exv10w1





Exhibit 10.1




EXECUTION VERSION




ASSET PURCHASE AGREEMENT




BY AND AMONG




ASSEMBLY COMPONENT SYSTEMS, INC.,




LAWSON PRODUCTS, INC.,




SUPPLY TECHNOLOGIES LLC




AND




PARK-OHIO INDUSTRIES, INC.




DATED AS OF AUGUST 31, 2010



 


 









 





TABLE OF CONTENTS




	 	 	 	 	 
	 	 	Page	 
	 
	 	 	 	 
	ARTICLE I DEFINITIONS
	 	 	1	 
	Section 1.1 Definitions
	 	 	1	 
	Section 1.2 Interpretation; Construction
	 	 	9	 
	 
	 	 	 	 
	ARTICLE II PURCHASE AND SALE OF ASSETS AND ASSUMPTION OF LIABILITIES
	 	 	9	 
	Section 2.1 Purchase of Seller Assets and Assumption of Seller Liabilities
	 	 	9	 
	Section 2.2 Purchase of Maquiladora Assets and Assumption of Maquiladora Liabilities
	 	 	10	 
	Section 2.3 Purchased and Excluded Assets
	 	 	10	 
	Section 2.4 Assumed and Excluded Liabilities
	 	 	13	 
	 
	 	 	 	 
	ARTICLE III PURCHASE PRICE AND CLOSINGS
	 	 	13	 
	Section 3.1 Closing
	 	 	13	 
	Section 3.2 Maquiladora Closing
	 	 	14	 
	Section 3.3 Purchase Price
	 	 	14	 
	Section 3.4 Purchase Price Adjustment
	 	 	14	 
	Section 3.5 Allocation of Purchase Price
	 	 	15	 
	 
	 	 	 	 
	ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE SELLER
	 	 	16	 
	Section 4.1 Organization
	 	 	16	 
	Section 4.2 Authorization of Transaction
	 	 	16	 
	Section 4.3 Noncontravention; Consents
	 	 	16	 
	Section 4.4 Financial Statements
	 	 	17	 
	Section 4.5 Absence of Certain Changes
	 	 	17	 
	Section 4.6 Title to and Sufficiency of Assets
	 	 	18	 
	Section 4.7 Contracts
	 	 	19	 
	Section 4.8 Real Property
	 	 	19	 
	Section 4.9 Intellectual Property
	 	 	20	 
	Section 4.10 Tax Matters
	 	 	21	 
	Section 4.11 Legal Compliance; Permits
	 	 	21	 
	Section 4.12 Litigation
	 	 	22	 
	Section 4.13 Product Liability; Product Warranties
	 	 	22	 
	Section 4.14 Employees and Employee Benefits
	 	 	22	 





 


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TABLE OF CONTENTS

(continued)




	 	 	 	 	 
	 	 	Page	 
	 
	 	 	 	 
	Section 4.15 Environmental
	 	 	23	 
	Section 4.16 Customers and Suppliers
	 	 	23	 
	Section 4.17 Brokers’ Fees
	 	 	24	 
	Section 4.18 Insurance
	 	 	24	 
	Section 4.19 Accounts Receivable
	 	 	24	 
	Section 4.20 Inventory
	 	 	24	 
	Section 4.21 LIMITATIONS ON REPRESENTATIONS AND WARRANTIES
	 	 	24	 
	 
	 	 	 	 
	ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE BUYER
	 	 	25	 
	Section 5.1 Organization
	 	 	25	 
	Section 5.2 Authorization of Transaction
	 	 	25	 
	Section 5.3 Noncontravention; Consents
	 	 	25	 
	Section 5.4 Litigation
	 	 	26	 
	Section 5.5 Availability of Funds
	 	 	26	 
	Section 5.6 Investigation
	 	 	26	 
	Section 5.7 Brokers’ Fees
	 	 	26	 
	Section 5.8 LIMITATIONS ON THE SELLER’S REPRESENTATIONS AND WARRANTIES
	 	 	26	 
	 
	 	 	 	 
	ARTICLE VI COVENANTS
	 	 	27	 
	Section 6.1 General
	 	 	27	 
	Section 6.2 Consents; Nonassignable Contracts
	 	 	27	 
	Section 6.3 Apportioned Obligations
	 	 	28	 
	Section 6.4 Agreements Regarding Employee Matters
	 	 	29	 
	Section 6.5 Agreements Regarding Tax Matters
	 	 	30	 
	Section 6.6 Preservation of Records
	 	 	31	 
	Section 6.7 Seller’s Obligation to Change its Name
	 	 	32	 
	Section 6.8 Non-Competition; Non-Solicitation
	 	 	32	 
	 
	 	 	 	 
	ARTICLE VII CLOSING DELIVERIES AND CONDITIONS
	 	 	33	 
	Section 7.1 Closing Deliveries of the Seller
	 	 	33	 
	Section 7.2 Closing Deliveries of the Buyer
	 	 	34	 
	Section 7.2 Conditions to the Maquiladora Closing
	 	 	34	 





 


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TABLE OF CONTENTS

(continued)




	 	 	 	 	 
	 	 	Page	 
	 
	 	 	 	 
	ARTICLE VIII REMEDIES
	 	 	35	 
	Section 8.1 Survival
	 	 	35	 
	Section 8.2 Indemnification by the Seller
	 	 	36	 
	Section 8.3 Indemnification by the Buyer
	 	 	36	 
	Section 8.4 Exclusive Remedy
	 	 	37	 
	Section 8.5 Procedures for Indemnification of Third Party Claims
	 	 	37	 
	Section 8.6 Certain Limitations
	 	 	38	 
	Section 8.7 Treatment of Indemnity Payments
	 	 	39	 
	Section 8.8 Mitigation
	 	 	39	 
	 
	 	 	 	 
	ARTICLE IX MISCELLANEOUS
	 	 	39	 
	Section 9.1 Notices
	 	 	39	 
	Section 9.2 Expenses; No Offset
	 	 	40	 
	Section 9.3 Disclosure Schedules
	 	 	40	 
	Section 9.4 Bulk Sales or Transfer Laws
	 	 	41	 
	Section 9.5 Assignment; Successors and Assigns
	 	 	41	 
	Section 9.6 Amendment; Waiver
	 	 	41	 
	Section 9.7 Severability
	 	 	41	 
	Section 9.8 Counterparts
	 	 	41	 
	Section 9.9 Descriptive Headings
	 	 	41	 
	Section 9.10 No Third-Party Beneficiaries
	 	 	41	 
	Section 9.11 Exhibits and Schedules
	 	 	41	 
	Section 9.12 Governing Law
	 	 	42	 
	Section 9.13 Forum Selection; Consent to Service of Process; Waiver of Jury Trial
	 	 	42	 
	Section 9.14 Entire Agreement
	 	 	42	 
	Section 9.15 Confidentiality; Public Announcement
	 	 	42	 
	Section 9.16 Parent Guaranty
	 	 	43	 
	Section 9.17 Buyer Parent Guaranty
	 	 	43	 





 


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ASSET PURCHASE AGREEMENT




This ASSET PURCHASE AGREEMENT (this “Agreement”), dated as of August 31, 2010, is made
by and among Assembly Component Systems, Inc., an Illinois corporation (the “Seller”),
solely for purposes of Section 9.16 hereof, Lawson Products, Inc., a Delaware corporation (the
“Parent”), Supply Technologies LLC, an Ohio limited liability company (the
“Buyer”), and, solely for purposes of Section 9.17 hereof, Park-Ohio Industries, Inc., an
Ohio corporation (the “Buyer Parent”).



WHEREAS, the Seller and Lawson Maquiladora, S. de R.L. de C.V., a business entity organized
under the laws of the country of Mexico (individually, the “Maquiladora Entity”, and
together with the Seller, the “Sellers”), are engaged in the business of supplying
manufacturers and other third parties with customized production components, including fasteners,
safety products, screw machine parts fittings, elastometers, molded and machined rubber components,
decals, overlays and production consumables, through inventory management systems and supply chain
services (the “Business”); and



WHEREAS, this Agreement contemplates that the Buyer shall acquire substantially all of the
assets of the Business (other than certain specified excluded assets) and shall assume only certain
specified liabilities of the Business, in each case on the terms and subject to the conditions set
forth in this Agreement and the Ancillary Documents.



NOW, THEREFORE, in consideration of the foregoing and the mutual agreements contained herein,
and for other good and valuable consideration, the value, receipt and sufficiency of which are
acknowledged, the Parties hereby agree as follows:



ARTICLE I

DEFINITIONS




Section 1.1 Definitions. For purposes of this Agreement, the following terms have the
meanings set forth below:



“Action” means any claim, action, charge, grievance, suit, inquiry, proceeding,
citation, summons, subpoena, hearing, assessment or investigation of any nature, civil, criminal,
regulatory or otherwise, at law or in equity, by or before any Governmental Entity or any
arbitrator with legal and binding authority over such matter.




“Active Employees” has the meaning set forth in Section 6.4(a).



“Affiliates” has the meaning set forth in Rule l2b-2 of the regulations promulgated
under the Securities Exchange Act of 1934, as amended.




“Agreement” has the meaning set forth in the Preamble.



“Allocation” has the meaning set forth in Section 3.5.


 


 









 





“Ancillary Documents” means the Note, the Transition Services Agreement, the U.S. Bill
of Sale and Assignment and Assumption Agreement and the Assignment and Assumption of Leases.



“Apportioned Obligations” means all real property taxes, personal property taxes or ad
valorem obligations and similar recurring taxes and fees with respect to the Purchased Assets for
any Straddle Period.



“Article” means, except as otherwise expressly indicated herein, an article of this
Agreement.




“Assignment and Assumption of Leases” has the meaning set forth in Section 7.1(c).




“Assumed Liabilities” has the meaning set forth in Section 2.4(a).



“Benefit Plans” means all employee benefit plans, programs, policies, agreements or
other arrangements, including any Employee Welfare Benefit Plan, any Employee Pension Benefit Plan,
and any bonus, incentive, equity award, deferred compensation, vacation, severance, employment or
fringe benefit plan, program or agreement (other than any “multiemployer plan” within the meaning
of Section 4001(a)(3) of ERISA), in each case that are sponsored, maintained or contributed to by
the Seller or any of its ERISA Affiliates for the benefit of current or former employees or
independent contractors of the Business.




“Business” has the meaning set forth in the Recitals.



“Business Day” means any day that is not a Saturday, Sunday or any other day on which
banks are required or authorized by Law to be closed in New York City, New York.




“Buyer” has the meaning set forth in the Preamble.




“Buyer Parent” has the meaning set forth in the Preamble.




“Buyer Claims” has the meaning set forth in Section 8.2(a).




“Buyer Indemnified Party” has the meaning set forth in Section 8.2(a).




“Buyer Material Adverse Effect” has the meaning set forth in Section 5.1.



“CERCLA” means the Comprehensive Environmental Response, Compensation, and Liability
Act, 42 U.S.C. § 9601 et seq.




“Claim Notice” has the meaning set forth in Section 8.5(a).




“Claims” has the meaning set forth in Section 8.3(a).




“Closing” has the meaning set forth in Section 3.1.



“Closing Date” has the meaning set forth in Section 3.1.


 


2









 






“Closing Date Net Working Capital” has the meaning set forth in Section 3.4(a).




“Closing Payment” has the meaning set forth in Section 3.3.




“COBRA” means the Consolidated Omnibus Budget Reconciliation Act of 1985.



“Code” means the Internal Revenue Code of 1986, as amended (together with all rules
and regulations promulgated thereunder).



“Confidential Information” means all information of a confidential or proprietary
nature (whether or not specifically labeled or identified as “confidential”), in any form or
medium, that relates to the business, products, Intellectual Property, services and/or research
and/or development of the Business and/or its suppliers, distributors, customers, independent
contractors and/or other business relations.



“Contracts” means any contracts, agreements, arrangements, leases, subleases, deeds,
indentures, licenses, obligations, commitments and undertakings that are binding, or purport to be
binding by their terms, on the parties thereto, and any outstanding bids or proposals (which bids
or proposals if accepted by the recipient thereof would result in a binding contract), whether
written or oral.



“Disclosure Schedules” means the Schedules pertaining to, and corresponding to the
Section references, of this Agreement.



“Dollars” and the sign “$” each means lawful money of the United States of
America.




“Employee Pension Benefit Plan” has the meaning set forth in Section 3(1) of ERISA.




“Employee Welfare Benefit Plan” has the meaning set forth in Section 3(2) of ERISA.




“Employee Withholding Documents” has the meaning set forth in Section 6.4(e).



“Environmental Laws” means any Law with respect to any Hazardous Materials, drinking
water, groundwater, wetlands, soil, ambient air, air emissions, gas vapor, landfills, open dumps,
above ground storage tanks, underground storage tanks, solid waste, waste water, storm water
run-off, oil spills or discharges, waste emissions or wells (but not including federal, state, or
local Occupational Safety and Health Administration or other occupational health or safety
requirements). Without limiting the generality of the foregoing, the term shall encompass each of
the following statutes and the regulations promulgated thereunder, as amended: (a) the CERCLA; (b)
the Resource Conservation and Recovery Act of 1976; (c) the Hazardous Materials Transportation Act;
(d) the Toxic Substances Control Act; (e) the Clean Water Act; (f) the Clean Air Act; (g) the Safe
Drinking Water Act; (h) the National Environmental Policy Act of 1969; (i) the Emergency Planning
and Community Right-to-Know Act; and (j) any non-U.S. equivalents of the foregoing.



“ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and the
rules and regulations promulgated thereunder.


 


3









 





“ERISA Affiliate” means any trade or business (whether or not incorporated) (a) under
common control within the meaning of Section 4001(b)(1) of ERISA with the Seller or (b) which
together with the Seller is treated as a single employer under Section 414(t) of the Code.




“Excluded Assets” has the meaning set forth in Section 2.3(b).




“Excluded Liabilities” has the meaning set forth in Section 2.4(b).



“Exhibit” means an exhibit to this Agreement that is attached hereto in accordance
with the terms hereof.




“Final Statement” has the meaning set forth in Section 3.4(c).




“Financial Statements” has the meaning set forth in Section 4.4(a).




“Fundamental Representations” has the meaning set forth in Section 8.1.



“GAAP” means United States generally accepted accounting principles, applied on a
basis consistent with the past practices of the Seller and its Affiliates.



“Governmental Entity” means the United States, any state or other political
subdivision thereof, and any other foreign or domestic entity exercising executive, legislative,
judicial, regulatory or administrative authority or functions of or pertaining to government,
including any government authority, agency, department, corporation, board, commission, court,
tribunal or instrumentality of the United States or any foreign entity, any state of the United
States or any political subdivision of any of the foregoing.



“Hazardous Materials” means any element, compound, chemical mixture, contaminant,
pollutant, material, waste or other substance that is regulated under any applicable Environmental
Law, determined or identified as hazardous or toxic under any applicable Environmental Law, or the
Release of which is regulated or controlled under any applicable Environmental Law.



“Indebtedness” of any Person means, without duplication: (a) all obligations of such
Person (i) for the principal of, interest on, and premium and breakage costs in respect of
indebtedness for borrowed money (whether borrowed from an Affiliate of such Person) or (ii)
evidenced by notes, debentures, bonds or other similar instruments for the payment of which such
Person is responsible or liable; (b) all obligations of such Person issued or assumed as the
deferred purchase price for property, all conditional sale obligations of such Person and all
obligations of such Person under any title retention agreement, including all obligations of such
Person for the payment of money relating to leases that are required to be classified as
capitalized lease obligations in accordance with GAAP; (c) all obligations of such Person for the
reimbursement of any obligor on any letter of credit, banker’s acceptance or similar credit
transaction; (d) all obligations of such Person under interest rate or currency swap transactions
(valued at the termination value thereof); (e) all obligations of the type referred to in clauses
(a) through (d) of other Persons for the payment of which such Person is responsible or liable,
directly or indirectly, as obligor, guarantor or surety, including guarantees of such obligations;
and (f) all obligations of the type referred to in clauses (a) through (e) of other Persons secured


 


4









 






by (or for which the holder of such obligations has an existing right, contingent or
otherwise, to be secured by) any Lien on any property or asset of such Person (whether or not such
obligation is assumed by such Person).




“Indemnified Party” has the meaning set forth in Section 8.1.




“Indemnifying Party” has the meaning set forth in Section 8.1.



“Intellectual Property” means any and all of the following in any jurisdiction
throughout the world: (a) patents, patent applications, inventions, invention disclosures,
industrial designs, and statutory invention registrations; (b) trademarks, service marks,
certification marks, trade names, corporate names, domain names, logos, trade dress, or other
indicia of source or origin, and all registrations of and applications to register the foregoing;
(c) copyright registrations and applications; (d) Software of any type and in any form; (e)
unpatented technology, discoveries, improvements, ideas, designs, models, formulae, drawings,
blueprints, mask works, methods, techniques, processes, customer lists, technical information,
trade secrets, know-how and other confidential and proprietary information; and (f) registrations
and applications for registration of any of the foregoing, including any renewals, extensions,
continuations (in whole or in part), divisionals, re-examinations or reissues or equivalent or
counterpart thereof.



“Law” means any applicable United States or non-United States federal, provincial,
state or local statute, common law, rule, regulation, ordinance, permit, order, writ, injunction,
judgment or decree of any Governmental Entity.




“Leased Facilities” has the meaning set forth in Section 4.8(a).




“Leases” has the meaning set forth in Section 4.8(a).



“Lien” means any pledge, security interest, mortgage, deed of trust, title defect,
title retention agreement, occupancy agreement, easement, encroachment, lien or other encumbrance.



“Losses” means any losses, liabilities, damages, deficiencies, Taxes, penalties,
fines, costs and expenses (including interest, reasonable and documented attorneys’ fees and
disbursements and all amounts paid in investigation, defense or settlement of any of the foregoing
and the enforcement of any related rights), whether or not arising out of third party claims.




“Maquiladora Closing” has the meaning set forth in Section 3.2.




“Maquiladora Closing Date” has the meaning set forth in Section 3.2.




“Maquiladora Entity” has the meaning set forth in the Recitals.



“Material Adverse Effect” means any event, occurrence, change, circumstance or effect
that has had or would reasonably be expected to have a material adverse effect on the business,
operations, results of operations or financial condition of the Business taken as a whole;
provided, however, that none of the following shall be deemed in itself, or in any
combination, to constitute, and none of the following shall be taken into account in determining
whether there


 


5









 






has been or would be, a Material Adverse Effect: (a) changes or effects that generally affect
the industry in which the Seller operates, the United States economy as a whole or the capital
markets in general or the geographical markets in which the Seller operates; (b) changes in
securities markets, interest rates or general economic, regulatory or political conditions,
including acts of terrorism or the commencement or escalation of any war, whether declared or
undeclared, or other hostilities; (c) changes or effects arising out of, or attributable to, the
announcement of the execution of this Agreement or the identity of the Buyer; (d) compliance with
the terms of, or the taking of any action required by, this Agreement or as required by applicable
Law, including the consummation of the transactions completed hereby; (e) changes or effects due to
changes in any Laws; (f) changes in GAAP or other applicable accounting regulations; (g) the
failure of the Seller to meet any internal projections or forecasts; and (h) actions or events
caused by or under the responsibility of the Buyer.




“Material Contracts” has the meaning set forth in Section 4.7(a).



“Net Working Capital” means the amount by which (a) the aggregate amount of all
current assets (excluding cash and cash equivalents) of the Business contained in the Purchased
Assets exceeds (b) the aggregate amount of all current liabilities of the Business contained in the
Assumed Liabilities.




“Neutral Auditor” has the meaning set forth in Section 3.4(c).




“Note” has the meaning set forth in Section 3.3.




“Objection Notice” has the meaning set forth in Section 3.4(b).




“Parent” has the meaning set forth in the Preamble.



“Parties” means the Buyer, the Seller, for purposes of Section 9.16 only, the Parent,
and, for purposes of Section 9.17 only, the Buyer Parent, and “Party” means the Buyer or,
for purposes of Section 9.17 only, the Buyer Parent, on the one hand, or the Seller or, for
purposes of Section 9.16 only, the Parent, on the other hand, as appropriate and as the case may
be.



“Permits” means any permits, authorizations, licenses, certificates, accreditations or
other authorizations of any Governmental Entity.



“Permitted Liens” means any: (a) statutory Liens or mechanics’, materialmens’ and
similar Liens imposed by Law with respect to amounts not yet due and payable or the validity of
which is being contested in good faith and for which adequate reserves have been established in
accordance with GAAP; (b) Liens for Taxes not yet due and payable or the validity of which is being
diligently contested in good faith by appropriate proceedings; (c) Liens encumbering any of the
Purchased Assets that do not materially interfere with their present use in the Business; and (d)
contractual provisions providing for retention of title to goods until payment is made entered into
in the ordinary course of business.



“Person” means an individual, partnership, corporation, limited liability company,
association, joint stock company, trust, joint venture, unincorporated organization or Governmental
Entity.


 


6









 






“Preliminary Statement” has the meaning set forth in Section 3.4(a).




“Purchase Price” has the meaning set forth in Section 3.3.




“Purchased Assets” has the meaning set forth in Section 2.3(a).




“Purchased Contracts” has the meaning set forth in Section 2.3(a)(iii).



“Purchased Intellectual Property” means all Intellectual Property owned, held or used
by the Sellers in the operation or conduct of the Business, including the Intellectual Property
listed on Schedule 4.9, together with all income, royalties, damages and payments due or
payable as of the Closing or thereafter (including damages and payments for past, present or future
infringements, misappropriations or other violations thereof) and the rights to sue and collect
damages for past, present or future infringements, misappropriations or other violations thereof,
and any corresponding, equivalent or counterpart rights, title or interest that now exist or may be
secured hereafter anywhere in the world, and all copies and tangible embodiments of the foregoing.




“Recent Balance Sheets” has the meaning set forth in Section 4.4(a).



“Release” means any spilling, leaking, pumping, pouring, emitting, emptying,
discharging, injecting, escaping, leaching, dumping, discarding, burying, abandoning or disposing
into the environment of Hazardous Materials.




“Resolution Period” has the meaning set forth in Section 3.4(b).




“Restricted Business” has the meaning set forth in Section 6.8(a).




“Restricted Period” has the meaning set forth in Section 6.8(a).




“Restrictive Covenants” has the meaning set forth in Section 6.8(d).




“Review Period” has the meaning set forth in Section 3.4(b).



“Schedule” means a schedule to this Agreement (including each of the Disclosure
Schedules), all of which Schedules are incorporated herein by reference.



“Section” means, except as otherwise expressly indicated herein, a section of this
Agreement.




“Seller” has the meaning set forth in the Preamble.




“Seller Claims” has the meaning set forth in Section 8.3(a).




“Seller Indemnified Parties” has the meaning set forth in Section 8.3(a).



“Seller’s Knowledge” means the actual knowledge of James Degnan, John Radke, Daniel
Murray, Michael Tuvell and Stewart Howley, as to the matters represented, as of the date the
representation is made.


 


7









 






“Sellers” has the meaning set forth in the Recitals.



“Software” means software of any type and in any form, including source code,
executable code, databases and documentation.




“Specified Consent” has the meaning set forth in Section 6.2(b).




“Specified Contract” has the meaning set forth in Section 6.2(b).



“Specified Liabilities” means those liabilities set forth on Schedule A
hereto.




“Standard Procedure” has the meaning set forth in Section 6.4(e).



“Straddle Period” means any taxable period beginning on or before the Closing Date and
ending after the Closing Date.



“Subsidiary” or “Subsidiaries” means, with respect to any Person, any
corporation, limited liability company, partnership or other legal entity of which such Person
(either alone or through or together with any other Subsidiary) owns, directly or indirectly, more
than 50 percent of the stock or other equity interests the holder of which is generally entitled to
vote for the election of the board of directors or other governing body of such corporation,
limited liability company, partnership or other legal entity. The term “Subsidiary” shall
include any Subsidiaries of a Subsidiary.



“Tax” or “Taxes” means (a) any tax or taxes of any kind or nature, or however
denominated, including any federal, provincial, state, local or foreign sales, use, transfer,
registration, franchise, profits, environmental, business and occupation, value added, excise,
escheat, severance, stamp, premium, windfall profit, customs, duties, real property, personal
property, capital stock, employment, withholding, social security, unemployment, disability,
payroll, license, employee tax, estimated tax or other tax, assessment, like governmental fee or
like charge of any kind whatsoever, together with any interest, penalties or additions to tax or
additional amounts imposed by any Law or taxing authority, whether disputed or not, (b) any
liability for the payment of any amounts of any of the foregoing types as a result of being a
member of an affiliated, consolidated, combined or unitary group, or being a party to any agreement
or arrangement whereby liability for payment of such amounts was determined or taken into account
with reference to the liability of any other Person, (c) any liability for the payment of any
amounts as a result of being a party to any tax sharing or allocation agreements or arrangements
(whether or not written) or with respect to the payment of any amounts of any of the foregoing
types as a result of any express or implied obligation to indemnify any other Person, and (d) any
liability for the payment of any of the foregoing types as a successor, transferee or otherwise.




“Tax Matter” has the meaning set forth in Section 6.5(b).



“Tax Returns” means, with respect to any Tax, any information return or report, and
any return, report, statement, election, schedule, form (including estimated Tax), declaration,
claim for refund or document.


 


8









 






“Third Party Claim” has the meaning set forth in Section 8.5(a).




“Transfer Taxes” has the meaning set forth in Section 6.5(d).




“Transferred Employees” has the meaning set forth in Section 6.4(a).




“Transition Services Agreement” has the meaning set forth in Section 7.1(a).



“United States” or “U.S.” means the United States of America, including its
territories and possessions.



“U.S. Bill of Sale and Assignment and Assumption Agreement” has the meaning set forth
in Section 7.1(b).



“WARN Act” means the United States Worker Adjustment and Retraining Act of 1988, as
amended.



Section 1.2 Interpretation; Construction. References to “applicable” Law or Laws with respect
to a particular Person, thing or matter shall include only such Law or Laws as to which the
Governmental Entity that enacted or promulgated such Law or Laws has jurisdiction over such Person,
thing or matter. Whenever the context requires, the singular number shall include the plural, and
vice versa, the masculine gender shall include the feminine and neuter genders, the feminine gender
shall include the masculine and neuter genders, and the neuter gender shall include masculine and
feminine genders. The words “include” and “including,” and variations thereof, shall not be deemed
to be terms of limitation, but rather shall be deemed to be followed by the words “without
limitation.” The terms “hereof,” “hereunder,” “herein” and words of similar import shall refer to
this Agreement as a whole and not to any particular provision of this Agreement. Each Party hereto
has participated in the drafting of this Agreement, which each Party acknowledges is the result of
extensive negotiations between the Parties, and consequently this Agreement shall be interpreted
without reference to any rule or precept of Law to the effect that any ambiguity in a document be
construed against the drafter.



ARTICLE II

PURCHASE AND SALE OF ASSETS

AND ASSUMPTION OF LIABILITIES




Section 2.1 Purchase of Seller Assets and Assumption of Seller Liabilities. On the terms and
subject to the conditions set forth in this Agreement, at the Closing:



(a) the Buyer shall purchase from the Seller, and the Seller shall sell, transfer, assign,
convey and deliver to the Buyer, all of the Purchased Assets of the Seller, free and clear of all
Liens other than Permitted Liens; and



(b) the Buyer shall assume and agree to pay, discharge and perform when due all of the Assumed
Liabilities of the Seller; provided, however, that the Buyer shall not assume any
liabilities or obligations of the Seller or its Affiliates other than Assumed Liabilities.


 


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Section 2.2 Purchase of Maquiladora Assets and Assumption of Maquiladora Liabilities. On the
terms and subject to the conditions set forth in this Agreement, at the Maquiladora Closing:



(a) the Buyer (or its designated Affiliate) shall purchase from the Maquiladora Entity, and
the Seller shall cause the Maquiladora Entity to sell, transfer, assign, convey and deliver to the
Buyer (or its designated Affiliate), all of the Purchased Assets of the Maquiladora Entity, free
and clear of all Liens other than Permitted Liens; and



(b) the Buyer (or its designated Affiliate) shall assume and agree to pay, discharge and
perform when due all of the Assumed Liabilities of the Maquiladora Entity; provided,
however, that the Buyer shall not assume any liabilities or obligations of the Maquiladora
Entity or its Affiliates other than Assumed Liabilities.




Section 2.3 Purchased and Excluded Assets.



(a) The “Purchased Assets” means all of the right, title and interest of the Sellers
in, to and under all of the business, properties, assets and rights of every nature, kind and
description, tangible and intangible (including goodwill), whether real, personal or mixed, whether
accrued, contingent or otherwise that are owned, leased or licensed by the Seller on the Closing
Date or by the Maquiladora Entity on the Maquiladora Closing Date, as applicable, and used, held
for use or intended to be used primarily in the operation or conduct of the Business, including:




(i) all accounts and notes receivable and other such claims for money due to the
Sellers from any third parties arising from the rendering of services or the sale of goods
or materials by the Sellers in connection with the Business;




(ii) all raw materials, work in process and finished goods inventories, including
consignment and prepaid inventory, whether or not delivered to the Sellers;




(iii) all of the Contracts set forth on Schedule 2.3(a)(iii) (collectively, the
“Purchased Contracts”);




(iv) all machinery, equipment, hardware, spare parts, tools, office equipment,
furniture, fixtures, vehicles, fork lifts, racking, computers, computer-related equipment,
desktop systems and other tangible personal property, together with such other tangible
personal property set forth on Schedule 2.3(a)(iv);




(v) all Permits related to the conduct of the Business or any of the Leased Facilities;




(vi) all rights under or pursuant to promotional allowances, rebates, warranties,
representations and guarantees made by suppliers, manufacturers or contractors in connection
with products or services provided to the Sellers from third parties (other than the Parent
and/or any of its Affiliates);


 


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(vii) the leasehold interests of each of the Sellers, as lessee, under the Leases
relating to the Leased Facilities;




(viii) all books, records, ledgers, data, files, documents, correspondence, lists,
plats, specifications, advertising and promotional materials, reports and other materials
(in whatever form or medium) of the Sellers to the extent pertaining to the Business;




(ix) the Purchased Intellectual Property;




(x) any credits, prepaid expenses, deferred charges, advance payments, prepaid items
and claims for refunds or reimbursements (but excluding cash security or other deposits,
except with respect to the Leased Facilities);




(xi) all insurance proceeds or rights to insurance proceeds under any insurance
policies of the Sellers with respect to any of the Purchased Assets (including proceeds or
rights to proceeds under insurance policies relating to the Leased Facilities) or the
Assumed Liabilities;




(xii) any rights to credits, refunds, rebates or abatements of Taxes with respect to
the Purchased Assets for any taxable period (or portion thereof) beginning after the Closing
Date;




(xiii) all goodwill and intangible assets associated or arising in connection with the
Business or any of the Purchased Assets; and




(xiv) the assets, rights and properties set forth on Schedule 2.3(a)(xiv).



(b) Notwithstanding anything to the contrary contained in Section 2.3(a), the Sellers or their
Affiliates, as the case may be, shall retain all of their respective right, title and interest in
and to, and shall not, and shall not be deemed to, sell, transfer, assign, convey or deliver to the
Buyer, and the Purchased Assets shall not, and shall not be deemed to, include, the following
(collectively, the “Excluded Assets”):




(i) any cash or cash equivalents, including any marketable securities or certificates
of deposit, or any collected funds or accounts or items in the process of collection at the
financial institutions of the Sellers through and including the Closing Date or the
Maquiladora Closing Date, as applicable, together with all accrued but unpaid interest
thereon;




(ii) any accounts or notes receivable or other such claims for money due to the Sellers
from the Parent or any of the Parent’s other Subsidiaries;




(iii) (A) any rights of the Sellers or any of their Affiliates to any credits, refunds,
rebates or abatements with respect to assets that are not Purchased Assets; (B) any rights
to credits, refunds, rebates or abatements of Taxes with respect to the Purchased Assets and
relating to taxable periods (or portions thereof) ending on or prior to the Closing Date;
(C) any Tax Returns or Tax records of the Sellers or any of their


 


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Affiliates; and (D) any rights of the Sellers or any of their Affiliates under any Tax
allocation or sharing Contract;




(iv) any credits, prepaid expenses, deferred charges, advance payments, security
deposits (except with respect to the Leased Facilities), prepaid items, deposits and claims
for refunds or reimbursements, in each case, to the extent relating to the Excluded Assets
and/or the Excluded Liabilities;




(v) any rights to indemnification, contribution or other reimbursement, or limitations
on liability, under the Purchased Contracts, or any warranties and guarantees, in each case,
from any third parties with respect to any Excluded Liabilities and/or Losses for which the
Seller has an indemnification obligation;




(vi) any property, casualty or other insurance policy held by the Sellers or any of
their Affiliates or related insurance services Contract to which the Sellers or any of their
Affiliates is a party, and any rights of the Sellers or any of their Affiliates under any
such policy or Contract, except to the extent included in the Purchased Assets;




(vii) any rights of the Sellers or the Seller Indemnified Parties under this Agreement,
any Ancillary Document or any other Contract between the Sellers and the Buyer;




(viii) the corporate charters, qualifications to conduct business as a foreign
corporation, arrangements with registered agents relating to foreign qualifications,
taxpayer and other identification numbers, corporate seals, minute books, stock transfer
books, blank stock certificates, books and records relating to Taxes, and any other
documents relating to the governance, organization, maintenance and existence of the
Sellers;




(ix) any of the Benefit Plans and underlying assets or any rights of the Sellers or any
of their Affiliates under the Benefit Plans;




(x) except for licenses or rights granted under a Purchased Contract, any licenses or
other rights to use Intellectual Property or Software owned by Persons other than the
Sellers;




(xi) any Contracts under which either of the Sellers receives a license to
commercially-available Software or any services related thereto (including maintenance,
hosting or consulting services);




(xii) any real property or any leasehold interest in any real property, except for
Leased Facilities; and




(xiii) any other assets, rights and properties that are set forth on Schedule
2.3(b)(xiii).


 


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Section 2.4 Assumed and Excluded Liabilities.



(a) “Assumed Liabilities” means only the following liabilities and obligations of the
Sellers, whether known or unknown, asserted or unasserted, absolute or contingent, accrued or
unaccrued, liquidated or unliquidated, and whether due or to become due:




(i) all liabilities and obligations of the Sellers (excluding liabilities to the Parent
and/or any of its Affiliates) that arose in connection with the Business and are reflected
on or reserved for on the Recent Balance Sheets;




(ii) all Specified Liabilities of the Sellers (excluding liabilities to the Parent
and/or any of its Affiliates) that arose in connection with the Business and that were
incurred in the ordinary course of business since the respective dates of the Recent Balance
Sheets;




(iii) all liabilities and obligations arising under or relating to the Purchased
Contracts, excluding any liability that results from, arises out of or relates to any breach
of contract or breach of warranty by the Sellers prior to the Closing Date; and




(iv) all liabilities and obligations with respect to services provided or products sold
by the Business on or prior to the Closing Date to the extent arising out of or relating to
product return, exchange, rebate, credit and warranty obligations, and all product
liabilities relating thereto, up to a maximum amount of $25,000 in the aggregate.



(b) The Buyer shall not assume or become in any way liable or responsible for, and shall not
be deemed to have assumed or to have become liable or responsible for, any liabilities of the
Sellers or any of their Affiliates, whether known or unknown, asserted or unasserted, absolute or
contingent, accrued or unaccrued, liquidated or unliquidated, whether due or to become due and
whether related to the Business or the Purchased Assets, other than the Assumed Liabilities (the
“Excluded Liabilities”), which Excluded Liabilities specifically include (i) all
liabilities and obligations with respect to services provided or products sold by the Business on
or prior to the Closing Date to the extent arising out of or relating to product return, exchange,
rebate, credit and warranty obligations, and all product liabilities relating thereto, in excess of
$25,000 in the aggregate and (ii) those obligations and liabilities of the Seller set forth on
Schedule 2.4(b).



ARTICLE III

PURCHASE PRICE AND CLOSINGS




Section 3.1 Closing. Except as set forth in Section 3.2, the closing of the transactions
contemplated hereby (the “Closing”) shall take place at the offices of Jenner & Block LLP,
353 North Clark Street, Chicago, Illinois 60654 (or at such other place as the Parties mutually
agree in writing) concurrent with the execution of this Agreement. The date on which the Closing
actually occurs shall be referred to as the “Closing Date,” and except as otherwise
expressly provided herein, the Closing shall for all purposes be deemed effective as of 11:59pm,
Eastern Daylight Time, on the Closing Date.


 


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Section 3.2 Maquiladora Closing. The closing of the transactions contemplated by Section 2.2
(the “Maquiladora Closing”) shall take place at the offices of Jenner & Block LLP, 353
North Clark Street, Chicago, Illinois 60654 (or at such other place as the Parties mutually agree
in writing) on the second Business Day (unless the Parties agree to another time or date) following
the satisfaction or waiver of the conditions set forth in Section 7.3, other than those conditions
that by their nature are to be satisfied at the Maquiladora Closing (but subject to the fulfillment
or waiver of those conditions at the Maquiladora Closing). The date on which the Maquiladora
Closing actually occurs shall be referred to as the “Maquiladora Closing Date,” and except
as otherwise expressly provided herein, the Maquiladora Closing shall for all purposes be deemed
effective as of 11:59pm, Eastern Daylight Time, on the Maquiladora Closing Date. Each of the
Parties shall use its reasonable best efforts to cause the Maquiladora Closing to occur as promptly
as practicable following the Closing Date.



Section 3.3 Purchase Price. On the terms and subject to the conditions set forth in this
Agreement, at the Closing, the Buyer shall (a) pay to the Seller an aggregate amount equal to
$16,000,000 (the “Closing Payment”) in cash by wire transfer of immediately available funds
to the account or accounts designated in writing by the Seller and (b) deliver to the Seller a duly
executed copy of the Subordinated Promissory Note in the form attached hereto as Exhibit A
in principal amount equal to $3,000,000 (the “Note”). The sum of the Closing Payment plus
the principal amount of the Note plus the aggregate amount of the Assumed Liabilities, as such sum
may be adjusted in accordance with Section 3.4 or Section 8.7, is referred to herein as the
“Purchase Price”.




Section 3.4 Purchase Price Adjustment.



(a) Within sixty (60) days after the Closing Date, the Buyer shall deliver to the Seller a
preliminary statement (the “Preliminary Statement”) of the Net Working Capital, determined
as of the effective time of the Closing and in accordance with GAAP (the “Closing Date Net
Working Capital”). The Seller and its Affiliates shall provide the Buyer and its
representatives with full access at all reasonable times and on reasonable advance notice to such
personnel and books, records and other materials of the Seller to the extent they are reasonably
necessary for the preparation of, or relate to the matters covered by, the Preliminary Statement,
Final Statement and Closing Date Net Working Capital.



(b) The Seller shall have thirty (30) days to review the Preliminary Statement from the date
of its receipt thereof (the “Review Period”). If the Seller objects to any aspect of the
Preliminary Statement, then the Seller must deliver a written notice of objection (the
“Objection Notice”) to the Buyer on or prior to the expiration of the Review Period. The
Objection Notice shall specify in reasonable detail any adjustment to the Preliminary Statement
proposed by the Seller and the basis therefor, including the specific items proposed to be adjusted
and the specific Dollar amount of each such proposed adjustment and an explanation of how such
proposed adjustment was calculated. If the Seller delivers an Objection Notice to the Buyer prior
to the expiration of the Review Period in accordance with this Section 3.4(b), the Buyer and the
Seller shall, for a period of fifteen (15) days thereafter (the “Resolution Period”),
attempt in good faith to resolve the matters properly contained therein, and any written
resolution, signed by each of the Buyer and the Seller, as to any such matter shall be final,


 


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binding, conclusive and non-appealable for all purposes hereunder. Except to the extent properly
challenged in an Objection Notice as provided in this Section 3.4(b), or in the event the
Seller does not deliver an Objection Notice to the Buyer in accordance with this Section 3.4(b)
prior to the expiration of the Review Period, the Seller shall be deemed to have agreed to the
Preliminary Statement in its entirety, which Preliminary Statement or undisputed portions thereof
(as the case may be) shall be final, binding, conclusive and non-appealable for all purposes
hereunder.



(c) If, at the conclusion of the Resolution Period, the Buyer and the Seller have not reached
an agreement with respect to all disputed matters properly contained in the Objection Notice, then
within ten (10) days thereafter, the Buyer and the Seller shall submit for resolution such matters
remaining in dispute to PricewaterhouseCoopers LLC, or if such firm is unavailable or unwilling to
so serve, to a mutually acceptable nationally recognized independent accounting firm (the
“Neutral Auditor”). Each of the Seller and the Buyer agrees to execute, if requested by
the Neutral Auditor, an engagement letter reasonably satisfactory to such Party. The Neutral
Auditor shall act as an arbitrator to resolve (based solely on the written submissions of the Buyer
and the Seller and not by independent review) only those matters properly included in the Objection
Notice and still in dispute at the end of the Resolution Period. The Buyer and the Seller shall
direct the Neutral Auditor to render a reasoned written resolution of all such disputed matters, in
accordance with the foregoing, within thirty (30) days after its engagement or such other period
agreed upon by the Buyer and the Seller. The resolution of the Neutral Auditor shall be set forth
in a written statement delivered to each of the Buyer and the Seller and shall be final, binding,
conclusive and non-appealable for all purposes hereunder. The Preliminary Statement, once modified
and/or agreed to in accordance with Section 3.4(b) or this Section 3.4(c), shall become the
“Final Statement.”



(d) All fees and expenses of the Neutral Auditor shall be borne equally by the Seller and the
Buyer, and each of them shall promptly advance to the Neutral Auditor, upon its request, such
Party’s share of such fees and expenses. Except as provided in the preceding sentence, all other
costs and expenses incurred by the Parties in connection with resolving any dispute hereunder
before the Neutral Auditor shall be borne by the Party incurring such cost and expense.



(e) If the Closing Date Net Working Capital as stated on the Final Statement exceeds
$22,400,000, then the outstanding principal amount of the Note shall be increased by an amount
equal to the excess of such Closing Date Net Working Capital over $22,400,000. If the Closing Date
Net Working Capital as stated on the Final Statement is less than $21,800,000, then an amount equal
to the excess of $21,800,000 over such Closing Date Net Working Capital shall be applied as an
offset against, and shall be deemed to be a prepayment of, the outstanding principal amount of the
Note. Any (i) increase of the outstanding principal amount of the Note or (ii) offset against, or
deemed prepayment of, the outstanding principal amount of the Note, as applicable, pursuant to this
Section 3.4 will be treated by the Parties as an adjustment to the Purchase Price. If the Closing
Date Net Working Capital as stated on the Final Statement is greater than or equal to $21,800,000
and less than or equal to $22,400,000, then there shall be no adjustment to the Purchase Price.



Section 3.5 Allocation of Purchase Price. The allocation of the Purchase Price and other
consideration paid in exchange for the Purchased Assets is set forth in Schedule 3.5 in


 


15









 






accordance with Section 1060 of the Code (or any successor form or successor provision of any
future Tax Law) (the “Allocation”). The Seller and the Buyer each agree to use such
Allocation to prepare and file in a timely manner all Tax Returns including, if applicable, Form
8594, and to take no position in any Tax Return, Tax proceeding or Tax audit that is inconsistent
with such Allocation, unless otherwise required under applicable Law or agreed in writing by the
Seller or the Buyer as required by a Tax audit by a taxing authority having jurisdiction over such
party. Each Party shall, and shall cause its respective Affiliates to, provide prompt notice to
the other Party of any audit, inquiry or Action with respect to the Allocation. Notwithstanding
the foregoing, the Parties hereby agree that in no event shall more than 1% of the Purchase Price
be allocated to the Purchased Assets of the Maquiladora Entity.



ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF THE SELLER




Except as set forth in, and in all cases subject to, the Disclosure Schedules, the Seller
represents and warrants to the Buyer as follows:



Section 4.1 Organization. Each of the Seller and the Parent is duly organized, validly
existing and in good standing under the Laws of the jurisdiction of its organization. The Seller
is duly qualified or licensed to do business as a foreign entity and is in good standing in each
jurisdiction in which the ownership or lease of the Purchased Assets or the conduct of the Business
requires such qualification or license, except where the failure to be so qualified or be so
licensed would not have a Material Adverse Effect. The Seller has all requisite corporate or other
organizational power and authority to carry on the Business as currently conducted or to own, lease
or use, as the case may be, the Purchased Assets.



Section 4.2 Authorization of Transaction. Each of the Seller and the Parent has all requisite
corporate power and authority to execute and deliver this Agreement, and each of the Seller and the
Parent has all requisite corporate power and authority to execute, deliver and perform the
Ancillary Documents to which it is a party. This Agreement constitutes, and each Ancillary
Document when executed and delivered by the Seller and/or the Parent, as applicable, shall
constitute, a valid and legally binding obligation of each of the Seller and/or the Parent
(assuming that this Agreement and such Ancillary Documents constitute valid and legally binding
obligations of the other parties thereto), enforceable in accordance with its terms and conditions,
except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer and similar Laws of general applicability relating to or affecting
creditors’ rights, or by general equity principles, including principles of commercial
reasonableness, good faith and fair dealing.




Section 4.3 Noncontravention; Consents.



(a) The execution and delivery by each of the Seller and the Parent of this Agreement, and by
each of the Seller and the Parent of the Ancillary Documents to which it is a party, and the
consummation of the transactions contemplated hereby and thereby, do not: (i) violate any
applicable Law; (ii) conflict with or result in a breach of any provision of the certificates of
incorporation, bylaws or other organizational documents of the Seller or the Parent; (iii) create a
breach, default, termination, cancellation or acceleration of any obligation of


 


16









 






the Seller under
any Material Contract or require the consent or approval of any party to any
Material Contract; or (iv) result in the creation or imposition of any Lien, other than any
Permitted Liens, upon the Purchased Assets, except for any of the foregoing in the case of clauses
(i) and (iii) that would not have a Material Adverse Effect.



(b) No notices, Permits, consents, approvals, authorizations, qualifications or orders of any
Governmental Entities are required in connection with the consummation by the Seller or the Parent
of the transactions contemplated hereby or by the Ancillary Documents to which they are parties,
other than such of the foregoing that, if not given or obtained, would not have a Material Adverse
Effect or have a material adverse effect upon the ability of the Seller or the Parent to consummate
the transactions contemplated by, and discharge their respective obligations under, this Agreement
and the Ancillary Documents.




Section 4.4 Financial Statements.



(a) Set forth on Schedule 4.4 are copies of (i) the unaudited balance sheets for each
of the Seller and the Maquiladora Entity as of the end of the fiscal year of each of 2008 and 2009,
and the unaudited statements of operations for each of the Seller and the Maquiladora Entity for
each of the fiscal years ended 2008 and 2009, including the notes thereto, and (b) an unaudited
balance sheet of the Seller as of July 31, 2010, including the notes thereto, and an unaudited
balance sheet of the Maquiladora Entity as of June 30, 2010, including the notes thereto
(collectively, the “Recent Balance Sheets”), and the related unaudited statements of
operations for each of the Seller and the Maquiladora Entity, including the notes thereto, for the
seven (7) month period then ended, in the case of the Seller, and the six (6) month period then
ended, in the case of the Maquiladora Entity (collectively, the foregoing, the “Financial
Statements”). The Financial Statements (including the notes thereto) were prepared in
accordance with GAAP, present fairly in all material respects the financial condition and the
results of operations of the Business as of the dates and for the periods indicated therein and are
derived from the books and records of the Seller and the Parent relating to the Business. The
unaudited Financial Statements are subject to normal year-end adjustments (including Tax
adjustments) and do not include footnotes and other presentation items.



(b) Neither of the Sellers has any material liabilities or obligations of any nature that
would be Assumed Liabilities other than those (i) incurred in connection with the transactions
contemplated by this Agreement; (ii) that are disclosed, reflected in, reserved against or
otherwise described on the Recent Balance Sheets; or (iii) incurred in the ordinary course of
business since the respective dates of the Recent Balance Sheets.



Section 4.5 Absence of Certain Changes. Between the respective dates of the Recent Balance
Sheets and the date hereof, (a) there has not been any material change in the financial position,
operations or results of operations of the Business, (b) the Sellers have conducted the operations
of the Business in the ordinary course of business and (c) the Sellers have not, with respect to
the Business:



(a) paid any obligation or liability (including trade or account payables) other than in the
ordinary course of business or accelerated the collection of (or discounted) any accounts or notes
receivable (whether billed or unbilled) or any deferred revenue;


 


17









 





(b) sold, leased, assigned or transferred any of its tangible assets (including those included
in the Purchased Assets), except in the ordinary course of business, or canceled without fair
consideration any debts or claims owing to or held by it;



(c) sold, assigned, licensed, sublicensed, transferred or encumbered any Intellectual Property
or other intangible assets, disclosed any Confidential Information to any Person (other than the
Buyer and the Buyer’s representatives) other than in the ordinary course of business consistent
with how it was conducted prior to the date hereof, or abandoned or permitted to lapse any
Purchased Intellectual Property;



(d) made or granted any bonus or any wage or salary increase to any employee or group of
employees (except as required by pre-existing Contracts or, in the case of non-officer employees,
consistent with past practice), or made or granted any increase in any employee benefit plan or
arrangement, or amended or terminated any existing employee benefit plan or arrangement or adopted
any new employee benefit plan or arrangement;



(e) incurred any Indebtedness or incurred or become subject to any material liability, except
liabilities incurred in the ordinary course of business;



(f) suffered any extraordinary Losses or waived any rights of material value, whether or not
in the ordinary course of business;



(g) made any capital expenditures or commitments therefore that aggregate in excess of
$50,000;



(h) made any change in any method of accounting or accounting policies, other than those
required by GAAP, which have been disclosed in writing to the Buyer;



(i) engaged in any promotional sale, discount, price reduction or other activity that has had
or would reasonably be expected to have the effect of accelerating to pre-Closing periods sales
that otherwise would be expected to occur in post-Closing periods;




(j) entered into, amended or terminated any Material Contract or Permit; or



(k) entered into any other material transaction, whether or not in the ordinary course of
business, or materially changed any business practice.



Section 4.6 Title to and Sufficiency of Assets. As of the Closing, the Seller has good title
to, a valid leasehold interest in, or other legal rights to possess or use all of the tangible
personal property contained in the Purchased Assets of the Seller, free and clear of all Liens,
except for Permitted Liens. As of the Maquiladora Closing, the Maquiladora Entity will have good
title to, a valid leasehold interest in, or other legal rights to possess or use all of the
tangible personal property contained in the Purchased Assets of the Maquiladora Entity, free and
clear of all Liens, except for Permitted Liens. The Purchased Assets are in good working condition
and repair (subject to normal wear and tear consistent with the age of the assets and properties)
and include all of the buildings, machinery, equipment, and other tangible assets necessary to
conduct the Business in substantially the same manner as presently conducted by the Sellers. None
of the Business is conducted through, and none of the Purchased Assets are owned or


 


18









 






operated by, any Affiliate of the Sellers. At the Closing, the Buyer will acquire good title
to the tangible personal property contained in the Purchased Assets of the Seller and a valid and
enforceable leasehold interest in the leased personal property contained in the Purchased Assets of
the Seller, in each case, except for Permitted Liens. At the Maquiladora Closing, the Buyer (or
its designated Affiliate) will acquire good title to the tangible personal property contained in
the Purchased Assets of the Maquiladora Entity and a valid and enforceable leasehold interest in
the leased personal property contained in the Purchased Assets of the Maquiladora Entity, in each
case, except for Permitted Liens.




Section 4.7 Contracts.



(a) Schedule 4.7 lists all Contracts contained in the Purchased Assets: (i) the
performance of which is expected to involve payment or receipt by the Business of aggregate
consideration in excess of $50,000 in the twelve (12) month period immediately following the date
hereof, (ii) pursuant to which the Business is committed to make a capital expenditure or to
purchase a capital asset in excess of $50,000 that is not contemplated by the capital expenditure
budget for the Business, (iii) under which the Sellers have incurred any Indebtedness; (iv) that
provide for the employment of any Person or management, consulting, support or any other similar
services (including any Contracts with distributors, sales representatives or brokers); (v) that
are licenses of Intellectual Property (other than licenses for off-the-shelf software of less than
five thousand dollars ($5,000) in the aggregate); (vi) that grant to any Person a first-refusal,
first-offer or similar preferential right to purchase or acquire any Purchased Asset; (vii) that
involve a joint venture, affiliation or joint development arrangement; (viii) that involve the
acquisition of any business enterprise whether via stock or asset purchase or otherwise; (ix) that
are otherwise material to the Business and to which either Seller is a party; or (x) that contain a
non-compete provision or similar covenant restricting the operation of the Business in any material
respect (the Contracts listed in (i) through (x) above, the “Material Contracts”). Except
as prohibited by Law, by the terms of such Material Contract or under any confidentiality
agreement, the Seller has made available to the Buyer a correct and complete copy or summary of
each Material Contract.



(b) Each Material Contract is a valid, binding and enforceable obligation of the Seller and,
to the Seller’s Knowledge, of the other party or parties thereto, except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and
similar Laws of general applicability relating to or affecting creditors’ rights, or by general
equity principles, including principles of commercial reasonableness, good faith and fair dealing
and each Material Contract is in full force and effect. Neither the Seller nor, to the Seller’s
Knowledge, any other party thereto is in material breach of or default under any term of any
Material Contract or has repudiated any term of any Material Contract. The Seller has not received
any notice of termination, cancellation or non-renewal that is currently in effect with respect to
any Material Contract.




Section 4.8 Real Property.



(a) Neither of the Sellers owns any real property. Schedule 4.8 sets forth a complete
list, as of the date hereof, of the address of each parcel of real property leased, subleased,
licensed or otherwise occupied by either of the Sellers, including all buildings and


 


19









 






other structures or improvements located thereon and all easements, licenses, rights, and
appurtenances of the Sellers in connection therewith (the “Leased Facilities”). The Leased
Facilities constitute all of the real property used or required by the Seller in connection with
the operation of the Business as currently conducted. The Seller has: (i) a valid leasehold
interest in all Leased Facilities, free and clear of all Liens except for the Permitted Liens; (ii)
made available to the Buyer true and complete copies of each lease, sublease, license or occupancy
agreement underlying the Leased Facilities, including all amendments, modifications, renewals and
extensions thereto or assignments thereof (each a “Lease” and collectively, the
“Leases”), as set forth on Schedule 4.8; (iii) complied in all material respects
with the terms of all Leases to which it is a party; (iv) peaceful and undisturbed possession of
the Leased Facilities in all material respects; (v) not assigned, subleased, licensed or granted
any Person the right to use or occupy any of the Leased Facilities or any portion thereof; and (vi)
not collaterally assigned or granted any other security interest in the Leases or any interest
thereunder. Other than the rights of Buyer under this Agreement, there are no outstanding options,
rights of first offer or rights of first refusal to lease the Leased Facilities or any portion
thereof. No option, extension or renewal has been exercised under any Leases except options,
extensions or renewals whose exercise has been evidenced by a written document, a true and complete
copy of which has been made available to Buyer with the corresponding Lease.



(b) All Leased Facilities are in reasonably good repair and operating condition (subject to
normal wear and tear). To the Seller’s Knowledge, there are no material (i) defects in, (ii)
mechanical failures of or (iii) damages to the Leased Facilities. The Seller has not received any
notice of, and to the Seller’s Knowledge there are no, condemnation, expropriation, eminent domain
or similar proceedings or other adverse claims or actions affecting or threatened against any of
the Leased Facilities. All of the Leases are in full force and effect and are enforceable in
accordance with their terms and conditions, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and similar Laws of general
applicability relating to or affecting creditors’ rights, or by general equity principles,
including principles of commercial reasonableness, good faith and fair dealing. The Seller has not
received written notice of, and to the Seller’s Knowledge, no event or circumstance has occurred
that with notice or lapse of time or both would constitute, a material default or breach under any
of the Leases. To the Seller’s Knowledge, the Leases are binding on the lessors thereunder, and
such lessors have complied in all material respects with the terms of their respective Leases. The
execution, delivery, performance and consummation by the Seller of the transactions contemplated by
this Agreement do not and will not violate the terms of any Lease in any material respect.




Section 4.9 Intellectual Property.



(a) Schedule 4.9 sets forth, with the application number, application date,
registration/issue number, registration/issue date, title or mark, country or other jurisdiction
and owner(s), as applicable, each item of registered Intellectual Property and application to
register the same that is owned by the Seller. With respect to each such item that is listed on
Schedule 4.9, the Seller has good title to such item, free and clear of any Liens other
than Permitted Liens.


 


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(b) To the Seller’s Knowledge, the operation of the Business as it is presently conducted by
the Sellers does not, has not, and will not immediately after the Closing infringe,
misappropriate, violate, or otherwise conflict with any Intellectual Property of any Person.
There is no Action pending or, to the Seller’s Knowledge, threatened that asserts that the
operation of the Business as conducted by the Sellers is, was, or will be infringing or otherwise
in violation of any Intellectual Property of any other Person.



(c) To the Seller’s Knowledge: (i) no Person is infringing, misappropriating, or otherwise
using or making available for use any of the Purchased Intellectual Property; (ii) none of the
Purchased Intellectual Property is invalid or unenforceable; (iii) no Person has challenged in
writing the validity or enforceability of any of the Purchased Intellectual Property; and (iv)
there is no Action pending or threatened that challenges the rights of the Sellers in respect of,
or the scope of, any of the Purchased Intellectual Property or is otherwise adverse to the use,
registration, right to use, validity, enforceability or sole and exclusive ownership of any of the
Purchased Intellectual Property.



(d) Seller has taken commercially reasonable efforts to protect the ownership interests of the
Business in the Purchased Intellectual Property and the confidentiality of the Purchased
Intellectual Property that is or was confidential in nature. No director, stockholder, employee,
consultant, agent or other representative of the Seller owns or claims any personal rights in (nor
has any of them made application for) any of the Purchased Intellectual Property.




Section 4.10 Tax Matters.



(a) Except as would not have a Material Adverse Effect, the Sellers and their Affiliates have
filed all Tax Returns that they were required to file with respect to the Purchased Assets within
the three (3) year period prior to the date of this Agreement. All material Taxes shown on such
Tax Returns as owing and that are Excluded Liabilities have been or will be paid in a timely
fashion.




(b) There are no Liens for Taxes upon the Purchased Assets, other than Permitted Liens.



(c) The transactions contemplated by this Agreement are not subject to withholding pursuant to
the provisions of section 3406 or subchapter A of chapter 3 of the Code, or to Tax withholding
provisions of any other applicable Law.



(d) The Sellers have not waived any statute of limitations with respect to Taxes, or agreed to
any extension of time with respect to an assessment or deficiency of Taxes, in each case with
respect to the Purchased Assets.




Section 4.11 Legal Compliance; Permits.



(a) Since January 1, 2010, (i) the conduct of the Business and the operation of the Purchased
Assets by the Sellers have complied in all material respects with all applicable Laws and (ii) no
Action has been filed or commenced or, to the Seller’s Knowledge, threatened, against the Sellers
alleging any failure to so comply in any material respect.


 


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(b) The Sellers hold all Permits necessary for the conduct of the Business and are in all
material respects in compliance with all terms and conditions of any such Permits.



Section 4.12 Litigation. As of the date of this Agreement, there are no (and, during the
three (3) years preceding the date hereof, there have not been any), Actions pending or, to the
Seller’s Knowledge, threatened, (a) against the Sellers relating to the Business or the Purchased
Assets or (b) that question the validity of this Agreement or any of the Ancillary Documents, or
any action taken or to be taken by the Sellers or the Parent in connection with this Agreement or
any of the Ancillary Documents. Neither of the Sellers is subject to or bound by any outstanding
orders, judgments or decrees of any court or Governmental Entity with respect to the Business, the
Purchased Assets or the Assumed Liabilities.



Section 4.13 Product Liability; Product Warranties. The Seller has made no express or implied
warranties or guarantees to any third party with respect to the products marketed and/or sold or
services rendered by it, other than warranties or guarantees set forth in the Purchased Contracts.
Since January 1, 2010: (a) the products sold by the Business and the services provided by the
Business have complied with applicable Laws, contractual commitments and all express and implied
warranties in all material respects; and (b) there have not been any material defects or
deficiencies in any such products or services, at the time sold or provided by the Business to its
customers, that would result in material breach of warranty claims against the Business. There are
no pending, nor to the Seller’s Knowledge, threatened, claims under or pursuant to any warranty,
whether expressed or implied, on products or services sold on or prior to the Closing Date by the
Business that are not disclosed in the Financial Statements and that are not reserved against in
accordance with GAAP.




Section 4.14 Employees and Employee Benefits.



(a) Schedule 4.14(a) sets forth a list of (i) the names of all individuals who are
employees of the Business as of the date hereof; (ii) the commencement date of employment of each
such individual; (iii) the title, position or job classification of each such individual; (iv) the
current annual salary of each such individual paid on a salaried basis and the effective date
thereof; (v) the hourly wage of each such individual paid on an hourly basis; and (vi) the exempt
or nonexempt status (where applicable) of each such individual.



(b) (i) Neither of the Sellers is a party to or bound by any union contract, collective
bargaining agreement or other similar type of Contract in connection with the Business, (ii)
neither of the Sellers has agreed to recognize any union or other collective bargaining unit in
connection with the Business, and (iii) no union or collective bargaining unit has been certified
as representing the employees of the Business. During the past three (3) years, the Sellers have
not experienced any labor strike, dispute, slowdown or stoppage, material grievance, claim of
unfair labor practice or any other material labor difficulty in respect of the Business and, with
respect to the Business, the Sellers have not committed any material unfair labor practice.



(c) Schedule 4.14(c) lists all material Benefit Plans. All such Benefit Plans comply
and have been administered in form and in operation, in all material respects in accordance with
their terms and with all applicable requirements of Law (including ERISA and


 


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the Code). Each
Benefit Plan that is intended to meet the requirements of a “qualified plan” under section 401(a)
of the Code has received a determination from the Internal Revenue Service that such Benefit Plan
is so qualified, and nothing has occurred since the date of such
determination that could reasonably be expected to materially adversely affect the qualified
status of any such Benefit Plan.



(d) Copies of the following materials have been delivered or made available to the Buyer: (i)
all current plan documents for each Benefit Plan or, in the case of an unwritten Benefit Plan, a
written description thereof; (ii) the most recent determination letters from the IRS with respect
to any of the Benefit Plans; (iii) all current summary plan descriptions, summaries of material
modifications, annual reports, and summary annual reports; (iv) all current trust agreements,
insurance contracts, and other documents relating to the funding or payment of benefits under any
Benefit Plan; and (v) any other documents, forms or other instruments relating to any Benefit Plan
reasonably requested by the Buyer.



(e) Neither the Seller nor any ERISA Affiliate currently has, and at no time in the past has
had, an obligation to contribute to a “defined benefit plan” as defined in Section 3(35) of ERISA,
a pension plan subject to the funding standards of Section 302 of ERISA or Section 412 of the Code,
a “multiemployer plan” as defined in Section 3(37) of ERISA or Section 414(f) of the Code or a
“multiple employer plan” within the meaning of Section 210(a) of ERISA or Section 413(c) of the
Code.




Section 4.15 Environmental.



(a) The Sellers have obtained all Permits required under any Environmental Law with respect to
the operation of the Business, a list of which is set forth on Schedule 4.15, and each such
Permit can be transferred to the Buyer without any change to any of its material terms and
conditions.



(b) There are no continuing Releases of any Hazardous Material at any of the Leased Facilities
that may give rise to any liability or obligation under any Environmental Law.



(c) There are no environmental conditions at any of the Leased Facilities that may give rise
to any material obligation or requirement on the part of the lessee under any Lease.




Section 4.16 Customers and Suppliers.



(a) Schedule 4.16(a) sets forth a complete and accurate list of the ten (10) largest
customers of the Business based on revenues derived from sales to those customers for fiscal year
2009 and the twelve (12) month period ended July 31, 2010. Neither of the Sellers has received any
notice that any of those ten (10) customers, and to the Seller’s Knowledge, none of those ten (10)
customers intends to terminate its existing agreement (if any) or materially reduce its business
with the Sellers with respect to the Business or not to renew its agreement (if any) with the
Sellers with respect to the Business upon its expiration.



(b) Schedule 4.16(b) sets forth a complete and accurate list of the ten (10) largest
suppliers of the Business based on payments to those suppliers for fiscal year 2009 and the twelve
(12) month period ended July 31, 2010. Neither of the Sellers has received any notice


 


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that any of
those ten (10) suppliers, and to the Seller’s Knowledge, none of those ten (10) suppliers intends
to terminate its existing agreement (if any) or materially reduce its business
with the Sellers with respect to the Business or not to renew its agreement (if any) with the
Sellers with respect to the Business upon its expiration.



Section 4.17 Brokers’ Fees. Neither the Seller, the Parent nor any of their respective
Affiliates has engaged or has any liability or obligation to pay any fees or commissions to any
broker, finder or agent with respect to the transactions contemplated by this Agreement for which
the Buyer would become liable.



Section 4.18 Insurance. Schedule 4.18 sets forth a list of insurance policies
maintained by or on behalf of the Business, including amounts and scope of coverage. Each such
policy is in full force and effect and all premiums are currently paid in accordance with the terms
of such policy or accrued. Neither of the Sellers has received any notice that any policy will be
cancelled or will not be renewed nor has either of the Sellers received any written notice that
cancellation or non renewal is threatened nor any written notice that any material modification of
the terms of policy of insurance will be or is threatened to be required as a condition of renewal.



Section 4.19 Accounts Receivable. All accounts and notes receivable reflected on the Recent
Balance Sheets are valid receivables arising in the ordinary course of business and are current and
collectible at the aggregate recorded amount therefor. No Person has any Liens (other than
Permitted Liens) on such receivables or any part thereof, and no agreement for deduction, free
goods, discount or other deferred price or quantity adjustment has been made with respect to any
such receivables.



Section 4.20 Inventory. The net inventory of the Business reflected on the Recent Balance
Sheets has been calculated in all material respects in accordance with the past accounting
practices of the Business, including the inventory reserve policy of the Business set forth on
Schedule 4.20, and consists of a quantity and quality usable and salable in the ordinary
course of business consistent with past practice, is not defective or damaged and is fit for its
intended use.



Section 4.21 LIMITATIONS ON REPRESENTATIONS AND WARRANTIES. EXCEPT AS EXPRESSLY SET FORTH IN
THIS ARTICLE IV, THE SELLER MAKES NO REPRESENTATION OR WARRANTY OF ANY KIND WHATSOEVER, EXPRESS OR
IMPLIED, AT LAW OR IN EQUITY, IN CONNECTION WITH OR WITH RESPECT TO ANY OF THE PURCHASED ASSETS,
THE ASSUMED LIABILITIES, THE BUSINESS OR OTHERWISE, OR WITH RESPECT TO ANY INFORMATION PROVIDED TO
THE BUYER, INCLUDING WITH RESPECT TO ANY REPRESENTATIONS OR WARRANTIES OF MERCHANTABILITY, FITNESS
FOR ANY PARTICULAR PURPOSE OR USE, TITLE, NON-INFRINGEMENT, OR ENVIRONMENTAL MATTERS. ALL OTHER
REPRESENTATIONS OR WARRANTIES ARE HEREBY DISCLAIMED. EXCEPT AS EXPRESSLY SET FORTH IN THIS ARTICLE
IV, THE SELLERS ARE SELLING, ASSIGNING AND TRANSFERRING THE PURCHASED ASSETS TO THE BUYER ON AN
“AS-IS, WHERE-IS” BASIS.


 


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ARTICLE V

REPRESENTATIONS AND WARRANTIES OF THE BUYER





The Buyer represents and warrants to the Seller as follows:



Section 5.1 Organization. Each of the Buyer and the Buyer Parent is duly organized, validly
existing and in good standing under the Laws of its jurisdiction of organization. Each of the
Buyer and the Buyer Parent is duly qualified or licensed to do business as a foreign entity and is
in good standing in each jurisdiction where such qualification or license is required, except where
the failure to be so qualified or be so licensed would not have a material adverse effect on the
ability of the Buyer or the Buyer Parent to consummate the transactions contemplated by, and
discharge their respective obligations under, this Agreement and the Ancillary Documents (a
“Buyer Material Adverse Effect”). Each of the Buyer and the Buyer Parent has all requisite
limited liability power and corporate power and authority, respectively, to carry on its business
as currently conducted and as proposed to be conducted after the Closing.



Section 5.2 Authorization of Transaction. Each of the Buyer and the Buyer Parent has all
requisite limited liability and corporate power and authority, respectively, to execute, deliver
and perform this Agreement, and the Buyer has all limited liability power and authority to execute,
delivery and perform each of the Ancillary Documents to which it is a party. This Agreement
constitutes, and each of the Ancillary Documents when executed and delivered by the Buyer shall
constitute, a valid and legally binding obligation of the Buyer and/or the Buyer Parent (assuming
that this Agreement and such Ancillary Documents constitute valid and legally binding obligations
of the other parties thereto), as applicable, enforceable in accordance with its terms and
conditions, except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer and similar Laws of general applicability relating
to or affecting creditors’ rights or by general equity principles, including principles of
commercial reasonableness, good faith and fair dealing.




Section 5.3 Noncontravention; Consents.



(a) The execution and delivery by the Buyer and the Buyer Parent of this Agreement, the
execution and delivery by the Buyer of the Ancillary Documents to which it is a party and the
consummation by the Buyer and the Buyer Parent of the transactions contemplated hereby and thereby,
do not: (i) violate any Law to which the Buyer or the Buyer Parent or any of their respective
assets is subject; (ii) conflict with or result in a breach of any provision of the organizational
documents of the Buyer or the Buyer Parent; or (iii) create a breach, default, termination,
cancellation or acceleration of any obligation under any Contract to which the Buyer or the Buyer
Parent is a party or by which the Buyer or the Buyer Parent or any of their respective assets or
properties are bound or subject, except for any of the foregoing in the case of clauses (i) and
(iii) that would not have a Buyer Material Adverse Effect.



(b) No notices, permits, consents, approvals, authorizations, qualifications or orders of
Governmental Entities are required for the consummation by the Buyer or the Buyer Parent of the
transactions contemplated hereby or by the Ancillary Documents to which the


 


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Buyer is a party, other than such of the foregoing that, if not given or obtained, would not
have a Buyer Material Adverse Effect.



Section 5.4 Litigation. As of the date of this Agreement, there are no Actions pending or, to
the knowledge of the Buyer or the Buyer Parent, threatened, that question the validity of this
Agreement or any of the Ancillary Documents, or any action taken or to be taken by the Buyer or the
Buyer Parent in connection with this Agreement or any of the Ancillary Documents, other than such
of the foregoing that would not have a Buyer Material Adverse Effect.



Section 5.5 Availability of Funds. Each of the Buyer and the Buyer Parent has access to
immediately available funds in a quantity sufficient to pay the Purchase Price and to perform all
of their respective obligations pursuant to, and to consummate the transactions contemplated by,
this Agreement, the Note and each of the other Ancillary Documents to which the Buyer is a party.



Section 5.6 Investigation. The Buyer and the Buyer Parent have been given the opportunity to
ask questions of, and receive answers from the Seller, and have made all inquiries and
investigations that they deem necessary or appropriate, concerning the transactions contemplated by
this Agreement and other related matters. The Seller has made available to the Buyer, the Buyer
Parent or their respective agents all documents and information requested by or on behalf of the
Buyer or the Buyer Parent relating to the transactions contemplated by this Agreement, and the
Buyer and the Buyer Parent have made their own inquiry and investigation into and, based thereon,
have formed an independent judgment concerning the Business.



Section 5.7 Brokers’ Fees. Neither the Buyer, the Buyer Parent nor any of their respective
Affiliates has engaged or has any liability or obligation to pay any fees or commissions to any
broker, finder or agent with respect to the transactions contemplated by this Agreement for which
any of the Seller or its Affiliates would become liable.



Section 5.8 LIMITATIONS ON THE SELLER’S REPRESENTATIONS AND WARRANTIES. EACH OF THE BUYER AND THE BUYER
PARENT HEREBY ACKNOWLEDGES AND AGREES THAT, EXCEPT AS EXPRESSLY SET FORTH IN ARTICLE IV, THE SELLER
IS NOT MAKING, AND NEITHER THE BUYER NOR THE BUYER PARENT IS RELYING ON, ANY REPRESENTATION OR
WARRANTY OF ANY KIND WHATSOEVER, EXPRESS OR IMPLIED, AT LAW OR IN EQUITY, IN CONNECTION WITH OR
WITH RESPECT TO ANY OF THE PURCHASED ASSETS, THE ASSUMED LIABILITIES, THE BUSINESS OR OTHERWISE, OR
WITH RESPECT TO ANY INFORMATION PROVIDED TO THE BUYER OR THE BUYER PARENT, INCLUDING WITH RESPECT
TO ANY REPRESENTATIONS OR WARRANTIES OF MERCHANTABILITY, FITNESS FOR ANY PARTICULAR PURPOSE OR USE,
TITLE, NON-INFRINGEMENT OR ENVIRONMENTAL MATTERS, AND THAT ALL OTHER REPRESENTATIONS AND WARRANTIES
ARE DISCLAIMED BY THE SELLER. EACH OF THE BUYER AND THE BUYER PARENT FURTHER ACKNOWLEDGES AND
AGREES THAT, EXCEPT AS EXPRESSLY SET FORTH IN ARTICLE IV, THE BUYER IS PURCHASING THE
PURCHASED ASSETS ON AN “AS-IS, WHERE-IS” BASIS.


 


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ARTICLE VI

COVENANTS




Section 6.1 General. In the event that at any time any further action is reasonably necessary
to carry out the purposes of this Agreement, each of the Parties shall take such further action
(including the execution and delivery of such further instruments and documents) as the other Party
may reasonably request, at the sole cost and expense of the requesting Party (unless otherwise
specified herein).




Section 6.2 Consents; Nonassignable Contracts.



(a) The Seller and the Buyer each shall use commercially reasonable efforts after the Closing
Date to obtain any consents, approvals or authorizations of any third parties that are not obtained
prior to the Closing Date and that are required in connection with the transactions contemplated by
this Agreement (including, with respect to the Leases, consents, estoppel certificates and such
other documents reasonably required by, and in form and substance reasonably acceptable to, the
Buyer); provided that neither Party shall be required to make any expenditure or incur any
liability in connection with such efforts, unless reimbursed by the other Party for the full amount
of any such expenditure or liability; provided further that notwithstanding the
foregoing, the Seller shall be responsible for any costs incurred in obtaining the consents,
estoppel certificates and other documents with respect to the Leases.



(b) Notwithstanding anything to the contrary contained in this Agreement, to the extent that
any Material Contract is not capable of being transferred by either of the Sellers to the Buyer
pursuant to this Agreement without the consent, approval or authorization of a third party (a
“Specified Contract”), and such consent, approval or authorization is not obtained prior to
the Closing, or if such transfer or attempted transfer would materially impair Buyer’s rights under
or constitute a breach or a violation of such Specified Contract or any Law (each a “Specified
Consent”), nothing in this Agreement shall constitute an assignment or transfer or an attempted
assignment or transfer thereof.



(c) In the event that any such Specified Consent is not obtained on or prior to the Closing
Date, for a reasonable period of time not to exceed one hundred eighty (180) days after the Closing
Date, the Seller shall use commercially reasonable efforts to, or cause one of its Affiliates to
use commercially reasonable efforts to: (i) provide to the Buyer the benefits of the applicable
Specified Contract, at the Buyer’s expense; (ii) cooperate in any reasonable and lawful arrangement
designed to provide such benefits to the Buyer; and (iii) enforce at the request and expense of the
Buyer and for the account of the Buyer, any rights of the Sellers arising from any such Specified
Contract; provided that the Seller shall not be required to make any expenditure or incur
any liability in connection with any such activities described in clauses (i) through (iii) above,
unless reimbursed by the Buyer for the full amount of any such expenditure or liability.



(d) If the Buyer is provided benefits under any Specified Contract pursuant to Section 6.2(c),
the Buyer shall perform and discharge when due the obligations and liabilities of the Sellers under
such Specified Contract, for the benefit of the Sellers and the other party or parties thereto.
The Seller shall, without further consideration therefor, pay and remit to
the


 


27









 






Buyer promptly all
monies, rights, and other consideration received in respect of the Buyer’s performance of any
obligations under such Specified Contracts, and, at the Buyer’s request, shall direct that such
payments be made directly to the Buyer. Without limiting the foregoing, the Seller shall not
terminate any Specified Contract without the prior written consent of the Buyer.



(e) Once a Specified Consent is obtained, the applicable Specified Contract shall be deemed to
be a Purchased Contract on the terms set forth in this Agreement with respect to the other
Purchased Contracts.



(f) The Buyer agrees that, so long as the Seller has complied with its obligations under
Section 6.2(a), the Seller shall have no liability whatsoever to the Buyer arising out of or
relating to the failure to obtain any consents, approvals or authorizations that may have been or
may be required in connection with the transactions contemplated by this Agreement or because of
the breach, violation, acceleration or termination of any Contract as a result thereof.



(g) Without limiting the generality of the foregoing, with respect to any such Specified
Contract that is a Lease of a Leased Facility, the Buyer shall enter into a sublease containing the
same terms and conditions as such Lease, unless the Lease prohibits such subleasing arrangement,
and entry into and compliance with such sublease shall satisfy the obligations of the Parties under
this Section 6.2 until the Specified Consent is obtained and the Specified Contract assigned and/or
transferred in accordance with Section 6.2(e).



Section 6.3 Apportioned Obligations. All Apportioned Obligations are to be prorated between
the Buyer and the Seller as of the Closing Date. The Seller shall be responsible for all such
Apportioned Obligations accruing during any period up to and including the Closing Date. The
Seller agrees to indemnify the Buyer for the amount of such Apportioned Obligations that are
determined by multiplying the Apportioned Obligation by a fraction, the numerator of which is the
number of calendar days in the portion of the Straddle Period ending on and including the Closing
Date and the denominator of which is the number of calendar days in the entire Straddle Period.
The Buyer is responsible for all such Apportioned Obligations accruing during any period after the
Closing Date. The Buyer agrees to indemnify the Seller for the amount of such Apportioned
Obligations that are determined by multiplying the Apportioned Obligation by a fraction, the
numerator of which is the number of calendar days in the portion of the Straddle Period after the
Closing Date and the denominator of which is the number of calendar days in the entire Straddle
Period. With respect to Taxes described in this Section 6.3, the Seller shall timely file all Tax
Returns due before the Closing Date with respect to such Taxes and the Buyer shall prepare and
timely file all Tax Returns due after the Closing Date with respect to such Taxes. If one party
remits to the appropriate taxing authority payment for Taxes, which are subject to proration under
this Section 6.3 and such payment includes the other party’s share of such Taxes, such other party
shall promptly reimburse the remitting party for its share of such Taxes. For Apportioned
Obligations measured by the amount or level of any item (including such Taxes as are measured by
the amount of capital or the value of intangibles), the
Seller agrees to indemnify the Buyer for the amount of such Apportioned Obligations that are
determined by multiplying the Apportioned Obligation by a fraction, the numerator of which is the
number of calendar days in the portion of the Straddle Period ending on and including the Closing
Date and the denominator of which is the number of calendar days in the entire Straddle


 


28









 






Period.
The Seller and the Buyer shall share the costs of any inquiry, examination or Action by a
Governmental Entity with respect to any Apportioned Obligation in proportion to the fraction
determined in this Section 6.3 with respect to the nature of the obligation in dispute. 




Section 6.4 Agreements Regarding Employee Matters.



(a) Effective as of the Closing Date, the Buyer shall offer to employ each person who was an
Active Employee of the Seller immediately prior to the Closing Date for the same or greater amount
of base salary that such Active Employee received from the Business immediately prior to the
Closing Date. Effective as of the Maquiladora Closing Date, the Buyer (or its designated
Affiliate) shall offer to employ each person who was an Active Employee of the Maquiladora Entity
immediately prior to the Maquiladora Closing Date for the same or greater amount of base salary
that such Active Employee received from the Business immediately prior to the Maquiladora Closing
Date. An “Active Employee” shall mean any employee of either of the Sellers who is working
in the Business and (i) is actively at work on the Closing Date or the Maquiladora Closing Date, as
applicable, or (ii) is not actively at work on the Closing Date or the Maquiladora Closing Date, as
applicable, due to vacation, holiday, illness or injury (other than an employee receiving benefits
under the Seller’s short- or long-term disability plans), jury duty, or death leave in accordance
with applicable policies of the Sellers. Employees who accept the Buyer’s offer of employment and
commence employment with the Buyer shall be referred to herein as “Transferred Employees.”



(b) The Buyer agrees that, during the period commencing at the Closing or the Maquiladora
Closing Date, as applicable, and ending on December 31, 2010, the Transferred Employees shall be
provided with compensation opportunities and employee benefits that, in the aggregate, are
substantially comparable to those provided by the Seller and its Affiliates to such employees as of
the date of this Agreement. Solely with respect to medical coverage, for the period beginning on
the Closing Date and ending on September 30, 2010, the Seller shall cause the applicable Benefit
Plan to provide medical continuation coverage for Transferred Employees of the Seller on a COBRA
basis. Buyer shall be solely responsible for the entire cost of providing such continuation
coverage. Upon receipt of an invoice from the Seller with respect to the cost of providing such
continuation coverage, Buyer shall remit to Seller such amounts within five (5) Business Days.



(c) The Buyer will cause any benefit plans of the Buyer (the “Buyer Plans”) which
Transferred Employees are eligible to participate in to take into account for purposes of
eligibility, vesting and benefit accrual thereunder, prior service by such Transferred Employees
with the Seller and its Affiliates as if such service were with the Buyer, to the same extent such
service was credited under a comparable plan of the Seller and/or its Affiliates; provided
that such prior service will not count towards any accruals under a defined benefits plan or result
in the duplication of benefits. The Buyer will use commercially reasonable efforts to credit such
Transferred Employees with any amounts paid under Benefit Plan of the Seller prior to the Closing
or the Maquiladora Closing, as applicable, toward satisfaction of the applicable
deductible amounts and co-payment obligations under the corresponding Buyer Plans for the plan
year in which such Transferred Employees become eligible to participate in such Buyer Plans to the
extent such Benefit Plans and Buyer Plans have the same plan year.


 


29









 





(d) The Buyer (i) agrees to provide any required notice under the WARN Act or any similar Law
with respect to any “plant closing” or “mass layoff” (as defined in the WARN Act) or group
termination or similar event affecting Transferred Employees occurring from and after the Closing
or the Maquiladora Closing (not including as a result of the consummation of the transactions
contemplated by this Agreement), as applicable, and (ii) shall bear and be responsible for any
liability and related costs and expenses arising from or relating to any claim brought as a result
of any action of the Buyer or its Affiliates that would cause any termination of employment of any
employees by the Seller or its Affiliates that occurs prior to the Closing or the Maquiladora
Closing, as applicable, (A) to constitute a “plant closing”, “mass layoff” or group termination or
similar event under the WARN Act or any similar Law or (B) to create any liability or penalty to
the Seller for any employment terminations under applicable Law.



(e) The Buyer and the Seller agree to comply with the Standard Procedure described in Section
4 of Revenue Procedure 2004-53, 2004-2 C.B. 320 (the “Standard Procedure”). With respect
to Transferred Employees, the Seller shall, in accordance with Revenue Procedure 2004-53, assume
all responsibility for preparing and filing Form W-2, Wage and Tax Statements; Form W-3,
Transmittal of Income and Tax Statements; Form 941, Employer’s Quarterly Federal Tax Returns; Form
W-4, Employee’s Withholding Allowance Certificates; and Form W-5, Earned Income Credit Advance
Payment Certificates (collectively, the “Employee Withholding Documents”) with regard to
wages paid through the day before the Closing Date. The Buyer shall assume all responsibility for
preparing and filing the Employee Withholding Documents with regard to wages paid to Transferred
Employees on and after the Closing Date. The Buyer and the Seller shall cooperate in good faith to
the extent necessary to permit each of them to comply with the Standard Procedure.



(f) The Seller shall have sole responsibility for “continuation coverage” benefits for any
employee of the Seller and all “qualified beneficiaries” of any such employee for whom a
“qualifying event” occurs on or prior to the Closing (including all qualifying events that occur in
connection with the consummation of the transactions contemplated by this Agreement). The terms
“continuation coverage,” “qualified beneficiaries” and “qualifying event” shall have the meanings
ascribed to them under Section 4980B of the Code and Sections 601-608 of ERISA. The Buyer shall
have sole responsibility for “continuation coverage” benefits for any Transferred Employee and all
“qualified beneficiaries” of any such Transferred Employee for whom a “qualifying event” occurs
after the Closing.



(g) No provision of this Section 6.4 shall (i) create any third party beneficiary or other
rights in any employee or former employee (including any beneficiary or dependent thereof) of the
Seller or any other Person other than the Parties and their respective successors and permitted
assigns, (ii) constitute or create an employment agreement or (iii) constitute or be deemed to
constitute an amendment to any Benefit Plan or any employee benefit plan sponsored or maintained by
the Buyer or its Affiliates.




Section 6.5 Agreements Regarding Tax Matters.



(a) The Sellers and the Buyer shall provide each other with such assistance and non-privileged
information relating to the Purchased Assets as may reasonably be requested


 


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in connection with the
preparation of any Tax Return or the performance of any audit, examination or any other Action by
any taxing authority relating to any Tax Return, whether conducted in a judicial or administrative
forum. The Sellers and the Buyer shall retain and provide to the other Party all non-privileged
records and other information which may be relevant to any such Tax Return, audit, examination or
any other proceeding. The Seller shall deliver within five days of the Buyer’s request therefor
any information required to be reported by the Buyer or the Seller pursuant to Section 6043A of the
Code.



(b) The Sellers shall exercise control over the handling, disposition and settlement of any
inquiry, examination or proceeding by a Governmental Entity that relates solely to Taxes for which
the Sellers would be required to indemnify the Buyer (a “Tax Matter”). The Buyer shall
notify the Seller in writing promptly upon learning of any Tax Matter. Neither Seller (nor any of
its Affiliates) shall agree to settle any Tax Matter that may affect the liability for Taxes of the
Buyer (or any of its Affiliates) for any taxable period that ends after the Closing Date without
the Buyer’s prior written consent, which consent shall not be unreasonably withheld, conditioned or
delayed.



(c) If the Buyer or an Affiliate of the Buyer receives a refund with respect to Taxes for
which the Seller or any of its Affiliates is wholly or partially responsible under Section 6.3, the
Buyer or such Affiliate shall pay to the Seller, within five (5) Business Days following the
receipt of such refund, the amount of such refund attributable to the Seller. If the Seller or an
Affiliate of the Seller receives a refund with respect to Taxes for which the Buyer is wholly or
partially responsible under Section 6.3, the Seller or such Affiliate shall pay to the Buyer,
within five (5) Business Days following the receipt of such refund, the amount of such refund
attributable to the Buyer.



(d) Notwithstanding anything else contained herein, the Buyer and the Seller shall (i) pay
one-half of all amounts that are required to be paid in respect of any transfer, sales, use,
recording, value-added or similar Taxes (including any registration and/or stamp Taxes, levies and
duties) that may be imposed by reason of the sale, assignment, transfer and delivery of the
Purchased Assets (the “Transfer Taxes”); and (ii) timely file all Tax Returns, at the
Parties’ shared expense, required to be filed in connection with the payment of such Taxes.



Section 6.6 Preservation of Records. The Parties shall preserve and keep all books and
records that they own immediately after the Closing relating to the Business, the Purchased Assets
or the Assumed Liabilities for a period of six (6) years following the Closing Date or for such
longer period as may be required by applicable Law, unless disposed of in the ordinary course or
pursuant to a document retention policy. During such retention period, duly authorized
representatives of a Party shall, upon reasonable notice, have reasonable access during normal
business hours to examine, inspect and copy such books and records held by the other Party, except
as may be prohibited by Law, by the terms of any Contract or under any confidentiality agreement;
provided that to the extent that disclosing any such information would reasonably be
expected to constitute a waiver of attorney-client, work product or other privilege
with respect thereto, the Parties shall take all commercially reasonable action to prevent a
waiver of any such privilege, including entering into an appropriate joint defense agreement in
connection with affording access to such information.


 


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Section 6.7 Seller’s Obligation to Change its Name. Promptly following the Closing, but in
any event no later than thirty (30) days following the Closing, the Seller shall take any action
necessary (including amending its constituent documents) to change its name to a name that does not
include or relate to and is not based on or likely to be confused with the name “Assembly Component
Systems” or “ACS”.




Section 6.8 Non-Competition; Non-Solicitation.



(a) The Seller hereby acknowledges that the Seller is familiar with the Business’ trade
secrets and with other Confidential Information. The Seller further acknowledges and agrees that
the covenants and agreements set forth in this Section 6.8 are a material inducement to the Buyer
to enter into this Agreement and to perform its obligations hereunder, and that the Buyer and its
Affiliates would not obtain the benefit of the bargain set forth in this Agreement as specifically
negotiated by the Parties if the Seller breached the provisions of this Section 6.8. Therefore,
during the period from the Closing Date through the three (3) year anniversary of the Closing Date
(the “Restricted Period”), the Seller shall not, and shall cause its Affiliates not to, (i)
engage, directly or indirectly (whether as shareholder, partner, joint venturer, financing source
or consultant in any capacity whatsoever), anywhere in the world, in any business that competes
directly with the Business (a “Restricted Business”).



(b) Notwithstanding anything in Section 6.8(a) to the contrary, (i) no Affiliate of the Seller
will be prohibited from engaging in any business currently conducted by such Affiliate or any
natural extensions thereof, including (for the avoidance of doubt) the continued sale and/or
distribution by such Affiliate of any products or product lines currently sold or distributed by
such Affiliate or any natural extensions thereof; (ii) the acquisition (by asset purchase, stock
purchase, merger, consolidation or otherwise) by the Seller or any of its Affiliates of the stock,
business or assets of any Person that at the time of such acquisition is engaged in a Restricted
Business, and the continuation of such Restricted Business following such acquisition, will not be
prohibited hereunder if such activities do not constitute the principal activities of the Person or
business acquired (based on the sales of such business during the preceding four (4) full calendar
quarters); provided that if the Restricted Business constitutes in excess of the lesser of
(A) forty percent (40%) of the revenues of the Person or business acquired or (B) revenues in
excess of twenty five million dollars ($25,000,000) of the Person or business acquired (in each
case based on the preceding four (4) full calendar quarters), the Seller will use its commercially
reasonable efforts to divest that portion of such Person or business that engages in the Restricted
Business within twelve (12) months after its acquisition of such Person or business; and (iii) the
acquisition of the stock, business or assets of the Seller and/or any of its Affiliates (by asset
purchase, stock purchase, merger, consolidation or otherwise) by any Person who is not a current
Affiliate of the Seller will not be prohibited hereunder. Nothing in this Section 6.8 will
restrict or prevent the Seller or any of its Affiliates from maintaining or undertaking passive
investments in any Person primarily engaged in a Restricted Business so long as the aggregate
interest represented by such investments does not exceed ten percent (10%) of any class of the
outstanding debt or equity securities of any such Person.



(c) During the period from the Closing Date through the two (2) year anniversary of the
Closing Date, the Seller shall not, and shall cause its Affiliates not to, recruit or hire any
employee of the Business or any employee, agent or consultant of the Buyer or any of


 


32









 






its
Affiliates, or encourage any such employee, agent or consultant to terminate his or her
relationship with the Buyer or any of its Affiliates; provided that the foregoing
restriction shall not (i) prevent the Seller, the Parent or any of its other Affiliates from
offering employment to any Transferred Employee who responds to a general solicitation or
advertisement that is not specifically directed at him or her (and nothing shall prohibit such
general solicitation or advertisement not specifically directed at Transferred Employees) and (ii)
prevent the Seller, the Parent or any of its other Affiliates from hiring any Transferred Employee
that has been terminated by the Buyer and/or any of its Affiliates, successors or assigns prior to
the date of such hiring.



(d) If the Seller breaches, or threatens to commit a breach of, any of the provisions of this
Section 6.8 (the “Restrictive Covenants”), the Buyer shall have the right to seek to have
the Restrictive Covenants specifically enforced by any court having jurisdiction, it being
acknowledged and agreed that any such breach or threatened breach may cause irreparable injury to
the Buyer and its Affiliates and that money damages may not provide an adequate remedy to the Buyer
and its Affiliates. Nothing in this Section 6.8 shall be construed to limit the right of the Buyer
to collect money damages in the event of a breach of the Restrictive Covenants. In addition to the
remedies the Buyer may seek and obtain pursuant to this Section 6.8, the Restricted Period shall be
extended by and all periods during which the Seller shall be found by a court of competent
jurisdiction to have been in violation of the Restrictive Covenants.



(e) If any Governmental Entity determines that any of the Restrictive Covenants, or any part
thereof, is invalid or unenforceable, the remainder of the Restrictive Covenants shall, to the
extent enforceable under applicable Law, not thereby be affected and shall be given full effect,
without regard to the portions which have been declared invalid or unenforceable. If any
Governmental Entity determines that any of the Restrictive Covenants, or any part thereof, is
unenforceable because of the duration or geographic scope of such provision, it is the intention of
the Parties that such Governmental Entity shall have the power to modify any such provision, to the
extent necessary to render the provision enforceable, and such provision as so modified shall be
enforced.



ARTICLE VII

CLOSING DELIVERIES AND CONDITIONS




Section 7.1 Closing Deliveries of the Seller. Simultaneous with the execution of this
Agreement, the Seller will deliver to the Buyer:



(a) a duly executed counterpart of a transition services agreement in substantially the form
attached hereto as Exhibit B (the “Transition Services Agreement”);



(b) a duly executed counterpart of a bill of sale and assignment and assumption agreement in
substantially the form attached hereto as Exhibit C (the “U.S. Bill of Sale and
Assignment and Assumption Agreement”);



(c) a duly executed counterpart of an assignment and assumption of leases in substantially the
form attached hereto as Exhibit D (the “Assignment and Assumption of Leases”);


 


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(d) a duly executed non-foreign person affidavit that complies with the requirements of
Section 1445 of the Code, in form and substance reasonably satisfactory to the Buyer; and



(e) all instruments and documents (including payoff letters) necessary to release any and all
Liens (other than Permitted Liens) on the Purchased Assets, including appropriate UCC financing
statement amendments (termination statements).



Section 7.2 Closing Deliveries of the Buyer. Simultaneous with the execution of this
Agreement, the Buyer will deliver to the Seller:



(a) the Closing Payment in cash by wire transfer of immediately available funds to the account
or accounts designated by the Seller;




(b) a duly executed counterpart of the Note;




(c) a duly executed counterpart of the Transition Services Agreement;



(d) a duly executed counterpart of the U.S. Bill of Sale and Assignment and Assumption
Agreement; and




(e) a duly executed counterpart of the Assignment and Assumption of Leases.



Section 7.3 Conditions to the Maquiladora Closing. The respective obligation of each Party to
consummate the Maquiladora Closing is subject to the fulfillment or written waiver by the Parties
(to the extent permitted by applicable Law) of each of the following conditions:



(a) no statute, rule, regulation, order, injunction or decree shall have been enacted,
entered, promulgated or enforced by any Governmental Entity and shall continue to be in effect that
prohibits or makes illegal consummation of the Maquiladora Closing;



(b) the Parties shall have obtained all consents, approvals, authorizations and Permits of
Governmental Entities and other third parties that are required in connection with the consummation
of the Maquiladora Closing, other than those the failure of which to obtain would not have a
material adverse effect on the Maquiladora Entity, the Buyer (or its designated Affiliate) or the
Business following the Maquiladora Closing;



(c) each of the Maquiladora Entity and the Buyer (or its designated Affiliate) shall have duly
executed a purchase and sale agreement in respect of the Purchased Assets of the Maquiladora Entity
in form and substance reasonably acceptable to the Parties, and the Maquiladora Entity shall have
delivered one or more invoices to the Buyer (or its designated Affiliate) with respect to the
Purchased Assets of the Maquiladora Entity that will meet all necessary requirements set forth in
Mexico’s applicable Tax laws; provided that such purchase
and sale agreement shall be subject to the terms and conditions of this Agreement and nothing
therein shall change, amend, extend or alter (nor shall it be deemed or construed as changing,
amending, extending or altering) the terms or conditions of this Agreement;


 


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(d) the Maquiladora Entity shall have delivered to the Buyer (or its designated Affiliate), at
the election of the Maquiladora Entity, (i) a copy of documents reasonably evidencing the
termination of the Transferred Employees of the Maquiladora Entity in accordance with the
applicable provisions of the Federal Labor Law of Mexico or (ii) a copy of the notice given to all
Transferred Employees prior to the Maquiladora Closing, informing them that as of the Maquiladora
Closing, the Buyer (or its designated Affiliate) will be their new substitute employer;



(e) subject to applicable Laws, the Maquiladora Entity shall have delivered to the Buyer (or
its designated Affiliate) copies of all personnel files and labor and social security records of
the Transferred Employees pertaining to the Maquiladora Entity;



(f) all legal requirements necessary for the transfer of any Purchased Assets of the
Maquiladora Entity subject to IMMEX programs under IMMEX rules, and without generating definitive
importations thereof, shall have been duly complied with in all material respects, such that
transfer thereof to the Buyer (or its designated Affiliate) is ready to be carried out at the
Maquiladora Closing;



(g) the Parties shall have received the applicable consents for the assignment of the Leases
pertaining to the Purchased Assets of the Maquiladora Entity and the parties to such Leases shall
have executed corresponding assignment agreements in form and substance reasonably acceptable to
the Maquiladora Entity and the Buyer; and



(h) each of the Maquiladora Entity and the Buyer shall have delivered to the other such
instruments of sale, conveyance, transfer and/or assumption as may be reasonably requested by
either Party in form and substance reasonably satisfactory to each Party, in order to convey the
Purchased Assets of the Maquiladora Entity to the Buyer (or its designated Affiliate) and to cause
the Buyer (or its designated Affiliate) to assume the Assumed Liabilities of the Maquiladora Entity
in compliance with the Laws of the relevant jurisdiction.



ARTICLE VIII

REMEDIES




Section 8.1 Survival. The representations and warranties of the Parties contained in this
Agreement and in the Ancillary Documents shall survive until the eighteen (18) month anniversary of
the Closing Date, except for (a) the representations and warranties in Section 4.2 (Authorization
of Transaction), Section 4.6 (Title to and Sufficiency of Assets), Section 4.17 (Brokers’ Fees),
Section 5.2 (Authorization of Transaction) and Section 5.7 (Brokers’ Fees) (collectively, the
“Fundamental Representations”), which shall survive indefinitely, (b) the representations
and warranties in Section 4.10 (Tax Matters), which shall survive until sixty days after the
expiration of the applicable statute of limitations and (c) the representations and warranties in
Section 4.9 (Intellectual Property), Section 4.14 (Employees and Employee Benefits) and Section
4.15 (Environmental), which shall survive for a period of
five (5) years after the Closing Date. The covenants or agreements of the Parties contained
in this Agreement and the Ancillary Documents shall survive the Closing indefinitely, except that
those covenants and agreements that by their express terms are to be performed or complied with for
a shorter period of time shall survive only until the expiration of such shorter time period.


 


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Notwithstanding anything to the contrary, no Claim may be made with respect to any representations
or warranties under this Agreement or any Ancillary Document after the expiration of the applicable
survival period set forth in this Section 8.1, and no Party shall be liable for any Claim for
indemnification under this ARTICLE VIII unless written notice of a Claim for indemnification is
delivered by the Party seeking indemnification (the “Indemnified Party”) to the Party from
whom indemnification is sought (the “Indemnifying Party”) prior to the expiration of the
applicable survival period set forth in this Section 8.1.




Section 8.2 Indemnification by the Seller.



(a) Subject to the terms and conditions of this ARTICLE VIII, from and after the Closing, the
Seller agrees to indemnify and hold harmless the Buyer, its directors, officers, representatives,
employees, Affiliates and Subsidiaries (each, a “Buyer Indemnified Party”) from, against
and in respect of any and all Losses incurred by any Buyer Indemnified Party resulting from, or
that exist or arise due to, any of the following (collectively, “Buyer Claims”):




(i) prior to its expiration in accordance with Section 8.1, the breach of any
representation or warranty made by the Seller in this Agreement or in any Ancillary Document
(provided, that for purposes of determining whether there has been a breach and the
amount of Losses that are the subject matter of a claim for indemnification or reimbursement
hereunder, each such representation or warranty shall be read without regard and without
giving effect to the term “material” or “Material Adverse Effect” or similar phrases
contained in such representation or warranty);




(ii) prior to its expiration in accordance with Section 8.1, the breach by the Seller
or the Parent of any covenant or agreement under this Agreement or any Ancillary Document
(subject to any express limitations therein); and




(iii) the Excluded Liabilities.



(b) Notwithstanding anything contained herein to the contrary, the obligations of the Seller
pursuant to Section 8.2(a)(i) shall: (i) not apply to any Buyer Claims until, and then only to the
extent that, the Losses incurred by all Buyer Indemnified Parties exceeds $300,000; (ii) be limited
to, and shall not exceed, the aggregate amount of $3,750,000; and/or (iii) not apply to any
individual Buyer Claim or series of related Buyer Claims with respect to which the Losses incurred
by the Buyer Indemnified Party are less than $25,000; provided that the limitations set
forth in this Section 8.2(b) shall not apply (i) to breaches of the Fundamental Representations or
(ii) in the case of fraud by the Seller.




Section 8.3 Indemnification by the Buyer.



(a) Subject to the terms and conditions of this ARTICLE VIII, from and after the Closing, the
Buyer agrees to indemnify and hold harmless the Seller and its respective
directors, officers, representatives, employees, Affiliates and Subsidiaries (collectively,
the “Seller Indemnified Parties”) from, against and in respect of any and all Losses
incurred by any Seller Indemnified Party resulting from, or that exist or arise due to, any of the
following (collectively, “Seller Claims,” and together with Buyer Claims,
“Claims”):


 


36









 






(i) prior to its expiration in accordance with Section 8.1, the breach of any
representation or warranty made by the Buyer in this Agreement or in any Ancillary Document
(provided, that for purposes of determining whether there has been a breach and the
amount of Losses that are the subject matter of a claim for indemnification or reimbursement
hereunder, each such representation or warranty shall be read without regard and without
giving effect to the term “material” or “Buyer Material Adverse Effect” or similar phrases
contained in such representation or warranty);




(ii) prior to its expiration in accordance with Section 8.1, the breach by the Buyer or
the Buyer Parent of any covenant or agreement under this Agreement or any Ancillary
Document;




(iii) the Assumed Liabilities; and




(iv) the conduct and operation of the Business or the use or ownership of the Purchased
Assets from and after the Closing (subject to Section 2.4(b)).



(b) Notwithstanding anything contained herein to the contrary, the obligations of the Buyer
pursuant to Section 8.3(a)(i) shall: (i) not apply to any Seller Claims until, and then only to the
extent that, the Losses incurred by all Seller Indemnified Parties exceeds $300,000; (ii) be
limited to, and shall not exceed, the aggregate amount of $3,750,000; and/or (iii) not apply to any
individual Seller Claim or series of related Seller Claims with respect to which the Losses
incurred by the Seller Indemnified Party (excluding any attorneys’ fees relating to such Losses)
are less than $25,000; provided that the limitations set forth in this Section 8.3(b) shall
not apply (i) to breaches of the Fundamental Representations or (ii) in the case of fraud by the
Buyer.



Section 8.4 Exclusive Remedy. From and after the Closing, the right of indemnification
provided in this ARTICLE VIII shall be the sole and exclusive remedy of the Parties (and all
Indemnified Parties) for all disputes arising out of or relating to this Agreement, except in the
case of fraud or intentional misrepresentation, and shall supersede and replace all other rights
and remedies that either Party may have under any Law. Nothing in this Section 8.4 shall be
construed to limit or prohibit any Party from pursuing injunctive or other equitable relief to
require another Party to perform its obligations under Section 6.8 or Section 9.15.




Section 8.5 Procedures for Indemnification of Third Party Claims.



(a) If any third party notifies an Indemnified Party with respect to any matter that may give
rise to a Claim for indemnification (a “Third Party Claim”) against the Indemnifying Party
under this ARTICLE VIII, then the Indemnified Party shall notify the Indemnifying Party promptly
thereof in writing (a “Claim Notice”) and in any event within fifteen (15) days after
receiving notice from a third party; provided that no delay on the part of the Indemnified
Party in notifying the Indemnifying Party shall relieve the Indemnifying Party from any obligation
hereunder except to the extent the Indemnifying Party is actually prejudiced
thereby. All Claim Notices shall describe with reasonable specificity the Third Party Claim
and the basis of the Indemnified Party’s Claim for indemnification. Upon the Indemnified Party’s
delivery of a Claim Notice, the Indemnifying Party shall be entitled to participate therein and, to
the extent desired, to assume the defense thereof with counsel of its choice by providing the


 


37









 






Indemnified Party with written notice within thirty (30) days of receipt of a Claim Notice;
provided that the Indemnifying Party may not assume such defense unless (i) it has
sufficient financial resources, in the reasonable judgment of the Indemnified Party, to satisfy the
amount of any adverse monetary judgment that is reasonably likely to result; and (ii) the Third
Party Claim solely seeks (and continues to solely seek) monetary damages. If the Indemnifying
Party provides the Indemnified Party with notice of its determination to assume the defense of such
Third Party Claim, the Indemnifying Party shall control such Third Party Claim and shall not be
liable to the Indemnified Party for any legal or other expenses subsequently incurred by the
Indemnified Party in connection with the defense of the Third Party Claim, other than reasonable
costs of investigation, unless the Indemnifying Party does not actually assume the defense thereof
following notice of such election. Unless and until the Indemnifying Party notifies the
Indemnified Party that it is assuming the defense of such Third Party Claim, the Indemnified Party
shall have the right to undertake the defense of such Third Party Claim, by counsel or other
representatives of its own choosing (subject to the limitations on the Indemnifying Party’s
obligations to indemnify as set forth in this ARTICLE VIII). The Indemnifying Party or the
Indemnified Party, as the case may be, shall have the right to participate in (but not control), at
its own expense, the defense of any Third Party Claim which the other is defending as provided in
this Agreement.



(b) The Indemnified Party shall not consent to the entry of any judgment or enter into any
settlement of any Third Party Claim without the prior written consent of the Indemnifying Party.
The Indemnifying Party shall not consent to the entry of any judgment or enter into any settlement
of any Third Party Claim that might give rise to liability of the other Party under this ARTICLE
VIII without such Party’s consent, which consent shall not be unreasonably withheld, conditioned or
delayed.



(c) Upon the mutual written agreement of the Parties or the entry of a final and
non-appealable order of a court of competent jurisdiction with respect to the amount of
indemnifiable Losses for any Buyer Claim pursuant to this ARTICLE VIII, the Buyer shall have the
right and option (but not the obligation) to offset the amount of such Losses against the then
outstanding principal amount of the Note, which shall be deemed to be a prepayment of the then
outstanding principal amount of the Note by the Buyer.




Section 8.6 Certain Limitations.



(a) NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, EXCEPT (i) IN THE CASE OF FRAUD OR
INTENTIONAL MISREPRESENTATION, (ii) TO THE EXTENT AWARDED BY A COURT OF COMPETENT JURISDICTION OR
ARBITRATOR WITH RESPECT TO A THIRD PARTY CLAIM INDEMNIFIABLE HEREUNDER OR (iii) TO THE EXTENT PAID
BY A BUYER INDEMNIFIED PARTY TO A THIRD PARTY WITH RESPECT TO A THIRD PARTY CLAIM INDEMNIFIABLE
HEREUNDER, AN INDEMNIFYING PARTY SHALL NOT BE LIABLE UNDER THIS ARTICLE VIII IN RESPECT OF ANY
CLAIM FOR DIMINUTION OF VALUE OR
INCIDENTAL, EXEMPLARY, SPECIAL, PUNITIVE OR CONSEQUENTIAL DAMAGES OF ANY KIND, INCLUDING
CONSEQUENTIAL DAMAGES RESULTING FROM BUSINESS INTERRUPTION, LOST TAX OR INCOME TAX BENEFITS,
INCREASED INSURANCE PREMIUMS OR LOST PROFITS.


 


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(b) The obligations of the Indemnifying Party to provide indemnification under this ARTICLE
VIII shall be terminated, modified or abated as appropriate to the extent that the underlying Claim
would not have arisen but for a voluntary act that is carried out by or at the express written
request of the Indemnified Party.



(c) The amount of any indemnification payable under this ARTICLE VIII shall be reduced by an
amount equal to the proceeds available to the Indemnified Party under any insurance policy or from
any third-party in respect of such Claim. An Indemnified Party shall use commercially reasonable
efforts to pursue any insurance recovery or third-party recovery available to it with respect to
any Claim for which such Indemnified Party seeks indemnification pursuant to this ARTICLE VIII.



Section 8.7 Treatment of Indemnity Payments. All indemnification payments made pursuant to
this Agreement, or amounts deemed to be prepayments of outstanding principal amount of the Note
pursuant to Section 8.5(c), shall be treated by the Parties as adjustments to the Purchase Price.



Section 8.8 Mitigation. The Indemnified Parties shall take, and shall cause their respective
Affiliates to take, commercially reasonable steps to mitigate or otherwise minimize any Losses that
form the basis of a Claim hereunder.



ARTICLE IX

MISCELLANEOUS




Section 9.1 Notices. Any notice, request, instruction or other document to be given hereunder
shall be sent in writing and delivered personally, sent by reputable, overnight courier service
(charges prepaid), sent by registered or certified mail, postage prepaid, or by facsimile,
according to the instructions set forth below. Such notices shall be deemed given: at the time
delivered by hand, if personally delivered; one Business Day after being sent, if sent by
reputable, overnight courier service; at the time received, if sent by registered or certified
mail; and at the time when confirmation of successful transmission is received by the sending
facsimile machine, if sent by facsimile.



If to the Seller:




Lawson Products, Inc.

1666 E. Touhy Avenue

Des Plaines, IL 60018

Attention: Neil E. Jenkins

Facsimile No.: (847) 795-9030


 


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




Jenner & Block LLP

353 North Clark Street

Chicago, IL 60654

Attention: Michael T. Wolf

Facsimile No.: (312) 840-7530



If to the Buyer:




Supply Technologies LLC

6065 Parkland Boulevard

Cleveland, Ohio 44124

Attention: Robert D. Vilsack

Facsimile No.: (440) 947-2209




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




Jones Day

North Point

901 Lakeside Avenue

Cleveland, Ohio 44114

Attention: James P. Dougherty

Facsimile No.: (216) 579-0212



or to such other address or to the attention of such other Party that the recipient Party has
specified by prior written notice to the sending Party in accordance with the preceding.



Section 9.2 Expenses; No Offset. Except as expressly provided in this Agreement, each of the
Parties shall bear its own costs and expenses (including legal, accounting and investment banking
fees and expenses) incurred in connection with this Agreement and the transactions contemplated
hereby, whether or not such transactions are consummated. Except as set forth in Section 3.4(e) or
Section 8.5(c), neither Party may make any offset against amounts due to the other Party or any of
the other Party’s Affiliates pursuant to this Agreement, the Ancillary Documents or otherwise.



Section 9.3 Disclosure Schedules. The representations and warranties of the Seller set forth
in this Agreement are made and given subject to the disclosures contained in the Disclosure
Schedules. Inclusion of information in the Disclosure Schedules shall not be construed as an
admission that such information is material to the business, operations or condition (financial or
otherwise) of the Business or the Purchased Assets, taken in part or as a whole, or as an admission
of liability or obligation of the Seller to any third party. The specific disclosures set forth in
the Disclosure Schedules have been organized to correspond to Section references in this Agreement
to which the disclosure may be most likely to relate; provided, however, that any
disclosure in the Disclosure Schedules shall apply to another Section of this Agreement only to the
extent that the applicability of such disclosure to such Section is reasonably apparent on the face
of such disclosure. In the event that there is any inconsistency


 


40









 






between this Agreement, as the case may be, and matters disclosed in the Disclosure Schedules,
information contained in the Disclosure Schedules shall prevail and shall be deemed to be the
relevant disclosure.



Section 9.4 Bulk Sales or Transfer Laws. Buyer hereby waives compliance with any applicable
bulk sales law that may be applicable to the transactions contemplated by this Agreement.



Section 9.5 Assignment; Successors and Assigns. Neither this Agreement nor any of the rights,
interests or obligations provided by this Agreement may be assigned by either Party (whether by
operation of Law or otherwise) without the prior written consent of the other Party;
provided, however, that the Buyer may assign its rights under this Agreement (a) to
a Subsidiary of the Buyer, (b) in connection with a disposition, merger or consolidation of the
Buyer or all or any portion of the Business or (c) to any of its lender(s) as collateral security,
but such assignment shall not relieve the Buyer of its obligations or liabilities under this
Agreement. Subject to the preceding sentence and except as otherwise expressly provided herein,
this Agreement shall be binding upon and inure to the benefit of the Parties hereto and their
respective successors and permitted assigns.



Section 9.6 Amendment; Waiver. This Agreement may be amended only by a written instrument
executed and delivered by the Seller and the Buyer. No agreement extending or waiving any
provision of this Agreement shall be valid or binding unless it is in writing and is executed and
delivered by or on behalf of the Party against which it is sought to be enforced.



Section 9.7 Severability. Whenever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under Law, but if any provision of this
Agreement is held to be prohibited by or invalid under Law, such provision shall be ineffective
only to the extent of such prohibition or invalidity, without invalidating the remainder of this
Agreement.



Section 9.8 Counterparts. This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all such counterparts taken together shall constitute one
and the same Agreement. Any such counterpart, to the extent delivered by means of a facsimile
machine or by .pdf, .tif, .gif, .peg or similar attachment to electronic mail shall be treated in
all manner and respects as an original executed counterpart and shall be considered to have the
same binding legal effect as if it were the original signed version thereof delivered in person.



Section 9.9 Descriptive Headings. The descriptive headings of this Agreement are inserted for
convenience only and shall not constitute a part of this Agreement.



Section 9.10 No Third-Party Beneficiaries. This Agreement does not confer any rights or
remedies upon any Person or entity, other than the Parties hereto and their respective successors
and permitted assigns and the Buyer Indemnified Parties and the Seller Indemnified Parties under
ARTICLE VIII.



Section 9.11 Exhibits and Schedules. The Exhibits and Schedules to this Agreement are made a
part of this Agreement as if set forth fully herein.


 


41









 





Section 9.12 Governing Law. THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO ANY
LAW OR RULE THAT WOULD CAUSE THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF NEW YORK TO BE
APPLIED, GOVERN ALL MATTERS ARISING OUT OF OR RELATING TO THIS AGREEMENT, INCLUDING ITS VALIDITY,
INTERPRETATION, CONSTRUCTION, PERFORMANCE AND ENFORCEMENT.



Section 9.13 Forum Selection; Consent to Service of Process; Waiver of Jury Trial. Each Party
hereby irrevocably (a) submits to the exclusive jurisdiction of any state court sitting in the
County of New York, New York or any federal court sitting in the Southern District of New York in
any Action arising out of or relating to this Agreement, (b) agrees that all claims in respect of
such Action may be heard and determined only in any such court, (c) hereby waives any claim of
inconvenient forum or other challenge to venue in such court, and (d) agrees not to bring any
Action arising out of or relating to this Agreement in any other court. The Seller agrees to cause
the Seller Indemnified Parties, and the Buyer agrees to cause the Buyer Indemnified Parties, to
comply with the foregoing as though such Indemnified Party was a Party to this Agreement. Each of
the Parties further irrevocably consent to the service of process out of any of the courts listed
in this Section 9.13 by the mailing of copies by registered or certified mail, postage prepaid, to
each Party at its address set forth in Section 9.1, such service to become effective thirty (30)
days after such mailing. EACH OF THE PARTIES HEREBY IRREVOCABLY WAIVES, AND SHALL CAUSE ITS
INDEMNIFIED PARTIES TO IRREVOCABLY WAIVE, ANY AND ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION ARISING
OUT OF OR RELATING TO THIS AGREEMENT, THE ANCILLARY DOCUMENTS AND/OR THE TRANSACTIONS CONTEMPLATED
HEREBY AND THEREBY.



Section 9.14 Entire Agreement. This Agreement and the Ancillary Documents collectively
constitute the entire agreement among the Parties and supersede any prior and contemporaneous
understandings, agreements or representations by or among the Parties, written or oral, that may
have related in any way to the subject matter hereof.




Section 9.15 Confidentiality; Public Announcement.



(a) From and after the Closing, (i) each Party shall insure that all confidential information
of the other Party which the recipient Party or any of its respective officers, directors,
employees, counsel, agents, or accountants and, in the case of the Buyer, its lenders, investors,
or prospective lenders or investors, may now possess or may hereafter create or obtain shall not be
published, disclosed, or made accessible by any of them to any other Person at any time or used by
any of them in each case without the prior written consent of the other Party; (ii) the Sellers
shall not disclose any Confidential Information relating to the Purchased Assets to any Person; and
(iii) the Buyer shall not disclose any Confidential Information relating to the Excluded Assets to
any Person; provided, however, that the restrictions of this Section 9.15(a) shall
not apply: (i) as may otherwise be required by Law; (ii) as may be necessary or appropriate in
connection with the enforcement of this Agreement; (iii) to the extent such information shall have
otherwise become publicly available; or (iv) to such information that is approved for release by
prior specific written authorization of the other Party, but only to the extent of such
authorization.


 


42









 





(b) Notwithstanding the foregoing, no public announcement or other public disclosure
concerning this Agreement or the transactions contemplated by this Agreement shall be made by
either Party without the consent of the other Party, which consent shall not be unreasonably
withheld (unless disclosure is otherwise required by applicable Law or by the applicable rules of
any stock exchange or self-regulatory organization on which a Party lists securities);
provided, however, each Party may provide information concerning the transactions
contemplated by this Agreement to such Party’s professional advisors who are involved in assisting
with the transactions contemplated by this Agreement.



Section 9.16 Parent Guaranty. The Parent irrevocably guarantees each and every
representation, warranty, covenant, agreement and obligation of the Seller and the full and timely
performance of its obligations under this Agreement. This is a guarantee of payment and
performance, and not merely of collection, and the Parent acknowledges and agrees that this
guarantee is full and unconditional, and no release or extinguishments of the Seller’s obligations
or liabilities (other than in accordance with the terms of this Agreement), whether by decree in
any bankruptcy proceeding or otherwise, shall affect the continuing validity and enforceability of
this guarantee. The Parent hereby waives, for the benefit of the Buyer, (a) any right to require
the Buyer, as a condition of payment or performance by the Parent, to proceed against the Seller or
pursue any other remedies whatsoever and (b) to the fullest extent permitted by Law, any defenses
or benefits that may be derived from or afforded by Law that limit the liability of or exonerate
guarantors or sureties. The Parent understands that the Buyer is relying on this guarantee in
entering into this Agreement.



Section 9.17 Buyer Parent Guaranty. The Buyer Parent irrevocably guarantees the full and
timely performance of the Buyer’s obligations under the Note. This is a guarantee of payment and
performance, and not merely of collection, and the Buyer Parent acknowledges and agrees that this
guarantee is full and unconditional, and no release or extinguishments of the Buyer’s obligations
or liabilities (other than in accordance with the terms of the Note), whether by decree in any
bankruptcy proceeding or otherwise, shall affect the continuing validity and enforceability of this
guarantee. The Buyer Parent hereby waives, for the benefit of the Seller, (a) any right to require
the Seller, as a condition of payment or performance by the Buyer Parent, to proceed against the
Buyer or pursue any other remedies whatsoever and (b) to the fullest extent permitted by Law, any
defenses or benefits that may be derived from or afforded by Law that limit the liability of or
exonerate guarantors or sureties. The Buyer Parent understands that the Seller is relying on this
guarantee in entering into this Agreement.



[Remainder of Page Intentionally Left Blank; Signature Page Follows]



 


43









 





IN WITNESS WHEREOF, the Parties have duly executed and delivered this Agreement on the date
first written above.



	 	 	 	 	 
	 	ASSEMBLY COMPONENT SYSTEMS, INC.

 	 
	 	By:  	/s/ Thomas J. Neri 	 
	 	 	Name:  	Thomas J. Neri 	 
	 	 	Title:  	Chief Executive Officer 	 
	 
	 	For purposes of Section 9.16 only:



LAWSON PRODUCTS, INC.

 	 
	 	By:  	/s/ Thomas J. Neri 	 
	 	 	Name:  	Thomas J. Neri 	 
	 	 	Title:  	President and Chief Executive Officer 	 
	 
	 	SUPPLY TECHNOLOGIES LLC

 	 
	 	By:  	/s/ Matthew V. Crawford 	 
	 	 	Name:  	Matthew V. Crawford 	 
	 	 	Title:  	President 	 
	 
	 	For purposes of Section 9.17 only:



PARK-OHIO INDUSTRIES, INC.

 	 
	 	By:  	/s/ Matthew V. Crawford 	 
	 	 	Name:  	Matthew V. Crawford 	 
	 	 	Title:  	President 	 



[Signature Page to Asset Purchase Agreement]




 


 









 





SCHEDULE A




Specified Liabilities




ACCOUNTS PAYABLE




	 	 	 	 	 
	ACCRUED EXPENSES AND P/R WITHOLDINGS CONSISTING OF:
	 	 	 	 
	FICA TAX PAYABLE
	 	 	 	 
	WITHOLDING TAXES PAYABLE
	 	 	 	 
	STATE W/H TAXES PAYABLE
	 	 	 	 
	COUNTY WITHHELD TAXES
	 	 	 	 
	CITY WITHHELD TAXES
	 	 	 	 
	ACCD FEDERAL & STATE UNEMP TAX
	 	 	 	 
	CHILD SUPPORT
	 	 	 	 
	MISC GARNISHMENTS
	 	 	 	 
	CAPITAL LEASE OBLIGATION
	 	 	 	 
	ACCD GST PAID
	 	 	 	 
	ACCD GST COLLECTED
	 	 	 	 
	ACCD QST COLLECTED
	 	 	 	 
	MEXICO VAT PAID
	 	 	 	 
	SALES TAX PAYABLE ILLINOIS
	 	 	 	 
	SALES TAX PAYABLE INDIANA
	 	 	 	 
	SALES TAX PAYABLE KANSAS
	 	 	 	 
	SALES TAX PAYABLE LOUISIANA
	 	 	 	 
	SALES TAX PAYABLE MICHIGAN
	 	 	 	 
	SALES TAX PAYABLE MINNESOTA
	 	 	 	 
	SALES TAX PAYABLE MISSOURI
	 	 	 	 
	SALES TAX PAYABLE N. CAROLINA
	 	 	 	 
	SALES TAX PAYABLE PENNSYLVANIA
	 	 	 	 
	SALES TAX PAYABLE TENNESSEE
	 	 	 	 
	SALES TAX PAYABLE TEXAS
	 	 	 	 
	ACCRUED EXPENSES FREIGHT
	 	 	 	 
	ACCD EXPENSES — ADVERTISING
	 	 	 	 
	ACCD EXPENSES — SALES
	 	 	 	 
	SALES REBATE ELECTROMOTIVE
	 	 	 	 
	SALES REBATE ITW RAMSET
	 	 	 	 
	SALES REBATE MARLEY
	 	 	 	 
	SALES REBATE BEST ACCESS
	 	 	 	 
	SALES REBATE OPW
	 	 	 	 
	ACCRUED PURCHASE REBATES
	 	 	 	 
	ACCRUED PROPERTY TAXES
	 	 	 	 





 


 









 





	 	 	 	 	 
	ACCD PROP TAX — ARKANSAS
	 	 	 	 
	ACCD PROP TAX — ILLINOIS
	 	 	 	 
	ACCD PROP TAX — KANSAS
	 	 	 	 
	ACCD PROP TAX — KENTUCKY
	 	 	 	 
	ACCD PROP TAX — MISSOURI
	 	 	 	 
	ACCD PROP TAX — NORTH CAROLINA
	 	 	 	 
	ACCD PROP TAX — OHIO
	 	 	 	 
	ACCD PROP TAX — OKLAHOMA
	 	 	 	 
	ACCD PROP TAX — TENNESSEE
	 	 	 	 
	ACCD PROP TAX — TEXAS
	 	 	 	 
	ACCRUED SALARIES-VACATION
	 	 	 	 
	ACCRUED HOURLY PAYROLL
	 	 	 	 
	LAWSON EXECUTIVE DEFERRAL W/H
	 	 	 	 
	ACCRUED BONUS G&A
	 	 	 	 





 


 









 





EXHIBIT A




Form of Subordinated Promissory Note



 


 









 







EXECUTION VERSION




SUBORDINATED PROMISSORY NOTE




			
	 	 	 
	August 31, 2010
	 	$3,000,000.00






FOR VALUE RECEIVED, the undersigned, Supply Technologies LLC, an Ohio limited liability
company (the “Maker”), hereby promises to pay to the order of Lawson Products, Inc., a
Delaware corporation (the “Payee”), the principal amount of Three Million and No/100
Dollars ($3,000,000.00), together with interest thereon calculated from the date hereof, in
accordance with the provisions of this Subordinated Promissory Note (this “Note”).



This Note was issued pursuant to Section 3.3 of that certain Asset Purchase Agreement, dated
as of the date hereof, by and among the Maker, Park-Ohio Industries, Inc., an Ohio corporation (the
“Maker Parent”), Assembly Component Systems, Inc., an Illinois corporation, and the Payee
(as amended, modified or supplemented from time to time in accordance with its terms, the
“Purchase Agreement”). All capitalized terms used but not defined in this Note have the
meanings set forth in the Purchase Agreement.



1. Principal. The Maker shall pay to the holder of this Note (the “Holder”)
the outstanding principal amount of this Note in twelve equal quarterly installments of Two Hundred
Fifty Thousand and No/100 Dollars ($250,000.00) each, with such quarterly payments to be made on
the following dates: November 30, 2010; February 28, 2011; May 31, 2011; August 31, 2011; November
30, 2011; February 29, 2012; May 31, 2012; August 31, 2012; November 30, 2012; February 28, 2013;
May 31, 2013; and August 31, 2013, or if any such date is not a Business Day, then on the next
immediately succeeding Business Day following such date.



2. Interest. The unpaid principal amount of this Note shall accrue interest from and
after the date hereof on a daily basis at the rate of 8.00% per annum; provided that upon
the occurrence and during the continuance of an Event of Default (as defined below), interest
shall, at the written election of the Payee, accrue at the rate of 10.80% per annum. The Maker
shall pay to the Holder all accrued interest on the outstanding principal amount of this Note on
each quarterly payment date set forth in Section 1. Interest on this Note and the amounts payable
hereunder shall be computed on the basis of a 365-day, or, if appropriate, 366-day year and the
actual number of days elapsed (including the first and excluding the last day of the period).



Unless prohibited under applicable Law, any accrued interest which is not paid on the date on
which it is due and payable shall bear interest at the same rate at which interest is then accruing
on the outstanding principal amount of this Note. Any accrued interest which for any reason has
not theretofore been paid shall be paid in full on the date on which the final principal payment on
this Note is paid.



The rate of interest payable hereunder shall in no event exceed the maximum rate permissible
under applicable Law. If the rate of interest payable hereunder is ever reduced as a result of
this paragraph and at any time thereafter the maximum rate permitted by applicable Law shall exceed
the rate of interest provided for in this Note, then the rate provided for in this Note


 


 









 






shall be increased to the maximum rate provided by applicable Law for such period as is
required so that the total amount of interest received by the Holder is that which would have been
received by the Holder but for the operation of the first sentence of this paragraph.



3. Mandatory Prepayment. Upon the occurrence of any sale, conveyance, assignment or
other transfer of all or substantially all of the assets of the Maker or the Maker Parent or any
“Change in Control” of the Maker or the Maker Parent, the Maker shall pay to the Holder the
outstanding principal amount of this Note and all accrued but unpaid interest. For purposes of
this Section 3, “Change in Control” shall have the meaning set forth in the Credit Agreement (as
defined below).



4. Optional Prepayment. At any time and from time to time, the Maker may, at its
option, prepay, without premium or penalty, all or any portion of the outstanding principal amount
of this Note, together with all of the accrued and unpaid interest on the principal amount being
prepaid.




5. Deemed Prepayments.



(a) Pursuant to Section 3.4(e) of the Purchase Agreement, if the Closing Date Net Working
Capital as stated on the Final Statement is less than $21,800,000, then an amount equal to the
excess of $21,800,000 over such Closing Date Net Working Capital shall be applied as an offset
against, and shall be deemed to be a prepayment of, the outstanding principal amount of this Note.



(b) Pursuant to Section 8.5(c) of the Purchase Agreement, if the Maker elects to offset the
amount of any indemnifiable Losses under the Purchase Agreement against the outstanding principal
amount of this Note, the amount of such offset shall be deemed to be a prepayment of the
outstanding principal amount of this Note.



6. Application of Prepayments. All prepayments (or deemed prepayments) of principal
by the Maker under this Note shall reduce the then outstanding principal amount of this Note and
shall be applied against the outstanding principal payments contemplated by Section 1 in the
reverse order in which such payments would otherwise be required to be made by the Maker.



7. Subordination. Each of the Maker and the Payee agrees, for itself and each future
Holder, that the payment of this Note is and shall be subordinate and junior to any indebtedness
for borrowed money of the Maker pursuant to that certain Third Amended and Restated Credit
Agreement, dated as of March 8, 2010, by and among the Maker, RB&W Corporation of Canada, the Ex-Im
Borrowers party thereto, the other loan parties thereto, the lenders party thereto and JP Morgan
Chase Bank, N.A., as administrative agent (the “Agent”), JP Morgan Chase Bank, N.A. Toronto
Branch, as Canadian agent, RBS Business Capital, as syndication agent, KeyBank National
Association, as co-documentation agent, JP Morgan Securities Inc., as sole lead arranger, PNC Bank,
National Association, as joint bookrunner and U.S. Bank National Association, as co-documentation
agent and joint bookrunner (the “Credit Agreement”). Until payment in full of the
obligations and termination of commitments under the Credit Agreement, unless otherwise agreed to
by the Agent, the Maker agrees not to pay, any


 


2









 






amounts due and payable hereunder other than scheduled payments and mandatory and deemed
prepayments of principal and interest. Notwithstanding anything contained herein to the contrary,
no payments of any amounts due and payable hereunder shall be made if, at the time of the making of
such payment, an Event of Default (as defined in the Credit Agreement) has occurred and is
continuing or would result therefrom. Holder shall promptly turn over any payment received in
violation of this Section 7 to the Agent for application to the indebtedness under the Credit
Agreement and related documents as from time to time in effect. Until payment in full of the
obligations and termination of commitments under the Credit Agreement, Holder agrees not to, during
any period during which it is not permitted to receive any amounts due and payable hereunder
pursuant to this Section 7, (i) accelerate any such payment or commence any action or proceeding
against Maker or Maker Parent to enforce payment of all or any portion of such amount due and
payable or (ii) make any demand for any payment of any amounts due and payable hereunder, or
attempt to receive, collect or retain the same, whether by collection, setoff, foreclosure,
counterclaim or otherwise. No provision of this Note may be amended or otherwise modified without
the prior written consent of the Agent.




8. Events of Default.



(a) Definition. For purposes of this Note, an “Event of Default” shall be
deemed to have occurred if:




(i) the Maker fails to pay when due, or when declared or deemed due, (A) all or any
portion of the principal amount of this Note or (B) all or any portion of the accrued
interest or any other amount payable under this Note, and such failure shall continue for a
period of five (5) Business Days unless at such time such payment was not permitted under
the subordination terms hereof;




(ii) the Maker fails to perform in any material respect or defaults in the performance
of any material covenant, condition or agreement contained in this Note and, if capable of
being cured, such failure to perform in all material respects or default in performance
continues for a period of five (5) Business Days after the Maker receives written notice of
such failure to perform or default in performance;




(iii) any representation or warranty of the Maker made in this Note or in any other
writing or certificate furnished by or on behalf of the Maker to the Payee for the purposes
of or in connection with this Note is or shall be incorrect when made in any material
respect;




(iv) (A) the Maker, the Maker Parent or any of their respective Subsidiaries shall
commence any case, proceeding or other action (1) under any existing or future Law of any
jurisdiction, domestic or foreign, relating to bankruptcy, insolvency, reorganization or
relief of debtors, seeking to have an order for relief entered with respect to it, or
seeking to adjudicate it a bankrupt or insolvent, or seeking reorganization, arrangement,
adjustment, winding up, liquidation, dissolution, composition or other relief with respect
to it or its debts, or (2) seeking appointment of a receiver, trustee, custodian,
conservator or other similar official for it or for all or any substantial part of its
assets, or the Maker, the Maker Parent or any of their respective Subsidiaries shall make a
general


 


3









 






assignment for the benefit of its creditors; or (B) there shall be commenced against
the Maker, the Maker Parent or any of their respective Subsidiaries any case, proceeding or
other action of a nature referred to in clause (A) above which (1) results in the entry of
an order for relief or any such adjudication or appointment or (2) remains undismissed,
undischarged or unbonded for a period of sixty (60) days; or (C) there shall be commenced
against the Maker, the Maker Parent or any of their respective Subsidiaries any case,
proceeding or other action seeking issuance of a warrant of attachment, execution, distraint
or similar process against all or any substantial part of its assets which results in the
entry of an order for any such relief which shall not have been vacated, discharged, stayed
or bonded pending appeal within sixty (60) days from the entry thereof; or (D) the Maker,
the Maker Parent or any of their respective Subsidiaries shall take any action in
furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the
acts set forth in clause (A), (B), or (C) above; or (E) the Maker, the Maker Parent or any
of their respective Subsidiaries shall generally not, or shall be unable to, or shall admit
in writing its inability to, pay its debts as they become due; or




(v) the Maker, the Maker Parent or any of their respective Subsidiaries fails to make
payment on the due date (whether by scheduled maturity, required repayment, acceleration,
demand or otherwise), after giving effect to applicable grace periods (if any), of any
amount payable under the Credit Agreement; or




(vi) one or more orders, judgments and/or decrees shall be entered against the Maker,
the Maker Parent and/or any of their respective Subsidiaries for the payment of money in an
aggregate amount (as to all such orders, judgments and decrees) exceeding $5,000,000 (to the
extent not covered by insurance as to which the insurer has been notified of the potential
claim and does not dispute coverage), and all such orders, judgments or decrees shall not
have been paid and satisfied, vacated, discharged, stayed or bonded pending appeal within
sixty (60) days from the entry thereof.



The foregoing shall constitute Events of Default whatever the reason or cause for any such
Event of Default and whether it is voluntary or involuntary or is effected by operation of law or
pursuant to any judgment, decree or order of any court or any order, rule or regulation of any
administrative or governmental body.



(b) Consequences of Events of Default. If any Event of Default shall occur and be
continuing, then the entire principal balance and all accrued interest under this Note shall, at
the option of the Holder and upon written notice to the Maker by the Holder (except in the case of
any Event of Default under Section (iv) above, in which event acceleration shall be automatic),
become immediately due and payable. Each right, power or remedy of the Holder upon the occurrence
of any Event of Default as provided for in this Note or now or hereafter existing at law or in
equity or by statute shall be cumulative and concurrent and shall be in addition to every other
right, power or remedy provided for in this Note or now or hereafter existing at law or in equity
or by statute, and the exercise or beginning of the exercise by the Holder of any one or more of
such rights, powers or remedies shall not preclude the simultaneous or later exercise by the Holder
of any or all such other rights, powers or remedies.


 


4









 





9. Representations of the Maker. The Maker hereby represents and warrants to the
Payee as follows:



(a) The Maker is duly organized, validly existing and in good standing under the Laws of the
State of Ohio. The Maker has all requisite limited liability company power and authority to carry
on its business as currently conducted and as proposed to be conducted after the closing of the
transactions contemplated by the Purchase Agreement.



(b) The Maker has all requisite limited liability company power and authority to execute and
deliver this Note. This Note constitutes the valid and legally binding obligation of the Maker,
enforceable in accordance with its terms and conditions, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and similar Laws
of general applicability relating to or affecting creditors’ rights or by general equity
principles, including principles of commercial reasonableness, good faith and fair dealing.



(c) The execution and delivery by the Maker of this Note do not: (i) violate any Law to which
the Maker is subject; (ii) conflict with or result in a breach of any provision of the
organizational documents of the Maker; or (iii) create a breach, default, termination, cancellation
or acceleration of any obligation under any contract to which the Maker is a party or by which the
Maker or any of its assets or properties are bound or subject.



(d) No notices, permits, consents, approvals, authorizations, qualifications or orders of
Governmental Entities are required for the execution and delivery of this Note by the Maker.




(e) No Event of Default (as defined in the Credit Agreement) has occurred and is continuing.



10. Offset. Except for any deemed prepayments of the outstanding principal amount of
this Note pursuant to Section 3.4(e) or Section 8.5(c) of the Purchase Agreement, the Maker may not
offset the amounts owed by it under this Note against any amounts payable by the Payee or any
future Holder to the Maker.



11. Cancellation. After all principal and interest owed on this Note have been paid
in full, this Note shall be surrendered to the Maker for cancellation and shall not be reissued.



12. Payments. All payments to be made to the Holder shall be made in the lawful money
of the United States of America in immediately available funds.



13. Place of Payment. Payment of principal and interest shall be made to the Holder
to a bank account designated by the Holder to the Maker in writing.



14. Amendment and Waiver. This Note may be amended only by a written instrument
executed and delivered by the Maker and the Holder. No agreement extending or waiving any
provision of this Note shall be valid or binding unless it is in writing and is executed and
delivered by or on behalf of the party against which it is sought to be enforced.


 


5









 





15. Governing Law. THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO ANY
LAW OR RULE THAT WOULD CAUSE THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF NEW YORK TO BE
APPLIED, GOVERN ALL MATTERS ARISING OUT OF OR RELATING TO THIS NOTE, INCLUDING ITS VALIDITY,
INTERPRETATION, CONSTRUCTION, PERFORMANCE AND ENFORCEMENT.



16. Forum Selection; Consent to Service of Process; Waiver of Jury Trial. The Maker
hereby irrevocably (a) submits to the exclusive jurisdiction of any state court sitting in the
County of New York, New York or any federal court sitting in the Southern District of New York in
any Action arising out of or relating to this Agreement, (b) agrees that all claims in respect of
such Action may be heard and determined only in any such court, (c) hereby waives any claim of
inconvenient forum or other challenge to venue in such court, and (d) agrees not to bring any
Action arising out of or relating to this Note in any other court. The Maker further irrevocably
consents to the service of process out of any of the courts listed in this Section 16 by the
mailing of copies by registered or certified mail, postage prepaid, to the Maker at its address set
forth in Section 18, such service to become effective thirty (30) days after such mailing. THE
MAKER HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION ARISING OUT OF OR
RELATING TO THIS NOTE.



17. Expenses. The Maker agrees to pay on demand all reasonable documented
out-of-pocket costs, fees and expenses (including, without limitation, all reasonable documented
out-of-pocket costs, fees and expenses of outside legal counsel) incurred by the Holder in
connection with the collection of the obligations owing by the Maker under this Note or during any
workout, restructuring or negotiations in respect thereof.



18. Notices. Any notice, request, instruction or other document to be given hereunder
shall be sent in writing and delivered personally, sent by reputable, overnight courier service
(charges prepaid), sent by registered or certified mail, postage prepaid, or by facsimile,
according to the instructions set forth below. Such notices shall be deemed given: at the time
delivered by hand, if personally delivered; one Business Day after being sent, if sent by
reputable, overnight courier service; at the time received, if sent by registered or certified
mail; and at the time when confirmation of successful transmission is received by the sending
facsimile machine, if sent by facsimile.



If to the Payee:




Lawson Products, Inc.

1666 E. Touhy Avenue

Des Plaines, IL 60018

Attention: Neil E. Jenkins

Facsimile No.: (847) 795-9030


 


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




Jenner & Block LLP

353 North Clark Street

Chicago, IL 60654

Attention: Michael T. Wolf

Facsimile No.: (312) 840-7530



If to the Maker:




Supply Technologies LLC

c/o Park Ohio Industries, Inc.

6065 Parkland Blvd.

Cleveland, Ohio 44124

Attention: Robert D. Vilsack

Facsimile No.: (440) 947-2209



or to such other address or to the attention of such other party that the recipient party has
specified by prior written notice to the sending party in accordance with the preceding.



19. Waivers. The Maker hereby waives diligence, presentment, protest and demand and
notice of protest and demand, dishonor and nonpayment of this Note, and expressly agrees that this
Note, or any payment hereunder, may be extended from time to time and that the Payee may accept
security for this Note or release security for this Note, all without in any way affecting the
liability of the Maker hereunder.



20. Severability. Whenever possible, each provision of this Note shall be interpreted
in such manner as to be effective and valid under Law, but if any provision of this Note is held to
be prohibited by or invalid under Law, such provision shall be ineffective only to the extent of
such prohibition or invalidity, without invalidating the remainder of this Note.



21. Descriptive Headings. The descriptive headings of this Agreement are inserted for
convenience only and shall not constitute a part of this Agreement.



22. Assignment. The Payee shall not assign this Note without the prior written
consent of the Maker and the Maker shall not assign this Note without the prior written consent of
the Payee.



23. Entire Agreement. This Note and the Purchase Agreement together embody the entire
agreement and understanding among the Maker and the Payee and supersede and preempt any prior
understandings, agreements or representations by or among them, written or oral, which may have
related to the subject matter hereof.



[Remainder of Page Intentionally Left Blank; Signature Page Follows]



 


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IN WITNESS WHEREOF, the Maker has executed and delivered this Note on the date first above
written.



	 	 	 	 	 
	 	SUPPLY TECHNOLOGIES LLC

 	 
	 	By:  	/s/ Matthew V. Crawford 	 
	 	 	Name:  	Matthew V. Crawford 	 
	 	 	Title:  	President 	 
	 



[Signature Page to Subordinated Promissory Note]




 


 









 





EXHIBIT B




Form of Transition Services Agreement



 


 









 





EXECUTION VERSION




TRANSITION SERVICES AGREEMENT




This TRANSITION SERVICES AGREEMENT (this “Agreement”), dated as of August 31, 2010
(the “Effective Date”), is made by and between Lawson Products, Inc., a Delaware
corporation (“Parent”), and Supply Technologies LLC, an Ohio limited liability company
(“Buyer”).



WHEREAS, pursuant to that certain Asset Purchase Agreement, dated as of the date hereof (as
such agreement may be amended, modified or supplemented in accordance with its terms, the
“Purchase Agreement”), by and among Buyer, Parent, Assembly Component Systems, Inc., an
Illinois corporation, and Park-Ohio Industries, Inc., an Ohio corporation, Buyer is, among other
things, acquiring the Purchased Assets and assuming the Assumed Liabilities on the terms and
subject to the conditions set forth in the Purchase Agreement; and



WHEREAS, Buyer requires certain transition services from Parent and its Subsidiaries and
Parent is willing to provide such transition services on the terms and subject to the conditions
contained herein.



NOW, THEREFORE, in consideration of the foregoing and the mutual agreements contained in this
Agreement, and for other good and valuable consideration, the value, receipt and sufficiency of
which are acknowledged, the Parties hereby agree as follows:



ARTICLE 1

INTERPRETATION; DEFINITIONS




Section 1.1 Definitions. All capitalized terms used but not defined in this Agreement shall
have the respective meanings set forth in the Purchase Agreement. As used in this Agreement, the
following terms have the meanings set forth below or in the sections set forth below:



“Additional Services” has the meaning set forth in Section 2.5.



“Agreement” has the meaning set forth in the Preamble to this Agreement.



“Buyer” has the meaning set forth in the Preamble to this Agreement.



“Buyer Services Manager” has the meaning set forth in Section 2.14(a).



“Disputed Amount” has the meaning set forth in Section 2.9.



“Effective Date” has the meaning set forth in the Preamble to this Agreement.



“Force Majeure Event” has the meaning set forth in Section 2.7.



“Neutral Arbitrator” has the meaning set forth in Section 2.9.



“Parent” has the meaning set forth in the Preamble to this Agreement.



“Parent Services Manager” has the meaning set forth in Section 2.14(b).


 


 









 





“Parties” means Parent and Buyer together, and “Party” shall mean Parent or
Buyer, individually, as the case may be.



“Personally Identifiable Information” means any single element, or combination of
elements, of non-public information related to an individual where that information either directly
or indirectly identifies that individual.



“Prime Rate” means the rate of interest per annum publicly announced from time to time
by JPMorgan Chase Bank, N.A. as its prime rate in effect at its office located at 270 Park Avenue,
New York, New York; each change in the Prime Rate shall be effective from and including the date
such change is publicly announced as being effective.



“Privacy Policy” means, with respect to any Person, any written privacy policy,
statement, rule or notice regarding the collection, use, access, safeguarding and retention of
Personally Identifiable Information of any individual, including a customer, potential customer,
employee or former employee of such Person.



“Purchase Agreement” has the meaning set forth in the Recitals to this Agreement.



“Schedules” means Schedule A and Schedule B, collectively.



“Security Regulations” has the meaning set forth in Section 2.16(a).



“Service Providers” has the meaning set forth in Section 2.1(a).



“Services Licensee” has the meaning set forth in Section 2.15(a).



“Systems” has the meaning set forth in Section 2.16(a).



“Termination Date” has the meaning set forth in Section 4.1.



“Third Party Service Provider” means any Unaffiliated Third Party that a Service
Provider has designated as a direct or indirect provider or supporter of Transition Services.



“Transition Services” has the meaning set forth in Section 2.1(a).



“Unaffiliated Third Party” means any Person other than Parent and its Affiliates.



Section 1.2 Interpretation. References to “applicable” Law or Laws with respect to a
particular Person, thing or matter shall include only such Law or Laws as to which the Governmental
Entity that enacted or promulgated such Law or Laws has jurisdiction over such Person, thing or
matter. Whenever the context requires, the singular number shall include the plural, and vice
versa, the masculine gender shall include the feminine and neuter genders, the feminine gender
shall include the masculine and neuter genders, and the neuter gender shall include masculine and
feminine genders. The words “include” and “including,” and variations thereof, shall not be deemed
to be terms of limitation, but rather shall be deemed to be followed by the words “without
limitation.” The terms “hereof,” “hereunder,” “herein” and words of similar import shall refer to
this Agreement as a whole and not to any particular provision of this


 


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Agreement. Each Party has
participated in the drafting of this Agreement, which each Party acknowledges is the result of
extensive negotiations between the Parties, and consequently this Agreement shall be interpreted
without reference to any rule or precept of Law to the effect that any ambiguity in a document be
construed against the drafter.



ARTICLE 2

TRANSITION SERVICES





Section 2.1 Provision of Transition Services.




(a) Commencing on the Effective Date, Parent and its Subsidiaries (the “Service
Providers”) shall provide, or cause a Third Party Service Provider to provide, to Buyer
or its designated Affiliates (exclusively in connection with the operation or conduct of the
Business or use of the Purchased Assets) each of the transition services and support
functions set forth on Schedule A (collectively, the “Transition Services”).




(b) Each Service Provider shall provide Transition Services in a manner that is
substantially similar to analogous services provided by such Service Provider in connection
with the Business prior to the Closing Date, including with respect to the nature, quality
and timeliness, and in accordance with any applicable specifications and limitations set
forth on Schedule A; provided that with respect to Transition Services that
a Service Provider renders for (or obtains from a Third Party Service Provider for) its own
or its Subsidiaries’ operations, a Service Provider shall not be obligated to render such
Transition Services in a manner more favorable to Buyer than the manner in which such
Transition Services are performed or obtained by such Service Provider for its own account.




(c) All procedures, methods, systems, strategies, tools, equipment, facilities and
other resources used by any Service Provider in connection with the provision of Transition
Services shall remain the property of such Service Provider and, except as otherwise
provided herein, shall at all times be under the sole direction and control of such Service
Provider.




(d) No Service Provider shall have any obligation to purchase, lease, license or renew
a lease or license applicable to any equipment or software in connection with its provision
of Transition Services.




(e) A Service Provider may also from time to time subcontract with an Unaffiliated
Third Party to directly or indirectly provide or support any other Transition Services to
Buyer only upon obtaining the prior written consent of Buyer, which consent shall not be
unreasonably withheld or delayed. Notwithstanding the foregoing, no Service Provider shall
be relieved of its obligations under this Agreement by use of such Unaffiliated Third
Parties.



Section 2.2 Modification of Transition Services. A Service Provider may make changes from
time to time in the manner of performing Transition Services as long as (a) the Service Provider
provides Buyer with ten (10) days’ advance written notice of such changes and (b) such changes do
not have an adverse impact on the nature, quality, availability or timeliness


 


3









 






of the applicable
Transition Services. In addition, the Buyer acknowledges and agrees that to the extent all or part
of any Transition Services are provided by a Third Party Service Provider, such Transition Services
will be subject to such additional changes or modifications (including increases in the costs
charged by such Third Party
Service Provider for such Transition Services), as may be required by such Third Party Service
Provider.



Section 2.3 Compliance with Law. Notwithstanding anything herein to the contrary, the Service
Providers shall not be responsible for providing any Transition Service, or part thereof, if and to
the extent such Transition Service would violate applicable Law; provided that, at the
expense of Buyer, the Parties shall cooperate to modify the applicable Transition Service so that
such Transition Service may be provided in compliance with applicable Law. No Service Provider
shall have any responsibility or liability for failure to provide any, or part of any, Transition
Service unable to be provided as contemplated by this Section 2.3.



Section 2.4 Third Party Consents and Providers. Following the Effective Date, the Service
Providers may be required to obtain third-party consents and approvals to provide certain
Transition Services. Buyer and the Service Providers shall cooperate in all respects to obtain
such consents or approvals, and each Party shall bear fifty percent (50%) of any fees and expenses
of third parties incurred in connection with obtaining such consents and approvals.



Section 2.5 Requests for Additional Services. Following the Effective Date, Buyer may request
in writing that the Service Providers provide additional transition services necessary for Buyer’s
operation of the Business. Following such written request, the Parties agree to negotiate in good
faith the provision of such additional transition services and, to the extent agreed upon by the
Parties, Schedule A shall be amended to reference such additional services (the
“Additional Services”) and such Additional Services shall be deemed to be Transition
Services under this Agreement.



Section 2.6 Shutdowns. If a Service Provider determines that it is necessary or appropriate
to temporarily suspend a Transition Service due to scheduled or emergency repairs, maintenance
and/or modification, the Service Provider shall give Buyer reasonable prior notice of such shutdown
(including information regarding the nature of the shutdown and the projected length of such
shutdown), unless it is not practical to give such prior notice because the shut down is due to an
emergency.



Section 2.7 Force Majeure; Reduction of Services. Each Service Provider (including with
respect to services performed through Third Party Service Providers) shall be excused from the
performance of its obligations under this Agreement, for any period, and to the extent that such
performance is prevented, in whole or in part, as a result of delays caused by any act of God,
public enemy, war or threats of same, terrorism or threats of same, epidemic, fire, flood,
accident, embargoes, severe weather, civil disturbance or unrest, act, order, regulation or request
of government or public authorities, court order, labor dispute, lack of or shortage of electrical
power, malfunctions of equipment or software programs or other cause beyond its reasonable control
(a “Force Majeure Event”), and such non-performance shall not be a breach or default
hereunder or grounds for termination hereof. Parent shall give notice to Buyer of any such Force
Majeure Event as soon as reasonably
practicable, and the respective Service Providers (including with respect to services
performed through Third Party Service Providers) and the Buyer will use


 


4









 






commercially reasonable
efforts to mitigate the effect of any such Force Majeure Event and its consequences on performance
hereunder.



Section 2.8 Fees for Transition Services. The fees to be charged for each Transition Service
are set forth on Schedule A and the billing, payment and other terms therefor are set forth
on Schedule B. The fees to be charged for each Transition Service may be adjusted from
time to time, upon reasonable notice to the Buyer (including appropriate documentation), but only
to the extent that there is an adjustment after the date hereof in the costs actually incurred by
Parent and/or its Subsidiaries in providing such Transition Service due to changes in the costs
charged by a Third Party Service Provider in connection with such Transition Service.



Section 2.9 Disputes. The Parties shall exercise commercially reasonable efforts to resolve
disputes in good faith as promptly as practicable. In the event that Buyer in good faith disputes
the accuracy or legitimacy of any portion (the “Disputed Amount”) of an invoice or charge,
Buyer shall pay the Disputed Amount when paying such invoice or charge pending resolution of the
dispute and will provide written notice of the amount, nature and supporting detail regarding the
Disputed Amount to Parent. Promptly following receipt of such written notice, the dispute
resolution process set forth below in this Section 2.9 shall become applicable and the Parties
shall discuss the resolution of such Disputed Amount. If a full resolution of the Disputed Amount
has not occurred within 30 days of the initial discussion described in the foregoing sentence, the
Parties shall cooperate to promptly submit for resolution such matter (or the portion remaining in
dispute) to an arbitrator mutually agreed to by the Parties (the “Neutral Arbitrator”).
The Parties shall execute, if requested by the Neutral Arbitrator, an engagement letter reasonably
satisfactory to the Neutral Arbitrator. The Parties shall direct the Neutral Arbitrator to render
a resolution of such disputed matter within 30 days after its engagement (or such other period
agreed upon by the Parties). The resolution of the Neutral Arbitrator shall be set forth in a
written statement delivered to each of the Parties and shall be final, binding, conclusive and
non-appealable for all purposes hereunder. The fees and expenses of the Neutral Arbitrator shall
be borne equally by Parent and Buyer. The Neutral Arbitrator shall determine the amount of the
Disputed Amount, if any, to be returned to Buyer, which amount shall not exceed the Disputed Amount
or be less than zero. If the Neutral Arbitrator determines that Parent is required to return to
Buyer any portion of the Disputed Amount, then the Neutral Arbitrator shall award to Buyer (i) the
portion of the Disputed Amount determined by the Neutral Arbitrator to be returned to Buyer and
(ii) interest, from the date the invoice giving rise to the dispute was paid in full by Buyer, at
the Prime Rate on the portion of the Disputed Amount to which Buyer is entitled. Any amount
awarded by the Neutral Arbitrator shall be paid by wire transfer of immediately available funds to
the account or accounts designated in writing by the recipient within five Business Days after the
date on which the resolution of the Neutral Arbitrator is delivered to the Parties. Each Service
Provider will continue performing Transition Services in accordance with this Agreement pending
resolution of any dispute hereunder.


 


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Section 2.10 Personnel.




(a) Designation of Personnel. Subject to Section 2.1(b), a Service Provider shall have
the right, in its sole and absolute discretion, to designate which personnel shall be
assigned to perform the Transition Services, and shall have the right, in its sole and
absolute discretion, to remove and replace any such personnel at any time and/or designate a
Third Party Service Provider in accordance with the terms hereof, to perform such Transition
Service.




(b) Employees. Subject to Section 2.1(b), nothing in this Agreement shall obligate the
Service Providers to hire any additional employees or provide any incentives to employees in
addition to those in effect immediately prior to the Effective Date or to retain the
employment of any particular employee or retain the services of any particular consultant,
contractor or agent; provided, however, that in the event that a Service
Provider loses employees or independent contractors that it needs to provide the Transition
Services, then such Service Provider shall (and, if applicable, shall cause the other
Service Providers to) replace such employees or independent contractors to the extent
necessary to continue to provide the applicable Transition Services.



Section 2.11 Status of Service Providers. In all matters relating to this Agreement, each
Service Provider shall be acting as an independent contractor and not as an agent, representative
or joint venture partner of Buyer. The Service Providers shall not be liable for any debts,
obligations or liabilities of Buyer.



Section 2.12 Protective Acknowledgements. Buyer acknowledges that the Service Providers are
not insurers or guarantors of the Transition Services, are not in the business of providing
Transition Services and are providing the Transition Services only as an accommodation to Buyer.



Section 2.13 Buyer Obligations. Buyer shall cooperate with the Service Providers and Third
Party Service Providers with respect to the provision of Transition Services. Without limiting the
foregoing, Buyer shall: (a) adhere in all material respects to the policies of the Service
Providers or Third Party Service Providers with respect to the protection of proprietary
information, to the extent relevant to the Transition Services provided; (b) provide reasonably
timely responses to any information requested by the Service Providers or the Third Party Service
Providers, to the extent relevant to the Transition Services provided; and (c) provide access to
the facilities and assets of Buyer to the applicable Service Provider or Third Party Service
Provider, to the extent such access is required for the provision of Transition Services by such
Service Provider or Third Party Service Provider. The Service Providers and the Third Party
Service Providers shall be entitled to rely on any instructions or other information provided by
the Buyer; provided that no such instructions shall expand the obligations of the Service
Providers hereunder. The Service Providers shall be excused from their obligation to perform or
cause to be performed a Transition Service if and to the extent that (i) such failure to perform or
cause to be performed such Transition Service was due to the Buyer’s failure to perform its
responsibilities under this
Section 2.13 and (ii) the Service Providers use commercially reasonable efforts to perform or
cause to be performed such Transition Service notwithstanding the Buyer’s failure, if practicable.


 


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Section 2.14 Transition Service Managers. The Buyer Services Manager and the Parent Services
Manager (each as defined below) shall liaise with each other, and seek to resolve in good faith all
issues related to the scope, sufficiency and/or performance of Transition Services and any other
issues arising in connection with this Agreement. The Parent Services Manager and the Buyer
Services Manager shall meet periodically (in person or by telephone), as reasonable, for purposes
of establishing procedures, reviewing performance and forecasting needs.




(a) Buyer shall appoint an individual, by giving written notice thereof to Parent
within three Business Days following the date hereof, to act as its initial services manager
(the “Buyer Services Manager”), who will be directly responsible for, among other
things, coordinating and managing the receipt of the Transition Services. Buyer shall
promptly notify Parent of the appointment of a new Buyer Services Manager.




(b) Parent shall appoint an individual, by giving written notice thereof to Buyer
within three Business Days following the date hereof, to act as its initial services manager
(the “Parent Services Manager”), who will be directly responsible for, among other
things, coordinating and managing the delivery of the Transition Services. The Parent
Services Manager will work with the personnel of Parent, as well as with any Third Party
Service Providers providing Transition Services, to address issues and matters raised by the
Buyer Services Manager relating to this Agreement. Parent shall promptly notify Buyer of
the appointment of a new Parent Services Manager.




Section 2.15 Ownership of Intellectual Property.




(a) Except as otherwise expressly provided in the Purchase Agreement, this Agreement or
in any other Ancillary Document, Parent, Buyer, any Third Party Service Provider and the
respective Affiliates of each such entity shall retain all right, title and interest in and
to their respective Intellectual Property and any and all improvements, modifications and
derivative works thereof. No license or right, express or implied, is granted under this
Agreement by Parent, Buyer, any Third Party Service Provider or the respective Affiliates of
each such entity in or to their respective Intellectual Property, except that, solely to the
extent required for the provision or receipt of the Transition Services in accordance with
this Agreement, each of Parent and Buyer, for itself and on behalf of its respective
Affiliates, hereby grants to the other Party (and the respective Affiliates thereof) a
non-exclusive, revocable license during the term of this Agreement to such Intellectual
Property rights that are provided by the granting Party to the other Party (“Services
Licensee”) in connection with this Agreement, but only to the extent and for the
duration necessary for the Services Licensee to provide or receive the applicable Transition
Service as permitted by this Agreement. The foregoing license shall terminate immediately
upon the expiration of the applicable Transition Service and is subject to any licenses
granted by others with respect to Intellectual Property rights not owned by Parent, Buyer or
the respective Affiliates of such entity.




(b) Subject to the limited license granted in Section 2.15(a), in the event that any
Intellectual Property rights are created solely by a Service Provider in the performance of
the Transition Services, all right, title and interest throughout the world in


 


7









 






and to all
such Intellectual Property rights shall vest solely in such Service Provider unconditionally
and immediately upon such Intellectual Property rights having been developed, written or
produced, unless the Parties agree otherwise in writing.




(c) Except as otherwise expressly provided in the Purchase Agreement, this Agreement or
in any other Ancillary Document, no Party (nor any of its Affiliates) shall have any rights
or licenses with respect to any Intellectual Property (including software), hardware or
facility of the other Party or any Third Party Service Provider. All rights and licenses
not expressly granted in the Purchase Agreement, this Agreement or in any other Ancillary
Document are expressly reserved by the relevant Party. Each Party shall from time to time
execute any documents and take any other actions reasonably requested by the other Party to
effectuate the intent of this Section 2.15.




Section 2.16 Systems Security.




(a) If either Party or its personnel will be given access to any of the other Party’s
computer systems or software (“Systems”) in connection with the performance of the
Transition Services, the accessing Party or its personnel, as the case may be, shall comply
with all of such other Party’s system security policies, procedures and requirements (as
amended from time to time, the “Security Regulations”), and shall not tamper with,
compromise or circumvent any security or audit measures employed by such other Party.




(b) Each Party shall use commercially reasonable efforts to ensure that only those of
its personnel who are specifically authorized to have access to the Systems of the other
Party gain such access, and to prevent unauthorized access, use, destruction, alteration or
loss of information contained therein, including notifying its personnel regarding the
restrictions set forth in this Agreement and establishing appropriate policies designed to
effectively enforce such restrictions.




(c) If, at any time, either Party determines that the other Party or its personnel has
sought to circumvent, or has circumvented, its Security Regulations, that any unauthorized
personnel of the other Party has accessed its Systems or that the other Party or any of its
personnel has engaged in activities that may lead to the unauthorized access, use,
destruction, alteration or loss of data, information or software, such Party shall
immediately terminate any such personnel’s access to the Systems and immediately notify the
other Party.




(d) Each Party and its personnel shall access and use only those Systems, and only such
data and information with such Systems, to which it has been granted the right to access and
use. Any Party shall have the right to deny the personnel of the other Party access to such
Party’s Systems, after prior written notice, in the event such Party reasonably believes
that such personnel pose a security concern.



Section 2.17 Books and Records. Except as may be prohibited by applicable Law or by the terms
of any Contract (including any confidentiality agreement), duly authorized representatives of (a)
Buyer shall, upon reasonable written notice to Parent, have reasonable


 


8









 






access during normal
business hours to examine, inspect and copy the books and records held by Parent (as of immediately
after the Effective Date) relating to the Transition Services to the extent such access is
reasonably required in connection with Buyer’s financial, accounting or tax reporting purposes, and
(b) Parent shall, upon reasonable written notice to Buyer, have reasonable access during normal
business hours to examine, inspect and copy the books and records held by Buyer (as of immediately
after the Effective Date) relating to the Transition Services to the extent such access is
reasonably required in connection with Parent’s financial, accounting or tax reporting purposes;
provided that, in the case of clauses (a) and (b) above, no such access will be provided to
the extent that disclosing any such information would reasonably be expected to constitute a waiver
of attorney client, work product or other legal privilege with respect thereto. The access
provided pursuant to this Section 2.17 shall be subject to such additional confidentiality
provisions as the disclosing Party may reasonably deem necessary.



ARTICLE 3

CONFIDENTIALITY; PRIVACY




Section 3.1 Confidentiality. All information shared in the course of providing or receiving
Transition Services, including information related to employees, customers or suppliers, will be
considered Confidential Information and will be subject to the confidentiality provisions set forth
in Section 9.15 of the Purchase Agreement; provided that, notwithstanding the term set
forth in Section 9.15 of the Purchase Agreement, the term of the confidentiality obligation with
respect to the Confidential Information covered by virtue of this Section 3.1 shall extend until
the second anniversary of the Termination Date. Notwithstanding the foregoing, a Service Provider
may disclose such Confidential Information to its Subsidiaries, Third Party Service Providers and
its and their respective employees and to Unaffiliated Third Parties subcontracted by the Service
Provider under Section 2.1(e) on a confidential basis to the extent necessary for the provision of
the Transition Services; provided that the Service Provider shall impose upon any such
Person to whom it discloses such Confidential Information the same secrecy and confidentiality
obligations as imposed upon each Party under this Agreement or the Purchase Agreement.



Section 3.2 Privacy. Notwithstanding anything herein to the contrary, with respect to
Personally Identifiable Information owned or controlled by the Parties and shared under this
Agreement, the Parties shall at all times comply with the Privacy Policies of the Party that owns
or controls such information, including with respect to using, accessing, storing, handling,
processing, transmitting and disposing of such information. Furthermore, with respect to
Personally Identifiable Information owned or controlled by the Parties and shared under this
Agreement, written notice shall be provided to the Party that owns or controls such information,
as soon as reasonably practicable after any Party (other than the Party that owns or controls such
information) becomes aware of (a) any breach or potential breach of the applicable Privacy Policies
of the Party that owns or controls such information, or (b) any incident where such information may
have been accessed by or disclosed to an unauthorized Person.



Section 3.3 Survival. The provisions of this Article 3 shall survive any expiration or
termination of this Agreement. Each Party shall use commercially reasonable efforts not to, and
shall cause its Subsidiaries, successors and permitted assigns to use commercially reasonable


 


9









 






efforts not to, attempt at any time to access any data, information or system of the other Party
except as required to provide or receive Transition Services, as the case may be.



ARTICLE 4

TERM AND TERMINATION




Section 4.1 Term and Final Termination. This Agreement shall commence on the Effective Date and continue until the date upon which
all Transition Services have (a) terminated in accordance with Schedule A or (b) been
earlier terminated pursuant to Sections 4.2 or 4.3 (the “Termination Date”).



Section 4.2 Early Termination by Mutual Consent. Notwithstanding anything to the contrary
contained in this Agreement, the Parties may terminate this Agreement or any Transition Service by
mutual agreement at any time. Notwithstanding anything in this Agreement to the contrary, Buyer
shall have no right to unilaterally reinstitute the Transition Services after the Transition
Services have been terminated.



Section 4.3 Early Termination by Non-Defaulting Party. Either Party may terminate this
Agreement upon 30 days prior written notice to the other Party, if such other Party is in breach of
its obligations hereunder and such Party fails to cure such breach within such 30 day period.
Other than as provided in Section 4.2 and 4.3, this Agreement may not be terminated by either Party
under any circumstances.



Section 4.4 Effect of Termination. If this Agreement is terminated in its entirety pursuant
to Section 4.1, 4.2 or 4.3, all obligations of the Parties under this Agreement shall terminate,
except for (a) Articles 3, 5, 6 and 7, the terms and conditions of which shall survive any
termination or expiration of this Agreement, and (b) the obligation of Buyer to pay all unpaid
amounts in respect of Transition Services provided under this Agreement prior to the Termination
Date, whether or not invoiced prior to such date.



ARTICLE 5

REMEDIES




Section 5.1 Cure. In the event a Service Provider fails to perform any Transition Service
required to be performed under this Agreement, Buyer shall provide notice thereof to Parent and the
applicable Service Provider shall use commercially reasonable efforts to cure such failure,
including by performing or re-performing such Transition Service. If, and to the extent, the
Service Provider fails to cure such failure within fifteen (15) days of receiving such notice,
Buyer shall be entitled to and may seek indemnification pursuant to Section 5.2 for any Losses
arising from the failure of any Service Provider to provide Transition Services required to be
performed under this Agreement.



Section 5.2 Indemnification. Subject to Article 6 and the other limitations set forth in this
Agreement, Parent shall indemnify, defend and hold harmless the Buyer Indemnified Parties from,
against and in respect of any and all Losses incurred by any Buyer Indemnified Parties as a result
of the material breach of this Agreement by any Service Provider in connection with the performance
of the Transition Services; provided that Parent shall not be responsible for any Losses
suffered by any Buyer Indemnified Party that have resulted from a breach by such


 


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Buyer Indemnified
Party of this Agreement or from the gross negligence, recklessness or willful misconduct of such
Buyer Indemnified Party in connection with any Transition Services. The obligations of Parent
contained in this Section 5.2 shall survive for a period of two (2) years after the Termination
Date. Notwithstanding the preceding sentence, any breach of covenant or agreement in respect of
which indemnity may be sought under this Section 5.2 shall survive the time at which it would
otherwise terminate pursuant to the preceding sentence, if notice of such breach shall have been
given by the Buyer Indemnified Party seeking indemnification prior to the expiration of the
survival period.



Section 5.3 Exclusivity of Remedy. Notwithstanding anything to the contrary herein, the right
to performance or re-performance set forth in Section 5.1 and/or indemnification set forth in
Section 5.2 shall be the sole and exclusive remedies of the Buyer Indemnified Parties with respect
to any breach of this Agreement or any Losses otherwise arising out of or relating to the
Transition Services, except for any sustained by any Buyer Indemnified Party as a result of the
fraud or intentional misconduct of any Service Provider. In no event shall such remedies be deemed
to have failed of their essential purpose.



ARTICLE 6

LIMITATION OF LIABILITY; EXCLUSION OF CONSEQUENTIAL DAMAGES




Section 6.1 LIMITATION OF LIABILITY. IN NO EVENT SHALL THE AGGREGATE LIABILITY OF THE SERVICE
PROVIDERS UNDER ANY LEGAL THEORY ARISING FROM OR IN CONNECTION WITH ANY TRANSITION SERVICE EXCEED
THE AGGREGATE AMOUNT OF FEES PREVIOUSLY RECEIVED BY PARENT UNDER THIS AGREEMENT FOR SUCH SERVICE.



Section 6.2 EXCLUSION OF CONSEQUENTIAL DAMAGES. NOTWITHSTANDING ANYTHING HEREIN TO THE
CONTRARY, IN NO EVENT SHALL ANY SERVICE PROVIDER BE LIABLE FOR ANY INCIDENTAL, SPECIAL, PUNITIVE OR
CONSEQUENTIAL DAMAGES OR LOSSES OF ANY KIND ARISING UNDER OR IN CONNECTION WITH THIS AGREEMENT,
REGARDLESS OF LEGAL THEORY, INCLUDING ANY SUCH DAMAGES OR LOSSES RESULTING FROM BUSINESS
INTERRUPTION OR LOST PROFITS, AND REGARDLESS OF WHETHER ANY SUCH DAMAGES ARE FORESEEABLE OR WHETHER
AN INDEMNIFIED PERSON HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH LOSSES.



ARTICLE 7

MISCELLANEOUS




Section 7.1 Notices. Any notice, request, instruction or other document to be given hereunder
shall be sent in writing and delivered personally, sent by reputable, overnight courier service
(charges prepaid), sent by registered or certified mail, postage prepaid, or by facsimile,
according to the
instructions set forth below. Such notices shall be deemed given: at the time delivered by
hand, if personally delivered; one Business Day after being sent, if sent by reputable, overnight
courier service; at the time received, if sent by registered or certified mail; and at the time
when confirmation of successful transmission is received by the sending facsimile machine, if sent
by facsimile.


 


11









 





If to Parent:




Lawson Products, Inc.

1666 E. Touhy Avenue

Des Plaines, IL 60018

Attention: Neil E. Jenkins

Facsimile No.: (847) 795-9030




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




Jenner & Block LLP

353 North Clark Street

Chicago, IL 60654

Attention: Michael T. Wolf

Facsimile No.: (312) 840-7530



If to Buyer:




Supply Technologies LLC

6065 Parkland Boulevard

Cleveland, Ohio 44124

Attention: Robert D. Vilsack

Facsimile No.: (440) 947-2209




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




Jones Day

North Point

901 Lakeside Avenue

Cleveland, OH 44114

Attention: James P. Dougherty

Facsimile No.: (216) 579-0212



Section 7.2 Taxes. Buyer shall bear 100% of any and all sales, use, goods and services or
value-added Taxes due for the Transition Services.



Section 7.3 Assignment; Successors and Assigns. Except as provided in Section 2.10, neither
this Agreement nor any of the rights, interests or obligations provided by this Agreement may be
assigned by either Party (whether by
operation of Law or otherwise) without the prior written consent of the other Party;
provided, however, that Buyer may assign its rights under this Agreement (a) to a
Subsidiary of Buyer, (b) in connection with a disposition, merger or consolidation of Buyer or all
or any portion of the Business or (c) to any of its lender(s) as collateral security, but such
assignment shall not relieve Buyer of its obligations or liabilities under this Agreement. Subject
to the preceding sentence and except as otherwise expressly provided herein, this Agreement shall
be binding upon and inure to the benefit of the Parties hereto and their respective successors and
permitted assigns.


 


12









 





Section 7.4 Amendment; Waiver. This Agreement may be amended only by a written instrument
executed and delivered by Parent and Buyer. Either Party may extend the time for performance of or
waive compliance with any of the covenants or agreements of the other Party to this Agreement, and
may waive any breach of the representations or warranties of such other Party. No agreement
extending or waiving any provision of this Agreement shall be valid or binding unless it is in
writing and is executed and delivered by or on behalf of the Party against which it is sought to be
enforced.



Section 7.5 Schedules. The Schedules to this Agreement are made a part of this Agreement as
if set forth fully herein.



Section 7.6 Severability. Whenever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under Law, but if any provision of this
Agreement is held to be prohibited by or invalid under Law, such provision shall be ineffective
only to the extent of such prohibition or invalidity, without invalidating the remainder of this
Agreement.



Section 7.7 Counterparts. This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all such counterparts taken together shall constitute one
and the same Agreement. Any such counterpart, to the extent delivered by means of a facsimile
machine or by .pdf, .tif, .gif, .peg or similar attachment to electronic mail shall be treated in
all manner and respects as an original executed counterpart and shall be considered to have the
same binding legal effect as if it were the original signed version thereof delivered in person.



Section 7.8 Descriptive Headings. The descriptive headings of this Agreement are inserted for
convenience only and shall not constitute a part of this Agreement.



Section 7.9 No Third Party Beneficiaries. This Agreement does not confer any rights or
remedies upon any Person or entity, other than the Parties, their Affiliates and their respective
permitted successors or assigns.



Section 7.10 Governing Law. THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO ANY
LAW OR RULE THAT WOULD CAUSE THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF NEW YORK TO BE
APPLIED, GOVERN ALL MATTERS ARISING OUT OF OR RELATING TO THIS AGREEMENT, INCLUDING ITS VALIDITY,
INTERPRETATION, CONSTRUCTION, PERFORMANCE AND ENFORCEMENT.



Section 7.11 Forum Selection; Consent to Service of Process; Waiver of Jury Trial. Each Party
hereby irrevocably (a) submits to the exclusive jurisdiction of any state court sitting in the
County of New York, New York or any federal court sitting in the Southern District of New York in
any Action arising out of or relating to this Agreement, (b) agrees that all claims in respect of
such Action may be heard and determined only in any such court, (c) hereby waives any claim of
inconvenient forum or other challenge to venue in such court, and (d) agrees not to bring any
Action arising out of or relating to this Agreement in any other court. Each Party irrevocably
consents to the service of process out of any of the courts listed in this Section 7.11


 


13









 






by the
mailing of copies by registered or certified mail, postage prepaid, to such Party at its address
set forth in Section 7.1, such service to become effective thirty (30) days after such mailing.
EACH OF THE PARTIES HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION
ARISING OUT OF OR RELATING TO THIS AGREEMENT AND/OR THE TRANSACTIONS CONTEMPLATED HEREBY.



Section 7.12 Entire Agreement. This Agreement and the Purchase Agreement constitute the
entire agreement between the Parties and supersede any prior and contemporaneous understandings,
agreements or representations by or between the Parties, written or oral, that may have related in
any way to the subject matter hereof.



Section 7.13 Disclaimer. EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, NONE OF PARENT, THE
OTHER SERVICE PROVIDERS OR THEIR RESPECTIVE AFFILIATES OR ANY PERSON ACTING ON BEHALF OF ANY SUCH
PARTY MAKES ANY REPRESENTATIONS OR WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED, AT LAW OR IN EQUITY
WITH RESPECT TO THE TRANSITION SERVICES OR THE SUBJECT MATTER OF THIS AGREEMENT, INCLUDING ANY
WARRANTY OF MERCHANTABILITY, FITNESS FOR ANY PARTICULAR PURPOSE OR USE, TITLE OR NON-INFRINGEMENT,
OR THE ACCURACY, AVAILABILITY, TIMELINESS OR COMPLETENESS OF, OR THE RESULTS TO BE OBTAINED FROM,
SUCH TRANSITION SERVICES, AND PARENT, THE OTHER SERVICE PROVIDERS AND THEIR RESPECTIVE AFFILIATES
HEREBY DISCLAIM THE SAME.



Section 7.14 No Right to Offset. Neither Party shall offset, counterclaim or otherwise withhold any amounts owed or claimed
to be owed to the other Party under this Agreement, notwithstanding any dispute that may be pending
between them, or in order to offset any obligation due to such Party pursuant to this Agreement,
the Purchase Agreement or otherwise, whether or not such obligation has been finally adjudicated,
settled or otherwise agreed upon by the Parties in writing.



Section 7.15 Interpretation of Schedules. Within the Schedules, references to Parent shall be
deemed to include any Subsidiaries of Parent providing any Transition Services, as appropriate.



[SIGNATURE PAGE FOLLOWS]



 


14









 





IN WITNESS WHEREOF, the Parties have duly executed and delivered this Agreement on the date
first written above.



	 	 	 	 	 
	 	SUPPLY TECHNOLOGIES LLC

 	 
	 	By:  	/s/ Matthew V. Crawford 	 
	 	 	Name:  	Matthew V. Crawford 	 
	 	 	Title:  	President 	 
	 
	 	LAWSON PRODUCTS, INC.

 	 
	 	By:  	/s/ Thomas J. Neri 	 
	 	 	Name:  	Thomas J. Neri 	 
	 	 	Title:  	President and Chief Executive Officer 	 
	 



[Signature Page to Transition Services Agreement]




 


 









 





EXHIBIT C




Form of U.S. Bill of Sale and Assignment and Assumption Agreement



 


 









 







EXECUTION VERSION




BILL OF SALE AND ASSIGNMENT AND ASSUMPTION AGREEMENT




THIS BILL OF SALE AND ASSIGNMENT AND ASSUMPTION AGREEMENT (this “Bill of Sale”) is
entered into on August 31, 2010, by and between Assembly Component Systems, Inc., an Illinois
corporation (the “Seller”), and Supply Technologies LLC, an Ohio limited liability company
(the “Buyer”). This Bill of Sale is being entered into pursuant to that certain Asset
Purchase Agreement (the “Purchase Agreement”), dated as of the date hereof, by and among
the Seller, the Buyer, Lawson Products, Inc., a Delaware corporation, and Park-Ohio Industries,
Inc., an Ohio corporation.



FOR GOOD AND VALUABLE CONSIDERATION, the receipt and sufficiency of which are hereby
acknowledged, and pursuant to the Purchase Agreement, the Seller (i) hereby sells, transfers,
assigns, conveys and delivers to the Buyer all right, title and interest that the Seller possesses
in and to the Purchased Assets, free and clear of all Liens other than Permitted Liens, and (ii)
hereby assigns, transfers and delegates all of the Assumed Liabilities to the Buyer. The Buyer (i)
hereby purchases, accepts and acquires from the Seller such Purchased Assets, and (ii) hereby
assumes and agrees to pay, discharge and perform when due all of the Assumed Liabilities.
Notwithstanding the foregoing, (a) the Seller will retain and not transfer, and the Buyer will not
purchase or acquire, the Excluded Assets and (b) the Seller will retain and not assign, and the
Buyer will not be obligated or become liable for, the Excluded Liabilities.



The Seller hereby appoints the Buyer and the Buyer’s directors, managers, officers, successors
and assigns as the Seller’s true and lawful attorney, each with the full power of substitution to
act in the Seller’s name and on its behalf with respect to the reduction to possession of any of
the Purchased Assets pursuant to the terms and conditions of the Purchase Agreement and to execute
any documents and instruments and to do all such other acts and things as may be necessary to
effectuate the foregoing. The Buyer’s rights and powers under this paragraph shall be related to
the Purchased Assets and not the Excluded Assets.



All capitalized terms used and not otherwise defined herein will have the respective meanings
ascribed to such terms in the Purchase Agreement. This Bill of Sale is subject to all of the
terms, conditions and limitations set forth in the Purchase Agreement (including, but not limited
to, the representations, warranties, covenants and indemnities set forth in the Purchase
Agreement). In the event of any conflict or inconsistency between the terms of this Bill of Sale
and the terms of the Purchase Agreement, the terms of the Purchase Agreement shall control. This
instrument is intended to implement the provisions of the Purchase Agreement and shall not be
construed to alter, enhance, expand, limit or modify the rights or obligations of the Parties
thereunder.



This Bill of Sale may be executed in two counterparts, each of which shall be deemed an
original, but all such counterparts taken together shall constitute one and the same agreement.



[remainder of page intentionally left blank]



 


 









 





IN WITNESS WHEREOF, the undersigned have caused this Bill of Sale to be executed as of the
date first written above.



	 	 	 	 	 
	 	ASSEMBLY COMPONENT SYSTEMS, INC.

 	 
	 	By:  	/s/ Thomas J. Neri 	 
	 	 	Name:  	Thomas J. Neri 	 
	 	 	Title:  	Chief Executive Officer 	 
	 
	 	SUPPLY TECHNOLOGIES LLC

 	 
	 	By:  	/s/ Matthew V. Crawford 	 
	 	 	Name:  	Matthew V. Crawford 	 
	 	 	Title:  	President 	 
	 



[Signature Page to Bill of Sale and Assignment and Assumption Agreement]




 


 









 





EXHIBIT D




Form of Assignment and Assumption of Leases



 


 









 







EXECUTION VERSION




ASSIGNMENT AND ASSUMPTION OF LEASES




THIS ASSIGNMENT AND ASSUMPTION OF LEASES (this “Assignment”) is made and entered into
as of August 31, 2010 (the “Effective Date”) by and between Assembly Component Systems,
Inc., an Illinois corporation (“Assignor”), and Supply Technologies LLC, an Ohio limited
liability company (“Assignee”).



RECITALS




A. Assignor and Assignee are both parties to that certain Asset Purchase Agreement dated as of
the Effective Date (the “Agreement”), pursuant to which, among other things, Assignee is
acquiring the Purchased Assets and assuming the Assumed Liabilities on the terms and subject to the
conditions set forth therein. The Agreement is hereby incorporated into this Assignment as if
fully rewritten herein, and capitalized terms used but not defined in this Assignment shall have
the respective meanings set forth in the Agreement.



B. As part of the transaction contemplated by the Agreement, Assignor has agreed to assign,
convey and transfer to Assignee, and Assignee has agreed to assume, all of Assignor’s right, title
and interest in, to and under the Leases, a schedule of which is attached hereto as Exhibit
A and incorporated herein by this reference, all to the extent affecting or otherwise relating
to the Leased Facilities.



NOW, THEREFORE, in consideration of the foregoing and the mutual covenants contained herein,
and for other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Assignor and Assignee agree as follows:



1. Transfer and Assignment by Assignor. Assignor hereby transfers, conveys and
assigns to Assignee all of Assignor’s right, title and interest in, to and under the Leases.



2. Assumption by Assignee. Assignee hereby accepts the foregoing assignment and
assumes and agrees to perform all of the duties, obligations, liabilities, commitments and
covenants of Assignor accruing from and after the Effective Date arising under each of the Leases.



3. No Waiver or Modification; Subject to the Agreement. The scope, nature and extent
of this Assignment is expressly set forth in the Agreement. Nothing contained herein shall itself
change, amend, extend or alter (nor shall it be deemed or construed as changing, amending,
extending or altering) the terms or conditions of the Agreement in any manner whatsoever. In the
event of any conflict, inconsistency or other difference between the Agreement and this Assignment,
the provisions of the Agreement shall govern and control.



4. Governing Law. This Assignment shall be governed by, and construed and enforced in
accordance with, the laws of the State of New York, without regard to the conflicts of law rules
thereof, except to the extent that laws of a State where a Leased Facility is located necessarily
govern because such Leased Facility is located in such State.



5. Counterparts. This Assignment may be executed in two counterparts, each of which
shall be deemed an original, but all such counterparts taken together shall constitute one


 


 









 






and the same Assignment. Any such counterpart, to the extent delivered by means of a
facsimile machine or by .pdf, .tif, .gif, .peg or similar attachment to electronic mail shall be
treated in all manner and respects as an original executed counterpart and shall be considered to
have the same binding legal effect as if it were the original signed version thereof delivered in
person.



[Remainder of Page Intentionally Left Blank; Signature Page Follows]



 


 









 





IN WITNESS WHEREOF, the parties hereto have caused this Assignment to be executed by their
duly authorized officers as of the Effective Date.



	 	 	 	 	 
	 	ASSIGNOR:



Assembly Component Systems, Inc.

 	 
	 	By:  	/s/ Thomas J. Neri 	 
	 	 	Name:  	Thomas J. Neri 	 
	 	 	Title:  	Chief Executive Officer 	 
	 
	 	ASSIGNEE:



Supply Technologies LLC

 	 
	 	By:  	/s/ Matthew V. Crawford 	 
	 	 	Name:  	Matthew V. Crawford 	 
	 	 	Title:  	President 	 
	 



[Signature Page to Assignment and Assumption of Leases]



 


 









 





EXHIBIT A TO

ASSIGNMENT AND ASSUMPTION OF LEASES




Schedule of Leases




	 	 	 	 	 
	No.	 	Address	 	Lease Document(s)
	1.
	 	303 Northfullenwider St., Centralia, MO 65240	 	Standard Industrial Lease—Multi-Tenant between Hubbell Power Systems Inc. and ACS, Inc., dated May 15, 2002.
	 
	 	 	 	 
	 
	 	 	 	Amendment No. 1 to Standard Industrial Lease—Multi-Tenant between Hubbell Power Systems Inc. and ACS, Inc., dated November 1, 2004.
	 
	 	 	 	 
	2.
	 	Industrial Center #9, 4709 Interstate	 	Lease Agreement between ProLogis and ACS/Simco, Inc., dated June 18, 2004.
	 
	 	Drive, West Chester Township, OH	 
	 
	 	 	 	 
	 
	 	 	 	First Amendment to the Lease Agreement by and between ProLogis and the Assignor.
	 
	 	 	 	 
	 
	 	 	 	Second Amendment to Lease Agreement by and between ProLogis and ACS, Inc., dated June 9, 2007.
	 
	 	 	 	 
	 
	 	 	 	Notice to Tenant letter from Cabot II — OH2W03-W12, LLC to ACS, Inc., dated June 27, 2007.
	 
	 	 	 	 
	 
	 	 	 	Third Amendment to Lease Agreement by and between Cabot II — OH2W03-W12, LLC and Assignor, dated July 22, 2010.
	 
	 	 	 	 
	3.
	 	301 W. 25th St., Stuttgart, AR 72160	 	Business Lease by and between Stuttgart Industrial Development Corp. and the Assignor, dated June 10, 2010.
	 
	 	 	 	 
	4.
	 	273 Cumberland St., Memphis TN 38112	 	Lease Agreement between Bell Properties, Inc. and Automatic Screw Machine Products Company, dated November 22, 1994.
	 
	 	 	 	 
	 
	 	 	 	Lease Modification Agreement between Bell Properties, Inc. and Automatic Screw Machine Products Company, dated as of






 


 









 





	 	 	 	 	 
	No.	 	Address	 	Lease Document(s)
	 
	 	 	 	1995. 
	 
	 	 	 	 
	 
	 	 	 	Lease Extension Agreement between Bell Properties, Inc. and Automatic Screw Machine Products Company, dated January 19, 1996.
	 
	 	 	 	 
	 
	 	 	 	Lease Extension Agreement between Bell Properties, Inc. and the Assignor dated February 24, 1997.
	 
	 	 	 	 
	 
	 	 	 	Lease Modification Agreement between Bell Properties, Inc. and the Assignor, dated February 13, 1998.
	 
	 	 	 	 
	 
	 	 	 	Lease Extension Agreement between Bell Properties, Inc. and the Assignor, dated March 1, 1999.
	 
	 	 	 	 
	 
	 	 	 	Lease Extension Agreement between Bell Properties, Inc. and the Assignor, dated March 3, 2000.
	 
	 	 	 	 
	 
	 	 	 	Lease Extension and Modification Agreement between Bell Property Group General Partnership and the Assignor, dated November 27, 2001.
	 
	 	 	 	 
	 
	 	 	 	Lease Extension and Modification Agreement between Bell Property Group General Partnership and the Assignor, dated 2002.
	 
	 	 	 	 
	 
	 	 	 	Lease Extension and Modification Agreement between Bell Property Group General Partnership and the Assignor, signed 2/21/2003.
	 
	 	 	 	 
	 
	 	 	 	Lease Extension and Modification Agreement between Bell Property Group General Partnership and the Assignor, dated December 21, 2005.
	 
	 	 	 	 
	 
	 	 	 	Lease Extension and Modification






 


 









 





	 	 	 	 	 
	No.	 	Address	 	Lease Document(s)
	 
	 	 	 	Agreement between Bell Property Group General Partnership and the Assignor, dated May 27, 2009.
	 
	 	 	 	 
	5.
	 	1116-G W. 15th St., Hopkinsville, KY	 	Lease by and between Howard Read and Sunsource/Simco, dated November 10, 1998.
	 
	 	42240	 
	 
	 	 	 	 
	 
	 	 	 	Addendum #1 to the Lease Agreement between Howard Read and the Assignor.
	 
	 	 	 	 
	 
	 	 	 	Addendum #2 to Lease Agreement between Howard Read and the Assignor, dated November 23, 2004.
	 
	 	 	 	 
	 
	 	 	 	Addendum #3 to Lease Agreement between Howard Read and the Assignor, dated September 24, 2007.
	 
	 	 	 	 
	 
	 	 	 	Addendum #4 to Lease Agreement between Howard Read and the Assignor, dated August 19, 2010.
	 
	 	 	 	 
	6.
	 	2125 E. US Highway 12, Michigan City,	 	Lease Agreement by and between Michiana Industrial Park, Inc. and the Assignor, dated August 15, 1999.
	 
	 	IN 46360	 
	 
	 	 	 	 
	7.
	 	N22747 US Hwy 53, Ettrick, WI 54627	 	Lease by and between Marvin and Travis Matejka d/b/a TDM Enterprises and the Assignor, dated June 1, 2008.
	 
	 	 	 	 
	 
	 	 	 	Lease Amendment by and between Marvin and Travis Matejka d/b/a TDM Enterprises and the Assignor, dated June 1, 2010.
	 
	 	 	 	 
	8.
	 	1081 Selfield Road, Selma, AL 36701	 	Standard Lease Agreement between Bush Hog, Inc. and the Assignor, dated March 19, 2010.
	 
	 	 	 	 
	9.
	 	15850 W. 108th St., Lenexa KS 66219	 	Lease by and between J & R Land Company and ACS/Simco, Inc. dated November 7, 2005.
	 
	 	 	 	 
	 
	 	 	 	Lease Extension Agreement between J & R Land Company and the Assignor dated






 


 









 





	 	 	 	 	 
	No.	 	Address	 	Lease Document(s)
	 
	 	 	 	February 2009 and executed March 3, 2009.