STOCK PURCHASE AGREEMENT
by and among
LASER TECH COLOR, INC.
and
PCC INVESTMENTS, L.P.,
XXXXX XXXXXXX, XXXXXX XXXXXXX,
XXXXXX XXXXXXX, XXXX XXXXXXX,
XXXXX XXXXXX, XX XXXXXX, XXXXX XXXXX
and each of the CHARITABLE REMAINDER TRUSTS and
UNITRUSTS listed on the signature pages to this Agreement
Dated as of October 1, 1996
TABLE OF CONTENTS
Page
ARTICLE
SALE AND PURCHASE OF THE SHARES
Section 1.1 The Shares.....................................................1
Section 1.2 Purchase Price.................................................1
Section 1.3 Adjustments to the Shares Purchase Price.......................2
Section 1.4 Closing........................................................4
Section 1.5 Deliveries by Seller...........................................4
Section 1.6 Deliveries by Purchaser........................................6
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLERS
Section 2.1 Organization, Standing, and Qualification......................7
Section 2.2 Authority......................................................7
Section 2.3 Capitalization.................................................7
Section 2.4 Consents and Approvals: No Violation...........................8
Section 2.5 Books and Records..............................................9
Section 2.6 Financial Statements; Certain Financial; Information..........10
Section 2.7 Absence of Undisclosed Liabilities............................10
Section 2.8 Accounts Receivable...........................................11
Section 2.9 Inventory.....................................................11
Section 2.10 Absence of Certain Changes or Events.........................11
Section 2.11 Real Property................................................13
Section 2.12 Leases.......................................................13
Section 2.13 Title to Assets..............................................13
Section 2.14 Intellectual Property Business Know-How......................14
Section 2.15 Contracts....................................................15
Section 2.16 Litigation...................................................16
Section 2.17 Plants, Buildings, Structures, Facilities and Equipment......16
Section 2.18 Insurance....................................................17
Section 2.19 Employee Benefit Plans.......................................18
Section 2.20 Tax Matters..................................................19
Section 2.21 Environmental Matters........................................20
Section 2.22 Labor Relations and Employment...............................22
Section 2.23 Compliance with Applicable Law...............................23
Section 2.24 Brokers or Finders...........................................24
Section 2.25 Disclosure...................................................24
Section 2.26 Customers and Suppliers......................................24
Section 2.27 Transactions with Affiliates.................................24
Section 2.28 Government Permits...........................................25
Section 2.29 Guarantees...................................................25
Section 2.30 Common Activities............................................26
Section 2.31 Personnel....................................................26
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Section 3.1 Organization. Standing and Qualification......................26
Section 3.2 Authority.....................................................26
Section 3.3 Consents and Approvals, No Violation..........................27
Section 3.4 Brokers or Finders............................................27
ARTICLE IV
COVENANTS
Section 4.1 Conduct of Business...........................................27
Section 4.2 Access to Company Information; Confidentiality................29
Section 4.3 Disclosure Supplements........................................30
Section 4.4 Reasonable Best Efforts.......................................31
Section 4.5 Further Assurances............................................31
Section 4.6 No Solicitation by Sellers....................................31
Section 4.7 Fees and Expenses.............................................32
Section 4.8 Repayment of Loans, Advances, Notes, etc......................32
Section 4.9 Termination of Affiliate Agreements...........................32
Section 4.10 Dividends, Distributions, Etc................................32
Section 4.11 Public Announcements.........................................33
Section 4.12 Financial Statements.........................................33
Section 4.13 Environmental Due Diligence..................................34
Section 4.14 Non-Competition Agreements...................................34
Section 4.15 Escrow Agreement.............................................34
Section 4.16 Books and Records............................................34
Section 4.17 General Release..............................................34
Section 4.18 Tax Matters..................................................35
Section 4.19 Plans........................................................36
Section 4.20 Compliance with Laws and Contracts...........................36
Section 4.21 Transactions with Affiliates.................................36
ARTICLE V
CONDITIONS
Section 5.1 Conditions to Obligations of Purchaser........................37
Section 5.2 Conditions to Obligations of Seller...........................39
ARTICLE VI
TERMINATION
Section 6.1 Termination...................................................40
Section 6.2 Effect of Termination.........................................40
ARTICLE VII
SURVIVAL AND INDEMNIFICATION
Section 7.1 Survival Periods..............................................40
Section 7.2 Indemnification...............................................41
Section 7.3 Method of Asserting Claims....................................41
Section 7.4 Seller's Environmental Indemnity..............................44
ARTICLE VIII
MISCELLANEOUS
Section 8.1 Notices.......................................................45
Section 8.2 Interpretation................................................46
Section 8.3 Counterparts..................................................47
Section 8.4 Entire Agreement: Assignment..................................47
Section 8.5 Amendment.....................................................47
Section 8.6 Extensions, Waiver............................................47
Section 8.7 Governing Law.................................................47
Section 8.8 Specific Performance..........................................47
Section 8.9 Parties in Interest...........................................47
Section 8.10 Severability.................................................48
Section 8.11 Consent to Service of Process................................48
EXHIBITS
Exhibit 1.1 Shares of the Company
Exhibit A Definitions
Exhibit B Non-Competition Agreement
Exhibit C Escrow Agreement
Exhibit D Officer's Certificate of Company
Exhibit E Certificate of Seller
Exhibit F Secretary's Certificate of Company
Exhibit G Opinion of Counsel to the Seller and Company
Exhibit H Opinion of Counsel to Purchaser
Exhibit I Officer's Certificate of Purchaser
Exhibit J Secretary's Certificate of Purchaser
Exhibit K General Releases
Exhibit L P&E Budget
DISCLOSURE SCHEDULE
Section 2.1 Business of Company
Directors and Officers of Company
Section 2.4 Consents and Approvals
Section 2.5 Books and Records
Section 2.6 Financial Statements
Section 2.7 Certain Liabilities
Section 2.8 Accounts Receivable
Section 2.10 Absence of Certain Changes or Events
Section 2.12 Leases
Section 2.13 Encumbrances
Section 2.14 Intellectual Property and Business Know-How
Section 2.15 Contracts
Section 2.16 Litigation
Section 2.18 Insurance
Section 2.19 Employee Benefit Plans
Section 2.20 Tax Matters
Section 2.21 Environmental Matters
Section 2.22 Personnel Policies
Section 2.26 List of Customers and Suppliers
Section 2.27 Transactions with Affiliates
Section 2.28 Governmental Permits
Section 4.1 Conduct of Business
STOCK PURCHASE AGREEMENT (THE "AGREEMENT"), dated as of October 1,
1996, among Laser Tech Color, Inc., a Delaware corporation ("LTC"),
or its permitted assigns (LTC, or such assigns, "Purchaser"), and
PCC Investments, L.P., a California limited partnership, Xxxxx
Xxxxxxx, Xxxxxx Xxxxxxx, Xxxxxx Xxxxxxx, Xxxx Xxxxxxx, Xxxxx Xxxxxx,
Xx XxXxxx, Xxxxx Xxxxx and each of the Charitable Remainder Trusts
and Unitrusts listed on the signature pages to this Agreement
(collectively, "Seller" or "Sellers").
INTRODUCTION
Immediately prior to the date of this Agreement, there were
outstanding 100 shares of common stock, no par value (the "Common Stock"),
of Pacific Color Connection, Inc., a California corporation (the
"Company"), all of which are owned beneficially and of record by Sellers,
representing all of the issued and outstanding equity securities of the
Company.
Upon the terms and subject to the conditions of this Agreement,
Purchaser has agreed to acquire from Sellers, and Sellers have agreed to
sell to Purchaser, 100 shares of Common Stock (the "Shares").
Capitalized terms shall have the meaning assigned to such terms in
Exhibit A.
In consideration of the foregoing and the representations,
warranties, covenants, agreements, and conditions contained in this
Agreement, the parties agree as follows:
ARTICLE I
SALE AND PURCHASE OF THE SHARES
Section 1.1 The Shares. Upon the terms and subject to the
conditions of this Agreement, at the Closing, each Seller shall sell,
convey, assign, transfer and deliver to Purchaser, and Purchaser shall
purchase, acquire and accept from each Seller, all of the Shares owned by
such Seller (which Shares are listed on Exhibit 1.1), free and clear of any
Encumbrances.
Section 1.2 Purchase Price.
Upon the terms and subject to the conditions contained in this
Agreement, in consideration of the sale, conveyance, assignment, transfer
and delivery of the Shares, Purchaser agrees to pay to each Seller in cash
an amount equal to $200,000 per Share for each Share owned by such Seller
as set forth on Exhibit 1.1, subject to adjustment as set forth in Section
1.3 (the aggregate price, as so adjusted, paid to all Sellers for all the
Shares being referred to herein as the "Shares Purchase Price"). The amount
paid to Seller at the Closing before adjustment pursuant to Section 1.3(c)
is the "Closing Payment." The Closing Payment shall be an amount equal to
the Seller's best estimate of the Shares Purchase Price, based on the
Estimated Closing Date Balance Sheet, less (x) the Escrow Amount (defined
below) that shall be paid by Purchaser to the Escrow Agent as required by
Section 1.2(b) and (y) the Hold-Back Amount (defined below) that shall be
held and distributed by Purchaser as provided by Section 1.2(c).
At the Closing, Purchaser shall deliver to the Escrow Agent
pursuant to the Escrow Agreement $750,000, an amount equal to $7,500 per
Share, in cash (the "Escrow Amount").
Purchaser shall retain and shall not pay to Seller at the Closing
$150,000, an amount equal to $1,500 per Share, of the Seller's best
estimate of the Shares Purchase Price, based on the Estimated Closing Date
Balance Sheet (the "Hold-Back Amount"), and shall hold such amount
following the Closing until the Hold-Back Amount shall be distributed in
accordance with Section 1.3(c) of this Agreement.
Section 1.3 Adjustments to the Shares Purchase Price. (a) As
required under Section 4.12, not less than 7 days prior to the Closing
Date, Seller and the Company shall deliver to Purchaser the Estimated
Closing Date Balance Sheet and the related officer's certificate. Purchaser
shall be satisfied in its reasonable discretion that the information set
forth therein represents a good faith determination of the matters set
forth therein.
The Shares Purchase Price (and the price per Share) shall be
subject to the adjustments set forth below and in Section 1.3(c) hereof:
(i) If the Adjusted Net Working Capital as of the
Closing Date as shown on the Estimated Closing Date Balance Sheet
is more than $3.3 million, the Shares Purchase Price shall be
increased, on a dollar-for-dollar basis, by an amount equal to the
difference between $3.3 million and the Adjusted Net Working
Capital as of the Closing Date as shown on the Estimated Closing
Date Balance Sheet. If the Adjusted Net Working Capital as of the
Closing Date as shown on the Estimated Closing Date Balance Sheet
is less than $3.3 million, the Shares Purchase Price shall be
decreased, on a dollar-for-dollar basis, by an amount equal to the
difference between $3.3 million and the Adjusted Net Working
Capital as of the Closing Date as shown on the Estimated Closing
Date Balance Sheet.
(ii) If the Indebtedness of the Company as of the
Closing Date as shown on the Estimated Closing Date Balance Sheet
is more than zero, the Shares Purchase Price shall be decreased,
on a dollar-for-dollar basis, by an amount equal to the amount of
any such Indebtedness as of the Closing Date as shown on the
Estimated Closing Date Balance Sheet.
(a) The payment of the Hold-Back Amount to Seller, Purchaser or
both shall be determined by comparing (i) the Adjusted Net Working Capital
and the Indebtedness of the Company in each case as of the Closing Date as
shown on the Estimated Closing Date Balance Sheet with (ii) the Adjusted
Net Working Capital and the Indebtedness of the Company in each case as of
the Closing Date as shown on the Final Closing Date Balance Sheet. The
parties agree that each of them will attempt in good faith to resolve any
disagreements between them as to the amount of the Company's Adjusted Net
Working Capital and Indebtedness as of the Closing Date. The determination
of the amount of the payments of the Hold-Back Amount shall be made
pursuant to the following provisions:
(i) If after delivery to Purchaser by Seller of the Closing
Date Balance Sheet and the corresponding Seller's certificate,
Seller and Purchaser agree on (x) the Adjusted Net Working Capital
and (y) the Indebtedness of the Company as of the Closing Date, in
each case as shown on the Closing Date Balance Sheet, then the
Closing Date Balance Sheet shall become the Final Closing Date
Balance Sheet, and the adjustments and payments, if any, called
for under subparagraphs (iii), (iv), (v) and (vi) of this Section
1.3(c) shall be made as promptly as practicable following the
parties' agreement.
(ii) If within 30 days after delivery to Purchaser by Seller
of the Closing Date Balance Sheet and the corresponding Seller's
certificate, the parties are unable to agree on the Adjusted Net
Working Capital or Indebtedness of the Company as of the Closing
Date as shown on the Closing Date Balance Sheet, either party
shall have the right to submit the determination of such matter to
KPMG Peat Marwick (the "Independent Auditor") for resolution. The
Independent Auditor shall, as promptly as practicable, make an
independent determination of the Adjusted Net Working Capital and
Indebtedness of the Company as of the Closing Date and the Closing
Date Balance Sheet, as so adjusted, shall thereafter become the
Final Closing Date Balance Sheet. The fees and expenses of the
Independent Auditor shall be borne equally by Sellers on the one
hand and Purchaser on the other hand. The determination by the
Independent Auditor with respect to the Adjusted Net Working
Capital and Indebtedness of the Company as of the Closing Date
shall be final, binding and conclusive. Following such
determination by the Independent Auditor, the adjustments and
payments, if any, called for under subparagraphs (iii), (iv), (v)
and (vi) of this Section 1.3(c) shall be made as promptly as
practicable.
(iii) If the Adjusted Net Working Capital as of the Closing
Date as shown on the Final Closing Date Balance Sheet is higher or
lower than the Adjusted Net Working Capital as of the Closing Date
as shown on the Estimated Closing Date Balance Sheet, the Shares
Purchase Price will be adjusted either up or down, as the case may
be, on a dollar-for-dollar basis, by an amount equal to the
difference between the amount of Adjusted Net Working Capital as
of the Closing Date as shown on the Final Closing Date Balance
Sheet on the one hand and on the Estimated Closing Date Balance
Sheet on the other hand.
(iv) If the Indebtedness of the Company as of the Closing
Date as shown on the Final Closing Date Balance Sheet is higher or
lower than the Indebtedness of the Company as of the Closing Date
as shown on the Estimated Closing Date Balance Sheet, the Shares
Purchase Price will be adjusted either down or up, as the case may
be, on a dollar-for-dollar basis, by an amount equal to the
difference between the amount of Indebtedness of the Company as of
the Closing Date as shown on the Final Closing Date Balance Sheet
on the one hand and on the Estimated Closing Date Balance Sheet on
the other hand.
(v) If Sellers and Purchaser or the Independent Auditor, as
the case may be, determines that the Shares Purchase Price is less
than the Closing Payment, Purchaser shall retain from the
Hold-Back Amount, without regard to the provisions of Article VII
of this Agreement, an amount equal to the difference between the
Shares Purchase Price, as determined by this Section 1.3(c), and
the Closing Payment. After such deduction, Purchaser shall deliver
the remainder, if any, of the Hold-Back Amount to Sellers. If the
amount due to Purchaser under this paragraph (v) is greater than
the Hold-Back Amount, Purchaser may make a claim against the
Escrow Amount for the amount of any such excess or, if such excess
exceeds the Escrow Amount, Purchaser may make a claim directly
against one or more Seller, in each case, without regard to the
provisions of Article VII of this Agreement.
(vi) If Sellers and Purchaser or the Independent Auditor, as
the case may be, determines that the Shares Purchase Price is more
than the Closing Payment, Purchaser shall pay to Sellers an amount
equal to the difference between the Shares Purchase Price, as
determined by this Section 1.3(c), and the Closing Payment (which
amount may include all or any portion of the Hold-Back Amount),
without regard to the provisions of Article VII of this Agreement.
Section 1.4 Closing. Upon the terms and subject to the conditions
contained in this Agreement, the consummation of the transactions
contemplated in this Agreement (the "Closing") will take place on the later
of the date all conditions to Closing have been satisfied or waived and the
third business day following the expiration or early termination of the
applicable waiting period under the HSR Act, at 10:00 a.m., at the offices
of Xxxxxx, Xxxxx & Xxxxx, 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, XX 00000,
or at such other time or at such other place as shall be agreed upon by the
parties. The date on which the Closing occurs is referred to herein as the
"Closing Date."
Section 1.5 Deliveries by Seller. At the Closing, Seller shall
deliver or cause to be delivered (unless previously delivered) to Purchaser,
the following:
(a) (i) stock certificates representing all of the Shares, in
genuine and unaltered form accompanied by stock powers duly executed in
blank and (ii) any other documents that are necessary to transfer to
Purchaser good and valid title in and to the Shares, with any necessary
transfer tax stamps affixed or accompanied by evidence satisfactory to
Purchaser that all requisite stock transfer taxes have been paid;
(b) A counterpart or counterparts of the Escrow Agreement, duly
executed by the Company and each Seller;
(c) Counterparts of the non-competition agreements referred to
in Section 4.14, duly executed by each Seller who is a party to such
agreement;
(d) The General Releases duly executed by the Persons
designated by Purchaser pursuant to Section 4.17;
(e) Resignations of such of the directors and officers of the
Company as may be requested by Purchaser;
(f) The Books and Records of the Company, including without
limitation the stock books, stock ledgers, minute books and corporate seals
of the Company (to be held at the principal executive offices of the
Company unless otherwise directed by Purchaser);
(g) The certificates regarding repayment of loans referenced in
Section 4.8;
(h) A certificate, dated the Closing Date and executed by the
Chief Executive Officer or the Chief Financial Officer of the Company,
substantially in the form and to the effect of Exhibit D, and a
certificate, dated the Closing Date and executed by the Secretary or an
Assistant Secretary of the Company, substantially in the form and to the
effect of Exhibit F;
(i) (1) A copy of the certificate or articles of incorporation (or
other comparable corporate charter documents), including all amendments, of
the Company certified by the Secretary of State or other appropriate
official of the State of California, (2) certificates from the Secretary of
State or other appropriate official of the State of California to the
effect that the Company is in good standing or subsisting in such
jurisdiction, listing all charter documents of the Company on file and
attesting to its payment of all franchise or similar Taxes, and (3) a
certificate from the Secretary of State or other appropriate official in
each jurisdiction in which the Company is qualified or admitted to do
business to the effect that the Company is duly qualified or admitted and
in good standing in such jurisdiction;
(j) A certificate of each Seller (referenced in Section 5.1 (d)),
dated the Closing Date, regarding the truth and correctness of the
representations and warranties and compliance with covenants, duly executed
by each Seller;
(k) Estoppel Certificates with respect to the real property
leases listed in Section 2.12 of the Disclosure Schedule;
(l) The interim financial statements of the Company required to be
provided by Section 4.12, together with certificates referenced therein;
(m) Opinions of (i) Xxxxx Xxxxxx Xxxxxx, counsel to certain
Sellers and the Company and (ii) Xxxxxx, Xxxx & Xxxxxxxx, LLP, counsel to
PCC Investments L.P., in each case, as applicable, in the form attached as
Exhibit G and otherwise in form and substance satisfactory to the
Purchaser;
(n) For Indebtedness, a payoff letter (or such other evidence of
termination of the Company's obligations) from the relevant lender as to
the satisfaction in full of such Indebtedness (or other termination of the
Company's obligations), in form and in substance satisfactory to Purchaser
and confirming that such Indebtedness may be prepaid (or otherwise
terminated) in accordance with its terms without any prepayment or other
penalties or other consideration except as set forth in such letter; and
(o) Such other documents and certificates duly executed as may be
required to be delivered by Seller or the Company pursuant to the terms of
this Agreement (including, without limitation, Section 5.1) or as may be
reasonably requested by Purchaser prior to the Closing Date.
Section 1.6 Deliveries by Purchaser. At the Closing, Purchaser
shall deliver (unless previously delivered) to Sellers (or the Escrow Agent,
as indicated), the following:
(a) The purchase price to be paid for the Shares as follows: (i)
the Closing Payment, by wire transfer of immediately available funds to
such account as Seller may reasonably direct by written notice delivered to
Purchaser by Seller at least five business days prior to the Closing Date
and (ii) the Escrow Amount by wire transfer of immediately available funds
to such account as the Escrow Agent may reasonably request by written
notice delivered to Purchaser by the Escrow Agent at least five business
days prior to the Closing Date;
(b) A counterpart of the Escrow Agreement, duly executed by
Purchaser;
(c) A counterpart of each of the non-competition agreements
referred to in Section 4.14, duly executed by the Company;
(d) Certificates from the Secretary of State or other appropriate
official of the State of Delaware, to the effect that Purchaser is in good
standing or subsisting in such jurisdiction, listing all charter documents
of Purchaser on file and attesting to its payment of all franchise or
similar Taxes;
(e) The certificate from Purchaser regarding the truth and
correctness of the representations and warranties and performance of
obligations referenced in Section 5.2(c), duly executed by an authorized
officer of Purchaser;
(f) An opinion of counsel to Purchaser, in the form attached as
Exhibit H and otherwise in form and substance satisfactory to Sellers; and
(g) Such other documents and certificates duly executed as may be
required to be delivered by Purchaser pursuant to the terms of this
Agreement or as may be reasonably requested by Sellers prior to the Closing
Date.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLERS
Sellers hereby jointly and severally represent and warrant to
Purchaser as follows:
Section 2.1 Organization, Standing, and Qualification. The Company
is a corporation duly incorporated, validly existing and in good standing
under the laws of the State of California and has all requisite corporate
power and authority to own, lease and operate its properties and to carry
on its business as now being conducted. Section 2.1 of the Disclosure
Schedule lists all lines of business in which the Company is participating
or engaged (the "Business"). The Company has engaged in no other lines of
business in the past. The Company is duly qualified or licensed and in good
standing to do business in each jurisdiction in which its property is
owned, leased or operated or the nature of the Business makes such
qualification necessary, and in which the failure to qualify would have a
Material Adverse Effect. The name of each director and officer of the
Company on the date hereof, and the position with the Company held by each,
are set forth in Section 2.1 of the Disclosure Schedule. Seller has
delivered to Purchaser complete and correct copies of the articles of
incorporation and bylaws, as currently in effect, of the Company. The
Company has no subsidiaries and owns no stock or equity interest in any
corporation, limited liability company, partnership, limited liability
partnership, joint venture or other entity or Person.
Section 2.2 Authority. Each Seller has the capacity (including,
without limitation, in the case of PCC Investments, L.P., authority
pursuant to its Partnership Agreement) and power to execute, deliver and
perform this Agreement and the Escrow Agreement and to consummate the
transactions contemplated by this Agreement, including without limitation
to own, hold, sell and transfer the Shares set forth opposite such Seller's
name in Exhibit 1.1. This Agreement has been duly and validly executed and
delivered by each Seller and constitutes, and each agreement that is to be
executed and delivered by each Seller in connection with the transactions
contemplated in this Agreement when executed and delivered by such Seller
will constitute, a legal, valid and binding obligation of such Seller,
enforceable against such Seller in accordance with its terms, and will not
conflict with, or result in any violation of or breach of any duty under
any governing instrument of any Seller or of any trust which is a Seller or
of which any Seller is trustee, grantor or beneficiary except (i) as such
enforceability may be limited by bankruptcy, insolvency, moratorium,
reorganization and other similar laws affecting creditors' rights
generally, and (ii) as such enforceability may be limited by general
principles of equity, regardless of whether asserted in a proceeding in
equity or law. Each Seller, as all of the stockholders of the Company, has
approved this Agreement and the transactions contemplated herein, and no
further stockholder action, action on the part of the partners of PCC
Investments, L.P., or corporate action on the part of the Company is or
will be required in connection with the transactions contemplated herein.
Section 2.3 Capitalization. The authorized capital stock of the
Company consists of 1,000,000 shares of common stock, no par value, of
which (i) as of the date of this Agreement only the Shares were issued and
outstanding and (ii) 999,900 shares were held in treasury by the Company.
There are no other shares of capital stock of the Company authorized,
issued or outstanding. Except as set forth in the immediately preceding
sentence, the Company does not have (a) issued or outstanding (i) shares of
capital stock or issued share capital of the Company, or (ii) securities
convertible into or exchangeable or exercisable for, or any options,
warrants, calls, puts, subscriptions or other rights (preemptive or
otherwise) to acquire, any shares of capital stock or issued, share capital
of the Company, (b) except for the Stockholders Agreement, agreements or
contractual commitments, whether written or oral (other than this
Agreement) relating to the Shares or obligating the Company or any Seller
to issue or sell any shares of its capital stock or any such securities,
options, warrants, calls, puts, subscriptions or other rights, (c) pledges,
security interests, liens, charges, Encumbrances, equities, claims or
options of whatever nature relating to any of the Shares, or (d) except for
the Stockholders Agreement, rights or contractual commitments (whether
written or oral) that give any Person other than Seller any right to
reserve or exercise any benefits or rights similar to any rights enjoyed by
or accruing to the holder of shares of capital stock of the Company,
including without limitation any right to participate in the equity or
income of the Company or to participate in or direct the election of any
directors or officers of the Company or the manner in which any shares of
capital stock of the Company are listed. The Shares are duly authorized,
validly issued, fully paid and non-assessable and are not subject to any
preemptive rights. Set forth on Exhibit 1.1 is a list of all record holders
of the Common Stock of the Company, with the number of shares of Common
Stock held of record by each Person. Each Seller beneficially owns the
Shares set forth opposite his name in Exhibit 1.1 free and clear of all
Encumbrances. At the Closing, the delivery in the manner provided in
Section 1.5 of the certificates representing the Shares will transfer to
Purchaser good and valid title in and to the Shares, free and clear of all
Encumbrances.
Section 2.4 Consents and Approvals: No Violation. Except as set
forth in Section 2.4 of the Disclosure Schedule and except for applicable
requirements of the Xxxx-Xxxxx- Xxxxxx Antitrust Improvements Act of 1976,
as amended, and the rules and regulations thereunder (the "HSR Act"), there
is no requirement applicable to any Seller or the Company to make any
filing with, or to obtain any permit, authorization, consent or approval
of, any court of competent jurisdiction, regulatory authority or other
public body, federal, state or local, domestic or foreign (a "Governmental
Entity") or any other Person in connection with the execution, delivery, or
performance of this Agreement or any Operative Agreement or as a condition
to the lawful consummation by Sellers or the Company of the transactions
contemplated in this Agreement or any Operative Agreement to which any
Seller or the Company is a party. For purposes of this Agreement, the
"Operative Agreements" shall consist of the Escrow Agreement, the
non-competition agreements provided for in Section 4.14, the General
Releases provided for in Section 4.17, and any other agreement entered into
in connection with the foregoing or this Agreement. Except as set forth in
Section 2.4 of the Disclosure Schedule and except for applicable
requirements of the HSR Act, neither the execution and delivery of this
Agreement, or any Operative Agreement to which any Seller or the Company is
a party, by any Seller or the Company, nor the consummation by any Seller
or the Company of the transactions contemplated herein or therein, nor
compliance by any Seller or the Company with any of the provisions hereof
or thereof will (i) conflict with or result in any breach of any provision
of the articles of incorporation or bylaws of the Company, (ii) (A)
conflict with or result in a violation or breach of, (B) constitute (with
or without the giving of notice or passage of time or both) a default
under, (C) require any Seller or the Company to obtain any consent,
approval or action of, make any filing with or give any notice to any
Person as a result or under the terms of, (D) result in or give to any
Person any right of termination, cancellation, acceleration or modification
in or with respect to, (E) result in or give to any Person any additional
rights or entitlement to increased, additional, accelerated or guaranteed
payments under, or (F) result in the creation or imposition of any
Encumbrance upon any Seller, the Company or any of their respective assets
and properties, under or in respect of any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, other evidence of
Indebtedness, license, agreement (whether written or oral), lease,
commitment (whether written or oral), Contract or other instrument or
obligation to which any Seller or the Company is a party, or by which any
of their respective businesses, properties or assets may be bound, except
for such breaches or defaults or rights of termination, cancellation or
acceleration as are listed in Section 2.4 of the Disclosure Schedule and as
to which requisite waivers or consents have been obtained or will be
obtained prior to the Closing Date at no cost to the Company and without
giving to any Person any additional rights or entitlement to increased,
additional, accelerated or guaranteed payments; or (iii) conflict with or
violate any Order or Law of any Governmental Entity applicable to any
Seller, the Company or their respective assets or properties. Except as set
forth and described in Section 2.4 of the Disclosure Schedule, no consent
is required to be obtained or notice provided under any Contract listed on
Schedule 2.15 of the Disclosure Schedule. There is no Proceeding pending
or, to the Knowledge of Seller, threatened against the Company, any Seller
or any of their respective assets and properties that seeks to prevent the
consummation of the transactions contemplated herein or in any Operative
Agreement.
Section 2.5 Books and Records. The minute books and other similar
records of the Company made available to Purchaser prior to the execution
of this Agreement contain a true, correct and complete record of all action
taken at all meetings and by all written consents in lieu of meetings of
the stockholders, the board of directors and committees of the board of
directors of the Company. The stock transfer ledger and other similar
records of the Company made available to Purchaser prior to the execution
of this Agreement accurately reflect all record transfers prior to the
execution of this Agreement in the capital stock of the Company. Except as
set forth in Section 2.5 of the Disclosure Schedule, no Books and Records
of the Company have been recorded, stored, maintained, operated or are
otherwise wholly or partly dependent upon or held by any means (including
any electronic, mechanical or photographic process, whether computerized or
not) which (including all means or access thereto and therefrom) are not
under the exclusive ownership and direct control of the Company. "Books and
Records" means all files, documents, instruments, papers, books and records
relating to the Business or the condition of the Company, including without
limitation financial statements, Tax Returns and related work papers and
letters from accountants, budgets, pricing guidelines, ledgers, journals,
deeds, title policies, minute books, stock certificates and books,
corporate seals, stock transfer ledgers, Contracts, licenses, customer
lists, computer files and programs, retrieval programs, operating data and
plans and environmental studies and plans.
Section 2.6 Financial Statements; Certain Financial Information.
(a) Seller has previously furnished to Purchaser true and complete copies
of the following financial statements: (i) audited balance sheets of the
Company as of December 31, 1994 and December 31, 1995 and the related
statements of income, retained earnings and cash flows of the Company for
the periods then ended, together with the notes thereto and a true and
correct copy of the report of Xxxxxx Xxxxxxxx LLP thereon (the audited
balance sheet of the Company for the period ending December 31, 1995 is
referred to herein as the "Year-End Balance Sheet"), and all letters from
such accountants with respect to the result of such audits; and (ii) the
unaudited balance sheet of the Company as of August 31, 1996 (the "Interim
Balance Sheet") and the related unaudited statements of income and cash
flow of the Company for the period then ended (such financial statements
described in clauses (i) and (ii) collectively, the "Financial
Statements"). Except as set forth on Schedule 2.6, each balance sheet
included in the Financial Statements is true, complete and correct and
presents fairly the financial position of the Company as of the respective
date of such balance sheet and each of the statements of income and
retained earnings, and cash flows included in the Financial Statements is
true, complete and correct and presents fairly the results of operations
and cash flows of the Company for the periods set forth therein, in each
case in accordance with GAAP, except as otherwise noted therein, and in
each case were compiled from the Books and Records of the Company regularly
maintained by management and used to prepare financial statements of the
Company in accordance with the principles stated therein. Such Financial
Statements for August 31, 1996 include comparative amounts at August 31,
1995 and for the period then ended. The Company has maintained its Books
and Records in a manner sufficient to permit the preparation of financial
statements in accordance with GAAP. Such Books and Records fairly reflect,
in all material respects, the income, expenses, assets and liabilities of
the Company and provide a fair and accurate basis for the preparation of
the Financial Statements.
(b) As of the Closing Date: (i) the Adjusted Net Working Capital
shall be not less than $3.3 million and (ii) the Net Worth shall be not less
than $4.8 million.
(c) The EBITDA of the Company (i) for the year ended December 31,
1995 was not less than $3.7 million, (ii) for the six months ended June 30,
1996 was not less than $1.28 million, and (iii) for the eight months ended
August 31, 1996 was not less than $2.15 million.
Section 2.7 Absence of Undisclosed Liabilities. Except as set
forth in Section 2.7 of the Disclosure Schedule, the Company does not have,
and as a result of the transactions contemplated herein will not have, any
Indebtedness, liabilities or obligations of any nature (whether known or
unknown, absolute, accrued, fixed, contingent, liquidated, unliquidated or
otherwise), except for the Indebtedness, liabilities and obligations (i)
reflected in the Interim Balance Sheet, (ii) incurred in the ordinary
course of business consistent with past practice since August 31, 1996 and
which, individually or in the aggregate, do not exceed $50,000, (iii)
pertaining to Taxes (which shall be limited solely to those matters
addressed in Section 2.20), and (iv) pursuant to any Contract set forth in
Section 2.15 of the Disclosure Schedule or not required to be set forth
therein due to dollar threshold or other parameter and not required to be
set forth on a balance sheet in accordance with GAAP.
Section 2.8 Accounts Receivable. Except as set forth in Section
2.8 of the Disclosure Schedule, the accounts and notes receivable and all
other receivables shown on the Year-End Balance Sheet and the Interim
Balance Sheet (subject to reserves for non-collectibility as reflected
therein), and all receivables acquired or generated by the Company since
December 31, 1995, are bona fide receivables and represent amounts due with
respect to actual, arm's length transactions entered into in the ordinary
course of business consistent with past practice and are reasonably stated
in accordance with GAAP. Such reserves for non-collectibility have been
reflected on the Year-End Balance Sheet and Interim Balance Sheet in
accordance with GAAP and the Company's historical practice and are
adequate. No such account has been assigned or pledged to any other Person
and no defense or set-off or similar right to any such account has been
asserted by the account obligor. No receivables or payables between the
Company and any Seller or its, his or their Affiliates, associates or
family members have been, since the date of the Year-End Balance Sheet, or
will be prior to the Closing Date, acquired or generated by the Company.
Section 2.9 Inventory. The inventories on the Year-End Balance
Sheet and Interim Balance Sheet are stated at the lower of cost (first in,
first out) or market in accordance with GAAP. The inventories used in or
relating to the conduct of the Business of the Company are usable or
saleable in the ordinary course of business consistent with past practice
(subject to reserves as reflected on the Year End Balance Sheet and Interim
Balance Sheet) and are owned by the Company free and clear of any
Encumbrance. Such reserves have been reflected on the Year-End Balance
Sheet and Interim Balance Sheet in accordance with GAAP and the Company's
historical practice and are adequate. For purposes of this Agreement,
"Encumbrance" means any mortgage, pledge, lien, encumbrance, assessment
charge or adverse claim affecting title or resulting in an encumbrance
against real or personal property, or a security interest of any kind
(including any conditional sale or other title retention agreement), any
lease in the nature thereof, any option or other agreement to sell and any
filing of or agreement to give any financing statement under the Uniform
Commercial Code (or equivalent statutes of any jurisdiction).
Section 2.10 Absence of Certain Changes or Events. Except set
forth in Section 2.10 of the Disclosure Schedule, since December 31, 1995,
the Company has not:
(a) Made any material change in its Business or operations or
in the manner of conducting its Business;
(b) Suffered any Material Adverse Effect and no fact or condition
exists or is contemplated or, to the Knowledge of any Seller, threatened
that might reasonably be expected to cause a Material Adverse Effect in the
future, or suffered any material casualty loss (whether insured) or
condemnation or other taking adversely affecting the Business;
(c) Entered into any employment Contract or commitment (whether
oral or written) or compensation arrangement or employee benefit plan, or
changed or committed to change (including, without limitation, any change
pursuant to any bonus, pension, profit-sharing or other plan, commitment,
policy or arrangement) the compensation payable or to become payable to any
of its officers, directors, employees, agents or consultants, or made any
pension, retirement, profit-sharing, bonus or other employee welfare or
benefit payment or contribution;
(d) Declared, paid or made, or set aside for payment or making,
any dividend or other distribution in respect of its Common Stock or other
capital stock or securities, or directly or indirectly redeemed, purchased
or otherwise acquired any of its Common Stock or other capital stock or
securities or subdivided or in any way reclassified or changed any of the
terms or provisions of its Common Stock or other capital stock or
securities;
(e) Paid, loaned or advanced any amount to or in respect of, or
sold, transferred or leased any property or assets (real, personal or
mixed, tangible or intangible) to, or entered into or amended any
transactions, agreements or arrangements with or for the benefit of any
Seller or any of their respective Affiliates, associates or family members
or any of the Company's officers or directors or any Affiliate or associate
of its officers or directors, except for the reimbursement of business
expenses of a usual and customary nature and not exceeding, in the
aggregate, $10,000;
(f) Made or proposed any change in any accounting or tax
principles, practices or methods, including, without limitation, its
accounts payable or accounts receivable practices and terms, except for
such changes which are both required by GAAP or Law and set forth in
Section 2.10 of the Disclosure Schedule;
(g) Incurred any liability (whether absolute, accrued, contingent
or otherwise and whether due or to become due), except for current
liabilities reflected on the Interim Balance Sheet or, thereafter, incurred
in the ordinary course of business consistent with past practice;
(h) Canceled or waived rights with respect to any debts owed to or
claims held by the Company (including the settlement of any claims or
litigation or other Proceeding);
(i) Accelerated or delayed collection of notes or accounts
receivable generated by the Business in advance of or beyond their regular
due dates or the dates when the same otherwise would have been collected;
(j) Allowed the levels of raw materials, supplies, work-in-process
or other materials included in the inventory of the Company to vary in any
material respect from the levels customarily maintained;
(k) Terminated or amended or suffered the termination or amendment
of any Contract pursuant to which the Company would receive from any Person
or pay to any Person more than $25,000 in any calendar year or disposed of
or permitted to lapse any item of Intellectual Property;
(1) Made any capital expenditures or commitments for additions to
property, plant or equipment constituting capital assets except as
reflected on the Interim Balance Sheet and, thereafter, in accordance with
the Budget;
(m) Incurred Indebtedness except as reflected on the Interim
Balance Sheet; or
(n) Agreed, whether in writing or otherwise, to take any action
described in this Section 2.10 or any action which, if taken after the date
of this Agreement without Purchaser's consent, would constitute a breach
under Section 4.1.
Section 2.11 Real Property. The Company has never owned, and will
not own as of the Closing Date, any real property nor any options to
acquire any real property.
Section 2.12 Leases.
(a) All leases of real or personal property as to which the
Company is the lessee or sublessee, and all amendments and modifications
thereof, are listed in Section 2.12(a) of the Disclosure Schedule (true,
correct and complete copies of which have been made available to
Purchaser). All such leases are in full force and effect, are enforceable
against the Company and the other parties thereto and have not been
modified or amended, except as set forth in Section 2.12(a) of the
Disclosure Schedule. There exists no default by the Company under any such
leases or, to the Knowledge of Seller, by any other party thereto, nor any
event which, with the giving of notice or the passage of time or both,
would constitute an event of default by the Company or any other party
thereunder.
(b) All leases of real or personal property leased or subleased
for the use or benefit of Person other than Company to which the Company is
a party, and any and all amendments thereto and modifications thereof, are
listed on Section 2.12(b) of the Disclosure Schedule (true, correct and
complete copies of which have been made available to Purchaser). All such
leases are in full force and effect and have not been modified or amended,
except as set forth in Section 2.12(b) of the Disclosure Schedule. No such
lease, nor any other agreement relating to such property, contains any
option or right (conditional or otherwise) to extend the term thereof or to
purchase all or any part of the property or any rights therein. There
exists no default by the Company under such leases or, to the Knowledge of
Seller, by any third party thereto, nor any event which, with the giving of
notice or the passage of time or both, would constitute an event of default
by the Company or any other party thereunder.
Section 2.13 Title to Assets. The Company has good, valid and
marketable title to all its assets shown on the Year-End Balance Sheet and
the Interim Balance Sheet or acquired since the date of the Year-End
Balance Sheet or the Interim Balance Sheet, as the case may be, other than
the assets shown on the Year-End Balance Sheet or the Interim Balance
Sheet, as the case may be, and disposed of as obsolete since the date
thereof in the ordinary course of business and consistent with past
practice, and all such assets are free and clear of Encumbrances other than
those set forth on Section 2.13 of the Disclosure Schedule and Permitted
Encumbrances. Subject to any Permitted Encumbrances, the Company has good,
valid and marketable title to all assets currently used in operating the
Business, and such assets constitute all of the assets needed to operate
the Business as it is currently conducted. "Permitted Encumbrances" means
(i) liens for current taxes or assessments not yet due, (ii) pledges or
deposits to secure payment of workers' compensation obligations and
deposits or indemnities to secure public or statutory obligations or for
similar purposes, (iii) minor defects that in the aggregate do not
materially affect the title to the property or the value of such property
to the Company or Purchaser, and (iv) mechanics', workmen's, repairmen's,
warehousemen's, vendors' or carriers' liens or other similar liens
attaching by operation of law, incurred in the ordinary course of business
consistent with past practice and securing payments not past due or
deposits or pledges to obtain the release of any such liens, provided that
the amounts at issue in subsections (i) through (iv) shall not, in the
aggregate, exceed $25,000.
Section 2.14 Intellectual Property; Business Know-How. Section
2.14 of the Disclosure Schedule lists: (a) the federal registration number
and the date of registration concerning registrations of patents,
trademarks and service marks and of other marks, trade names or other trade
rights currently or presently intended to be used by the Company in the
conduct of its Business, all of the registered copyrights and all
applications for any of the foregoing; and (b) all intellectual property
rights owned by any Person other than the Company which are not generally
commercially available on a "shrink-wrap" basis and are currently or
presently intended to be used by the Company in the conduct of its
Business, whether such use is or will be pursuant to license, sublicense,
agreement, other Contract, or permission, including the expiration date of
any such license, sublicense, agreement, other Contract or permission.
Seller has delivered to Purchaser complete and accurate copies of each
agreement, other Contract, registration and other documents relating to the
intellectual property set forth on Section 2.14 of the Disclosure Schedule.
The Company owns or possesses adequate and enforceable licenses or other
rights to use (i) all intellectual property rights listed or required to be
listed on Section 2.14 of the Disclosure Schedule, (ii) all computer
software used by the Company in the conduct of its Business and (iii) all
other patents, trademarks, service marks, other marks, trade names and
assumed names, all applications for any of the foregoing, all trade
secrets, designs, plans, specifications and other intellectual property
rights of every kind of the Company (whether or not registered) that are
possessed by the Company or used in its Business (all of the items referred
to in clauses (a), (b)(ii) and (iii) of this sentence being the
"Intellectual Property"). No Person has a right to receive a royalty or
similar payment in respect of any item of Intellectual Property pursuant to
any Contract entered into by the Company or Seller or otherwise. The
Company's business know-how includes, but is not limited to, all
technologies, product developments, lists and records pertaining to
customers, suppliers, distributors, personnel, agents and inventory, and
all the other books, ledgers, files, documents, correspondence,
specifications, computer programs, records and storage media and business
records, product registrations, marketing and sales records, plans and
data, promotional material, label and shipping carton dyes, designs,
artwork, photography, mechanical art and graphic materials possessed by the
Company or used in its Business (collectively, the "Business Know- How").
Neither the Company nor Seller has granted or committed to grant any
license, sublicense or other similar agreement or Contract relating in
whole or in part to any Intellectual Property or Business Know-How. To the
Knowledge of Seller, the Company's use of any item of Intellectual Property
or Business Know-How is not interfering with, infringing upon or otherwise
violating the rights of any Person in or to such Intellectual Property or
Business Know-How. No Proceedings have been instituted or, to the Knowledge
of Seller, threatened against Seller or the Company alleging that the use
or proposed use of any item of the Intellectual Property or Business
Know-How by the Company infringes upon or otherwise violates any rights of
a Person in or to such Intellectual Property or Business Know-How. The
Company has taken all measures and precautions necessary or appropriate to
protect and maintain the confidentiality and secrecy of all such
Intellectual Property or Business Know-How. The Company has obtained, from
all current and former employees of the Company signed agreements
appropriately restricting the use and disclosure of the Intellectual
Property and Business Know-How, and providing for assignment to the Company
of Intellectual Property or Business Know-How developed by such employees
and consultants. To the Knowledge of Seller, no other Person is infringing,
misappropriating or making any unlawful use of the Intellectual Property or
Business Know-How that the Company has the exclusive right to use. Since
January 1, 1991, the Company has not hired any consultants or independent
contractors who had access to any Intellectual Property or Business
Know-How.
Section 2.15 Contracts. Except as set forth in Section 2.15 of the
Disclosure Schedule, the Company is not a party to, or bound by, any
written or oral: (a) contract, agreement, understanding, commitment, or
other arrangement (each a "Contract") with (i) any present or former
director, officer, employee, or Affiliate or associate of the Company
pursuant to which payments may be required to be made at any time following
the date hereof to any such Person, (ii) any agent, consultant, advisor,
salesperson, or sales representative who is not an Affiliate of the Company
pursuant to which payments may be required to be made at any time following
the date hereof to any such Person in excess of $25,000 during any
consecutive twelve month period, or (iii) any Seller or any of their
respective Affiliates, associates or family members; (b) Contract,
including, but not limited to, any mortgage, indenture, debenture, bond,
note, installment obligation or other instrument, constituting Indebtedness
(and Section 2.15 of the Disclosure Schedule shall include with respect to
any such items, the principal amounts thereof as of the date hereof, all
prepayment or other penalties or consideration which would be payable if
such principal amounts were prepaid and the Indebtedness terminated on the
Closing Date); (c) guaranty of any obligation for borrowings or
performances, or guaranty or warranty of products or services; (d) Contract
for the sale or lease of any asset or property owned or used by the Company
exceeding $10,000 in value or annual payments; (e) Contract for the
purchase of any real estate, machinery, equipment or other capital assets
with a purchase price exceeding $10,000; (f) Contract pursuant to which the
Company is or may be obligated to make payments, contingent or otherwise,
on account of or arising out of prior acquisitions or sales of businesses,
assets, or stock of other companies; (g) Contract which is not terminable
on thirty or fewer days' notice at any time without premium or penalty or
payment of other consideration in excess of $10,000; (h) employee
collective bargaining agreement or Contract with any labor organization;
(i) Contract to which the Company, any Seller, or any of the Company's
employees is a party which will restrict such Person's ability to do
business in any geographic area or grants to any Person exclusive or
similar rights in any line of business or in any geographic area; (j)
Contract pursuant to which the Company has a right to receive from any
Person or an obligation to pay to any Person more than $25,000 during any
consecutive twelve month period; or (k) any other Contract of any nature
not otherwise described in this Section 2.15 which is material (without
reference to dollar amounts set forth herein) to the Business, properties,
assets, operations or prospects of the Company. Except as set forth in
Section 2.15 of the Disclosure Schedule, with respect to each Contract
listed in Section 2.15 of the Disclosure Schedule, there is no default by
the Company or event that with the giving of notice or the passage of time,
or both, would constitute such a default nor, to the Knowledge of Seller,
any default, or event that with the giving of notice, the passage of time
or both, would constitute such a default, by any other party thereto,
existing with respect to any such Contract, except for such defaults which,
in the aggregate, result in loss or liability to the Company of no more
than $5,000. Neither the Company nor Seller intend, and neither have
received notice that any party to any such Contract intends, to terminate,
amend or cancel any such Contract. Each of the Contracts listed in Section
2.15 of the Disclosure Schedule is in full force and effect and constitutes
a legal, valid and binding obligation of the Company and the other parties
thereto enforceable in accordance with its terms. Seller has made available
to Purchaser complete and accurate copies of each Contract or other written
evidence of the obligations, and all amendments thereto, listed in Section
2.15 of the Disclosure Schedule.
Section 2.16 Litigation. Except as set forth in Section 2.16 of
the Disclosure Schedule, there are (i) no investigations pending or, to the
Knowledge of Seller, threatened, (ii) no actions, causes of action, claims,
suits, proceedings, arbitrations, mediations or other alternative dispute
resolution procedures, orders, writs, injunctions or decrees (each, a
"Proceeding") pending or, to the Knowledge of Seller, threatened against
the Company or any Seller affecting or potentially affecting the operations
of the Company, its Business, assets, properties or prospects at law or in
equity, or before or by any Governmental Entity, and (iii) to the Knowledge
of Seller, no existing or prior facts, circumstances or conditions that
could form the basis for a Proceeding against the Company or Seller that
would affect or potentially affect the operations of the Company, its
Business, assets, properties or prospects at law or in equity, or before or
by any Governmental Entity. The Company is not in default with respect to
any Order of any Governmental Entity. Each Seller or the Company has made
available to Purchaser accurate and complete copies of all documentation
related to each Proceeding, including, without limitation, complaints,
answers, motions, responses, court orders, interrogatories and answers
thereto, discovery requests and responses, any other discovery
documentation, transcripts of all discovery and other proceedings, and
correspondence among counsel for the parties and/or the relevant tribunal,
arbitrator or mediator. Purchaser acknowledges that delivery of such
materials could result in a waiver of a privilege.
Section 2.17 Plants, Buildings, Structures, Facilities and
Equipment.
(a) To the Knowledge of the Seller, all plants, buildings,
structures, facilities and equipment located on the Leased Real Property or
used by the Company in the conduct of its Business are structurally sound
with no defects that would require in excess of $25,000 in the aggregate to
correct or repair and are in good operating condition and repair (subject
to normal wear and tear) so as to permit the operation by the Company of
its Business as presently conducted;
(b) No such plant, building, structure, facility or equipment is
in need of maintenance or repairs except for ordinary, routine maintenance
and repairs which are not reasonably likely to exceed, in the aggregate,
$50,000 in the next 12 months; no notice from any Governmental Entity has
been received by Seller or the Company requiring or calling attention to
the need for any work, repair, construction, alteration or installation on,
or in connection with, any real property or any of the plants, buildings,
structures, facilities or equipment located thereon; and to the Knowledge
of Seller there are no existing or prior facts, circumstances or conditions
that could form the basis for such a notice;
(c) All Leased Real Property and each plant, building, structure,
facility or equipment located thereon, is in compliance with any applicable
deed restrictions or covenants and all building, zoning, subdivision,
health, safety or other Laws, ordinances and regulations, including without
limitation the Americans with Disabilities Act and the Occupational Safety
and Health Act, and neither the Company nor any Seller has received
notification that any alleged violation exists and, to the Knowledge of
Seller, there are no existing or prior facts, circumstances or conditions
that could form the basis of such an allegation;
(d) There is no pending or, to the Knowledge of Seller, threatened
condemnation of any Leased Real Property or any part thereof or of any
general or special assessment relating thereto;
(e) To the Knowledge of Seller, all roads bounding each parcel of
the Leased Real Property are public roads and the Company has full access
to and the right of ingress and egress over, to and from such roads and the
right to use such roads freely as well as all rights in such roads
appurtenant to each parcel of such property; and
(f) To the Knowledge of Seller, each parcel of Leased Real
Property has connection to sanitary sewer, storm sewer, water, electricity,
gas, telephone and all other necessary utility services and, to the
Knowledge of Seller there are no existing or prior facts, circumstances or
conditions which are reasonably likely to result in termination of such
connections for any significant period of time.
Section 2.18 Insurance. Set forth in Section 2.18 of the
Disclosure Schedule is a complete and accurate list of all primary, excess
and umbrella policies, bonds and other forms of insurance currently owned
or held by or on behalf of or providing insurance coverage to the Company,
its Business, properties and assets and its directors, officers,
salespersons, agents or employees, including the following information for
each such policy: type(s) of insurance coverage provided; name of insurer;
effective and expiration date; policy number; per occurrence and annual
aggregate deductibles or self-insured retention; annual premium and any
other fees for the procurement of such insurance; per occurrence and annual
aggregate limits of liability and the extent, if any, to which the limits
of liability have been exhausted. All policies set forth in Section 2.18 of
the Disclosure Schedule are in full force and effect and shall remain in
full force and effect through the Closing Date and thereafter shall remain
in full force and effect without assignment by the Company, consent of the
insurer or other action by the Company, Seller, Purchaser or the insurer,
until its expiration date or the date of cancellation or termination by
Purchaser or the Company. With respect to all policies, all premiums
currently payable or previously due have been paid, and no notice of
cancellation or termination has been received by the Company or any Seller
with respect to any such policy. All such policies are sufficient for
compliance with all requirements of Law and of all Contracts to which the
Company is a party or otherwise bound and are valid, outstanding,
collectible and enforceable policies and provide insurance coverage which
is adequate and customary for a business of the Company's size and type.
Complete and accurate copies of all such policies and related documentation
have previously been provided to Purchaser.
Section 2.19 Employee Benefit Plans.
(a) Set forth in Section 2.19(a) of the Disclosure Schedule is a
true and complete list of each Pension Plan maintained by the Company or an
ERISA Affiliate. Set forth in Section 2.19(a) of the Disclosure Schedule is
a true and complete list of each Welfare Plan maintained by the Company or
an ERISA Affiliate. With respect to each ERISA Benefit Plan, Section
2.19(a) of the Disclosure Schedule identifies each Person whose employees
or prior employees are or will be provided benefits under such ERISA
Benefit Plan due to employment with such Person. Neither the Company nor
any ERISA Affiliate has ever, prior to the Closing Date, maintained or been
required to make any payment at any time with respect to any Multiemployer
Plan or any Employee Pension Benefit Plan ever subject to Section 302 or
Title IV of ERISA.
(b) Other than those listed in Section 2.19(a) of the Disclosure
Schedule, set forth in Section 2.19(b) of the Disclosure Schedule is a true
and complete list of every Non-ERISA Commitment to which the Company or an
ERISA Affiliate is a party or with respect to which it is or will be
required to make any payment. Section 2.19(b) of the Disclosure Schedule
contains a complete and accurate description of all oral Non-ERISA
Commitments. With respect to each Non-ERISA Commitment, Section 2.19(b) of
the Disclosure Schedule identifies each Person whose employees or prior
employees are or will be provided benefits under such Non-ERISA Commitments
due to employment with such Person.
(c) Sellers have delivered to Purchaser with respect to each Plan
true, correct and complete copies of (A) all Plan documents and amendments
thereto, trust agreements and amendments thereto and insurance and annuity
contracts and policies, (B) the current summary plan description, (C) the
annual reports and accompanying schedules filed with the Internal Revenue
Service for the most recently completed three Plan years for which such
reports have been filed, and, with respect to any Plan that is described in
Section 401(k) of the Code, annual reports filed with the Internal Revenue
Service for the most recently completed three Plan years evidencing such
Plan's compliance with the non-discrimination rules applicable to such Plan
under Sections 401(k) and, if applicable 401(m) of the Code and the
regulations thereunder, (D) the financial statements for the most recently
completed three Plan years for which such statements have been prepared,
(E) the actuarial reports for the most recently begun three Plan years for
which such reports exist and the report prepared in accordance with the
Statement of Financial Accounting Standards No. 87, Employer's Accounting
for Pensions, for the most recently completed three Plan years for which
such reports have been prepared, (F) the most recent determination letter
issued by the Internal Revenue Service and the application submitted with
respect to such letter, and (G) all correspondence with the Internal
Revenue Service and the Department of Labor concerning any audit,
investigation or controversy. Each document, statement or report described
in clause (B), (C), (D) or (E) of the preceding sentence is accurate and
complete.
(d) Each Pension Plan which is intended to qualify under Section
401(a) of the Code is so qualified and has been determined by the Internal
Revenue Service to be so qualified, and no circumstance exists which might
cause such Pension Plan to cease being so qualified.
(e) With respect to each Plan, (i) there is no pending, or, to the
Knowledge of Seller, anticipated or threatened claim (other than any
routine claim for benefits), (ii) all contributions and premiums due have
been made on a timely basis, and all contributions and premiums paid by the
Company are deductible by the Company, (iii) the Company has no potential
liability under ERISA or the Code, and (iv) the Company has and shall have
no liability with respect to any benefits to be provided to any Person
other than with respect to periods of employment solely with the Company.
Each of the Plans (i) has been administered in accordance with its terms
and (ii) complies in form, and has been administered in accordance, with
all Laws, including, where applicable, the requirements of ERISA and the
Code. There are no reserves, assets, surplus or prepaid premiums with
respect to any Plan other than a Pension Plan. No "prohibited transaction"
described in Section 406 of ERISA or Section 4975 of the Code has occurred
with respect to any ERISA Benefit Plan. The Company and each ERISA
Affiliate has complied with the health care requirements of Part 6 of Title
1 of ERISA. The Company has no obligation to provide medical, health, death
or other benefits to its prior employees or any other person other than
while an employee of the Company except as specifically required by Part 6
of Title 1 of ERISA. The consummation of the transactions contemplated by
this Agreement will not (i) entitle any individual to severance pay or (ii)
accelerate the time of payment or vesting, or increase the amount, of any
compensation due to any such individual. No amounts payable by the Company
under any Plan will fail to be deductible by the Company for federal income
tax purposes. All employees of the Company are employed at will, except as
set forth on Schedule 2.19.
Section 2.20 Tax Matters.
(a) The Company has filed, or as of the Closing Date will have
filed, with the appropriate federal, state, local and foreign taxing
authorities all Tax Returns required to be filed by or with respect to the
Company whose due dates (taking into account any timely filed extensions)
fall on or before the Closing Date, and such Tax Returns are or will be
true, correct and complete and disclose all Taxes required to be paid by
the Company. The Company has paid in full or has made adequate provisions
in the Interim Balance Sheet for all Taxes which are or will be due or
claimed to be due from it by any authority for all periods or portions
thereof up to and including the Closing Date. There are no liens for Taxes
upon the assets of the Company except for statutory liens for current Taxes
not yet due.
(b) The Company is registered to do business in the states and
localities set forth in Section 2.20(b) of the Disclosure Schedule. The
Company has not requested any extension of time within which to file any
Tax Return, which Tax Return has not since been filed, and the Company has
not waived any statute of limitations for, or agreed to any extension of
time with respect to, the assessment of Taxes of the Company. No claim has
ever been made by an authority in a jurisdiction where the Company does not
file Tax Returns that it is or may be subject to taxation by that
jurisdiction.
(c) Schedule 2.20(c) of the Disclosure Schedule lists all federal,
state, local and foreign income Tax Returns filed with respect to the
Company for taxable periods ending on or after January 1, 1990, and
indicates those Tax Returns that have been audited or that are currently
the subject of an audit. Sellers have caused the Company to deliver to
Purchaser true, correct and complete copies of all federal income Tax
Returns, examination reports and statements of deficiencies assessed
against or agreed to by the Company since January 1, 1990. Neither the
Company nor any Seller has received any notice of deficiency or assessment
from any federal, state, local or foreign taxing authority with respect to
liabilities for Taxes of the Company which has not been fully paid or
finally settled and, to the Knowledge of Seller, there are no existing or
prior facts, circumstances or conditions that would form the basis for such
a notice of deficiency or assessment. No power of attorney has been
executed by, or on behalf of, the Company with respect to any matter
relating to Taxes which is currently in force.
(d) The Company is not a party to any Contract that would result,
separately or in the aggregate, in the requirement to pay any "excess
parachute payments" within the meaning of Section 28OG of the Code. The
Company is not a party to a tax sharing or tax indemnity agreement or any
other agreement of a similar nature that remains in effect. The Company has
not filed a consent under Section 341(f) of the Code concerning collapsible
corporations. The Company has not been a United States real property
holding corporation within the meaning of Section 897(c)(2) of the Code
during the period specified in Section 897(c)(1)(A)(ii) of the Code. The
Company is not and has never been a member of an affiliated group filing a
consolidated federal income Tax Return and does not have any liability for
the Taxes of any Person (other than the Company) under Treasury Regulation
1.1502-6 (or any similar provision of state, local or foreign law), as a
transferee, or successor, by contract, or otherwise.
(e) The Company has 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.
Section 2.21 Environmental Matters. Except as set forth in Section
2.21 of the Disclosure Schedule:
(a) The operations of the Company comply in all material respects
with all applicable Environmental Laws;
(b) The Company has obtained all environmental, health and safety
Governmental Permits necessary for the operation of its Business, and all
such Governmental Permits are in full force and effect and the Company is
in material compliance with all terms and conditions of such Governmental
Permits;
(c) None of the Company, nor any of the present Company Property
or operations, or the past Company Property or operations, is or, was
(during the period that the Company has conducted operations on such
Company Property) subject to any on-going investigation by, Order from or
Contract with any Governmental Entity or other Person (including without
limitation any prior owner or operator of Company Property) respecting (i)
any Environmental Law, (ii) any Remedial Action or (iii) any claim of Loss
arising from the Release or threatened Release of a Contaminant into the
Environment; and to the Knowledge of Seller, (x) there are no existing or
prior facts, circumstances or conditions that could form the basis of any
such investigation, Order or Contract and (y) none of the matters
contemplated by this subsection (c) has occurred with respect to any
Company Property prior to the commencement by the Company of operations on
any Company Property;
(d) The Company is not subject to any judicial, administrative or
other Proceeding, Order, judgment, decree or settlement alleging or
addressing a violation of or liability or Indebtedness under any
Environmental Law;
(e) The Company has not:
(i) reported a Release of a hazardous substance
pursuant to Section 103(a) of CERCLA, or any state equivalent Law;
(ii) filed a notice pursuant to Section 103(c) of
CERCLA;
(iii) filed notice pursuant to Section 3010 of RCRA,
indicating the generation of any hazardous waste, as that term is
defined under 40 CFR Part 261 or any state equivalent Law;
(iv) filed any notice under any applicable
Environmental Law reporting a violation of any applicable
Environmental Law; or
(v) previously conducted operations at any real
property other than any Leased Real Property currently occupied
by the Company;
(f) Neither the Company nor any of its Affiliates has caused to
exist and, to the Knowledge of Seller, there is not now, nor has there ever
been, on or in any Company Property:
(i) any treatment, recycling, storage or disposal of
any hazardous waste, as that term is defined under 40 CFR Part 261
or any state equivalent Law, that requires or required a
Governmental Permit pursuant to Section 3005 of RCRA; or
(ii) any underground storage tank or surface
impoundment or landfill or waste pile;
(g) There is not now on or in any Company Property any
polychlorinated biphenyls ("PCB") used in pigments, hydraulic oils,
electrical transformers or other equipment;
(h) The Company has not received any notice or claim to the effect
that it is or may be liable to any Governmental Entity or any other Person
as a result of the Release or threatened Release of a Contaminant into the
Environment, and to the Knowledge of Seller, there are no existing or prior
facts, circumstances or conditions that could form the basis for such a
notice or claim; and the Company has not sent or arranged for the disposal
of any Contaminant generated by the Company or its operations to any
disposal site that (i) is undergoing, or to the Knowledge of Seller, could
reasonably be expected to undergo, Remedial Action; (ii) is listed or
proposed for listing on the National Priorities List pursuant to CERCLA; or
(iii) could give rise to any Loss on the part of the Company;
(i) No Environmental Encumbrance has attached to any Company
Property or assets;
(j) Any asbestos-containing material which is on or part of any
Company Property is in good repair according to the current standards and
practices governing such material, and its presence or condition does not
violate any Environmental Law;
(k) None of the products the Company manufactures, distributes or
sells now, or manufactured, distributed or sold in the past, contains
asbestos or asbestos-containing material;
(1) There have been no environmental investigations, studies,
audits, tests, reviews or other analyses conducted by or for, or that are
in the possession of, the Company or any Seller in relation to any site or
facility now or previously owned, operated or leased by the Company which
have not been delivered to Purchaser prior to the execution of this
Agreement; and
(m) To the Knowledge of Seller, there is no facility, site or real
property located within five miles of any Leased Real Property of the
Company that is listed on or proposed for listing on the National
Priorities List pursuant to CERCLA.
Section 2.22 Labor Relations and Employment
(a) (i) There is no labor strike, dispute, slowdown, stoppage or
lockout pending, affecting, or to the Knowledge of Seller, threatened
against the Company, and during the past five years there has not been any
such action and, to the Knowledge of Seller, there are no existing or prior
facts, circumstances or conditions that may lead to such an action; (ii)
there are no union claims to represent the employees of the Company nor
have there been any such claims within the last five years; (iii) there is
no Contract with any labor organization, nor work rules or practices agreed
to with any labor organization or employee association, applicable to
employees of the Company nor is the Company a party to or bound by any
collective bargaining or similar agreement; (iv) to the Knowledge of
Seller, there is, and within the last five years has been, no
representation of the employees of the Company by any labor organization
and there are no union organizing activities among the employees of the
Company, nor does any question concerning representation exist concerning
such employees; (v) Section 2.22(a) of the Disclosure Schedule sets forth
all personnel policies, rules or procedures (whether written or oral)
applicable to employees of the Company, and the Company has delivered to
Purchaser complete and accurate copies of all such written policies, rules
or procedures plus summaries of all oral policies, rules or procedures;
(vi) the Company has not engaged in any unfair labor practices as defined
in the National Labor Relations Act or other applicable law, ordinance or
regulation and the Company is, and has for the past three years been, in
compliance in all material respects with all applicable Laws respecting
employment and employment practices, terms and conditions of employment,
wages, hours of work and occupational safety and health; (vii) there is no
unfair labor practice charge or complaint against the Company (or any
Seller with respect to the Company) pending or, to the Knowledge of Seller,
threatened before the National Labor Relations Board or any similar state
or foreign agency and to the Knowledge of Seller there are no existing or
prior facts, circumstances or conditions that could form the basis
therefor; (viii) there is no grievance pending or, to the Knowledge of
Seller, threatened against the Company arising out of any collective
bargaining agreement or other grievance procedure and to the Knowledge of
Seller there are no existing or prior facts, circumstances or conditions
that could form the basis therefor; (ix) there are no charges with respect
to or relating to the Company pending or, to the Knowledge of Seller,
threatened before the Equal Employment Opportunity Commission or any other
Governmental Entity responsible for the prevention of unlawful employment
practices and to the Knowledge of Seller there are no existing or prior
facts, circumstances or conditions that could form the basis therefor; (x)
neither the Company nor Seller has received notice of the intent of any
Governmental Entity responsible for the enforcement of labor or employment
laws to conduct an investigation with respect to or relating to the Company
and, to the Knowledge of Seller, no such investigation is in progress; and
(xi) no complaints, lawsuits or other proceedings are pending or, to the
Knowledge of Seller, threatened in any forum by or on behalf of any present
or former employee of the Company, any applicant for employment or classes
of the foregoing alleging breach of any express or implied Contract for
employment, any Law governing employment or the termination thereof or
other discriminatory, wrongful or tortious conduct in connection with any
employment relationship.
(b) Since the enactment of the Worker Adjustment and Retraining
Notification Act of 1988 (the "WARN Act"), the Company has not effectuated
or experienced (i) a "plant closing" (as defined in the WARN Act) affecting
any site of employment or one or more facilities or operating units within
any site of employment or facility used by the Company; or (ii) a "mass
layoff" (as defined in the WARN Act) affecting any site of employment or
facility used by the Company, nor has the Company been affected by any
transaction or engaged in layoffs or employment terminations sufficient in
number to trigger application of any similar state or local law. None of
the Company's employees has suffered an "employment loss" (as defined in
the WARN Act) at any time prior to the Closing Date.
Section 2.23 Compliance with Applicable Law. The Company has for
the past five years complied in all material respects and is presently
complying in all material respects with all applicable laws (whether
statutory or otherwise), rules, regulations, orders, ordinances, judgments,
decrees or other pronouncements having the effect of any of the foregoing,
of all Governmental Entities having jurisdiction (collectively, "Laws"),
including, but not limited to, the Federal Occupational Safety and Health
Act and all Laws relating to the safe conduct of business and environmental
protection and conservation, the Civil Rights Act of 1964 and Executive
Order 11246 concerning equal employment opportunity obligations of federal
contractors and any applicable health, sanitation, fire, safety, labor,
zoning and building laws and ordinances. Neither the Company nor any Seller
has received written notification of any asserted present or past failure
by the Company to so comply with the Laws and, to the Knowledge of Seller,
there are no existing or prior facts, circumstances or conditions that
could form the basis for such notification or assertion. The
representations of this Section 2.23 are, intended to be in addition to and
not as a qualification of Section 2.21 or any other Section in this Article
II.
Section 2.24 Brokers or Finders. Each of the Company and Purchaser
does not have nor will have any obligation to pay any broker's, finder's,
investment banker's, intermediary's, financial advisor's or similar fee in
connection with this Agreement, or the transactions contemplated herein, by
reason of any action taken by or on behalf of any Seller or the Company or
any of their respective Affiliates.
Section 2.25 Disclosure. The representations and warranties by
Sellers in this Agreement and the statements contained in the Disclosure
Schedule or any other schedules, certificates, documents, exhibits and
agreements referred to herein or otherwise furnished or to be furnished by
Seller to Purchaser pursuant to this Agreement, the Operative Agreements to
which any Seller is a party, and the transactions contemplated herein and
therein (collectively, the "Seller's Documents") do not and will not
contain any untrue statement of a material fact and do not and will not
omit to state any material fact necessary to make the statements herein or
therein not misleading.
Section 2.26 Customers and Suppliers. Section 2.26 of the
Disclosure Schedule sets forth a true and complete list of the names and
addresses of the ten largest suppliers (and for each such supplier the
dollar volume and percentage of total purchases of similar items from all
suppliers of such item) of products and services to the Company and the ten
largest customers (and for each such customer the dollar volume and
percentage of total sales of the Company to all customers) of products and
services of the Company during the twelve months ended December 31, 1995,
indicating any existing contractual arrangements for continued supply from
or to each such firm. Except as set forth in Section 2.26 of the Disclosure
Schedule, there exists no actual or, to the Knowledge of Sellers,
threatened termination, cancellation or limitation of, or any modification
or change in, the business relationship of the Company or any Seller on
behalf of the Company with any customer or group of customers which are
listed in Section 2.26 of the Disclosure Schedule or which are otherwise
material to the operations of the Business, or with any supplier or group
of suppliers which are listed in Section 2.26 of the Disclosure Schedule or
which are otherwise material to the operations of the Business, and to the
Knowledge of Seller, there exists no condition or state of facts or
circumstances involving customers, suppliers or sales representatives
(including the consummation of the transactions contemplated in this
Agreement) which would materially adversely affect the Business of the
Company or prevent the conduct of the Business after the consummation of
the transactions contemplated in this Agreement on substantially the same
terms as the Business has been conducted. Seller has delivered to Purchaser
copies of all written Contracts or other arrangements and written summaries
of any oral arrangements with the customers and suppliers listed in Section
2.26 of the Disclosure Schedule.
Section 2.27 Transactions with Affiliates.
(a) Except as set forth in Section 2.27(a) of the Disclosure
Schedule, the Company has no outstanding Indebtedness, liabilities or
obligations for amounts owing to, or notes or accounts receivable from, or
leases, Contracts or other commitments or arrangements with or for the
benefit of, any Seller, or their Affiliates, associates or family members,
or the Company's directors, officers or employees or Affiliates of any of
the foregoing. As of the Closing Date, (i) all Indebtedness, liabilities
and obligations set forth in Section 2.27(a) shall have been repaid in cash
and in full and (ii) all leases, Contracts or other commitments or
arrangements set forth in Section 2.27(a) shall have been terminated
without continuing liability on the part of the Company or Purchaser, as
successor to the Company.
(b) Since December 31, 1995, except as set forth in Sections
2.27(b) and 2.20 of the Disclosure Schedule, the Company has not made any
payments, loans or advances of any kind or paid any dividends or
distributions of any kind to or for the benefit of any Seller or their
Affiliates, associates or family members.
Section 2.28 Government Permits. The Company owns, holds or
possesses all licenses, franchises, permits, privileges, immunities,
approvals and other authorizations from all Governmental Entities which are
necessary to entitle it to own or lease, operate and use its assets and to
carry on and conduct the Business substantially as currently conducted
(herein collectively called "Governmental Permits"), except for such
Governmental Permits as to which the failure to so own, hold or possess
would not have a Material Adverse Effect. Section 2.28 of the Disclosure
Schedule sets forth a list and brief description of each Governmental
Permit. Complete and correct copies of all of the Governmental Permits have
been delivered to Purchaser. Except as set forth in Section 2.28 of the
Disclosure Schedule, (i) the Company has fulfilled and performed its
obligations under each of the Governmental Permits, and no event has
occurred or condition or state of facts exists which constitutes or, after
the giving of notice or the passage of time or both, would constitute a
breach or default under any such Governmental Permit or which permits or,
after the giving of notice or the passage of time or both, would permit
revocation, termination or modification of any such Governmental Permit, or
which might adversely affect the rights of the Company under any such
Governmental Permit; (ii) no notice of cancellation, of default or of any
dispute concerning any Government Permit, or of any event, condition or
state of facts described in the preceding clause, has been received by, or
is Known to Seller; and (iii) each of the Governmental Permits is valid,
subsisting and in full force and effect and may be assigned and transferred
to Purchaser, if required in accordance with this Agreement, and will
continue in fill force and effect thereafter on behalf of the Company or
the Purchaser, as the case may be, in each case without (x) the occurrence
of any breach, default or forfeiture of rights thereunder, (y) the consent,
approval, or act of, or the making of any filing with, any Governmental
Entity, or (z) the payment of any additional fees by the Company or
Purchaser, or the posting of any bonds or surety or other incurrence of
cost by the Company or Purchaser.
Section 2.29 Guarantees.
(a) None of the Company's Indebtedness, liabilities or obligations
are guaranteed by any Seller or their Affiliates, or associates or family
members (the "Guarantees").
(b) The Company is not a guarantor or co-obligor of any
Indebtedness, liability or obligation of any Seller or their Affiliates,
associates or family members.
Section 2.30 Common Activities. In the conduct of its Business,
neither the Company nor any Seller on behalf of the Company has commingled
its assets with those of any Affiliate or associate of the Company or of
any Seller, engaged in any joint activities with regard to purchase or sale
of products or services, failed to maintain appropriate distinction between
the Business and assets and property of the Company and those of any other
Person or engaged in any other acts or omitted to take any other action
which could reasonably be expected to form the basis for any claim or
assertion that the Company or its property or assets were responsible or
liable for any Indebtedness, liability or obligation of any other Person.
Section 2.31 Personnel. There is no Senior Employee of the Company
(as defined below) who is not also a Seller. A Senior Employee of the
Company is any Company employee who has management level responsibility for
any significant aspect of the Company's business.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to each Seller as follows:
Section 3.1 Organization; Standing and Qualification. Purchaser is
a corporation duly organized, validly existing and in good standing under
the laws of its jurisdiction of incorporation and has all requisite
corporate power and authority to own, lease and operate its properties and
to carry on its business as now being conducted.
Section 3.2 Authority. Purchaser has full corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated herein. The execution and delivery of this
Agreement and the consummation of the transactions contemplated herein have
been duly and validly authorized by Purchaser's Board of Directors and no
other corporate proceedings on the part of Purchaser is necessary to
authorize this Agreement or to consummate the transactions contemplated
herein. This Agreement has been duly and validly executed and delivered by
Purchaser and constitutes, and each other agreement that is to be executed
and delivered by Purchaser in connection with the transactions contemplated
by this Agreement when executed and delivered by Purchaser, as the case may
be, will constitute, a valid and binding agreement of Purchaser,
enforceable against Purchaser in accordance with its terms, except (i) as
such enforceability may be limited by bankruptcy, insolvency, moratorium,
reorganization and other similar laws affecting creditors' rights
generally, and (ii) as such enforceability may be limited by general
principles of equity, regardless of whether asserted in a proceeding in
equity or law.
Section 3.3 Consents and Approvals; No Violation. Except for
applicable requirements of the HSR Act, there is no requirement applicable
to Purchaser to make any filing with, or to obtain any permit,
authorization, consent or approval of, any Governmental Entity as a
condition to the lawful consummation by Purchaser of the transactions
contemplated herein. Except as set forth in Section 3.3 of Purchaser's
disclosure schedule delivered concurrently herewith (the "Purchaser
Disclosure Schedule") and except for applicable requirements of the HSR
Act, neither the execution and delivery of this Agreement by Purchaser, nor
the consummation by Purchaser of the transactions contemplated herein, nor
compliance by Purchaser with any of the provisions hereof will (i) conflict
with or result in a breach of any provision of its certificate of
incorporation or bylaws, (ii) result in a breach of, or default under (or
give rise to any right of termination, cancellation or acceleration under),
any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, license, agreement, Contract, lease or other instrument or
obligation to which it is a party or by which any of its properties or
assets may be bound, except for such breaches or defaults (or rights of
termination, cancellation or acceleration) as to which requisite waivers or
consents have been obtained or will be obtained prior to the Closing Date,
or (iii) violate any Order or Laws applicable to it or its properties or
assets except for such violations which would not have a Material Adverse
Effect on (x) the business, properties, results of operations or financial
or other conditions of Purchaser, taken as a whole, or (y) on the ability
of Purchaser to consummate the transactions contemplated herein. There is
no Proceeding pending or, to the knowledge of Purchaser, threatened against
Purchaser that seeks to prevent the consummation of the transactions
contemplated herein.
Section 3.4 Brokers or Finders. Seller will not have any
obligation to pay any broker's, finder's, investment banker's,
intermediary's, financial advisor's or similar fee in connection with this
Agreement, or the transactions contemplated herein by reason of any action
taken by or on behalf of Purchaser.
ARTICLE IV
COVENANTS
Section 4.1 Conduct of Business. During the period from the date
hereof to the Closing, except as otherwise contemplated in this Agreement,
Sellers shall cause the Company to be operated only in the ordinary course of
business consistent with past practice. Sellers will use his, its or their
best efforts to cause the Company to preserve intact the present organization
of the Company; keep available the services of the present officers and
employees of the Company; preserve the Companys goodwill and relationships
with customers, suppliers, licensors, licensees, contractors, distributors,
lenders and other Persons having significant business dealings with the
Company; continue all current sales, marketing and other promotional policies,
programs and activities; maintain the assets of the Company in good repair,
order and condition; and maintain the Company's insurance policies and risk
management programs and in the event of casualty, loss or damage to any assets
of the Company, repair or replace such assets with assets of comparable
quality, as the case may be. Without limiting the generality of the foregoing,
and except as otherwise provided in this Agreement or Section 4.1 of the
Disclosure Schedule, from the date of this Agreement to the Closing, without
the prior written consent of Purchaser, Sellers shall take no action which
would permit the Company to and shall cause the Company, and in the case of
Paragraph (h) hereof shall cause each ERISA Affiliate, not to:
(a) (i) authorize for issuance, issue, sell, deliver or agree or
commit to issue, sell or deliver (whether through the issuance or granting of
options, warrants, commitments, subscriptions, rights to purchase or
otherwise) any shares of its capital stock or any other securities or equity
equivalents, (ii) split, combine or reclassify any shares of its capital stock
or (iii) amend the terms of any such securities or agreements outstanding on
the date hereof;
(b) amend its articles of incorporation or bylaws;
(c) declare, set aside or pay any dividend or other distribution
(whether in cash, stock or property or any combination thereof) in respect of
the Common Stock or any other of its capital stock, or redeem, repurchase or
otherwise acquire any of the Common Stock or any other of its securities;
(d) (i) sell, lease, transfer or dispose of any assets or rights,
(ii) permit any asset to suffer any Encumbrance thereupon, except for such
Encumbrances existing on the date hereof and Permitted Encumbrances, (iii)
acquire any assets or rights, unless in the case of (i), (ii) and (iii),
pursuant to obligations in effect on the date hereof and set forth in Section
4.1 (d) of the Disclosure Schedule or pursuant to a reasonably detailed
capital expenditure budget as set forth in Section 4.1 (d) of the Disclosure
Schedule (the "Budget"), or (iv) enter into any commitment or transaction
binding on the Company or its assets with respect to (i), (ii) or (iii) above,
except as provided therein;
(e) (i) incur or assume any Indebtedness, (ii) issue or sell any
debt securities or warrants or rights to acquire any debt securities, (iii)
assume, guarantee, endorse or otherwise become liable (whether directly,
continently or otherwise) for the obligations of any other Person, or (iv)
make any loans, advances or capital contributions to, or investments in, any
other Person;
(f) pay, discharge or satisfy any liability, obligation, or
Encumbrance (absolute, accrued, asserted or unasserted, contingent or
otherwise) of the Company, other than the payment, discharge or satisfaction
in the ordinary course of business consistent with past practice or in
accordance with their terms of claims, liabilities or obligations of the
Company reflected on or reserved against in the Interim Balance Sheet;
(g) change or propose to change any of the financial reporting,
accounting or tax principles, practices or methods used by the Company (except
as required by GAAP or Law); change the fiscal year of the Company; write down
the value of any assets of the Company; or change any policies or practices
with respect to the pricing of products and services, investments by the
Company, maintenance of inventory levels or other practices related to
inventory, credit, allowance or other material policy;
(h) enter into, adopt, amend or terminate any Plan, increase in
any manner the compensation or fringe benefits of any director, officer or
employee of the Company or pay any benefit not required by any existing Plan,
or enter into any Contract, agreement, commitment or arrangement to do any of
the foregoing, except to the extent required by applicable law;
(i) enter into or offer to enter into any employment
arrangement or consulting arrangement with any Person;
(j) make or authorize any capital expenditures except in
accordance with the Budget described in Section 4.1(d);
(k) settle or compromise any Tax liability;
(l) (i) enter into, amend or terminate any Contract or
Governmental Permit, unless the aggregate amount involved in all such
Contracts and Governmental Permits is no more than $25,000, (ii) take any
action or fail to take any action that, with or without either the giving of
notice or the passage of time, would constitute a default under any such
Contract or Governmental Permit, or (iii) grant waivers or consents to other
parties to Contracts or powers of attorney to other Persons with respect to
Contracts;
(m) except as specifically provided in Sections 4.8 or 4.9, make
any payments, loans, advances or other distributions to or enter into or amend
any transaction, Contract or arrangement with or for the benefit of, any
Seller, or any of their Affiliates, associates or family members;
(n) make or propose to make any change in its accounts payable
practices, including, without limitation, the timing of payment thereof;
(o) make or propose to make any change in its accounts
receivable practices, including, without limitation, the timing of collection
thereof;
(p) terminate or amend or fail to perform any of its obligations
or permit any default to exist or cause any breach under any of the Company
policies of insurance set forth in Section 2.18 of the Disclosure Schedule;
(q) dispose of or permit to lapse any item of Intellectual
Property; or
(r) take, or agree in writing, orally or otherwise to take, any of
the foregoing actions or any action which would make any representation or
warranty of Sellers contained in this Agreement untrue or incorrect as of the
date when made or as of any future date or which could prevent the
satisfaction of any condition to closing set forth in Article V hereof.
Section 4.2 Access to Company Information; Confidentiality (a)
Sellers shall, and shall cause the Company to, (i) give Purchaser and its
authorized representatives full access during normal business hours to all
Books and Records, plants, offices, warehouses and other facilities and
properties utilized by the Company in connection with its Business and all
information relating to the Company, its Business, properties, assets,
financial condition, results of operations and prospects, (ii) permit
Purchaser and its authorized representatives to make such inspections thereof
and interview personnel of the Company during normal business hours as
Purchaser may request and (iii) cause the Company's officers and auditors to
furnish Purchaser and its authorized representatives with such financial
operating data and other information with respect to the items set forth in
clause (i) of this paragraph (a) as Purchaser may from time to time request
(including, but not limited to, monthly management reports and monthly
financial statements delivered within ten days following the end of each
month), and cause the auditors to deliver their workpapers related to such
information if Purchaser shall so request, and (iv) at Purchaser's reasonable
request, cause the Company's officers to compile information that has not been
compiled for another purpose.
(b) All information about the Company obtained by Purchaser from
Sellers, the Company or any of their directors, officers, employees, agents
or representatives in connection with the transactions contemplated herein
(other than publicly available information or information which becomes
available to Purchaser on a non-confidential basis from another source)
shall be held in confidence by Purchaser and such information shall not be
disclosed to any Person (other than Purchaser and its Affiliates and their
respective directors, officers, employees, agents, and representatives)
except as may be required by judicial process, administrative or other
Order, or any Law, rule or regulation, including without limitation the
rules and regulations of any national securities exchange. After the
Closing, this covenant shall have no application to information disclosed
by Purchaser about the Company in the ordinary course of conduct of its
business or the Business of the Company.
(c) Notwithstanding the provisions of paragraph (b) of this
Section 4.2, Purchaser may disclose information concerning the Company, its
Business, assets and properties, and the transactions contemplated by this
Agreement in any disclosure document prepared by Purchaser or any of its
Affiliates in order to obtain financing for such transactions. Each Seller
and his accountants, lawyers, agents and other representatives will
cooperate with Purchaser in the preparation of any such disclosure document
and other reasonable requests with respect to obtaining such financing.
Section 4.3 Disclosure Supplements. From time to time prior to the
Closing, Sellers and Purchaser shall supplement or amend the Disclosure
Schedule and the Purchaser Disclosure Schedule, respectively, with respect
to any matter hereafter arising that, if existing or occurring at or prior
to the date of this Agreement, would have been required to be set forth or
described in the Disclosure Schedule or the Purchaser Disclosure Schedule,
as the case may be, or any information with respect to any matter hereafter
arising that is necessary to complete or correct any information in such
schedule or in any representation and warranty of Sellers or Purchaser, as
the case may be, that has been rendered inaccurate thereby. For purposes of
Articles V, VI and VII hereof, any such supplement or amendment shall be
disregarded and given no effect. Seller has delivered or made available to
Purchaser copies of all documents set forth in the Disclosure Schedule
Section 4.4 Reasonable Best Efforts.
(a) Upon the terms and subject to the conditions of this
Agreement, each of the parties hereto agrees to use its reasonable best
efforts to take, or cause to be taken, all actions, and to do, or cause to
be done, all things necessary, proper or advisable under applicable Laws
and regulations to consummate and make effective the transactions
contemplated in this Agreement as promptly as practicable, including, but
not limited to, (i) the preparation and filing of all applicable forms
under the HSR Act, (ii) the preparation and filing of all other forms,
registrations and notices required to be filed to consummate the
transactions contemplated in this Agreement and the taking of such actions
as are necessary to obtain any requisite approvals, consents, orders,
exemptions or waivers by any third party or Governmental Entity and (iii)
the satisfaction of all conditions to Closing. Each party shall promptly
consult with the other with respect to, provide any necessary information
not subject to legal privilege with respect to and provide the other (or
its counsel) copies of, all filings made by such party with any
Governmental Entity or any other information supplied by such party to a
Governmental Entity in connection with this Agreement and the transactions
contemplated in this Agreement.
(b) Each party hereto shall promptly inform the other of any
communication from any Governmental Entity regarding any of the
transactions contemplated in this Agreement. If any party or Affiliate
thereof receives a request for additional information or documentary
material from any such Governmental Entity with respect to the transactions
contemplated in this Agreement, then such party will endeavor in good faith
to make, or cause to be made, as soon as reasonably practicable and after
consultation with the other party, an appropriate response in compliance
with such request.
(c) Notwithstanding the foregoing, nothing in this Agreement shall
be deemed to require Purchaser to enter into any agreement with any
Governmental Entity or to consent to any Order requiring Purchaser to hold
separate or divest, or to restrict the dominion or control of Purchaser or
any of its Affiliates over any of the assets, properties or businesses of
Purchaser, its Affiliates or the Company.
Section 4.5 Further Assurances. Each Seller agrees that, from time
to time after the Closing, without additional consideration, each of them
will execute and deliver such further instruments, provide such materials
and information and take such other action as Purchaser may request to make
effective the transactions contemplated in this Agreement and otherwise to
fulfill the obligations of Seller under this Agreement and the Operative
Agreements.
Section 4.6 No Solicitation by Sellers. Each Seller shall, and
shall cause the Company to, immediately cease any existing discussions or
negotiations with any third parties conducted prior to the date hereof with
respect to any merger, business combination, sale of assets (other than
sales permitted by this Agreement), sale of shares of capital stock or
other securities or similar transaction involving any third party and
Seller or the Company (an "Acquisition Transaction"). Each Seller shall,
and Seller shall ensure that the Company and its directors and officers
shall, use his or its best efforts to cause the Company's employees or
other Affiliates not to, directly or indirectly, encourage, solicit,
participate in, facilitate or initiate discussions or negotiations with, or
provide any information to, any Person or group (other than Purchaser or
its directors, officers, employees or other Affiliates or representatives)
concerning any Acquisition Transaction or any discussions or negotiations
with respect thereto. Sellers shall immediately communicate to Purchaser
any such inquiries or proposals regarding an Acquisition Transaction and
the terms thereof
Section 4.7 Fees and Expenses. Except as otherwise set forth in
this Agreement, each party hereto shall pay the fees and expenses incurred
by it in connection with the transactions contemplated herein including
performance of such party's obligations hereunder and no such fees and
expenses of any Seller shall be paid or reimbursed or otherwise incurred by
the Company.
Section 4.8 Repayment of Loans, Advances, Notes, etc. Prior to the
Closing, each Seller shall, and shall cause their respective Affiliates,
associates and family members to, repay to the Company in cash all amounts
owed by such Persons to the Company. All such amounts as of the date hereof
are set forth in Section 2.27(a) of the Disclosure Schedule. Prior to the
Closing, each Seller which has amounts set forth on Section 2.27(a) of the
Disclosure Schedule shall deliver to Purchaser a certificate executed by
such Seller and the Chief Financial Officer of the Company certifying that
all such amounts have been repaid in full in cash to the Company. Such
certificate shall set forth each such amount so repaid and the date of such
repayments. Prior to the Closing, the Company shall repay to each Seller
and their Affiliates, associates and family members all amounts owed to
such Persons by the Company. All such amounts as of the date hereof are set
forth in Section 2.27(a) of the Disclosure Schedule. Prior to the Closing,
the Company shall deliver to Purchaser a certificate with respect to each
such amount owed by the Company, executed by the Chief Financial Officer of
the Company and such Seller certifying that all such amounts have been
repaid in full by the Company, the amount repaid, the method of repayment
and the date of such repayments.
Section 4.9 Termination of Affiliate Agreements. Prior to the
Closing, each Seller shall, and shall cause their respective Affiliates,
associates and family members to, terminate any and all Contracts or other
commitments or arrangements between such Persons and the Company without
any further liability on the part of the Company. All such Contracts,
commitments and arrangements as of the date hereof are set forth in Section
2.27(a) of the Disclosure Schedule. Prior to the Closing, the Company shall
deliver to Purchaser a certificate with respect to the termination of all
such Contracts, commitments and arrangements, executed by the Chief
Executive Officer of the Company, which certificate shall state that all
such Contracts, commitments and arrangements have been terminated without
any further obligations or liability on the part of the Company.
Section 4.10 Dividends, Distributions, Etc. Prior to the Closing,
Sellers shall not cause the Company to, and the Company shall not, declare
or pay dividends or distributions to any Seller.
Section 4.11 Public Announcements. Subject to Section 4.2, none of
Sellers, the Company, or Purchaser will issue or cause the publication of
any press release or otherwise make any public statement with respect to
the transactions contemplated hereby without the prior written consent of
the parties hereto, provided, that any party hereto may make a public
announcement to the extent required by Law, judicial process or the rules,
regulations or interpretations of the Securities and Exchange Commission or
any national securities exchange.
Section 4.12 Financial Statements. (a) No later than ten days
after the end of each month ending after the date hereof and before the
Closing Date, Sellers shall cause the Company to deliver to Purchaser true
and complete copies of the unaudited balance sheet, and the related
unaudited statements of income, stockholders' equity and cash flows, of the
Company for the month then ended and the portion of the fiscal year then
ended, together with notes relating thereto, which financial statements
shall be prepared on a basis consistent with the Financial Statements; (b)
prior to the Closing Date, Sellers shall cause the Company to prepare and
deliver to Purchaser an unaudited balance sheet of the Company as of the
end of the most recent calendar month ending at least ten days prior to the
Closing Date (the "Month-End Balance Sheet"), and unaudited statements of
income, stockholders' equity and cash flow of the Company for the twelve
months then ended, accompanied by a certificate signed by the Company's
chief financial officer (i) stating that such financial statements are true
and correct and fairly present the financial position of the Company as of
such date, and the results of its operations for the twelve months then
ended in accordance with GAAP except for the lack of footnotes and subject
to year-end audit adjustments; (ii) stating that GAAP was applied in the
preparation of such financial statements on a basis consistent with the
application of GAAP in the preparation of the Company's audited financial
statements for the year ended December 31, 1995; and (iii) setting forth
EBITDA for the twelve months then ended (including a reasonably detailed
calculation thereof), the Indebtedness of the Company then outstanding
(including premiums and penalties upon prepayment of such Indebtedness and
any negative cash balance), the Adjusted Net Working Capital (including a
reasonably detailed calculation thereof) and the Net Worth as of the date
of the financial statements.
(b) Not later than 7 days prior to the Closing Date, Seller shall
cause the Company to prepare (in accordance with GAAP) and deliver to
Purchaser the Company's best available estimate of the balance sheet of the
Company anticipated as of the Closing Date (the "Estimated Closing Date
Balance Sheet"), accompanied by a certificate signed by Seller and the
Company's chief financial officer (i) stating that such Estimated Closing
Date Balance Sheet is the Company's best estimate of its expected financial
position as of the Closing Date; (ii) setting forth the Indebtedness, if
any, of the Company expected to be outstanding (including premiums and
penalties upon prepayment of such Indebtedness and any negative cash
balance), the Adjusted Net Working Capital (including a reasonably detailed
calculation thereof), and the Net Worth, in each case, estimated as of the
Closing Date; and (iii) certifying that the EBITDA of the Company (x) for
the year ended December 31, 1995 was not less than $3.7 million, (y) for
the six months ended June 30, 1996 was not less than $1.28 million, and (z)
for the eight months ended August 31, 1996 was not less than $2.15 million.
(c) Not later than 15 days after the Closing Date, Seller shall
prepare (in accordance with GAAP) and deliver to Purchaser the balance
sheet of the Company as of the Closing Date (the "Closing Date Balance
Sheet"), accompanied by a certificate signed by each Seller (i) stating
that such Closing Date Balance Sheet is a true, complete and correct
statement of the Company's financial position as of the Closing Date and
(ii) setting forth the Indebtedness, if any, of the Company outstanding
(including premiums and penalties upon prepayment of such Indebtedness and
any negative cash balance) and the Adjusted Net Working Capital (including
a reasonably detailed calculation thereof), in each case, as of the Closing
Date. Purchaser shall cooperate with Seller and provide Seller and its
representatives with reasonable access to the Books and Records in order to
facilitate Seller's preparation and delivery of the Closing Date Balance
Sheet.
Section 4.13 Environmental Due Diligence. Seller shall cooperate
with, and provide reasonable access to, Purchaser and its representatives
for environmental assessments and other environmental due diligence with
respect to each of the facilities owned, operated or leased by the Company
which Purchaser, in its sole discretion, deems necessary. If Purchaser's
environmental assessment indicates a potential material environmental
liability, Purchaser may conduct additional assessments, including, but not
limited to, soil and ground water sampling and testing. Purchaser shall
conduct all environmental assessments and other environmental due diligence
in a commercially reasonable manner and shall use reasonable efforts to
minimize any interference with or impairment of the regular conduct of the
Company.
Section 4.14 Non-Competition Agreements. Immediately prior to the
Closing, the Company, as directed by Purchaser, will enter into
non-competition agreements with each of the Sellers, other than PCC
Investments, L.P., substantially in the form and attached hereto as Exhibit
B.
Section 4.15 Escrow Agreement. At the Closing, Purchaser, each
Seller and the Escrow Agent shall enter into an escrow agreement
substantially in the form of Exhibit C (the "Escrow Agreement").
Section 4.16 Books and Records. Sellers shall cause the Company to
maintain all Books and Records in the regular and customary manner as such
Books and Records have been maintained. At the Closing, each Seller shall
deliver to the Company all Books and Records in his possession relating to
the Company, including, but not limited to, Business Know- How.
Section 4.17 General Release. Immediately prior to the Closing,
each Seller shall deliver to Purchaser one or more general releases (the
"General Releases"), executed by such Seller and those of Seller's
Affiliates, associates and family members designated by Purchaser,
releasing the Company and its directors, officers and employees as such,
from any and all claims such Seller and such Affiliates, associates and
family members of such Seller might have against such persons and all
liabilities owed to such Seller and such Affiliates, associates and family
members of any Seller by such Persons. The General Releases shall be in
form and substance satisfactory to Purchaser.
Section 4.18 Tax Matters.
(a) (i) Each Seller shall be jointly and severally
liable for and indemnify Purchaser and the Company for Taxes of
the Company for any taxable year or period that ends on or before
the Closing Date and, with respect to any taxable year or
period beginning before and ending after the Closing Date,
the portion of such taxable year ending on and including the
Closing Date.
(ii) Purchaser and the Company shall be liable for and
indemnify Sellers for the Taxes of the Company for any taxable
year or period that begins after the Closing Date and, with
respect to any taxable year or period beginning before and ending
after the Closing Date, the portion of the taxable year beginning
on the day after the Closing Date.
(iii) For purposes of paragraphs (a)(i) and (a)(ii),
whenever it is necessary to determine the liability for Taxes of
the Company for a portion of a taxable year or period that begins
before and ends after the Closing Date, the determination of such
Taxes for the portion of the year or period ending on, and the
portion of the year or period beginning after, the Closing Date
shall be determined by assuming that the Company had a taxable
year or period which ended at the close of the Closing Date,
except that exemptions, allowances or deductions that are
calculated on an annual basis, such as the deduction for
depreciation, shall be apportioned based on the number of days in
the year elapsed to and including the Closing Date.
(iv) Any payment by Sellers or the Purchaser under
this Section 4.18 will be treated for tax purposes as an
adjustment to the Shares Purchase Price.
(b) Sellers shall cause the Company to file when due all Tax
Returns that are required to be filed by the Company for taxable years or
periods ending on or before the Closing Date, and Purchaser shall file or
cause to be filed when due all other Tax Returns that are required to be
filed by or with respect to the Company.
(c) After the Closing Date, each Seller and Purchaser shall:
(i) assist in all reasonable respects (and cause their
respective Affiliates to assist) the other party in preparing any
Tax Returns or reports which such other party is responsible for
preparing and filing in accordance with this Section 4.18;
(ii) cooperate in all reasonable respects in preparing
for any audits of, or disputes with taxing authorities regarding,
any Tax Returns of the Company;
(iii) make available to the other and to any taxing
authority as reasonably requested all information, records, and
documents relating to Taxes of the Company;
(iv) provide timely notice to the other in writing of
any pending or threatened Tax audits or assessments of the Company
for taxable periods for which the other may have a liability under
this Section 4.18; and
(v) furnish the other with copies of all
correspondence received from any taxing authority in connection
with any Tax audit or information request with respect to any such
taxable period.
(d) Purchaser shall notify each Seller in writing upon receipt by
Purchaser or the Company of notice of any pending or threatened federal,
state, local or foreign Tax audits or assessments which may materially
affect the Tax liabilities of the Company for which Sellers would be
required to indemnify Purchaser and the Company, provided that failure to
comply with this provision shall not affect Purchaser's right to
indemnification hereunder except to the extent such failure materially
impairs Seller's ability to contest any such Tax liabilities.
(e) Sellers shall have the right to represent the Company's
interests in any Tax audit or administrative or court proceeding relating
to taxable period ending on or before the Closing Date, and to employ
counsel of their choice at their expense, provided, however, that Purchaser
and its representatives shall be permitted, at Purchaser's expense, to be
present at, and participate in, any such audit or proceeding.
Notwithstanding the foregoing, Sellers shall not be entitled to settle,
either administratively or after the commencement of litigation, any claim
for Taxes without the prior written consent of Purchaser, which consent
shall not be unreasonably withheld.
Section 4.19 Plans. Sellers shall cause the Company to take such
actions as are reasonably satisfactory to Purchaser so that each Plan
maintained by the Company or with respect to which the Company may have any
liability or other Indebtedness provides benefits to any Person only with
respect to periods of employment of such Person solely with the Company.
Section 4.20 Compliance with Laws and Contracts. Sellers shall
cause the Company to comply, in all material respects, with all Laws,
Orders and Contracts applicable to the Business or the operations of the
Company, and promptly following receipt thereof give Purchaser copies of
any notice received from any Governmental Entity or other Person alleging
any violation of any such Law or Order or any Contract.
Section 4.21 Transactions with Affiliates. After the date of this
Agreement and prior to the Closing Date, the Sellers shall not, and shall
cause the Company not to, enter into any transaction, whether through
Contract or otherwise, with any Affiliate of the Company or any Seller or
their respective Affiliates, associates and family members.
ARTICLE V
CONDITIONS
Section 5.1 Conditions to Obligations of Purchaser. The
obligations of Purchaser to effect the transactions contemplated by this
Agreement are further subject to the satisfaction or waiver at or prior to
the Closing of the following conditions:
(a) Each of the representations and warranties of Sellers in this
Agreement shall be true and correct in all respects as of the date hereof
and at and as of the Closing with the same effect as though such
representations and warranties had been made at and as of such time, other
than representations and warranties that speak as of a specific date or
time (which need only be true and correct in all respects as of such date
or time);
(b) Sellers and the Company shall have performed and complied with
each agreement, covenant and obligation required to be performed or
complied with by either Sellers or the Company under this Agreement at or
prior to the Closing;
(c) From December 31, 1995, the Company shall not have suffered a
Material Adverse Effect;
(d) Purchaser shall have received certificates, dated the Closing
Date, from (i) the Company, duly executed by the Chief Executive Officer or
the Chief Financial Officer of the Company and (ii) each Seller, duly
executed by each Seller, in each case, substantially in the form attached
hereto as Exhibits D and E, respectively;
(e) All authorizations, Permits, consents, orders or approvals of,
or declarations or filings with, or expirations or terminations of waiting
periods (including the waiting period under the HSR Act) imposed by any
Governmental Entity, and all third party consents (collectively, the
"Authorizations") necessary to effect the transactions contemplated by this
Agreement, shall have occurred, been filed or been obtained and all other
Authorizations ("Other Authorizations") shall have occurred, been filed or
been obtained;
(f) Notwithstanding the satisfaction of paragraph (a) of this
Section 5.1, and disregarding all materiality, dollar limit or similar
qualifications with respect to all representations and warranties for
purposes of this condition, the aggregate breaches of the representations
and warranties of Seller shall not have a Material Adverse Effect on the
Company or a Material Adverse Effect on Purchaser's ability to own and
operate the Company's assets and properties or materially detract from the
value of the Company's assets;
(g) The distributions, loans and accounts receivable referred to
in Section 2.27 shall have been repaid to the Company in accordance with
Section 4.8 and all affiliate arrangements listed in Section 2.27(a) of the
Disclosure Schedule shall have been terminated without continuing liability
or obligation on the part of the Company or Purchaser, as successor to the
Company in accordance with Section 4.9;
(h) Purchaser shall have obtained all Governmental Permits
(whether by transfer, reissuance, modification or otherwise) required to be
obtained by it in connection with or for the operation of the Business of the
Company as presently conducted and contemplated in this Agreement;
(i) Sellers shall have delivered or caused to be delivered to
Purchaser each of the items specified in Section 1.5;
(j) There shall not be in effect on the Closing Date any Order or
Law restraining, enjoining or otherwise prohibiting or making illegal the
consummation of any of the transactions contemplated in this Agreement or
any of the Operative Agreements or which could reasonably be expected to
otherwise result in a material diminution of the benefits to Purchaser of
the transactions contemplated in this Agreement or any of the Operative
Agreements, and there shall not be pending or threatened on the Closing
Date any Proceeding or any other action in, before or by any Governmental
Entity which could reasonably be expected to result in the issuance of any
such Order or the enactment, promulgation or deemed applicability to
Purchaser, the Company, or any transaction contemplated in this Agreement
or any of the Operative Agreements of any such Law;
(k) Sellers shall have delivered or caused to be delivered to
Purchaser the Month-End Balance Sheet and the Estimated Closing Date
Balance Sheet, the related financial statements and the certificate of the
Company's Chief Financial Officer referred to in Section 4.12, and such
certificate shall state that, as of the dates of each of the Month-End
Balance Sheet and the Estimated Closing Date Balance Sheet: (i) the
Adjusted Net Working Capital is at least $3.3 million, (ii) there is no
Indebtedness of the Company then outstanding (including premiums and
penalties upon prepayment or other termination of such Indebtedness and any
negative cash balance) and (iii) the Net Worth is at least $4.8 million.
Such certificate shall also certify that the EBITDA of the Company (x) for
the year ended December 31, 1995 was not less than $3.7 million, (y) for
the six months ended June 30, 1996 was not less than $1.28 million, and (z)
for the eight months ended August 31, 1996 was not less than $2.15 million;
(l) Neither consummation of the purchase of the Shares nor the
other transactions contemplated in this Agreement or any of the Operative
Agreements nor Purchaser's ownership of the Company shall (i) prevent,
impede or restrict Purchaser or the Company from fully and freely providing
continued and uninterrupted performance under and otherwise fulfilling all
obligations under, and receiving the benefits of, any Contracts to which
the Company is a party, (ii) impair, interfere with or terminate the
Company's business relationship with the customers listed in Section 2.26
of the Disclosure Schedule or suppliers listed in Section 2.26 of the
Disclosure Schedule;
(m) Purchaser shall have completed its due diligence with respect
to environmental matters and shall be satisfied with the results of such
environmental assessments and other environmental due diligence;
(n) Purchaser shall have received satisfactory assurances that the
customer listed as number 1 in Section 2.26 of the Disclosure Schedule will
continue as a customer following the Closing Date on the same or better
terms as exist on the date hereof; and
(o) Purchaser shall have received the consent of the banks under
the Restated Credit Agreement, dated as of March 19, 1996, among Big Flower
Press Holdings, Inc., Treasure Chest Advertising Company, Inc. and the
financial institutions named therein, to the consummation of the
transactions contemplated by this Agreement.
Section 5.2 Conditions to Obligations of Sellers. The obligations
of Sellers to effect the transactions contemplated by this Agreement are
further subject to the satisfaction or waiver at or prior to the Closing of
the following conditions:
(a) The representations and warranties of Purchaser in this
Agreement shall be true and correct in all respects as of the date hereof
and at and as of the Closing with the same effect as though such
representations and warranties had been made at and as of such time, other
than representations and warranties that speak as of a specific date or
time (which need only be true and correct in all respects as of such date
or time);
(b) Purchaser shall have performed all obligations required to be
performed by it under this Agreement at or prior to the Closing;
(c) Sellers shall have received from Purchaser a certificate,
dated the Closing Date, executed by a duly authorized officer of Purchaser,
satisfactory in form to Seller, to the effect of (a) and (b) above;
(d) There shall not be in effect on the Closing Date any Order or
Law that became effective after the date of this Agreement restraining,
enjoining or otherwise prohibiting or making illegal the consummation of
any of the transactions contemplated in this Agreement or any of the
Operative Documents;
(e) All Authorizations necessary for Purchaser to effect the
transactions contemplated in this Agreement shall have occurred, been filed
or been obtained by Purchaser; and
(f) Purchaser shall have delivered or caused to be delivered to
Sellers each of the items specified in Section 1.6.
ARTICLE VI
TERMINATION
Section 6.1 Termination. This Agreement may be terminated, and the
transactions contemplated herein may be abandoned:
(a) at any time before the Closing, by mutual written agreement of
Sellers and Purchaser;
(b) at any time before the Closing, by Sellers, on the one hand,
or Purchaser, on the other hand, in the event (i) of a material breach
hereof by the non-terminating party if such non-terminating party fails to
cure such breach within five business days following notification thereof
by the terminating party or (ii) upon notification to the non-terminating
party by the terminating party that the satisfaction of any condition to
the terminating party's obligations under this Agreement becomes impossible
or impracticable with the use of commercially reasonable efforts if the
failure of such condition to be satisfied is not caused by a breach hereof
by the terminating party;
(c) at any time after the second-month anniversary of the date of
this Agreement, by Sellers or Purchaser upon notification of the
non-terminating party by the terminating party if the Closing shall not
have occurred on or before such date and such failure to consummate is not
caused by a breach of this Agreement by the terminating party; or
(d) any notice of termination under this Section 6.1 delivered by
Sellers to Purchaser shall be executed by the holders of a majority of the
shares owned by Sellers.
Section 6.2 Effect of Termination. If this Agreement is validly
terminated pursuant to Section 6.1, this Agreement will forthwith become null
and void, and there will be no liability or obligation on the part of Sellers
or Purchaser (or any of their respective officers, directors, employees,
partners, agents or other representatives or Affiliates), except as provided
in the next succeeding sentence and except that the provisions with respect to
expenses in Section 4.7 and confidentiality in Section 4.2 will continue to
apply following any such termination. Notwithstanding any other provision in
this Agreement to the contrary, upon termination of this Agreement pursuant to
Section 6.1(b) or (c), Sellers will remain liable to Purchaser for any breach
of this Agreement by Sellers existing at the time of such termination, and
Purchaser will remain liable to Sellers for any breach of this Agreement by
Purchaser existing at the time of such termination, and Sellers or Purchaser
may seek such remedies, including damages and fees of attorneys, against the
other with respect to any such breach as are provided in this Agreement or as
are otherwise available at law or in equity.
ARTICLE VII
SURVIVAL AND INDEMNIFICATION
Section 7.1 Survival Periods. All representations and warranties
of the Seller contained in this Agreement, the Disclosure Schedule, or any
certificate or document delivered in connection herewith shall survive the
Closing and shall apply with respect to claims asserted in writing within
eighteen months from the Closing Date, provided that the representations
and warranties set forth in Sections 2.1, 2.2, 2.3, 2.4, 2.13 and 2.24
shall survive the Closing indefinitely and those set forth in Sections
2.19, 2.20, 2.21 and 2.23 shall survive the Closing and shall apply to
claims asserted in writing prior to the expiration of any applicable
statutes of limitations. The covenants and agreements of the parties hereto
shall survive the Closing. Rights of an Indemnified Party to
indemnification shall not be limited or affected in any way by any
pre-Closing investigation by Purchaser or such Indemnified Party.
Section 7.2 Indemnification. (a) Sellers shall jointly and
severally indemnify Purchaser and its officers, directors, employees,
agents and Affiliates in respect of, and hold each of them harmless from
and against, any Loss suffered, incurred or sustained by any of them or to
which any of them becomes subject, resulting from, arising out of or
relating to any inaccuracy in or breach of any representation or warranty
or nonfulfillment of or failure to perform any covenant or agreement on the
part of any Seller contained in this Agreement (determined without giving
effect to any "Material Adverse Effect" qualification or any other
materiality, dollar limit or similar qualification contained in the
representation, warranty, covenant or agreement); provided; however, that
the indemnification obligations of PCC Investments, L.P. with respect to
the breach by Sellers of any of the representations and warranties set
forth in Article II of this Agreement or the covenants set forth in Article
IV of this Agreement, with the exception of the covenants set forth is
Sections 4.6, 4.7, 4.8, 4.9, 4.10 and 4.21, and, with respect to actions
taken by PCC Investments, L.P., Section 4.11, shall be limited to one half
of the Escrow Amount; provided, further, that the indemnification
obligations of PCC Investments, L.P. with respect to any breach of the
representations and warranties as to it set forth in Sections 2.1, 2.2 or
2.3 hereof shall not be so limited and shall instead be unlimited. The
indemnification obligations of Sellers other than PCC Investments, L.P.
under this Agreement shall not be limited to the Escrow Amount. The
indemnification obligations of PCC Investments, L.P. under this Section 7.2
shall be the exclusive remedy of the Purchaser against PCC Investments,
L.P. and its partners.
(b) Notwithstanding anything to the contrary contained in this
Article VII, Purchaser shall not be entitled to indemnification pursuant to
this Article VII, with respect to any claim for indemnification, unless, and
only to the extent that, the aggregate Loss to Purchaser, with respect to all
claims for indemnification pursuant to Section 7.1(a), exceeds $75,000,
whereupon Seller shall be obligated to pay in full the aggregate amount of
Purchaser's Loss (including such first $75,000); provided, however, that the
foregoing $75,000 threshold shall not apply to any adjustments of the Shares
Purchase Price contemplated by Section 1.3.
Section 7.3 Method of Asserting Claims. All claims for
indemnification by any Indemnified Party under Sections 4.18, 7.2 and 7.4,
subject to the provisions of Section 4.18 with respect to claims for
indemnification related to Taxes, will be asserted and resolved as follows:
In the event any claim or demand in respect of which an
Indemnified Party might seek indemnity under Sections 4.18, 7.2 and 7.4, is
asserted against or sought to be collected from such Indemnified Party by a
Person other than Purchaser or any Affiliate of Purchaser (a "Third Party
Claim"), the Indemnified Party shall deliver a Claim Notice with reasonable
promptness to the Indemnifying Party. If the Indemnified Party fails to
provide the Claim Notice with reasonable promptness after the Indemnified
Party receives notice of such Third Party Claim, the Indemnifying Party
shall not be obligated to indemnify the Indemnified Party with respect to
such Third Party Claim to the extent that the Indemnifying Party
demonstrates that its ability to defend such Third Party Claim has been
prejudiced by such failure of the Indemnified Party. The Indemnifying Party
shall notify the Indemnified Party as soon as practicable within the
Dispute Period whether the Indemnifying Party disputes its liability to the
Indemnified Party under Sections 4.18, 7.2 and 7.4, and whether the
Indemnifying Party desires, at its sole cost and expense, to defend the
Indemnified Party against such Third Party Claim.
(i) If the Indemnifying Party notifies the Indemnified
Party within the Dispute Period that the Indemnifying Party
desires to defend the Indemnified Party with respect to the Third
Party Claim pursuant to this Section 7.3(a), then the Indemnifying
Party shall have the right to defend, with counsel reasonably
satisfactory to the Indemnified Party, at the sole cost and
expense of the Indemnifying Party, such Third Party Claim by all
appropriate Proceedings, which Proceedings will be vigorously and
diligently prosecuted by the Indemnifying Party to a final
conclusion or may be settled at the discretion of the Indemnifying
Party; provided, however, that the Indemnifying Party shall not be
permitted to effect any settlement without the written consent of
the Indemnified Party unless (i) the sole relief provided in
connection with such settlement is monetary damages that are paid
in full by the Indemnifying Party, (ii) such settlement involves
no finding or admission of any violation or breach by any
Indemnified Party of any right of any other Person or any Laws,
Contracts, or Governmental Permits, and (iii) such settlement has
no effect on any other claims that may be made against any
Indemnified Party. The Indemnifying Party shall have full control
of such defense and Proceedings, including any compromise or
settlement thereof (except as provided in the preceding sentence)
provided, however, that the Indemnified Party may, at the sole
cost and expense of the Indemnified Party, at any time prior to
the Indemnifying Party's delivery of the notice referred to in the
first sentence of this clause (i), file any motion, answer or
other pleadings or take any other action that the Indemnified
Party reasonably believes to be necessary or appropriate to
protect its interests; and provided further, that if requested by
the Indemnifying Party, the Indemnified Party will, at the sole
cost and expense of the Indemnifying Party, provide reasonable
cooperation to the Indemnifying Party in contesting any Third
Party Claim that the Indemnifying Party elects to contest. The
Indemnified Party may participate in, but not control, any defense
or settlement of any Third Party Claim controlled by the
Indemnifying Party pursuant to this clause (i) and except as
provided in the preceding sentence, the Indemnified Party will
bear its own costs and expenses with respect to such
participation. Notwithstanding the foregoing, the Indemnified
Party may take over the control of the defense or settlement of a
Third Party Claim at any time if it irrevocably waives its right
to indemnity under Sections 4.18, 7.2 or 7.4, as the case may be,
with respect to such Third Party Claim.
(ii) If the Indemnifying Party fails to notify the
Indemnified Party within the Dispute Period that the Indemnifying
Party desires to defend the Third Party Claim pursuant to Section
7.3(a), or if the Indemnifying Party gives such notice but fails
to prosecute vigorously and diligently or settle the Third Party
Claim, or if the Indemnifying Party fails to give any notice
whatsoever within the Dispute Period, then the Indemnified Party
will have the right to defend, at the sole cost and expense of the
Indemnifying Party, the Third Party Claim by all appropriate
Proceedings, which Proceedings will be prosecuted by the
Indemnified Party in a reasonable manner and in good faith or will
be settled at the discretion of the Indemnified Party (with the
consent of the Indemnifying Party, which consent will not be
unreasonably withheld). Subject to the immediately preceding
sentence, the Indemnified Party will have full control of such
defense and Proceedings, including any compromise or settlement
thereof, provided, however, that if requested by the Indemnified
Party, the Indemnifying Party will, at the sole cost and expense
of the Indemnifying Party, provide reasonable cooperation to the
Indemnified Party and its counsel in contesting any Third Party
Claim which the Indemnified Party is contesting. Notwithstanding
the foregoing provisions of this clause (ii), if the Indemnifying
Party has notified the Indemnified Party within the Dispute Period
that the Indemnifying Party disputes its liability hereunder to
the Indemnified Party with respect to such Third Party Claim and
if such dispute is resolved in favor of the Indemnifying Party in
the manner provided in clause (iii) below, the Indemnifying Party
will not be required to bear the costs and expenses of the
Indemnified Party's defense pursuant to this clause (ii) or of the
Indemnifying Party's participation therein at the Indemnified
Party's request, and the Indemnified Party will reimburse the
Indemnifying Party in full for all reasonable costs and expenses
incurred by the Indemnifying Party in connection with such
litigation. The Indemnifying Party may participate in, but not
control, any defense or settlement controlled by the Indemnified
Party pursuant to this clause (ii), and the Indemnifying Party
will bear its own costs and expenses with respect to such
participation.
(iii) If the Indemnifying Party notifies the
Indemnified Party that it does not dispute its liability to the
Indemnified Party with respect to a Third Party Claim under
Sections 4.18, 7.2 or 7.4, as the case may be, or fails to notify
the Indemnified Party within the Dispute Period whether the
Indemnifying Party disputes its liability to the Indemnified Party
with respect to such Third Party Claim, the Loss in the amount
specified in the Claim Notice will be conclusively deemed a
liability of the Indemnifying Party under Sections 4.18, 7.2 or
7.4, as the case may be, and the Indemnifying Party shall pay the
amount of such Loss to the Indemnified Party on demand. If the
Indemnifying Party has timely disputed its liability with respect
to such claim, the Indemnifying Party and Indemnified Party will
negotiate, and if not resolved through negotiations within the
Resolution Period, such dispute shall be resolved by litigation in
a court of competent jurisdiction. Notwithstanding the previous
sentence, no payment need be made with respect to a Loss (other
than legal fees if the Indemnifying Party fails to defend)
incurred with respect to a third party claim until the third party
claim is resolved by settlement or a final judgment not subject to
appeal.
In the event any Indemnified Party should have a claim under
Sections 4.18, 7.2 or 7.4, against any Indemnifying Party that does not
involve a Third Party Claim, the Indemnified Party shall deliver an Indemnity
Notice with reasonable promptness to the Indemnifying Party. The failure by
any Indemnified Party to give the Indemnity Notice shall not impair such
party's rights hereunder except to the extent that an Indemnifying Party
demonstrates that it has been prejudiced thereby. If the Indemnifying Party
notifies the Indemnified Party that it does not dispute the claim described in
such Indemnity Notice or fails to notify the Indemnified Party within the
Dispute Period whether the Indemnifying Party disputes the claim described in
such Indemnity Notice, the Loss in the amount specified in the Indemnity
Notice will be conclusively deemed a liability of the Indemnifying Party under
Sections 4.18, 7.2 and 7.4, and the Indemnifying Party shall pay the amount of
such Loss to the Indemnified Party on demand. If the Indemnifying Party has
timely disputed its liability with respect to such claim, the Indemnifying
Party and the Indemnified Party will proceed in good faith to negotiate a
resolution of such dispute, and if not resolved through negotiations within
the Resolution Period, such dispute shall be resolved by litigation in a court
of competent jurisdiction.
Section 7.4 Sellers' Environmental Indemnity.
Notwithstanding any other provision of this Agreement, including the general
indemnity provisions and limitations set forth elsewhere in this Article VII
(but subject to the limitations applicable to the indemnification obligations
of PCC Investments, L.P. set forth in Section 7.2), Sellers jointly and
severally shall indemnify Purchaser and its officers, directors, employees,
agents and Affiliates in respect of, and hold each of them harmless from and
against, any Loss suffered, incurred or sustained by any of them or to which
any of them become subject, resulting from, arising out of or relating to any
Environmental Claim resulting from, arising out of or relating to:
(i) any inaccuracy in or breach of any
representation or warranty contained in Section 2.21;
(ii) the failure of the Company to have complied prior
to the Closing Date with applicable Environmental Laws, whether or
not such failure is disclosed in or pursuant to this Agreement or
is known or unknown on the Closing Date;
(iii) the Release, threatened Release or presence of
any Contaminant at, on or beneath any current or former Company
Property (whether or not owned or leased by the Company), or at
any other property to which wastes or substances generated by the
Company were sent for treatment or disposal, or were otherwise
Released, in each case prior to the Closing Date, whether or not
such Release, threatened Release or presence is disclosed in or
pursuant to this Agreement or is known or unknown on the Closing
Date; or
(iv) the conduct of the Business by the Company at
any time before the Closing Date.
ARTICLE VIII
MISCELLANEOUS
Section 8.1 Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given upon receipt if
delivered personally, telecopied (which telecopy is confirmed) or mailed by
registered or certified mail (return receipt requested) or the next day if by
overnight delivery service to the parties at the following addresses (or at
such other address for a party as shall be specified by like notice):
(a) if to Purchaser, to:
Laser Tech Color, Inc.
0000 Xxxxxxxxx Xxxxx
Xxxxxx, Xxxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Attention: President
with a copy to
Big Flower Press Holdings, Inc.
0 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Attention: Associate General Counsel
with a copy to:
Xxxxxx, Xxxxx & Xxxxx
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Attention: Xxxxx X. Xxxxx, Esq.
and:
(b) if to Seller,
Before the Closing, to:
Xxxxx Xxxxxx Xxxxxx
Plaza Del Mar
00000 Xxxx Xxxxx Xxxxx, Xxxxx 000
Xxx Xxxxx, Xxxxxxxxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
with a copy to
Xxxxxx, Xxxx & Xxxxxxxx
Xxx Xxxxxxxxxx Xxxxxx
Xxxxxxx Xxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000-0000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Attention: Xxxxx Xxxxx
After the Closing, to:
Xxxxx Xxxxxxx
X.X. Xxx 0000
Xxxxxx Xxxxx Xx, Xxxxxxxxxx 00000
Telephone: (000) 000-0000
with a copy to
PCC Investments, X.X.
Xxxxxxx Brothers Inc.
0 Xxxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Attention: Xxxxx Xxxxxx
Section 8.2 Interpretation. When a reference is made in this
Agreement to a Section or Exhibit, such reference shall be to a Section of or
Exhibit to this Agreement, unless otherwise indicated. The descriptive
headings herein are inserted for convenience only and are not intended to be
part of or to affect the meaning or interpretation of this Agreement.
Section 8.3 Counterparts. This Agreement may be executed in two or
more counterparts, all of which shall be considered one and the same
agreement.
Section 8.4 Entire Agreement; Assignment. This Agreement,
including the appendices, annexes and exhibits hereto and the, documents,
schedules (including, without limitation, the Disclosure Schedule and the
Purchaser Disclosure Schedule), certificates and instruments referred to
herein, constitute the entire agreement, and supersede all prior agreements
and understandings, both written and oral, including without limitation the
letter dated July 2, 1996 from Big Flower Press Holdings, Inc. to the
Company, PCC Investments, L.P., Capital Trust Management, Ltd. and Sellers
with respect to the subject matter hereof. This Agreement shall not be
assigned by operation of Law or otherwise, provided that (a) LTC may assign
all its rights and obligations under this Agreement to any direct or
indirect wholly owned subsidiary of Big Flower Press Holdings, Inc., (b)
Purchaser may assign or pledge its rights under this Agreement, and (c)
Purchaser's rights under Article VII may be assigned after the Closing in
connection with a sale of substantially all the assets of the Company or
Purchaser.
Section 8.5 Amendment. This Agreement may be amended at any time
by the parties hereto, but only by an instrument in writing signed by each of
the parties hereto.
Section 8.6 Extensions, Waiver. At any time prior to the Closing,
the parties hereto may (i) extend the time for the performance of any of
the obligations or other acts of the parties hereto, (ii) waive any
inaccuracies in the representations and warranties contained herein or in
any document delivered pursuant hereto and (iii) waive compliance with any
of the covenants, agreements or conditions contained herein. Any agreement
on the part of a party hereto to any such extension or waiver shall be
valid only if set forth in a written instrument signed by such party.
SECTION 8.7 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT
REGARD TO ANY APPLICABLE PRINCIPLES OF CONFLICTS OF LAW.
Section 8.8 Specific Performance. The parties hereto agree that if
any of the provisions of this Agreement were not performed in accordance
with their specific terms or were otherwise breached, irreparable damage
would occur, no adequate remedy at law would exist and damages would be
difficult to determine, and that the parties shall be entitled to specific
performance of the terms hereof, in addition to any other remedy at law or
equity.
Section 8.9 Parties in Interest. This Agreement shall be binding
upon and inure solely to the benefit of each party hereto, and nothing in
this Agreement, express or implied, is intended to or shall confer upon any
other Person or Persons any rights, benefits or remedies of any nature
whatsoever under or by reason of this Agreement
Section 8.10 Severability. This Agreement shall be deemed
severable, and the invalidity or unenforceability of any term or provision
of this Agreement shall not affect the validity or enforceability of this
Agreement or of any other term hereof, which shall remain in full force and
effect.
SECTION 8.11 CONSENT TO SERVICE OF PROCESS. SELLER AND PURCHASER
EACH HEREBY IRREVOCABLY SUBMIT TO THE JURISDICTION OF ANY NEW YORK STATE OR
FEDERAL COURT SITTING IN THE CITY AND COUNTY OF NEW YORK IN RESPECT OF ANY
SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT,
AND IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY,
GENERALLY AND UNCONDITIONALLY, JURISDICTION OF THE AFORESAID COURTS. SELLER
AND PURCHASER EACH IRREVOCABLY WAIVES, TO THE FULLEST EXTENT SUCH PARTY MAY
EFFECTIVELY DO SO UNDER APPLICABLE LAW, TRIAL BY JURY AND ANY OBJECTION
THAT SUCH PARTY MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY
SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT AND ANY CLAIM
THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN
BROUGHT IN AN INCONVENIENT FORUM. NOTHING HEREIN SHALL AFFECT THE RIGHT OF
ANY PARTY HERETO TO SERVE PROCESS IN ANY MANNER PERMITTED BY LAW OR TO
COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE OTHER PARTY IN
ANY OTHER JURISDICTION.
The parties have signed or caused this Agreement to be signed by
their respective duly authorized officers, all as of the date first written
above.
PURCHASER:
LASER TECH COLOR, INC.
By:___________________________
Name:
Title:
SELLERS:
PCC INVESTMENTS, L.P.
By:___________________________
Xxxxx Xxxxxx, General Partner
By:___________________________
Xxxxxxx Xxxxx-Xxxxx, General Partner
______________________________
Xxxxx Xxxxxxx
______________________________
Xxxx Xxxxxxx
______________________________
Xxxxx Xxxxx
______________________________
Xxxxx Xxxxxx
_____________________________
Xxxxxx Xxxxxxx
_____________________________
Xxxxxx Xxxxxxx
_____________________________
Xx XxXxxx
THE EMORY AND XXXXXXXX XXXXXXX CHARITABLE
REMAINDER UNITRUST, UTA
By: Xxxx X. Xxxxxx, Special Trustee
THE XXXX AND XXXXX XXXXXXX CHARITABLE
REMAINDER UNITRUST, UTA
_____________________________________
By: Xxxxxxx Xxxxx, Special Trustee
THE XXXXX AND XXXX XXXXX CHARITABLE
REMAINDER UNITRUST, UTA
_____________________________________
By: Xxxxx X. Xxxxxx, Special Trustee
THE XXXXX AND XXXXX XXXXXX CHARITABLE
REMAINDER UNITRUST, UTA
_____________________________________
By: Xxxxx X. Xxxxxx, Special Trustee
THE XXXXXX X. XXXXXXX AND XXXXXX X.
XXXXXXX CHARITABLE REMAINDER TRUST, UTA
_____________________________________
By: Xxxx Xxxxxxxxx, Special Trustee
XXXXXX CHARITABLE UNITRUST, UTA
_____________________________________
By: Xxxxxx Xxxxx, Special Trustee
EXHIBIT A
CERTAIN DEFINITIONS
For purposes of the Agreement (including this Exhibit A):
"Acquisition Transaction" has the meaning set forth in Section 4.6.
"Act" has the meaning set forth in Section 2.29.
"Adjusted Net Working Capital" means the current assets of the
Company, including cash and Cash Equivalents, less (i) current liabilities
(other than the current portion of long-term debt) and (ii) any costs and
expenses related to the transactions contemplated in the Agreement not yet
paid as of the Closing Date, plus any actual cash expenditures by the Company
in accordance with the P&E Budget.
"Affiliate" means any Person that directly, or indirectly through
one or more intermediaries, controls or is controlled by or is under common
control with the Person specified. For purposes of this definition, control of
a Person means the power, direct or indirect, to direct or cause the direction
of management and policies of such Person whether by Contract or otherwise
and, in any event and without limitation of the previous sentence, any Person
owning ten percent or more of the voting securities of another Person shall be
deemed to control that Person.
"Agreement" means this Stock Purchase Agreement and the exhibits,
the Disclosure Schedule, the Purchaser Disclosure Schedule and any other
schedules hereto and the certificates delivered in accordance this Stock
Purchase Agreement, as the same shall be amended from time to time.
"Authorizations" has the meaning set forth in Section 5.1(e).
"BFP Stock" has the meaning set forth in Section 2.29.
"Books and Records" has the meaning set forth in Section 2.5.
"Budget" has the meaning set forth in Section 4.1 (d).
"Business " has the meaning set forth in Section 2.1.
"Business Know-How" has the meaning set forth in Section 2.14.
"Cash Equivalents" mean (i) securities issued or directly and
fully guaranteed or insured by the United States government or any agency or
instrumentality thereof having maturities of not more than six months from the
date of determination, (ii) certificates of deposit and Eurodollar time
deposits with maturities of six months or less from the date of determination,
bankers' acceptances with maturities not exceeding six months and overnight
bank deposits, (iii) repurchase obligations with a term of not more than seven
days for underlying securities of the types described in clauses (i) and (ii)
above, and (iv) commercial paper having the highest rating obtainable from
Xxxxx'x Investors Service or Standard & Poor's and in each case maturing
within six months from the date of determination.
"CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S. C. xx.xx. 9601 et seq., any amendments
thereto, any successor statutes, and any regulations or guidance promulgated
thereunder.
"Claim Notice" means written notification by an Indemnified Party
to an Indemnifying Party, pursuant to Section 7.3(a), of a Third Party Claim
as to which indemnity under Sections 4.18, 7.2 or 7.4 is sought by such
Indemnified Party, enclosing a copy of all papers served, if any, and
specifying the nature of and basis for such Third Party Claim and for such
Indemnified Party's claim against such Indemnifying Party under Sections 4.18,
7.2 or 7.4, as the case may be, together with the amount or, if not then
reasonably ascertainable, the estimated amount, determined in good faith, of
such Third Party Claim.
"Closing" has the meaning set forth in Section 1.4.
"Closing Date" has the meaning set forth in Section 1.4.
"Closing Date Balance Sheet" has the meaning set forth in Section
4.12(b).
"Closing Payment" has the meaning set forth in Section 1.2(a)
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Common Stock" has the meaning set forth in the forepart of this
Agreement.
"Company" has the meaning set forth in the forepart of this
Agreement.
"Company Property" means any real or personal property, plant,
building, facility, structure, underground storage tank, equipment or unit, or
other asset owned, leased or operated by the Company (including any surface
water thereon or adjacent thereto, and soil or groundwater thereunder).
"Contaminant" means any pollutant, contaminant, chemical, or
industrial, hazardous or toxic material or waste for which liability or
standards of conduct are imposed under Environmental Laws, and includes,
without limitation, asbestos or asbestos-containing materials, PCBs, and
petroleum, oil or petroleum or oil products or derivatives.
"Contract" has the meaning set forth in Section 2.15.
"Disclosure Schedule" shall mean the schedule (dated as of the
date of the Agreement) delivered to Purchaser by Sellers.
"Dispute Period" means the period ending 30 days following receipt
by an Indemnifying Party of either a Claim Notice or an Indemnity Notice.
"EBITDA" shall mean, with respect to any fiscal period, the net
earnings (or loss) before net interest expense, provision for income taxes,
depreciation and amortization expense for such fiscal period, as determined in
accordance with GAAP and as reflected on the financial statements and
certificates of the Company supplied to Purchaser pursuant to this Agreement.
"Employee Pension Benefit Plan" has the meaning set forth in
Section 3 of ERISA.
"Employee Welfare Benefit Plan" has the meaning set forth in
Section 3 of ERISA.
"Encumbrance" has the meaning set forth in Section 2.9.
"Environment" means any surface water, ground water, drinking
water supply, land surface or subsurface strata, ambient air and includes,
without limitation, any indoor location.
"Environmental Claim" shall mean any inquiry, request for
information, threat, demand, order (whether judicial or administrative),
report of observations, notice of violation, claim, action, cause of action,
investigation or notice (written or oral) by any Governmental Entity or other
Person alleging liability or potential liability under any Environmental Law,
including, without limitation, potential liability for investigatory costs,
Remedial Action, natural resources damages, property damages, personal
injuries or penalties, or any other costs or expenses, including reasonable
attorney's fees.
"Environmental Encumbrance" means an Encumbrance in favor of any
Governmental Entity for any (i) liabilities or other Indebtedness under any
Environmental Law or (ii) Losses incurred by such Governmental Entity in
response to a Release or threatened Release of a Contaminant into the
Environment.
"Environmental Laws" means all federal state, local, and foreign
laws, codes, regulations, requirements, directives, orders, common law, and
administrative or judicial interpretations thereof that may be enforced by any
Governmental Entity, other Person or court, relating to pollution, the
protection of human health, the protection of the Environment, or the
emission, discharge, disposal, transportation, Release or threatened Release
of Materials in or into the Environment, including without limitation the
Occupational Safety and Health Act.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"ERISA Affiliate" means (i) any corporation which at any time on
or before the Closing Date is or was a member of the same controlled group of
corporations (within the meaning of section 414(b) of the Code) as the
Company; (ii) any partnership, trade or business (whether or not incorporated)
which at any time on or before the Closing Date is or was under common control
(within meaning of section 414(c) of the Code) with the Company; and (iii) any
entity which at any time on or before the Closing Date is or was a member of
the same affiliated service group (within the meaning of section 414(m) of the
Code) as either the Company, any corporation described in clause (i) or any
partnership, trade or business described in clause (ii).
"ERISA Benefit Plan" means the Pension Plans and the Welfare
Plans.
"Escrow Agent" shall mean Bankers Trust Company.
"Escrow Agreement" has the meaning set forth in Section 4.15.
"Escrow Amount" has the meaning set forth in Section 1.2(b).
"Estimated Closing Date Balance Sheet" has the meaning set forth
in Section 4.12(b).
"Estoppel Certificates" shall mean the written certificate, issued
not more than 30 days prior to the Closing Date by a lessor, sublessor or
other party to a lease or occupancy agreement, stating (a) that such lease or
occupancy agreement is (i) in full force and effect and (ii) has not been
modified or amended except as described therein, (b) the date to which rent
has been paid, (c) that no default or event of default exists thereunder and
(d) that to the knowledge of the issuer thereof after due investigation, no
event has occurred that, with the giving of notice or lapse of time or both,
would be a default or event of default thereunder.
"Final Closing Date Balance Sheet" means the balance sheet of the
Company as of the Closing Date which has been either (x) agreed by Purchaser
and Seller pursuant to Section 1.3(c)(i) or (y) conclusively determined by the
Independent Auditor pursuant to Section 1.3(c)(ii).
"Financial Statements" has the meaning set forth in Section 2.6.
"GAAP" means generally accepted accounting principles set forth in
the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as have been approved by a significant segment
of the accounting profession, which are in effect on the date of this
Agreement, consistently applied throughout the specified period and in the
immediately prior comparable period.
"General Releases" has the meaning set forth in Section 4.17.
"Governmental Entity" has the meaning set forth in Section 2.4.
"Governmental Permit" has the meaning set forth in Section 2.28.
"Guarantee" has the meaning set forth in Section 2.30.
"Hold-Back Amount" has the meaning set forth in Section 1.2(c).
"HSR Act" has the meaning set forth in Section 2.4.
"Indebtedness" of any Person means all obligations of such Person
(i) for borrowed money, (ii) evidenced by notes, bonds, debentures or similar
instruments, (iii) for which interest charges are customarily paid, (iv) under
conditional sale or other title retention agreements relating to property or
assets purchased by such Person, (v) issued or assumed as the deferred
purchase price of property or services (other than trade accounts payable and
accrued obligations incurred in the ordinary course of business), (vi) under
capital leases, (vii) in respect of interest rate protection agreements,
foreign currency exchange agreements or other interest or exchange rate
hedging arrangements, (viii) as an account party in respect of letters of
credit and bankers' acceptances, (ix) with respect to Indebtedness of others
secured by (or for which the holder of such Indebtedness has an existing
right, contingent or otherwise, to be secured by) any Lien on property owned
or acquired by such Person and (x) in the nature of guarantees of Indebtedness
of others.
"Indemnified Party" means any Person claiming indemnification
under any provision of Article VII or Section 4.18.
"Indemnifying Party" means any Party against whom a claim for
indemnification is being asserted under any provision of Article VII or
Section 4.18.
"Indemnity Notice" shall mean written notification by an
Indemnified Party to an Indemnifying Party pursuant to Section 7.3 of a claim
for indemnity under Section 4.18 or Article VII by such Indemnified Party,
specifying the nature of and basis for such claim, together with the amount
or, if not then reasonably ascertainable, the estimated amount, determined in
good faith, of such claim.
"Independent Auditor" has the meaning set forth in Section 1.3(c).
"Intellectual Property" has the meaning set forth Section 2.14.
"Interim Balance Sheet" has the meaning set forth in Section 2.6.
"Knowledge of Seller" or "Known to Seller" means the actual
knowledge after due investigation of any Seller, or of any officer or director
of the Company.
"Laws" has the meaning set forth in Section 2.23.
"Leased Real Property" means all real property as to which the
Company is a lessee or sublessee.
"Loss" means any and all damages, fines, fees, penalties,
deficiencies, losses and expenses (including without limitation interest,
court costs, fees of attorneys, accountants and other experts or other
expenses of litigation or other Proceedings or of any claim, default or
assessment which may be reflected on the Books and Records or Financial
Statements of the Company or the books, records and financial statements of
any Indemnified Party).
"LTC" has the meaning set forth in the forepart of this Agreement.
"Material Adverse Effect" shall mean an event, violation or other
matter that, considered together with all other matters that would constitute
exceptions to the representations and warranties set forth in the Agreement
but for the presence of "Material Adverse Effect" or other materiality or
similar qualifications in such representations and warranties, would have a
material adverse effect on the Business, condition, assets, liabilities,
operations or financial condition of the Company.
"Month-End Balance Sheet" has the meaning set forth in Section
4.12.
"Multiemployer Plan" has the meaning set forth in Section 3 of
ERISA.
"Net Worth" means the Total Shareholders' Equity of the Company
as derived from the Closing Date Balance Sheet.
"Non-ERISA Commitments" means any employee benefit plan and any
collective bargaining agreement or any bonus, pension, profit sharing,
deferred compensation, incentive compensation, stock ownership, stock
purchase, stock option, phantom stock, stock appreciation right, retirement,
vacation, severance, disability, death benefit, hospitalization, medical,
worker's compensation, disability, supplementary unemployment benefits, or
other plan, arrangement or understanding (whether or not legally binding) or
any employment agreement providing compensation or benefits to any current or
former employee, officer, director or independent contractor of the Company or
any beneficiary thereof or entered into, maintained or contributed to, as the
case may be, by the Company or any ERISA Affiliate.
"Operative Agreement" has the meaning set forth in Section 2.4.
"Order" means any writ, judgment, decree, injunction or similar
order or pronouncement of any Governmental Entity (in each such case whether
preliminary or final).
"Other Authorizations" has the meaning set forth in Section
5.1(e).
"PCB" has the meaning set forth in 2.21(g).
"P&E Budget" means the budget of the Company for expenditures with
respect to plant and equipment, a copy of which is attached hereto as Exhibit
L.
"Pension Plan" means each Employee Pension Benefit Plan maintained
by the Company or an ERISA Affiliate or with respect to which the Company or
an ERISA Affiliate is or will be required to make any payment, or which
provides or will provide benefits to present or former employees of the
Company or an ERISA Affiliate due to such employment.
"Permitted Encumbrance" has the meaning set forth in Section 2.13.
"Person" means any person, corporation, limited liability company,
limited liability partnership, partnership, joint venture, or other entity.
"Plan" means the Non-ERISA Commitments and the ERISA Benefit
Plans.
"Proceeding" has the meaning set forth in Section 2.16.
"Purchaser" has the meaning set forth in the forepart of the
Agreement.
"Purchaser Disclosure Schedule" has the meaning set forth in
Section 3.3.
"RCRA" means the Resource Conservation and Recovery Act, 42
U.S.C. xx.xx. 6901 et seq., and any successor statute, and any regulations or
guidance promulgated thereunder.
"Release" means release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or migration into
the Environment or into or out of any Company Property or other property,
including the movement of Contaminants through or in the air, soil, surface
water, groundwater or Company Property or other property.
"Remedial Action" means actions required to (i) clean up, remove,
treat or in any other way address Contaminants in the Environment; (ii)
prevent the Release or threat of Release or minimize the further Release of
Contaminants; or (iii) perform pre-remedial studies and investigations and
post remedial care.
"Resolution Period" means the period ending 30 days following
receipt by an Indemnified Party of a Dispute Notice.
"Seller" or "Sellers" has the meaning set forth in the forepart
of the Agreement.
"Seller's Documents" has the meaning set forth in Section 2.25.
"Shares" has the meaning set forth in the forepart of the
Agreement.
"Shares Purchase Price" has the meaning set forth in Section
1.2(a).
"Stockholders Agreement" means the Stockholders Agreement dated
March 31, 1994 entered into by the Company and the Sellers.
"Subsidiary" means any Person in which the Company, directly or
indirectly through Subsidiaries or otherwise, beneficially owns more than 50%
of either the equity interests in, or the voting control of, such Person.
"Tax" or "Taxes" shall mean all taxes, charges, fees, levies,
penalties or other assessments imposed by any United States federal, state,
local or foreign taxing authority, including, but not limited to, income,
gross receipts, excise, property, ad valorem, sales, use (or similar taxes),
transfer, franchise, payroll, withholding, social security, business license
fees, or other taxes including any interest, penalties or additions thereto.
"Tax Returns" shall mean any return, report, document, statement
or form required to be filed (whether on a consolidated, combined, separate or
unitary basis) with respect to any Taxes (including any schedules required to
be attached thereto), including, without limitation, information returns,
claims for refund, amended returns and declarations of estimated Tax.
"Third Party Claim" has the meaning set forth in Section 7.3(a).
"Treasury Regulation" means the United States Income Tax
Regulations, including Temporary Regulations, promulgated under the Code, as
such regulations are amended from time to time.
"WARN Act" has the meaning set forth in Section 2.22(b).
"Welfare Plan" means each Employee Welfare Benefit Plan maintained
by the Company or an ERISA Affiliate, or with respect to which the Company or
an ERISA Affiliate is or will be required to make any payment, or which
provides or will provide benefits to present or former employees of the
Company or an ERISA Affiliate due to such employment.
"Year-End Balance Sheet" has the meaning set forth in Section 2.6.
