STOCK PURCHASE AGREEMENT
EXHIBIT 10.2
THIS STOCK PURCHASE AGREEMENT (this
“Agreement”),
dated as of February 12, 2010 by and among XXXXXX
X. XXXXXX and XXXX X.
XXXXXX, (each a
“Seller”,
and collectively, “Sellers”),
residing at 000 Xxxxxxx Xxx, Xxxxxx, Xxx Xxxx 00000 and DOCUMENT SECURITY SYSTEMS,
INC., a New York
corporation with an office at 00 Xxxx Xxxx Xxxxxx, Xxxxx 0000, Xxxxxxxxx, Xxx
Xxxx 00000 (“Buyer”). Xxxxxx
X. Xxxxxx is also joined as a party to this Agreement solely to accept the
duties herein of “Sellers’
Agent” as set forth in Section 10.15, and in his individual capacity to
the extent expressly provided herein.
WHEREAS, Sellers are the sole
shareholders of PREMIER
PACKAGING CORPORATION, a
New York corporation (“PPC”);
and
WHEREAS, PPC is in the business of
designing and manufacturing printed products (the “Business”);
and
WHEREAS, Sellers desire to
sell to Buyer all of the outstanding shares in PPC which consist of 265,000
shares of $1.00 par value common stock (the “PPC
Shares”), and Buyer desires to purchase the PPC Shares; and
WHEREAS, it is a material
inducement to Buyer’s execution and delivery of this Agreement and the
consummation of the transaction contemplated herein that each Seller shall have
made the covenants and agreements as set forth in this Agreement including,
without limitation, those contained in Articles IV and VI hereof.
NOW, THEREFORE, in
consideration of the covenants, agreements, representations and warranties of
the parties herein contained, and upon the terms and subject to the conditions
hereinafter set forth, the parties hereto hereby agree as follows:
ARTICLE
I
PURCHASE
AND SALE OF SHARES
1.1 Shares
to Be Sold. On and subject to the terms and conditions of this
Agreement, Buyer agrees to purchase from Sellers, and Sellers agree to sell for
the Purchase Price (as defined below), the PPC Shares.
ARTICLE
II
PURCHASE
PRICE
2.1 Purchase Price. On
and subject to the terms and conditions of this Agreement, at Closing, Buyer
agrees to pay to Sellers the aggregate Purchase Price as follows:
(a) Buyer
shall pay to Sellers a cash payment in an amount equal to $2,000,000, subject to
adjustment as follows: (1) less the amount, if any, by which the Target Working
Capital exceeds the Estimated Net Working Capital by more than $107,717 or (2)
plus the amount, if any, by which the Estimated Net Working Capital exceeds the
Target Working Capital by more than $107,717, by immediately available funds
through a wire transfer to an account or accounts specified by Sellers;
and
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(b) Buyer
shall deliver to Sellers (i) $1,500,000 by issuance of a stock certificate for
the number of shares of Buyer common stock equal to $1,500,000, divided by the
average closing price per share of Buyer common stock on the NYSE AMEX over the
thirty (30) trading days for Buyer common stock ending on the second to last
such trading day prior to Closing, and (ii) a stock certificate for 250,000
shares of Buyer common stock (collectively, the “Buyer
Shares”).
2.2 Adjustments
to the Purchase Price. For purposes hereof the following terms
shall have the meanings ascribed below:
“Estimated Net
Working Capital” means the Net Working Capital, as set forth on the
Estimated Working Capital Schedule.
“Estimated Working
Capital Schedule” means the draft schedule of the Net Working Capital as
of the Closing Date, prepared and delivered by Sellers at Closing.
“Final Working
Capital Schedule” means the schedule of the Net Working Capital as of the
Closing Date, which shall be in the same format as the Estimated Working Capital
Schedule and will include a calculation of the Net Working Capital, as finally
determined pursuant to Section 2.2(b), and the Working Capital Deficit or
Working Capital Surplus, if any.
“Net Working
Capital” means the current assets less the current liabilities of PPC as
of the close of business on the Closing Date, prepared in accordance with PPC’s
past custom and practice.
“Target Working
Capital” means an amount equal to $1,077,168.
“Working Capital
Deficit” means the amount, if any, by which the Net Working Capital
reflected on the Final Working Capital Schedule is less than the Estimated Net
Working Capital, taking into consideration any adjustment already made at
Closing.
“Working Capital
Surplus” means the amount, if any, by which the Net Working Capital
reflected on the Final Working Capital Schedule is more than the Estimated Net
Working Capital, taking into consideration any adjustment already made at
Closing.
(a) Buyer
shall prepare and within thirty (30) days following Closing deliver to the
Sellers’ Agent the Final Working Capital Schedule. Buyer shall provide Sellers’
Agent and his accounting and tax representatives, at Sellers’ sole cost and
expense, with access to the books and records of PPC for purposes of validating
the Final Working Capital Schedule. In the absence of any objections
from the Sellers’ Agent within thirty (30) days following delivery of such
calculation, Buyer’s determination of the Final Working Capital Schedule shall
be conclusive, final and binding on the parties for purposes of determining the
Net Working Capital, Working Capital Surplus and Working Capital Deficit but
shall not affect any of Sellers’ or Buyer’s rights under this Agreement,
including without limitation under Article VIII. If Sellers’
Agent objects to the Final Working Capital Schedule within thirty (30) days
following receipt of such calculation from Buyer, Sellers’ Agent shall deliver a
written dispute notice to Buyer which shall set forth the specific line items in
dispute and provide the basis for such dispute in reasonable
detail. If, after ten (10) days from the date notice of a dispute is
given hereunder, Sellers’ Agent and Buyer cannot agree on the resolution of all
of the disputed items, the Final Working Capital Schedule shall be adjusted to
the extent of any items that are not in dispute, and the items still in dispute
shall be referred to a public accounting firm acceptable to both Sellers’ Agent
and Buyer (the “Unrelated
Accounting Firm”) to resolve the dispute,
whose decision as to the issues in dispute shall be conclusive, final and
binding upon Sellers and Buyer for purposes of this Agreement. The
Unrelated Accounting Firm shall address only those issues in dispute in
accordance with the terms of this Section 2.2(a) and may not assign a value
to any item greater than the greatest value for such item claimed by either
party or less than the smallest value for such item claimed by either
party. Upon finalizing the Final Working Capital Schedule, either by
agreement or by the Unrelated Accounting Firm, to the extent there is a Working
Capital Surplus, Buyer will pay Sellers an amount equal to such Working Capital
Surplus within fifteen (15) days of delivery of the Final Working Capital
Schedule. If such Working Capital Surplus is not paid within such
fifteen (15) day period, then interest shall accrue and be due and payable from
Buyer on the Working Capital Surplus from and including Closing through and
including the date of payment at Prime Rate plus eight percent (8%) per
annum.
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(b) To
the extent there is a Working Capital Deficit, within fifteen (15) days
following the delivery of the Final Working Capital Schedule, Sellers will pay
to Buyer in cash (by wire transfer of immediately available funds to an account
designated by Buyer) the amount of the Working Capital Deficit. If such amounts
are not paid within such fifteen (15) day period, then interest shall accrue and
be due and payable from Sellers on such amounts from and including Closing
through and including the date of payment at Prime Rate plus eight percent (8%)
per annum.
(c) Any
payments, distributions, or bonuses made after December 31, 2009 made to Sellers
or officers outside the Ordinary Course of Business (as defined below), will at
the time of closing be subject to a deduction of such amount from the Purchase
Price. For purposes of this Agreement, “Ordinary
Course of Business” means, when used with respect to any Person, the
ordinary course of business of such Person, consistent with past custom and
practice of such Person (including with respect to quantity and
frequency).
ARTICLE
III
CLOSING
3.1 Closing.
(a) Time and Place. The
closing of the transactions contemplated by this Agreement (“Closing”)
shall take place at the offices of Sellers, at 10:00 a.m., local time, on
February ____, 2010 or on such other date and place as mutually agreed upon by
Sellers and Buyer. The date on which Closing takes place is herein
called the “Closing
Date”.
(b) Share
Certificates. Subject to the terms of this Agreement, Sellers
will deliver to Buyer at Closing, the share certificates evidencing the PPC
Shares, duly endorsed in blank or accompanied by stock power executed in blank,
and otherwise in proper form for transfer, against payment of the Purchase
Price.
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3.2 Sellers’
Deliveries. At Closing, Sellers shall deliver or cause to be
delivered to Buyer:
(a) State
and county UCC, Judgment and Lien Searches for PPC;
(b) Certificate
of Good Standing;
(c) Copies
of Certificate of Incorporation of PPC, duly certified by the New York State
Department of State and its By-Laws, as amended to the Closing Date, and a
Franchise Tax Search from New York State and each state in which PPC conducts
business, indicating that no taxes or tax returns are past due; and
(d) All
other documents required by the terms of this Agreement to be delivered by
Sellers to Buyer at Closing.
3.3 Buyer’s
Deliveries. At Closing, Buyer will deliver to
Sellers:
(a) Two
Million Dollars ($2,000,000) by wire transfer of immediately available funds to
such account(s) as Sellers shall specify;
(b) Stock
certificates evidencing the Buyer Shares; and
(c) All
other documents required by the terms of this Agreement to be delivered by Buyer
to Sellers at Closing.
ARTICLE
IV
REPRESENTATIONS
AND WARRANTIES OF SELLERS
Sellers jointly and severally hereby
represent and warrant to Buyer, as of the date of this Agreement and as of the
Closing Date, except as set forth in the schedules referenced herein
(collectively, the “Disclosure
Schedules”). Disclosure made in a specific section or
subsection of the Disclosure Schedules shall be deemed to have been disclosed
with respect to any other section or subsection herein.
4.1 Title to
Shares. Sellers are the owners, beneficially and of record, of
all the PPC Shares, free of any liens, encumbrances, security agreements,
equities, options, claims, charges and restrictions. Sellers have the
right and authority to enter into this Agreement on the terms and conditions set
forth in it, and have full power to transfer the legal and beneficial ownership
of the PPC Shares to Buyer without giving notice to, making any filing with, or
obtaining the consent or approval of any other person or Governmental Entity (as
defined below).
4.2 Organization. PPC
is a corporation duly organized, validly existing and in good standing under the
laws of the State of New York and has all requisite corporate power and
authority to own, lease and operate its properties and to carry on its business
substantially as it is now being conducted. PPC is duly qualified as
a foreign corporation and is in good standing in each jurisdiction that requires
such qualification.
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4.3 Authority. Neither
the execution, delivery, nor performance of this Agreement by Sellers will, with
or without the giving of notice or the passage of time, or both, conflict with,
result in a default, right to accelerate, or loss of rights under, or result in
the creation of any lien, charge or encumbrance pursuant to, any provision of
PPC’s Certificate of Incorporation, By-Laws, or any franchise, mortgage, deed of
trust, lease, license, agreement, understanding, law, regulation, or any order,
judgment or decree to which Sellers or PPC is a party or by which Sellers or PPC
or its assets may be bound or affected, except, in the case of the foregoing,
for violations, breaches or otherwise which could not reasonably be expected to
have, individually or in the aggregate, any adverse effect on the validity or
enforceability of this Agreement or a Material Adverse Effect. This
Agreement has been duly executed and delivered by Sellers, and constitutes the
legal, valid and binding obligation of Sellers, enforceable against Sellers in
accordance with its terms. For purposes of this Agreement, the term
“Material
Adverse Effect” or “Material Adverse
Change” means, with respect to any entity any occurrence, incident,
action, failure to act, event, change or effect that is or could reasonably be
expected to be, materially adverse to the condition (financial or otherwise),
properties, assets, liabilities, business, results of operations, or prospects
of such entity and its subsidiaries, taken as a whole, or to the enforcement of
this Agreement and any agreement contemplated herein; provided that none of the
following shall be deemed to constitute, and none of the following shall be
taken into account in determining whether there has been, a Material Adverse
Effect or Material Adverse Change: (a) any adverse change, event, development,
or effect (whether short-term or long-term) arising from or relating to (i)
general business or economic conditions, including such conditions related to
the business of PPC, (ii) national or international political or social
conditions, including the engagement by the United States in hostilities,
whether or not pursuant to the declaration of a national emergency or war, or
the occurrence of any military or terrorist attack upon the United States, or
any of its territories, possessions, or diplomatic or consular offices or upon
any military installation, equipment or personnel of the United States, (iii)
financial, banking, or securities markets (including any disruption thereof and
any decline in the price of any security or any market index), (iv) changes in
United States generally accepted accounting principles, (v) changes in laws,
rules, regulations, orders, or other binding directives issued by any
Governmental Entity or (vi) the taking of any action contemplated by this
Agreement and the other agreements contemplated hereby, (b) any failure to meet
a forecast (whether internal or published) of revenue, earnings, cash flow, or
other data for any period or any change in such a forecast, (c) any existing
event, occurrence, or circumstance with respect to which Buyer has knowledge as
of the date hereof and (d) any adverse change in or effect on the business of
PPC that could be cured by Buyer after Closing.
4.4 Capital Stock. PPC
is authorized to issue 300,000 shares of common stock, $1.00 par value per
share, of which only the PPC Shares are outstanding and issued. All
of the PPC Shares are validly issued, fully paid and non-assessable. There are
no outstanding subscriptions, options, warrants, rights, convertible securities
or other agreements or commitments of any character relating to the issued or
unissued capital stock or other securities of PPC, or otherwise obligating PPC
to issue any securities. To Sellers’ knowledge, all of the issued and
outstanding shares of PPC were issued in compliance with all requirements of all
applicable federal and state securities laws, rules and
regulations.
4.5 Approval. To
Sellers’ knowledge, except as set forth on Schedule 4.5 of the
Disclosure Schedules, no material authorization, consent or approval of, or
filing with, any public body, regulatory or governmental authority (a “Governmental
Entity”) or any third party is necessary (i) for execution or delivery of
this Agreement by Sellers or the consummation by Sellers of the transactions
contemplated by this Agreement, or (ii) to prevent the termination of any
material right, privilege, license or agreement of PPC, or to prevent any
material loss to the business, operations, prospects or financial condition of
PPC, by reason of the consummation of the transactions contemplated by this
Agreement.
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4.6 Absence of Changes or
Events. Except as set forth in Schedule 4.6 of the
Disclosure Schedules, since December 31, 2009, PPC has conducted its business in
the Ordinary Course of Business. Without limiting the generality of
the foregoing, since December 31, 2009, PPC has not:
(a) incurred
any obligation or liability, absolute, accrued, contingent or otherwise, whether
due or to become due in excess of $50,000, outside the Ordinary Course of
Business;
(b) discharged
or satisfied any lien, charge or encumbrance other than those then required to
be discharged or satisfied, or paid any obligation or liability, absolute,
accrued, contingent or otherwise, whether due or to become due, other than in
the Ordinary Course of Business;
(c) declared
or made any payment of dividends or other distribution to any shareholder or
upon or in respect of the PPC Shares other than in the Ordinary Course of
Business and any payments that were accrued on the Financial Statements prior to
December 31, 2009;
(d) mortgaged,
pledged or subjected to lien, charge, security interest or any other encumbrance
or restriction any of its property, business or assets, tangible or intangible
other than in the Ordinary Course of Business;
(e) sold,
transferred, leased to others or otherwise disposed of any of its assets, except
for inventory sold in the Ordinary Course of Business, or canceled or
compromised any material debt or claim of a substantial value, or waived or
released any right of a substantial value;
(f) received
any notice of termination of any material contract, lease or other agreement or
suffered any substantial damage, destruction or loss (whether of not covered by
insurance) which, in any case or in the aggregate, has had a Material Adverse
Effect;
(g) except
in the Ordinary Course of Business, made any material change in the rate of
compensation, commission, bonus or other direct or indirect remuneration
payable, or paid or agreed or orally promised to pay, conditionally or
otherwise, any bonus, extra compensation, pension or severance or vacation pay,
to any employee, salesman, distributor or agent;
(h) issued
or sold any shares or other securities, or issued, granted or sold any options,
rights or warrants with respect thereto, or acquired any capital stock or other
securities of any corporation or any interest in any business enterprise, or
otherwise made any loan or advance to or investment in any person, firm or
corporation;
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(i) made
or committed to any capital expenditures or capital additions or betterments in
excess of an aggregate of $5,000;
(j) engaged
in any transaction not in the Ordinary Course of Business with any stockholder,
director, officer, employee, salesman, distributor or agent of PPC or made any
loans or advances to any director, officer, employee, salesman, distributor or
agent thereof;
(k) changed
its banking or safe deposit arrangements;
(l) suffered
any material adverse change in its business, condition (financial or otherwise),
assets, results of operation or prospects; or
(m)
entered into any agreement or made any commitment to take any of the
foregoing.
4.7 Taxes. PPC has
filed all tax returns for all Governmental Entities required to be filed by it
and has paid, or made provision for payment of, all taxes required to be paid by
it to the extent such taxes have become due. All liabilities for
unpaid federal, state and local taxes accrued on a tax basis in accordance with
PPC’s past practice are reflected on the books of PPC and the Financial
Statements. Except as set forth on Schedule 4.7 of the
Disclosure Schedules, (i) no deficiency for any taxes has been proposed,
asserted or assessed, in writing, with respect to PPC, and to the Sellers’
knowledge there is no basis for any such deficiencies and no requests for
waivers of the time to assess any such taxes are pending, and (ii) no
examination of the tax returns of PPC is currently in progress. For the purposes
of this Agreement, the term “tax” shall include all federal, state, local and
foreign income, property, sales, use, franchise, value added, employees’ income
withholding, social security, excise and all other taxes of any nature
whatsoever. PPC is not a “consenting corporation” within the meaning of Section
341 (f)(1) of the Internal Revenue Code of 1986, as amended. PPC has
withheld or collected and paid to the proper governmental body all
taxes required to be withheld, collected or paid by it. In the last
three (3) years, no claim has been made in writing by any Governmental Entity in
a jurisdiction where PPC does not file tax returns that it is or could be
subject to taxation by that jurisdiction, nor to Sellers’ knowledge is there any
reasonable basis for such a claim.
4.8 Title to
Properties. PPC has valid leases or good and marketable title
to all material properties and assets it owns or uses in the Business or
purports to own, free and clear of any Encumbrances except, with respect to all
such assets, the following Encumbrances (collectively, “Permitted
Encumbrances”): (a) Encumbrances securing debt reflected
as liabilities in the Financial Statements, which Encumbrances are listed in
Schedule 4.8 of
the Disclosure Schedules; (b) mechanics’, carriers’, workers’, repairmen’s,
statutory or common law liens being contested in good faith and by appropriate
proceedings, whether or not listed in Schedule 4.8 of the
Disclosure Schedules; (c) obligations for current taxes not yet due and payable
which have been fully reserved against, or which, if due, are being contested in
good faith and by appropriate proceedings, which contested liens are listed in
Schedule 4.8 of
the Disclosure Schedules; (d) such imperfections of title, easements and
Encumbrances, if any, against the Leased Real Property as are set forth in the
Leases or which are not, individually or in the aggregate, substantial in
character, amount or extent, and do not, individually or in the aggregate,
materially interfere with the present use of the Leased Real Property or
otherwise have an Material Adverse Effect; and (e) those additional Encumbrances
listed in Schedule
4.8 of the Disclosure Schedules.
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4.9 Leased Real
Property. PPC does not own any real property and, instead,
leases real property as a tenant. Schedule 4.9 of the
Disclosure Schedules is a true, correct and complete list of all real property
leased, operated or used by PPC (collectively, the “Leased Real
Property”). PPC has delivered to Buyer a true and complete
copy of each of the leases for the Leased Real Property.
4.10 Schedules. Attached
as Schedule
4.10 of the Disclosure Schedules are separate schedules, each containing
an accurate and complete list of each of the following:
(a) Personal
Property. Schedule 4.10(a) of
the Disclosure Schedule lists all machinery, tools, equipment, motor vehicles,
and other tangible personal property (other than inventory and supplies), owned,
leased or used by PPC except for (i) items having a value of less than $5,000.00
or (ii) items which (in the case of any item leased) payments to the owner
thereof do not exceed $10,000.00 per annum. Except as otherwise set
forth on Schedule
4.10(a) of the Disclosure Schedules, all tangible personal property
owned, leased or used by PPC is in a good state of repair and operating
condition (ordinary wear and tear excepted). The assets owned and
leased by PPC constitute all the material assets used in connection with the
business of PPC.
(b) Trademarks, Names,
Etc. Schedule 4.10(b) of
the Disclosure Schedule lists all material trademarks, trademark registrations,
and applications therefore, service marks, service names, trade names,
copyrights and copyright registrations, and applications therefore, patents, and
applications therefore wholly or partially owned or held by PPC or used in the
operation of the Business and all names under which PPC does
business.
(c) Insurance. Schedule 4.10(c) of
the Disclosure Schedule lists all fire, theft, casualty, liability and other
insurance policies insuring PPC.
(d) Sales Agreements,
Etc. Schedule 4.10(d) of
the Disclosure Schedule lists all material sales representative agreements or
franchises or agreements which are not cancelable by six months’ (or less)
notice providing for the services of an independent contractor to which PPC is a
party or by which it is bound.
(e) Trademark Contracts,
Etc. Schedule 4.10(e) of
the Disclosure Schedule lists all material contracts, agreements, commitments or
licenses relating to patents, trademarks, trade names, copyrights, inventions,
processes, know-how, formulae or trade secrets to which PPC is a party or by
which it is bound.
(f) Financing
Documents. Schedule 4.10(f) of
the Disclosure Schedule lists all material loan agreements, indentures,
mortgages, pledges, security agreements, guaranties, or
leases to which PPC is a party or by which it is bound.
(g) Securities
Agreements. Schedule 4.10(g) of
the Disclosure Schedule lists all contracts, agreements and commitments, in
respect of the issuance, sale or transfer of the capital stock, bonds or other
securities of PPC or by which PPC would acquire the securities of any other
corporations.
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(h) Material
Agreements. Schedule 4.10(h) of
the Disclosure Schedule lists the following contracts and agreements to which
PPC is a party which are or contain provisions relating to any of the following
(hereinafter referred to individually as a “Material
Agreement” and collectively as the “Material
Agreements”):
(1) any
contracts which are leases of personal property to or from any Person involving
the expenditure of more than $50,000 per year or which are not cancelable
without material penalty, cost or expense upon advance notice of ninety
(90) days or less;
(2) any
contract (or group of related contracts) for the purchase or sale of products,
or other personal property, or for the furnishing or receipt of services, the
performance of which will extend over a period of more than one year, reasonably
expected to result in a loss to PPC, or involve consideration in excess of
$50,000 per annum;
(3) any
contract (or group of related contracts) under which it has created, incurred,
assumed, or guaranteed any indebtedness for borrowed money, or any capitalized
lease obligation, in excess of $50,000 or under which it has imposed
Encumbrances on any of its assets, tangible or intangible;
(4) collective
bargaining agreements or other contracts to or with any labor unions or other
employee representatives, groups of employees, works councils or the
like;
(5) employment
contracts or other contracts to or with individual current or prospective
employees, consultants or agents (other than contracts with PPC’s attorneys,
accountants or advertising agencies that are cancelable without material
penalty, cost or expense upon advance notice of ninety (90) days or
less);
(6) any contract concerning a bonus, profit sharing,
incentive, deferred compensation, severance, or change in control (exclusive of
generally applicable severance policy) or other material plan or arrangement for
the benefit of any of PPC’s managers, directors, officers or
employees; and
(7) contracts
to borrow funds, except for trade payables incurred in the Ordinary Course of
Business.
(8) PPC
has delivered to Buyer a correct and complete copy of each contract or other
agreement (as amended to date) listed in Schedule 4.10 of the
Disclosure Schedule.
(i) Directors and Officers; Bank
Accounts; Powers of Attorney. Schedule 4.10(i) of
the Disclosure Schedule lists the names of all of the directors and officers of
PPC and the name of each bank in which PPC has an account or safe deposit box
and the names of all persons authorized to draw thereon or have access
thereto.
(j) Salaries. Schedule 4.10(j) of
the Disclosure Schedule lists the names and current annual salary rates of all
current employees of PPC, showing separately for each such person the amounts
paid or payable as salary, bonus payments and any indirect compensation for
PPC’s most recent full fiscal year.
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4.11 Litigation. Except
as set forth on Schedule 4.11, there
is no action, suit, claim, arbitration, governmental investigation or other
legal or administrative proceeding nor any order, decree or judgment in
progress, pending or in effect, or to the best of Sellers’ knowledge, threatened
against or affecting the Sellers or PPC, its officers, directors, employees, its
properties, assets or business.
4.12 Permits, Licenses,
Etc. PPC has all material permits, licenses and other
governmental authorizations (“Permits”)
which are necessary to the operation of its business. To the Sellers’
knowledge, the business of PPC has not and is not being conducted in material
violation of any applicable law, ordinance, rule, regulation, decree or order of
any court or Government Entity.
4.13 Compliance with
Laws. To Sellers’ knowledge, the Business is being, and since
January 1, 2006 has been, conducted in all material respects in compliance with
all applicable laws, except for such violations that could not reasonably be
expected to have, individually or in the aggregate, a Material Adverse
Effect. No investigation or review by any Governmental Entity with
respect to PPC is pending or, to Sellers’ knowledge is threatened nor has any
Governmental Entity indicated an intention to conduct the same.
4.14 Environmental
Matters.
(a) All
of the Permits required under Environmental Laws for the operation of the
Business have been obtained and maintained in effect in good
standing. No material change in the facts or circumstances reported
or assumed in the applications for such Permits exists. Sellers and PPC are in
material compliance, and at all times has materially complied, with all
Environmental Laws applicable to the operations associated with the Business,
and the Leased Real Property and with all of the Permits. Sellers and PPC are
not aware of any material violation with respect to any of the Permits, which
violations are outstanding or uncured as of the date hereof, and no proceeding
is pending, or to Sellers’ and PPC’s knowledge, threatened, to revoke or limit
any of the Permits.
(b) To
the Sellers’ Knowledge, Sellers and PPC have not performed or suffered any act
which could give rise to, or has otherwise incurred, liability to any Person,
including itself, under the Comprehensive Environmental Response, Compensation
and Liability Act, 42 U.S.C. § 9601 et seq. (“CERCLA”)
or any of the Environmental Laws, nor does Sellers and PPC have notice of any
such liability or any claim therefor or submitted notice pursuant to Section 103
of CERCLA to any Governmental Authority nor provided information in response to
a request for information pursuant to Section 104(e) of CERCLA or any analogous
state or local information gathering authority.
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(c) To
the Sellers’ Knowledge, no Hazardous Substances has been Released (as that term
is defined under CERCLA), on, at, or beneath the Leased Real Property or any
surface waters or ground-waters thereon or thereunder in excess of the levels
prescribed or permitted under Environmental Laws.
(d) To
the Sellers’ Knowledge, there have been and are no aboveground or underground
storage tanks, polychlorinated biphenyls or asbestos-containing materials
located at or within the Leased Real Property.
(e) None
of the Leased Real Property is identified or, to the Sellers’
Knowledge, proposed for listing on the National Priorities List under
40 C.F.R. § 000 Xxxxxxxx X,
the Comprehensive Environmental Response Compensation and Liability Inventory
System (“CERCLIS”) or any analogous list of
any Government Authority and Sellers are not aware of any conditions on such
properties which, if known to a Governmental Authority, would qualify such
properties for inclusion on any such list.
(f) None
of the Leased Real Property, or any current or previous business operations
conducted by Sellers and PPC, is the subject of any pending or, to the Sellers’
Knowledge, threatened investigation or judicial or administrative proceeding,
notice, decree or settlement respecting any actual, potential or alleged
violation of any Environmental Law, or any Releases (as that term is defined
under CERCLA) of Hazardous Substances into any surface water, ground water,
drinking water supply, soil, land surface or subsurface strata, or ambient air
(the “Environment”).
Sellers and PPC have not received from any Governmental Authority, or other
Person, any request for information indicating that Sellers and PPC are the
subject of an investigation under Environmental Laws, notice of any potential or
alleged violations of any Environmental Laws or of any proposed order under any
Environmental Laws or any order or proposed order requiring any of such parties
to prepare studies, action plans, or clean-up strategies concerning the Leased
Real Property. Sellers and PPC have not received notice of any
inquiry or investigation by any Person concerning matters regulated by
Environmental Laws.
(g) Sellers
and PPC have not reported any violation of any applicable Environmental Laws to
any Governmental Authority. To the Sellers’ Knowledge, no Releases
have occurred on any of the Real Property which would require reporting to any
Governmental Authority under any Environmental Laws.
(h) Sellers
and PPC have not sent, transported, or directly arranged for the transport of
any Hazardous Substances, whether generated by Sellers and PPC or another
Person, to any site listed on the National Priorities List or proposed for
listing on the National Priorities List or to a site included on the CERCLIS
list or any analogous state list of sites.
“Hazardous
Substances” means and includes any flammable explosives, radioactive
materials or hazardous, toxic or dangerous wastes, substances or related
materials or any other chemicals, materials or substances, exposure to which is
prohibited, limited or regulated by any federal, state, county, regional or
local authority including, but not limited to, asbestos, PCBs, petroleum
products and by-products (including, but not limited to, crude oil or any
fraction thereof, natural gas, natural gas liquids, liquefied natural gas, or
synthetic gas usable for fuel, or any mixture thereof), substances defined or
listed as “hazardous substances”, “hazardous materials”, ‘‘hazardous wastes”,
“toxic substances”, “hazardous air pollutants” or ‘‘waste’’ or similarly
identified in, pursuant to, or for purposes of, any Environmental Laws
applicable to the operations of the Business and the Leased Real
Property.
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“Environmental
Laws” means all federal, state and local environmental, health or safety
laws, ordinances, regulations, rules of common law or published policies
regulating Hazardous Substances, including, without limitation, those governing
the generation, use, refinement, handling, treatment, removal, storage,
production, manufacture, transportation or disposal of Hazardous Substances, to
the extent such laws, ordinances, regulations, rules and policies may be in
effect from time to time and be applicable to the operations of the Business and
the Leased Real Property, and with all associated permits, including, without
limitation; the Comprehensive Environmental Response, Compensation, and
Liability Act, as now in effect (42 U.S.C. Section 9601, et seq.); the
Hazardous Materials Transportation Act, as now in effect amended (49 U.S.C.
Section 1801, et seq.); the Resource Conservation and Recovery Act, as now in
effect (42 U.S.C. Section 6901, et seq.); (15 U.S.C. Section 2601 et seq.); the
Clean Water Act, as now in effect (33 U.S.C. Section 1251 et seq.); the
Clean Air Act, as now or hereafter amended (42 U.S.C. Section 7901 et
seq.).
4.15 Labor
Controversies. There are not any controversies or, to the
knowledge of Sellers, any basis or grounds therefore between PPC and any
employees which might reasonably be expected to materially adversely affect the
conduct of the business of PPC, and there are not any unresolved labor union
grievances or unfair labor practice charges or labor arbitration proceedings
pending or threatened related to the PPC or any known basis or grounds
therefore. To the knowledge of the Sellers, there are not any organizational
efforts presently being made or threatened involving any of the PPC’s
employees. Neither PPC nor Sellers have received notice of any claim,
nor, to the knowledge of the Sellers, is there any basis or grounds for any
claim, that PPC has not complied with any laws relating to the employment of
labor, including, without limitation, any provisions thereof relating to wages,
hours, collective bargaining, the payment of social security and similar taxes,
equal employment opportunity, the proper classification of workers as employees
or independent contractors, employment discrimination, sexual harassment, and
employment safety, or that it is liable for any arrears of wages or any taxes or
penalties for failure to comply with any of the foregoing.
4.16 Employee Benefit Plans.
(a) The
following terms shall have the definitions set forth for purposes of this
Section 4.16:
“Benefit
Arrangement” means any plan, agreement, arrangement or practice providing
for insurance coverage (including any self-insured plan, agreement, arrangement
or practice), supplemental unemployment benefits, deferred compensation,
bonuses, stock options, stock purchases, “parachute payments” (within the
meaning of section 280G of the Code), or other form of incentive or
post-employment compensation or benefits, which (1) is not a Pension Plan or
Welfare Plan, and (2) covers or may provide benefits to any employee or prior
employee of PPC or any ERISA Affiliate.
“Code” means the Internal Revenue
Code of 1986, as amended.
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“ERISA
Affiliate” means
any entity with which PPC is a member of any group of entities within the
meaning of sections 414(b), (c), (m) or (o) of the Code.
“Defined Benefit
Pension Plan”
means a Pension Plan that is not an “individual account plan” as defined in
section 3(34) of ERISA, which covers or may provide benefits to any employee or
prior employee of PPC or any ERISA Affiliate.
“ERISA” means the Employee
Retirement Income Security Act of 1974, as amended.
“Pension
Plan” means any
“employee pension benefit plan,” as such term is defined in Section 3(2) of
ERISA, including a profit sharing plan, 401(k) plan, stock bonus plan, employee
stock ownership plan, and any other “individual account plan” as defined in
section 3(34) of ERISA, which covers or may provide benefits to any employee or
prior employee of PPC or any ERISA Affiliate.
“Welfare
Plan” means any
“employee welfare benefit plan,” as such term is defined in section 3(1) of
ERISA, which covers or may provide benefits to any employee or prior employee of
PPC or any ERISA Affiliate.
(b) To
the Sellers’ Knowledge, neither PPC nor any ERISA Affiliate has ever contributed
to or been obligated to contribute to, and none of its employees have ever been
covered under: a “voluntary employee benefits association” (within the meaning
of section 501(c)(9) of the Code), providing for Welfare Plan benefits; a
“multiemployer plan” as defined in section 3(37)(A) of ERISA; a Defined Benefit
Pension Plan; or any other Pension Plan subject to the minimum funding
requirements of section 412 of the Code. To the Sellers’ Knowledge,
except for the Pension Plan(s), Welfare Plan(s) and Benefit Arrangement(s)
identified in Section 4.16, neither PPC nor any ERISA Affiliate has ever
maintained, administered or contributed to any Pension Plan, Welfare Plan or
Benefit Arrangement within the past six (6) years.
(c) To
the Sellers’ Knowledge, each Pension Plan, Welfare Plan and Benefit Arrangement
(as defined in this Section 4.16) has been administered in full compliance with
all applicable provisions of ERISA, the Code, other applicable laws, orders,
rules and regulations, the terms and provisions of such Pension Plan, Welfare
Plan or Benefit Arrangement, and all amendments thereto, except to the extent
that failure to do so would not be expected to have a Material Adverse
Effect.
(d) To
the Sellers’ Knowledge, except with respect to group health plan continuation
coverage required under section 601 of ERISA and section 4980B of the Code, none
of the terms of any Welfare Plan or Benefit Arrangement described in Section
4.16 require such Welfare Plan or Benefit Arrangement, or PPC or any ERISA
Affiliate, to provide or pay the cost of any benefits to any individuals after
retirement or other termination of his employment with PPC or such ERISA
Affiliate.
(e) To
the Sellers’ Knowledge, each Welfare Plan described in Section 4.16 which is (or
is in part) a “group health plan” within the meaning of section 607 of ERISA has
fully complied in each and every instance with the provisions of section 601 of
ERISA and section 4980B of the Code, relating to continuation coverage
requirements, except to the extent that failure to do so would not be expected
to have a Material Adverse Effect. Each such Welfare Plan which is
intended to meet the requirements for tax favored treatment under subchapter B
of chapter 1 of the Code meets such requirements and there is no disqualified
benefit (as defined in Section 4976(b) of the Code) which would give rise to any
material tax liability under section 4976 of the Code.
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(f) To
the Sellers’ Knowledge, no provision of any Pension Plan, Welfare Plan or
Benefit Arrangement identified in Section 4.16 or any amendment thereto, would
result in any limitation on the sponsoring employer’s right to terminate such
Pension Plan, Welfare Plan or Benefit Arrangement.
(g) PPC
has received a favorable Internal Revenue Service determination letter, or an
opinion letter in which it is entitled to rely, with respect to the qualified
status of each Pension Plan identified in Section 4.16 under section 401(a) of
the Code, as amended to comply with all federal requirements now in effect, and,
to the Sellers’ Knowledge, there has been no occurrence, whether by action or
inaction, which could adversely affect the qualified status of any such Pension
Plan.
(h) No
Pension Plan, Welfare Plan or Benefit Arrangement described in Section 4.16, nor
any trust created thereunder, now holds or within the past six (6) years has
held as assets any stock or other securities issued by PPC or any ERISA
Affiliate. To the Sellers’ Knowledge, no Pension Plan, Welfare Plan
or Benefit Arrangement described in Section 4.16, nor any trust created
thereunder, nor any trustee, administrator or fiduciary thereof, has engaged in
a material fiduciary breach within the meaning of section 404 of ERISA, a
material non-exempt “prohibited transaction” within the meaning of section 406
of ERISA or section 4975 of the Code, or any other transaction that could give
rise to any liability or penalty under section 502 of ERISA. To the
Sellers’ Knowledge, no event has occurred and no condition exists with respect
to any Pension Plan, Welfare Plan or Benefit Arrangement identified in Section
4.16 that could give rise to any material tax or liability under section 4972,
4977, 4979, 4980B or 6652 of the Code.
(i) All
insurance premiums, contributions and payments accrued under each Pension Plan,
Welfare Plan and Benefit Arrangement identified in Section 4.16, determined in
accordance with prior funding and accrual practices, as adjusted to include
proportional insurance premiums, contribution and payment accruals for the
period from the date of this agreement to the Closing Date, will be discharged
and paid on or prior to the Closing Date, except to the extent that any such
premiums, contributions or payment accrual is identified in Section
4.16.
(j) To
the Sellers’ Knowledge, all forms, reports and documents which have been
required to be filed with the Internal Revenue Service, the United States
Department of Labor, and/or distributed to participants, with respect to each
Pension Plan, Welfare Plan and Benefit Arrangement identified in Section 4.16,
including complete annual reports (Form 5500), summary annual reports and
summary plan descriptions, have been timely filed and/or distributed, as the
case may be, except to the extent that failure to do so would not be expected to
have a Material Adverse Effect. PPC has heretofore furnished to Buyer
a complete copy of (i) the most recent determination letter or opinion letter
issued by the Internal Revenue Service with respect to each Pension Plan
identified in Section 4.16 and any outstanding application for a determination,
(ii) the Plan, trust documents, amendments thereto and summary plan description
relating to each Pension Plan and Welfare Plan identified in Section 4.16, (iii)
the three most recent annual reports (to the extent such reports are
required by law) for each Pension Plan and Welfare Plan described in Section
4.16, and (iv) all material documents relating to each Benefit Arrangement
described in Section 4.16. To the Sellers’ Knowledge, all financial
statements provided by PPC and containing footnotes reflect all Pension Plan,
Welfare Plan and Benefit Arrangement liabilities in accordance with generally
accepted accounting principles, methods and practices set forth in the opinions
and pronouncements of the Accounting Principles Board and the American Institute
of Certified Public Accountants, and statements and pronouncements of the
Financial Accounting Standards Board or of such other entity as may be approved
by a significant segment of the accounting profession, which are consistently
maintained and applied throughout the periods referenced.
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(k) To
the Sellers’ Knowledge, there is no material action, suit, investigation,
arbitration or other proceeding pending, or threatened against, or affecting any
Pension Plan, Welfare Plan or Benefit Arrangement described in Section 4.16, any
fiduciary thereof or assets of any trust, insurance or annuity contract
thereunder, at law or in equity, by or before any court, government department,
commission, agency, instrumentality or arbitrator. To the Sellers’
Knowledge, there is presently no material outstanding judgment, decree,
injunction or order of any court, governmental department, commission, agency,
instrumentality or arbitrator against or affecting any such Pension Plan,
Welfare Plan or Benefit Arrangement, any fiduciary thereof or assets of any
trust, insurance or annuity contract thereunder.
4.17 Patents, Trademarks, Etc. To
the best of Sellers’ knowledge, PPC is not infringing upon or otherwise acting
adversely to any copyrights, trademarks, trademark rights, service marks,
service names, trade names, patents, patent rights, licenses or trade secrets
owned by any other person or persons, and there is no claim or action by any
such other person pending or, to the knowledge of the Sellers, threatened, with
respect thereto.
4.18 Certificate of Incorporation and
By-Laws. PPC has delivered to Buyer, complete and correct
copies of the Certificate of Incorporation and the By-Laws of PPC, as amended to
the date hereof.
4.19 Transactions with Certain
Persons. Except as set forth on Schedule 4.19 of the
Disclosure Schedules, during the past three (3) years PPC has not directly or
indirectly, purchased, leased from others or otherwise acquired any property or
obtained any services from, or sold, leased to others or otherwise disposed of
any property or furnished any services to, or otherwise dealt with (except with
respect to remuneration for services rendered as a director, officer or employee
of PPC), in the Ordinary Course of Business or otherwise (i) any person, firm or
corporation which has within the last three (3) years, directly or indirectly,
alone or together with others, controlled, been controlled by or been under
common control with PPC; (ii) officers and directors of PPC; (iii) any nominee
for election as officer of PPC; or (iv) any member of the immediate family of
any of the forgoing persons.
4.20 Absence of Undisclosed
Liabilities. Except as and to the extent reflected or reserved
against in the Financial Statements (including the notes thereto) or as set
forth on Schedule
4.20, (a) PPC has not had, as of the date hereof, any material
liabilities or accrued expenses, whether accrued, absolute, contingent or
otherwise, of a kind or character that would be required to be reflected in the
consolidated balance sheet of PPC as of December 31, 2009; (b) since December
31, 2009, except for trade payables and accrued expenses incurred in the
Ordinary Course of Business, PPC has not incurred any such
liabilities.
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4.21 No
Guarantees. Except as set forth at Schedule 4.21, none
of the obligations or liabilities of PPC are guaranteed by any other person,
firm or corporation, nor has PPC guaranteed the obligations or liabilities of
any other person, firm or corporation except for endorsements on instruments
made in the Ordinary Course of Business.
4.22 Inventories. Except
as set forth in Schedule 4.22, the
items of inventory and related supplies (including raw materials, work in
process and finished products) reflected on the Financial Statements or
thereafter acquired or generated by PPC (and not subsequently disposed of in the
Ordinary Course of Business), PPC’s inventories consist of a quantity and
quality historically useable or saleable in the Ordinary Course of
Business.
4.23 Receivables. All
notes receivable and accounts receivable of PPC are reflected properly on their
books and records, are valid receivables, and are collectible.
4.24 Minute Books. The minute
books, stock certificate books and stock transfer ledgers of PPC are complete
and correct in all material respects. The minute books contain accurate records
of the proceedings of all actions formally taken by the shareholders and the
board of directors of PPC.
4.25 Absence of Certain Business
Practices. To Sellers’ knowledge, neither PPC nor any of its
officers, employees or agents, has directly or indirectly, within the past five
(5) years, given or agreed to give any gift or similar benefit to any customer,
supplier, governmental employee or other person who is or may be in a position
to help or hinder the business of PPC (or assisted in connection with any actual
or proposed transaction) which, in any material respect, (i) might subject PPC
to any damage or penalty in any civil, criminal or governmental litigation or
proceeding, (ii) if not given in the past, might have had an adverse effect on
the assets or business or operations of PPC as reflected in the Financial
Statements, or (iii) if not continued in the future, might adversely affect the
assets, business operations or prospects of PPC.
4.26 Financial Statements. Schedule 4.26 of the
Disclosure Schedules provides copies of the unaudited statements of assets,
liabilities and stockholders’ equity, statements of revenue, expenses and
retained earnings and statements of cash flows for PPC for the years ended
December 31, 2009 and 2008 (the “Financial
Statements”). The Financial Statements (including the notes
thereto) are complete and accurate in all material respects and have been
prepared on a consistent basis throughout the periods covered thereby, and
present fairly the financial condition of PPC as of such dates and the results
of operations and cash flows of PPC for such periods, are correct and complete
in all material respects.
4.27
Securities
Matters.
(a) Sellers
have acquired sufficient information about Buyer to reach an informed and
knowledgeable decision to acquire the Buyer Stock. Sellers have had
the opportunity to ask questions of, and receive answers from, representatives
of Buyer concerning Buyer and has obtained from Buyer any information
requested. All questions raised by Sellers
concerning Buyer have been answered to the satisfaction
of Sellers. Sellers’ decision to acquire the Buyer Stock
is based on Sellers’ own evaluation of the risks and merits of such
purchase.
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(b) Sellers
are acquiring the Buyer Stock for their own account for investment purposes only
and not as a nominee or agent and not with a view to, or in connection with, any
distribution thereof within the meaning of the Securities Act of 1933, as
amended (the “Securities
Act”).
(c) Sellers
understand that the Buyer Stock has not been registered under the Securities Act
or any applicable state security law in reliance upon specific exemptions
therefrom, which exemptions depend upon, among other things, upon the bona fide
nature of Sellers’ investment intent as expressed herein. Sellers
further understands that the Buyer Stock must be held indefinitely unless
subsequently registered or qualified under the Securities Act and such laws or
unless exemptions from such registration and qualification are otherwise
available.
(d) Each
Seller is an “accredited investor” as defined in Rule 501 of Regulation D under
the Act.
4.28 Disclaimer of Other Representations
and Warranties. Except as expressly set
forth in this Article IV, Sellers make no representation or warranty, express or
implied, at law or in equity, with respect to any of its assets, liabilities or
operations, including, without limitation, with respect to merchantability or
fitness for any particular purpose, and any such other representations or
warranties are hereby expressly disclaimed. Without limiting the generality of
the foregoing, Sellers make no representation or warranty regarding any matter
unless specifically set forth herein and none shall be implied at law or in
equity.
ARTICLE
V
REPRESENTATIONS
AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to
Sellers, as of the date of this Agreement and as of the Closing Date, as
follows:
5.1 Organization. Buyer
is a corporation duly organized, validly existing and in good standing under the
laws of the State of New York and has all requisite corporate power and
authority to own, lease and operate its properties and to carry on its business
substantially as it is now being conducted.
5.2 Authority. Neither
the execution, delivery, nor performance of this Agreement by Buyer will, with
or without the giving of notice or the passage of time, or both, conflict with,
result in a default, right to accelerate, or loss of rights under, or result in
the creation of any lien, charge or encumbrance pursuant to, any provision of
Buyer’s Certificate of Incorporation, By-Laws, or any franchise, mortgage, deed
of trust, lease, license, agreement, understanding, law, regulation, or any
order, judgment or decree to which Buyer is a party or by which Buyer or its
assets may be bound or affected. This Agreement has been duly
executed and delivered by Buyer, and constitutes the legal, valid and binding
obligation of Buyer, enforceable against Buyer in accordance with its
terms.
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5.3 SEC Filings; Financial
Statements. Buyer has furnished or made available to Sellers a
correct and complete copy of Buyer’s Annual Report on Form 10-K filed with the
SEC with respect to the fiscal year ended December 31, 2009, and each Quarterly
Report on Form 10-Q, Current Report on Form 8-K, other report, schedule,
registration statement, and definitive proxy statement filed by Buyer with the
SEC on or after the date of filing of the Form 10-K which are all the documents
(other than preliminary material) that Buyer was required to file (or otherwise
did file) with the SEC in accordance with Sections 13, 14 and 15(d) of the
Exchange Act on or after the date of filing with the SEC of the Form 10-K
(collectively, the “Buyer SEC
Documents”). As of their respective filings dates, or in the
case of registration statements, their respective effective times, none of the
Buyer SEC Documents (including all exhibits and schedules thereto and documents
incorporated by reference therein) contained any untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading, and the Buyer SEC Documents complied
when filed, or in the case of registration statements, as of their respective
effective times, in all material respects with the then applicable requirements
of the Securities Act or the Exchange Act, as the case may be, and the rules and
regulations promulgated by the SEC thereunder. Each set of
consolidated financial statements (including, in each case, any related notes
thereto) contained in the Buyer SEC Documents was prepared in accordance with
GAAP applied on a consistent basis throughout the periods involved (except as
may be indicated in the notes thereto or, in the case of unaudited statements,
do not contain footnotes as permitted by Form 10-Q of the Exchange Act) and each
fairly presents the consolidated financial position of Buyer and its
subsidiaries at the respective dates thereof and the consolidated results of its
operations and cash flows for the periods indicated, except that the unaudited
interim financial statements were or are subject to normal year-end adjustments
(the effect of which will not, individually or in the aggregate, be materially
adverse).
5.4 Investment. The
Buyer is not acquiring the PPC Shares with a view to or for sale in connection
with any distribution thereof within the meaning of the Securities
Act.
5.5 Buyer Shares. The Buyer Shares and
additional Buyer common stock provided hereunder, when issued and delivered in
accordance with the terms of this Agreement, will be duly authorized, validly
issued, fully paid and non-assessable, and free and clear of all rights of first
refusal, preemptive rights and Encumbrances other than resale restrictions under
applicable securities laws.
5.6 Disclaimer of Other Representations
and Warranties. Except as expressly set
forth in this Article V, Buyer makes no representation or warranty, express or
implied, at law or in equity, with respect to any of its assets, liabilities or
operations, including, without limitation, with respect to merchantability or
fitness for any particular purpose, and any such other representations or
warranties are hereby expressly disclaimed. Without limiting the generality of
the foregoing, Buyer make no representation or warranty regarding any matter
unless specifically set forth herein and none shall be implied at law or in
equity.
ARTICLE
VI
MUTUAL
COVENANTS AND AGREEMENTS OF THE PARTIES
6.1 Expenses. Whether or not the
transactions contemplated herein are consummated, Buyer will bear its own legal
or other expenses (including disbursements) incurred in connection with this
Agreement or any transactions contemplated by this Agreement, and Sellers will
bear their and PPC’s own legal or other expenses (including disbursements),
incurred by them or it in connection with this Agreement or any transaction
contemplated by this Agreement. Notwithstanding any provision herein
to the contrary, PPC will bear its own accounting expenses incurred by it in
connection with this Agreement, provided that the accounting expenses are not
incurred for the benefit of Sellers.
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6.2 Public
Announcements. Prior to the Closing Date, the parties will
advise and confer with each other prior to the issuance of any reports,
statements or releases (including reports, statements or releases to its
respective employees) pertaining to this Agreement and any transaction
contemplated by this Agreement. Nothing contained herein, however,
shall prohibit any party from making any public statement required to be made by
such party as a matter of law, provided that any such statement is provided to
other party for review in advance of any disclosure or filing.
6.3 Further
Assurances. Each party hereby agrees to execute and deliver
such instruments and take such other actions as any other party may reasonably
require in order to carry out the intent of this Agreement.
6.4 Financial
Statements. Within sixty (60) days of the Closing, the Sellers
shall make good faith efforts to cause PPC’s current accounting firm to prepare
and deliver audited financial statements of PPC for the calendar years ending
December 31, 2008 and 2009. Buyer shall reimburse Sellers for any and all costs
incurred by Sellers in connection with the preparation of such financial
statements.
6.5 Confidentiality; Restrictive
Covenants.
(a) The
parties acknowledge that the value of confidential information developed by PPC
is attributable substantially to the fact that such information is maintained by
PPC in the strictest confidentiality and secrecy and is not available to others
without the expenditure of substantial time, effort and
money. Sellers acknowledge that Buyer and PPC would be irreparably
damaged if PPC’s confidential knowledge were disclosed to or utilized on behalf
of Sellers or any other person, firm, corporation or other business organization
which engages in the design, research, development, manufacture, promotion,
marketing, distribution and/or sale of products or services of the type
designed, developed, manufactured, promoted, marketed, provided, distributed
and/or sold by PPC or products or services which compete with such
products, and Sellers jointly and severally covenant and agree that
they shall not at any time, and shall ensure that their respective affiliates,
associates (as the terms “affiliate” and “associate” are defined by the rules
and regulations promulgated under the Securities Act ) or any other person whose
behavior can be controlled by Seller (a “Controlled
Person”) shall not at any time, without the prior written consent of
Buyer, disclose or use any such confidential information. For
purposes of this Agreement, (i) a product or service “competes with” a product
of PPC if such product can be substituted for any product or service, or any
part thereof, designed, manufactured, promoted, marketed, provided, distributed
and/or sold by PPC, and (ii) a business “engages in competition” with PPC if it
designs, manufactures, promotes, markets, provides, distributes or sells any
such product or service.
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(b) To
further secure the interests of Buyer hereunder, Sellers jointly and severally
covenant and agree that for a period of five (5) years from the Closing Date,
neither Sellers nor any of their respective, affiliates, associates and
Controlled Persons shall, directly or indirectly, engage in competition with, or
directly or indirectly perform services (as employee, manager, consultant,
independent contractor, advisor or otherwise) for any business, or own any
equity interest in any enterprise (other than an aggregate of not more than one
percent (1%) of the stock issued by any publicly held corporation) that engages
in competition with PPC or any of its affiliates anywhere in North
America. In addition, during such period, neither Seller shall
(and shall assure that none of their respective employees, affiliates,
associates or Controlled Persons shall) directly or indirectly solicit, raid or
entice, or otherwise induce any customer of PPC or any of its affiliates to
cease doing business therewith or to do business with a competitor with respect
to products or services that are competitive with the products or services of
PPC or any of its affiliates.
(c) To
further secure the interests of Buyer, Sellers jointly and severally agree that
for a period of five (5) years from the Closing Date, neither Seller shall (and
shall assure that none of their respective, affiliates, associates or Controlled
Persons shall), directly or indirectly, solicit for employment, offer employment
to, or employ for its own account or the account of any other person, any person
who is on the Closing Date or thereafter becomes an employee or consultant of
PPC or any of its affiliates.
(d) To
further secure the interests of Buyer hereunder, Sellers jointly and severally
agree that neither Seller shall (and shall assure that none of their respective,
affiliates, associates or Controlled Persons shall) at any time disparage the
business reputation, products or services of PPC or any of its
affiliates.
(e) Sellers
agree that the provisions of this Section 6.5 are reasonable in scope and
duration and necessary to protect the interests of Buyer in confidential
information. Sellers agree that, in addition to any other rights or
remedies which Buyer may have, Buyer shall be entitled to injunctive and other
equitable relief to prevent a breach of this Section 6.5 by Sellers, including a
temporary restraining order or an injunction from any court of competent
jurisdiction restraining any threatened or actual violation, and Sellers consent
to the entry of such an order and injunctive relief and waive the making of a
bond or undertaking as a condition for obtaining such relief.
6.6 Tax Matters.
(a) Final Tax Returns. Within
thirty (30) days of the Closing Date, the Buyers shall prepare, at Buyer’s sole
cost and expense, all income tax returns to be filed for PPC’s tax year
commencing on January 1, 2010 and ending on the Closing Date and provide the
same to Sellers’ Agent for review and approval (collectively, the “Final Tax
Returns”). Notwithstanding anything herein to contrary, Buyer
may not amend any of PPC’s tax returns filed or prepared prior to the Closing
Date without the prior written consent of Sellers’ Agent. Sellers
covenant and agree that they shall remit immediately available funds equal to
all taxes that are shown as due on such Final Tax Returns and Sellers and Buyer
shall cause any distribution to be made to Sellers in an amount sufficient to
satisfy any tax liability incurred by Sellers for the tax year commencing
January 1, 2010 and ending as of the Closing Date. The Final Tax
Return for the period from January 1, 2010 through the Closing Date shall
be prepared (i) using the "closing-of-the-books" method of allocation, wherein
it would be presumed that the books of PPC would be closed as of the Closing
Date and (ii) in accordance with Section 6.6(b) below. If within
forty-five (45) days after receiving a copy of the Final Tax Return for the tax
year commencing January 1, 2010 and ending as of the Closing
Date, Sellers’ Agent does not object thereto or otherwise consents
thereto, Buyer shall file such Final Tax Return with the appropriate
Governmental Entity. Buyer shall accept all reasonable comments of
Sellers’ Agent made to such Final Tax Return. Sellers shall have no
responsibility to Buyer for any taxes imposed upon PPC for any time period prior
to the Closing Date by reason of Buyer’s decision to cause PPC to file amended
tax returns to increase or otherwise change the taxable income of PPC for any
such periods.
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(b) Computation and Payment of
Taxes. Buyer will indemnify and hold Sellers harmless from and
against, without duplication, any loss, claim, liability, expense or other
damage attributable to all taxes (or the nonpayment thereof) of PPC for the
period of time after the Closing Date and for all taxes included in the Final
Working Capital Schedule. Any other provision of this Agreement to
the contrary notwithstanding, this Section 6.6 shall survive until the
sixtieth (60th) day
following expiration of the statute of limitations on collection of the
applicable tax.
(c) Tax Return
Preparation. Buyer, Sellers and Sellers’ Agent shall cooperate
fully, as and to the extent reasonably requested by the other parties, in
connection with the filing of any tax returns, and any audit, litigation or
other proceeding with respect to taxes. Such cooperation shall
include the retention and (upon the other party’s request) the provision of
records and information which are reasonably relevant to any such tax return, or
any such audit, litigation or other proceeding and making employees available on
a mutually convenient basis to provide additional information and explanation of
any material provided hereunder. Buyer, the Sellers and Sellers’
Agent agree (i) to retain or cause to be retained all books and records with
respect to tax matters pertinent to PPC relating to any tax period beginning
before the Closing Date until the expiration of the applicable statute of
limitations (and, to the extent notified by Buyer or Sellers’ Agent, any
extensions thereof) of the respective tax periods, and to abide by all record
retention agreements entered into with any tax authority, (ii) to provide to the
other party, upon request, all books and records with respect to tax matters
pertinent to PPC relating to any taxable period beginning before the Closing
Date until the expiration of the statute of limitations (and, to the extent
notified by Buyer or Sellers’ Agent, any extensions thereof) of the respective
periods, and (iii) to give the other parties reasonable written notice prior to
transferring, destroying or discarding any such books and records and, if any of
the other parties so requests, the other parties shall allow such requesting
party to take possession of such books and records.
6.7 Certain Taxes and
Fees. All transfer, documentary, sales, use, stamp,
registration and other such taxes, and all conveyance fees, recording charges
and other fees and charges (including any penalties and interest) incurred in
connection with the consummation of the transactions contemplated by this
Agreement shall be paid by Buyer when due, and Buyer will file all necessary Tax
returns and other documentation with respect to all such Taxes, fees and
charges. The expense of such filings shall be paid by
Buyer.
6.8 S-3 Registration Statement; 10b5-1
Plan; Late Payments.
(a) Buyer
will use its best efforts to file with the Securities and Exchange Commission
(the “SEC”)
within thirty (30) days of Closing, a Form S-3 Registration Statement (the
“Registration
Statement”) to register the resale of the Buyer Shares issued to Sellers
pursuant to this Agreement. Buyer shall prepare and provide Sellers
and their counsel an opportunity to review and provide comments to the
Registration Statement before it is filed with the SEC. Buyer will
use its best efforts to ensure effectiveness of the Registration Statement
within one hundred twenty (120) days from Closing.
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(b) If
the Registration Statement contemplated herein has not been declared effective
by the SEC before the date that is one hundred twenty (120) days after the
Closing Date (the “Effectiveness
Deadline”), Buyer will pay to Sellers on the Effectiveness Deadline the
sum of $5,000 (a “Late
Payment”). If the Registration Statement has not been declared effective
before the one month anniversary of the Effectiveness Deadline, Buyer will pay
to Sellers an additional Late Payment. Thereafter, Buyer will make an
additional Late Payment to Sellers on each subsequent monthly anniversary of the
Effectiveness Deadline, if the Registration Statement has not been declared
effective before such monthly anniversary of the Effectiveness
Deadline.
(c) Within
three (3) days of written request by Sellers’ Agent (subject to the Registration
Statement being declared effective by the SEC) (“Implementation
Deadline”), the Buyer shall implement the Rule 10b5-1 Plan in the form
attached hereto as Exhibit A the “Sellers’ 10b5-1
Plan”) to allow the Buyer Shares issued to Sellers pursuant to the terms
of this Agreement to be sold on the open market as part of a regular selling
program. If the Sellers’ 10b5-1 Plan is not filed by the
Implementation Deadline, the Buyer shall pay Sellers a Late Payment, except to
the extent the 10b5-1 Plan was not filed at Sellers’
election. Thereafter, the Buyer will make additional Late Payments to
Sellers on each subsequent weekly (seven day week) anniversary of the
Implementation Deadline, if the 10b5-1 Plan has not been implemented before such
weekly anniversary of the Implementation Deadline.
(d) The
Buyer acknowledges and agrees that each Late Payment shall be made in
immediately available funds to Sellers in accordance with the written directions
provided by Sellers’ Agent. If any payments are not paid within the
prescribed time period, then interest shall accrue and be due and payable from
Buyer on such amount from and including the due date through and including the
date of payment at eight percent (8%) per annum.
6.9 Issuance of Additional Shares of
Buyer Common Stock for Sellers’ Increased Income Tax
Liability.
(a) If
the Internal Revenue Service or other state or local income tax authority
implements changes to the income (or other) tax rates that would have the effect
of increasing the tax liability of Sellers (on a retroactive basis) as a result
of the transactions contemplated in this Agreement, then Buyer shall pay Sellers
(in additional shares of Buyer common stock or cash) the difference between the
estimated income tax liability of Sellers as of the Closing Date prior to change
in tax rates and the new tax liability of Sellers as result of any tax rate
change (the “Sellers’
Increased Tax Liability Payment”). As soon as practicable
after any such change in tax rates, Sellers’ Agent shall prepare and deliver to
Buyer a written statement calculating (with reasonable detail) Sellers’ tax
liability prior to any such tax rate change, Sellers’ tax liability as a result
of the tax rate change and a calculation of Sellers’ Increased Tax Liability
Payment (the “Increased Tax
Liability Statement”). Within three (3) days of receipt of the
Increased Tax Liability Statement, Buyer shall deliver to Sellers’ Agent a
written statement with any good faith objections thereto. Unless
Buyer objects within such period, Buyer shall be deemed to have accepted and
agreed to the Increased Tax Liability Statement and the same shall be final and
binding on the parties. If Buyer objects then the Unrelated
Accounting Firm shall resolve any such dispute, whose decision as to the issues
in dispute shall be conclusive, final and binding upon Sellers and Buyer for
purposes hereof. The Unrelated Accounting Firm shall address only
those issues in dispute. Any payment due by Buyer hereunder shall be
paid within ten (10) days after final determination. If not paid
within such time period, then interest shall accrue and be due and payable from
Buyer on such amount from and including the due date through and including the
date of payment at four percent (4%) per annum. If Buyer elects to
make payment in the form of additional shares of Buyer common stock, then the
number of shares to be issued by Buyer shall be determined by dividing the
amount of Sellers’ Increased Tax Liability Payment by the lesser of (i) $2.00,
or (ii) the average closing price of Buyer’s common stock over the thirty (30)
trading day period immediately prior to the date of final determination of the
payment amount multiplied by 0.80. Buyer acknowledges and agrees that
all such shares issued to Sellers under this Section shall be included, upon the
request of Sellers’ Agent, in the Registration Statement discussed above (as
part of the original filing and effectiveness or by
amendment thereto). In addition, on the request of
Sellers’ Agent, Buyer will make best efforts to implement a Rule 10b5-1 plan
substantially similar to the 10b5-1 Plan described above to allow such
additional shares issued to Sellers to be sold on the open market as part of a
regular selling program. Buyer acknowledges that the provision
regarding Late Payments shall be applicable to the additional shares issued
under this Section.
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(b) Buyer
will use its best efforts to file with the SEC within thirty (30) days after the
issuance of the shares under Section 6.9(a), a Form S-3 Registration Statement
to register the resale of all such shares issued to Sellers
thereunder. Buyer shall prepare and provide Sellers and their counsel
an opportunity to review and provide comments to such registration statement
before it is filed with the SEC. Buyer will use its best efforts to
ensure effectiveness of the Registration Statement within one hundred twenty
(120) days from Closing. If the registration statement contemplated
herein has not been declared effective by the SEC before the date that is one
hundred twenty (120) days after the issuance date, Buyer will pay to Sellers the
a Late Payment. Thereafter, Buyer will make an additional Late Payment to
Sellers on each subsequent monthly anniversary of the issuance date, if the
registration statement has not been declared effective before such monthly
anniversary of the issuance date.
6.10 Appointment as Director; PPC
Employees Stock Options Pool.
(a) Concurrently
with the Closing, Buyer shall appoint Sellers’ Agent as the President and Chief
Executive Officer of PPC. Buyer and Buyer’s Board of Directors
shall take the necessary corporate action to appoint Sellers’ Agent to Buyer’s
Board of Directors and as Buyer’s President and the Chief Operating Officer as
soon as practicable after the Closing, including, without limitation, to include
in the notice of the 2010 annual meeting of Buyer’s shareholders a proposal (and
as a appropriate proposal to be voted on by Buyer’s shareholders) recommending
for approval an an amendment to Article II, Section 2.1 of the Buyer’s bylaws to
increase the size of Buyer’s Board of Directors to create a vacancy that will be
filled by the appointment of Sellers’ Agent. Buyer shall provide
Seller’s Agent with a copy of the proxy statement for the 2010 annual meeting of
shareholders for review and shall accept reasonable comments from Seller’s Agent
or his counsel prior to filing the same with the SEC or mailing to Buyer’s
shareholders in advance of such meeting.
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(b) Within
ten (10) days of the Closing Date, Buyer shall have taken appropriate corporate
measures to make available 50,000 shares under the Buyer’s 2004 Employee Stock
Option Plan which shall be reserved for issuance to certain of the current
employees of PPC at the discretion of Sellers’ Agent after the Closing Date
pursuant to the attached Schedule 6.10(b) of the Disclosure
Schedules.
ARTICLE
VII
CONDITIONS
PRECEDENT
7.1 Conditions
Precedent to Buyer’s Obligations. The obligations
of the Buyer under this Agreement are subject to the satisfaction at or prior to
Closing of the following conditions:
(a) Financing. Buyer
shall have closed on a $1,000,000 revolving line of credit and a $1,500,000 Term
Note with RBS Citizens, N.A. as set its in their loan commitment letter dated
January 20, 2010 concurrently with the consummation of the transactions
hereunder.
(b) Representations and
Warranties. The representations and warranties of Sellers set
forth in this Agreement shall be true and correct in all material respects as of
the date of this Agreement and as of the Closing Date as though made on and as
of the Closing Date, except as to representations and warranties which are
expressly limited to a state of facts existing at a time prior to the Closing
Date; provided that representations and warranties containing materiality
qualifiers shall be true in all respects on each such date.
(c) Performance of Obligations of
Sellers. Sellers shall have performed in all material respects
all obligations required to be performed by it under this Agreement at or prior
to the Closing Date.
(d) Certificate. Sellers
shall have furnished Buyer with a certificate to the effect that (i) all of the
Sellers’ representations and warranties contained in this Agreement are in all
material respects true and accurate as of the date when made, except as to
representations and warranties which are expressly limited to a state of facts
existing at a time prior to the Closing Date, at and as of the Closing Date, as
though such representations and warranties remain on the Closing Date, and that
(ii) Sellers and PPC have performed and complied in all material respects with
all terms, covenants and provisions of this Agreement required to be performed
or complied with by them and/or it prior to or on the Closing Date.
(e) No Material Adverse
Changes.
Since the date of this Agreement there shall have not occurred any material
adverse change in the properties, assets, operations, business, condition
(financial or otherwise), cash flow, working capital or prospects of PPC taken
as a whole.
(f) Other
Certificates. Sellers shall have furnished the Buyer with (i)
a certificate of the New York Secretary of State dated as of a recent date as to
the due incorporation and good standing of PPC; and (ii) a franchise
tax search from New York State and each state in which PPC conducts business,
indicating that no taxes or tax returns are past due.
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(g) Delivery of
Documents. All documents required by this Agreement, including
but not limited to the Financial Statements, to be delivered by Sellers to
Buyer, by, at or prior to the Closing Date shall have been so
delivered.
(h) Employment
Agreement. Sellers’ Agent and Buyer shall have entered into
the Employment Agreement in the form, the “Employment Agreement”, as set forth
as Exhibit
B.
(i) Lease. Bzdick
Properties, LLC and PPC shall have entered into the Lease for the premises at 0
Xxxxxxx Xxxxx in the form of the Lease set forth as Exhibit
C.
7.2 Conditions
Precedent to Sellers' Obligations. The obligations
of Sellers under this Agreement are subject to the satisfaction at or prior to
the Closing of the following conditions:
(a) Representations and
Warranties. The representations and warranties of Buyer set
forth in this Agreement shall be true and correct in all material respects as of
the date of this Agreement and as of the Closing Date as though made on and as
of the Closing Date, except as to representations and warranties which are
expressly limited to a state of facts existing at a time prior to the Closing
Date; provided that representations and warranties containing materiality
qualifiers shall be true in all respects on each such date.
(b) Performance of Obligations of
Buyer. Buyer shall have performed in all material respects all
obligations required to be performed by it under this Agreement at or prior to
the Closing Date.
(c) Certificate. Buyer
shall have furnished Sellers with a certificate to the effect that (i) all of
Buyer’s representations and warranties contained in this Agreement are in all
material respects true and accurate as of the date when made, except for changes
expressly contemplated by this Agreement and except as to representations and
warranties which are expressly limited to a state of facts existing at a time
prior to the Closing Date, at and as of the Closing Date, as though such
representations and warranties remain on the Closing Date, and that (ii) Buyer
has performed and complied in all material respects with all terms, covenants
and provisions of this Agreement required to be performed or complied with by it
prior to or on the Closing Date.
(d) No Material Adverse
Changes.
Since December 31, 2009 there shall have not occurred any Material Adverse
Change in the properties, assets, operations, business, condition (financial or
otherwise ), cash flow, working capital or prospects of PPC taken as a
whole.
ARTICLE
VIII
INDEMNIFICATION
8.1 Survival. The
representations and warranties in this Agreement shall survive
Closing until the two (2) year anniversary of Closing, at which time they shall
terminate. For purposes of the is Article VII, “Loss”
or “Losses”
means any and all judgments, losses, Liabilities, amounts paid in settlement,
damages, fees, fines, penalties, deficiencies, costs and expenses (including
interest, court costs, reasonable fees and expenses of attorneys, accountants
and other experts or other reasonable expenses of litigation or other
proceedings or of any claim, default or assessment).
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8.2 Indemnification by Sellers’
Agent. From and after the Closing Date, for the applicable
survival period set forth in Section 8.1, Sellers’ Agent shall indemnify,
save and hold harmless Buyer, and their respective directors, officers and
stockholders and Representatives, or any of them (collectively, “Buyer
Indemnitees”) from and against any and all Losses asserted against,
resulting to, imposed on, sustained, incurred or suffered by any of them based
upon, arising out of, related to or otherwise in respect of any of the following
(including any action, suit or proceeding based upon, arising out of, related to
or otherwise in respect of any thereof):
(a) the
inaccuracy in or breach of any representation or warranty of Sellers contained
in Article IV or any certificate delivered by Sellers to Buyer in connection
with this Agreement;
(b) any
failure to perform or observe or any breach of any covenant or agreement made by
Sellers in this Agreement or any other agreement delivered by Sellers;
and
(c) any
pre-Closing taxes of PPC.
8.3 Indemnification by Buyer. From
and after the Closing Date, for the applicable survival period set forth in
Section 8.1, Buyer shall indemnify, save and hold harmless Sellers and
their heirs (collectively, “Seller
Indemnitees”) from and against any and all Losses asserted against,
resulting to, imposed on, sustained, incurred or suffered by any them based
upon, arising out of, related to or otherwise in respect of any of the following
(including any action, suit or proceeding based upon, arising out of, related to
or otherwise in respect of any thereof):
(a) the
inaccuracy in or breach of any representation or warranty by Buyer contained in
Article V or any certificate delivered by Buyer in connection with this
Agreement; and
(b) any
failure to perform or observe or any breach of any covenant or agreement made by
Buyer or any of their respective affiliates in this Agreement; and
(c) any
Losses resulting from or arising out of the post-Closing ownership of the PPC
Shares or operation of PPC’s Business.
8.4 Limitations. Sellers’ Agent
shall be required to indemnify and hold harmless pursuant to Section 8.2 with
respect to Losses incurred by Buyer Indemnitees only to the extent the aggregate
Losses exceed One Hundred Fifty Thousand Dollars ($150,000) (the “Basket”),
whereupon the Sellers’ Agent shall be liable for all Losses in excess of the
Basket; provided, that the maximum aggregate liability of the Sellers’ Agent to
all Buyer Indemnitees taken together for all Losses pursuant to Section 8.2
shall not exceed an amount equal to Two Million Dollars ($2,000,000) (the “Indemnification
Cap”).
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8.5 Notice of Claims.
Except as
provided in Section 8.6, if any Buyer Indemnitee or Sellers Indemnitee (an
“Indemnified
Party”) believes that it has suffered or incurred any Losses for which it
is entitled to indemnification under this Article VIII, such Indemnified Party
shall so notify the party from whom indemnification is being claimed (the “Indemnifying
Party”) with reasonable promptness and reasonable particularity in light
of the circumstances then existing. If any claim is instituted by or against a
third party with respect to which any Indemnified Party intends to claim
indemnification under this Article VIII, such Indemnified Party shall promptly
notify the Indemnifying Party of such claim. The notice provided by the
Indemnified Party to the Indemnifying Party shall describe the claim (the “Asserted
Liability”) in reasonable detail and shall indicate the amount (or an
estimate) of the Losses that have been or may be suffered by the Indemnified
Party. The failure of an Indemnified Party to give any notice required by this
Section 8.5 shall not affect any of the Indemnified Party’s rights under this
Article VIII or otherwise except and to the extent that such failure is
prejudicial to the rights or obligations of the Indemnifying Party.
Notwithstanding the foregoing, if prior to the stated expiration of any
representation and warranty there shall have been given notice of an Asserted
Liability by an Indemnified Party, such Indemnified Party shall continue to have
the right to such indemnification with respect to such noticed claim
notwithstanding such expiration.
8.6 Opportunity to Defend Third Party
Claims.
(a) Any
Indemnifying Party will have the right to defend the Indemnified Party against
any third party claim for which it is entitled to indemnification from such
Indemnifying Party under this Article VIII with counsel reasonably satisfactory
to the Indemnified Party so long as (i) any of the Indemnifying Parties notifies
the Indemnified Party in writing within twenty (20) days after the Indemnified
Party has given notice of the third party claim that all of the Indemnifying
Parties will indemnify the Indemnified Party from and against the entirety of
Losses the Indemnified Party may suffer resulting from, arising out of, relating
to, in the nature of or caused by the third party claim, (ii) the Indemnifying
Parties provide the Indemnified Party with evidence reasonably acceptable to the
Indemnified Party that the Indemnifying Parties will have the financial
resources to defend against the third party claim and fulfill their
indemnification obligations hereunder, (iii) the third party claim involves only
money damages and does not seek an injunction or other equitable relief, (iv)
settlement of, or an adverse judgment with respect to, the third party claim is
not, in the good faith judgment of the Indemnified Party, likely to establish a
precedential custom or practice materially adverse to the continuing business
interests of the Indemnified Party, and (v) the Indemnifying Parties diligently
conduct the defense of the third party claim.
Notwithstanding
the foregoing, without the prior consent of the Indemnified Party, the
Indemnifying Parties shall not settle or compromise any third party claim or
consent to the entry of a judgment in connection therewith that: (i) does not
provide for the claimant to give an unconditional release to the Indemnified
Party in respect of the Asserted Liability; (ii) involves relief other than
monetary damages; (iii) places restrictions or conditions on the operation of
the business of the Indemnified Party or any of its Affiliates; or (iv) involves
any finding or admission of criminal liability or of any Laws.
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(b) So
long as the Indemnifying Party has undertaken to conduct the defense of the
third party claim in accordance with Section 8.6(a), (i) the Indemnified Party
may retain separate co-counsel at its sole cost and expense and participate in
the defense of the third party claim, (ii) the Indemnified Party will not
consent to the entry of any judgment or enter into any settlement with respect
to the third party claim without the prior written consent of the Indemnifying
Party, and (iii) the Indemnifying Party shall keep the Indemnified Party
reasonably informed as to the status of the claim for which it is providing a
defense. Notwithstanding the foregoing or Section 8.6(a), in the event that (w)
any of the conditions in Section 8.6(a)(i) is or becomes unsatisfied or; (x) the
Indemnifying Party shall not have employed counsel reasonably satisfactory to
the Indemnified Party to defend such action within thirty (30) days after the
Indemnifying Party notifies the Indemnified Party of its intent to defend
against the Asserted Liability; (y) the Indemnified Party shall have reasonably
concluded, based upon written advice of counsel, that it has defenses available
to it that are different from or additional to those available to the
Indemnifying Party (in which case the Indemnifying Party shall not have the
right to direct the defense of such action on behalf of the Indemnified Party
with respect to such different defenses); or (z) representation of such
Indemnified Party by the counsel retained by the Indemnifying Party would be
inappropriate due to actual or potential differing interests between such
Indemnified Party and any other party represented by such counsel in such
proceeding, then the Indemnified Party may defend against the third party claim
in any manner it may deem appropriate and, the Indemnifying Parties will be
responsible for the Indemnified Party’s costs of defending against the third
party claim (including reasonable attorneys’ fees and expenses), and the
Indemnifying Parties will remain responsible for the entirety of the Losses the
Indemnified Party may suffer resulting from, arising out of or caused by the
third party claim.
8.7 Exclusive Remedies. From and
after Closing, the remedies contained in this Article VIII shall contain the
sole and exclusive monetary remedies of Buyer with respect to any breach by
Sellers of any representation, warranty, covenant or agreement contained herein;
provided that nothing herein shall be construed to restrict or limit Buyer’s
right to specific performance or injunctive relief to enforce the provisions of
this Agreement.
ARTICLE
IX
TERMINATION
9.1 Termination
Events. Subject
to Section 9.2, by notice given prior to or at the Closing, this Agreement may
be terminated as follows:
(a) by
mutual consent of Buyer and Sellers;
(b) by
Buyer if a material breach of any provision of this Agreement has been committed
by any Seller; or
(c) by
Sellers if a material breach of any provision of this Agreement has been
committed by Buyer.
9.2 Effect
of Termination. Each
party’s right of termination under Section 9.1 is in addition to any other right
it may have under this Agreement or otherwise, and the exercise of a
party’s right of termination will not constitute an election of
remedies. If this Agreement is terminated pursuant to Section 9.1,
this Agreement will be of no further force or effect; provided, however, that
(i) this Section 9.2 and Article X will survive the termination of this
Agreement and will remain in full force and effect, and (ii) the termination of
this Agreement will not relieve any party from any liability for any breach of
this Agreement.
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ARTICLE
X
MISCELLANEOUS
PROVISIONS
10.1 Amendment and
Modification. This Agreement
may be amended, modified and supplemented with respect to any of the terms
contained herein by mutual consent of Sellers’ Agent and Buyer, by an
appropriate written instrument executed at any time prior to the Closing
Date.
10.2 Waiver
of Compliance. Sellers
and Buyer may, by an instrument in writing extend the time for or waive the
performance of any of the obligations of the other or waive compliance by the
other with any of the covenants, or waive any of the conditions to its
obligations, contained herein. No such extension of time or waiver shall operate
as a waiver of, or estoppel with respect to, any subsequent or other
failure.
10.3 Knowledge. For
purposes of this Agreement and any agreements, schedules, exhibits, certificates
other contracts delivered in connection herewith, the terms “Sellers’
Knowledge”, “Sellers’
knowledge” or “knowledge of the
Sellers” shall mean the actual knowledge of Xxxxxx X. Xxxxxx without
independent investigation.
10.4 Assignment. This Agreement
and all of the provisions hereof shall be binding upon an inure to the benefit
of the parties hereto and its respective successors and permitted assigns, but
neither this Agreement nor any of the rights, interests or obligations hereunder
shall be assigned by any of the parties hereto without the prior written consent
of the other parties, except that the Buyer may assign its rights and
obligations hereunder to an affiliate.
10.5 Specific
Performance. Each party hereto acknowledges and agrees that
irreparable damage would occur in the event any of the provisions of this
Agreement were not performed in accordance with its specific terms or were
otherwise breached. It is accordingly agreed that each party shall be entitled
to an injunction or injunctions, without the need to post bond, to prevent
breaches of the provisions of this Agreement and to enforce specifically the
terms and provisions hereof in any state or United States court of competent
jurisdiction sitting in the State of New York, in addition to any other remedy
to which they may be entitled at law or equity.
10.6 No
Third-Party Beneficiaries. Nothing expressed
or implied in this Agreement is intended or shall be construed to confer upon or
give to any person, firm or corporation other than the parties hereto any rights
or remedies under or by reason of this Agreement or any transaction contemplated
hereby, except as specifically contemplated by this Agreement.
10.7 Governing
Law. This Agreement
shall be governed by and construed in accordance with the laws of the State of
New York.
10.8 Jurisdiction. Each of the
parties hereby irrevocably (i) submits, in any legal proceeding relating to this
Agreement, to the exclusive jurisdiction of any state or United States court of
competent jurisdiction sitting in the State of New York, Monroe County, and
agrees to suit being brought in any such court, (ii) agrees to service of
process in any such legal proceeding by mailing of copies thereof (by registered
or certified mail, if practicable) postage prepaid at the addresses set forth
below, and (iii) agrees that nothing contained herein shall affect the parties
right to effect service of process in any other manner permitted by
law.
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10.9 Notices. Each
notice and other communication given hereunder will be in writing and will be
deemed given when delivered personally, sent by telecopier (receipt of which is
confirmed), or mailed, freight prepaid, by internationally recognized overnight
courier (with receipt confirmed) to the party for which it is intended at the
following address (or at such other address for a party as is specified by like
notice):
if to the
Buyer, to:
Mr.
Xxxxxxx Xxxxx, CEO
Document
Security Systems
00 Xxxx
Xxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx,
Xxx Xxxx 00000
Facsimile:
with a
copy to:
Xxxxxx X.
Xxxxxxx & Associates, P.C.
000
Xxxxxx Xxxx, Xxxxx 000
Xxxxxxxxx,
Xxx Xxxx 00000
Attn:
Xxxxxx X. Xxxxxxx, Esq.
Facsimile:
if to
Sellers or Sellers’ Agent, to:
Xx.
Xxxxxx X. Xxxxxx
Premier
Packaging Corporation
0 Xxxxxxx
Xxxxx
Xxxxxx,
Xxx Xxxx 00000
Facsimile:
with a
copy to:
Xxxxxx,
Xxxxxxx & Xxxxx
1600Bausch
& Lomb Place
Rochester,
New York 14604
Attn:
Xxxxxxx X. Xxxxxxxxxx, Esq.
Facsimile:
(000) 000-0000
10.10 Headings. The
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this
Agreement.
10.11 Counterparts. This
Agreement may be executed in one or more counterparts, all of which shall be
considered one and the same agreement, and shall become effective when one or
more counterparts have been signed by each of the parties and delivered to the
other party, it being understood that all parties need not sign the same
counterpart. Facsimile signatures shall be deemed original purposes
hereunder.
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10.12 Entire
Agreement. This Agreement including the Exhibits and
Disclsoure Schedules hereto and other documents and certificates delivered
pursuant to the terms hereof, set forth the entire agreement and understanding
of the parties hereto in respect of the subject matter contained herein, and
supersedes all prior agreements, whether oral or
written.
10.13 Mutual
Agreement. This Agreement embodies the arm’s-length
negotiation and mutual agreement among the parties hereto and shall not be
construed against any party as having been drafted by it.
10.14 Severability. If in
any jurisdiction, any provision of this Agreement or its application to any
party or circumstance is restricted, prohibited or unenforceable, such provision
shall, as to such jurisdiction, be ineffective only to the extent of such
restriction, prohibition or unenforceability without invalidating the
remaining provisions hereof and without affecting the validity or enforceability
of such provision in any other jurisdiction or its application to other parties
or circumstances provided the economic or legal substance of the transactions
contemplated hereby is not effected in a manner adverse to any party
hereto. In addition, if any one or more of the provisions contained
in this Agreement shall for any reason in any jurisdiction be held to be
excessively broad as to time, duration, geographical scope, activity or
subject, it shall be construed, by limiting and reducing it, so as to be
enforceable to the extent compatible with the application law of such
jurisdiction as it shall then appear.
10.15 Sellers’
Agent. Sellers’ Agent is hereby appointed as agent, proxy, and
attorney-in-fact for, and on behalf of, each Seller with regard to all purposes
under this Agreement, including the Related Instruments, such that Sellers’
Agent shall have the full power and authority to consummate the Transaction on
behalf of Sellers, perform all post-Closing matters related thereto, and do any
and all things, and take any and all actions, that Sellers’ Agent, in Sellers’
Agent’s sole discretion, may consider necessary, proper, or convenient in
connection with, or to carry out, the Transaction. Without limiting
the foregoing sentence, Sellers’ Agent is fully empowered and authorized to: (i)
receive and disburse all payments, (ii) give and receive notices and other
communications on behalf of all Sellers, and (iii) agree to, negotiate, enter
into settlements, compromises, and any other resolutions of, demand arbitration
of, and comply with court orders and arbitration awards with respect to
indemnification and other claims by or against any Seller. Sellers
agree that the appointment of Sellers’ Agent is coupled with an interest and
shall be irrevocable, except to the extent, if any, provided otherwise by any
applicable Law. Any decision, act, consent, waiver, or instruction of
Sellers’ Agent relating to this Agreement, including the Related Instruments, or
any matter arising thereunder or related thereto shall constitute a decision of
all of the Sellers, jointly and severally, shall be final, binding, and
conclusive upon each of them, and shall survive the death, incapacity,
bankruptcy, dissolution, or liquidation of any Seller or the Sellers’
Agent. Buyer and the other Indemnitees may rely upon any such
decision, act, consent, waiver, or instruction of Sellers’ Agent as being the
decision, consent, waiver, or instruction of each and every
Seller. Buyer and the other Indemnitees are hereby relieved from all
liability to any Person for any acts done by them in accordance with any such
decision, consent, waiver, or instruction of Sellers’ Agent. Sellers
shall, jointly and severally, indemnify, defend, and hold Sellers’ Agent
harmless from any and all actions taken by Sellers’ Agent in good
faith.
(signature
page follows)
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IN WITNESS WHEREOF, the
parties have caused this Agreement to be signed by its respective officers
thereunto duly authorized, all as of the date first written above.
BUYER:
DOCUMENT
SECURITY SYSTEMS, INC.
By:
/s/ Xxxxxxx Xxxxx
Xxxxxxx
Xxxxx, CEO
SELLERS:
/s/
Xxxxxx X. Xxxxxx
Xxxxxx
X. Xxxxxx
/s/ Xxxx
X. Xxxxxx
Xxxx
X. Xxxxxx
SELLERS’
AGENT:
/s/
Xxxxxx X. Xxxxxx
Xxxxxx
X. Xxxxxx
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