STOCK PURCHASE AGREEMENT dated as of July 17, 2007 among Cenveo Corporation Commercial Envelope Manufacturing Co., Inc. Ira B. Kristel Trust IV, as amended and restated u/t/d May 31, 2006, between Ira B. Kristel, as Grantor, and William B. Wachtel, as...
dated
as of July 17, 2007
among
Cenveo
Corporation
Commercial
Envelope Manufacturing Co., Inc.
Xxx
X. Xxxxxxx Trust IV, as amended and restated
u/t/d
May 31, 2006, between Xxx X. Xxxxxxx, as
Grantor,
and Xxxxxxx X. Xxxxxxx, as Trustee
Xxxx
Xxxxxxx
Xxxxxx
Xxxxxxx
and
Xxxxxxx
X. Xxxxxxx
as
Stockholders’ Representative
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1
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1.1
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1
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1.2
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2
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1.3
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2
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1.4
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4
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1.5
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6
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ARTICLE
II
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6
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2.1
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6
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2.2
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7
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2.3
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8
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2.4
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9
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2.5
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11
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2.6
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11
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2.7
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13
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2.8
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15
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2.9
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16
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2.10
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17
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2.11
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17
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2.12
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18
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2.13
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18
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2.14
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20
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2.15
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21
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2.16
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24
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2.17
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24
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2.18
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25
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2.19
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26
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2.20
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26
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2.21
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26
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2.22
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27
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2.23
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27
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ARTICLE
III
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27
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3.1
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27
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3.2
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27
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3.3
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28
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3.4
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28
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3.5
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28
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ARTICLE
IV
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29
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4.1
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29
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-i-
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4.2
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29
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4.3
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30
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ARTICLE
V
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30
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5.1
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30
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5.2
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30
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5.3
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31
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5.4
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31
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ARTICLE
VI
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31
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6.1
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31
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6.2
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31
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6.3
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31
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6.4
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33
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6.5
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35
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6.6
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35
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6.7
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36
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6.8
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37
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6.9
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37
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6.10
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39
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6.11
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39
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6.12
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39
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6.13
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39
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6.14
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40
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6.15
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40
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6.16
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40
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ARTICLE
VII
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40
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7.1
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40
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7.2
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41
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7.3
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41
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7.4
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42
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7.5
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42
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7.6
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42
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7.7
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42
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7.8
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42
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7.9
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42
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7.10
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43
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7.11
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43
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7.12
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43
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7.13
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43
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ARTICLE
VIII
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43
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8.1
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43
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-ii-
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8.2
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44
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8.3
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44
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8.4
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44
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ARTICLE
IX
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44
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9.1
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44
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9.2
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45
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ARTICLE
X
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45
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10.1
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45
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10.2
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46
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10.3
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48
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10.4
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51
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10.5
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51
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10.6
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51
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ARTICLE
XI
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52
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11.1
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52
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11.2
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52
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11.3
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52
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11.4
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54
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11.5
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54
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11.6
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54
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11.7
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54
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11.8
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55
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11.9
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55
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11.10
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55
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11.11
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56
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11.12
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56
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11.13
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56
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11.14
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57
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11.15
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57
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11.16
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59
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LIST
OF
SCHEDULES AND EXHIBITS
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Exhibit
A
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Certain
Defined Terms
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Exhibit
B
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Accounting
Principles
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Exhibit
C
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Form
of Escrow Agreement
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Exhibit
D
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Form
of General Release
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Exhibit
E-1
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Form
of New Lease with Kristel, Inc.
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Exhibit
E-2
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Form
of New Lease with M.A.S. Boulevard Associates
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Exhibit
F
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Form
of Capitalization Opinion
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Schedule
1.1(b)(i)
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Percentage
Ownership of the Stockholders
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Schedule
1.3(a)(ii)
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Resigning
Directors and Officers
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-iii-
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Schedule
1.3(a)(iii)
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Additional
Releasors
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Schedule
2.1(a)
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Foreign
Jurisdiction – the Company
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Schedule
2.1(b)
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Foreign
Jurisdiction – the Subsidiaries
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Schedule
2.2(a)
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Capitalization
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Schedule
2.2(b)
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Subsidiaries
of the Company
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Schedule
2.3
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Consents
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Schedule
2.4(a)
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Exceptions
to GAAP
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Schedule
2.6(b)
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Absence
of Certain Changes
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Schedule
2.7
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Taxes
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Schedule
2.8(c)
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Material
Permits
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Schedule
2.9(b)
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Leased
Real Property
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Schedule
2.11(a)-1
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Company
Registered Domain Names
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Schedule
2.11(a)-2
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Company
Patents
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Schedule
2.12
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Insurance
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Schedule
2.13(a)
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Company
Agreements
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Schedule
2.14(a)
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Employees
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Schedule
2.14(b)
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Independent
Contractors, Leased Employees
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Schedule
2.14(c)
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Collective
Bargaining Agreements
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Schedule
2.15(a)
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Benefit
Plans
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Schedule
2.15(g)
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Multiemployer
Plans
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Schedule
2.15(l)
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Change
of Control for Nonqualified Deferred Compensation Plan
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Schedule
2.15(n)
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Retiree
Obligations
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Schedule
2.16-1
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Contracts
with Insiders
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Schedule
2.16-2
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Insider
Transactions since June 30, 2003
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Schedule
2.17
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Environmental
Matters
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Schedule
2.19
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Liens
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Schedule
2.21-1
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Performance
Bonds
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Schedule
2.21-2
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Top
20 Suppliers/Top 20 Customers
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Schedule
2.22(a)
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Bank
Accounts
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Schedule
2.22(b)
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Authorized
Signatories
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Schedule
5.2
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Consents
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Schedule
6.3(n)
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Transactions
with Insiders Prior to Closing
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Schedule
6.3(p)
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Pending
Tax Audit
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Schedule
7.7
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Excluded
Assets
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Schedule
10.2(a)(vi)
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Specific
Indemnities for Which There is an Escrow
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Schedule
10.2(a)(vii)
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Specific
Indemnities for Which There is no
Escrow
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This
Stock Purchase Agreement dated as of July 17, 2007 (this
“Agreement”) is among Cenveo Corporation, a Delaware
corporation (“Buyer”), Commercial Envelope Manufacturing Co.,
Inc., a New York corporation (the “Company”), Xxxxxxx X.
Xxxxxxx as trustee under Xxx X. Xxxxxxx Trust IV, as amended and restated u/t/d
May 31, 2006, between Xxx X. Xxxxxxx, as Grantor, and Xxxxxxx X. Xxxxxxx, as
Trustee, a trust organized under the laws of the State of New York (the
“Trust”), Xxxx Xxxxxxx, an individual residing in the State of
New York (“X. Xxxxxxx”), Xxxxxx Xxxxxxx, an individual
residing in the State of New York (“X. Xxxxxxx” and, together
with the Trust and X. Xxxxxxx, the “Stockholders”), and Xxxxxxx
X. Xxxxxxx as representative of the Stockholders (the “Stockholders’
Representative”). Capitalized terms used but not defined
herein have the meanings assigned to them on Exhibit A.
The
Stockholders are the sole owners of the Company’s issued and outstanding shares
(the “Shares”) of capital stock.
Buyer
desires to purchase the Shares from the Stockholders, and the Stockholders
desire to sell the Shares to Buyer, all on the terms and conditions hereinafter
set forth.
Concurrently
herewith, and as an inducement for Buyer to enter into this Agreement, Xxx
X.
Xxxxxxx, Xxxx Xxxxxxx and Xxxxx Xxxxxxx (the “Guarantors”) are
each delivering to Buyer a Guaranty (the “Guaranty”) pursuant
to which he is, among other things, guaranteeing the obligations of the Trust
under this Agreement and each of the Transaction Documents to which the Trust
is
a party.
In
consideration of the premises and the mutual representations, warranties,
covenants and agreements contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged,
the
parties agree as follows:
PURCHASE
AND SALE OF SHARES
1.1 Purchase
and Sale.
(a) Upon
the terms and subject to the conditions set forth in this Agreement, the
Stockholders shall sell, assign, transfer and deliver the Shares to Buyer free
and clear of all Liens, and Buyer shall accept and purchase the Shares from
the
Stockholders for an aggregate purchase price equal to the Final Purchase
Price.
(b) As
payment for the Shares, Buyer shall at the Closing pay and deliver:
(i) to
each Stockholder an amount in cash equal to the product obtained by multiplying
(x) the percentage next to the name of such Stockholder on Schedule
1.1(b)(i) by (y) the Initial Closing Payment by wire transfer of
immediately
available
funds in accordance with written instructions that the Stockholders shall have
provided to Buyer at least two Business Days prior to the Closing Date;
and
(ii) to
the Escrow Agent an amount equal to the Escrow Amount by wire transfer of
immediately available funds in accordance with instructions set forth in the
Escrow Agreement.
(c) The
escrowed funds being held by the Escrow Agent shall be held and distributed
as
provided in the Escrow Agreement.
1.2 Closing. On
the terms and subject to the conditions set forth in this Agreement, the closing
of the transactions contemplated by this Agreement (the
“Closing”) shall take place: (a) at the offices of
Xxxxxx Xxxxxxx & Xxxx LLP, One Battery Park Plaza, New York, New York, at
10:00 a.m., local time, on the later of: (i) August 20, 2007 (or, in
the event the Audited Financial Statement Delivery Date is after August 3,
2007,
on the Alternate Closing Date), and (ii) the fifth Business Day after the
conditions to the Closing set forth in this Agreement (other than those
conditions that by their terms require the delivery of any documents at the
Closing) are satisfied or waived; or (b) at such other time, on such other
date
and at such other place as may be mutually agreed upon by Buyer and the
Stockholders’ Representative. The date on which the Closing is to
occur is herein referred to as the “Closing Date.”
1.3 Deliveries
at the Closing. In addition to the other requirements set forth
herein, at the Closing:
(a) the
Stockholders shall cause each of the following to be delivered to
Buyer:
(i) one
or more certificates representing the Shares, and any other documents that
are
necessary to transfer to Buyer good, valid and marketable title to all the
Shares free and clear of all Liens;
(ii) instruments
evidencing the resignation of the directors and officers of the Company and
each
of its Subsidiaries specified on Schedule 1.3(a)(ii);
(iii) General
Releases from each officer and director of the Company, as well as each
Stockholder and each Person listed on Schedule 1.3(a)(iii), duly executed
by the applicable releasor;
(iv) the
certificate called for by Section 7.1, duly executed by each of the Stockholders
and the Stockholders’ Representative;
(v) a
certificate duly executed by the Secretary of the Company certifying as
to: (A) the full force and effect of resolutions of its board of
directors and stockholders attached thereto as exhibits evidencing the authority
of the Company to consummate the transactions contemplated by the Transaction
Documents to which it is a party; (B) the full force and effect of the
certificate of incorporation and bylaws of the Company attached thereto as
exhibits; and (C) the incumbency and signature of the
officers
of the Company who have executed the Transaction Documents to which the Company
is a party;
(vi) certificates
from appropriate government officials (each dated as of a recent date)
certifying as to the good standing of the Company and each of its Subsidiaries
in their respective jurisdictions of organization and in each jurisdiction
in
which they are qualified to conduct business as a foreign
corporation;
(vii) each
FIRPTA Certificate called for by Section 2.7(l), duly executed by each
Stockholder;
(viii) the
Opinion of Counsel, if required by the institutions providing debt financing
to
Buyer at the Closing, and the Capitalization Opinion;
(ix) the
Escrow Agreement, duly executed by the Stockholders’
Representative;
(x) each
New Lease, duly executed by the Company and the landlord party thereto;
and
(xi) all
other instruments and documents reasonably requested by Buyer.
(b) Buyer
shall cause the Initial Purchase Price to be delivered as contemplated by
Section 1.1(b) and shall cause each of the following to be delivered to the
Stockholders:
(i) the
certificate called for by Section 8.1, duly executed by Buyer;
(ii) a
certificate duly executed by the Secretary (or Assistant Secretary) of Buyer
certifying as to: (A) the full force and effect of resolutions of its
board of directors attached thereto as exhibits evidencing the authority of
Buyer to consummate the transactions contemplated by the Transaction Documents
to which it is a party; (B) the full force and effect of the certificate of
incorporation and bylaws of Buyer attached thereto as exhibits; and (C) the
incumbency and signature of the officers of Buyer who have executed the
Transaction Documents to which Buyer is a party;
(iii) a
certificate from an appropriate government official (dated as of a recent date)
certifying as to the good standing of Buyer in its jurisdiction of
organization;
(iv) the
Escrow Agreement, duly executed by Buyer; and
(v) all
other instruments and documents reasonably requested by the Stockholders’
Representative.
1.4 Purchase
Price Adjustment.
(a) On
or prior to the fifth Business Day prior to the Closing Date, the Stockholders’
Representative shall: (i) determine the Estimated Closing Working
Capital and the Estimated Closing Debt; and (ii) deliver to Buyer a written
statement (the “Preliminary Statement”) setting forth in
reasonable detail the calculation by the Stockholders’ Representative thereof
and the computations used in connection therewith. In the event Buyer
disagrees with the Estimated Closing Working Capital or Estimated Closing Debt
reflected on the Preliminary Statement, Buyer shall notify the Stockholders’
Representative of such disagreement within two Business Days after receipt
thereof (the “Buyer Disagreement Notice”), such Buyer
Disagreement Notice to include the amount Buyer believes to be the correct
Estimated Closing Working Capital or Estimated Closing Debt, as the case may
be. If the Buyer Disagreement Notice is not received by the
Stockholders’ Representative within such two Business Day period, the
Estimated Closing Working Capital or Estimated Closing Debt as included in
the
Preliminary Statement shall be used in order to determine the Initial Purchase
Price. If the Buyer Disagreement Notice is received by the
Stockholders’ Representative within such two Business Day period,
then: (i) in the event the Buyer Disagreement Notice disputes
the Estimated Closing Working Capital as included in the Preliminary Statement,
the Estimated Closing Working Capital used in order to determine the Initial
Purchase Price shall be the lower of: (A) the Estimated Closing
Working Capital as included in the Preliminary Statement; and (B) the
Estimated Closing Working Capital as included in the Buyer Disagreement Notice;
and (ii) in the event the Buyer Disagreement Notice disputes the Estimated
Closing Debt as included in the Preliminary Statement, the Estimated Closing
Debt used in order to determine the Initial Purchase Price shall be the greater
of: (A) the Estimated Closing Debt as included in the
Preliminary Statement; and (B) the Estimated Closing Debt as included in
the Buyer Disagreement Notice.
(b) Within
100 days after the Closing Date, Buyer shall prepare and deliver to the
Stockholders’ Representative a written statement (the
“Statement”) setting forth in reasonable detail its calculation
of Closing Working Capital and Closing Debt.
(c) During
the 30-day period following the receipt by the Stockholders’ Representative of
the Statement, the Stockholders’ Representative and his representatives shall be
permitted to review during normal business hours and make copies reasonably
required of (i) the working papers of Buyer, the Company and, if relevant,
its independent auditors relating to the preparation of the Statement and
(ii) any supporting schedules, supporting analyses and other supporting
documentation relating to the preparation of the Statement. The
Statement shall become final and binding upon the parties on the thirtieth
day
following delivery thereof, except to the extent that the Stockholders’
Representative gives written notice of disagreement with the Statement (the
“Notice of Disagreement”) to Buyer prior to such
date. Any Notice of Disagreement shall (A) specify in reasonable
detail the nature of any disagreement so asserted (any such disagreement to
be
limited to whether such calculation of Closing Working Capital and Closing
Debt
are mathematically correct and/or have been prepared in accordance with the
definitions of Closing Working Capital and Closing Debt, and the definitions
included in such definitions) and (B) if independent auditors are engaged
by the Stockholders’ Representative in connection with the preparation of the
Notice of Disagreement, be accompanied by a certificate of the independent
auditors of the Stockholders’ Representative that they concur with each of
the
positions
taken by the Stockholders’ Representative in the Notice of
Disagreement. If a Notice of Disagreement complying with the
preceding sentence is received by Buyer in a timely manner, then the Statement
(as revised in accordance with clause (I) or (II) below) shall become final
and
binding upon the parties on the earlier of (I) the date Buyer and the
Stockholders’ Representative resolve in writing any differences they have with
respect to the matters specified in the Notice of Disagreement or (II) the
date any disputed matters are finally resolved in writing by the Accounting
Firm.
(d) During
the 30-day period following the delivery of a Notice of Disagreement that
complies with the preceding paragraph, Buyer and the Stockholders’
Representative shall seek in good faith to resolve in writing any differences
which they may have with respect to the matters specified in the Notice of
Disagreement. During such period, Buyer and its independent auditors
shall be permitted to review and make copies reasonably required of (i) the
working papers of the Stockholders’ Representative and, if relevant, the
designated independent auditors (if any) of the Stockholders’ Representative
relating to the preparation of the Notice of Disagreement and (ii) any
supporting schedules, supporting analyses and other supporting documentation
relating to the preparation of the Notice of Disagreement. If, at the
end of such 30-day period, the differences as specified in the Notice of
Disagreement are not resolved, the Stockholders’ Representative and Buyer shall
promptly engage KPMG LLP (the “Accounting Firm”) and submit to
the Accounting Firm for review and resolution of any and all matters which
remain in dispute and which are properly included in the Notice of
Disagreement. In resolving any disputed item, the Accounting Firm
shall: (i) be bound by the provisions of this Section 1.4 and
the definitions of Closing Working Capital and Closing Debt and the definitions
included in such definitions; (ii) limit its review to matters still in
dispute as specifically set forth in the Notice of Disagreement (and only to
the
extent such matters are still in dispute following such 30-day period); and
(iii) further limit its review solely to whether the Statement has been
prepared in accordance with this Section 1.4. The determination of
any item that is a component of Closing Working Capital and Closing Debt and
is
the subject of a dispute cannot, however, be in excess of, or less than, the
greatest or lowest value, respectively, claimed for any particular item in
the
Statement or the Notice of Disagreement (or, if different, the value claimed
by
the relevant party at the end of such 30-day period). The
Stockholders’ Representative and Buyer shall use reasonable best efforts to
cause the Accounting Firm to render a decision resolving the matters in dispute
within 30 days following the submission of such matters to the Accounting
Firm. The Stockholders, the Stockholders’ Representative and Buyer
agree that judgment may be entered upon the determination of the Accounting
Firm
in any court having jurisdiction over the party against which such determination
is to be enforced. Except as specified in the following sentence, the
fees and expenses of the Accounting Firm in connection with the Accounting
Firm’s determination of Closing Working Capital or Closing Debt pursuant to this
Section 1.4 shall be borne, in its entirety, by the party (or, in the case
of
the Stockholders, the Stockholders jointly and severally) whose calculation
of
the Final Purchase Price based upon its calculation of Closing Working Capital
and Closing Debt as initially submitted to the Accounting Firm) is furthest
away
from the Final Purchase Price based upon the Closing Working Capital and Closing
Debt as determined by the Accounting Firm. The fees and expenses of
the Buyer’s independent auditors (if any) incurred in connection with the
issuance of the Statement shall be borne by the Buyer, and the fees and expenses
of the independent auditors of any Stockholders or the Stockholders’
Representative incurred in connection with their review of the Statement shall
be borne by the Stockholders.
(e) If
the Final Purchase Price is greater than the Initial Purchase Price, Buyer
shall, within five Business Days after the final determination of Closing
Working Capital and Closing Debt, make payment to the Stockholders (to each
Stockholder in proportion to the respective percentages set forth next to his,
her or its name on Schedule 1.1(b)(i)), by wire transfer of immediately
available funds of the amount of such excess, together with interest thereon
at
the rate of 6% per annum (the “Rate”), calculated on the basis
of the actual number of days elapsed and a 360-day year, from the Closing Date
to the date of actual payment, compounded annually. If the Final
Purchase Price is less than the Initial Purchase Price, the Stockholders
(jointly and severally) shall, within five Business Days after the final
determination of Closing Working Capital and Closing Debt, make payment to
Buyer
by wire transfer of immediately available funds, of the amount of such excess,
together with interest thereon at the Rate, calculated on the basis of the
actual number of days elapsed and a 360-day year, from the Closing Date to
the
date of actual payment, compounded annually. Buyer and the
Stockholders agree that if any amounts are owed by the Stockholders to Buyer
under this Section 1.4(e), Buyer may at its election proceed against the escrow
fund being held by the Escrow Agent pursuant to the Escrow Agreement in order
to
recover such amounts or directly against the Stockholders.
(f) Any
payment required to be made under this Section 1.4 shall be deemed an adjustment
to the Final Purchase Price.
1.5 Withholding
Taxes. To the extent required by applicable Law, Buyer shall be
entitled to deduct and withhold any Taxes required to be withheld from any
payments due to the Stockholders at any time pursuant to this Article I; and
such amounts shall be treated for all purposes of this Agreement as having
been
paid to the Stockholders.
REPRESENTATIONS
AND WARRANTIES
REGARDING
THE COMPANY
The
Company and the Stockholders hereby jointly and severally represent and warrant
as follows (it being understood and agreed that the Company shall only be liable
for the misrepresentation or breach of any representations and warranties in
this Article II if the Closing is not consummated):
2.1 Organization
and Good Standing.
(a) The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of New York and has the requisite corporate power
and authority to own, lease and operate the properties used in its business
and
to carry on its business as currently conducted and currently contemplated
to be
conducted. The Company is duly qualified to do business and is in
good standing as a foreign corporation in the states and jurisdictions set
forth
on Schedule 2.1(a) and in each other jurisdiction where qualification as
a foreign corporation is required, except for such failures to be qualified
and
in good standing that, individually or in the aggregate, do not have, and are
not reasonably likely to have, a Material Adverse Effect. Prior to
the date of this Agreement, the Stockholders have delivered to
Buyer
complete
and correct copies of its certificate of incorporation and bylaws, each as
presently in effect.
(b) Each
Subsidiary of the Company is the type of entity listed on Schedule 2.1(b)
and is duly organized, validly existing and in good standing under the laws
of
its jurisdiction of organization and has the requisite corporate (or other)
power and authority to own, lease and operate the properties used in its
business and to carry on its business as currently conducted and currently
contemplated to be conducted. Each of the Company’s Subsidiaries is
duly qualified to do business and is in good standing as a foreign corporation
or limited liability company, as applicable, in the states and jurisdictions
set
forth on Schedule 2.1(b) and in each other jurisdiction where
qualification as a foreign corporation is required, except for such failures
to
be qualified and in good standing that, individually or in the aggregate, do
not
have, and are not reasonably likely to have, a Material Adverse
Effect. Prior to the date of this Agreement, the Stockholders have
delivered to Buyer complete and correct copies of the certificate of
incorporation and bylaws (or comparable organizational documents with different
names) of its Subsidiaries, each as presently in effect.
2.2 Capitalization.
(a) The
authorized capital stock of the Company consists of 2,000,000 shares of common
stock, par value $0.10 per share (“Common Stock”), of which
8,000 shares are issued and outstanding and none are held in treasury, and
500,000 shares of preferred stock, par value $1 per share (“Preferred
Stock”), of which 12,000 shares are issued and outstanding and none are
held in treasury. As of the Closing, the Shares shall constitute all
the issued and outstanding shares of the Company’s capital stock, and each
Stockholder shall own the number and type of Shares set forth next to his,
her
or its name on Schedule 2.2(a). The Shares have been duly and
validly authorized and issued, are fully paid and nonassessable with no personal
liability attaching to the ownership thereof and have not been issued in
violation of any preemptive right or of any federal or state securities
law. There is no security, option, warrant, right, call,
subscription, agreement, commitment or understanding of any nature whatsoever,
fixed or contingent, that directly or indirectly (i) calls for the
issuance, redemption, sale, pledge or other disposition of any shares of capital
stock of the Company or any securities convertible into, or other rights to
acquire, any shares of capital stock of the Company, (ii) obligates the
Company to grant, offer or enter into any of the foregoing or (iii) relates
to the voting or control of such capital stock, securities or
rights. The Company has not created any “phantom stock,” stock
appreciation rights or other similar rights, the value of which is related
to or
based upon the price or value of any class or series of capital stock of the
Company. The Company does not have outstanding debt or debt
instruments providing for voting rights with respect to the Company to the
holders thereof. No stockholders of the Company or any other Person
is entitled to any preemptive or similar rights to subscribe for shares of
stock
of the Company. The Company has not granted to any Person the right
to demand or request that the Company effect a registration under the Securities
Act of any securities held by such Person or to include any securities of such
Person in any such registration by the Company.
(b) Other
than the Subsidiaries of the Company listed on Schedule 2.2(b) (or as
otherwise set forth on such Schedule), the Company does not have any
Subsidiaries or investments in, or joint venture agreements with, any other
Person. The Company owns all of
the
issued and outstanding capital stock or other equity awards of each of its
Subsidiaries. All of the issued and outstanding capital stock of the
Company’s Subsidiaries have been duly and validly authorized and issued, are
fully paid and nonassessable with no personal liability attaching to the
ownership thereof and have not been issued in violation of any preemptive right
or of any federal or state securities law. There is no security,
option, warrant, right, call, subscription, agreement, commitment or
understanding of any nature whatsoever, fixed or contingent, that directly
or
indirectly (i) calls for the issuance, redemption, sale, pledge or other
disposition of any shares of capital stock or other equity awards of any of
the
Company’s Subsidiaries or any securities convertible into, or other rights to
acquire, any shares of capital stock or other equity awards of any of the
Company’s Subsidiaries, (ii) obligates the Company or any of its
Subsidiaries to grant, offer or enter into any of the foregoing or
(iii) relates to the voting or control of such capital stock, securities or
rights. None of the Company’s Subsidiaries has created any “phantom
stock,” stock appreciation rights or other similar rights, the value of which is
related to or based upon the price or value of any class or series of capital
stock or other equity awards of the Company’s Subsidiaries. None of
the Company’s Subsidiaries has outstanding debt or debt instruments providing
for voting rights with respect to the Company’s Subsidiaries to the holders
thereof. No Person is entitled to any preemptive or similar rights to
subscribe for shares of capital stock or other equity awards of the Company’s
Subsidiaries. None of the Company’s Subsidiaries has granted to any
Person the right to demand or request that the Company’s Subsidiaries effect a
registration under the Securities Act of any securities held by such Person
or
to include any securities of such Person in any such registration by the
Company’s Subsidiaries.
2.3 Authority,
Approvals, Enforceability and Consents.
(a) The
Company has the corporate power and authority to enter into this Agreement
and
the other Transaction Documents to be executed and delivered by it and to
perform its obligations hereunder and thereunder.
(b) The
execution, delivery and performance by the Company of this Agreement and the
other Transaction Documents to be executed and delivered by it and the
consummation by the Company of the transactions contemplated hereby and thereby
have been duly authorized and approved by the Board of Directors of the Company
and no other corporate proceedings on the part of the Company or its
shareholders are necessary to authorize and approve this Agreement and the
other
Transaction Documents to be executed and delivered by it and the transactions
contemplated hereby and thereby.
(c) This
Agreement has been, and the other Transaction Documents to be executed and
delivered by the Company at the Closing will, at the Closing, have been, duly
executed and delivered by the Company and constitutes (or will constitute at
the
Closing, as applicable) the legal, valid and binding obligations of the Company
enforceable againstthe Company in accordance with their respective terms, except
as enforceability may be limited by applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium or other Laws relating to
or
affecting the rights and remedies of creditors generally and to general
principles of equity (regardless of whether in equity or at law).
(d) The
execution, delivery and performance by the Company and the Stockholders of
this
Agreement and the other Transaction Documents to be executed and delivered
by
the Company and the Stockholders and the consummation of the transactions
contemplated hereby and thereby do not and will not:
(i) contravene
any provision of the certificate of incorporation or bylaws (or comparable
organizational documents), of the Company or any of its
Subsidiaries;
(ii) (after
notice or lapse of time or both) violate, conflict with, result in a breach
of
any provision of, constitute a default under, result in or permit the
modification, revocation, cancellation, termination or acceleration of, any
Contract to which the Company or any of its Subsidiaries is a party or by which
any of their respective properties or assets are bound or otherwise subject
or,
except as set forth on Schedule 2.3, require any consent or waiver of any
party to any such Contract;
(iii) result
in the creation or imposition of any Lien upon, or any Person obtaining any
right to acquire or other interest in, any properties, assets or rights of
the
Company or any of its Subsidiaries;
(iv) violate
or conflict with any Law applicable to the Company or its Subsidiaries or their
respective businesses or properties; or
(v) require
any authorization, consent, order, permit or approval of, or notice to, or
filing, registration or qualification with, any Government Authority, except
in
connection with or in compliance with the provisions of the HSR
Act.
(e) No
authorization, consent, order, permit or approval of, or notice to, or filing,
registration or qualification with, any Government Authority is necessary to
be
obtained or made by the Company or any of its Subsidiaries to enable the Company
or any of its Subsidiaries to continue to conduct their respective businesses
and operations and use their respective properties after the Closing in a manner
that is consistent with the manner in which they are currently conducted and
used.
2.4 Financial
Statements.
(a) The
Stockholders have prior to the date of this Agreement delivered to Buyer a
true,
correct and complete copy of:
(i) the
unaudited combined balance sheets of the Company and its Subsidiaries and
Affiliate as of January 29, 2005, January 28, 2006 and February 3, 2007, and
the
related audited combined statements of income and retained earnings and
statements of cash flows for the fiscal years ended on such dates, together
with
the notes thereto (all the foregoing financial statements, including the notes
thereto being referred to herein collectively as the “Unaudited
Financial Statements”), and
(ii) the
unaudited consolidated balance sheet of the Company and its Subsidiaries as
of
May 5, 2007, and the unaudited consolidated statement of income and
retained
earnings and statement of changes in financial position for the 13-week period
ended on such date, together with the notes thereto (all the foregoing financial
statements, including the notes thereto being referred to herein collectively
as
the “Interim Financial Statements”);
(all
the
foregoing financial statements, including the notes thereto being referred
to
herein collectively as the “Company Financial
Statements”). The Company Financial Statements are, and the
Audited Financial Statements will, when delivered to Buyer and at the Closing
be, in accordance with the books and records of the Company and its Subsidiaries
and, in the case of the Unaudited Financial Statements and the Audited Financial
Statements, Affiliate and fairly present (or, in the case of the Audited
Financial Statements, will when delivered to Buyer and at the Closing fairly
present) the combined (or, in the case of the Interim Financial Statements,
consolidated) financial position, results of operations, stockholders’ equity
and cash flows of the Company and its Subsidiaries and, in the case of the
Unaudited Financial Statements and the Audited Financial Statements, Affiliate
as of the dates and for the periods indicated, in each case, except as and
to
the extent set forth on Schedule 2.4(a) (it is understood and agreed
that the exceptions set forth on Schedule 2.4(a) will not apply to
the Audited Financial Statements or the Unaudited Financial Statements), in
accordance with GAAP consistently applied during such periods, and the Interim
Financial Statements included in the Company Financial Statements include all
adjustments, which consist of only normal recurring accruals (that are not,
individually or in the aggregate, material) necessary for such fair
presentations. The statements of income included in the Company
Financial Statements do not, and the statements of income included in the
Audited Financial Statements will not when delivered to Buyer or at the Closing,
contain any items of material special or nonrecurring income except as expressly
specified therein, and the balance sheets included in the Company Financial
Statements do not, and the balance sheets included in the Audited Financial
Statements will not when delivered to Buyer or at the Closing, reflect any
write-up or revaluation increasing the book value of any assets. The
books and accounts of the Company and each of its Subsidiaries and, if
applicable, Affiliate are complete and correct and fully and fairly reflect
all
of the transactions of the Company and its Subsidiaries and, if applicable,
Affiliate.
(b) To
the Knowledge of the Company and the Stockholders, there are no significant
deficiencies in the Company’s internal controls which could adversely affect the
ability of the Company and its Subsidiaries to record, process, summarize and
report financial data. The management of the Company has not
identified for the Company’s outside auditors any material weaknesses in
internal controls nor is it aware of any fraud, whether or not material, that
involves management or other employees who have a significant role in the
internal controls of the Company and its Subsidiaries. The Company and its
Subsidiaries maintain a system of internal accounting controls sufficient to
provide reasonable assurance that (i) transactions are executed in accordance
with management’s general or specific authorizations, (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with GAAP and to maintain asset accountability, (iii) access to
assets is permitted only in accordance with management’s general or specific
authorization and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken
with
respect to any differences.
(c) Since
January 29, 2005, neither the Company nor, to the Knowledge of the Company
and
the Stockholders, any Representative of the Company or its Subsidiaries has
received or otherwise had or obtained knowledge of any complaint, allegation,
assertion or claim, whether written or oral, regarding the accounting or
auditing practices, procedures, methodologies or methods of the Company and
its
Subsidiaries with respect to the Company Financial Statements or the internal
accounting controls of the Company and its Subsidiaries, including any written
or oral complaint, allegation, assertion or claim that the Company or any of
its
Subsidiaries has engaged in questionable accounting or auditing
practices. No attorney representing the Company or any of its
Subsidiaries, whether or not employed by the Company or any of its Subsidiaries,
has reported evidence of a material violation of securities laws, breach of
fiduciary duty or similar violation by the Company or its Subsidiaries or any
of
their respective Representatives to the Board of Directors of the Company or
any
of its Subsidiaries or any committee thereof or to any director or officer
of
the Company or any of its Subsidiaries.
(d) To
the Knowledge of the Company and the Stockholders, no employee of the Company
or
its Subsidiaries has provided or is providing information to any law enforcement
agency regarding the commission or possible commission of any crime or the
violation or possible violation of any Law. The Company and its
Subsidiaries have not, and, to the Knowledge of the Company and the
Stockholders, no contractor, subcontractor or agent of the Company or its
Subsidiaries, has discharged, demoted, suspended, threatened, harassed or in
any
other manner discriminated against an employee of the Company or its
Subsidiaries in the terms and conditions of employment because of any act of
such employee described in 18 U.S.C. §1514A(a).
(e) Neither
the Company nor any of its Subsidiaries is subject to any “off-balance sheet
arrangement” (as defined in Item 303(a)(4)(ii) of Regulation S-K promulgated
under the Securities Exchange Act of 1934, as amended).
2.5 Absence
of Undisclosed Liabilities. Neither the Company nor any of its
Subsidiaries has any obligation, liability or commitment of any nature
whatsoever (whether direct or indirect, fixed or contingent, known or unknown,
due or to become due, accrued or otherwise, and whether or not determined or
determinable), and there is no existing condition, situation or set of
circumstances which is reasonably expected to result in such a obligation,
liability or commitment, except for (a) obligations, liabilities and
commitments reflected or reserved against in the audited consolidated balance
sheet as of February 3, 2007 (the “Balance Sheet Date”)
included in the Company Financial Statements (the “Company Balance
Sheet”), and (b) current liabilities incurred in the Ordinary
Course after the Balance Sheet Date that, individually or in the aggregate,
do
not have, and are not reasonably likely to have, a Material Adverse
Effect.
2.6 Absence
of Certain Changes. Since the Balance Sheet Date, the Company and
each of its Subsidiaries have conducted their respective businesses only in
the
Ordinary Course and:
(a) there
has been no:
(i) development,
change, event or occurrence that, individually or in the aggregate, has had,
or
is reasonably likely to have, a Material Adverse Effect; and
(ii) physical
damage, destruction or loss in an amount exceeding $25,000 in the aggregate
affecting the assets of the Company or its Subsidiaries that is not covered
by
insurance or has not been remedied within 30 days; and
(b) except
as set forth on Schedule 2.6(b), neither the Company nor any of its
Subsidiaries has directly or indirectly:
(i) amended
or otherwise changed its certificate of incorporation or bylaws (or comparable
organizational documents);
(ii) (A)
issued, granted or sold of any shares of its capital stock or any other equity
security, (B) issued, granted or sold any security, option, warrant, call,
subscription or other right of any kind, fixed or contingent, that directly
or
indirectly calls for the issuance, sale, pledge or other disposition of any
shares of its capital stock or any other equity security, (C) entered into
any agreement, commitment or understanding calling for any transaction referred
to in clause (A) or (B) of this paragraph (ii), or (D) made any other
changes in its equity capital structure;
(iii) declared,
set aside or paid any dividend or other distribution (whether in cash, stock,
property or any combination thereof) in respect of any shares of its capital
stock or any other equity security (other than dividends paid in cash by the
Company’s Subsidiaries to the Company), or purchase, redeem or otherwise
acquire, any shares of its capital stock or any other equity
security;
(iv) other
than capital expenditures that do not exceed $10,000 individually or $50,000
in
the aggregate, made any capital expenditures (including expenditures for
additions to plant, property and equipment) or appropriations or commitments
with respect thereto of more than $500,000 in the aggregate;
(v) created,
incurred or assumed any indebtedness for money borrowed or obligations in
respect of capital leases;
(vi) paid,
discharged or satisfied claims, liabilities or obligations (absolute, accrued,
contingent or otherwise and whether due or to become due) which involve payments
or commitments to make payments exceeding $100,000 in the aggregate, other
than
(A) liabilities or obligations incurred in the Ordinary Course and
(B) scheduled repayments of current portions of and interest on long-term
indebtedness, the estimated amounts of which payments (which in the case of
interest payments on variable rate debt have been projected on the basis of
rates currently in effect) have prior to the execution of this Agreement been
disclosed by the Company to Buyer in a writing which specifically refers to
this
Section;
(vii) assumed,
endorsed, guaranteed or otherwise become liable or responsible for (whether
directly, contingently or otherwise) any indebtedness for money borrowed or
any
other obligation of any other Person;
(viii) other
than purchase orders in the Ordinary Course that do not exceed $100,000
individually and Contracts with customers in the Ordinary Course that do not
exceed $100,000 individually, entered into any transaction or series of related
transactions, whether or not in the Ordinary Course, involving total payments
to
or by it of, or involving the acquisition or disposition by it of property,
assets or rights having a value of, more than $100,000 in the
aggregate;
(ix) approved
or put into effect any increase in compensation or benefits payable to any
of
its current or former employees, officers, independent contractors or directors,
made any bonus payment to any of its current or former employees, officers,
independent contractors or directors, entered into or adopted a new Benefit
Plan, or amended any Benefit Plan to increase the amount of compensation or
benefits payable thereunder;
(x) changed
its accounting methods, principles or practices, except as required by
GAAP;
(xi) waived
any right or entered into any one or more transactions that, individually or
in
the aggregate, has had, or is reasonably likely to have, a Material Adverse
Effect;
(xii) mortgaged,
pledged or subjected to any Lien (other than Permitted Liens) any of its
assets;
(xiii) changed
or modified any of the following: (A) billing and collection
policies, procedures and practices with respect to accounts receivable or
unbilled charges; (B) policies, procedures and practices with respect to the
provision of discounts, rebates or allowances; or (C) payment policies,
procedures and practices with respect to accounts payable;
(xiv) sold
or transferred any of its assets (including, without limitation, any
Intellectual Property), other than the sale of inventory in the Ordinary
Course;
(xv) settled
any Tax Audit or other proceeding, made or changed any Tax accounting or
recording method or election or filed any amended Tax Return; or
(xvi) authorized
any of, or committed or agreed to take, whether in writing or otherwise, any
of
the foregoing actions.
2.7 Taxes. Except
as set forth on Schedule 2.7:
(a) The
Company and its Subsidiaries have timely filed (or have had filed on their
behalf) with the appropriate Tax Authorities all Tax Returns required to be
filed by them, and such Tax Returns are true, correct and complete in all
material respects. The Company and its Subsidiaries have paid, or
have made adequate provision in the Company Balance Sheet in accordance with
GAAP for the payment of, all Taxes for all periods (including any portions
thereof) ending through the date thereof. The unpaid Taxes of the
Company and its Subsidiaries did not, as of the Balance Sheet Date, exceed
the
reserve for Tax liability set forth on the face of
the
Company Balance Sheet (rather than in any notes thereto). Since the
Balance Sheet Date, neither the Company nor any of its Subsidiaries has incurred
any liability for Taxes outside the Ordinary Course.
(b) There
are no liens for Taxes upon any property or assets of the Company or its
Subsidiaries, except for Taxes not yet due, for which adequate reserves have
been established in accordance with GAAP or which are being contested in good
faith.
(c) There
are no Federal, state, local or foreign Tax Audits currently pending with regard
to any Taxes or Tax Returns of the Company or any of its Subsidiaries and,
to
the Knowledge of the Company and the Stockholders, no such Tax Audit is
threatened. No claim has ever been made by a Tax Authority in a
jurisdiction where the Company or any of its Subsidiaries does not file Tax
Returns that it is or may be subject to taxation by that
jurisdiction. Prior to the date of this Agreement, the Stockholders
have delivered or made available to Buyer complete and accurate copies of Tax
Returns of each of the Company and its Subsidiaries and their predecessors
for
all open years and complete and accurate copies of all examination reports
and
statements of deficiencies assessed against or agreed to by either the Company
or its Subsidiaries or any predecessor since February 1, 2003.
(d) There
are no outstanding requests, agreements, consents or waivers to extend the
statutory period of limitations applicable to the assessment of any Taxes or
deficiencies against the Company or its Subsidiaries, and no power of attorney
granted by the Company or its Subsidiaries with respect to any matter relating
to Taxes is currently in force. Neither the Company nor any of its
Subsidiaries has requested or received a ruling from, or entered into a closing
or other agreement with, any Tax Authority that could affect the Tax liability
of the Company or its Subsidiaries for periods after the Closing
Date.
(e) Neither
the Company nor any of its Subsidiaries is a party to any agreement providing
for the allocation, indemnification, or sharing of Taxes that shall remain
in
force after the Closing Date, and neither the Company nor any of its
Subsidiaries shall have any liability after the Closing Date for Taxes pursuant
to any such agreement.
(f) There
are no elections with respect to Taxes affecting the Company or any of its
Subsidiaries, to the extent such elections are not shown on or in the Tax
Returns that have been delivered or made available to Buyer prior to the date
of
this Agreement.
(g) Neither
the Company nor any of its Subsidiaries (i) has consented at any time under
section 341(f)(1) of the Code to have the provisions of
section 341(f)(2) of the Code apply to any disposition of the assets of the
Company or any of its Subsidiaries; (ii) has agreed, or is required, to
make any adjustment under section 481(a) of the Code by reason of a
change in accounting method or otherwise; or (iii) has made any similar
election or is required to apply any similar rules under any comparable state,
local or foreign Tax provision.
(h) Neither
the Company nor any of its Subsidiaries has been a member of an affiliated
group
that includes any Third Party or Stockholder or any of their respective
Affiliates filing a consolidated, combined or unitary income Tax Return for
any
period for which the statute of limitations remains open. Neither the
Company nor any of its Subsidiaries has any
liability
for the Taxes of any Third Party or Stockholder or any of their respective
Affiliates (i) under Treasury Regulation section 1.1502-6 (or any similar
provision of state, local, or foreign law), (ii) as a transferee or successor,
(iii) by contract, or (iv) otherwise.
(i) The
Company and its Subsidiaries have each withheld and paid all Taxes required
to
have been withheld and paid in connection with amounts paid or owing to any
employee, independent contractor, creditor, stockholder or other third party
and
has complied with all applicable information reporting
requirements.
(j) Neither
the Company nor any of its Subsidiaries has distributed the stock of any
corporation in a transaction intended to satisfy the requirements of section
355
of the Code, and the stock of the Company and the stock of each of its
Subsidiaries have not been distributed in a transaction intended to satisfy
the
requirements of section 355 of the Code.
(k) Neither
the Company nor any of its Subsidiaries has participated in any “reportable
transaction” as defined under Treasury Regulations section 1.6011-4 or is
otherwise required to maintain a list pursuant to Treasury Regulations sections
301.6112-1 or 301.6112-1T.
(l) The
Stockholders are not foreign persons subject to withholding under Section 1445
of the Code and the regulations promulgated thereunder, and at the Closing
each
Stockholder shall deliver to Buyer a certificate (the “FIRPTA
Certificate”) to that effect.
2.8 Legal
Matters.
(a) (i) There
is no claim, action, arbitration, suit, litigation, investigation, inquiry,
review, demand, request for information or proceeding (collectively,
“Claims”) pending against, or, to the Knowledge of the Company
and the Stockholders, threatened against or affecting, the Company or any of
its
Subsidiaries or any of their respective properties or rights, at law or in
equity, before or by any court, arbitrator, panel or other Government Authority
and (ii) neither the Company nor any of its Subsidiaries is operating
under, or subject to, any judgment, decree, writ, injunction, ruling, award,
stipulation, determination or order (collectively, “Judgments”)
of any Government Authority, other than any such Claims and Judgments that,
individually or in the aggregate, do not have and are not reasonably to have,
a
Material Adverse Effect.
(b) The
businesses of the Company and its Subsidiaries are being conducted in all
material respects in compliance with all Laws applicable to the Company and
its
Subsidiaries or any of their respective businesses or properties.
(c) The
Company and its Subsidiaries own or hold all Permits material to the conduct
of
their respective businesses. The Company and its Subsidiaries are in
all material respects in compliance with all Permits required by all applicable
Laws. Schedule 2.8(c) lists all Permits owned or held by the
Company or its Subsidiaries. No event has occurred and is continuing
which permits, or after notice or lapse of time or both would permit, any
modification, revocation, non-renewal or termination of any Permit held by
the
Company or any of its Subsidiaries.
(d) Neither
the Company nor any of its Subsidiaries has received any notice asserting any
noncompliance in any material respect with any Law or Permit. Neither
the Company nor any Stockholder has Knowledge of any Law proposed or under
consideration that, if effective, individually or in the aggregate, would have
or is reasonably likely to have, a Material Adverse Effect. No
governmental, administrative or judicial authority has indicated any intention
to initiate any investigation, inquiry or review involving the Company or its
Subsidiaries or any of their respective properties or rights.
2.9 Real
Property.
(a) Neither
the Company nor any of its Subsidiaries owns any Real Property.
(b) Schedule
2.9(b) lists as of the date of this Agreement all Real Property
Leases. The real property described on Schedule 2.9(b)is
referred to as the “Leased Real Property.” Copies of
all written (and summaries of all oral) Real Property Leases have been provided
to Buyer prior to the date of this Agreement.
(c) The
Owned Real Properties and the Leased Real Properties and their condition are
suitable for their current use by the Company and its Subsidiaries.
(d) All
buildings, structures, improvements, fixtures, building systems and equipment,
and all components thereof, included in the Owned Real Properties and the Leased
Real Property are in good condition, ordinary wear and tear excepted and are
suitable for their current use.
(e) There
are adequate sanitary and storm sewer, public water, gas, electrical, telephone
and other utilities and facilities at each of the Owned Real Properties and
Leased Real Properties, and neither the Company nor any of its Subsidiaries
has
received notice from any provider of such services of any changes required
to
any facilities used in connection with such utilities. Neither the
Company nor any Stockholder has Knowledge of any pending or threatened
moratoriums or restrictions that are reasonably likely to adversely affect
the
cost or availability of any public utilities.
(f) The
Company and its Subsidiaries enjoy peaceful and undisturbed possession of each
Owned Real Property and Leased Real Property.
(g) There
are no pending condemnation, eminent domain, or any other taking by public
authority with or without payment of consideration therefor or similar actions
with respect to any of the Owned Real Properties, or, to the Knowledge of the
Company and the Stockholders, any of the Leased Real Properties, nor has any
notice of such a proposed condemnation been received by the Stockholders or
the
Company or any of its Subsidiaries.
(h) None
of the Owned Real Properties is subject to any lease, sublease, license or
other
agreement granting to any other Person any right to the use or occupancy of
such
Owned Real Property or any part thereof, and there are no outstanding options,
rights of first offer or rights of first refusal to purchase any Owned Real
Property or any interest therein.
(i) The
Company or each of its Subsidiaries has the right to conduct its business in
each Leased Real Property for the remaining term of the applicable Real Property
Lease.
(j) With
respect to the Leased Real Property, all options to renew, rights of first
offer
and rights of first refusal exercisable prior to the date of this Agreement
have
been properly exercised.
(k) Neither
the Company nor any of its Subsidiaries has entered into any subleases with
respect to any Real Property.
2.10 Inventory. All
inventories, net of reserves, reflected on the Company Balance Sheet or arising
since the Balance Sheet Date, are currently marketable and are good and usable
in connection with the business of the Company and its Subsidiaries as presently
conducted. The value of all inventory used or held for use by the
Company or its Subsidiaries that is obsolete, slow moving, excess or of
below-standard quality has been written down to net realizable value or adequate
reserves have been provided therefor. The values at which such
inventories are carried are in accordance with GAAP consistently
applied. The amount and mix of items in the inventories of supplies,
in process and finished products are consistent with the business practice
of
the Company and its Subsidiaries.
2.11 Intellectual
Property.
(a) Schedules
2.11(a)-1 to 2 list (1) all Domain Names of which the Company or
any of its Subsidiaries is the registrant or of which a third party is the
registrant for the benefit of the Company or its Subsidiaries (collectively,
the
“Company Registered Domain Names”); and (2) all Patents owned
by the Company or its Subsidiaries (collectively, the “Company
Patents” and, together with the Company Registered Domain Names, the
“Company Registered IP”). Neither the Company nor
any of its Subsidiaries owns any Marks or any pending applications for
registration or Marks or has any registered Copyrights or pending applications
for registration of any Copyrights. Neither the Company Registered IP
nor any other Intellectual Property owned or, to the Knowledge of the Company
and the Stockholders, used by the Company or any of its Subsidiaries (the
Company Registered IP, together with all other Intellectual Property owned
or
used by the Company, the “Company IP”) infringes upon or
misappropriates or violates the Intellectual Property rights or the confidential
and proprietary information, including Trade Secrets, of any Third
Party. None of the Company IP has been the subject of a judicial
finding or opinion, nor has the Company or any of its Subsidiaries received
any
written notice or claim challenging the ownership, validity, registrability,
enforceability, use or licensed right to use any Intellectual
Property. No claim or notice has been asserted against the Company or
any of its Subsidiaries in writing or, to the Knowledge of the Company and
the
Stockholders, orally, that the conduct of the business of the Company or any
of
its Subsidiaries as currently conducted infringes in any material respect upon
or misappropriates the Intellectual Property rights or the confidential and
proprietary information, including Trade Secrets, of any Third Party, in each
case, except with respect to claims or notices that have been fully
resolved. The Company and each of its Subsidiaries have timely paid
all filing, examination, issuance, post registration and maintenance fees,
annuities and the like associated with or required with respect to the Company
Registered IP, and all documents, recordations and certificates necessary to
be
filed
by
the Company or its Subsidiaries to maintain the effectiveness of the Company
Registered IP have been filed with the relevant patent, copyright, trademark
or
other authorities in the United States or foreign jurisdictions, as the case
may
be, so that no item required to be listed in Schedule 2.11(a)-1 or
2, has lapsed, expired or been abandoned or canceled other than
in the
Ordinary Course.
(b) The
Company and its Subsidiaries have used reasonable best efforts to protect its
rights and the secrecy of its confidential information and Trade Secrets,
including by requiring that all employees, consultants and independent
contractors who are involved in the creation of Intellectual Property for the
Company or its Subsidiaries enter into non-disclosure and invention assignment
agreements.
(c) The
Company and each of its Subsidiaries own all right, title and interest in and
to
the Company Registered IP, or have a valid license to use (if required), each
other item of Intellectual Property currently used by the Company or its
Subsidiaries in the business of the Company and its Subsidiaries and is entitled
to use any such Company Registered IP or other Intellectual Property used in
the
operation of the business of the Company and its Subsidiaries as currently
conducted to the extent such use is material to such business.
(d) There
are no claims asserted or threatened by the Company or its Subsidiaries that
a
Third Party infringes, misappropriates or otherwise violates any of the Company
IP.
(e) The
Company IP, together with the rights granted to the Company or its Subsidiaries
under any “shrink-wrap” or “click-wrap” license agreements relating to Software
desktop applications, are sufficient for the continued conduct of the business
of the Company and its Subsidiaries after the Closing Date in the same manner
as
it was conducted prior to the Closing Date in all material
respects.
2.12 Insurance. Schedule
2.12 lists as of the date of this Agreement all policies of title, property,
fire, casualty, liability, life, business interruption, product liability,
sprinkler and water damage, workmen's compensation, libel and slander, and
other
forms of insurance of any kind relating to the business and operations of the
Company or its Subsidiaries (the “Insurance
Policies”). Prior to the date of this Agreement, the Company
has furnished to Buyer true and complete copies of all such
policies. All of the Insurance Policies are in full force and effect
and are maintained with reputable insurance carriers, and the Company or each
of
its Subsidiaries has made all payments required to maintain the Insurance
Policies in full force and effect. Neither the Company nor any of its
Subsidiaries has received notice of default under any Insurance Policy, nor
has
any of them received written notice or, to the Knowledge of the Company and
the
Stockholders, oral notice of any pending or threatened termination or
cancellation, coverage limitation or reduction or premium increase with respect
to any Insurance Policy.
2.13 Company
Agreements.
(a) Schedule
2.13(a) lists as of the date of this Agreement (i) each Company
Agreement that is material to the business, assets, liabilities, results of
operation, operations,
financial
condition or EBITDA of the Company and its Subsidiaries taken as a whole, and
(ii) without regard to materiality, each of the following:
(i) any
mortgage, indenture, note, installment obligation or other instrument, agreement
or arrangement for or relating to any borrowing of money by the Company or
any
of its Subsidiaries;
(ii) any
guaranty, direct or indirect, primary or secondary, by the Company or any of
its
Subsidiaries of any obligation for borrowings or otherwise, excluding
endorsements made for collection in the Ordinary Course;
(iii) any
Company Agreement made other than in the Ordinary Course;
(iv) any
Company Agreement providing for the grant of any preferential rights to purchase
or lease any of the assets of the Company or its Subsidiaries;
(v) any
Company Agreement providing for any obligation to register any shares of the
capital stock or other securities of the Company or its Subsidiaries with the
Securities and Exchange Commission or otherwise relating to such stock or other
securities;
(vi) any
Company Agreement providing for any obligation to make payments, contingent
or
otherwise, arising out of the prior acquisition of the business, assets or
stock
of other Persons;
(vii) any
Company Agreement that is a collective bargaining agreement with any labor
union;
(viii) any
Company Agreement providing for any lease or similar arrangement for the use
by
the Company or its Subsidiaries of personal property involving payments of
in
excess of $25,000 per annum;
(ix) any
Company Agreement to which any Insider is a party;
(x) any
Company Agreement with a term in excess of one year or providing for aggregate
payments in excess of $25,000 or $100,000 for all such Company Agreements that
are not otherwise listed on Schedule 2.13(a);
(xi) any
Company Agreement that contains a non-competition provision relating to the
business of the Company or its Subsidiaries (or, at any time after the
consummation of the Closing, Buyer or any of its Affiliates) or any other
Contract restricting the right of the Company or its Subsidiaries (or, at any
time after the consummation of the Closing, Buyer or any of its Affiliates)
to
conduct business at any time, in any manner or at any place in the world, or
the
expansion thereof to other geographical areas or lines of business, or that
grants the other party or any third Person “most favored nation”
status;
(xii) any
Company Agreement that is a partnership, joint venture or similar agreement;
and
(xiii) any
Company Agreement relating to the acquisition or disposition of any
business.
(b) Copies
of all written Company Agreements referred to on Schedule 2.13(a) have
been delivered to Buyer prior to the date of this Agreement, and the
Stockholders have prior to the date of this Agreement provided Buyer with
accurate and complete written summaries of all such Company Agreements that
are
unwritten.
(c) With
such exceptions as, individually or in the aggregate, do not have, and are
not
reasonably likely to have, a Material Adverse Effect:
(i) all
of the Company Agreements are in full force and effect and are valid and binding
on and enforceable against the Company or its applicable Subsidiary in
accordance with their terms and, to the Knowledge of the Company and the
Stockholders, on and against the other parties thereto, except as enforceability
may be limited by applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or other Laws relating to or affecting the rights
and
remedies of creditors generally and to general principles of equity (regardless
of whether in equity or at law);
(ii) neither
the Company nor any of its Subsidiaries is, and, to the Knowledge of the Company
and the Stockholders, no other party to any Company Agreement is, in breach
of,
or default under, any Company Agreement and no event has occurred that, with
the
giving of notice or the lapse of time or both, would constitute a breach of,
or
default under, any Company Agreement;
(iii) neither
the Company nor any of its Subsidiaries has waived any right under any Company
Agreement;
(iv) there
are no unresolved disputes under any Company Agreement; and
(v) neither
the Company nor any of its Subsidiaries has given to or received from any other
Person, at any time since December 31, 2004, any notice or other written
communication regarding any actual, alleged, possible or potential violation
or
breach or, or default under, any Company Agreement.
2.14 Labor
Relations.
(a) Schedule
2.14(a) lists as of May 31, 2007 all employees of the Company or its
Subsidiaries, including for each such employee, his or her (i) name; (ii) job
title; (iii) status as a full-time or part-time employee; (iv) base salary
or
wage rate; (v) bonus entitlement; (vi) years of service; and (vii) whether
or not each such employee is actively at work and, if not, the reason that
such
employee is not actively at work.
(b) Schedule
2.14(b) lists as of May 31, 2007 all individuals who perform services for
the Company or its Subsidiaries as an independent contractor or a leased
employee, the services they perform, their rate of compensation and any bonus
entitlement.
(c) (i)
Except as set forth on Schedule 2.14(c), no employees of the Company
or its Subsidiaries are covered by a collective bargaining agreement; (ii)
no
employees of the Company or its Subsidiaries are, or within the last three
years
have been, represented by a union or other labor organization, association
or
bargaining agent; and (iii) to the Knowledge of the Company and the
Stockholders, no employee organizing efforts are now being conducted or pending
with respect to employees of the Company or any of its
Subsidiaries. The Stockholders have delivered to Buyer accurate and
complete copies of each collection bargaining agreement that covers any
employees of the Company or any of its Subsidiaries. Within the last
three years, there has been no strike, work stoppage, work slowdown or other
material labor dispute with respect to employees of the Company or any of its
Subsidiaries, nor to the Knowledge of the Company and the Stockholders, is
any
such action threatened. Neither the Company nor any of its
Subsidiaries is involved in any labor dispute, arbitration, lawsuit or
administrative proceeding relating to labor matters involving the employees
of
the Company or any of its Subsidiaries and, to the Knowledge of the Company
and
the Stockholders, no such dispute, arbitration, lawsuit or proceeding is
threatened.
(d) The
Company and its Subsidiaries have paid or made provision for the payment of
all
salaries and accrued wages and have complied in all material respects with
all
applicable Laws relating to the employment of labor, including those relating
to
wages, hours, collective bargaining and the payment and withholding of Taxes,
and have withheld and paid to the appropriate governmental authority, or are
holding for payment not yet due to such authority, all amounts required by
law
or agreement to be withheld from the wages or salaries of the employees of
the
Company and its Subsidiaries.
(e) There
are no claims or disputes pending or, to the Knowledge of the Company and the
Stockholders, threatened by any current or former employee of the Company or
its
Subsidiaries in relation to his or her employment with, or termination of
employment from, the Company or its Subsidiaries (including, without limitation,
any claim of discrimination).
2.15 Employee
Benefit Plans.
(a) Schedule
2.15(a) lists (i) all “employee benefit plans” within the meaning of Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended
(“ERISA”), (ii) all other employee benefit plans, arrangements
and policies, including all stock option, stock purchase, stock award, stock
appreciation, phantom stock, deferred compensation, pension, retirement,
savings, profit sharing, incentive, bonus, health, life insurance, cafeteria,
flexible spending, dependent care, fringe benefit, vacation pay, holiday pay,
disability, sick pay, unemployment, severance, employee loan or educational
assistance plans, arrangements and policies, and (iii) all employment,
consulting or change-in-control agreements, in each case, that is sponsored
or
maintained by the Company or any of its Subsidiaries or any of their respective
Affiliates, or to which the Company or any of its Subsidiaries, or any of their
respective Affiliates is a party, contributes or is required to contribute,
on
behalf of current or former employees, consultants or directors of the Company
or any of its Subsidiaries or their
beneficiaries
or dependents, whether or not written, other than a Multiemployer Plan
(“Benefit Plans”). Neither the Company, nor any of
its Subsidiaries, nor any of their respective Affiliates has communicated to
present or former employees of the Company or any of its Subsidiaries, or
formally adopted or authorized, any additional Benefit Plan or any change in
or
termination of any existing Benefit Plan. No Benefit Plan covers
employees other than employees of the Company or any of its
Subsidiaries.
(b) The
Stockholders have delivered to Buyer complete and correct copies of each Benefit
Plan, or written summaries of any unwritten Benefit Plan, any employee handbook
applicable to employees of the Company or its Subsidiaries, and, with respect
to
each Benefit Plan, the current summary plan description, all related trust
agreements and insurance contracts, the latest IRS determination letter, the
last three annual financial statements, and the last three annual reports on
IRS
Form 5500 (including all required schedules and accountant’s
opinions).
(c) Each
Benefit Plan is and has been operated and administered in accordance with its
terms, any applicable collective bargaining agreement and all applicable
Laws. Each Benefit Plan intended to be tax-qualified under Section
401(a) of the Internal Revenue Code of 1986, as amended (the
“Code”), has received a favorable determination letter from the
IRS as to its tax-qualified status under the Code and nothing has occurred
since
the date of such favorable determination letter which would adversely affect
the
qualified status of such plan. Each Benefit Plan that is subject to
Section 409A of the Code has been operated in accordance with the requirements
of Section 409A of the Code.
(d) All
contributions and premium payments required to have been paid under or with
respect to any Benefit Plan have been timely paid.
(e) No
Benefit Plan provides health, life insurance or other welfare benefits to
retirees or other terminated employees of the Company or its Subsidiaries,
other
than continuation coverage required by Section 4980B of the Code or Sections
601-608 of ERISA (“COBRA”) or as set forth on Schedule
2.15(n).
(f) Since
January 29, 2005, there has been no change in any Benefit Plan, or its related
funding vehicle, which would significantly increase the cost of the Company
or
its Subsidiaries, or the benefits payable, with respect to such
plan.
(g) Schedule
2.15(g) sets forth a true and complete list of each “multiemployer
plan” (within the meaning of Section 3(37) or Section 4001(a)(3) of ERISA)
maintained or contributed to by the Company or any of its Subsidiaries or any
of
their respective ERISA Affiliates, or to which the Company or any of its
Subsidiaries or any of their respective ERISA Affiliates is obligated to
contribute or has any liability (contingent or otherwise) (a
“Multiemployer Plan”). Neither the Company nor any of its
Subsidiaries nor any of their respective ERISA Affiliates (i) has incurred,
or
is reasonably likely to incur, a “complete withdrawal” or a “partial withdrawal”
(as such terms are defined in Sections 4203 and 4205, respectively, of ERISA)
with respect to any Multiemployer Plan, (ii) has engaged in a transaction that
is subject to Section 4212(c) of ERISA, (iii) has received any
notification, or has any reason to believe, that any Multiemployer Plan is
in
reorganization, has been terminated, is insolvent or may reasonably be expected
to be in reorganization, to be insolvent or to be terminated, or
(iv)
has
or
will have any liability (contingent or otherwise) as a result of the
transactions contemplated by this Agreement under the terms of any Multiemployer
Plan (including, but not limited to, the trust agreement for such
plan). During the last six years, neither the Company, nor any of its
Subsidiaries nor or any of their respective ERISA Affiliates is or has ever
been
a party to any multiple employer plan, as that term is defined in Section 413(c)
of the Code, or a multiple employer welfare arrangement, as that term is defined
in Section 3(40) of ERISA.
(h) No
Benefit Plan is a “defined benefit plan”, within the meaning of Section 3(35) of
ERISA, or a plan subject to Section 412 of the Code, and neither the Company
nor
any of its Subsidiaries has any liability (contingent or otherwise) with respect
to any such plan.
(i) No
event has occurred and no condition exists with respect to any Benefit Plan
which could subject any Benefit Plan, the Company or its Subsidiaries, directly
or indirectly (through an indemnification agreement or otherwise), to a
liability for a breach of fiduciary duty, a “prohibited transaction,” within the
meaning of Section 406 of ERISA or Section 4975 of the Code, or a tax, penalty
or fine under ERISA or the Code.
(j) No
actions, suits or claims (other than routine claims for benefits in the Ordinary
Course) are pending with respect to any Benefit Plan or, to the Knowledge of
the
Company and the Stockholders, threatened, and the Company and the Stockholders
have no Knowledge of any facts which could give rise to any such actions, suits
or claims (other than routine claims for benefits in the Ordinary
Course). No Benefit Plan is currently under governmental
investigation or audit and, to the Knowledge of the Company and the
Stockholders, no such investigation or audit is contemplated or under
consideration.
(k) No
event has occurred and no condition exists with respect to any employee benefit
plan or arrangement currently or previously maintained or contributed to by
any
Affiliate of the Company (other than a Benefit Plan or Multiemployer Plan listed
on Schedule 2.15(g)) which could subject the Company or its Subsidiaries
to liability, including liability under Section 412, 4971 or 4980B of the Code
or Title IV of ERISA.
(l) Except
as set forth on Schedule 2.15(l), neither the execution of this Agreement
nor the consummation of the transactions contemplated by this Agreement, will
(i) increase the amount of benefits otherwise payable under any Benefit Plan,
(ii) result in the acceleration of the time of payment, exercisability, funding
or vesting of any such benefits, or (iii) result in any payment (whether
severance pay or otherwise) becoming due to, or with respect to, any current
or
former employee or director of the Company or its Subsidiaries. No
payment or series of payments that would constitute an “excess parachute
payment” (within the meaning of Section 280G of the Code) has been made or will
be made by the Company or its Subsidiaries, directly or indirectly, to any
employee in connection with the execution of this Agreement or as a result
of
the consummation of the transactions contemplated hereby.
(m) Substantially
adequate and complete records have been and are maintained with respect to
each
Benefit Plan and are in the custody of the Company or its Subsidiaries or a
third party service provider retained by the Company or its
Subsidiaries.
(n) Except
for liabilities or obligations under COBRA, the employment and consulting
agreements listed on Schedule 2.13(a) or the Nonqualified Plan of Commercial
Envelope Manufacturing Co., Inc. (the “Nonqualified Plan”),
neither the Company nor any of its Subsidiaries has any liabilities or
obligations of any nature to any former officer, employee, independent
contractor, director or consultant of the Company, a Subsidiary or an Affiliate
of the Company (or any spouse, family member, dependent or beneficiary of such
a
person), other than to provide the benefits described on Schedule 2.15(n)
to the individuals listed on Schedule 2.15(n) (the
“Retirees”). As of the consummation of the Closing,
neither the Company nor any of its Subsidiaries will have any liability or
obligation to any of the Retirees.
(o) Neither
the Company nor any of its Subsidiaries sponsors, maintains or has any liability
with respect to an “account balance plan,” within the meaning of Treasury
Regulation Section 1.409A-1(c), other than the Nonqualified Plan.
2.16 Transactions
with Insiders. Schedule 2.16-1 describes all Contracts
between the Company or its Subsidiaries, on the one hand, and one or more
Insiders, on the other hand, and Schedule 2.16-2 describes all
transactions (including any payments) between the Company or its Subsidiaries,
on the one hand (“Insider Transactions”), and any Insider, on
the other hand, that have occurred since January 29, 2005, other than
compensation paid in the Ordinary Course and dividends paid to the
Stockholders.
2.17 Environmental
Matters.
(a) Except
as set forth on Schedule 2.17 and with such exceptions as, individually
or in the aggregate, do not have, and are not reasonably likely to have, a
Material Adverse Effect:
(i) (A) the
Company and its Subsidiaries have complied with and are currently in compliance
with the provisions of all applicable Environmental Laws; and (B) the Owned
Real Property and the Leased Real Property is in compliance with the provisions
of all applicable Environmental Laws;
(ii) no
Hazardous Materials have been discharged, disbursed, released, stored, treated,
generated, disposed of or allowed to escape on, in, under, or from the Owned
Real Property or the Leased Real Property;
(iii) there
are no underground storage tanks, asbestos, asbestos-containing materials,
polychlorinated biphenyls (PCBs) or PCB wastes located, contained, used or
stored at or on any Owned Real Property or Leased Real Property. No
underground storage tanks, asbestos, asbestos-containing materials,
polychlorinated biphenyls (PCBs) or PCB wastes were previously located,
contained, used or stored at or on any Owned Real Property or Leased Real
Property;
(iv) neither
the Companynor any of its Subsidiaries has received, and neither the Company
nor
any Stockholder has Knowledge of, any notice, order, directive, claim or demand
from any Government Authority with respect to: (A) the generation, storage,
use,
handling, transportation, treatment, emission, spillage, disposal, release,
discharge or removal of any chemical, Hazardous Materials, waste containing
any
chemical
or Hazardous Material, or asbestos; or (B) any actual or potential violation
or
failure to comply with any Environmental Law;
(v) neither
the Company nor any of its Subsidiaries nor any of their respective predecessors
has filed any notice under any Law reporting a release of a chemical, Hazardous
Material, or waste containing any chemical or Hazardous Material into the
environment;
(vi) neither
the Company nor any of its Subsidiaries nor any of their
respective predecessors has entered into any negotiations, agreements
or undertakings with any Person relating to any Remedial Action;
(vii) there
are no acts or omissions by the Company or its Subsidiaries that give rise
to,
or are reasonably likely to give rise to, Losses under Environmental
Laws. There are no facts, events or conditions with respect to the
past or present operation of the Real Property that interfere or prevent
continued compliance with, or that give rise to any action, suit, claim or
proceeding under, or that are reasonably likely to interfere with or prevent
continued compliance with, or that are reasonably likely give rise to any
action, suit, claim or proceeding under, Environmental Laws; and
(viii) there
have been no Hazardous Materials generated by the Company or any of its
Subsidiaries or any of their respective predecessors that have been disposed
of
or come to rest at any site that has been included in any published federal,
state or local priority list of hazardous or toxic waste sites, or that is
the
subject of a claim or demand from any third party.
(b) The
Company has made available to Buyer all: (i) copies of all
reports, studies, analyses or tests, and any results of monitoring programs,
in
the possession or control of the Company or its Subsidiaries within the last
five years pertaining to the generation, storage, use, handling, transportation,
treatment, emission, spillage, disposal, release or removal of Hazardous
Materials at, in, on or under the Real Property; and (ii) a copy of any
environmental investigation or assessment of the Owned Real Property or the
Leased Real Property conducted by the Company or its Subsidiaries or any
environmental consultant engaged by either of them within the past five
years.
(c) Neither
the Owned Real Property nor the Leased Real Property is subject to any Lien
securing the costs of any Remedial Action arising under Environmental
Laws.
2.18 OSHA
Matters. The Company and its Subsidiaries are in compliance with
the requirements of the Occupational Safety and Health Act and the regulations
promulgated thereunder and any similar Laws or regulations of any state or
local
jurisdiction (“OSHA”), except for such noncompliance as,
individually or in the aggregate, does not have, and is not reasonably likely
to
have, a Material Adverse Effect. Neither the Company nor any of its
Subsidiaries has received any citation from the Occupational Safety and Health
Administration or any comparable administration of any state or local
jurisdiction (an “Administration”) or any Administration
inspector setting forth any respect in which the facilities or operations of
the
Company or its Subsidiaries are not in compliance with OSHA, or the regulations
under such act,
which
non-compliance has not been corrected or remedied to the satisfaction of such
Administration or inspector. There have been no citations issued to
the Company or any of its Subsidiaries under OSHA or any correspondence between
the Company or any of its Subsidiaries from or to OSHA or any other
Administration or the inspectors of OSHA or any other Administration during
the
past five years.
2.19 Title;
Condition of Assets.
(a) The
Company or each of its Subsidiaries has good and marketable title to or valid
leasehold or license interests in all of the assets and properties that they
purport to own, lease or license (including those assets reflected on the
Company Financial Statements and all of its Intellectual Property), free and
clear of any and all Liens, except Permitted Liens and Liens listed on
Schedule 2.19. Except for the Excluded Assets, such assets and
properties (i) constitute all of the assets and properties which are owned,
used
or held for use in the conduct by the Company and its Subsidiaries of their
businesses as they are currently conducted or contemplated to be conducted
and
(ii) are suitable for the purposes for which they are currently used and
currently proposed to be used. No Insider has any right in or to any
of the assets and properties which are owned, used or held for use in the
conduct by the Company or its Subsidiaries of its business as they are currently
conducted or contemplated to be conducted.
(b) The
tangible personal property of the Company and each of its Subsidiaries is in
good working condition and repair, reasonable wear and tear
excepted.
2.20 Suitability. Neither
the Company nor any of its Subsidiaries, nor any of their respective directors
and officers, nor the Stockholders or, to the Knowledge of the Company and
the
Stockholders, any other Affiliate of the foregoing (a) has ever been convicted
of, plead no contest to or, to Knowledge of the Company and the Stockholders,
indicted for any felony or any crime involving fraud, misrepresentation, bribery
or moral turpitude, (b) is subject to any Judgment barring, suspending or
otherwise limiting the right of such Person to engage in any activity or (c)
has
ever been denied any Permit affecting the ability of such Person to conduct
any
activity currently conducted or currently contemplated to be conducted by such
Person, nor, to the Knowledge of the Company and the Stockholders, is there
any
basis upon which such Permit may be denied.
2.21 Suppliers
and Customers. Except for performance bonds listed on Schedule
2.21-1, neither the Company nor any of its Subsidiaries is required to
provide bonding or any other security arrangements in connection with any
transactions with any of its customers, suppliers, and
creditors. Schedule 2.21-2 lists the top 20 suppliers (by
volume of purchases from such suppliers) and top 20 customers (by volume of
purchases by such customers) of the Company and its Subsidiaries for the fiscal
year ended February 3, 2007 and the 13-week period ended May 5,
2007. The Company has not received any written or, to the Knowledge
of the Company and the Stockholders, oral, notice from any of the suppliers
or
customers on Schedule 2.21-2 to the effect that, and the Company has no
reason to believe that, any such supplier or customer will stop, materially
decrease the rate of, or materially change the terms (whether related to
payment, price or otherwise) with respect to, supplying or purchasing materials,
products or services to or from the Company or its Subsidiaries (whether as
a
result of the consummation of the transactions contemplated hereby or
otherwise).
2.22 Bank
Accounts, Authorized Signatories. Schedule 2.22 sets forth
the name of each bank in which the Company or its Subsidiaries has an account
or
safe deposit box or standby letter of credit, the identifying numbers or symbols
thereof and the names of all persons authorized to draw thereon or to have
access thereto. Schedule 2.22 also sets forth the names and
titles of all authorized signatories of the Company and its Subsidiaries for
each such account and safe deposit box.
2.23 Brokers. Other
than The Open Approach, neither the Company nor any of its Subsidiaries has,
and
no director, officer or employee of either of them has, employed any broker
or
finder, or incurred or will incur any broker’s, finder’s or similar fees,
commissions or expenses, in each case in connection with the transactions
contemplated by this Agreement or any other Transaction Document. All
fees and expenses of The Open Approach will be paid by the
Stockholders.
REPRESENTATIONS
AND WARRANTIES
REGARDING
THE STOCKHOLDERS
Each
Stockholder hereby severally and not jointly represents and warrants as
follows:
3.1 Ownership
of Shares; Title. Each Stockholder is the owner of record and
beneficially of the number of Shares set forth next to such Stockholder’s name
on Schedule 2.2. Such Stockholder has, and shall transfer to
Buyer at the Closing, good, valid and marketable title to such Shares, free
and
clear of any and all Liens.
3.2 Capacity,
Enforceability and Consents.
(a) In
the case of a Stockholder who is an individual, such Stockholder is a natural
person and has the legal capacity to enter into this Agreement and the other
Transaction Documents to be executed and delivered by such Stockholder and
to
perform his or her obligations hereunder and thereunder. In the case
of the Trust, such Stockholder is a trust duly formed, validly existing and
in
good standing under the laws of the State of New York and has all requisite
power and authority to carry on and conduct its business as it is now being
conducted. In the case of the Trust, the trustees of the Trust named
on the signature page to this Agreement are the only trustees of the Trust
and
have served as the only trustees of the Trust since its
formation. The Trust has provided to Buyer a true, complete and
correct copy of its trust agreement.
(b) This
Agreement has been, and the other Transaction Documents to be executed and
delivered by such Stockholder at the Closing will, at the Closing, have been,
duly executed and delivered by such Stockholder and constitutes (or will
constitute at the Closing, as applicable) the legal, valid and binding
obligations of such Stockholder, enforceable against such Stockholder in
accordance with their respective terms, except as enforceability may be limited
by applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium or other Laws relating to or affecting the rights and remedies of
creditors generally and to general
principles
of equity (regardless of whether in equity or at law) affecting creditors’
rights generally or by the principles governing the availability of equitable
remedies.
(c) The
execution, delivery and performance of this Agreement and the other Transaction
Documents to be executed by such Stockholder and the consummation by such
Stockholder of the transactions contemplated hereby and thereby does not and
will not:
(i) in
the case of the Trust, contravene any provisions of its trust
agreement;
(ii) (after
notice or lapse of time or both) violate, conflict with, result in a breach
of
any provision of, constitute a default under, result in or permit the
modification, revocation, cancellation, termination or acceleration of, any
Contract to which the Stockholders are party to or by which any of such
Stockholder’s properties or assets are bound or otherwise subject, or require
any consent or waiver of any party to any such Contract;
(iii) violate
or conflict with any Law applicable to such Stockholder or any of such
Stockholder’s Affiliates, businesses or properties;
(iv) result
in the creation or imposition of any Lien on any of the Shares set forth next
to
such Stockholder’s name on Schedule 2.2; or
(v) require
any authorization, consent, order, permit or approval of, or notice to, or
filing, registration or qualification with, any Government Authority, except
in
connection with or in compliance with the provisions of the HSR
Act.
3.3 Legal
Matters. There is no Claim pending against, or, to the Knowledge
of such Stockholder, threatened against or affecting, such Stockholder or any
of
his, her or it s properties or rights, at law or in equity, before or by any
court, arbitrator, panel or other Government Authority that could adversely
affect the ability of such Stockholder to consummate the transactions
contemplated by this Agreement or any of the other Transaction Documents to
which such Stockholder is a party.
3.4 Suitability. Such
Stockholder (a) has never been convicted of, plead no contest to or indicted
for
any felony or any crime involving fraud, misrepresentation, bribery or moral
turpitude, (b) is not subject to any Judgment barring, suspending or otherwise
limiting the right of such Stockholder to engage in any activity or (c) has
ever
been denied any Permit affecting the ability of such Stockholder to conduct
any
activity currently conducted or currently contemplated to be conducted by such
Stockholder, nor, to the Knowledge of such Stockholder, is there any basis
upon
which such Permit may be denied.
3.5 Brokers. Other
than The Open Approach such Stockholder has not employed any broker or finder
and has not incurred and will not incur any broker’s, finder’s or similar fees,
commissions or expenses, in each case in connection with the transactions
contemplated by this Agreement or any other Transaction Document.
REPRESENTATIONS
AND WARRANTIES
REGARDING
THE STOCKHOLDERS’ REPRESENTATIVE
The
Stockholders’ Representative hereby represents and warrants as
follows:
4.1 Capacity,
Enforceability and Consents.
(a) The
Stockholders’ Representative is a natural person and has the legal capacity to
enter into this Agreement and the other Transaction Documents to be executed
and
delivered by the Stockholders’ Representative and to perform his obligations
hereunder and thereunder.
(b) This
Agreement has been, and the other Transaction Documents to be executed and
delivered by the Stockholders’ Representative at the Closing will, at the
Closing, have been, duly executed and delivered by the Stockholders’
Representative and constitutes (or will constitute at the Closing, as
applicable) the legal, valid and binding obligations of the Stockholders’
Representative, enforceable against the Stockholders’ Representative in
accordance with their respective terms, except as enforceability may be limited
by applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium or other Laws relating to or affecting the rights and remedies of
creditors generally and to general principles of equity (regardless of whether
in equity or at law) affecting creditors’ rights generally or by the principles
governing the availability of equitable remedies.
(c) The
execution, delivery and performance of this Agreement and the other Transaction
Documents to be executed by the Stockholders’ Representative and the
consummation by the Stockholders’ Representative of the transactions
contemplated hereby and thereby does not and will not:
(i) (after
notice or lapse of time or both) violate, conflict with, result in a breach
of
any provision of, constitute a default under, result in or permit the
modification, revocation, cancellation, termination or acceleration of, any
Contract to which the Stockholders’ Representative are party to or by which any
of his properties or assets are bound or otherwise subject, or require any
consent or waiver of any party to any such Contract;
(ii) violate
or conflict with any Law applicable to the Stockholders’ Representative or any
of the Affiliates, businesses or properties of Stockholders’ Representative;
or
(iii) require
any authorization, consent, order, permit or approval of, or notice to, or
filing, registration or qualification with, any Government
Authority.
4.2 Legal
Matters. There is no Claim pending against, or, to the Knowledge
of the Stockholders’ Representative, threatened against or affecting, the
Stockholders’ Representative or any of his properties or rights, at law or in
equity, before or by any court, arbitrator, panel or other Government Authority
that could adversely affect the ability of the Stockholders’
Representative
to consummate the transactions contemplated by this Agreement or any of the
other Transaction Documents to which the Stockholders’ Representative is a
party.
4.3 Suitability. The
Stockholders’ Representative (a) has never been convicted of, plead no contest
to or indicted for any felony or any crime involving fraud, misrepresentation,
bribery or moral turpitude, (b) is not subject to any Judgment barring,
suspending or otherwise limiting the right of the Stockholders’ Representative
to engage in any activity or (c) has ever been denied any Permit affecting
the
ability of the Stockholders’ Representative to conduct any activity currently
conducted or currently contemplated to be conducted by the Stockholders’
Representative, nor, to the Knowledge of the Stockholders’ Representative, is
there any basis upon which such Permit may be denied.
REPRESENTATIONS
AND WARRANTIES REGARDING BUYER
Buyer
hereby represents and warrants as follows:
5.1 Organization
and Good Standing. Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the State of
Delaware.
5.2 Authority,
Approvals, Enforceability and Consents.
(a) Buyer
has the corporate power and authority to enter into this Agreement and the
other
Transaction Documents to be executed and delivered by Buyer and to perform
its
obligations hereunder and thereunder.
(b) The
execution, delivery and performance by Buyer of this Agreement and the other
Transaction Documents to be executed and delivered by Buyer and the consummation
by Buyer of the transactions contemplated hereby and thereby have been duly
authorized and approved by the Board of Directors or other governing body of
Buyer and no other corporate proceedings on the part of Buyer are necessary
to
authorize and approve this Agreement and the other Transaction Documents to
be
executed and delivered by Buyer and the transactions contemplated hereby and
thereby.
(c) This
Agreement has been and the other Transaction Documents to be executed and
delivered by Buyer at the Closing will, at the Closing, have been duly executed
and delivered by Buyer, and constitutes (or will constitute at the Closing,
as
applicable) the legal, valid and binding obligations of Buyer enforceable
against Buyer in accordance with their respective terms except as enforceability
may be limited by applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or other Laws relating to or affecting the rights
and
remedies of creditors generally and to general principles of equity (regardless
of whether in equity or at law).
(d) The
execution, delivery and performance by Buyer of this Agreement and the other
Transaction Documents to be executed and delivered by it and the consummation
by
Buyer of the transactions contemplated hereby and thereby do not and will
not:
(i) contravene
any provisions of the certificate of incorporation or bylaws of
Buyer;
(ii) (after
notice or lapse of time or both) violate, conflict with, result in a breach
of
any provision of, constitute a default under, result in or permit the
modification, revocation, cancellation, termination or acceleration of, any
Contract to which Buyer is a party or by which any of its properties or assets
are bound or otherwise subject or, except as set forth on Schedule 5.2,
require any consent or waiver of any party to any such Contract;
(iii) violate
or conflict with any Law applicable to Buyer or its business or its properties;
or
(iv) require
any authorization, consent, order, permit or approval of, or notice to, or
filing, registration or qualification with, any Government Authority, except
in
connection with or in compliance with the provisions of the HSR
Act.
5.3 Use
of the Accounting Firm. Since September 12, 2005, neither Buyer
nor any of its Subsidiaries has engaged Accounting Firm.
5.4 Brokers. Buyer
has not, and no director, officer or employee thereof has, employed any broker
or finder, and Buyer has not incurred, and will not incur, any broker’s,
finder’s or similar fees, commissions or expenses, in each case in connection
with the transactions contemplated by this Agreement or any other Transaction
Document.
COVENANTS
6.1 Access. Between
the date hereof and the Closing Date, the Company will, and the Stockholders
will cause the Company to, provide, to Buyer and its Representatives, full
access, during normal business hours, to any and all premises, properties,
files, books, records, documents, and other information of the Company and
its
Subsidiaries and will cause their respective officers to furnish to Buyer and
its Representatives any and all financial, technical and operating data and
other information pertaining to the businesses and properties of the Company
and
its Subsidiaries and make available for inspection and copying by Buyer true
and
complete copies of any documents relating to the foregoing.
6.2 Announcements. Each
of the Stockholders, the Stockholders’ Representative and the Company covenants
to Buyer that he, she or it will not (and will cause his, her or its Affiliates
not to) issue any press release or otherwise make any public statement with
respect to the transactions contemplated hereby without the prior written
consent of Buyer.
6.3 Conduct
of Business of the Company Prior to the Closing. During the
period from the date of this Agreement to the Closing, the Company shall, and
shall cause its Subsidiaries to (and the Stockholders shall cause the Company
and its Subsidiaries to): (v) operate its business only in the
Ordinary Course and in compliance with all Laws; (w) preserve
its
business organization intact; (x) keep available to itself and its Subsidiaries
(including following the Closing) the present services of its employees; (y)
preserve for itself (including following the Closing) the goodwill of their
suppliers, distributors and others with whom it has a business relationship;
and
(z) continue in full force and effect without modification any of its existing
policies or binders of insurance. Without limitation of the
foregoing, the Company shall not, and the Company shall not cause, suffer (other
than in the case of a termination pursuant to clause (j) below) or permit its
Subsidiaries to (and the Stockholders shall not cause, suffer or permit the
Company or its Subsidiaries to), directly or indirectly:
(a) amend
or otherwise change its certificate of incorporation or bylaws (or comparable
organizational documents with different names);
(b) (i)
issue, grant or sell any shares of its capital stock, (ii) issue, grant or
sell any security, option, warrant, call, subscription or other right of any
kind, fixed or contingent, that directly or indirectly calls for the issuance,
sale, pledge or other disposition of any shares of its capital stock,
(iii) enter into any agreement, commitment or understanding calling for any
transaction referred to in clause (i) or (ii) of this paragraph (b), or
(iv) make any other changes in its equity capital structure;
(c) declare,
set aside or pay any dividend or other distribution in respect of any shares
of
its capital stock, or purchase, redeem or otherwise acquire, any shares of
its
capital stock;
(d) other
than pending capital expenditures referred to on Schedule 2.6(b) and
capital expenditures that do not exceed $20,000 individually or $75,000 in
the
aggregate (provided, that the Company shall, and shall cause its
Subsidiaries to (and the Stockholders shall cause the Company and its
Subsidiaries to) give Buyer written notice not less than three Business Days
before making any of the foregoing capital expenditures), make any capital
expenditures (including expenditures for additions to plant, property and
equipment) or appropriations or commitments with respect thereto;
(e) create,
incur or assume any indebtedness for money borrowed or obligations in respect
of
capital leases;
(f) assume,
endorse, guarantee or otherwise become liable or responsible for (whether
directly, contingently or otherwise) any indebtedness for money borrowed or
any
other obligation of any other Person;
(g) other
than pending capital expenditures referred to on Schedule 2.6(b) and
capital expenditures that do not exceed $20,000 individually or $75,000 in
the
aggregate (provided, that the Company shall, and shall cause its
Subsidiaries to (and the Stockholders shall cause the Company and its
Subsidiaries to) give Buyer written notice not less than three Business Days
before making any of the foregoing capital expenditures), enter into any
transaction or series of related transactions, other than the purchase and
sale
of inventory in the Ordinary Course involving the acquisition or disposition
by
it of property, assets or rights having a value of, more than $75,000 in the
aggregate;
(h) (i)
approve or put into effect any increase in compensation or benefits payable
to
any of its current or former employees, officers, independent contractors or
directors, make any bonus payment to any of its current or former employees,
officers, independent contractors or directors or amend any Benefit Plan to
increase the amount of compensation or benefits payable thereunder, except
for
increases in base compensation in the Ordinary Course that do not exceed 3%
per
annum per person, or pursuant to the terms of any Benefit Plan provided to
Buyer
prior to the date of this Agreement; or (ii) enter into or adopt any new Benefit
Plan;
(i) change
its accounting methods, principles or practices, except as required by
GAAP;
(j) terminate,
amend, modify, waive any rights or exercise an extension or renewal option
under
any Company Agreement, other than terminations, amendments, modifications,
waivers and exercises with respect to Company Agreements that do not,
individually or in the aggregate, involve aggregate payments of more than
$50,000 (or enter into any Contract that would be a Company Agreement if it
had
entered into it on or prior to the date of this Agreement other than Contracts
that do not involve aggregate payments of more than $50,000 individually or
$150,000 in the aggregate);
(k) mortgage,
pledge or subject to any Lien (other than Permitted Liens) any of its
assets;
(l) change
or modify any of the following: (i) billing and collection policies,
procedures and practices with respect to accounts receivable or unbilled
charges; (ii) policies, procedures and practices with respect to the provision
of discounts, rebates or allowances; or (iii) payment policies, procedures
and practices with respect to accounts payable;
(m) sell
or transfer any asset, other than the sale of inventory in the Ordinary Course
or as otherwise expressly provided by Section 6.3(a) - (p);
(n) except
as set forth on Schedule 6.3(n), enter into a transaction with an Insider
or make any payment to, or receive any payment from, an Insider;
(o) other
than in the Ordinary Course, settle any Claim involving money damages or waive
or release any material rights or claims;
(p) except
as set forth on Schedule 6.3(p), settle any Tax Audit or other
proceeding, make or change any Tax accounting or recording method or election
or
file any amended Tax Return; or
(q) authorize
any of, or commit or agree to take, whether in writing or otherwise, any of
the
foregoing actions.
6.4 Further
Assurances. Each party hereto (Buyer, on the one hand, and the
Company and the Stockholders, jointly and severally, on the other hand)
covenants from the date of this Agreement to the Closing Date (and subject
to
the other terms and conditions of this Agreement):
(a) to
cooperate with the other parties and to take such actions as may be necessary,
in each case, as promptly as possible in (i) determining whether notices,
declarations, registrations and filings are required to be made with or consents
required to be obtained from any Third Party or Government Authority in
connection with the consummation of the transactions contemplated by this
Agreement and the other Transaction Documents and in making or causing to be
made any such notices, declarations, registrations and filings promptly
(including filings under the HSR Act, which will be made within ten days of
the
date of this Agreement), (ii) seeking to terminate any waiting periods under
the
HSR Act as soon as practicable, (iii) obtaining, in a timely manner, any such
consents, and (iv) furnishing the other party and to the other party’s
counsel all such information as may be reasonably required in order to
effectuate the foregoing actions;
(b) to
keep the other parties hereto informed in all material respects of any material
communications received by such party from, or given by such party to, any
Government Authority and to consult with the other parties hereto in advance
of
any meeting or conference with any Government Authority;
(c) use
reasonable best efforts and cooperate with the other parties hereto to obtain
all consents required from Third Parties, whose consent or approval is required
pursuant to any Company Agreement or otherwise to consummate the transactions
contemplated by this Agreement and the other Transaction Documents;
provided, however, that Buyer will have no obligation to give any
guarantee or other consideration of any nature in connection with any such
required consents or to consent to any change in the terms of any Company
Agreement; and
(d) without
limiting the specific obligations of any party under any covenant or agreement
under this Agreement, to use reasonable best efforts to take all action and
do
all things necessary in order to promptly consummate the transactions
contemplated hereby and the other Transaction Documents, including satisfaction,
but not waiver, of the conditions precedent set forth in Articles VII and
VIII. Notwithstanding anything to the contrary contained in this
Agreement, nothing in this Agreement will require or obligate Buyer or any
of
its Affiliates to (and in no event shall any representation, warranty or
covenant of Buyer contained in this Agreement be breached or deemed breached
as
a result of the failure of Buyer to take any of the following actions) (i)
agree
to or otherwise become subject to any limitations on (A) the right of Buyer
effectively to control or operate its business (including the business of the
Company and its Subsidiaries) or assets (including the assets of the Company),
(B) the right of Buyer to acquire the Shares, or (C) the right of Buyer to
exercise full rights of ownership of its business (including the business of
the
Company and its Subsidiaries) or assets (including the assets of the Company
and
its Subsidiaries), (ii) agree or be required to sell or otherwise dispose of,
hold (through the establishment of a trust or otherwise), or divest itself
of
all or any portion of the business, assets or operations of Buyer or any of
its
Affiliates or the business of the Company or its Subsidiaries or any of the
assets of the Company or its Subsidiaries, or (iii) otherwise take any steps
to
avoid or eliminate any impediment that may be asserted under any Law governing
competition, monopolies or restrictive trade practices.
6.5 Additional
Agreements; Notification of Certain Matters.
(a) Between
the date hereof and the Closing, the Company and the Stockholders
will: (i) perform all acts to be performed by them pursuant to this
Agreement and the other Transaction Documents contemplated hereby to be executed
and delivered by such Person, (ii) refrain from taking or omitting to take
any
action that would violate any of their representations, warranties or covenants
contained in this Agreement or render any of them inaccurate or untrue as of
the
date of this Agreement or the Closing Date or that in any way could reasonably
be expected to prevent the consummation of the transactions contemplated hereby
or thereby, and (iii) not take or omit to take any action that, if taken or
omitted prior to the date of this Agreement, would constitute a breach of any
representation or warranty of the Company contained in this
Agreement.
(b) Between
the date hereof and the Closing, the Company and the Stockholders will confer
on
a regular and frequent basis with one or more designated representatives of
Buyer to report operational matters and to report the general status of ongoing
operations. Without limiting the foregoing, the Company and the
Stockholders will give prompt notice in writing to Buyer
of: (i) any information that indicates that any of their
representations and warranties contained in this Agreement was not true and
correct as of the date of this Agreement or will not be true and correct as
of
the Closing Date, (ii) any event that, individually or in the aggregate,
has, or may in the future have, a Material Adverse Effect, (iii) the occurrence
of any event or the existence of any circumstance which will result, or has
a
reasonable prospect of resulting, in the failure to satisfy a condition
specified in Article VII hereof, (iv) any notice or other communication
from any third Person alleging that the consent of such third Person is or
may
be required in connection with the transactions contemplated by this Agreement,
(v) any notice of, or other communication relating to, any default under or
breach of, or event which, with notice or lapse of time or both, would become
a
default under or breach of, any Company Agreement or any agreement to which
any
Stockholder is a party, (vi) any emergency or change in the operation of
the properties of the Company or any of its Subsidiaries, and (vii) any
governmental complaints, investigations or hearings (or communications
indicating that the same may be contemplated) or adjudicatory proceedings
involving any property of the Company or any of its Subsidiaries, and, in the
case of any event contemplated by clauses (i), (ii), (iii), (iv), (v) and (vi)
will keep Buyer fully informed of such event and permit Buyer’s representatives
access to all materials prepared in connection therewith. The
Stockholders shall give prompt notice to Buyer of any notice or other
communication from any third Person asserting any right, title or interest
in
any of the Shares (including any threat to commence, or notice of the
commencement of, any action or other proceeding with respect to the Shares)
or
the occurrence of any other event of which the Stockholders have Knowledge
which
will result, or has a reasonable prospect of resulting, in any failure to
consummate the sale of the Shares as contemplated hereby.
6.6 Assurance
by the Stockholders. The Stockholders shall cause the Company to
comply with its covenants set forth in this Agreement.
6.7 Covenant
Not to Compete; Non-Solicitation; Confidentiality.
(a) If
the Closing occurs, for a period of 60 months beginning on the Closing Date,
no
Stockholder will, and each Stockholder will cause his, her or its Affiliates
not
to, directly or indirectly, engage or participate in, or render services to
(whether as owner, operator, member, shareholder, trustee, manager, consultant,
strategic partner, employee or otherwise) any business competitive with the
business as conducted and proposed to be conducted as of the Closing Date by
the
Company or its Subsidiaries (a “Competing
Business”). For the purposes of the foregoing, no
Stockholder will be in breach of this Section 6.7 by reason of his, her or
its
beneficial ownership, together with that of his, her or its Affiliates and
that
of the other Stockholders and their respective Affiliates, of two percent or
less of a Competing Business’ voting capital stock if (i) such Competing
Business is publicly traded and (ii) such Stockholder and his, her or its
Affiliates, together with the other Stockholders and their respective
Affiliates, do not control the operation or management of such Competing
Business.
(b) If
the Closing occurs for a period of 60 months beginning on the Closing Date,
no
Stockholder will, and each Stockholder will cause his, her or its Affiliates
not
to, directly or indirectly, (i) solicit for employment, recruit or hire, either
as an employee or a consultant, any employee, consultant or independent
contractor of the Company or its Subsidiaries or Buyer or any of its Affiliates
who was an employee, consultant or independent contractor of the Company or
its
Subsidiaries or Buyer or any of its Affiliates as of the date of this Agreement
or at any time thereafter and prior to the expiration of such 60-month period
to
become an employee or consultant of, or otherwise provide services to, any
Competing Business, (ii) solicit any business from, or conduct any business
with, any Person that is as of the date of this Agreement or at any time
thereafter and prior to the expiration of such 60-month period is a customer
of,
or supplier to, the Company or its Subsidiaries or Buyer or any of its
Affiliates, (iii) interfere or attempt to interfere with any transaction,
agreement, prospective agreement, business opportunity or business relationship
in which the Company or its Subsidiaries or Buyer or any of its Affiliates
is
involved in as of the date of this Agreement or at any time thereafter and
prior
to the expiration of such 60-month period or (iv) otherwise engage or
participate in any effort or act to induce any Person to discontinue a
relationship with the Company or its Subsidiaries or Buyer or any of its
Affiliates.
(c) If
the Closing occurs, each Stockholder shall, and shall cause his, her or its
Affiliates and Representatives to, keep confidential and not disclose to any
other Person or use for the benefit of any other Person any information,
technology, know-how, trade secrets, product formulas, industrial designs,
franchises, inventions or other industrial and intellectual property in the
Stockholders’ possession or control regarding the Company or any of its
Subsidiaries or their respective businesses (unless and to the extent compelled
to disclose by judicial or administrative process or, in the opinion of its
counsel, by other Laws). The obligations of the Stockholders under
this Section 6.7(c) shall not apply to information that (i) is obtained from
public information, (ii) is received from a third party not, to the Knowledge
of
the Stockholders, subject to any obligation of confidentiality with respect
to
such information, or (iii) is or becomes known to the public, other than through
a breach of this Agreement.
(d) If
the Closing occurs, no Stockholder will, and each Stockholder will cause his,
her or its Affiliates not to, make or cause to be made or condone the making
of
any
statement,
comment or other communication, written or otherwise, that is disparaging,
critical, derogatory or detrimental to, or otherwise reflect adversely on,
harm
the reputation of, or encourage any adverse action against, the Company or
its
Subsidiaries or Buyer or any of its Representatives or Affiliates or any of
any
of the products or services of the Company or its Subsidiaries or Buyer or
any
of its Representatives or Affiliates.
(e) The
parties acknowledge and agree that the restrictions contained in
Sections 6.7(a), (b), (c) and (d) are a reasonable and necessary protection
of the immediate interests of Buyer, and any violation of these restrictions
would cause substantial injury to Buyer and that Buyer would not have entered
into this Agreement and the other Transaction Documents without receiving the
additional consideration offered by the Stockholders in binding themselves
to
these restrictions. In the event of a breach or a threatened breach
by the Stockholders or any Affiliate of the Stockholders of these restrictions,
Buyer will be entitled to an injunction restraining the Stockholders or their
Affiliates, as applicable, from such breach or threatened breach (without the
necessity of proving the inadequacy as a remedy of money damages or the posting
of a bond); provided, however, that the right to injunctive relief
will not be construed as prohibiting Buyer from pursuing any other available
remedies, whether at law or in equity, for such breach or threatened
breach.
(f) In
consideration of the significant financial benefit to be received by the
Stockholders hereunder, the parties agree that 1% of the Final Purchase Price
shall be allocated to the covenant not to compete contained in
Section 6.7(a).
6.8 Negotiations. From
the date of this Agreement until the termination of this Agreement in accordance
with its terms, the Company and the Stockholders shall, and they shall cause
their respective Representatives and Affiliates to, negotiate exclusively and
in
good faith with Buyer with respect to any transaction involving the sale,
transfer or other disposition of the Shares; and the Company and the
Stockholders shall not, and shall not permit or authorize any of their
respective Representatives or Affiliates to, solicit, initiate or encourage
or
take any other action to facilitate, any inquiries or proposals by, or engage
in
or continue any discussions or negotiations with, or furnish any nonpublic
information to or enter into any agreement with any Person other than Buyer
concerning the sale, transfer or other disposition of capital stock of the
Company or its Subsidiaries or the merger, consolidation, sale of securities
or
any other transaction involving, directly or indirectly, the Company or its
Subsidiaries, or any substantial portion of the assets of the Company or its
Subsidiaries. The Company and the Stockholders shall notify Buyer of
any inquiry or proposal promptly after receipt or awareness of the
same.
6.9 Taxes.
(a) The
Stockholders shall pay and jointly and severally indemnify Buyer and its
Affiliates (including, after the Closing, the Company and its Subsidiaries)
from
and against all Taxes required to be paid by the Company or its Subsidiaries
with respect to any taxable periods of the Company or its Subsidiaries that
end
on or prior to the Closing Date to the extent such Taxes exceed the accruals
for
such Taxes reflected in the Closing Working Capital (as finally
determined). The Stockholders’ Representative shall cause the
preparation of all Tax Returns of the Company and its Subsidiaries for taxable
periods ending on or prior to the Closing Date. Such Tax Returns
shall be prepared in a manner consistent with past practice except as
otherwise
required
by Law; provided, however, that such Tax Returns shall be prepared
on a basis consistent with any settlements of Tax audits for prior
years. No later than 30 days prior to the filing of any such Tax
Returns, the Stockholders’ Representative shall provide to Buyer copies of such
Tax Returns for review and approval, which approval shall not be unreasonably
withheld or delayed. Buyer shall cause to be prepared and filed, all
Tax Returns of the Company and its Subsidiaries for taxable periods beginning
prior to but ending after the Closing Date (any such period, a “Straddle
Period” ) and for periods beginning after the Closing
Date.
(b) The
Stockholders shall pay and jointly and severally indemnify Buyer and its
Affiliates (including, after the Closing, the Company and its Subsidiaries)
from
and against Taxes of the Company or its Subsidiaries allocable to the portion
of
a Straddle Period which ends on the Closing Date to the extent such Taxes exceed
the accruals for such Taxes reflected in the Closing Working Capital (as finally
determined). For purposes of this Section 6.9(b), in the case of
any Taxes that are imposed on a periodic basis and are payable for a Straddle
Period, the portion of such Tax which relates to the portion of such tax period
ending on the Closing Date shall (i) in the case of any Taxes other than
Taxes based upon or related to income, receipts or purchases, be deemed to
be
the amount of such Tax for the entire tax period multiplied by a fraction,
the
numerator of which is the number of days in the portion of the tax period ending
on the Closing Date and the denominator of which is the number of days in the
entire tax period and (ii) in the case of any Tax based upon or related to
income, receipts or purchases, be deemed equal to the amount which would be
payable if the relevant tax period ended on the Closing Date, except that
exemptions, allowances and deductions (such as depreciation deductions)
calculated on an annual basis shall be prorated between the portion of the
applicable Straddle Period that ends on the Closing Date and the portion after
the Closing Date on a per diem basis. Any Taxes for a Straddle Period
paid prior to the Closing shall be deducted from the Stockholders’ liability
pursuant to the immediately preceding sentence, and to the extent in excess
of
the Stockholder’s liability, will be refunded to the Stockholders by Buyer
within 10 days after filing the relevant Tax Return.
(c) In
the event Buyer or any of its Affiliates receives notice of any examination,
claim, adjustment, or other proceeding (a “Proceeding Notice”)
with respect to the liability for any Taxes for which the Stockholders are
or
may be liable under Section 6.9(a) or (b), Buyer shall notify the
Stockholders’ Representative in writing thereof (the “Stockholder
Notice”) no later than the earlier of (x) 30 days after the
receipt by Buyer of the Proceeding Notice, and (y) 10 days prior to the
deadline for responding to the Proceeding Notice (or, if Buyer did not receive
the Proceeding Notice more than 10 days prior to such deadline, as promptly
as
practicable). As to any examination, claim, adjustment or other
proceeding relating to a taxable period of the Company or any of its
Subsidiaries that ends on or before the Closing Date, the Stockholders shall
be
entitled at the Stockholders’ sole expense to control the contest of such
examination, claim, adjustment, or other proceeding; provided
that: (i) the Stockholders’ Representative notifies Buyer in
writing that it desires to do so no later than the earlier of (x) 30 days after
receipt of the Stockholder Notice, and (y) five days prior to the deadline
for responding to the Proceeding Notice, and (ii) the Stockholders’
Representative may not, without the consent of Buyer, agree to any settlement
that could result in an increase in the amount of Taxes for which Buyer or
any
of its Affiliates are not entitled to indemnification. With respect
to any examination, claim, adjustment, or other proceeding with respect to
a
Straddle Period, Buyer shall control the contest of such examination, claim,
adjustment, or other proceeding, provided
that
Buyer may not, without the prior consent of the Stockholders’ Representative
(such consent not to be unreasonably withheld or delayed), agree to any
settlement that could result in an increase in the amount of Taxes for which
the
Stockholders are liable under Section 6.9(a) or (b). The
parties shall cooperate with each other and with their respective affiliates,
and will consult with each other, in the negotiation and settlement of any
proceeding described in this Section 6.9(c).
(d) Buyer,
on the one hand, and the Stockholders, on the other hand, will provide, or
cause
to be provided, to the other party copies of all correspondence received from
any Taxing Authority by such party or any of its affiliates in connection with
the liability of the Company or its Subsidiaries for Taxes for any period for
which such other party is or may be liable. The parties will provide
each other with such cooperation and information as they may reasonably request
of each other in preparing or filing any return, amended return, or claim for
refund, in determining a liability or a right of refund, or in conducting any
audit or other proceeding, in respect of Taxes imposed on the Company or its
Subsidiaries.
(e) The
Stockholders, jointly and severally on the one hand, and Buyer, on the other
hand, shall each pay when due one-half of all transfer, documentary, sales,
use,
stamp, registration and other such Taxes and fees (including any penalties
and
interest) incurred in connection with the sale of the Shares (including, without
limitation, any such Taxes imposed as a result of any deemed sale of the assets
of the Company or its Subsidiaries).
6.10 Excluded
Assets. Prior to the consummation of the Closing, the
Stockholders shall cause: (a) each of the Excluded Assets to be
transferred to the Person listed on Schedule 7.7 as the transferee
thereof pursuant to one or more instruments in form and substance reasonably
satisfactory to Buyer; and (b) the Company and its Subsidiaries to be released
from all liabilities and obligations in connection with the Excluded Assets
pursuant to one or more instruments in form and substance reasonably
satisfactory to Buyer.
6.11 Loans
Receivable Prior to the consummation of the Closing, the
Stockholders shall cause the Loans Receivable to be repaid in full.
6.12 Company
Guaranty. The Stockholders shall, prior to the consummation of
the Closing, cause the Company to be released from all of its obligations under
the Company Guaranty pursuant to an instrument in form and substance reasonably
satisfactory to Buyer.
6.13 ISRA
Compliance. With respect to the facility located in Carlstadt,
New Jersey leased by a Subsidiary of the Company, prior to the consummation
of
the Closing the Stockholders shall cause the Company and such Subsidiary to
comply with the obligations imposed by the New Jersey Industrial Site Recovery
Act, N.J.S.A. 12:1K-6 et seq. (“ISRA”) at no cost or expense to
Buyer by either: (a) securing and providing a copy to Buyer of a
Letter of Non-Applicability from the New Jersey Department of Environmental
Protection (the “NJDEP“); (b) securing and providing a copy to
Buyer of a written approval by the NJDEP of a negative declaration affidavit,
which affidavit has been submitted by an appropriate Person to the NJDEP and
is
supported by a “preliminary assessment” prepared in compliance with ISRA; (c)
securing and providing a copy to Buyer of a “no further action” letter from the
NJDEP under ISRA; (d) filing a deminimus quantity exemption
affidavit with NJDEP and providing Buyer
with
a
copy thereof evidencing the filing with the NJDEP; (e) securing from the NJDEP
and providing to Buyer a “remediation-in-progress waiver” along with
documentation demonstrating that a proper remediation funding source
satisfactory to the NJDEP is in place in t he amount necessary to pay the
estimated cost of the required investigation, remediation and other activities
under ISRA; or (f) entering into with the NJDEP, and providing to Buyer a copy
of a fully executed and filed Remediation Agreement and providing to Buyer
documentation demonstrating that the requirements of N.J.S.A. 58:1-B-3 have
been
met to the satisfaction of the NJDEP in that a proper remediation funding source
has been established by the Stockholders to pay the estimated cost of the
required investigation, remediation and other activities under
ISRA. Prior to the consummation of the Closing, the Stockholders
shall also cause Buyer to receive copies of all submissions made by or on behalf
of the Company, its Subsidiaries or the Stockholders to NJDEP pursuant to ISRA
and copies of all correspondence to or from the NJDEP under ISRA.
6.14 Retiree
Obligations. The Stockholders (a) shall satisfy and discharge all
Retiree Obligations, and (b) prior to the consummation of the Closing cause
Buyer and the Company and their respective Subsidiaries to be released from
all
of the Retiree Obligations pursuant to releases from each Retiree in form and
substance reasonably satisfactory to Buyer (it is understood and agreed that
such release shall be reasonably satisfactory to Buyer if it includes the terms
and provisions set forth in the General Release and such changes and additions
thereto as Buyer shall reasonably request).
6.15 F.L.
Smithe Machine Co., Inc.. The Stockholders shall prior to the
consummation of the Closing cause the Company to satisfy in full all of its
obligations (originally $1,808,362.59) to F.L. Smithe Machine Co., Inc. in
respect of a Champion Servo-Rotomatic Web Fed Envelope Folding Machine (SR-5554)
(the “FL Smithe Obligations”).
6.16 Nonqualified
Deferred Compensation Plan. Prior to the Closing, the
Stockholders will cause the Company to amend the Nonqualified Plan to cease
all
accruals under such plan effective as of the Closing Date and to terminate
such
plan effective as of the Closing Date.
CONDITIONS
TO THE OBLIGATIONS
OF
BUYER TO EFFECT THE CLOSING
The
obligations of Buyer required to be performed by it at the Closing shall be
subject to the satisfaction, at or prior to the Closing, of each of the
following conditions, each of which may be waived in whole or in part by Buyer
as provided herein except as otherwise required by applicable Law:
7.1 Representations
and Warranties; Agreements; Covenants. Each of the
representations and warranties of the Company, the Stockholders or the
Stockholders’ Representative contained in Sections 2.1(a) (first and last
sentences only) (Organization and Good Standing), 2.2 (Capitalization), 2.3
(Authority, Approvals, Enforceability and Consents), 2.4(a) (Financial
Statements), 2.5 (Absence of Undisclosed Liabilities), 2.6(a)(i) (Absence of
Certain Changes), 2.23 (Brokers), 3.1 (Ownership of Shares; Title), 3.2
(Capacity, Enforceability
and
Consents) and 4.1 (Capacity, Enforceability and Consents) of this Agreement
that
are qualified as to materiality or by reference to Material Adverse Effect
or
another similar materiality qualification shall be true and correct, and such
representations and warranties of the Company, the Stockholders or the
Stockholders’ Representative that are not so qualified shall be true and correct
in all material respects, in each case both as of the date of this Agreement
and
as of the Closing Date, as if made on the Closing Date (except to the extent
expressly made as of an earlier date, in which case as of such
date). All of the other representations and warranties of the
Company, the Stockholders and the Stockholders’ Representative set forth herein
(each, a “Curable Representation and Warranty”) shall be true
and correct both as of the date of this Agreement and at and as of the Closing
Date, as if made on the Closing Date (except to the extent expressly made as
of
an earlier date, in which case as of such date), except where the failure of
such representations and warranties to be so true and correct (without giving
effect to any limitation as to “materiality” or “Material Adverse Effect” or
another similar materiality qualification set forth therein) does not have,
and
would not reasonably be expected to have, individually or in the aggregate,
a
Material Adverse Effect. Each of the obligations of the Company, the
Stockholders and the Stockholders’ Representative required by this Agreement to
be performed by one or more of them at or prior to the Closing pursuant to
Sections 6.14 (Retiree Obligations), 6.15 (F.L. Smithe Machine Co., Inc.) and
6.16 (Nonqualified Deferred Compensation Plan) shall have been duly performed
and complied with in all respects, and each of the other obligations of the
Company, the Stockholders or the Stockholders’ Representative required by this
Agreement to be performed by one or more of them at or prior to the Closing
shall have been duly performed and complied with in all material respects as
of
the Closing. At the Closing, Buyer shall have received a certificate,
dated the Closing Date and duly executed by each of the Stockholders and by
the
Stockholders’ Representative to the effect that the conditions set forth in the
three preceding sentences have been satisfied.
7.2 HSR
Act. All filings required to be made under the HSR Act in
connection with the transactions contemplated hereby shall have been made and
all applicable waiting periods with respect to each such filing, including
any
extensions thereof, shall have expired or been terminated.
7.3 Authorization;
Consents. All notices to, and declarations, filings and
registrations with, and consents, authorizations, approvals and waivers from,
governmental and regulatory bodies required to consummate the transactions
contemplated hereby and all consents and waivers listed on
Schedule 2.3 (including applicable UCC-3 termination statements,
payoff letters and other documentation relating thereto) and all other consents
and waivers required to consummate the transactions contemplated hereby (other
than consents and waivers that, if not obtained would not be reasonably likely
to have a Material Adverse Effect) shall have been made or obtained to the
reasonable satisfaction of Buyer. Buyer shall have
received: (a) estoppel certificates and landlord-lender agreements
from each landlord under the Real Property Leases, in each case in form and
substance reasonably satisfactory to Buyer; (b) evidence satisfactory to it
that
all Liens listed on Schedule 2.19 with respect to Debt that is satisfied
at or prior to the Closing have been terminated (such evidence to include
applicable UCC-3 termination statements, payoff letters and other documentation
relating thereto); and (c) releases in form and substance reasonably
satisfactory to it from each obligee under Debt that is satisfied at or prior
to
the Closing.
7.4 Injunction;
Litigation; Legislation. (a) No party hereto shall be subject to
any order or injunction (whether preliminary or permanent) restraining or
prohibiting the consummation of the transactions contemplated hereby or by
the
other Transaction Documents, (b) no Claim shall have been instituted before
any arbitrator, court or other Government Authority to restrain or prohibit,
or
to obtain substantial damages in respect of, the consummation of the
transactions contemplated hereby or by the other Transaction Documents,
(c) none of the parties hereto or any of their Affiliates shall have
received written notice from any Government Authority or any other Person of
(i) its intention to institute any Claim to restrain, enjoin or nullify
this Agreement, the other Transaction Documents or the transactions contemplated
hereby or thereby, or to commence any investigation into the consummation of
the
transactions contemplated hereby or thereby, or (ii) the actual
commencement of such a Claim or investigation, (d) there shall not be any
pending or threatened Claim by any Person which could reasonably be expected
to
limit or materially adversely affect Buyer’s ability effectively to exercise
full rights of ownership of the Shares or to operate the respective businesses
of the Company or its Subsidiaries, and (e) no action shall have been
taken, and no statute, rule, regulation or order shall have been promulgated
or
enacted by any Government Authority, which would prevent or make illegal the
consummation of the transactions contemplated hereby or thereby.
7.5 Delivery
of Transaction Documents. Buyer shall have received each of the
documents listed in Section 1.3(a).
7.6 Employment
Agreements; Consulting Agreement; Noncompetition Agreements. The
Employment Agreements shall be in full force and effect, and the employees
named
therein shall be employed by Buyer thereunder. Buyer shall have
received a certificate from each such employee to the effect that the Employment
Agreement to which he or she is a party remains in full force and
effect. The Consulting Agreement shall be in full force and effect,
and the consultant named in the Consulting Agreement shall be retained by Buyer
thereunder. Buyer shall have received a certificate from such
consultant to the effect that the Consulting Agreement remains in full force
and
effect. The Noncompetition Agreements shall be in full force and
effect. Buyer shall have received a certificate from each individual
subject to the obligations thereunder to the effect that the Noncompetition
Agreement to which he or she is a party remains in full force and
effect.
7.7 Excluded
Assets. Each of the assets listed on Schedule
7.7 (the “Excluded Assets”) shall have been
transferred to the Person listed thereon as the transferee thereof pursuant
to
one or more instruments in form and substance reasonably satisfactory to
Buyer. The Company and each of its Subsidiaries shall have been
released from all liabilities and obligations in connection with the Excluded
Assets pursuant to one or more instruments in form and substance reasonably
satisfactory to Buyer.
7.8 Guaranty. Buyer
shall have received a certificate from the Guarantors to the effect that the
Guaranty remains in full force and effect.
7.9 Loans
Receivable. The Loans Receivable shall have been repaid in full
and all applicable UCC-3 termination statements, payoff letters and other
documentation relating thereto shall be in form and substance reasonably
satisfactory to Buyer.
7.10 Company
Guaranty. The Company shall have been released from all of its
obligations under the Company Guaranty pursuant to an instrument in form and
substance reasonably satisfactory to Buyer.
7.11 ISRA
Compliance. The Stockholders shall have satisfied their
obligations under Section 6.13 (ISRA Compliance).
7.12 Audited
Financial Statements. The Stockholders shall have delivered to
Buyer the audited combined balance sheets of the Company and its Subsidiaries
as
of January 29, 2005, January 28, 2006 and February 3, 2007 and the related
audited combined statements of income and retained earnings and statements
of
cash flows of the Company and its Subsidiaries and Affiliate for the years
then
ended (the “Audited Financial Statements”). The
Audited Financial Statements shall not show any changes to the unaudited
combined balance sheets of the Company and its Subsidiaries as of January 29,
2005, January 28, 2006 and February 3, 2007 and the related unaudited combined
statements of income and retained earnings and statements of cash flows of
the
Company and its Subsidiaries for the years then ended included in the Unaudited
Financial Statements. The report of the Company's independent
auditors on the Audited Financial Statements shall be made without qualification
or any adverse explanatory paragraph. The Company's independent
auditors will be Xxxxxxxxx Xxxxx Xxxxxxx LLP or another firm reasonably
acceptable to Buyer.
7.13 Amendment
to Schedule 1.1(b)(i). The Stockholders and the Stockholders
Representative shall each have duly signed an amendment to Schedule
1.1(b)(i) providing for the final allocation of amounts due to them pursuant
to Section 1.1(b)(i).
CONDITIONS
TO THE OBLIGATIONS OF THE
STOCKHOLDERS
TO EFFECT THE CLOSING
The
obligations of the Stockholders required to be performed by them at the Closing
shall be subject to the satisfaction, at or prior to the Closing, of each of
the
following conditions, each of which may be waived in whole or in part by the
Stockholders’ Representative as provided herein except as otherwise required by
applicable Law:
8.1 Representations
and Warranties; Agreements. The representations and warranties of
Buyer set forth herein shall be true and correct both as of the date of this
Agreement and at and as of the Closing Date, as if made on the Closing Date
(except to the extent expressly made as of an earlier date, in which case as
of
such date), except where the failure of such representations and warranties
to
be so true and correct (without giving effect to any limitation as to
“materiality” or “material adverse effect” or another similar qualification set
forth therein) does not have, and would not reasonably be expected to have,
individually or in the aggregate, a material adverse effect on the ability
of
Buyer to consummate the transactions contemplated hereby. Each of the
obligations of Buyer required by this Agreement to be performed by it at or
prior to the Closing shall have been duly performed and complied within all
material respects as of the Closing. At the Closing, the Stockholders
shall have received a certificate, dated the
Closing
Date and duly executed by an officer of Buyer to the effect that the condition
set forth in the preceding two sentences has been satisfied.
8.2 HSR
Act. All filings required to be made under the HSR Act in
connection with the transactions contemplated hereby shall have been made and
all applicable waiting periods with respect to each such filing (including
any
extensions thereof) shall have expired or been terminated.
8.3 Injunction;
Litigation; Legislation. (a) No party hereto shall be
subject to any order or injunction (whether preliminary or permanent)
restraining or prohibiting the consummation of the transactions contemplated
hereby or by the other Transaction Documents, and (b) no action shall have
been taken, and no statute, rule, regulation or order shall have been
promulgated or enacted by any Government Authority, which would prevent or
make
illegal the consummation of the transactions contemplated hereby or
thereby.
8.4 Delivery
of Transaction Documents. The Stockholders shall have received
each of the documents listed in Section 1.3(b).
TERMINATION
9.1 Termination.
(a) This
Agreement may be terminated at any time prior to the Closing:
(i) by
mutual consent of Buyer and the Stockholders’ Representative;
(ii) by
Buyer or the Stockholders’ Representative, if the Closing shall not have taken
place on or prior to November 17, 2007 (the “Termination Date”)
(but in the event the date that is four weeks after the Audited Financial
Statement Delivery Date is after the Termination Date, then the Stockholders’
Representative shall not be so entitled to terminate this Agreement until the
date that is four weeks after the Audited Financial Statement Delivery Date),
or
such later date as shall have been approved by the Buyer and the Stockholders’
Representative; provided, however, that the right to terminate
this Agreement under this Section 9.1(a)(ii) shall not be available to (x)
Buyer
if the failure by Buyer to perform any covenant or obligation under this
Agreement or the misrepresentation or breach by Buyer of a representation or
warranty contained in or made pursuant to this Agreement has been the cause
of
or resulted in the failure of the Closing to occur on or before such date or
(y)
the Stockholders’ Representative if the failure by the Stockholders, the
Stockholders’ Representative or the Company to perform any covenant or
obligation under this Agreement or the misrepresentation or breach by the
Stockholders, the Stockholders’ Representative or the Company of a
representation or warranty contained in or made pursuant to this Agreement
has
been the cause of or resulted in the failure of the Closing to occur on or
before such date;
(iii) by
Buyer or the Stockholders’ Representative if any court of competent jurisdiction
in the United States or other United States governmental body shall have issued
an order, decree or ruling or taken any other action restraining, enjoining
or
otherwise prohibiting the transactions contemplated by this Agreement or any
other Transaction Document, and such order, decree, ruling or other action
shall
have become final and nonappealable;
(iv) by
Buyer, if there has been any violation or breach by the Company, the
Stockholders or the Stockholders’ Representative of any representation,
warranty, covenant or obligation of or by the Company, the Stockholders, or
the
Stockholders’ Representative contained in this Agreement that has rendered the
satisfaction of any condition to the obligations of Buyer under Article VII
impossible and such violation or breach has not been waived by Buyer;
and
(v) by
the Stockholders’ Representative, if there has been a violation or breach by
Buyer of any representation, warranty, covenant or obligation of or by Buyer
contained in this Agreement that has rendered the satisfaction of any condition
to the obligations of the Stockholders impossible and such violation or breach
has not been waived by the Stockholders’ Representative.
(b) If
Buyer or the Stockholders’ Representative shall terminate this Agreement
pursuant to the provisions hereof, such termination shall be effected by notice
to the other parties specifying the provision hereof pursuant to which such
termination is made (“Termination Notice”); provided,
however, that prior to the delivery by Buyer of
a Termination Notice
pursuant to Section 9.1(a)(iv) on the grounds that there has been a violation
or
breach of one or more Curable Representations and Warranties, Buyer shall have
provided the Stockholders’ Representative written notice thereof of not less
than 30 days to cure such violation or breach.
9.2 Effect
of Termination. In the event of the termination and abandonment
hereof prior to the Closing Date pursuant to the provisions of this Article
IX,
this Agreement shall become void and have no effect, and each party shall pay
all of its own expenses incurred in connection herewith, without any liability
on the part of any party or its partners, directors, officers or shareholders;
provided, however, that if this Agreement is terminated and
abandoned because either party has defaulted under or breached this Agreement
or
any representation, warranty, covenant or obligation set forth in this
Agreement, then the party so electing to terminate this Agreement shall be
entitled to pursue, exercise and enforce any and all other remedies, rights,
powers and privileges available to it at law or in equity.
SURVIVAL
AND INDEMNIFICATION
10.1 Survival. All
representations, warranties, covenants and agreements contained in this
Agreement or in any other Transaction Document, shall survive (and not be
affected in any respect by) the Closing, any investigation conducted by or
on
behalf of any party hereto and any information which any party may receive
or
have. Notwithstanding the foregoing, the
representations
and warranties contained in or made pursuant to this Agreement shall terminate
on, and no Claim with respect thereto may be brought after, the 18-month
anniversary of the Closing Date; provided, however,
that: (a) the representations and warranties contained in Sections
2.1(a) (first and last sentences only) (Organization and Good Standing), 2.2
(Capitalization), 2.3(a), (b), (c), (d)(i) and (iii) - (v) and (e) (Authority,
Approvals, Enforceability and Consents), 2.19(a) (first sentence only) (Title),
3.1 (Ownership of Shares, Title), 3.2(a), (b) and (c)(i) and (iii) and (iv)
(Capacity, Enforceability and Consents), 4.1 (Capacity, Enforceability and
Consents), 5.1 (Organization and Good Standing) and 5.2(a), (b), (c) and (d)(i),
(iii) and (iv) (Authority, Approvals, Enforceability and Consents) and the
indemnity obligations for the misrepresentation or breach of such
representations and warranties shall survive indefinitely; (b) the
representations and warranties contained in Sections 2.7 (Taxes), 2.15 (Employee
Benefit Plans), 2.23 (Brokers), 3.5 (Brokers) and 5.4 (Brokers) and the
indemnity obligations for the misrepresentation or breach of such
representations and warranties shall survive until 60 days following the
expiration of the applicable statutes of limitation; and (c) the representations
and warranties contained in Section 2.17 (Environmental Matters) and the
indemnity obligations for the misrepresentation or breach of such
representations and warranties shall survive until the third anniversary of
the
Closing Date. The representations and warranties and the applicable
indemnity obligations for breach thereof that terminate pursuant to this Section
10.1, and the liability of any party to this Agreement with respect thereto
pursuant to this Article X, shall not terminate with respect to any Claim,
whether or not fixed as to liability or liquidated as to amount, with respect
to
which the Indemnifying Party (or, in the event one or more Stockholders are
the
Indemnifying Party, the Stockholders’ Representative) has been given written
notice from the Indemnified Party setting forth the facts upon which the claim
for indemnifications is based prior to the expiration of the applicable survival
period.
10.2 Indemnification. The
parties shall indemnify each other as set forth below:
(a) The
Stockholders shall jointly and severally indemnify and hold harmless Buyer,
its
Affiliates (including from and after the Closing, the Company) and their
respective Representatives (collectively, the “Buyer Indemnified
Parties”) from and against any Losses based upon, arising out of,
asserted against, resulting from, imposed on, in connection with, or otherwise
in respect of:
(i) any
misrepresentation or breach as of the date of this Agreement or the Closing
Date
of any representation or warranty of the Stockholders and the Company contained
in Article II of this Agreement or of any representation, warranty or
statement made in any schedule, certificate, document or instrument delivered
by
the Stockholders or the Company in connection therewith at or in connection
with
the Closing, or any third party allegation or Claim based upon facts that,
if
true, would constitute such an misrepresentation or breach, in each case without
giving effect to any materiality qualification (including qualifications
indicating accuracy in all material respects) or “Material Adverse Effect”
qualification (including qualifications indicating accuracy with such exceptions
as, individually or in the aggregate, do not have, and are not reasonably likely
to have, a Material Adverse Effect), other than with respect to Section 2.5(b)
(Absence of Undisclosed Liabilities) and 2.6(a)(i) (Absence of Certain
Changes);
(ii) (A)
the breach by the Stockholders of, or the failure by the Stockholders to
perform, any of their covenants or agreements contained in this Agreement to
cause the Company to take or not take any action and (B) the breach by the
Company of, or the failure by the Company to perform, any of its covenants
or
agreements contained in this Agreement;
(iii) the
Discontinued Operations;
(iv) any
Transaction Expenses incurred by the Company or its Subsidiaries that is not
included in Closing Working Capital;
(v) the
transfer of the Excluded Assets and all liabilities and obligations incurred
in
connection with the Excluded Assets;
(vi) each
matter listed on Schedule 10.2(a)(vi);
(vii) each
matter listed on Schedule 10.2(a)(vii);
(viii) any
withdrawal liability with respect to any Multiemployer Plan; and
(ix) the
Retiree Obligations.
provided,
however, that: (x) other than for fraud or intentional
misrepresentation or with respect to Losses based upon, arising out of, asserted
against, resulting from, imposed on, in connection with, or otherwise in respect
of any misrepresentation or breach of any of the Specified Basket
Representations, the Stockholders shall not be responsible for any Losses
with respect to the matters referred to in clause (i) of this Section 10.2(a)
until the cumulative aggregate amount of all such Losses exceeds the Basket
Amount, in which event the Stockholders shall then be liable for all Losses
in
excess of the Basket Amount; and (y) other than for fraud or intentional
misrepresentation or with respect to Losses based upon, arising out of, asserted
against, resulting from, imposed on, in connection with, or otherwise in respect
of any misrepresentation or breach of any of the Specified Cap Representations,
the cumulative aggregate indemnity obligation of the Stockholders with respect
to the matters referred to in clause (i) of this Section 10.2(a) shall in no
event exceed 30% of the Final Purchase Price (the “Cap
Amount”); and
(b) Each
Stockholder shall severally and not jointly indemnify and hold harmless the
Buyer Indemnified Parties from and against any Losses based upon, arising out
of, asserted against, resulting from, imposed on, in connection with, or
otherwise in respect of:
(i) any
misrepresentation or breach as of the date of this Agreement or the Closing
Date
of any representation or warranty of such Stockholder contained in
Article III of this Agreement or of any representation, warranty or
statement made in any schedule, certificate, document or instrument delivered
by
such Stockholder in connection therewith at or in connection with the Closing,
or any third party allegation or Claim based upon facts that, if true, would
constitute such a misrepresentation or breach, in each case, without giving
effect to any materiality qualification (including qualifications indicating
accuracy in all material respects) or “Material Adverse Effect”
qualification
(including qualifications indicating accuracy with such exceptions as,
individually or in the aggregate, do not have, and are not reasonably likely
to
have, a Material Adverse Effect); or
(ii) the
breach by such Stockholder of, or the failure by such Stockholder to perform,
any of his, her or its covenants or agreements contained in this Agreement
(other than covenants or agreements that require the Stockholders to cause the
Company to take or not take any action).
(c) The
Stockholders’ Representative agrees that he shall indemnify and hold harmless
the Buyer Indemnified Parties from and against any Losses based upon, arising
out of, asserted against, resulting from, imposed on, in connection with, or
otherwise in respect of:
(i) the
misrepresentation or breach as of the date of this Agreement or the Closing
Date
of any representation or warranty of the Stockholders’ Representative contained
in Article IV of this Agreement or of any representation, warranty or
statement made in any schedule, certificate document or instrument delivered
by
the Stockholders’ Representative in connection therewith at or in connection
with the Closing or any third party allegation or Claim based upon facts that,
if true, would constitute such an misrepresentation or breach; and
(ii) the
breach by the Stockholders’ Representative of, or the failure by the
Stockholders’ Representative to perform, any of his covenants or agreements
contained in this Agreement.
(d) Buyer
agrees that it shall indemnify and hold harmless the Stockholders and their
Representatives (collectively, the “Stockholder Indemnified
Parties”) from and against any Losses based upon, to the extent arising
out of, asserted against, resulting from, imposed on, in connection with, or
otherwise in respect of:
(i) the
misrepresentation or breach as of the date of this Agreement or the Closing
Date
of any representation or warranty of Buyer contained in Article V of this
Agreement or of any representation, warranty or statement made in any schedule,
certificate document or instrument delivered by Buyer in connection therewith
at
or in connection with the Closing or any third party allegation or Claim based
upon facts that, if true, would constitute such an misrepresentation or breach;
and
(ii) the
breach by Buyer of, or the failure by Buyer to perform, any of its covenants
or
agreements contained in this Agreement.
10.3 Indemnification
Procedures.
(a) If
any Buyer Indemnified Party, on the one hand, or any Stockholder Indemnified
Party, on the other hand (the “Indemnified Party”), has a Claim
or receives actual notice of any Claim, or the commencement of any Claim that
could give rise to an obligation on the part of any the Stockholders (or, prior
to the Closing, the Company), on the one hand, or Buyer, on the other hand,
other than a Third Party Claim, to provide indemnification (the
“Indemnifying Party”) pursuant to this Article X, the
Indemnified Party shall promptly give the
Indemnifying
Party (or, in the event one or more Stockholders are the Indemnifying Party,
Stockholders’ Representative) notice thereof (the “Indemnification Claim
Notice”); provided, however, that the failure to give
such prompt notice shall not prevent any Indemnified Party from being
indemnified hereunder for any Losses, except to the extent that the failure
to
so promptly notify the Indemnifying Party, actually materially damages the
Indemnifying Party; provided, further, however, that during
the five Business Day period following delivery of an Indemnification Claim
Notice, the Indemnifying Party (or, in the event one or more Stockholders are
the Indemnifying Party, the Stockholders’ Representative) and the Indemnified
Party shall seek in good faith to resolve any differences they have with respect
to the matters set forth in such Indemnification Claim Notice (and, after
expiration of such period, the Indemnified Party shall be entitled to seek
any
remedies available to it).
(b) Upon
receipt by an Indemnified Party of actual notice of a Claim, or the commencement
of any Claim, by a Third Party (a “Third Party Claim”) that
does or could give rise to an obligation to provide indemnification pursuant
to
this Article X, the Indemnified Party will give the Indemnifying Party (or,
in
the event one or more Stockholders are the Indemnifying Party, the Stockholders’
Representative) prompt written notice thereof (the “Third Party
Indemnification Claim Notice”); provided, however, that
the failure of the Indemnified Party to so promptly notify the Indemnifying
Party (or, in the event one or more Stockholders are the Indemnifying Party,
the
failure to so promptly notify the Stockholders’ Representative) shall not
prevent any Indemnified Party from being indemnified for any Losses, except
to
the extent that the failure to so promptly notify the Indemnifying Party (or,
in
the event one or more Stockholders are the Indemnifying Party, the Stockholders’
Representative) actually materially damages the Indemnifying Party or materially
prejudices the Indemnifying Party’s ability to defend against such Third Party
Claim.
(c) Any
Indemnification Claim Notice or Third Party Indemnification Claim Notice will
describe the Claim in reasonable detail. If the Indemnifying Party
(or, in the event one or more Stockholders are the Indemnifying Party, the
Stockholders’ Representative) confirms in writing to the Indemnified Party
within 15 days after receipt of a Third Party Indemnification Claim Notice
the Indemnifying Party’s responsibility to indemnify and hold harmless the
Indemnified Party therefor and within such 15-day period demonstrates to the
Indemnified Party’s reasonable satisfaction that, as of such time, the
Indemnifying Party has sufficient financial resources (taking into account
the
amount of escrowed funds then held by the Escrow Agent under the Escrow
Agreement) in order to indemnify for the full amount of any potential liability
in connection with such Claim, the Indemnifying Party (or, in the event one
or
more Stockholders are the Indemnifying Party, the Stockholders’ Representative)
may elect to assume control over the compromise or defense of such Third Party
Claim at the expense of the Indemnifying Party and by counsel selected by the
Indemnifying Party (or, in the event one or more Stockholders are the
Indemnifying Party, by counsel selected by the Stockholders’ Representative),
which counsel will be reasonably satisfactory to the Indemnified
Party. If the Indemnifying Party (or, in the event one or more
Stockholders are the Indemnifying Party, the Stockholders’ Representative) so
elects to assume control over the compromise and defense of such Third Party
Claim, the Indemnifying Party (or, in the event one or more Stockholders are
the
Indemnifying Party, the Stockholders’ Representative) shall within such
15 days (or sooner, if the nature of the asserted Third Party Claim so
requires) notify the Indemnified Party of the agreement of the Indemnifying
Party (or, in the event one or more Stockholders are the
Indemnifying
Party, of the agreement of the Stockholders’ Representative) to do so, and the
Indemnified Party shall cooperate, at the expense of the Indemnifying Party,
in
the compromise of, or defense against, such Third Party Claim; provided,
however, that: (i) the Indemnified Party
may, if such Indemnified Party so desires, employ counsel at such Indemnified
Party’s own expense to assist in the handling (but not control the defense) of
any Third Party Claim; (ii) the Indemnifying Party (or, in the event one or
more Stockholders are the Indemnifying Party, the Stockholders’ Representative)
shall keep the Indemnified Party advised of all material events with respect
to
any Third Party Claim; (iii) the Indemnifying Party (or, in the event one
or more Stockholders are the Indemnifying Party, the Stockholders’
Representative) shall obtain the prior written approval of the Indemnified
Party
before ceasing to defend against any Third Party Claim or entering into any
settlement, adjustment or compromise of such Third Party Claim involving
injunctive or similar equitable relief being asserted against any Indemnified
Party or any of its or his Affiliates; and (iv) no Indemnifying Party will
(or, in the event one or more Stockholders are the Indemnifying Party, the
Stockholders’ Representative will not), without the prior written consent of
each Indemnified Party, settle or compromise or consent to the entry of any
judgment in any pending or threatened Claim in respect of which indemnification
may be sought hereunder (whether or not any such Indemnified Party is a party
to
such action), unless such settlement, compromise or consent by its terms
obligates the Indemnifying Party to pay the full amount of the liability in
connection with such Third Party Claim and includes an unconditional release
of
all such Indemnified Parties from all liability arising out of such Third Party
Claim.
(d) Notwithstanding
anything contained herein to the contrary, the Indemnifying Party (or, in the
event one or more Stockholders are the Indemnifying Party, the Stockholders’
Representative) shall not be entitled to have sole control over (and if it
so
desires, the Indemnified Party shall have sole control over) the defense,
settlement, adjustment or compromise of (but the Indemnifying Party shall
nevertheless be required to pay all Losses incurred by the Indemnified Party
in
connection with such defense, settlement or compromise): (i) any
Third Party Claim that seeks an order, injunction or other equitable relief
against any Indemnified Party or any of its Affiliates; (ii) any Third Party
Claim in which both the Indemnifying Party and the Indemnified Party are named
as parties and either the Indemnifying Party or the Indemnified Party determines
with advice of counsel that there may be one or more legal defenses available
to
it that are different from or additional to those available to the other party
or that a conflict of interest between such parties may exist in respect
thereto; (iii) any Third Party Claim pursuant to Section 10.2(b)(i) prior to
such time as the aggregate amount of Buyer’s Losses pursuant to such Third Party
Claim and all prior Claims pursuant to Section 10.2(b)(i) are reasonably
expected to exceed the Basket Amount (as applicable) or after such time as
the
aggregate amount of the Losses of Buyer Indemnified Parties pursuant to such
Third Party Claim and all prior Claims pursuant to Section 10.2(b)(i) are
reasonably expected to exceed the Cap Amount; and (iv) any Third Party Claim
relating to Taxes of the Company or its Subsidiaries for periods after the
Closing Date; provided, however, that with respect to any such
Third Party Claim relating to Taxes, the Stockholders’ Representative may
participate in the conduct thereof and Buyer shall not settle or compromise
such
Third Party Claim without the consent of the Stockholders’ Representative, such
consent not to be unreasonably withheld, conditioned or delayed.
(e) If
the Indemnifying Party (or, in the event one or more Stockholders are the
Indemnifying Party, the Stockholders’ Representative) elects not to assume the
defense,
settlement,
adjustment or compromise of an asserted liability, fails to timely and properly
notify the Indemnified Party of his, her or its election as herein provided,
or,
at any time after assuming such defense, fails to diligently defend against
such
Third Party Claim in good faith, fails to have sufficient financial resources
to
pay the full amount of such potential liability in connection with such Third
Party Claim or if the Indemnified Party is otherwise entitled pursuant to this
Agreement to have control over the defense, settlement or compromise of any
Claim, the Indemnified Party may, at the Indemnifying Party’s expense, pay,
defend, settle, adjust or compromise such asserted liability (but the
Indemnifying Party shall nevertheless be required to pay all Losses incurred
by
the Indemnified Party in connection with such payment, defense, settlement,
adjustment or compromise). In connection with any defense of a Third
Party Claim (whether by the Indemnifying Parties, the Stockholders’
Representative or the Indemnified Parties), all of the parties hereto shall,
and
shall cause their respective Affiliates to, cooperate in the defense or
prosecution thereof and to in good faith retain and furnish such records,
information and testimony, and attend such conferences, discovery proceedings,
hearings, trials and appeals, as may be reasonably requested by a party hereto
in connection therewith.
10.4 Set-Off;
etc.
(a) If
any Indemnified Party becomes entitled to indemnification from an Indemnifying
Party pursuant to this Agreement, such indemnification payment will be made
in
cash upon demand; provided, however, that a Buyer Indemnified
Party may proceed against the escrow fund held under the Escrow Agreement in
order to satisfy any such entitlement.
(b) Buyer
may, at its option (at any time and from time to time), reduce any amount owed
by Buyer or one of its Affiliates to any Stockholders Indemnified Party under
this Agreement (whether pursuant to this Article X or otherwise) or any other
Transaction Document by all or part of any amount owed by any Stockholders
Indemnified Person to Buyer or one of its Affiliates under this Agreement
(whether pursuant to this Article X or otherwise) or any other Transaction
Document.
(c) Any
payment made by the Stockholders or Buyer pursuant to this Article X will be
deemed an adjustment to the Final Purchase Price.
10.5 Taxes Section
10.3 shall have no application to Losses with respect to Taxes that are subject
to Section 6.9, which shall be governed exclusively by Section 6.9, but shall
otherwise apply to Losses resulting from the misrepresentation or breach as
of
the date of this Agreement or the Closing Date of any representation or warranty
of the Stockholders and the Company contained in Section 2.7 or of any
representation, warranty or statement made in any schedule, certificate,
document or instrument delivered by the Stockholders or the Company in
connection therewith at or in connection with the Closing, or any third party
allegation or Claim based upon facts that, if true, would constitute such a
misrepresentation or breach.
10.6 No
Contribution From the Company, Etc.Notwithstanding anything in this
Agreement to the contrary: (a) each Stockholder acknowledges and
agrees that he, she or it does not have any right of indemnification,
contribution or reimbursement from or remedy against the Company or its
Subsidiaries as a result of any indemnification he, she or it is required to
make under or arising out of the breach or inaccuracy of any representation,
warranty, covenant or
other
obligation contained in this Agreement or in any certificate, document or other
instrument delivered in connection herewith (including, without limitation,
any
such breach or inaccuracy of a representation, warranty, covenant or other
obligation of the Company); and (b) each Stockholder hereby releases, waives
and
forever discharges any right to indemnification, contribution or reimbursement
that he or she may have at any time against the Company or its Subsidiaries
under or arising out of the breach or inaccuracy of any representation,
warranty, covenant or other obligation in this Agreement or in any certificate,
document or other instrument delivered in connection herewith.
MISCELLANEOUS
11.1 Expenses. Each
of the parties hereto shall pay its own fees and expenses (including the fees
of
any attorneys, accountants, investment bankers or others engaged by such party)
in connection with this Agreement and the other Transaction Documents and the
transactions contemplated hereby and thereby (the “Transaction
Expenses” ) whether or not the transactions contemplated hereby
are consummated; provided, however, that the Stockholders shall
bear all of the Transaction Expenses of the Company to the extent they are
not
reflected in Closing Working Capital.
11.2 Certain
Interpretative Matters. The captions or Articles and Sections of
this Agreement are for convenience only and shall not control or affect the
meaning or construction of any of the provisions of this
Agreement. As used herein, (a) words in the singular shall be
held to include the plural and vice versa and words of one gender shall be
held
to include the other gender as the context requires, (b) the terms
“hereof,” “herein,” and “herewith” and words of similar import shall, unless
otherwise stated, be construed to refer to this Agreement as a whole (including
all of the Schedules and Exhibits) and not to any particular provision of this
Agreement, (c) Article, Section, paragraph, Exhibit and Schedule references
are
to the Articles, Sections, paragraphs, Exhibits, and Schedules to this Agreement
unless otherwise specified, and (d) unless the context otherwise requires,
the
word “or” is not exclusive. Whenever the words “included”, “includes”
or “including” are used in this Agreement, they shall be deemed to be followed
by the words “without limitation”. The parties intend that each
representation, warranty and covenant contained herein shall have independent
significance. If any party has breached any representation, warranty
or covenant contained herein, the fact that there exists another representation,
warranty or covenant relating to the same subject matter (regardless of the
relative levels of specificity) which the party has not breached shall not
detract from or mitigate the fact that the party is in breach of the first
representation, warranty or covenant, as the case may be.
11.3 Notices. All
notices or other communications required or permitted hereunder shall be given
in writing and given by certified or registered mail, return receipt requested,
nationally recognized overnight delivery service, such as Federal Express,
facsimile or e-mail (or like transmission) with confirmation of transmission
by
the transmitting equipment or personal delivery against receipt to the party
to
whom it is given, in each case, at such party’s address, facsimile number or
e-mail address set forth below or such other address, facsimile number
or
e-mail
address as such party may hereafter specify by notice to the other parties
hereto given in accordance herewith. Any such notice or other
communication shall be deemed to have been given as of the date so personally
delivered or transmitted by facsimile (or, if delivered or transmitted after
normal business hours, on the next Business Day) or e-mail or like transmission,
on the next Business Day when sent by overnight delivery services or five days
after the date so mailed if by certified or registered mail:
If
(prior
to the consummation of the Closing) the Company:
Commercial
Envelope Manufacturing Co. Inc.
000
Xxxxx
Xxxxxxxxx
Xxxx
Xxxx, XX 00000
Fax
No.: (000) 000-0000
E-mail
Address: xxxxxxxx@xxxxxxxxxx-xxxxxxxx.xxx
Attention: Xxxxxx
Xxxxxxx
with
a
copy to
Xxxxxxx
& Masyr, LLP
000
Xxxx
00xx
Xxxxxx
Xxx
Xxxx,
XX 00000
Fax
No.: (000) 000-0000
E-mail
Address: xxxxxxx@xxxxx.xxx
Attention: Xxxxxxx
X. Xxxxxxx
If
to
Buyer or (from and after the consummation of the Closing) the
Company:
Cenveo
Corporation
000
Xxxxx
Xxxxxx, 0xx
Xxxxx
Xxx
Xxxxxxxxxx Xxxxx
Xxxxxxxx,
XX 00000
Fax
No.: (000) 000-0000
E-mail
Address: xxx.xxxxx@xxxxxx.xxx
Attention: General
Counsel
with
a
copy to:
Xxxxxx
Xxxxxxx & Xxxx LLP
Xxx
Xxxxxxx Xxxx Xxxxx
Xxx
Xxxx,
XX 00000
Fax
No.: (000) 000-0000
E-mail
Address: xxxxxxxx@xxxxxxxxxxxxx.xxx
Attention: Xxxxxxx
X. Xxxxxxxxx
If
to any
Stockholder or the Stockholders’ Representative, to his, her or its address on a
signature page hereto.
11.4 Assignment. This
Agreement and all of the provisions hereof shall be binding upon and inure
to
the benefit of the parties hereto and their respective heirs (in the case of
the
Stockholders), successors and permitted assigns, and the provisions of Article
IX and Section 11.13 hereof shall inure to the benefit of the Indemnified
Parties; provided, however, that neither this Agreement nor any of
the rights, interests or obligations hereunder may be assigned by any of the
parties hereto without the prior written consent of the other parties (except
that Buyer and, upon the request of Buyer, the Company may collaterally assign,
without the consent of any other party hereto, all of their respective rights
and obligations under this Agreement (including their rights under covenants,
representations, warranties and indemnities) and any other Transaction Document
to an Affiliate, to any and all lenders or other financing sources to Buyer,
any
of its Affiliates or the Company or to any Person who acquires all or
substantially all of any of their properties or assets, any and all of whom
may
enforce their rights and remedies in connection with any such assignment or
realization thereon to the extent provided in the applicable security agreements
and other debt instruments or at law or in equity. Any purported
assignment or delegation in violation of this Agreement shall be null and void
ab initio.
11.5 Entire
Agreement. This Agreement and the other Transaction Documents
(including the Schedules and Exhibits hereto and thereto) embodies the entire
agreement and understanding of the parties and their respective Affiliates
with
respect to the transactions contemplated hereby and merges in, supersedes and
cancels all prior written or oral commitments, arrangements or understandings
with respect thereto, including the Letter of Intent dated May 1, 2007 among
the
Company, Buyer and certain Stockholders (and it is understood and agreed that
the Confidentiality Agreement dated as of April 9, 2007 between the Company
and
Buyer shall survive until the consummation of the Closing). There are
no restrictions, agreements, promises, warranties, covenants or undertakings
with respect to the transactions contemplated hereby other than those expressly
set forth in this Agreement and the other Transaction Documents.
11.6 Modifications,
Amendments and Waivers. This Agreement may not be modified or
amended except by an instrument or instruments in writing signed by the Company
(prior to consummation of the Closing), Buyer and the Stockholders’
Representative; provided, however, that any amendment to
Schedule 1.1(b)(i) shall also require the written consent of each
Stockholder. Any party hereto (or, the Stockholders’ Representative
on behalf of any Stockholder) may, only by an instrument in writing, waive
compliance by any other party or parties hereto with any term or provision
hereof on the part of such other party or parties hereto to be performed or
complied with. No failure or delay of any party in exercising any
right or remedy hereunder shall operate as a waiver thereof, nor will any single
or partial exercise of any right or power, or any abandonment or discontinuance
of steps to enforce such right or power, preclude any other or further exercise
thereof or the exercise of any other right or power. The waiver by
any party hereto of a breach of any term or provision hereof shall not be
construed as a waiver of any subsequent breach. The rights and
remedies of the parties hereunder are cumulative and are not exclusive of any
rights or remedies that they would otherwise have hereunder.
11.7 Counterparts. This
Agreement may be executed in one or more counterparts, all of which shall be
considered one and the same agreement and each of which shall be deemed an
original, and will become effective when one or more counterparts have been
signed by a party
and
delivered to the other parties. Copies of executed counterparts
transmitted by telecopy, telefax or other electronic transmission service shall
be considered original executed counterparts for purposes of this Section 11.7,
provided that receipt of copies of such counterparts is confirmed.
11.8 GOVERNING
LAW. THIS AGREEMENT AND (UNLESS EXPRESSLY SET FORTH THEREIN) EACH
OF THE OTHER TRANSACTION DOCUMENTS SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK THAT APPLY TO CONTRACTS MADE
AND PERFORMED ENTIRELY IN SUCH STATE.
11.9 Severability. To
the fullest extent that they may effectively do so under applicable law, the
parties hereto hereby waive any provision of law which renders any provision
of
this Agreement invalid, illegal or unenforceable in any respect. Such
parties further agree that any provision of this Agreement which,
notwithstanding the preceding sentence, is rendered or held invalid, illegal
or
unenforceable in any respect in any jurisdiction shall be ineffective, but
such
ineffectiveness shall be limited as follows: (a) if such provision is
rendered or held invalid, illegal or unenforceable in such jurisdiction only
as
to a particular Person or Persons or under any particular circumstance or
circumstances, such provision shall be ineffective, but only in such
jurisdiction and only with respect to such particular Person or Persons or
under
such particular circumstance or circumstances, as the case may be; (b) without
limitation of clause (a), such provision shall in any event be ineffective
only
as to such jurisdiction and only to the extent of such invalidity, illegality
or
unenforceability, and such invalidity, illegality or unenforceability in such
jurisdiction shall not render invalid, illegal or unenforceable such provision
in any other jurisdiction; and (c) without limitation of clause (a) or (b),
such
ineffectiveness shall not render invalid, illegal or unenforceable this
Agreement or any of the remaining provisions hereof.
11.10 Submission
to Jurisdiction; Waiver of Jury Trial. Each party to this
Agreement, for himself, herself or itself and his, her or its Affiliates, hereby
irrevocably and unconditionally:
(a) (i) agrees
that any suit, action or proceeding instituted against him or it by any other
party with respect to this Agreement or (unless expressly set forth therein)
any
other Transaction Document may be instituted, and that any suit, action or
proceeding by him, her or it against any other party with respect to this
Agreement or any other Transaction Document shall be instituted, only in the
courts of the State of New York, located in New York County or the U.S. District
Court for the Southern District of New York (and appellate courts from any
of
the foregoing) as the party instituting such suit, action or proceeding may
in
his, her or its sole discretion elect, (ii) consents and submits, for himself,
herself or itself and its property, to the jurisdiction of such courts for
the
purpose of any such suit, action or proceeding instituted against him, her
or it
by any other party and (iii) agrees that a final judgment in any such suit,
action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by
law;
(b) agrees
that service of all writs, process and summonses in any suit, action or
proceeding pursuant to Section 11.10(a) may be effected by the mailing of copies
thereof by registered or certified mail, postage prepaid, to the Company, Buyer,
the Stockholders’ Representative or the Stockholders, as the case may be, at the
addresses for notices pursuant to
Section
11.3 hereof (with copies to such other Persons as specified therein);
provided, however, that nothing contained in this Section 11.10
shall affect the right of the Company, Buyer, the Stockholders or the
Stockholders’ Representative, as the case may be, to serve process in any other
manner permitted by law;
(c) (i)
waives any objection that he, she or it may now or hereafter have to the laying
of venue of any suit, action or proceeding arising out of or relating to this
Agreement or any other Transaction Document brought in any court specified
in
Section 11.10(a), (ii) waives any claim that any such suit, action or proceeding
brought in any such court has been brought in an inconvenient forum and (iii)
agrees not to plead or claim either of the foregoing;
(d) WAIVES
ANY RIGHT HE, SHE OR IT MAY HAVE TO A TRIAL BY JURY OF ANY DISPUTE ARISING
OUT
OF OR RELATING TO THIS AGREEMENT OR (UNLESS EXPRESSLY SET FORTH THEREIN) ANY
OTHER TRANSACTION DOCUMENT AND AGREES THAT ANY SUCH DISPUTE SHALL BE TRIED
BEFORE A JUDGE SITTING WITHOUT A JURY; and
(e) to
the extent he, she or it has or hereafter may acquire any immunity from
jurisdiction of any court or from any legal process (whether through service
or
notice, attachment prior to judgment, attachment in aid of execution, execution
or otherwise) with respect to himself, herself or itself, or his, her or its
property, hereby irrevocably waives such immunity in respect of his, her or
its
obligations with respect to this Agreement and (unless expressly set forth
therein) the other Transaction Documents.
11.11 Specific
Performance. Each of the parties hereto acknowledges that Buyer
would not have an adequate remedy at law for money damages in the event that
any
of the covenants or agreements set forth in this Agreement were not performed
by
the Company or the Stockholders and, if applicable, their Affiliates in
accordance with its terms and therefore, each of the Company and the
Stockholders agrees that Buyer shall be entitled to specific performance,
injunctive and other equitable relief in addition to any other remedy to which
it may be entitled at law or in equity (without the necessity of proving the
inadequacy as a remedy of money damages or the posting of a bond).
11.12 No
Presumption. With regard to each and every term and condition of
this Agreement and the other Transaction Documents, the parties hereto
understand and agree that the same have or has been mutually negotiated,
prepared and drafted, and if at any time the parties hereto desire or are
required to interpret or construe any such term or condition or any agreement
or
instrument subject hereto, no consideration shall be given to the issue of
which
party hereto actually prepared, drafted or requested any term or condition
of
this Agreement or any agreement or instrument subject hereto.
11.13 No
Third Party Beneficiary. This Agreement is for the sole benefit
of the parties hereto and their respective successors and permitted assigns
and,
except as provided in Section 10.2 (which is intended to and shall inure to
the
benefit of, and may be enforced by, each Buyer Indemnified Party or Stockholder
Indemnified Party, as the case may be), nothing herein, express or implied,
is
intended to or shall confer upon any other Person any legal or equitable right,
benefit or remedy of any nature whatsoever under or by reason of this
Agreement. Without
limitation
of the right of any Indemnified Party directly to bring and to maintain an
action pursuant to Section 10.2 hereof, Buyer may make any indemnification
claim
under, and may bring and maintain any action in respect of, Section 10.2 hereof
on behalf of any Buyer Indemnified Party.
11.14 Non-Recourse. No
past, present or future director, officer, employee, incorporator, member,
partner, stockholder, Affiliate, agent, attorney, consultant, representative
or
principal of Buyer or any Affiliate of Buyer shall have any liability for any
liabilities of Buyer under this Agreement or any Transaction Document or for
any
Claim based on, in respect of, or by reason of, the transactions contemplated
hereby or thereby.
11.15 Stockholders’
Representative.
(a) By
the execution and delivery of this Agreement, each Stockholder shall be deemed
to have irrevocably appointed, authorized and directed Xxxxxxx X. Xxxxxxx to
act
as such Stockholder’s agent, representative, proxy and attorney-in-fact for the
purpose of effecting the consummation of the transactions contemplated by this
Agreement and the Transaction Documents, and exercising, on behalf of all
Stockholders, the rights and powers of the Stockholders hereunder and
thereunder. Without limiting the generality of the foregoing, the
Stockholders’ Representative shall have full power and authority, and is hereby
directed, for and on behalf of the Stockholders, to take such action, and to
exercise such rights, power and authority, as are authorized, delegated and
granted to the Stockholders’ Representative hereunder in connection with the
transactions contemplated hereby and thereby and to exercise such rights, power
and authority as are incidental thereto, to represent any Stockholder at the
Closing, to give or receive any notices required or permitted to be given
hereunder and thereunder, to accept service of process on behalf of any
Stockholder, to execute and deliver, or hold in escrow and release, any exhibits
or amendments to this Agreement, the Transaction Documents or any other
agreements, certificates, stock powers, statements, notices, approvals,
extensions or waivers relating to the transactions contemplated hereby or
thereby, to conduct or cease to conduct the defense of all claims against any
Stockholder in connection with this Agreement and to settle all such
claims on behalf of all Stockholders and exercise any and all rights that the
Stockholders are permitted or required to do or exercise under Article X, and
in
connection with any claim against or by theStockholders under this
Agreement. The appointment and agency created hereby is irrevocable,
and shall be deemed to be coupled with an interest. Execution of this
Agreement by the Stockholders shall constitute agreement to be bound by the
actions of the Stockholders’ Representative taken hereunder and
thereunder. The parties hereto acknowledge and agree that, as to all
matters arising under this Agreement and the Transaction Documents, the
Stockholders’ Representative shall act for and on behalf of the
Stockholders. When this Agreement or any Transaction Document
provides that a determination or any other action or event is conclusive and
binding upon theStockholders, such determination, action or event of the
Stockholders’ Representative shall be conclusive and binding upon the
Stockholders. In addition, the Stockholder’s Representative shall
have all such incidental powers as may be necessary or desirable to carry into
effect the provisions of this Section 11.15, including, at the expense of
the Stockholders, to retain attorneys, accountants and other advisors to assist
him in the performance of his duties hereunder.
(b) Subject
to the provisions of this Section 11.15(b), the Stockholders’
Representative shall serve as such from the date hereof until the earlier of
his
removal or the completion of his obligations hereunder. In the event
that the Person who is acting as the Stockholders’ Representative is terminated
by the Stockholder (which termination shall require the unanimous vote of the
Stockholder) or is unable or unwilling to continue to serve as the Stockholders’
Representative, or otherwise ceases to be the Stockholders’ Representative, his
successor shall be appointed in accordance with this Section 11.15;
provided, however, that the Stockholders’ Representative shall not
voluntarily resign without the Stockholders first selecting a successor
Stockholders’ Representative (reasonably satisfactory to Buyer) in accordance
with this Section 11.15. Upon the termination or resignation of
any Stockholders’ Representative, a successor Stockholders’ Representative (and,
if necessary, further successor Stockholders’ Representatives) shall be
appointed by the Stockholders’ Representative or in the event of his death, the
executor of his estate. Any successor to a Stockholders’ Seller
Representative shall for purposes of this Agreement be deemed to be, for the
time of the appointment thereof, a Stockholders’ Representative and from and
after such time, the term “Stockholders’ Representative” as used herein shall be
deemed to refer to any successor. No appointment of a successor shall
be effective unless such successor agrees in writing to be bound by the terms
of
this Agreement.
(c) The
Stockholders agree that the provisions set forth in this Section 11.15
shall in no way impose any liability or obligation on Buyer other than those
explicitly set forth in this Agreement. In particular,
notwithstanding in any case any notice received by Buyer to the contrary, Buyer
shall be fully protected in relying upon and shall be entitled (i) to rely
upon actions, decisions and determinations of the Stockholders’ Representative
and (ii) to assume that all actions, decisions and determinations of the
Stockholders’ Representative are fully authorized and binding upon the
Stockholders’ Representative and the Stockholders.
(d) Each
Stockholder further agrees that the Stockholders’ Representative (i) shall
not incur any liability to any Stockholder for acting or omitting from acting
in
such capacity if in doing so he acts or omits to act upon advice of counsel
or
otherwise acts or omits to act in good faith, (ii) shall not incur any
liability for acting or omitting from acting in such capacity in the absence
of
his gross negligence or willful misconduct and (iii) may act or omit to act
upon any instrument or signature believed by him to be genuine and may assume
that any Person purporting to give any notice or instruction under this
Agreement or any Transaction Document or document believed by him to be
authorized has been authorized to do so.
(e) The
Stockholders’ Representative shall act without any
compensation. Notwithstanding the foregoing, each Stockholder hereby
unconditionally and irrevocably agrees to pay to the Stockholders’
Representative, promptly upon request and in any event within 10 days of such
request, such Stockholder’s prorata share (based, if applicable,
on such Stockholder’s relative ownership of the Shares) of any amounts paid, or
in the Stockholders’ Representative’s reasonable judgment expected to be paid,
by the Stockholders’ Representative on behalf of the Stockholders and agrees to
pay such prorata share of any and all costs and expenses
(including legal fees and expenses) incurred by the Stockholders’ Representative
on behalf of the Stockholders in connection with the protection, defense,
expense or enforcement of any rights under this Agreement or any Transaction
Document.
(f) It
is understood and agreed that, notwithstanding anything to the contrary
contained in this Section 11.15: (i) each Stockholder (and not the
Stockholders’ Representative) shall sign the certificate contemplated by Section
7.1 and any exhibit to this Agreement that calls for the signature of such
Stockholder; and (ii) this Section 11.15 shall in no event apply to the
Employment Agreement, the written instructions referred to in Section 1.1(b)(i)
or any New Lease.
11.16 Schedules. The
Schedules to this Agreement shall be arranged in sections and subsections
corresponding to the numbered section and lettered subsections of this
Agreement, and the exceptions and disclosures in each such section and
subsection of the Schedules shall, except as provided in the next sentence,
apply only to the correspondingly numbered section and lettered subsection
of
this Agreement. The information contained in any Schedule shall be
deemed to be incorporated by reference in other applicable Schedules if the
applicability of such information to such other Schedules is reasonably apparent
on its face.
[The
next
page is the signature page]
The
parties hereto have caused this Stock Purchase Agreement to be executed as
of
the date first written above.
| CENVEO CORPORATION | |||
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By:
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/s/ Xxxxxxx Xxxxx | |
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Name: Xxxxxxx
Xxxxx
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Title: Senior
Vice President
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COMMERCIAL
ENVELOPE
MANUFACTURING CO., INC.
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By:
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/s/ Xxxx Xxxxxxx | |
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Name: Xxxx
Xxxxxxx
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Title: President
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STOCKHOLDERS’
REPRESENTATIVE
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/s/ Xxxxxxx
X. Xxxxxxx
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| Xxxxxxx X. Xxxxxxx | |||
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Address:
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Xxxxxxx
X. Xxxxxxx
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Xxxxxxx
& Masyr, LLP
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| 000 Xxxx 00xx Xxxxxx | |||
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Xxx
Xxxx, XX 00000
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Fax
No.: (000) 000-0000
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E-Mail
Address: xxxxxxx@xxxxx.xxx
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[Stockholder
Signatures Are on the Next Page]
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XXX
X. XXXXXXX TRUST IV
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By:
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/s/ Xxxxxxx X. Xxxxxxx | |
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Name: Xxxxxxx
X. Xxxxxxx
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Title: Trustee
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Address:
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c/o
Wachtel & Masyr, LLP
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| 000 Xxxx 00xx Xxxxxx | |||
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Xxx
Xxxx, XX 00000
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Fax
No.: (000) 000-0000
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E-Mail
Address: xxxxxxx@xxxxx.xxx
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Attention: Xxxxxxx
X. Xxxxxxx
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/s/ Xxxx
Xxxxxxx
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| XXXX XXXXXXX | |||
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Address:
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Xxxx
Xxxxxxx
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Commercial
Envelope Manufacturing Co., Inc.
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000
Xxxxx Xxxx Xxxxxxxxx
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Xxxx
Xxxx, XX 00000
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Fax
No.: (000) 000-0000
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E-Mail
Address: xxxxx@xxxxxxxxxx-xxxxxxxx.xxx
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/s/ Xxxxxx
Xxxxxxx
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XXXXXX XXXXXXX | ||
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Address:
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Xxxxxx
Xxxxxxx
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Commercial
Envelope Manufacturing Co., Inc.
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000
Xxxxx Xxxx Xxxxxxxxx
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Xxxx
Xxxx, XX 00000
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Fax
No.: (000) 000-0000
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E-Mail
Address: xxxxxxxx@xxxxxxxxxx-xxxxxxxx.xxx
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EXHIBIT
A
CERTAIN
DEFINED TERMS
1. For
purposes of the Agreement to which this Exhibit A is attached, the following
terms shall have the respective meanings specified below.
“Accounting
Principles” means the accounting principles listed on
Exhibit B.
“Additional
Escrow Amount” means the amount to be deposited in the escrow
established under the Escrow Agreement pursuant to the Side Letter.
“Affiliate”
means, with respect to any Person, any other Person that directly, or through
one or more intermediaries, controls or is controlled by or is under common
control with such first Person.
“Alternative
Closing Date” means four weeks after the Audited Financial Statement
Delivery Date but in no event before September 10, 2007.
“Associate”
means, with respect to any Person: (a) any corporation, partnership,
joint venture or other entity of which such Person is an officer or partner
or
is, directly or indirectly, through one or more intermediaries, the beneficial
owner of 10% or more of: (i) any class or type of equity
securities or other profits interest; or (ii) the combined voting power of
interests ordinarily entitled to vote for management or otherwise; and
(b) any trust or other estate in which such Person has a substantial
beneficial interest or as to which such Person serves as trustee or in a similar
fiduciary capacity.
“Audited
Financial Statement Delivery Date” means the date on which the Audited
Financial Statements, which satisfy the condition precedent in Section 7.12
of
the Agreement, are delivered to Buyer.
“Base
Purchase Price” means $229,777,890.
“Basket
Amount” means an amount equal to 0.35% of the Final Purchase
Price.
“Business
Day” means a day other than Saturday, Sunday or any other day which
commercial banks in New York, New York are authorized or required by law to
close.
“Capitalization
Opinion” means the opinion of counsel to the Company regarding the
capitalization and ownership of the Company and its Subsidiaries in the form
attached as Exhibit F.
“Closing
Debt” means all Debt as of 12:01 a.m. (New York time) on the Closing
Date.
“Closing
Working Capital” means Working Capital as of 12:01 a.m. (New York time)
on the Closing Date.
“Company
Agreements” means all Contracts to which the Company or any of its
Subsidiaries is a party or by which the Company or its Subsidiaries or any
of
their respective properties may be bound or affected.
“Company
Guaranty” means the Guaranty of Payment and Performance dated August 5,
2003 from the Company to Washington Mutual Bank, FA, as amended from time to
time.
“Consulting
Agreement” means the Consulting Agreement dated as of the date of the
Agreement between Buyer and Xxx X. Xxxxxxx.
“Contract”
means any agreement, contract, commitment, instrument, undertaking or
arrangement, whether written or oral.
“Copyrights”
means all copyrights and registrations and applications therefor and all other
rights corresponding thereto, and mask works and registrations and applications
therefor.
“Debt”
means (a) all of the indebtedness for borrowed money of the Company or its
Subsidiaries, (b) all obligations of the Company or its Subsidiaries evidenced
by notes, bonds, debentures or similar instruments (including capital lease
obligations), (c) all indebtedness of the Company or its Subsidiaries created
or
arising under any conditional sale or other title retention agreement, (d)
all
outstanding obligations of the Company or its Subsidiaries under acceptance,
letter of credit or similar facilities or surety bonds, (e) all indebtedness
of
the type described in clauses (a) and (b) above guaranteed, directly or
indirectly, in any manner by the Company or its Subsidiaries, including interest
and penalties thereon, (f) any indebtedness of the type described in clauses
(a)
and (b) above secured by (or for which the holder of such indebtedness has
an
existing right, contingent or otherwise, to be secured by) any Lien on assets
or
property owned by the Company or its Subsidiaries, (g) all accrued but unpaid
interest (or interest equivalent) to the date of determination related to any
obligations of the type described in clauses (a) through (e) above, and (h)
all
obligations of the Company or its Subsidiaries for the deferred purchase price
of property or services. Without limitation of the foregoing; (x)
Debt shall include all fees, costs and other expenses incurred in connection
with the repayment at or prior to the consummation of the Closing of any
obligations described in clauses (a) through (h) above; (y) Debt shall include
any under-funding with respect to the Nonqualified Plan; and (z) in the event
the FL Smithe Obligations shall not be satisfied in full at or prior to the
consummation of the Closing, Debt shall include the FL Smithe
Obligations.
“Discontinued
Operations” means the assets and liabilities sold by National Imprint
on June 17, 2005, including, without limitation, all liabilities and obligations
of National Imprint under the 2005 Purchase Agreement.
“Domain
Names” means all Internet addresses and domain
names.
“Employment
Agreements” means the Employment Agreement dated as of the date of the
Agreement between Buyer and Xxxx Xxxxxxx, the Employment Agreement dated as
of
the date of the Agreement between Buyer and Xxxxxx Xxxxxxx and Employment
Agreement dated as of the date of the Agreement between Buyer and Xxxxx
Xxxxxxx.
“Environmental
Laws” means all U.S., state and local statutes, codes, regulations,
rules, ordinances, policies, decrees, guidelines, guidances, policies, orders
or
decisions, including the common law, arising out of or relating
to: (a) emissions, discharges, releases or threatened releases
of any Hazardous Material into the environment (including ambient air, surface
water, ground water, land surface or subsurface strata); (b) the
manufacture, processing, distribution, use, generation, treatment, storage,
disposal, transport or handling of any Hazardous Material; (c) liability
for personal injury or property damage arising out of the manufacture,
processing, distribution, use, generation, treatment, storage, disposal,
transport, handling, emission, discharge, release, threatened release, or
presence of Hazardous Materials at real property (whether or not owned, leased
or used by the Company or its Subsidiaries); (d) remediation, reclamation
or restoration of real property (whether or not owned, leased or used by the
Company or its Subsidiaries); and (e) workplace health and safety and
protection of employees from workplace hazards.
“ERISA
Affiliate” means an entity required to be aggregated with the Company
or any of its Subsidiaries under Section 414(b), (c), (m) or (o) of the Code
or
4001 of ERISA.
“Escrow
Agent” means U.S. Bank National Association and any successor escrow
agent appointed under the Escrow Agreement.
“Escrow
Agreement” means the Escrow Agreement among Buyer, the Stockholders’
Representative and the Escrow Agent in the form attached to the Agreement
as
Exhibit C.
“Escrow
Amount” means the sum of (a) 10% of the Initial Purchase Price, (b)
$450,000, and (c) the Additional Escrow Amount, all of which are to be deposited
in accordance with the Escrow Agreement in the form attached to the Agreement
as
Exhibit C.
“Estimated
Closing Debt” means the good faith estimate by the Stockholders’
Representative of Closing Debt, based on the most recent month-end
balance sheet
and other information available to the Stockholders’ Representative at the time
of his preparation of such estimate, with such adjustments as the Stockholders’
Representative reasonably believes are necessary to reflect his good faith
estimate of changes from 12:01 a.m. (New York time) on the date of such balance
sheet until 12:01 a.m. (New York time) on the Closing Date.
“Estimated
Closing Working Capital” means the good faith estimate by the
Stockholders’ Representative of Closing Working Capital, based on the most
recent month-end balance sheet and other information available to the
Stockholders’ Representative at the time of his preparation of such estimate,
with such adjustments as the Stockholders’ Representative reasonably believes
are necessary to reflect his good faith estimate of changes from 12:01 a.m.
(New
York time) on the date of such balance sheet until 12:01 a.m. (New York time)
on
the Closing Date.
“Final
Closing Debt” means Closing Debt as finally determined pursuant to
Section 1.4(d).
“Final
Closing Working Capital” means Closing Working Capital as finally
determined pursuant to Section 1.4(d).
“Final
Purchase Price” means the Base Purchase Price
(a) plus the amount, if any, by which the Final Closing Working
Capital exceeds the Target Working Capital, or (b) minus the amount, if
any, by which the Target Working Capital exceeds the Final Closing Working
Capital, and minus (c) the amount, if any, of the Final Closing
Debt.
“GAAP”
means generally accepted accounting principles in the United States as in effect
from time to time.
“General
Release” means the General Release in the form attached to the
Agreement as Exhibit D.
“Government
Authority” means any foreign, United States or international, federal,
state or local (or any subdivision thereof), agency, authority, bureau,
commission, department or similar body or instrumentality thereof, or any
governmental court or tribunal.
“Hazardous
Materials” means any solid, liquid or gaseous material, alone or in
combination, mixture or solution, which is now or hereafter defined, listed
or
identified as “hazardous” (including “hazardous substances” or “hazardous
wastes”), “toxic”, a “pollutant” or a “contaminant” pursuant to any
Environmental Law, including asbestos, urea formaldehyde, polychlorinated
biphenyls (PCBs), radon, petroleum (including its derivatives, by-products
or
other hydrocarbons); and any other substance which is subject in any respect
to
any Environmental Law, or which poses or could pose a threat or nuisance to
health or the environment.
“HSR
Act” means the United States Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976, as amended, and rules and regulations promulgated
thereunder.
“Initial
Closing Payment” means the Initial Purchase Price minus the Escrow
Amount.
“Initial
Purchase Price” means the Base Purchase Price
(a) plus the amount, if any, by which the Estimated Closing
Working Capital exceeds the Target Working Capital, or (b) minus the
amount, if any, by which the Target Working Capital exceeds the Estimated
Closing Working Capital, and minus (c) the amount, if any, of the
Estimated Closing Debt.
“Insider”
means any Stockholder, any director or officer of the Company, and any
Affiliate, Associate or Relative of any of the foregoing Persons.
“Intellectual
Property” means all intellectual property rights arising under the laws
of any jurisdiction in which the Company currently is conducting business with
respect to, arising from or associated with the
following: (i) Domain Names; (ii) Marks;
(iii) Patents; (iv) Copyrights; (v) Trade Secrets; and
(vi) all moral rights, rights of publicity and other intellectual property
and proprietary rights of a similar nature.
“Knowledge”
means, when used with respect to (a) the Company, the actual knowledge of Xxxx
Xxxxxxx, Xxx X. Xxxxxxx, Xxxxx Xxxxxxx, Xxxxxx Xxxxxxx, Xxx Xxxx and Xxxxxxx
X.
Xxxxxxx after due inquiry, (b) any Stockholder, the actual knowledge of
such Stockholder after due inquiry and (c) the Stockholders’
Representative, the actual Knowledge of the Stockholders’ Representative after
due inquiry.
“Law”
or “Laws” means all statutes, codes, ordinances, decrees,
rules, regulations, standards, municipal by-laws, judicial or arbitral or
administrative or ministerial or departmental or regulatory judgments, orders,
injunctions, decisions, rulings or awards, policies or other requirement of
any
Government Authority, or any provisions or interpretations of the foregoing,
including general principles of common and civil law and equity, binding on
or
affecting the Person referred to in the context in which such word is
used.
“Legal
Expenses” means the fees, costs and expenses of any kind incurred by
any Person indemnified herein and its counsel in investigating, preparing for,
defending against or providing evidence, producing documents or taking other
action with respect to any threatened or asserted Claim.
“Law”
means any Law, standard, writ, or injunction.
“Lien”
means any lien, charge, claim, pledge, security interest, conditional sale
agreement or other title retention agreement, lease, mortgage, security
agreement, right of first refusal, option, restriction, tenancy, license,
covenant, right-of-way, easement or other encumbrance (including the filing
of,
or agreement to give, any financing statement under the UCC or any other Law
of
any jurisdiction).
“Loans
Receivable” means the loans receivable by, or other indebtedness
(including, without limitation, prepaid expenses or other current assets) owed
to, the Company or any of its Subsidiaries from Insiders.
“Losses”
means any and all demands, claims, complaints, actions or causes of action,
suits, proceedings, investigations, arbitrations, assessments, losses, damages,
liabilities (whether asserted or unasserted, absolute or contingent) or
obligations (including those arising out of any action, such as any settlement
or compromise thereof or judgment or award therein) and any fees, costs and
expenses related thereto, including interest, fines, penalties, fees,
disbursements and amounts paid in settlement (including any reasonable Legal
Expenses); provided, however, that Losses shall be calculated on a
Net After-Tax Basis.
“Marks”
means all trade names, trademarks and service marks (registered and
unregistered), trade dress, industrial designs, brand names, brand marks,
service names, logos, emblems, signs or insignia, and similar rights and
applications to register any of the foregoing, and all goodwill associated
therewith throughout the world.
“Material
Adverse Effect” means any circumstance, state of facts or matters,
change, event, occurrence, action or omission that could have or result in
a
material adverse effect on (i) the business, assets, liabilities, results
of operation, operations, financial condition or EBITDA of the Company and
its
Subsidiaries, taken as a whole, or (ii) the ability of the Company or the
Stockholder to perform their respective obligations under this Agreement or
any
other Transaction Document.
“National
Imprint” means National Imprint Corporation, a New York
corporation.
“Net
After-Tax Basis” means, with respect to any calculation of any
indemnification payment owed to any Indemnified Party, calculation thereof
taking into account any Taxes
actually
owing by the Indemnified Party as a result of receipt or accrual of the
indemnity payment (including as a result of any reduction in Tax benefits
otherwise available) and any savings in Taxes actually realized by the
Indemnified Party as a result of the indemnified liability. In the
event that a Tax liability is actually incurred or a savings in Taxes is
actually realized by an Indemnified Party subsequent to the time that an
indemnification payment is required to be paid, such liability or savings shall
be taken into account (and payment with respect thereto shall be made by the
appropriate party) only as and when such liability is incurred or savings are
realized.
“New
Leases” means the Lease between the Company and Kristel, Inc., a
Pennsyvania corporation, in the form of Exhibit E-1 and the Lease between
the Company and M.A.S. Boulevard Associates, a New York partnership, in the
form
of Exhibit E-2.
“Noncompetition
Agreements” means the Noncompetition Agreement dated as of the date of
the Agreement between Buyer and Xxx X. Xxxxxxx and the Noncompetition Agreement
dated as of the date of the Agreement between Buyer and Xxxxx
Xxxxxxx.
“Opinion
of Counsel” means the opinion of counsel to the Stockholder in the form
requested by Persons or Persons providing debt financing to Buyer at the
Closing.
“Ordinary
Course” means, with respect to an action taken by a
Person:
(a) such
action is consistent with the past practices of such Person and is taken in
the
ordinary course of the normal day-to-day operations of such Person;
(b) such
action is not required to be authorized by the board of directors (or similar
governing body) or equity holders of such Person (or by any Person or group
of
Persons exercising similar authority) and is not required to be specifically
authorized by the parent company (if any) of such Person; and
(c) consistent
with the representations and warranties in Section 2.8(b).
“Patents”
means all patents, patent applications (including any divisionals,
continuations, continuations-in-part, renewals, reexaminations, extensions,
and
reissues) and rights in respect of utility models or industrial
designs.
“Permit”
means any franchise, approval, permit, consent, qualification, certification,
authorization, license, order, registration, certificate, variance or other
similar permit, right or authorization from any Government Authority and all
pending applications therefor.
“Permitted
Liens” means all:
(a) liens
for Taxes, assessments and other governmental charges which are not due and
payable and which may thereafter be paid without penalty;
(b) the
title and other interests of a lessor under a capital or operating lease or
of a
licensor under a license or royalty agreement;
(c) such
minor imperfections in title as do not detract in any material respect from
the
value or utility of the subject property in the operation of the business that
uses such property.
“Person”
means any individual, corporation, partnership, joint venture, trust,
unincorporated organization, limited liability company, estate, association,
joint stock company, company other form of business or legal entity or
Governmental Authority.
“Real
Properties” means all real properties and interests in real properties
(including any leasehold interests, licenses, options or reversionary
interests), together with all fixtures, fittings, buildings, structures and
other improvements erected thereon, and easements, rights of way, water lines,
rights of use, licenses, hereditaments, tenements, privileges and other
appurtenances thereto (such as appurtenant rights in and to public
streets).
“Real
Property Leases” means all leases, subleases, licenses and other
occupancy agreements, and all amendments, modification or supplements thereto
or
renewals thereof, relating to Real Properties and to which the Company or any
its Subsidiaries is a party or pursuant to which the Company or any of its
Subsidiaries uses or occupies any Real Property.
“Relative”
of a Person means such Person’s spouse, such Person’s parents, sisters,
brothers, children and the spouses of the foregoing, and any member of the
immediate household of such Person.
“Remedial
Action” means all action required under applicable Laws: (x) to
cleanup, remove, treat or in any other way remediate any chemical, Hazardous
Material or waste containing any chemical or Hazardous Material in the
environment; (y) to prevent the release of any chemical, Hazardous Material
or waste containing any chemical or Hazardous Material so that they do not
endanger or otherwise adversely affect the environment or public health or
welfare; or (z) to perform pre-remedial studies, investigations or
monitoring, in or under any real property, assets or facilities.
“Representatives”
of any Person mean such Person’s officers, directors, employees, agents,
counsel, accountants, financial advisors, consultants and other
representatives.
“Retiree
Obligations” means all obligations and liabilities of the Company and
its Subsidiaries to the Retirees.
“Securities
Act” means the Securities Act of 1933, as amended.
“Side
Letter” means the letter agreement dated as of the date of the
Agreement among Buyer, the Company and the Stockholders’
Representative.
“Specified
Basket Representations” means Sections 2.1 (first and last sentences
only) (Organization and Good Standing), 2.2 (Capitalization), 2.3(a), (b),
(c),
(d)(i) and (iii) - (v) and (e) (Authority, Approvals, Enforceability and
Consents), 2.7 (Taxes), 2.15(c) through (o) (Employee Benefit Plans), 2.19(a)
(Title) and 2.23 (Brokers).
“Specified
Cap Representations” means Sections 2.1 (first and last sentences only)
(Organization and Good Standing), 2.2 (Capitalization), 2.3(a), (b), (c), (d)(i)
and (iii) - (v) and (e) (Authority, Approvals, Enforceability and Consents),
2.7
(Taxes), 2.15(c) through (o) (Employee Benefit Plans), 2.19(a) (Title) and
2.23
(Brokers).
“Subsidiary”
means any Person more than 50% of the outstanding Voting Securities of which
is
owned or controlled, directly or indirectly, by the Company.
“Target
Working Capital” means $33,035,000.
“Tax”
or “Taxes” means all Federal, state, local, and foreign taxes,
unclaimed property liabilities unclaimed property liabilities and other charges,
duties or assessments of any kind whatsoever (whether imposed directly or
through withholding), including any interest, additions to tax, or penalties
applicable thereto, imposed by any Tax Authority, and including any such taxes
imposed upon third parties for which the Company or any of its Subsidiaries
has
liability as an indemnitor or successor.
“Tax
Audit” means any audit, assessment, or other examination relating to
Taxes by any Tax Authority or any judicial or administrative proceedings
relating to Taxes.
“Tax
Authority” means the IRS and any other domestic or foreign governmental
entity responsible for the administration of any Taxes.
“Tax
Returns” means all federal, state, local, and foreign tax returns of
any kind whatsoever, including any declarations, statements, reports, schedules,
forms, and information returns and any amendments thereto.
“Third
Party” means any Person other than the Company, any of its
Subsidiaries, any Stockholder or Buyer or any of their respective
Affiliates.
“Trade
Secrets” means all know-how, discoveries, trade secrets, methods,
processes, technical data, specifications, research and development information,
technology, data bases, and other proprietary or confidential information ,
including customer lists, in each case that derives economic value from not
being generally known to other Persons who can obtain economic value from its
disclosure, but excluding any Copyrights or Patents that cover or protect any
of
the foregoing.
“Transaction
Document” means the Agreement and the other agreements, instruments,
certificates and documents contemplated hereby and thereby, including each
exhibit and schedule hereto and thereto.
“2005
Purchase Agreement” means the Asset Purchase Agreement dated as of June
17, 2005 among National Imprint, the shareholders of National Imprint and
Printegra Corporation, a Georgia corporation, pursuant to which, among other
things, the Company sold the Discontinued Operations.
“UCC”
means the Uniform Commercial Code, as amended, and any successor
thereto.
“Voting
Securities” means any class or classes of stock of a Person pursuant to
which the holders thereof have the general power under ordinary circumstances
to
vote with respect to the election of the Board of Directors (or similar body),
irrespective of whether or not, at the time, stock of any other class or classes
shall have, or might have, voting power by reason of the happening of any
contingency.
“Working
Capital” means the Company’s consolidated current assets minus
the Company’s consolidated current liabilities (including, without limitation,
accrued and unpaid Transaction Expenses of the Company and its Subsidiaries),
as
determined in accordance with the Accounting Principles.
2. The
following terms are defined on the Sections indicated below.
|
Term
|
Section
|
|
X.
Xxxxxxx
|
Preamble
|
|
Accounting
Firm
|
1.4(d)
|
|
Administration
|
2.18
|
|
Agreement
|
Preamble
|
|
Audited
Financial Statements
|
7.12
|
|
Balance
Sheet Date
|
2.5
|
|
Benefit
Plans
|
2.15(a)
|
|
Buyer
|
Preamble
|
|
Buyer
Disagreement Notice
|
1.4(a)
|
|
Buyer
Indemnified Parties
|
10.2(a)
|
|
Cap
Amount
|
10.2(a)
|
|
Claims
|
2.8(a)
|
|
Closing
|
1.2
|
|
Closing
Date
|
1.2
|
|
COBRA
|
2.15(e)
|
|
Code
|
2.15(c)
|
|
Common
Stock
|
2.2(a)
|
|
Company
|
Preamble
|
|
Company
Balance Sheet
|
2.5
|
|
Company
Financial Statements
|
2.4(a)
|
|
Company
IP
|
2.11(a)
|
|
Company
Patents
|
2.11(a)
|
|
Company
Registered Domain Names
|
2.11(a)
|
|
Company
Registered IP
|
2.11(a)
|
|
Competing
Business
|
6.7(a)
|
|
Curable
Representation and Warranty
|
7.1
|
|
ERISA
|
2.15(a)
|
|
Excluded
Assets
|
7.7
|
|
FIRPTA
Certificate
|
2.7(l)
|
|
FL
Smithe Obligations
|
6.15
|
|
Guarantors
|
Recitals
|
|
Guaranty
|
Recitals
|
|
Indemnification
Claim Notice
|
10.3(a)
|
|
Indemnified
Party
|
10.3(a)
|
|
Indemnifying
Party
|
10.3(a)
|
|
Insider
Transactions
|
2.16
|
|
Insurance
Policies
|
2.12
|
|
Interim
Financial Statements
|
2.4(a)
|
|
ISRA
|
6.13
|
|
Judgments
|
2.8(a)
|
|
Leased
Real Property
|
2.9(b)
|
|
Multiemployer
Plan
|
2.15(g)
|
|
NJDEP
|
6.13
|
|
Nonqualified
Plan
|
2.15(n)
|
|
Notice
of Disagreement
|
1.4(c)
|
|
OSHA
|
2.18
|
|
Preferred
Stock
|
2.2(a)
|
|
Preliminary
Statement
|
1.4(a)
|
|
Proceeding
Notice
|
6.9(c)
|
|
Rate
|
1.4(e)
|
|
Retirees
|
2.15(n)
|
|
X.
Xxxxxxx
|
Preamble
|
|
Shares
|
Recitals
|
|
Statement
|
1.4(b)
|
|
Stockholder
Indemnified Parties
|
10.2(d)
|
|
Stockholder
Notice
|
6.9(c)
|
|
Stockholders
|
Preamble
|
|
Stockholders’
Representative
|
Preamble
|
|
Straddle
Period
|
6.9(a)
|
|
Termination
Date
|
9.1(a)(ii)
|
|
Termination
Notice
|
9.1(b)
|
|
Third
Party Claim
|
10.3(b)
|
|
Third
Party Indemnification Claim Notice
|
10.3(b)
|
|
Transaction
Expenses
|
11.1
|
|
Trust
|
Preamble
|
|
Unaudited
Financial Statements
|
2.4(a)
|
A-10
