j) all Prepayments except those listed on Schedule 1.3(g);

 

(k) all Customer Prepayments;

 

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(l) all third party warranties and guaranties with respect to any of the
Purchased Assets to the extent that they are transferable;

 

(m) the sole and exclusive rights to receive insurance proceeds relating to the
damage, destruction or impairment of any of the Purchased Assets, which damage,
destruction or impairment occurs subsequent to the date hereof and prior to the
Closing;

 

(n) all rights, demands, claims, credits, allowances, rebates, choses in action,
causes of action and judgments, known or unknown, or rights of set-off relating
to the Business or the Purchased Assets, excluding any of the same identified in
Section 1.3(g) below; and

 

(o) subsections (a) through (n) are inclusive of documents including plans,
data, test results, drawings, diagrams, training manuals, engineering data,
safety and environmental reports and documents, maintenance schedules and
operating and production records, in each case that relate to, are used in or
are held for use in connection with the Purchased Assets, whether in hard copy
or electronic format.

 

1.3. Excluded Assets.

 

Notwithstanding Section 1.2 or anything to the contrary in this Agreement, the
following assets of Seller, whether or not related to the Business
(collectively, the “Excluded Assets”), shall be excluded from the definition of
Purchased Assets and retained by Seller:

 

(a) Except for Prepayments (subject to Section 1.2(j)) and Customer Prepayments,
all bank accounts, cash, cash equivalents and marketable securities and notes
receivable, including all rights to any amounts received by or on behalf of
Seller in any lock-box or depository account, as of the Closing Date
(collectively, “Retained Cash”);

 

(b) the IPT Receivable;

 

(c) all refunds and rights to refunds of any Taxes for all periods ending on or
prior to the Closing Date and all Tax Returns with respect to such periods;

 

(d) the articles of incorporation, by-laws, minute books, stock transfer records
and other corporate records of Seller;

 

(e) any Records that Seller is required by Applicable Law to retain, subject to
Section 1.2(h);

 

(f) all Contracts that are not Assumed Contracts;

 

(g) all Prepayments listed on Schedule 1.3(g);

 

(h) except as provided in Section 1.2(g) and Section 1.2(n), any rights and
claims of Seller, whether known or unknown, absolute or contingent, matured or
unmatured, against third parties whether in tort, contract, or contingent, or
otherwise, which (i) do not relate in any way to the Purchased Assets or the
Business, (ii) are made under the Uniform Fraudulent Conveyance Act, the Uniform
Fraudulent Transfer Act or any of Sections 544, 547, 548, 549 and

 

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550 of the Bankruptcy Code (iii) are against the Lenders or (iv) are against any
directors, officers and/or employees of Seller relating to actions or failures
to act at any time on or prior to the Closing Date, including with respect to
any notes receivable from any officer, director and/or employee;

 

(i) except as provided in Section 1.2(m), all insurance policies and benefits
thereunder, including all refunds, all proceeds and all claims against officers
and directors acting in such capacity, and directors and officers insurance
policies (collectively, “Seller Insurance Policies”);

 

(j) all intercompany claims and receivables of Seller against companies that
own, are owned by or are under common ownership with Seller;

 

(k) all other assets of Seller not listed as Purchased Assets; and

 

(l) all rights of Seller under this Agreement.

 

1.4. Assumption of Liabilities.

 

On the Closing Date, Buyer shall assume and agree to pay, perform and discharge
when due and be responsible only for the following Liabilities of Seller (the
“Assumed Liabilities”) and no other Liabilities whatsoever:

 

(a) any Liability that arises, accrues or is to be performed under Assumed
Contracts after the Closing.

 

(b) any Liability arising after the Closing arising out of Buyer’s ownership of
the Purchased Assets or operation of the Business after Closing.

 

(c) any Liability of Buyer under the WARN Act pursuant to Section 7.7.

 

(d) the warranties made by Seller on products made by Seller in the ordinary
course of the Business, including, without limitation, those warranty claims
which Seller has knowledge as of the date hereof and which are set forth on
Schedule 1.4(d).

 

(e) all Post-Petition Accounts Payable.

 

Notwithstanding anything to the contrary contained in this Agreement or the
Schedules hereto, or any Other Document, Buyer is assuming only the Assumed
Liabilities, and all Liabilities of Seller not expressly assumed by Buyer,
whether or not incurred or accrued, whether asserted before, on or after the
Closing Date, shall be assumed or retained, as the case may be, by Seller, who
shall be responsible for paying, performing and discharging such Liabilities
when due, and Buyer shall not assume or have any responsibility for such
Liabilities (such Liabilities are hereinafter referred to as the “Excluded
Liabilities”). Buyer shall not assume, pay, perform, discharge, hold Seller
harmless against or be responsible for, any of the Excluded Liabilities. The
Excluded Liabilities include, without limitation, the following Liabilities:

 

  (i) all Liabilities relating to any environmental, health or safety matter
(including, without limitation, any liability or obligation arising under any
Environmental Law);

 

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  (ii) all brokerage, finder’s or other fee or commission and any expenses to
which any broker, finder or investment banker is entitled in connection with the
transactions contemplated by this Agreement or the Other Documents;

 

  (iii) all accounts payable that are not Post-Petition Accounts Payable;

 

  (iv) all Cure Costs with respect to Assumed Contracts other than Cure Costs
with respect to Additional Assumed Contracts under Section 1.6 hereof;

 

  (v) all liabilities and obligations, whether presently in existence or arising
hereafter, with respect to the Employee Benefit Plans;

 

  (vi) all Liabilities for all hospital, medical, life insurance, disability and
other welfare plan expenses and benefits, for all workers’ compensation,
unemployment compensation and other government mandated benefits, for all wages,
commissions, bonuses, accrued vacation, severance and other compensation or
payroll related expenses and benefits and any other liabilities or obligations
of any kind in respect of claims which are incurred by Seller’s current and
former employees and their dependents, or otherwise arise, prior to Closing;

 

  (vii) all Liabilities, whether presently in existence or arising hereafter,
with respect to any key employee retention, stay bonus, severance or similar
plan implemented for the benefit of Seller’s current and former employees;

 

  (viii) all Liabilities, whether presently in existence or arising hereafter
with respect to the corporate staff of Seller who are not Transferred Employees;

 

  (ix) all Liabilities for Taxes relating to periods (or any portion of a
period) ending on or prior to Closing;

 

  (x) all liabilities and obligations of Seller relating to the Pending
Litigation;

 

  (xi) royalty or similar payments to third parties in connection with Owned
Intellectual Property, whether arising before, on or after the Closing Date; and

 

  (xii) royalty or similar payments to third parties in connection with Licensed
Intellectual Property (A) which is not the subject of an Assumed Contract, (B)
which is not a Post-Petition Account Payable or (C) to the extent such payment
is a Cure Cost other than a Cure Cost relating to an Additional Assumed Contract
under Section 1.6 hereof.

 

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1.5. Adequate Assurance.

 

No later than five (5) Business Days prior to the Sale Hearing, Buyer shall
provide information to Seller reasonably necessary to demonstrate adequate
assurance of future performance under the Assumed Contracts as required under
Section 365 of the Bankruptcy Code.

 

1.6. Additional Assumed Contracts

 

(a) With respect to Seller, if Buyer determines at any time after the date
hereof (including after the Closing Date) that Seller is a party to any Contract
related to the Business that has not been previously transferred to Buyer or its
designee, Buyer shall have the right, in its sole discretion, to demand that
Seller seek to assume and assign any such Contract (each, an “Additional Assumed
Contract”) to Buyer, or its designee, and thereby transfer to Buyer or its
designee as a Purchased Asset, subject to the approval of the Bankruptcy Court,
without any additional consideration, by written notice to Seller and Seller
shall use its commercially reasonable efforts to assign such Additional Assumed
Contract to Buyer, or its designee, and to obtain any required third-party
consents associated therewith; provided that Buyer may not demand the assumption
or assignment of any Additional Assumed Contract that previously has been
rejected by Seller in the Bankruptcy Case pursuant to a final order of the
Bankruptcy Court; and provided further that Buyer shall be responsible for all
Cure Costs related to any such Additional Assumed Contract.

 

(b) No later than two (2) Business Days prior to the Bid Deadline (as defined in
the Sale Procedures), Buyer shall notify Seller in writing as to whether Buyer
desires to delete any of the Contracts listed on Schedule 1.2(b) and, upon
Seller’s receipt of such notice, Schedule 1.2(b) shall be deemed to be amended
to reflect such requested additions and deletions; provided, however, that
Seller shall not be required to delete any Contract entered into or assumed
after the commencement of the Bankruptcy Case. The Contracts that remain on
Schedule 1.2(b) following this amendment, if any, shall be deemed to be “Assumed
Contracts”. The Contracts, if any, deleted from Schedule 1.2(b) shall be deemed
to be Excluded Assets. Notwithstanding any other provision of this Agreement,
without the prior written authorization of Buyer, Seller shall not seek to
assume and assign to Buyer, or seek to obtain any consents, waivers,
authorizations or approvals required from any Person or Governmental Authority
to permit the assumption and assignment to Buyer, of any of the Contracts set
forth on Schedule 1.6(b).

 

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2. CLOSING; DELIVERIES; DEPOSIT; RECONCILIATION AMOUNT

 

2.1. Closing.

 

The consummation of the transactions contemplated herein (the “Closing”) shall
take place at the offices of Dreier LLP, counsel to Seller (“Dreier”), 499 Park
Avenue, 23rd Floor, New York, NY 10022, or such other place as the parties shall
agree in writing on the second Business Day following the satisfaction or waiver
by the appropriate party of all the conditions contained in Sections 8, 9 and 10
hereof, or at such other time and date as the parties hereafter agree in writing
(the “Closing Date”); provided however, in no event shall the Closing occur
prior to October 1, 2005.

 

2.2. Deposit.

 

Simultaneously with the execution and delivery of this Agreement, Buyer shall
deliver to Dreier by wire transfer of immediately available U.S. funds a deposit
in the aggregate amount equal to 10% of the Purchase Price (the “Deposit”) to be
held in escrow in accordance with the terms of the Escrow Agreement in the form
as attached hereto as Exhibit A and applied to the Purchase Price payable by
Buyer at the Closing in accordance with Section 3.1.

 

3. PURCHASE PRICE

 

3.1. Purchase Price.

 

(a) For and in consideration of the conveyances and assignments described
herein, and in addition to Buyer’s assumption of the Assumed Liabilities under
Section 1.4, at Closing, Buyer agrees to (i) pay to Seller an amount equal to
the difference between (x) the Purchase Price, as it may be adjusted pursuant to
Section 3.1(c) and (y) the Deposit, by wire transfer of immediately available
U.S. funds and (ii) deliver to Seller written instructions addressed to Dreier
directing Dreier to pay the Deposit to Seller.

 

(b) Not earlier than five (5) Business Days and not later than two (2) Business
Days prior to the Closing Date, Seller shall deliver to Buyer a statement (the
“Closing Statement”) setting forth the value of the Closing Net Current Assets
as determined in accordance with Schedule 3.1(b). The Closing Statement shall be
certified by a duly authorized officer of Seller. Seller shall give Buyer and
Buyer’s accountants full access to the process relating to the preparation of
the Closing Statement and shall consult with Buyer and Buyer’s accountants in
the preparation and finalization thereof.

 

(c) If the value of the Closing Net Current Assets as set forth on Closing
Statement is greater than the Reference Net Current Assets, then the Purchase
Price payable at Closing under Section 3.1 (a) shall be increased by the amount
of such excess. If the value of the Closing Net Current Assets as set forth on
Closing Statement is less than the Reference Net Current Assets, then the
Purchase Price payable at Closing under Section 3.1 (a) shall be decreased by
the amount of such shortfall.

 

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3.2. Purchase Price Adjustment Procedure.

 

(a) Not later than sixty (60) days following the Closing Date, Buyer shall
deliver to Seller a statement (the “Final Statement’”) setting forth the value
of the Closing Net Current Assets as determined in accordance with Schedule
3.1(b). The Closing Statement shall be certified by a duly authorized officer of
Buyer. Subject to Section 3.2(c) below, within fifteen (15) days following the
delivery of the Final Statement to Seller, Buyer shall pay to Seller or Seller
shall pay to Buyer, as the case may be, the amounts required to be paid pursuant
to Section 3.2(b).

 

(b) If the Closing Net Current Assets as set forth on the Closing Statement is
higher than the Closing Net Current Assets as set forth on the Final Statement,
then Seller shall pay Buyer the amount of such excess if such amount exceeds
$10,000. If the Closing Net Current Assets as set forth on the Final Statement
is higher than the Closing Net Current Assets as set forth on the Closing
Statement, then Buyer shall pay Seller the amount of such excess if such amount
exceeds $10,000.

 

(c) In the event Seller objects to any amounts shown on the Final Statement,
Seller shall notify Buyer in writing of such objection within fifteen (15) days
following the delivery thereof, stating in such written objection the reasons
therefor and setting forth in reasonable detail Seller’s calculation of the
Closing Net Current Assets in accordance with Schedule 3.1(b). Upon receipt by
Buyer of such written objection, the parties shall attempt to resolve the
disagreement concerning the Closing Net Current Assets through negotiation. If
Buyer and Seller cannot resolve such disagreement concerning the Closing Net
Current Assets within twenty (20) days following the end of the foregoing
fifteen (15) day period, then the parties shall submit the matter for resolution
to a firm of independent certified public accountants jointly selected by Seller
and Buyer and not affiliated with either party, with the costs thereof to be
shared equally by the parties, to deliver a statement setting forth such
independent certified public accountants’ calculation of the Closing Net Current
Assets. Such independent certified public accountants’ calculation of the
Closing Net Current Assets shall, absent manifest error, (i) be binding and
conclusive on Buyer and Seller, (ii) notwithstanding Section 3.1 (a), become the
Final Statement for purposes of Section 3.1(b) and (iii) not be subject to
appeal.

 

3.3. Purchase Price Allocation.

 

The Purchase Price shall be allocated among the Purchased Assets pursuant to the
allocation schedule set forth on Schedule 3.3, which schedule shall be mutually
agreed between Buyer and Seller. Each of Buyer and Seller agrees to file Form
8594 as required by Section 1060 of the Code and applicable Treasury
Regulations, and all federal, state, local and foreign Tax Returns, in
accordance with such agreed allocation. Each of Buyer and Seller shall report
the transactions contemplated by this Agreement for federal Tax and all other
Tax purposes in a manner consistent with the allocation determined pursuant to
this Section 3.3. Each of Buyer and Seller agrees to provide the other promptly
with any information required to complete the Form 8594. Buyer and Seller shall
notify and provide the other with reasonable assistance in the event of an
examination, audit or other proceeding regarding any allocation of the Final
Purchase Price determined pursuant to this Section 3.3. Buyer and Seller shall
not take any position in any Tax Return, Tax proceeding or audit that is
inconsistent with such allocation.

 

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3.4. Other Purchase Price Adjustment. (a) Two (2) Business Days prior to the Bid
Deadline (as defined in the Sale Procedures) and on the date of the Sale Hearing
(each a “Representation Date”), Seller shall furnish to Buyer a certificate (the
“Representation Certificate”) certifying either (i) that (A) the representations
and warranties made by Seller in Article 4 individually and in the aggregate,
are true and correct in all material respects on and as of the Representation
Date as if again made by Seller on and as of such date, except for such
representations and warranties that contain “materiality” or “Material Adverse
Effect” qualifiers, which are true and correct in all respects and (B) Seller
has performed in all material respects all obligations, individually and in the
aggregate, required by this Agreement to be performed by it on or before the
Representation Date (the certifications in clauses (A) and (B) being the “Seller
Certifications”) or (ii) that Seller is unable to make the Seller Certifications
as of the Representation Date, including a description with reasonable detail
and specificity of any breaches or failures to perform that would cause the
Seller Certifications to be inaccurate if made as of such Representation Date.

 

(a) In addition to the foregoing, Buyer shall notify Seller in writing (the
“Buyer Notice of Breach”) on each Representation Date if it is aware of any
information that would cause the Seller Certifications to be inaccurate if made
as of such Representation Date, including, with reasonable specificity and
detail, the basis for any such conclusions.

 

(b) If Buyer does not deliver a Buyer Notice of Breach to Seller on either
Representation Date and Seller is able to make the Seller Certifications as of
each Representation Date, then there shall be no adjustment to the Purchase
Price pursuant to this Section 3.4. The parties agree that no adjustment to the
Purchase Price pursuant to this Section 3.4 shall be made in the event that both
parties agree that any breach of a representation or warranty by Seller or
failure of Seller to perform its obligations required by this Agreement is
immaterial.

 

(c) If Buyer delivers a Buyer Notice of Breach to Seller on either
Representation Date or Seller is unable to make the Seller Certifications as of
either Representation Date, then Buyer and Seller shall negotiate in good faith
an amount, if any, by which to reduce the Purchase Price at Closing as a cure
for the breaches or failures by Seller specified in such notice or notices
unless such breaches or failures have otherwise been cured.

 

(d) If, within five (5) days following the second Representation Date, Seller
and Buyer are unable to agree upon (i) whether there have been breaches or
failures that require a reduction in the Purchase Price or (ii) the amount of
any such reduction, the Bankruptcy Court shall determine the actual amount, if
any, of any such reduction in the Purchase Price as a cure for the specified
breaches and failures. The determination of the Bankruptcy Court will be final
and binding upon the parties. The parties agree that the Closing shall not occur
unless and until the Bankruptcy Court has made such determination.

 

(e) Notwithstanding anything in this Section 3.4 or the proviso in Section
12.1(j) to the contrary, if Buyer delivers a Buyer Notice of Breach or Seller
delivers a Representation Certificate which in any way relates to (i) the sale
or assignment to Buyer of any Company Intellectual Property or (ii) Transferred
Employees, then Buyer shall be entitled to terminate this Agreement in
accordance with Section 12.1(j) and Buyer shall not be compelled to accept any
reduction in Purchase Price pursuant to this Section 3.4 or the proviso in
Section 12.1(j).

 

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4. REPRESENTATIONS AND WARRANTIES OF SELLER

 

Except as may be set forth on the Disclosure Schedule, Seller represents and
warrants to Buyer, on the date hereof and on the Closing Date, as follows:

 

4.1. Organization and Qualification.

 

Seller is a corporation duly organized and validly existing under the laws of
the State of Delaware. Seller has all necessary corporate power and authority to
own, operate or lease its properties and to carry on its business as it is now
being conducted and, subject to the entry of the Sale Approval Order, to enter
into, perform its obligations and consummate the transaction under this
Agreement, the Other Documents to which it is a party and the transactions
contemplated hereby and thereby.

 

4.2. Corporate Authority.

 

Assuming entry of the Sale Approval Order, the execution, delivery and
performance by Seller of this Agreement and the Other Documents and the
consummation by Seller of the transactions contemplated hereby and thereby have
been duly authorized by all requisite corporate action on the part of Seller and
no other corporate action on the part of Seller is necessary to authorize such
execution. Assuming entry of the Sale Approval Order, this Agreement has been
duly executed and delivered by Seller and constitutes, and upon execution and
delivery of each of the Other Documents, such Other Documents will constitute,
the legal, valid and binding obligation of Seller, enforceable in accordance
with their terms.

 

4.3. No Conflict.

 

Assuming the Bankruptcy Court’s entry of the Sale Procedures Order and the Sale
Approval Order and the termination or expiration of any waiting period under the
HSR Act and assuming that all consents, approvals, authorizations and other
actions described in Section 4.4 have been obtained and all filings and
notifications listed in Section 4.4 of the Disclosure Schedule have been made
and any applicable waiting period has expired or been terminated, the execution,
delivery and performance of this Agreement and the Other Documents by Seller do
not and will not (a) violate, conflict with or result in the breach of any
provision of the Certificate of Incorporation or By-Laws (or similar
organizational documents) of Seller, (b) conflict with or violate (or cause an
event which could have a Material Adverse Effect as a result of) any Applicable
Law or Governmental Order applicable to Seller, or any of its assets, properties
or businesses, including the Business or (c) conflict with, result in any breach
of, constitute a default (or event which with the giving of notice or lapse of
time, or both, would become a default) under, require any consent under, or give
to others any rights of termination, amendment, acceleration, suspension,
revocation or cancellation of, or result in the creation of any Encumbrance on
any of the Purchased Assets pursuant to, any note, bond, mortgage or indenture,
contract, agreement, lease, sublease, license, permit, franchise or other
instrument or arrangement to which Seller is a party or by which any of the
Purchased Assets is bound or affected.

 

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4.4. Governmental Consents and Approvals.

 

Schedule 4.4 of the Disclosure Schedule sets forth a true and complete list of
each material consent, waiver, authorization or approval of any Governmental
Authority or of any other Person (other than (i) the Bankruptcy Court’s entry of
the Sale Procedures Order and the Sale Approval Order and (ii) the termination
or expiration of any waiting period under the HSR Act), and each material
declaration to or filing or registration with any such Governmental Authority
(other than those required to be made to or filed with the Bankruptcy Court),
that is required in connection with the execution and delivery of this Agreement
and the Other Documents by Seller or the performance by Seller of its
obligations hereunder and thereunder.

 

4.5. Financial Statements.

 

Schedule 4.5 of the Disclosure Schedule sets forth true and complete copies of
the unaudited balance sheets and the related unaudited statements of income of
the Division for the ten-month period ended July 31, 2005 (the “Financial
Statements”). The Financial Statements relating to the Division were prepared in
accordance with the books and accounts and other financial records of the
Division. Except as related to intercompany accounts, the Financial Statements
present fairly the financial condition and results of operations of the Division
as of the dates thereof or for the respective periods covered thereby, and the
Financial Statements have been prepared in accordance with GAAP applied on a
basis consistent with past practices since the filing of the Bankruptcy
Petition, except as set forth on Schedule 4.5 of the Disclosure Schedule.

 

4.6. Litigation; Disputes.

 

Other than the litigation described on Schedule 4.6 of the Disclosure Schedule
(the “Pending Litigation”), and all proceedings commenced or to be commenced
before the Bankruptcy Court, there is no action, claim, demand, suit,
proceeding, arbitration, or investigation pending or, to the Knowledge of
Seller, threatened against, relating to or affecting the Purchased Assets, the
Business, Seller’s right to sell the Purchased Assets, the Transferred Employees
(in their capacity as employees of the Seller) or relating to the transactions
contemplated by this Agreement. The Business of Seller is not operating under,
subject to or in default with respect to any order, award, writ, injunction,
decree or judgment of any Governmental Authority.

 

4.7. Machinery and Equipment.

 

(a) Schedule 4.7(a) of the Disclosure Schedule lists each item or distinct group
of Machinery and Equipment used in the Business.

 

(b) Schedule 4.7(b) of the Disclosure Schedule sets forth a true and complete
list of all leases for Machinery and Equipment and any and all material
ancillary documents pertaining thereto (including all amendments, consents and
evidence of commencement dates and expiration dates).

 

(c) The Seller has the full right to exercise any renewal options contained in
the leases pertaining to the Machinery and Equipment on the terms and conditions
contained therein

 

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and upon due exercise would be entitled to enjoy the use of each item of leased
Machinery and Equipment for the full term of such renewal options.

 

4.8. Assets.

 

Seller has good and marketable title to, or right by license, lease or other
agreement to use, the Purchased Assets. Subject to the entry of the Sale
Approval Order, at the Closing, Seller will have the right to transfer the
Purchased Assets to Buyer free and clear of all Liens other than Permitted
Liens. The Purchased Assets include all assets, properties, rights and licenses
that are necessary for the operation of the Business by Seller immediately prior
to the Closing. All of the tangible Purchased Assets with an initial cost of
greater than $5,000 or a book value as of the date hereof of greater than $5,000
are (a) in good operating condition and repair, except for ordinary wear and
tear, (b) are suitable for the purposes for which they are intended, and (c) are
free of material defects.

 

4.9. Environmental.

 

Except as set forth on Schedule 4.9 of the Disclosure Schedule:

 

(i) There has been no Release or threatened Release of any Hazardous Materials
by Seller to the air, surface water, groundwater, soil or soil improvements of
the Leased Real Property requiring corrective action under, or that is a
violation of, any applicable Environmental Laws.

 

(ii) Seller is in compliance with, and for the past three (3) years has been in
compliance with, all applicable Environmental Laws. Any past noncompliance with
Environmental Laws by Seller which has been the subject of a written complaint,
order, directive or citation by any Governmental Authority in the past three (3)
years has, been resolved without any pending or ongoing obligation, costs or
liability.

 

(iii) In the past three (3) years, Seller has not received a written complaint,
order, directive, claim, citation, notice, information request or investigation
by any Governmental Authority or any other Person with respect to any Release or
threatened Release of any Hazardous Materials to the air, surface water,
groundwater or soil of the Leased Real Property or alleging that Seller may be
in violation of, or liable under, any Environmental Law.

 

(iv) There are no underground or aboveground storage tanks or any surface
impoundments, septic tanks or lagoons in which any Hazardous Material is being
or has been treated, stored or disposed of by Seller on any of the Leased Real
Property.

 

(v) Seller is not conducting any Remedial Action relating to any Release or
threatened Release of any Hazardous Material at the Leased Real Property. Seller
is not conducting any Remedial Action related to any Release or threatened
Release of any Hazardous Material at any other site, location or operation,
either voluntarily or pursuant to the order of any Governmental Authority or the
requirements of any Environmental Law.

 

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(vi) There is no planned or contemplated closure, decommissioning or other
material change in operations or activities at any Leased Real Property by
Seller that would require any Remedial Action under any Environmental Law.

 

(vii) Seller has provided Buyer with copies of (A) any environmental assessment
or environmental compliance audit reports in its possession relating to the
Business or any of the Leased Real Property and (B) all insurance policies
issued at any time that may provide coverage to Seller relating to the Leased
Real Property and/or environmental matters at the Business.

 

(viii) Neither the execution of this Agreement or the Other Documents nor the
consummation of transactions contemplated hereby or thereby will require any
Remedial Action or notice to or consent of Governmental Authorities or third
parties pursuant to any Environmental Law.

 

4.10. Employee Benefit Matters.

 

(i) Schedule 4.10(i) of the Disclosure Schedule lists all Employee Benefit Plans
relating to the Business. True, correct and complete copies of all such Employee
Benefit Plans have been made available to Buyer.

 

(ii) Except as disclosed on Schedule 4.10(ii) of the Disclosure Schedule, none
of the Employee Benefit Plans is a multiemployer plan, as defined in Section
3(37) of ERISA, or a single-employer plan, as defined in Section 4001(a)(15) of
ERISA, that is subject to Title IV of ERISA, and, to the Knowledge of Seller,
Seller has not incurred, and could not reasonably be expected to incur, any
liability under, arising out of or by operation of Title IV of ERISA.

 

(iii) There are no unpaid contributions due prior to the date of this Agreement
with respect to any 401(k) Retirement Plan (a “401(k) Plan”) that are required
to be made under the terms of such 401(k) Plan or any Applicable Law.

 

(iv) Except as disclosed on Schedule 4.10(iv) of the Disclosure Schedule, Seller
has no obligation to provide any deferred compensation, pension or non-pension
benefits to retired or other former employees, except for health benefits as
specifically required by Part 6 of Title I of ERISA (“COBRA”) or other
Applicable Law or pension benefits payable from a Employee Benefit Plan intended
to be “qualified” within the meaning of Section 401 (a) of the Code.

 

(v) Except as disclosed on Schedule 4.10(v) of the Disclosure Schedule, with
respect to any Employee Benefit Plan: (A) no filing, application or other matter
is pending with the IRS, the United States Department of Labor or any other
Governmental Authority; (B) there is no Action pending (or, to the Knowledge of
Seller, any basis for such an Action), other than routine claims for benefits;
(C) neither the transactions contemplated by this Agreement nor the consummation
of the transactions contemplated hereby will result in any Action, whether
actual or threatened and (D) there are no outstanding liabilities for Taxes or
penalties under ERISA or the Code.

 

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(vi) Seller is in compliance with the requirements of the WARN Act and has no
liabilities pursuant to the WARN Act.

 

(vii) All of the individuals set forth on Schedule 4.10(vii) of the Disclosure
Schedule are employed by Seller and, to the Knowledge of Seller, none of such
employees intends to resign prior to the Closing Date.

 

(viii) Schedule 4.10(viii) of the Disclosure Schedule lists all unused vacation
days and other paid time off accrued by each employee of Seller. At the
reasonable request of Buyer, Seller shall provide Buyer with an updated Schedule
4.10(viii) of the Disclosure Schedule for the time period up to and including
the Closing Date.

 

(ix) Except as set forth on Schedule 4.10(ix) of the Disclosure Schedule, the
Seller has no Foreign Benefit Plans.

 

4.11. Taxes.

 

(a) All Tax Returns required to be filed by or with respect to Seller have been
timely filed.

 

(b) All Taxes required to be shown on such Tax Returns or otherwise due, by or
with respect to Seller have been timely paid.

 

(c) All such Tax Returns are true, correct and complete in all material
respects.

 

(d) No adjustment relating to such Tax Returns has been proposed formally or
informally by any Governmental Authority or taxing authority and no basis exists
for any such adjustment.

 

(e) Seller has withheld and paid all Taxes required to have been withheld and
paid in connection with amounts owing to any employee, independent contractor,
creditor, stockholder or other third party.

 

(f) There are no pending or threatened claims, actions, suits, proceedings or
investigations for the assessment or collection of Taxes against Seller or any
Person that was included in the filing of a Tax Return with any of Seller, on a
consolidated, combined or unitary basis.

 

(g) Except as set forth on Schedule 4.11(g) of the Disclosure Schedule, there
are no Liens for Taxes on any properties or assets of Seller.

 

(h) None of the Purchased Assets are “tax-exempt use property” within the
meaning of Section 168(h) of the Code.

 

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4.12. Brokers.

 

Seller is represented by Houlihan Lokey Howard & Zukin Capital, Inc.
(“Houlihan”) as its exclusive sales agent with respect to the transactions
contemplated herein pursuant to Seller’s engagement agreement with Houlihan as
modified and approved by the Bankruptcy Court. Houlihan’s fees and expenses are
to be paid in accordance with the terms of provisions specified therein,
including but not limited to the payment of the transaction fee that shall be
payable out of the proceeds received by Seller pursuant to this Agreement. Other
than Houlihan, no broker or finder or investment banker is entitled to any
brokerage, finder’s or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of Seller.

 

4.13. Purchased Accounts Receivable.

 

Schedule 4.13 of the Disclosure Schedule is an aged list of the Accounts
Receivable as of July 31, 2005 showing separately those Accounts Receivable that
as of such date had been outstanding for (i) 29 days or less, (ii) 30 to 59
days, (iii) 60 to 89 days, (iv) 90 to 119 days and (v) more than 119 days. All
Accounts Receivable (A) are valid and (B) arise out of bona fide sales and
deliveries of goods, performance of services or other transactions in the
ordinary course of business and consistent with past practices. The allowance
for doubtful accounts with respect to the Accounts Receivable of Seller has been
calculated in accordance with GAAP consistently applied.

 

4.14. Material Adverse Effect.

 

Since February 1, 2005, there has not occurred any event or condition that has
resulted in or could reasonably be likely to result in a Material Adverse
Effect.

 

4.15. Inventories.

 

The Inventory of the Business (i) has been or will have been acquired and has
been or will have been maintained in accordance with the regular business
practices of Seller since the filing of the Bankruptcy Petition and (ii)
consists or will consist of items of a quality and quantity useable or saleable
in the ordinary course of business consistent with past practice and (iii) is
valued at the lower of cost or market value. Such Inventories, net of reserves,
are or will be in good and merchantable condition in all material respects, are
or will be suitable and useable for the purposes for which they are intended,
are not or will not be obsolete and are or will be in a condition such that they
can be sold in the ordinary course of business consistent with past practice.

 

4.16. Material Contracts.

 

(a) Schedule 4.16(a) of the Disclosure Schedule lists each of the following
contracts and agreements (including oral agreements) of Seller relating to the
Business (such contracts and agreements, together with all contracts,
agreements, leases and subleases concerning the use, occupancy, management or
operation of any Real Property (including all contracts, agreements, leases and
subleases), Material Intellectual Property Contracts and all

 

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contracts, agreements, leases and subleases relating to Machinery and Equipment,
being “Material Contracts”):

 

(x) each contract, agreement, invoice, purchase order and other arrangement, for
the purchase of Inventory, spare parts, other materials or personal property,
with any supplier or for the furnishing of services to Seller (relating to the
Business) or otherwise related to the Business under the terms of which Seller:
(A) is likely to pay or otherwise give consideration of more than $20,000 in the
aggregate during the calendar year ended December 31, 2005, (B) is likely to pay
or otherwise give consideration of more than $20,000 in the aggregate over the
remaining term of such contract, or (C) cannot be cancelled by Seller without
penalty or further payment and without more than 30 days’ notice;

 

(xi) each contract, agreement, invoice, sales order and other arrangement for
the sale of Inventory or other personal property, or for the furnishing of
services by Seller (relating to the Business) that (A) is likely to involve
consideration of more than $20,000 in the aggregate during the calendar year
ending December 31, 2005, (B) is likely to involve consideration of more than
$20,000 in the aggregate over the remaining term of the contract, or (C) cannot
be cancelled by Seller without penalty or further payment and without more than
30 days’ notice;

 

(xii) all broker, distributor, dealer, manufacturer’s representative, franchise,
agency, sales promotion, market research, marketing, consulting and advertising
contracts and agreements to which Seller (relating to the Business) is a party;

 

(xiii) all management contracts and contracts with independent contractors or
consultants (or similar arrangements) to which Seller (relating to the Business)
is a party and which cannot be cancelled by Seller without penalty or further
payment and without more than 30 days’ notice;

 

(xiv) all contracts and agreements relating to Indebtedness of Seller (relating
to the Business);

 

(xv) all contracts and agreements with any Governmental Authority to which
Seller (relating to the Business) is a party;

 

(xvi) all contracts and agreements that limit or purport to limit the ability of
Seller (relating to the Business) to compete in any line of business or with any
Person or in any geographic area or during any period of time;

 

(xvii) all contracts and agreements between or among Seller (relating to the
Business), on the one hand, and one or more Affiliates of Seller, on the other
hand;

 

(xviii) all contracts and agreements which establishes or requires any type of
exclusive dealing, “most favored nation” or similar arrangement imposed on
Seller.

 

(xix) all contracts and agreements providing for benefits under any employee
benefits plan; and

 

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(xx) all other contracts and agreements, whether or not made in the ordinary
course of business, which are material to Seller (relating to the Business) or
the conduct of the Business, or the absence of which would have a Material
Adverse Effect, including, without limitation, any contract or agreement for
services to be performed outside the United States.

 

For purposes of this Section 4.16, the term “lease” shall include any and all
leases, subleases, sale/leaseback agreements or similar arrangements.

 

(b) Each Material Contract: (i) is valid and binding on the parties thereto and
is in full force and effect, (ii) subject to entry of an order by the Bankruptcy
Court approving the assumption and assignment of such Material Contract, is
freely and fully assignable to the Buyer without penalty or other adverse
consequences and (iii) upon consummation of the transactions contemplated by
this Agreement, except to the extent that any consents set forth in Section 4.4
of the Disclosure Schedule are not obtained, shall continue in full force and
effect without penalty or other adverse consequence. Except as set forth on
Schedule 4.16(b), the Seller is not in breach of, or default under, any Material
Contract.

 

(c) Seller has not received any notice of termination, cancellation, breach or
default under any Material Contract and to the Knowledge of Seller, no other
party to any Material Contract is in breach thereof or default thereunder.

 

(d) The Seller has made available to Buyer true and complete copies of all
written Material Contracts.

 

(e) There is no contract, agreement or other arrangement granting any Person any
preferential right to purchase any of the Purchased Assets (other than in the
ordinary course of business consistent with past practice).

 

4.17. Owned Intellectual Property. Assuming entry of the Sale Approval Order:

 

(a) Schedule 4.17(a) of the Disclosure Schedule sets forth a true and complete
list of all (i) patents and patent applications, trademark and copyright
registrations and applications and Internet domain names included within the
Owned Intellectual Property, (ii) material Intellectual Property Contracts
(other than licenses of commercially available off the shelf Software licensed
pursuant to shrink-wrap or click-wrap licenses, in each case, that is not
material to the Business) (the “Material Intellectual Property Contracts”) and
(iii) other material Owned Intellectual Property (including Owned Intellectual
Property embodied in Software).

 

(b) The Company Intellectual Property (including Company Intellectual Property
embodied in Software) includes all Intellectual Property used in or held for use
in connection with the Business as currently operated. The Owned Intellectual
Property, and to the Knowledge of Seller, the Licensed Intellectual Property,
are subsisting, valid and enforceable, and have not been adjudged invalid or
unenforceable in whole or in part. Except as set forth on Schedule 4.17(b), the
Business as currently operated does not, to the Knowledge of Seller, infringe,
dilute, misappropriate or otherwise violate or interfere with the Intellectual
Property of any third party, and no claim or Action is pending or has been
threatened or asserted in writing (or, to the Knowledge of Seller, orally or
otherwise) alleging any of the foregoing. To the Knowledge of

 

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Seller, no Person is engaging in any activity or using any Intellectual Property
(whether embodied in Software or otherwise), that infringes, dilutes,
misappropriates or otherwise violates or interferes with the Company
Intellectual Property (including Company Intellectual Property embodied in
Software). Except as set forth on Schedule 4.17(b), Seller exclusively owns the
entire and unencumbered right, title and interest in and to each item of Owned
Intellectual Property, and has the right to use (i) the Owned Intellectual
Property (including, without limitation, Owned Intellectual Property embodied in
Software and other Intellectual Property Embodiments) and (ii) to the Knowledge
of Seller, the Licensed Intellectual Property (including, without limitation,
Licensed Intellectual Property embodied in Software and other Intellectual
Property Embodiments) pursuant to the terms of the Intellectual Property
Contracts, both in connection with the continued operation of the Business as
currently operated. None of the Owned Intellectual Property (including, without
limitation, Owned Intellectual Property embodied in Software) or Intellectual
Property Embodiments (nor, to the Knowledge of Seller, the Licensed Intellectual
Property or Licensed Software) is subject to any outstanding consent, settlement
or Governmental Order that, among other things, specifically restricts the use
of such Intellectual Property, Intellectual Property Embodiment or Software in
connection with the continued operation of the Business as currently operated,
or that would materially modify the scope or materially impair the validity or
enforceability of such Intellectual Property.

 

(c) Except as set forth in Schedule 4.17(c) of the Disclosure Schedule, Seller
has not granted any license or other right to any third party with respect to
the material Company Intellectual Property (including material Company
Intellectual Property in Software form). The consummation of the transactions
contemplated by this Agreement will neither violate nor result in the
abandonment, breach, modification, cancellation, termination or suspension of
(i) the Material Intellectual Property Contracts or (ii) the Owned Intellectual
Property. Following the Closing Date, Buyer will be permitted to exercise the
rights of Seller in and to (A) the Material Intellectual Property Contracts and
(B) the Owned Intellectual Property, to the same extent Seller would have been
able to had the transactions contemplated by this Agreement not occurred and
without being required to pay any additional amount accruing to the extent
resulting from the transactions contemplated hereby. Each Intellectual Property
Contract is valid and enforceable, is in full force and effect, is binding on
Seller (and, to the Knowledge of Seller, all other parties thereto), and Seller
(and, to the Knowledge of Seller, any other party thereto) is not in breach
thereof or default thereunder.

 

(d) Seller has used commercially reasonable efforts in accordance with normal
industry practice in the United States to maintain the confidentiality of all
confidential Company Intellectual Property, and to the Knowledge of Seller (i)
no Person has misappropriated any material confidential Company Intellectual
Property (including material confidential Company Intellectual Property embodied
in Software), (ii) no employee, independent contractor or agent of Seller has
misappropriated any trade secrets of any other Person and (iii) no employee,
independent contractor or agent of Seller is in default or breach of any term of
any agreement for the protection, ownership, development, use or transfer of
Intellectual Property (including Intellectual Property embodied in Software).

 

(e) All Software material to the Business as currently operated is free of all
defects that materially disrupt its operation or materially adversely impact the
operation of other Software operating systems. Seller owns or, to the Knowledge
of Seller, has a valid right to

 

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access and use pursuant to the terms of the Intellectual Property Contracts, all
computer systems, hardware and Software used in connection with the continued
operation of the Business as currently operated (the “Company IT Systems”), and
Seller has used commercially reasonable efforts in accordance with normal
industry practice in the United States to secure the Company IT Systems from
unauthorized access or use by any Person, and to ensure the continued,
uninterrupted and error-free operation of the Company IT Systems in connection
with the continued operation of the Business as currently operated.

 

4.18. Real Property.

 

Seller does not own, beneficially or otherwise, any fee interest in any real
property.

 

4.19. Permits.

 

Schedule 4.19 of the Disclosure Schedule sets forth a complete and correct list
of all material permits currently held by Seller in connection with the
Business. The Seller is in compliance in all material respects with all of the
permits set forth on Schedule 4.19 of the Disclosure Schedule, and no suspension
or cancellation of any of such permits is pending or, to Knowledge of Seller,
threatened. Seller has all permits necessary for Seller to own, lease and
operate the Purchased Assets, and to conduct the Business as presently
conducted. No material permits set forth on Schedule 4.19 of the Disclosure
Schedule will be cancelled or suspended as a result of or upon the consummation
of the transactions contemplated by this Agreement.

 

4.20. Legal Compliance.

 

As of the date hereof, to the Knowledge of Seller, Seller has conducted the
Business in all material respects in accordance with all Laws and Governmental
Orders applicable to the Business, Seller or the Purchased Assets, and Seller is
not in violation in any material respect of any Law or Governmental Order
applicable to the Business, the Purchased Assets or Seller, except for any
violations which would not have a Material Adverse Effect. As of the date
hereof, to the Knowledge of Seller, Seller has not received written notice of
any violation of any Law or Governmental Order applicable to Seller, the
Business or any of the properties or assets, including the Purchased Assets, of
Seller.

 

4.21. Labor Matters.

 

(a) Seller is not a party, or is otherwise subject, to any collective bargaining
agreement or other labor union contract applicable to employees of the Business,
and no collective bargaining agreement is being negotiated by Seller with
respect to employees of the Business. There is no labor dispute, strike or work
stoppage against Seller pending or, to the Knowledge of Seller, threatened in
writing that may interfere with the Business. To the Knowledge of Seller,
neither Seller nor any representative or employee of Seller has committed any
unfair labor practices in connection with the operation of the Business.

 

(b) Seller is currently in compliance in all material respects with all
applicable Laws relating to the employment of labor, including those related to
wages, hours, collective bargaining, occupational safety or health, human rights
or anti-discrimination or any other Laws

 

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or regulations affecting employees of the Business and, to the Knowledge of
Seller, there is no material investigation being conducted or threatened by the
Governmental Authority relating thereto.

 

(c) Seller is currently in compliance with all applicable Laws relating to the
payment and withholding of Taxes and, to the Knowledge of Seller, there is no
material investigation being conducted or threatened by the Governmental
Authority relating thereto.

 

4.22. Exclusivity of Representations and Warranties.

 

The representations and warranties made by Seller in Section 4 of this Agreement
are in lieu of and are exclusive of all other representations and warranties,
including, without limitation, any implied warranties. Seller hereby disclaims
any such other or implied representations or warranties, notwithstanding the
delivery or disclosure to Buyer or its officers, directors, employees, agents or
representatives of any documentation or other information (including any
financial projections or other supplemental data not included in this
Agreement).

 

5. REPRESENTATIONS AND WARRANTIES OF BUYER

 

Except as may be set forth on the Schedule attached to this Agreement, Buyer
hereby represents and warrants to Seller, on the date hereof and on the Closing
Date, as follows:

 

5.1. Organization.

 

Buyer is a corporation duly incorporated or a limited liability company duly
formed, as the case may be, validly existing and in good standing under the law
of the State of Delaware. Buyer has all necessary corporate power, authority and
capacity to own its property, to carry on its business, and to enter into and
perform its obligations under this Agreement and the Other Documents to which it
is a party and to carry out the transactions contemplated hereby and thereby.

 

5.2. Authority.

 

The execution, delivery and performance by Buyer of this Agreement and the Other
Documents to which it is a party and the consummation by Buyer of the
transactions contemplated hereby or thereby have been duly authorized by all
requisite corporate action or limited liability company action, as the case may
be, on the part of Buyer. This Agreement has been duly executed and delivered by
Buyer and constitutes, and upon execution and delivery by Buyer of each of the
Other Documents to which it is a party, such Other Documents will constitute,
the legal, valid and binding obligation of Buyer, enforceable against Buyer in
accordance with its terms, except to the extent that enforceability may be
limited by applicable bankruptcy, insolvency or similar laws affecting the
enforcement of creditors’ rights generally and subject to general principles of
equity.

 

5.3. No Conflict.

 

Neither the execution or delivery by Buyer of this Agreement or the Other
Documents to which it is a party, nor the consummation of the transactions
contemplated hereby

 

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or thereby will (a) conflict with or result in a breach of any of the provisions
of, or constitute a default under, the charter, by-laws, or other organizational
document of Buyer, as amended to date, (b) result in a breach of any of the
provisions of, or constitute a default under any contract to which Buyer is
bound, or (c) result in a violation of any Applicable Law to which Buyer or its
property is subject.

 

5.4. Consents.

 

The execution, delivery and performance of this Agreement and the Ancillary
Agreements do not and will not require the consent or approval of, or filing
with, any Governmental Authority or any other Person except (i) as may be
required to be obtained by Buyer after the Closing in order to own or operate
any of the Purchased Assets, (ii) as required pursuant to the HSR Act and any
other Antitrust Laws applicable to the sale of the Purchased Assets to Buyer,
(iii) for entry of the Sale Procedures Order by the Bankruptcy Court or (iv) for
such consents, approvals and filings, of which the failure to obtain or make
would not, individually or in the aggregate, have a material adverse effect on
the ability of Buyer to consummate the transactions contemplated hereby.

 

5.5. Litigation.

 

There is no action, claim, demand, suit, proceeding, arbitration, grievance,
citation, summons, subpoena, inquiry or investigation of any nature, civil,
criminal, regulatory or otherwise, in law or in equity, pending or, to the
knowledge of Buyer, threatened against or relating to Buyer which seeks to
enjoin or rescind the transactions contemplated by this Agreement or otherwise
prevent Buyer from complying with the terms and provisions of this Agreement.

 

5.6. Brokers.

 

No broker or finder or investment banker is entitled to any brokerage, finder’s
or other fee or commission in connection with the transactions contemplated by
this Agreement based upon arrangements made by or on behalf of Buyer for which
Seller could become liable or obligated.

 

5.7. No Financing or Due Diligence Contingency.

 

Buyer’s obligations under this Agreement are not subject to the satisfaction of
any financing or further due diligence contingencies. Buyer has sufficient funds
available to consummate the transactions contemplated by this Agreement.
Absolutely no financing or due diligence contingencies apply with respect to the
transactions contemplated hereby.

 

5.8. Exclusivity of Representations and Warranties.

 

The representations and warranties made by Buyer in Section 5 of this Agreement
are in lieu of and are exclusive of all other representations and warranties,
including, without limitation, any implied warranties. Buyer hereby disclaims
any such other or implied representations or warranties, notwithstanding the
delivery or disclosure to Seller or its officers,

 

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directors, employees, agents or representatives of any documentation or other
information (including any financial projections or other supplemental data not
included in this Agreement).

 

6. CONDUCT OF BUSINESS PENDING CLOSING

 

6.1. Conduct of Business.

 

Except as otherwise contemplated by this Agreement or as set forth on Section
6.1 of the Disclosure Schedule, other than those filings and proceedings before
or required by order of the Bankruptcy Court and the incurrence of expenses
required thereunder, during the period from the date hereof through the Closing
Date (the “Pre-Closing Period”), Seller will conduct the operations of the
Business in the ordinary and usual course, consistent with the conduct of the
Business since the filing of the Bankruptcy Petition, and keep the tangible
assets included in the Purchased Assets in substantially the same condition
reasonable wear and tear excepted. Without limiting the generality of the
foregoing without the prior written consent of Buyer, which consent shall not be
unreasonably withheld or delayed, Seller shall not take any of the following
actions during the Pre-Closing Period:

 

(a) other than as required pursuant to any employee benefit plan, agreement or
other arrangement existing as of the date hereof or as may be required by
Applicable Law, (i) grant any bonus, severance or termination pay to, or enter
into any employment or severance agreement with, any director, officer or other
employee of the Business or establish, enter into, adopt or amend any collective
bargaining agreement, bonus, profit sharing, compensation, pension, retirement,
deferred compensation, employment termination, severance or other employee
benefit plan, agreement, policy or arrangement for the benefit of any director,
officer or employee of the Business or (ii) increase the compensation payable or
to become payable to any director, officer or employee of the Business, except
for (A) increases in base salary or wages in the ordinary course of business and
consistent with past practice and (B) subject to the approval of the Bankruptcy
Court, the payment of compensation and benefits under a key employee retention,
stay bonus, severance or similar plan with respect to the employees of Seller so
long as the compensation and/or benefits under any such plan is payable or
provided by, as the case may be, Seller and does not create any obligations or
liabilities for Buyer at any time, regardless of whether such obligations or
liabilities will continue, survive or remain outstanding after the Closing Date;

 

(b) hire any new employees for the Business;

 

(c) sell or otherwise dispose of or grant any security interest in any Purchased
Assets, except security interests and adequate protection liens granted to
secure post-petition financing or the use of cash collateral, which liens shall
be released and attach to the proceeds of the sale contemplated hereby on or
before the Closing Date, or make any commitment to do so, other than the
disposition of Inventory in the ordinary course of business consistent with past
practice;

 

(d) modify, amend, cancel or terminate any Material Contract;

 

(e) fail to use commercially reasonable efforts to maintain the Purchased Assets
in commercially reasonable operating condition, ordinary wear and tear excepted;

 

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(f) (i) abandon, sell, assign, or grant any security interest in any Owned
Intellectual Property, except security interests and adequate protection liens
granted to secure post-petition financing or the use of cash collateral, which
liens shall be released and attach to the proceeds of the sale contemplated
hereby on or before the Closing Date, (ii) grant to any third party any license
with respect to any Owned Intellectual Property, (iii) develop, create or invent
any Intellectual Property or Software jointly with any third party, (iv) with
respect to Seller, fail to use commercially reasonable efforts in accordance
with normal industry practice in the United States or (v) permit any item of
Owned Intellectual Property to lapse or be abandoned, dedicated or disclaimed,
and Seller shall, perform all applicable filings, recordings and other acts, and
pay all required fees and Taxes, to maintain and protect its interest in all
Company Intellectual Property, Company Software and Intellectual Property
Embodiments;

 

(g) fail to perform all of the material post-petition obligations of Seller
under the Assumed Contracts in accordance with their terms, except to the extent
that such performance is excused by the Bankruptcy Code;

 

(h) change, in any material respect, any of their methods or procedures relating
to accounting, other than such changes required by GAAP;

 

(i) enter into any new Contracts with customers of the Business that involve
exchanges of value of more than $300,000 during the course of such Contract;

 

(j) notwithstanding Section 6.1(i), enter into any new Contracts with customers
of the Business that involve exchanges of value of more than $50,000 during the
course of such Contract if such Contract (i) would require consent to be
assigned to Buyer at Closing unless such consent has previously been obtained or
(ii) deviates in any material respect from standard terms and conditions of
Seller;

 

(k) enter into any new Contracts with suppliers of the Business that involve
exchanges of value of more than $100,000 during the course of such Contract;

 

(l) fail to notify Buyer promptly of any written objection, litigation or
administrative proceeding that challenges the transactions contemplated hereby
or the entry of the Sale Approval Order other than any written objection,
litigation or administration proceeding disclosed in any filing with the
Bankruptcy Court;

 

(m) cease to maintain in full force and effect insurance comparable in amount
and scope to coverage maintained by it (or on its behalf) with respect to the
Business on the date hereof;

 

(n) bring, settle, compromise or waive any claim or legal right included in the
Purchased Assets materially affecting the validity or value of any of the
Business or the Purchased Assets;

 

(o) incur any Indebtedness other than the use of cash collateral or trade
payables incurred in the ordinary course of business;

 

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(p) (i) issue or sell any capital stock, notes, bonds or other securities, or
any option, warrant or other right to acquire the same, (ii) redeem any of the
capital stock or declare, make or pay any dividends or distributions (whether in
cash, securities or other property) to the holders of its capital stock or
otherwise, (iii) amend or restate its organizational documents or (iv) merge
with, enter into a consolidation with or acquire an interest of 5% or more in
any Person or acquire a substantial portion of the assets or business of any
Person or any division or line of business thereof, or otherwise acquire any
material assets other than in the ordinary course of business consistent with
past practice;

 

(q) make or commit to make capital expenditures in excess of $50,000 in the
aggregate; and

 

(r) agree to take any of the actions specified in this Section 6.1, except as
contemplated by this Agreement or the Other Documents or pursuant to an order of
the Bankruptcy Court.

 

6.2. Cure of Defaults.

 

Seller shall, at or prior to the Closing, cure any and all defaults under the
Assumed Contracts required to be cured and pay all Cure Costs that are required
to be paid pursuant to the Sale Approval Order or other Bankruptcy Court order
required to be paid as a condition to assumption and assignment under Section
365 of the Bankruptcy Code. Prior to payment or cure of any Cure Cost, Seller
shall give Buyer reasonable advance written notice of the proposed Cure Cost.
Any monetary amounts of such Cure Costs, to the Knowledge of Seller, as of the
date hereof are listed on Schedule 6.2. At Closing, Seller shall maintain a
reserve of cash in a bank account (the “Cure Cost Reserve Amount”) in an amount
sufficient to satisfy any disputed Cure Costs pending resolution of the disputed
Cure Costs. After Closing, Seller shall pay disputed Cure Costs from the Cure
Cost Reserve Amount within three (3) Business Days after entry of a Bankruptcy
Court order resolving the dispute over the amount of the required Cure Cost.
Prior to settling any disputed Cure Cost, Seller shall give Buyer reasonable
advance written notice of the resolution.

 

6.3. Commercially Reasonable Efforts.

 

Between the date hereof and the Closing Date, each party shall use commercially
reasonable efforts to and shall use commercially reasonable efforts to (i)
obtain all necessary consents, waivers, authorizations and approvals of all
Governmental Authorities, and of all other Persons, required to be obtained by
such party in connection with the execution, delivery and performance by such
party of this Agreement, including, without limitation, as a result of the sale
of the Purchased Assets and (ii) take, or cause to be taken, all action, and do,
or cause to be done, all things necessary or proper, consistent with Applicable
Law, to consummate and make effective in an expeditious manner the transactions
contemplated hereby. Seller and Buyer agree that, in the event that any consent,
approval or authorization necessary or desirable to preserve for the Business
any right or benefit under any Assumed Contract or Contract to which Seller is a
party is not obtained prior to the Closing, Seller will, subsequent to the
Closing, cooperate with Buyer in attempting to obtain such consent, approval or
authorization as promptly thereafter as practicable. If such consent, approval
or authorization cannot be obtained, Seller shall use its

 

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commercially reasonable efforts to provide Buyer with the rights and benefits of
the affected Assumed Contract or Contract to which Seller is a party, and, if
Seller provides such rights and benefits, Buyer shall assume the obligations and
burdens thereunder.

 

7. ADDITIONAL COVENANTS AND AGREEMENTS

 

7.1. Bankruptcy Covenants; Bankruptcy Scheduling; Breakup Fee; Deposit Return.

 

(a) Operation as Debtor in Possession. Seller has and shall continue to operate
its business as a debtor in possession pursuant to Sections 1107 and 1108 of the
Bankruptcy Code.

 

(b) Entry of Bankruptcy Orders.

 

(i) No later than three (3) Business Days after the date hereof, Seller shall
file, and provide sufficient notice to all parties entitled to notice under
applicable provisions of the Bankruptcy Code, the Federal Rules of Bankruptcy
Procedure (including all parties to Contracts and all applicable Governmental
Authorities) and such other parties reasonably designated by Buyer of, a motion
(the “Sale Motion”) with the Bankruptcy Court, in form and substance
satisfactory to Buyer, seeking entry of the following orders:

 

  (A) an order, in the form attached hereto as Exhibit B, which approves the
Sale Procedures set forth on Exhibit C attached hereto and incorporates said
Sale Procedures as if set forth in full in the Sale Procedures Order, approves
the Breakup Fee and schedules a hearing (the “Sale Hearing”) for approval of the
Sale Motion, or which is otherwise in form and substance satisfactory to Buyer
(the “Sale Procedures Order”); and

 

  (B) an order (the “Sale Approval Order”), in the form attached hereto as
Exhibit D or which is otherwise in form and substance satisfactory to Buyer.

 

(ii) No later than September 12, 2005, the Sale Procedures Order shall be
approved by the Bankruptcy Court and same shall have become a Final Order.

 

(iii) No later than October 11, 2005, the Sale Approval Order shall be approved
by the Bankruptcy Court and same shall have become a Final Order.

 

(iv) Subject to the Sale Procedures Order, Seller shall promptly make any
filings, take all actions, and use all reasonable best efforts to obtain any and
all other approvals and orders of the Bankruptcy Court necessary or appropriate
for consummation of the transactions contemplated hereby.

 

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(c) Breakup Fee. Seller hereby confirms that it is integral to the process of
arranging an orderly sale of the Purchased Assets to proceed by selecting Buyer
to enter into this Agreement in order to present the Bankruptcy Court with
arrangements for obtaining the highest realizable prices for the Purchased
Assets and that, without Buyer having committed substantial time and effort to
such process, the estate of Seller may have had to employ a less orderly sale
process and thereby incur higher costs and risk attracting lower prices.
Accordingly, the contributions of Buyer to the process have provided substantial
benefit to the estate of Seller. Seller acknowledges that Buyer would not have
invested the effort in negotiating and documenting the transaction provided for
herein and incurring duties to pay its outside advisers if Buyer were not
entitled to the Breakup Fee. Accordingly, upon the first to occur of any of the
following events:

 

(i) this Agreement is terminated pursuant to Section 12.1(f) or Section 12.1(i)
hereof and at such time Seller does not have the right to terminate this
Agreement pursuant to Section 12.1(d);

 

(ii) the Bankruptcy Court enters an order authorizing the sale of the Purchased
Assets to a party other than Buyer (a “Third-Party Buyer”) and at such time
Seller does not have the right to terminate this Agreement pursuant to Section
12.1(d) and the sale of the Purchased Assets to the Third-Party Buyer is
consummated;

 

(iii) Seller seeks, supports or fails to oppose, any of the following actions
that could reasonably cause the Purchased Assets not to be sold to Buyer
pursuant to this Agreement and at such time Seller does not have the right to
terminate this Agreement pursuant to Section 12.1(d):

 

  (A) dismissal of the Bankruptcy Case;

 

  (B) filing of a plan of reorganization or liquidation, sale pursuant to
Section 363 of the Bankruptcy Code, dissolution, merger, or substantially
similar transaction that is inconsistent with the sale of the Purchased Assets,
including the Assumed Contracts, to Buyer pursuant to this Agreement, except as
permitted by the Sale Procedures Order;

 

  (C) the appointment of a liquidator or similar Person for the purpose of
liquidating the Purchased Assets; or

 

  (D) liquidation of the Purchased Assets pursuant to a proceeding under Chapter
11 of the Bankruptcy Code or conversion of the Bankruptcy Case to a proceeding
under Chapter 7 of the Bankruptcy Code; and

 

(iv) termination of this Agreement by Buyer pursuant to Section 12.1(j).

 

then, Buyer shall, without further court order, be entitled to receive $700,000
(the “Breakup Fee”). The payment of the Breakup Fee shall be made from proceeds
of the sale to the Third-Party Buyer or an Alternative Transaction
(notwithstanding any Liens on such proceeds) within three (3) Business Days of
the closing of the sale to such Third-Party Buyer or such Alternative

 

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Transaction, except that, at all times that Buyer is entitled to but has not
received the Breakup Fee, Buyer shall have a claim for administrative expense
under sections 503(b) and 507(a)(1) of the Bankruptcy Code in the Bankruptcy
Case in respect of the Breakup Fee.

 

(d) Return of Deposit. If this Agreement is terminated (other than by Seller in
accordance with Section 12.1(d)), Dreier shall return the Deposit to Buyer. If
this Agreement is terminated in accordance with Section 12.1(d), Buyer shall
forfeit the Deposit and Dreier shall remit the Deposit to Seller, which shall be
Seller’s sole and exclusive remedy hereunder.

 

(e) Acknowledgement. Buyer acknowledges that this Agreement, and the
transactions contemplated hereby, shall be subject to higher and better offers
by third parties and that Seller shall be required to provide notice of this
Agreement, and an opportunity for any third party to bid, prior to the
Bankruptcy Court considering approval of the Sale Approval Order.
Notwithstanding the foregoing, from the date hereof and until the entry by the
Bankruptcy Court of the Sale Procedures Order, Seller shall not and shall cause
its representatives and Affiliates not to initiate, contract with, solicit or
encourage submission of any inquiries, proposals or offers by, any Person (other
than Buyer and its Affiliates, agents and representatives), or negotiate with
actual or potential competing bidders in connection with (A) any sale or
disposition of all or any material portion of the Purchased Assets or the
capital stock of Seller or (B) any merger, consolidation, business combination,
recapitalization, reorganization or other extraordinary business transaction
involving or otherwise relating to Seller (each, an “Alternative Transaction”),
except that Seller may (i) prior to the filing of the Sale Motion, provide a
copy of this Agreement to the Lenders, the Committee and their respective
counsel and financial advisors but only to the extent that any such party to
whom this Agreement is to be provided has agreed in writing or is otherwise
bound by written agreement, in form and substance reasonably satisfactory to
Buyer, to maintain the confidentiality of this Agreement and (ii) after the
filing of the Sale Motion, provide to any party, upon such party’s request, a
copy of the Sale Motion or this Agreement to the extent such documents have been
filed with the Bankruptcy Court (unless filed under seal). From the date hereof
and until the entry by the Bankruptcy Court of the Sale Procedures Order, Seller
and its representatives shall be permitted to furnish to any Person any
information and respond to inquiries by any Person interested in effectuating an
Alternative Transaction. From the date of the entry by the Bankruptcy Court of
the Sale Procedures Order and until the entry by the Bankruptcy Court of the
Sale Approval Order, Seller shall be permitted to cause its representatives and
Affiliates to solicit and negotiate Alternative Transactions and respond to any
inquiries, proposals or offers by, any Person (in addition to Buyer and its
Affiliates and representatives) in connection with any Alternative Transaction
in the manner contemplated by the Sale Procedures Order. Following the date of
the entry by the Bankruptcy Court of the Sale Approval Order and through the
earlier of the consummation of the transactions contemplated by this Agreement
or the termination hereof, Seller shall not, and shall cause its representatives
and Affiliates not to, engage in the conduct set forth in the second sentence of
this Section 7.1(e).

 

(f) Cure of Defaults. At or prior to the Closing, Seller shall have complied
with its obligations pursuant to Section 6.2 in all respects.

 

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(g) Other Actions. Seller shall not seek, support or fail to oppose, any of the
following actions that could reasonably cause the Purchased Assets not to be
sold to Buyer pursuant to this Agreement:

 

(i) dismissal of the Bankruptcy Case;

 

(ii) filing of a plan of reorganization or liquidation, sale pursuant to Section
363 of the Bankruptcy Code, dissolution, merger or substantially similar
transaction that is inconsistent with the sale of the Purchased Assets,
including the Assumed Contracts, to Buyer pursuant to this Agreement, except as
permitted by the Sale Procedures Order;

 

(iii) the appointment of a liquidator or similar Person for the purpose of
liquidating the Purchased Assets;

 

(iv) liquidation of the Purchased Assets pursuant to a proceeding under Chapter
11 of the Bankruptcy Code or conversion of the Bankruptcy Case to a proceeding
under Chapter 7 of the Bankruptcy Code; or

 

(v) file any pleading authorizing any course of action materially inconsistent
with the sale of the Purchased Assets, including the Assumed Contracts, to Buyer
in accordance with this Agreement, except as permitted by the Sale Procedures
Order.

 

7.2. Access by Buyer and Confidential Information.

 

(a) Buyer’s Access to Properties, Records and Employees; Confidentiality.
Between the date hereof and the Closing Date, Seller shall afford to Buyer, and
to the accountants, counsel, financial advisors and other authorized
representatives of Buyer, reasonable access during normal business hours to all
books and records (including, without limitation, payroll information) of Seller
relating to the Business, the Purchased Assets and the Assumed Liabilities. Upon
reasonable prior notice and in addition to the foregoing, Seller shall afford
Buyer reasonable access during normal business hours to all facilities related
to the Business and to all Purchased Assets throughout the period prior to the
Closing Date. Between the date hereof and the Closing Date, Seller and Buyer
shall cooperate to provide an opportunity for representatives of Buyer to meet
directly with key employees and key management of the Business, provided that
Buyer shall provide Seller reasonable notice of any such meeting and Seller
shall have the right to attend same. Between the date of entry of the Sale
Procedures Order by the Bankruptcy Court and the Closing Date, Seller shall
afford to Buyer reasonable access to any employees or outside sales
representatives located in the United States and any other country, provided
that Buyer shall provide Seller reasonable notice of any such meeting and Seller
shall have the right to attend same. Without limiting the foregoing, Seller
shall provide such reasonable access to employees of Seller for the purposes of
integrating the Business into the Buyer’s business. The rights of access
contained in this Section 7.2(a) are granted subject to, and on, the following
terms and conditions: (i) any such investigation will be conducted in a
reasonable manner; and (ii) Buyer shall not have access to personnel records of
Seller relating to individual performance or evaluation records, medical
histories or other information that in Seller’s good faith opinion is sensitive
or the disclosure of which could subject Seller or any of its Affiliates to risk
of liability, (iii) Buyer shall not have access to, or

 

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any right to obtain, information if such disclosure would, as determined by
Seller, in its reasonable good faith judgment, (A) cause significant competitive
harm to the Business if the transactions contemplated hereby are not
consummated, (B) jeopardize any attorney-client or other legal privilege or (C)
contravene any applicable Laws, fiduciary duties or binding agreement of Seller
as of the date hereof.

 

(b) All information provided or disclosed to Buyer in connection with this
Agreement, the Business or the Purchased Assets shall be governed by that
certain Confidentiality Agreement dated May 20, 2005 by and between Buyer and
Seller.

 

7.3. Post-Closing Access and Cooperation.

 

(a) After the Closing Date, Buyer and Seller shall provide each other and their
respective professional advisors and any administrators of Seller’s estate with
reasonable access to the Records transferred to Buyer or retained by Seller, as
the case may be, pursuant to Section 1.2(h) until the later of (a) six (6) years
after the Closing Date or (b) the required retention period for all government
contact information, records or documents in order to enable Seller or Buyer and
their respective Affiliates, as the case may be, to prepare financial
statements, file any Tax Return, respond to any audit request or any
administrative or judicial proceeding with respect to Taxes, comply with any
Applicable Law or for any other reasonable business purpose, including, without
limitation, in connection with any action involving any of Seller’s officers,
directors or employees. Each party will reimburse the other for reasonable
out-of-pocket costs and expenses incurred in assisting the other pursuant to
this Section 7.3. This Section 7.3 will not require either party to take any
action that would unreasonably interfere with the conduct of its business or
unreasonably disrupt its normal operations. Prior to destroying any Records for
period prior to the Closing, Buyer or Seller shall notify the other party thirty
(30) days in advance of any such proposed destruction of its intent to destroy
such Records, and Buyer or Seller, as applicable, will permit the other party to
retain such Records; provided however, that failure to provide such notification
shall not constitute a basis for any liability or claim for damages.

 

(b) Buyer’s Access to Records. Following the Closing Date and until the
Bankruptcy Case related to Seller has been closed, Seller shall permit Buyer and
its counsel, tax, financial and other advisors as may be retained from time to
time, Affiliates and successors and assigns (collectively, the “Buyer Parties”),
reasonable access during business hours to any books and records related to the
Business, the Purchased Assets in order to facilitate the resolution of any
claims made against or incurred by Buyer relating to the Business. The access
referenced in the preceding sentence shall include the right of Buyer Parties to
copy and use such records as they reasonably request.

 

(c) Seller and Buyer shall provide each other with any final determination of
any such audit, administrative or judicial proceeding or determination that
affects any amount required to be shown on any Return of the other for any
period.

 

(d) Following the Closing Date and until the Bankruptcy Case has been closed,
Seller shall provide Buyer with all information necessary to allow Buyer to
apply the provisions of Section 41(f)(3)(A) of the Code.

 

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7.4. Consents; Commercially Reasonable Efforts.

 

Seller and Buyer shall use all reasonable efforts to satisfy promptly the
conditions to the Closing specified in this Agreement. Seller and Buyer shall
furnish to each other and to each other’s counsel all such information as may be
reasonably required in order to effectuate the foregoing actions. Without
limiting the foregoing, between the date hereof and the Closing Date, Seller and
shall use commercially reasonable efforts to (i) obtain all necessary consents,
waivers, authorizations and approvals of all Governmental Authorities, and of
all other Persons, required to be obtained by Seller in connection with the
execution, delivery and performance by Seller of this Agreement, including,
without limitation, as a result of the sale of the Purchased Assets and (ii)
take, or cause to be taken, all action, and do, or cause to be done, all things
necessary or proper, consistent with Applicable Law, to consummate and make
effective in an expeditious manner the transactions contemplated hereby. Seller
and Buyer agree that, in the event that any consent, approval or authorization
necessary or desirable to preserve for the Business any right or benefit under
any Assumed Contract or Contract is not obtained prior to the Closing, Seller
will, subsequent to the Closing, cooperate with Buyer in attempting to obtain
such consent, approval or authorization as promptly thereafter as practicable.
If such consent, approval or authorization cannot be obtained, Seller shall use
its commercially reasonable efforts to provide Buyer with the rights and
benefits of the affected Assumed Contract or Contract, and, if Seller provides
such rights and benefits, Buyer shall assume the obligations and burdens
thereunder.

 

7.5. Postclosing Collections by Seller.

 

The parties acknowledge that the Purchased Assets include, among other things,
Purchased Accounts Receivable and certain Intellectual Property. From and after
the Closing, to the extent that Seller receives any funds or payments
(including, without limitation, funds or payments received (i) pursuant to any
Assumed Contract pursuant to which Seller is a licensor of Intellectual Property
or (ii) pursuant to Section 365(n) of the Bankruptcy Code with respect to any
Intellectual Property), any and all rights of Seller to receive such funds or
payments are hereby assigned to Buyer, Seller shall hold any such funds or
payments that are received by it on and after the Closing Date in trust or the
benefit of Buyer and, within seven (7) Business Days of receipt thereof, remit
such funds to Buyer.

 

7.6. Transfer Taxes.

 

If and to the extent not exempted from Taxes by order of the Bankruptcy Court,
all Taxes levied or arising in connection with the transfer of the Purchased
Assets pursuant to this Agreement and the Other Documents, including any
applicable sales or use Taxes, real property gains taxes, sales taxes, transfer
Taxes, deed stamp and recording fees or other Taxes, whether local, state or
federal, other than Taxes based on the income of Seller (collectively,
“Transaction Taxes”), and any refund, abatement or rebate therefrom, shall be
shared 50% by Seller and 50% by Buyer. Buyer and Seller shall cooperate in an
effort to exempt the transfer of the Purchased Assets from any Transaction Tax
pursuant to Section 1146(c) of the Bankruptcy Code. Buyer and Seller agree to
cooperate to determine the amount of Transaction Taxes payable in connection
with the transfer of the Purchased Assets to Buyer under this Agreement. Seller
and Buyer agree to reasonably assist each other in the preparation and filing of
any and all required returns for or with respect to such Transaction Taxes with
any and all appropriate

 

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Governmental Authorities or taxing authorities. Seller, after the review and
consent by Buyer, shall file such applications and documents as shall permit any
such Transaction Taxes to be assessed and paid on or prior to the Closing Date
in accordance with any available pre-sale filing procedure. Buyer shall execute
and deliver all instruments and certificates necessary to enable Seller to
comply with the foregoing.

 

Buyer or Seller, as the case may be, shall pay to or reimburse Seller or Buyer,
as the case may be, so that each shall pay its respective share of such
Transaction Taxes within thirty (30) days of receiving reasonable written notice
thereof.

 

7.7. Employees.

 

A list of employees by position and location is set forth on Schedule 7.7 of the
Disclosure Schedule. Buyer shall deliver a list of employees to be offered
employment by Buyer no later than five (5) Business Days prior to the Closing
Date. During the period from entry of the Sale Approval Order to the Closing
Date, Buyer shall offer employment to the employees so identified by Buyer.
Buyer’s obligation with respect to Transferred Employees shall commence as of
the Closing Date. The Transferred Employees’ employment with the Buyer shall be
upon such terms and conditions as Buyer, in its sole discretion, shall
determine, and nothing herein express or implied shall confer upon any employee
of the Business, or legal representative thereof, any rights or remedies,
including any right to employment, or for any specified period, of any nature or
kind whatsoever, under or by reason of this Agreement. To the extent that any
act or failure to act by Buyer, standing alone, triggers any liability under the
WARN Act or any other mass lay-off statute, such liability shall be the
liability of Buyer. To the extent that any act or failure to act by Seller,
standing alone, triggers any Liability under the WARN Act or any other mass
lay-off statute, such Liability shall be the liability of Seller. To the extent
that any act or failure to act by Buyer, considered in the aggregate with any
act or failure to act by Seller, triggers any liability under the WARN Act or
any other mass lay-off statute, such liability shall be borne ratably (based on
the number of employees terminated or laid off) by Buyer and Seller. Each party
agrees to retain all books, Records and information records relating to any
employees hired by Buyer consistent with applicable Law.

 

7.8. Notice of Certain Events.

 

Between the date hereof and the Closing Date, Seller shall promptly notify Buyer
of:

 

(a) any notice or other communication from any Person alleging that the consent
of such Person is or may be required in connection with the transactions
contemplated by this Agreement;

 

(b) any notice or other communication from any Governmental Authority in
connection with the transactions contemplated by this Agreement;

 

(c) in the event, after the date of this Agreement, Seller receives any written
notice that any Significant Customer of the Business has ceased, or will cease,
to use the products, equipment, goods or services of the Business, or has
substantially reduced, or will substantially reduce, the use of such products,
equipment, goods or services or that any Significant Supplier will not sell raw
materials, supplies, merchandise and other goods to Seller

 

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or Seller receives oral notice thereof under circumstances that Seller in good
faith believes to have a reasonable likelihood of being effectuated, then Seller
shall give Buyer prompt written notice thereof and Seller and Buyer shall
cooperate and communicate with such Significant Customer or Significant Supplier
to address the concerns giving rise to such notice; and

 

(d) any Actions commenced or, to Knowledge of Seller, threatened to be commenced
relating to Seller or the Business that, if pending on the date of this
Agreement, would have been required to have been disclosed pursuant to Section
4.8.

 

7.9. Further Assurances.

 

At the request of Buyer, at any time after the Closing Date, Seller shall
execute and deliver such documents as Buyer or its counsel may reasonably
request to effectuate the purposes of this Agreement. Seller shall timely
execute and deliver prior to Closing any additional documents and perform such
additional acts necessary or desirable under applicable Law to record and
perfect the ownership interest of Seller in and to the Owned Intellectual
Property.

 

7.10. “AS IS” TRANSACTION.

 

BUYER HEREBY ACKNOWLEDGES AND AGREES THAT, EXCEPT FOR AND SUBJECT TO THE EXPRESS
REPRESENTATIONS AND WARRANTIES IN THIS AGREEMENT, THE OTHER AGREEMENTS AND THE
SCHEDULES HEREOF AND THERETO, BUYER WILL ACCEPT THE PURCHASED ASSETS AT THE
CLOSING “AS IS,” “WHERE IS,” AND “WITH ALL FAULTS” AND SELLER MAKES NO OTHER
REPRESENTATIONS OR WARRANTIES WHATSOEVER, EXPRESS OR IMPLIED, WITH RESPECT TO
THE PURCHASED ASSETS, INCLUDING, WITHOUT LIMITATION, INCOME TO BE DERIVED OR
EXPENSES TO BE INCURRED IN CONNECTION WITH THE PURCHASED ASSETS, THE PHYSICAL
CONDITION OF ANY PERSONAL PROPERTY COMPRISING A PART OF THE PURCHASED ASSETS OR
THAT IS THE SUBJECT OF ANY OTHER LEASE OR CONTRACT TO BE ASSUMED BY BUYER AT THE
CLOSING, THE ENVIRONMENTAL CONDITION OR ANY OTHER MATTER RELATING TO THE
PHYSICAL CONDITION OF ANY REAL PROPERTY OR IMPROVEMENTS THAT ARE TO BE
TRANSFERRED TO BUYER AT CLOSING OR ARE THE SUBJECT OF ANY REAL PROPERTY LEASE TO
BE ASSUMED BY BUYER AT THE CLOSING, THE ZONING OF ANY SUCH REAL PROPERTY OR
IMPROVEMENTS, THE VALUE OF THE PURCHASED ASSETS (OR ANY PORTION THEREOF),
SUBJECT TO SECTION 1.1, THE TRANSFERABILITY OF PURCHASED ASSETS, THE TERMS,
AMOUNT, VALIDITY OR ENFORCEABILITY OF ANY ASSUMED LIABILITIES, THE TITLE OF THE
PURCHASED ASSETS (OR ANY PORTION THEREOF), THE COLLECTIBILITY OF THE
RECEIVABLES, THE MERCHANTABILITY OR FITNESS OF THE PERSONAL PROPERTY OR ANY
OTHER PORTION OF THE PURCHASED ASSETS FOR ANY PARTICULAR PURPOSE, OR ANY OTHER
MATTER OR THING RELATING TO THE PURCHASED ASSETS OR ANY PORTION THEREOF. EXCEPT
FOR AND SUBJECT TO THE EXPRESS REPRESENTATIONS AND WARRANTIES IN THIS AGREEMENT,
THE OTHER AGREEMENTS AND THE SCHEDULES HEREOF AND THERETO, AND WITHOUT IN ANY
WAY LIMITING THE FOREGOING, SELLER

 

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HEREBY DISCLAIMS ANY WARRANTY, EXPRESS OR IMPLIED, OF MERCHANTABILITY OR FITNESS
FOR ANY PARTICULAR PURPOSE AS TO ANY PORTION OF THE PURCHASED ASSETS. BUYER
FURTHER ACKNOWLEDGES THAT BUYER HAS CONDUCTED AN INDEPENDENT INSPECTION AND
INVESTIGATION OF THE PHYSICAL CONDITION OF THE PURCHASED ASSETS AND ALL SUCH
OTHER MATTERS RELATING TO OR AFFECTING THE PURCHASED ASSETS AS BUYER DEEMED
NECESSARY OR APPROPRIATE AND THAT IN PROCEEDING WITH ITS ACQUISITION OF THE
PURCHASED ASSETS, EXCEPT FOR AND SUBJECT TO THE EXPRESS REPRESENTATIONS AND
WARRANTIES IN THIS AGREEMENT, THE OTHER AGREEMENTS AND THE SCHEDULES HEREOF AND
THERETO, BUYER IS DOING SO BASED SOLELY UPON SUCH INDEPENDENT INSPECTIONS AND
INVESTIGATIONS. NOTHING IN THIS SECTION 7.10 IS INTENDED TO COUNTERMAND OR
DEROGATE FROM (A) THE TERMS, VALIDITY, ENFORCEABILITY OR EFFECTIVENESS OF THE
EXPRESS REPRESENTATIONS AND WARRANTIES OF SELLER IN THIS AGREEMENT AND THE SALE
APPROVAL ORDER AS HEREIN PROVIDED OR (B) THE OBLIGATIONS OF SELLER UNDER SECTION
1.1.

 

7.11. Customer and Supplier Information.

 

No later than two (2) Business Days after the entry of the Sale Approval Order,
Seller shall deliver to Buyer (i) the names and addresses of all Significant
Customers as of the date hereof and the amount for which each such Significant
Customer was invoiced during the last twelve (12) months, (ii) the names and
addresses of all the Significant Suppliers as of the date hereof and the amount
for which each such Significant Supplier was invoiced during the last twelve
(12) months, (iii) all open customer purchase order and open quotations as of
the date hereof and (iv) all Accounts Receivable of the Business as of the date
hereof including all related customer information.

 

8. MUTUAL CONDITIONS PRECEDENT TO OBLIGATIONS TO CLOSE

 

Unless waived by Seller and Buyer, the obligations of the parties hereto to
consummate the transactions contemplated by this Agreement shall be subject to
the following:

 

(a) the Bankruptcy Court shall have entered the Sale Approval Order which shall
not have been stayed, vacated, reversed or modified by the Bankruptcy Court or
any other court of competent jurisdiction, in a manner unacceptable to Buyer or
Seller in their sole discretion;

 

(b) any applicable waiting period under the HSR Act shall have expired or
terminated;

 

(c) all other authorizations, approvals or consents required from any
Governmental Authority or any third party to permit the consummation of the sale
of the Purchased Assets shall have been obtained and be in full force and
effect; and

 

(d) no Applicable Law or Governmental Order (whether temporary, preliminary or
permanent) that has the effect of making the transactions contemplated by this
Agreement or any Other Document illegal or otherwise restraining or prohibiting
the consummation of the transactions contemplated hereby or thereby shall be in
effect.

 

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9. CONDITIONS TO BUYER’S OBLIGATION TO CLOSE

 

The obligations of Buyer to consummate the transactions contemplated by this
Agreement are subject to the satisfaction, on or before the Closing Date, of
each of the following conditions, unless otherwise waived in writing by Buyer:

 

9.1. Representations and Warranties.

 

(a) The representations and warranties of Seller contained herein or in any
document delivered pursuant hereto on or before the Closing Date (i) that are
qualified by “materiality” or “Material Adverse Effect” shall be true and
correct as of the Closing Date, (ii) that are not qualified by materiality or
“Material Adverse Effect” shall be true and correct in all material respects as
of the date hereof and on and as of the Closing Date, and (iii) shall be true
and correct on the Closing Date, so as not to, individually or in the aggregate,
have caused a Material Adverse Effect.

 

(b) The Buyer shall have received a certificate from Seller to such effect
signed by a duly authorized officer of Seller.

 

9.2. Performance.

 

Seller shall have duly performed or complied in all material respects with all
of the covenants, acts and obligations to be performed or complied with by
Seller hereunder at or prior to the Closing.

 

9.3. Cure of Defaults. At or prior to the Closing, Seller shall have complied
with its obligations pursuant to Section 6.2 in all respects.

 

9.4. Contracts. At or prior to the Closing, (a) Seller shall have assumed and
assigned to Buyer and shall have obtained all consents required for such
assumption or assignment under Section 365(c) of the Bankruptcy Code, pursuant
to the Sale Approval Order or other order of the Bankruptcy Court, each of the
Contracts set forth on Schedule 1.2(b), and (b) under the GIL999 Software Escrow
Agreement, dated as of June 18,1999, no “Release Event,” as defined therein,
other than as a result of the filing of the Bankruptcy Petition, shall have
occurred.

 

9.5. Sale Approval Order.

 

The Bankruptcy Court shall have entered the Sale Approval Order and same shall
have become a Final Order.

 

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9.6. Intellectual Property. At or prior to the Closing, Seller shall have (a)
assumed and assigned to Buyer, each of the Intellectual Property Contracts and
(b) performed all acts necessary to transfer Seller’s ownership interests in the
Owned Intellectual Property to Buyer free and clear of all Liens.

 

9.7. Seller’s Closing Documents.

 

Seller shall have delivered all documents required to be delivered by Seller at
the Closing, including, without limitation, those described in Section 11.1.

 

9.8. Non-Foreign Person.

 

On or prior to Closing, Seller will deliver to Buyer an affidavit stating, under
penalty of perjury, Seller’s United States taxpayer identification number and
that Seller is not a foreign person, pursuant to Section 1145(b)(2) of the Code
and Treas. Reg. § 1.1445-2(b)(2).

 

9.9. Legal Compliance.

 

On the Closing Date, the Business will comply in all material respects with all
Laws and Governmental Orders applicable to the Business, Seller or the Purchased
Assets, and Seller will not be in violation in any material respect of any Law
or Governmental Order applicable to the Business, the Purchased Assets or
Seller, except for any violations which would not have a Material Adverse
Effect. As of the Closing, Seller has not received written notice of any
violation of any Law or Governmental Order applicable to Seller, the Business or
any of the properties or assets, including the Purchased Assets, of Seller.

 

10. CONDITIONS TO SELLER’S OBLIGATIONS TO CLOSE

 

The obligations of Seller to consummate the transactions contemplated by this
Agreement are subject to the satisfaction, on or before the Closing Date, of
each of the following conditions unless otherwise waived in writing by Seller:

 

10.1. Representations and Warranties.

 

(a) The representations and warranties of Buyer contained herein or in any
document delivered pursuant hereto on or before the Closing Date shall be true
and correct in all material respects as of the date hereof and on and as of the
Closing Date.

 

(b) Seller shall have received a certificate from Buyer to such effect signed by
a duly authorized officer of Buyer.

 

10.2. Performance.

 

Buyer shall have performed or complied in all material respects with all
covenants, acts and obligations to be performed or complied with by Buyer
hereunder at or prior to the Closing.

 

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10.3. Buyer’s Closing Documents.

 

Buyer shall have delivered all documents required to be delivered by it at the
Closing, including, without limitation, those described in Section 11.2.

 

11. DELIVERIES

 

11.1. Deliveries of Seller.

 

At the Closing, Seller shall deliver to Buyer the following:

 

(a) an executed Bill of Sale, dated as of the Closing Date;

 

(b) an executed Assignment and Assumption, dated as of the Closing Date;

 

(c) a certified copy of the Sale Approval Order;

 

(d) a certificate executed by an executive officer of Seller, dated the Closing
Date, certifying that all covenants, acts and obligations to be performed or
complied with by Seller hereunder at or prior to the Closing have been duly
performed and complied with by Seller

 

(e) a certificate signed by a duly authorized officer of Buyer as required by
Section 9.1(b) hereof;

 

(f) such other certificates, instruments or documents as Buyer may reasonably
request in order to effect and document the transactions contemplated hereby and
all such other general instruments of transfer, assignment and conveyance,
evidences of consent, waiver or other approval, and other instruments or
documents in form and substance reasonably satisfactory to Buyer, as shall be
necessary to evidence or perfect the sale, assignment, transfer and conveyance
of the Purchased Assets to Buyer and the assumption of the Assumed Liabilities
by Buyer in accordance with the terms and conditions of this Agreement; and

 

(g) evidence satisfactory to Buyer that the transfer of substantially all of the
assets of RVSI Europe Limited (other than (a) any accounts receivable held by
RVSI Europe Limited against Seller or (b) any other monetary obligations of
Seller to RVSI Europe Limited) to an entity designated by Buyer has been
effectuated and is in full force and effect.

 

11.2. Deliveries of Buyer.

 

At the Closing, Buyer shall deliver to Seller the following:

 

(a) a certified copy of the resolutions duly adopted by the Board of Directors
of Buyer authorizing or ratifying this Agreement and authorizing the
consummation by Buyer of the transactions contemplated hereby and by the Other
Documents;

 

(b) a certificate executed by an executive officer of Buyer, dated the Closing
Date, certifying that all covenants, acts and obligations to be performed or
complied with by

 

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Buyer hereunder at or prior to the Closing have been duly performed and complied
with by Buyer;

 

(c) a certificate signed by a duly authorized officer of Buyer as required by
Section 10.1(b) hereof;

 

(d) an executed Assignment and Assumption, dated as of the Closing Date;

 

(e) such other certificates, instruments or documents as Seller may reasonably
request in order to effect and document the transactions contemplated hereby and
all such other general instruments of transfer, assignment and conveyance,
evidences of consent, waiver or other approval, and other instruments or
documents in form and substance reasonably satisfactory to Seller, as shall be
necessary to evidence or perfect the sale, assignment, transfer and conveyance
of the Purchased Assets to Buyer and the assumption of the Assumed Liabilities
by Buyer, in accordance with the terms and conditions of this Agreement;

 

(f) the Purchase Price less the Deposit; and

 

(g) written instructions directing Dreier to pay the Deposit to Seller.

 

12. TERMINATION

 

12.1. Termination.

 

Subject to the provisions of Section 12.2, this Agreement may be terminated at
any time before the Closing under any one or more of the following
circumstances:

 

(a) by mutual consent of Seller and Buyer;

 

(b) by Seller or Buyer if the Closing shall not have been consummated twenty
(20) days after the entry of the Sale Approval Order (the “Termination Date”)
unless at such date the condition set forth in Section 8(b) is the only
unsatisfied condition to the obligations of the parties to consummate the
transactions contemplated by this Agreement (other than those conditions capable
of being satisfied concurrently with the Closing), in which event the
Termination Date shall be extended by an additional 120 days; provided that the
right to terminate this Agreement under this Section 12.1(b) will not be
available to any party whose failure to fulfill in any material respect any
obligation under this Agreement has been the cause of, or resulted in the
failure of, the Closing to occur on or before such date;

 

(c) by either Seller or Buyer in the event that any Governmental Order
restraining, enjoining or otherwise prohibiting the transactions contemplated by
this Agreement shall have become final and nonappealable;

 

(d) by Seller if Buyer shall have breached or failed to perform in any material
respect any of its representations, warranties, covenants or other agreements
contained in this Agreement, which breach or failure to perform would give rise
to the failure of a condition set forth in Section 10.1 or 10.2 and either (i)
has not been cured within 20 days after notice of such breach or failure to
perform has been delivered to Buyer or (ii) is incapable of being cured prior

 

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to the Termination Date (other than as a result of Seller’s failure to perform
the agreements set forth herein required to be performed by Seller);

 

(e) by Buyer if the Sale Procedures Order has not been approved by the
Bankruptcy Court by September 2, 2005;

 

(f) by Buyer or Seller if Buyer is determined not to be the Winning Bidder (as
defined in the Sale Procedure Order);

 

(g) by Buyer or Seller if the Sale Approval Order has not been approved by the
Bankruptcy Court by September 30, 2005;

 

(h) by Buyer if the Closing shall not have occurred 20 Business Days after the
Sale Approval Order is entered (other than as a result of Buyer’s failure to
perform the agreements set forth herein required to be performed by Buyer or the
failure of the condition set forth in Section 8(b) to be satisfied);

 

(i) automatically, upon Seller consummating any Alternative Transaction;

 

(j) by Buyer if Seller shall have breached or failed to perform in any material
respect any of its representations, warranties, covenants or other agreements
contained in this Agreement, which breach or failure to perform would give rise
to the failure of a condition set forth in Section 9.1 or 9.2 and either (i) has
not been cured within twenty (20) days after notice of such breach or failure to
perform has been delivered to Seller or (ii) is incapable of being cured prior
to the Termination Date (other than as a result of Buyer’s failure to perform
the agreements set forth herein required to be performed by Buyer); provided
that nothing precludes the parties from agreeing that a cure for which monetary
damages would suffice may be effected by a reduction in the Purchase Price; and

 

(k) by Buyer in the event that the covenants in Section 6.3 are breached in any
respect.

 

12.2. Effect of Termination.

 

In the event of termination of this Agreement as provided above, this Agreement
shall forthwith become void and there shall be no liability or obligation
hereunder on the part of Seller or Buyer, except that the following shall
survive the termination hereof: (a) the liability, if any, of Seller under
Section 7.1(c) to pay the Breakup Fee, (b) the obligation of Dreier either to
return the Deposit to Buyer or remit the Deposit to Seller under Section 7.1(d),
(c) the agreements with respect to confidentiality contained in Section 7.2, (d)
the agreement respecting expenses contained in Section 14.13, and (e) any
liability in this Section 12.2.

 

12.3. Remedies.

 

(a) In the event that, on the Closing Date, Buyer fails to perform any
obligations of Buyer to be performed at the Closing and, at such time, Buyer
does not have the right to terminate this Agreement pursuant to Section 12.1,
then Seller shall be entitled to specific performance of Buyer’s obligations
hereunder (and shall be entitled to commence an action or

 

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proceeding in the Bankruptcy Court to enforce such specific performance) in
order to enable Seller to effect a Closing.

 

(b) Seller’s sole and exclusive remedies under this Agreement shall be (i) the
remedy of specific performance in accordance with Section 12.3(a) or (ii) the
remittance of the Deposit to Seller in accordance with Sections 12.2(b) and
7.1(d).

 

13. SURVIVAL

 

None of the representations or warranties of Seller herein, or in any Other
Document delivered prior to or at the Closing, shall survive the Closing, and,
except for the covenants and agreements expressly by their terms to be performed
after the Closing Date, none of the respective covenants and agreements of
Seller and Buyer herein, or in any Other Document delivered prior to or at the
Closing, shall survive the Closing. In addition to the foregoing, in the event
of a breach of a representation or warranty of Seller, Buyer’s sole remedy shall
be to terminate this Agreement pursuant to Section 12.1(j) on account of such
breach (if such remedy is otherwise in all respects applicable and available to
Buyer), and to require return of the Deposit upon such termination pursuant to
Section 7.1(d).

 

14. MISCELLANEOUS

 

14.1. Certain Definitions.

 

As used herein, the following terms have the meanings set forth below:

 

“401(k) Plan” has the meaning given to it in Section 4.10(iii).

 

“Accounts Receivable” means any and all accounts receivable, notes and other
amounts receivable from third parties, including, without limitation, customers
and employees, arising from the conduct of the Business, together with any
unpaid financing charges accrued thereon.

 

“Action” means any claim, action, suit, litigation, arbitration, inquiry,
proceeding or investigation by or before any Governmental Authority.

 

“Additional Assumed Contract” has the meaning given to it in Section 1.6(a).

 

“Affiliate” means a Person that directly or indirectly through one or more
intermediaries, controls, is controlled by, or is under common control with, the
first Person. “Control” (including the terms “controlled by” and “under common
control with”) means the possession, directly or indirectly, of the power to
direct or cause the direction of the management policies of a person, whether
through the ownership of voting securities, by contract, as trustee or executor
or otherwise.

 

“Agreement” has the meaning given to it in the Preamble.

 

“Alternative Transaction” has the meaning given to it in Section 7.1(e).

 

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“Applicable Law” means all applicable provisions of all (i) federal, national,
state, provincial, local or similar constitutions, treaties, statutes, laws
(including the common law), rules, regulations, ordinances, codes or orders of
any Governmental Authority, (ii) Governmental Approvals and (iii) Governmental
Orders.

 

“Assignment and Assumption” means the Instrument of Assignment and Assumption,
substantially in the form attached hereto as Exhibit E and in substance
satisfactory to Buyer.

 

“Assumed Contracts” has the meaning given to it in Section 1.2(b).

 

“Assumed Liabilities” has the meaning given to it in Section 1.4.

 

“Bankruptcy Case” has the meaning given to it in the Recitals.

 

“Bankruptcy Code” has the meaning given to it in the Recitals.

 

“Bankruptcy Court” has the meaning given to it in the Recitals.

 

“Bankruptcy Petition” has the meaning given to it in the Recitals.

 

“Bill of Sale” means the Bill of Sale substantially in the form attached hereto
as Exhibit F.

 

“Breakup Fee” has the meaning given to it in Section 7.1(c).

 

“Business” means Seller’s business, as conducted by the Division, of designing,
manufacturing and marketing general-purpose machine vision systems, fixed-mount
and handheld imagers that read two dimensional bar codes, and associated machine
vision lighting products.

 

“Business Day” means any day other than Saturday, Sunday and any day that is a
legal holiday or a day on which banking institutions in New York, New York are
authorized by Applicable Law or other governmental action to close.

 

“Buyer” has the meaning given to it in the Preamble.

 

“Buyer Notice of Breach” has the meaning given to it in Section 3.4(b).

 

“Buyer Parties” has the meaning given to it in Section 7.3(b).

 

“Closing” has the meaning given to it in Section 2.1.

 

“Closing Date” has the meaning given to it in Section 2.1.

 

“Closing Net Current Assets” means the sum of (i) the outstanding amount of
Current Receivables and (ii) the value of the Gross Inventory minus (iii) the
Post-Petition Accounts Payable as of the Closing Date.

 

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“Closing Statement” has the meaning set forth in Section 3.1(b).

 

“COBRA” has the meaning given to it in Section 4.10(iv).

 

“Code” means the Internal Revenue Code of 1986, as amended, and any successor
Law.

 

“Committee” means the Official Committee of Unsecured Creditors appointed in the
Bankruptcy Case.

 

“Company Intellectual Property” means the Owned Intellectual Property and the
Licensed Intellectual Property.

 

“Company IT Systems” has the meaning given to it in Section 4.17(e).

 

“Company Software” means the Owned Software and the Licensed Software.

 

“Contract” means any contract (including, without limitation, Intellectual
Property Contracts), agreement, lease, commitment, sale or purchase order, loan
agreement, mortgage, security agreement, trust indenture, understanding or other
agreement or instrument.

 

“Cure Cost Reserve Amount” has the meaning given to it in Section 6.2.

 

“Cure Costs” means all costs required to be paid and all defaults required to be
cured as a condition to assumption and assignment pursuant to Section 365 of the
Bankruptcy Code.

 

“Current Inventory” has the meaning given to it within the definition of
“Inventory” in Section 14.1.

 

“Current Receivables” means only those Accounts Receivable that are outstanding
for 60 days or less.

 

“Customer Prepayments” means all deposits from customers of Seller and all
progress payments, prepayments, advances, milestone payments and the like
received from customers of Seller in connection with the Business or any Assumed
Contracts for services to be rendered to such customers after the Closing Date
or the pro rated portion of any such advanced payment or deposit received from
customers of Seller in connection with the Business or any of the Assumed
Contracts for services to be rendered after the Closing Date.

 

“Deposit” has the meaning given to it in Section 2.3.

 

“Disclosure Schedule” means the Disclosure Schedule attached hereto, dated as of
the date hereof, delivered by Seller to Buyer in connection with this Agreement.

 

“Division” means the Acuity CiMatrix division of Seller.

 

“Dreier” has the meaning given to it in Section 2.1.

 

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“Employee Benefit Plans” means any employee benefit plan (as defined in section
3(3) of ERISA) sponsored, maintained or contributed to by Seller, and all other
material employee benefit arrangements relating to the current or former
employees of the Business, including any such arrangements providing severance
pay, sick leave, vacation pay, salary continuation for disability, retirement
benefits, deferred compensation, bonus pay, retention pay, stay bonus, incentive
pay, hospitalization insurance, medical insurance, life insurance or
scholarships or tuition reimbursements, sponsored, maintained or contributed to
by Seller to which Seller is obligated to contribute thereunder for current or
former employees of the Business.

 

“Environmental Laws” means all applicable foreign, federal, state and local
statutes, ordinances, rules, orders, regulations and other provisions having the
force of law (including common law), any permit, approval, identification
number, license, or other authorization required or issued thereunder, and all
judicial and administrative orders, concerning pollution, protection of human
health and the environment or natural resources, including, without limitation,
all those relating to the presence, use, production, generation, handling,
transportation, treatment, storage, disposal, distribution, labeling, testing,
processing, discharge, release, threatened release, control or cleanup of any
Hazardous Materials.

 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

 

“Escrow Agreement” means the Escrow Agreement between Seller and Buyer entered
into as of the date hereof.

 

“Excluded Assets” has the meaning given to it in Section 1.3.

 

“Excluded Liabilities” has the meaning give to it in Section 1.4.

 

“Final Statement” has the meaning given to it in Section 3.2.

 

“Financial Statements” has the meaning given to it in Section 4.5.

 

“Foreign Benefit Plans” means any employee benefit plan sponsored, maintained or
contributed to by Seller, and all other material employee benefit arrangements
relating to the current or former employees of the Business, including any such
arrangements providing severance pay, sick leave, vacation pay, salary
continuation for disability, retirement benefits, deferred compensation, bonus
pay, retention pay, stay bonus, incentive pay, hospitalization insurance,
medical insurance, life insurance or scholarships or tuition reimbursements,
sponsored, maintained or contributed to by Seller to which Seller is obligated
to contribute thereunder for current or former non-US employees of the Business.

 

“GAAP” means generally accepted accounting principles in the United States.

 

“Governmental Approvals” means permits, approvals, orders, authorizations,
consents, exemptions of, or filings or registrations with, any Governmental
Authority in any jurisdiction, which have been issued or granted to or are owned
or used by Seller in connection with the Business and all pending applications
therefor.

 

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“Governmental Authority” means any court, administrative agency or commission or
other governmental authority or instrumentality, domestic or foreign.

 

“Governmental Order” means any order, writ, judgment, injunction, decree,
stipulation, determination or award entered by or with any Governmental
Authority.

 

“Gross Inventory” means all raw materials, work in progress and capitalized
variances, excluding any reserves.

 

“Final Order” means an order or judgment of the Bankruptcy Court (a) which has
not been reversed, stayed, modified or amended and as to which (i) any right to
appeal or seek certiorari has been waived or (ii) the time to appeal or seek
certiorari has expired and no appeal or petition for certiorari is pending, or
(b) as to which an appeal has been taken or petition for certiorari has been
filed with the Bankruptcy Court and (i) such appeal or petition for certiorari
has been resolved by the highest court to which the order or judgment was
appealed or from which certiorari was sought or (ii) the time to appeal further
or seek certiorari has expired and such further appeal or petition for
certiorari is pending.

 

“Hazardous Materials” means any chemical, substance, waste contaminant or
pollutant regulated or otherwise creating liability under any Environmental Law,
including, but not limited to, “hazardous substances” as defined by the
Comprehensive Environmental Response Compensation and Liability Act, as amended,
“toxic substance” as defined by the Toxic Substance Control Act, as amended,
“hazardous wastes” as defined by the Resource Conservation and Recovery Act, as
amended, “hazardous materials” as defined by the Hazardous Materials
Transportation Act, as amended, thermal discharges, asbestos containing
materials, radioactive substances, PCBs, natural gas, petroleum products or
byproducts, and crude oil, but only to the extent that the presence, use,
handling, transportation, treatment, manufacture, storage, disposal or Release
of such a chemical, substance, waste, contaminant or pollutant violates an
Environmental Law applicable to the Purchased Assets or the Business or is of a
quantity or nature that is not customary for enterprises such as the operations
of the Purchased Assets or the Business.

 

“Houlihan” has the meaning given to it in Section 4.12.

 

“HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended.

 

“Indebtedness” means, with respect to any Person, (a) all indebtedness of such
Person, whether or not contingent, for borrowed money, (b) all obligations of
such Person evidenced by notes, bonds, debentures or other similar instruments,
(c) all indebtedness created or arising under any conditional sale or other
title retention agreement with respect to property acquired by such Person (even
though the rights and remedies of the seller or lender under such agreement in
the event of default are limited to repossession or sale of such property), (d)
all obligations of such Person as lessee under leases that have been or should
be, in accordance with GAAP, recorded as capital leases, (e) all obligations,
contingent or otherwise, of such Person under acceptance, letter of credit or
similar facilities, (f) all Indebtedness of others referred to in clauses (a)
through (e) above guaranteed directly or indirectly in any manner by such
Person, or

 

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in effect guaranteed directly or indirectly by such Person through an agreement
(i) to pay or purchase such Indebtedness or to advance or supply funds for the
payment or purchase of such Indebtedness or (ii) otherwise to assure a creditor
against loss and (g) all Indebtedness referred to in clauses (a) through (e)
above secured by (or for which the holder of such Indebtedness has an existing
right, contingent or otherwise, to be secured by) any Lien on property
(including accounts and contract rights) owned by such Person, even though such
Person has not assumed or become liable for the payment of such Indebtedness.

 

“Intellectual Property” means all rights in intellectual property of any type
throughout the world, including, without limitation, (a) patents, patent
applications and statutory invention registrations, including reissues,
divisions, continuations, continuations-in-part, extensions and reexaminations
thereof, (b) trademarks, service marks, trade dress, Internet domain names,
trade names and other source identifiers, whether registered or unregistered,
(c) copyrights, whether registered or unregistered (including, without
limitation, copyrights in Software), (d) confidential and proprietary
information (including, without limitation, confidential and proprietary
information incorporated in Software), including trade secrets, inventions
(whether or not patentable or reduced to practice), know-how, manufacturing and
production processes and techniques, research and development information, and
customer and supplier lists and information, (e) any and all rights in any of
the foregoing provided by international treaties or conventions, (f) any and all
rights to sue or recover and retain damages and costs and attorneys’ fees for
past, present and future infringement, dilution, misappropriation, or other
violation of any of the foregoing, and rights for priority and protection of
interests therein under the Laws of any jurisdiction and (g) any and all
applications, registrations and renewals for, and goodwill associated with, any
of the foregoing.

 

“Intellectual Property Contracts” means all (a) agreements governing licenses of
Intellectual Property (including Intellectual Property embodied in Software) (i)
to Seller or (ii) by Seller to third parties, (b) agreements between Seller and
any third party, or between or among Seller, relating to the development or use
of Intellectual Property (including Intellectual Property embodied in Software)
and (c) consents, orders, or judgments governing the use, validity or
enforceability of Company Intellectual Property (including Company Intellectual
Property embodied in Software).

 

“Intellectual Property Embodiments” means tangible embodiments of Intellectual
Property (including Intellectual Property embodied in Software) in any form or
medium (including, without limitation, electronic media) that are used in or
held for use in connection with the Business.

 

“Interim Financial Statements” has the meaning given to it in Section 4.5.

 

“Inventory” means all stock in trade, merchandise, goods, supplies and other
products, raw materials, work-in-process and finished products related primarily
to the Business, together with all rights against suppliers of such inventories
(including claims receivable for rejected inventory), and all prepayments and
amounts paid on deposit with respect to the same (including any of the foregoing
in the possession of manufacturers, suppliers or dealers or in transit or
returned goods) as set forth (i) Schedule 1.2(d) under the heading “Used Within
Year

 

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1” (the “Current Inventory”) or which is otherwise less than one-year old as of
the Closing Date and (ii) the Inventory on Schedule 1.2(d) that is not Current
Inventory.

 

“IPT Receivable” means the purchase price for certain assets of Seller’s former
Semiconductor Equipment Group division due to Seller from International Product
Technology, Inc. as of and after the date hereof.

 

“IRS” means the Internal Revenue Service.

 

“Knowledge of Seller” means the actual knowledge of Robert Bettilyon, Scott
Gaarder, Neal Sanders, John O’Brien, John Agapakis, Howard Stern, J. Richard
Budd and Frederick Van Alstyne.

 

“Leased Machinery and Equipment” has the meaning given to it in Section
1.2(a)(ii).

 

“Leased Real Property” means all of Seller’s right, title and interest, as
tenant or sub-tenant, under the real property leases described on Schedule
1.2(e) of the Disclosure Schedule.

 

“Lenders” means RVSI Investors L.L.C. and the Export-Import Bank of the United
States.

 

“Liabilities” means, as to any Person, all debts, adverse claims, liabilities,
commitments, responsibilities and obligations of any kind or nature whatsoever,
direct, indirect, absolute or contingent, of such person, whether accrued,
vested or otherwise, whether known or unknown and whether or not actually
reflected, or required to be reflected, in such Person’s balance sheets or other
books and records.

 

“Licensed Intellectual Property” means all Intellectual Property licensed to
Seller by a third party pursuant to the Intellectual Property Contracts and used
in or held for use in connection with the Business.

 

“Licensed Software” means all Software licensed to Seller by a third party
pursuant to the Intellectual Property Contracts and used in or held for use in
connection with the Business.

 

“Lien” means any mortgage, pledge, security interest, encumbrance, lien
(statutory or other), claim, conditional sale agreement or any other “interest
in property,” as such term is used in section 363 of the Bankruptcy Code,
including, without limitation, any interest of a license in any Intellectual
Property Contract that has not been assumed and assigned to Buyer to the extent
permitted by Section 365(n) of the Bankruptcy Code, other than (a) a lessor’s
interest in, and any mortgage, pledge, security interest, encumbrance, lien
(statutory or other), or conditional sale agreement on or affecting a lessor’s
interest in, property underlying any leases; (b) any imperfection of title with
respect to any asset that does not materially interfere with the current
occupancy, use or marketability of such asset as currently occupied or used and
that does not secure any indebtedness and the continuation of the current
occupancy or use of such asset; and (c) such covenants, conditions,
restrictions, easements, encroachments or encumbrances that

 

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are not created pursuant to mortgages or other financing or security documents,
or any other state of facts, that do not materially interfere with the current
occupancy or use of an asset.

 

“Machinery and Equipment” has the meaning given to it in Section 1.2(a)(ii).

 

“Material Adverse Effect” means any circumstance, event, change in or effect on
the Business, the Purchased Assets or Seller that, individually or in the
aggregate with all other circumstances, changes in or effects on the Business,
the Purchased Assets or Seller: (a) is or is reasonably likely to be materially
adverse to the business, operations, assets or liabilities (including contingent
liabilities), employee relationships, customer or supplier relationships,
prospects, results of operations or the condition (financial or otherwise) of
the Business or the Purchased Assets or (b) is reasonably likely to materially
and adversely affect the ability of Buyer to operate or conduct the Business or
the Purchased Assets in the manner in which it is currently or contemplated to
be operated or conducted by Seller; provided, however, that none of the
following, either alone or in combination, shall be considered in determining
whether there has been a breach of a representation, warranty, covenant or
agreement that is qualified by the term “Material Adverse Effect”: (i) events,
circumstances, changes or effects that generally affect the industries in which
Seller (including legal and regulatory changes) generally operate but only to
the extent Seller is not disproportionately affected, (ii) general economic
conditions or events, circumstances, changes or effects affecting the securities
markets generally, or (iii) changes arising from the consummation of the
transactions or the announcement of the execution of this Agreement.

 

“Material Contract” has the meaning given to it in Section 4.16.

 

“Material Intellectual Property Contracts” has the meaning given to it in
Section 4.17(a).

 

“Other Documents” means the Escrow Agreement, the Bill of Sale and the
Assignment and Assumption and any other document or instrument executed in
connection with the transactions contemplated hereby or thereby.

 

“Other Inventory” has the meaning given to it in Section 14.1.

 

“Owned Intellectual Property” means all Intellectual Property owned by Seller
and used in or held for use in connection with the Business.

 

“Owned Machinery and Equipment” has the meaning given to it in Section
1.2(a)(i).

 

“Owned Real Property” means all of Seller’s right, title and interest in and to
the real property owned by Seller.

 

“Owned Software” means all Software to the extent owned by Seller and used in or
held for use in connection with the Business.

 

“Pending Litigation” has the meaning given to it in Section 4.6.

 

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“Permitted Liens” means (a) zoning, entitlement, building and other land use
regulations imposed by Governmental Authorities having jurisdiction over the
Real Property used in the Business; (b) Liens upon assets subject to capital
lease obligations arising under capital leases included in the Purchased Assets,
provided that such Liens only serve to secure payments arising under such
capital lease obligations and that Seller identified such Purchased Assets as
being subject to lease; (c) Liens arising under precautionary UCC financing
statement filings regarding operating leases included in the Purchased Assets
(provided that Seller identified such Purchased Assets as being subject to
lease); (d) Liens upon vehicles arising under financing agreements (including,
without limitation, retail installment contracts); (e) Liens for Taxes not yet
due and payable, or which are being contested in good faith and by appropriate
proceedings; and (f) liens in respect of pledges or deposits under workers’
compensation laws or similar legislation, carriers’, warehousemen’s, mechanics’,
laborers’ and materialmen’s, landlords’ and similar liens, if the obligations
secured by such Liens are not then delinquent.

 

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

 

“Post-Petition Accounts Payable” means all accounts payable, vouchered payables,
un-vouchered payables and unapplied cash related to the Purchased Assets and
incurred after the filing of the Bankruptcy Petition.

 

“Prepayments” means all payments made by or on behalf of or deposits from Seller
to its vendors, suppliers, landlords and other providers of goods and services
(including, without limitation, any prepayments by Seller or deposits by Seller
for any Assumed Contracts) prior to the date that the goods or services to which
the payments or deposits are attributable are in fact delivered.

 

“Purchase Price” means $23,000,000.

 

“Purchased Accounts Receivable” means all Seller’s Accounts Receivable arising
in respect of the Business, billed and unbilled, that have accrued as of the
Closing Date; provided, however, that the term “Purchased Accounts Receivable”
shall not include the IPT Receivable.

 

“Purchased Assets” has the meaning given to it in Section 1.2, as modified by
Section 1.3.

 

“Reconciliation Amount” has the meaning given to it in Section 3.2.

 

“Records” has the meaning given to it in Section 1.2(h).

 

“Reference Net Current Assets” means $9,434,000 the details of which are set
forth on Schedule 3.1(b).

 

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“Release” means disposing, discharging, injecting, spilling, leaking, leaching,
dumping, emitting, escaping, emptying, seeping, placing and the like into or
upon any land or water or air or otherwise entering into the environment.

 

“Remedial Action” means any action to (a) clean up, remove, treat or handle in
any other way Hazardous Materials in the environment, (b) prevent the Release of
Hazardous Materials so that they do not migrate, endanger or threaten to
endanger public health or the environment or (c) perform remedial
investigations, feasibility studies, corrective actions, closures and
post-remedial or post-closure studies, investigations, operations, maintenance
and monitoring.

 

“Representation Certificate” has the meaning given it in Section 3.4(a).

 

“Representation Date” has the meaning given it in Section 3.4(a).

 

“Retained Cash” has the meaning given to it in Section 1.3(a).

 

“Sale Motion” has the meaning given to it in Section 7.1(b)(i).

 

“Sale Approval Order” has the meaning given to it in Section 7.1(b)(i)(B).

 

“Sale Hearing” has the meaning given to it in Section 7.1(b)(i)(A).

 

“Sale Procedures” means the Auction and Overbid Procedures substantially in the
form annexed hereto as Exhibit B, in form and substance satisfactory to Buyer.

 

“Sale Procedures Order” has the meaning given to it in Section 7.1(b)(i).

 

“Seller” has the meaning given to it in the Preamble.

 

“Seller Certifications” has the meaning given it in Section 3.4(a).

 

“Seller Insurance Policies” has the meaning given to it in Section 1.3(h).

 

“Significant Customers” means all the customers of the Business that ordered
goods or merchandise from Seller having an aggregate value of $50,000 during the
last twelve (12) months.

 

“Significant Suppliers” means suppliers from which Seller in connection with the
Business, ordered raw materials, supplies, merchandise and other goods for the
Business having an aggregate purchase price of $50,000 or more during the last
twelve (12) months.

 

“Software” means computer software, programs, data, databases, utilities,
graphical user interfaces, Internet websites, all associated content in any form
(including, without limitation, source and object code), all versions, updates,
enhancements and modifications thereto, and all related documentation, files,
and other materials.

 

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“Tax Return” means any return, report declaration, form, claim for refund or
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.

 

“Taxes” means all federal, state, local and foreign taxes, and any charges,
penalties, interest, fees imposts, duties or other assessments with respect
thereto arising out of or relating to the Purchased Assets with respect to any
period ending prior to, on or after the Closing Date, including, without
limitation, income, gross income, gross receipts, profits, capital stock,
franchise, withholding, payroll, social security, workers compensation, service,
sales, use license, lease, transfer, import, export, value added, alternative
minimum, estimated, or other similar tax, including any fee, assessment, or
other charge in the nature of or in lieu of any tax, imposed by any Governmental
Authority, and any interest, penalties, additions to tax, or additional amounts
in respect of the foregoing.

 

“Termination Date” has the meaning given to it in Section 12.1(b).

 

“Third-Party Buyer” has the meaning given to it in Section 7.1(c)(ii).

 

“Transaction Taxes” has the meaning given to it in Section 7.6.

 

“Transferred Employees” means each active employee of Seller who accepts and
commences employment with Buyer within three (3) Business Days after the Closing
Date (or to the extent any employee of Seller is on vacation during the three
(3) Business Days following the Closing Date, within three (3) Business Days of
their scheduled return to work following the Closing Date.) Notwithstanding the
foregoing, Transferred Employees shall not include those employees identified by
Buyer to Seller on or prior to the date hereof.

 

“Treasury Regulations” means the regulations promulgated under the Code as in
effect for the relevant tax period.

 

“WARN Act” means the Worker Adjustment and Retraining Notification Act.

 

14.2. Buyer Not Successor.

 

It is expressly understood by each of Buyer and Seller that in no respect is
Buyer intended to be deemed the successor in interest to Seller under any theory
of law or equity.

 

14.3. Written Agreement to Govern.

 

This Agreement (together with the Schedules and Exhibits hereto, and the other
instruments and documents delivered pursuant hereto) sets forth the entire
understanding and supersedes all prior oral and written agreement among the
parties relating to the subject matter contained herein, and merges all prior
discussions among them.

 

14.4. Severability.

 

The parties expressly agree that it is not their intention to violate any public
policy or Applicable Law. If any provision of this Agreement is judicially or
administratively

 

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interpreted or construed as being so in violation, such provision shall be
inoperative and the remainder of this Agreement shall remain binding upon the
parties hereto only if, after excluding the portion deemed to be unenforceable,
the remaining terms shall provide for the consummation of the transactions
contemplated on economic or legal terms that would not in any manner be
materially more adverse to either party hereto than the economic and legal
substance of this Agreement as originally executed or last amended.

 

14.5. Notices and Other Communications.

 

Any notice or other communication required, contemplated or permitted by this
Agreement by any party shall be in writing and shall be deemed served (a) when
personally delivered, (b) when transmitted via facsimile machine to the party
for whom it is intended at the number shown below, (c) on the next business day
after delivery to a reputable overnight courier for next business day delivery,
or (d) five (5) Business Days after deposit in the mail, registered or certified
mail, return receipt requested, postage prepaid, addressed, in the case of
deliveries made pursuant to clause (c) or (d), as follows:

 

If to Buyer:

 

Siemens Energy & Automation, Inc.

3333 Old Milton Parkway

Alpharetta, GA 30202-4499

Attention: Mike Williamson

Facsimile number: (678) 297-8448

 

With a copy (which shall not constitute notice) to:

 

Siemens Corporation

153 East 53rd Street

Suite 5600

New York, NY 10022

Attention: E. Robert Lupone, Esq.

Facsimile number: (732) 590-1639

 

With a copy (which shall not constitute notice) to:

 

Shearman & Sterling LLP

599 Lexington Avenue

New York, NY 10022

Attention: Andrew V. Tenzer, Esq.

Facsimile number: (212) 848-7179

 

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If to Seller, to the attention of:

 

Acuity CiMatrix, Inc.

c/o Marotta, Gund, Budd & Dzera, LLC

360 Lexington Ave., Third Floor

New York, NY 10017

Attn: Mr. Frederick H. Van Alstyne

Facsimile number: (212) 207-2464

 

With a copy (which shall not constitute notice) to:

 

Dreier LLP

499 Park Avenue, 23rd Floor

New York, NY 10022

Attention: Norman Kinel, Esq.

Facsimile number: (212) 328-6101

 

or to such other address or addresses as any addressee may designate for itself
by written notice served in accordance herewith.

 

14.6. Counterparts.

 

This Agreement may be executed in any number of counterparts, and each
counterpart shall constitute an original instrument, but all such separate
counterparts shall constitute one and the same agreement.

 

14.7. Law to Govern; Bankruptcy Court Jurisdiction.

 

(a) THE VALIDITY, CONSTRUCTION AND ENFORCEABILITY OF THIS AGREEMENT SHALL BE
GOVERNED IN ALL RESPECTS BY THE LAWS OF THE STATE OF NEW YORK.

 

(b) THE PARTIES AGREE THAT THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT
OF NEW HAMPSHIRE SHALL HAVE EXCLUSIVE JURISDICTION OVER ALL DISPUTES AND OTHER
MATTERS RELATING TO (i) THE INTERPRETATION AND ENFORCEMENT OF THIS AGREEMENT OR
ANY OTHER DOCUMENT EXECUTED PURSUANT HERETO; (ii) THE PURCHASED ASSETS AND/OR
ASSUMED LIABILITIES AND/OR ASSUMED CONTRACTS; AND (iii) ANY OTHER MATTER IN
DISPUTE HEREUNDER. BUYER EXPRESSLY CONSENTS TO AND AGREES NOT TO CONTEST SUCH
EXCLUSIVE JURISDICTION AND, ACCORDINGLY, WAIVES ITS RIGHTS TO A JURY TRIAL.

 

14.8. Successors and Assigns.

 

This Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors and assigns, provided, however,
that no party may assign its rights and obligations hereunder without the prior
written consent of the other party hereto.

 

14.9. Interpretation.

 

The masculine, feminine or neuter pronouns used herein shall be interpreted
without regard to gender, and the use of the singular or plural shall be deemed
to include the

 

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other whenever the context so requires. The headings in this Agreement are
inserted for convenience of reference only and shall not be a part of or control
or affect the meaning of this Agreement. Unless otherwise expressly stated
herein, all references herein to Articles, Sections and paragraphs are to
Articles, Sections and paragraphs in this Agreement and all references herein to
Schedules and Exhibits are to Schedules and Exhibits to this Agreement. The
phrase “including” means “including, without limiting the generality of the
foregoing.” The parties have each been represented by counsel in connection with
the negotiation of this Agreement. The fact that any provision hereof may have
been drafted by counsel for a given party shall not be taken into consideration
in interpreting such provision.

 

14.10. Schedules and Exhibits.

 

The Schedules and Exhibits referred to herein and attached to this Agreement are
incorporated herein by such reference as if fully set forth in the text hereof.
The inclusion of information in the Schedules hereto shall not be construed as
an admission that such information is material to the Purchased Assets or the
Business. Terms used in the Schedules and not specifically defined shall have
the same meanings as ascribed to them in this Agreement. An item disclosed in a
Schedule which is relevant to another Schedule shall be deemed disclosed in such
other Schedule, but only if a person reading such Schedule would reasonably
conclude that such item is relevant to the other Schedule.

 

14.11. Modification.

 

The parties to this Agreement may, by mutual written consent executed by an
authorized officer of each of Buyer and Seller, modify or supplement this
Agreement in such manner as may be mutually agreed upon by them in writing.

 

14.12. Waiver of Provisions.

 

The terms, covenants, representations, warranties and conditions of this
Agreement may be waived only by a written instrument executed by the party
waiving compliance. The failure of any party at any time to require performance
of any provisions hereof shall, in no manner, affect the right at a later date
to enforce the same. No waiver by any party of any condition, or breach of any
provision, term, covenant, representation or warranty contained in this
Agreement, whether by conduct or otherwise, in any one or more instances, shall
be deemed to be or construed as a further or continuing waiver of any such
condition or of the breach of any other provision, term, covenant,
representation or warranty of this Agreement.

 

14.13. Expenses.

 

Except as otherwise provided in this Agreement, each party shall bear its own
expenses incident to this Agreement and the transactions contemplated hereby,
including, without limitation, all fees of counsel, accountants and consultants.

 

14.14. Further Assurances.

 

At any time on or after the Closing, the parties hereto shall each perform such
acts, execute and deliver such instruments, assignments, endorsements and other
documents and

 

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do all such other things consistent with the terms of this Agreement as may be
reasonably necessary to accomplish the transactions contemplated in this
Agreement or otherwise carry out the purpose of this Agreement and the Other
Documents, provided, however, that the foregoing shall not require Seller to
expend any funds.

 

14.15. Binding Effect.

 

Upon execution of this Agreement, each and every of Seller’s obligations
hereunder shall only become legal, valid, binding and enforceable, in any and
all respects, upon Seller having obtained all requisite approvals from the
Bankruptcy Court with respect to each of Seller’s respective obligations
hereunder.

 

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IN WITNESS WHEREOF, each of the parties hereto has caused this Asset Purchase
and Sale Agreement to be executed on its behalf by its officer thereunto duly
authorized, all on or as of the day and year first above written.

 

SELLER: ACUITY CIMATRIX, INC. By:   /s/    J. R. BUDD        

Name:

  J. R. Budd

Title:

  CRO BUYER: SIEMENS ENERGY AND AUTOMATION, INC. By:    

Name:

   

Title:

   

 

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IN WITNESS WHEREOF, each of the parties hereto has caused this Asset Purchase
and Sale Agreement to be executed on its behalf by its officer thereunto duly
authorized, all on or as of the day and year first above written.

 

SELLER: ACUITY CIMATRIX, INC. By:    

Name:

   

Title:

    BUYER: SIEMENS ENERGY AND AUTOMATION, INC. By:   /s/    AUBERT
MARTIN        

Name:

  Aubert Martin

Title:

  President & CEO